7 Common Questions Renters Ask Before Buying a House

Written by adminMay 21, 2019
Mortgage

Ask anyone who has ever spent a block of their time renting a room or an apartment, and they’ll tell you how frustrating it can be.  Dealing with horrible landlords, roommates, and other tenants is never fun. If you’re one of the numerous renters who are wondering how to take the next step in life by becoming a homeowner, you may not have any idea how to get started.

Here are the top seven questions renters ask while considering if they’re ready to purchase a home:

1) What is my first step?

Before you even start looking, you need to have a good understanding of your financial situation.  Unless you have the money upfront, you’ll have to work with a licensed loan officer to determine if you even qualify and how much you qualify for.  If there’s a black mark on your record, they can create a plan to help address those issues and get your credit in a bit better shape.

2) Does my credit score affect the interest rate?

Your credit score is a good indication of how well you’ve borrowed and paid back money in the past.  This is why lenders use it as a benchmark to determine whether or not they want to offer you a home loan.  If you have a poor credit score, lenders might not be so willing to trust you.

Imagine having a friend who asks to borrow $20 from different people in the neighborhood, but never pays anyone back. Eventually he’ll run out of people willing to help him, because word will get out he’s not good with the money previously lent to him. That’s how a credit report works.

Now, even if you have a great credit score, that doesn’t necessarily mean you’ll get a better interest rate, but you will likely be presented with many more options at your disposal than someone with a poor credit score.  If you have a good score and some money to use as a down payment, you will have more loan options and be trusted with better offers.

3) Do I need to make a down payment?

The more a person is willing to put down on a house, the better their loan and rates will be in the future.  But there is an option available for people who want 100% home financing. 100% home financing means a buyer won’t have to spend a single dollar of their own money on a down payment.  The issuing bank will loan you the whole price of the house.

Other programs, like the USDA and/or VA, exist to assist buyers in getting approved for a 100% home loan.  Speak with a local mortgage professional for more information.

4) How do I find a house to buy?

Once you have all your financial situation ready, it’s time to start shopping for your new home.  To begin that process, it’s highly recommended to hire a local realtor to represent you. When you sit down with a realtor, be prepared with a list of all the amenities you want your home to have.  Do you want extra land? A swimming pool? Is there a certain neighborhood or school district you want to stay in? Are there ones you want to avoid? A realtor will help you narrow down your options.

5) Can I find homes for sale only in my area?

When you hire a realtor, they will have access to all the homes for sale in the area through a database called the Multiple Listing Service, or MLS.  Every real estate agent in the state lists their homes, photos, and relevant details in that database, making it easier to find exactly what you’re looking for.  Only license realtors have access to it as well, so they will have more information about each listing than you’d find on a national real estate website.

6) When do I make my offer?

Once you find the house that suits your needs and fits the general price you can afford, then you can put up your offer.  While it can seem like a good idea to take as much time as possible before making a decision, it’s imperative to make a fast offer.  A lot of buyers who wait find themselves in a multi-offer situation where other buyers are interested and making higher offers, ultimately costing you thousands of extra dollars if you decide to up your offer.

7) What’s my next step?

Once you have everything situated, it’s a great time to review their current auto, home, and life insurance policies.  With this new journey in life, you will want to be as responsible as possible by protecting the ones you love in case the worst happens. It’s the only way to be 100% protected. You may think affording insurance is difficult, but most places will offer bundled savings.

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Having Student Loans Can Make Buying a Home Impossible

Written by adminMay 10, 2018
Saving

Owning a home is part of the big American dream. It’s why we care about going to college and getting the best education money can buy. When it’s time to settle down and start a family, part of the process involves securing a mortgage.

Right now, millennials fall within this age group. They’re graduating college, but find that life outside the campus isn’t as easy as they first thought, forcing them to live at home.

The first issue is the current housing economy. Millennials are starting their families, yet they find that housing isn’t so easy to find anymore. When they do find something, the prices are through the roof. That’s because the high demand coupled with low inventory sends cost nearly to unattainable levels on its own.

The cost of rent is much higher. 23% of millennials say they felt forced to buy a home because rent was way too high. Rent has gone up in 85 of the top 100 cities, according to a survey from the Department of Housing and Urban Development.

This isn’t the only thing stopping millennials from buying a home. The other issue is their debt.

Currently, 62% of millennials have student loan debt, which exacerbates the cost of home ownership. 45 million Americans owe $1.5 trillion in student debt, as it was recently reported. It’s a new record that doesn’t seem to be going away anytime soon.

