The SCOOP! Blog by ChangeMyRate.com®

If you’re looking to Refinance or Buy a Home click here before rates rise.

No matter where you’re buying a home, at some point you’re going to find yourself deep in escrow. (Don’t worry. It’s not as bad as it sounds.) What is escrow? In real estate, it has several meanings, but they all boil down to your house and your money being in a kind of limbo.

Escrow is when an impartial third party holds on to something of value during a transaction.

Escrow and offers

When you make an offer on a home, you will write an earnest money check that will be placed in “escrow.” That means it isn’t going directly to the seller but is being held by an impartial third party until you and the seller negotiate a contract and close the deal. You can’t touch it and the seller can’t touch it. It’s in escrow.

That’s important because it protects both parties. Say you put down earnest money that went directly to the seller and then couldn’t reach a final purchase and sale agreement. You don’t want the seller holding your earnest money hostage as a negotiating ploy. Likewise, the seller won’t want to sign over the deed to the home until you’ve paid for it. And you won’t want to hand over cash without the deed being signed. Escrow ensures everyone gets what they are due at essentially the same time.

Escrow and lenders

When you are talking with your mortgage lender, you’ll hear about escrow again. They might talk about an “escrow” or “impound” account or “reserves.” They may use these terms interchangeably, and that’s OK because they all mean the same thing. They are funds held by the lender to make payments for your homeowners insurance and property taxes. Lenders will collect them monthly along with your loan payment and then pay the tax and insurance bills when they are due. That’s because your lender has a vested interest in making sure those payments are made. You may hear the term “prepaids” as well. That’s money collected in advance for those bills to ensure they’ve got enough on hand to pay them when they are due.

Escrow and closing

Finally, you may hear someone refer to the “closing of escrow.” That’s when your purchase is completed. A closing or “escrow officer” will oversee the final paperwork and handle the exchange of funds and recording of deeds. This person, sometimes an attorney, will ensure that all the money is properly disbursed, that the documents are signed and recorded, and that all necessary conditions are met before closing the escrow.

What is a hold-back of funds?

Sometimes the sale may be completed and ownership transferred while funds are still held in escrow. For instance, if you’ve agreed to let the seller’s family stay in the house for an extra week until their new home is ready, you would sign a “rent-back” agreement requiring the seller to pay you a daily rate for the length of their stay. In the case of such a rent-back, your real estate agent will likely advise you to have the escrow agent hold back a portion of the seller’s proceeds until they’ve moved out and left the house in the condition specified in your contract.

Or perhaps you found something wrong during your final walkthrough of the house. Maybe the seller agreed to make the repair, but the work couldn’t be completed by closing day. Money can be held in escrow to cover the cost.

If you’re purchasing new construction, you may have funds held in escrow until all work is complete and you’ve signed off on it.

Once escrow is closed and all funds have been disbursed, you and the seller will receive a final closing statement and other documents in the mail. Check the statement carefully and call the closing agent immediately if you spot an error. File the statement with your most important papers. You’ll need it when you file your next income tax return.

Source: To view the original article click here   

 

Apply to Refinance              Apply to Buy a Home

Posted by Jackie A. Graves, President on June 20th, 2018 7:10 AM

If you’re looking to Refinance or Buy a Home click here before rates rise.

 

Amanda and Taylor Hall were married in May 2017 and, like nearly 60% of the primary residence market last year, they were faced with one of the most important decisions of their young lives – to continue renting or to buy a new home. They were renting a one bedroom converted apartment that was part of a twin home. With noisy tenants upstairs and a family of six who lived on the other side of their shared twin walls, the newlyweds were ready to explore new options.

For many, the thought of renting is much easier due to several conveniences, such as only paying your rent and a handful of utilities, having a landlord to fix any problems, the flexibility to move from city to city and a set monthly rent payment.

But there are also downsides to renting that many people don’t consider. According to Zillow, the median rent in the United States rose 2.8 percent over the past year to $1,445, the fastest pace of appreciation since May 2016. The