Almost 1/5 of those with student debt owe $100,000 or more. That’s a lot of money and it works against them when it’s time to buy a home.

A large amount of student will not only take a large portion of your income (if you’re paying back regularly), but also put a huge dent in your credit. If you’re credit isn’t in tip-top shape and you already have a large amount of debt, banks will be less likely to give you a loan.

Even if they do feel confident enough to do so, you can bet the interest rate will be enormous.

That’s why 80% of millennials blame their lack of home ownership on their student debt. Regardless of their need to escape high rent costs and/or they’ve started a family and need a bigger place, their student loans made their dream impossible.

Debt-to-Income Ratio

According to the National Association of Realtors, nearly 1/5 of those who can’t get mortgage approval are denied because of student loans. That’s because their debt-to-income ratio is way too high. Banks look it as unsecured debt, which is applied negatively towards the borrower.

If a large chunk of your income is going towards student loans, that means you probably don’t have much of an opportunity save money. If you can’t save, then you can’t afford a down payment.

85% of those with student loans say they delayed buying a home because they didn’t have the money for a down payment. Most former students pay between $350-$500 each month for their loans. That makes it extremely challenging to be able to throw down $40,000 for a down payment.

For this very reason, a lot of millennials turn toward their parents as a co-signer or for the loan.

The best thing for anyone to do after graduating college is to focus on their career and paying off debts. If your debt is getting the best of you and preventing you from having milestone moments, then you should get help in taking care of your loans.

The federal government has created several programs designed to help people pay off their debts faster.

For more information about these programs and to see if you qualify, call us today at: (855) 221-9282. Getting your student debt under control should always been your first goal, or else it will keep you from living the life you deserve.

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3 Beneficial Times To Refinance Your Home Mortgage

Written by adminJanuary 4, 2017
Mortgage , Refinance

The decision to refinance can end up costing you thousands in closing costs and other fees. If you time the rate and term refinance process right, however, you can actually end up improving your financial situation, despite these costs. When you refinance your home loan, your lender generates a brand new agreement, which pays off the balance of your current loan. The new mortgage agreement comes with updated terms, interest rates and payoff dates. Tactical use of rate and term refinancing allows you to improve your potential return on investment without depleting your resources. Here are three beneficial times to choose this refinance option.

Upon Reaching 78% Loan To Value Ratio

If you purchased your home without putting 20% down, your monthly mortgage payment includes private mortgage insurance, or PMI, which can add thousands to the final cost of your home. The PMI funds do not apply to your principal balance or interest costs; it just protects the lender in case of loan default. You are only responsible for paying PMI until your principal balance hits 78%.

You can speed up the PMI removal by refinancing your home loan once you have built up some equity. You can work with a professional to secure an appraisal and determine if your home’s current value has grown enough to eliminate PMI and secure you improved payment rates. If not, you may want to wait until your PMI payments drop off after the 78% mark. For government backed loans, however, you have no choice but to refinance with a different lender to eliminate PMI costs.

At The End Of Your Adjustable Rate Mortgage Term

An adjustable rate loan allows you to make reduced payments at first in anticipation of financial growth in the future. Upon reaching the end of the initial term limits, your monthly mortgage payment could jump hundreds of dollars. If your financial situation has not improved enough by that time, you could struggle to keep your loan payments current, especially when faced with property maintenance and repair costs.

If you refinance at the end of your adjustable rate mortgage term, you could obtain a fixed rate loan with financially viable payment amounts. With the fixed rate option, your payment terms remain static, which eliminates the risk of high recalculation amounts.

After Significant Credit And Income Improvements

If made great strides in your career advancement efforts, you may have experienced income and credit improvements since you first obtained your home loan. These improvements can help you secure better loan terms through a full refinance of your loan. You may qualify for reduced interest rates that drop your payoff amount significantly. As your total loan balance decreases, so do your monthly payments. As a result, you can start paying additional funds toward your principal balance to pay off your home loan even faster.

Choosing Between The Home Loan Refinance Options

Although rate and term refinancing can help improve your financial situation, the returns can take a long time to add up. You can predict the turnaround time by calculating your monthly and total savings, and then comparing them to the costs of the refinance. If you find yourself in a dire need for money right now, you can elect to apply for a cash out refinance instead. With the cash out refinance, you can use the funds to repair or renovate your home, pay down debt or finance other expenses. To determine the best refinance option for your situation, obtain an online quote and compare the results with your expectations. The quote will help you determine if you will benefit financially from the rate and term or cash out refinance options.

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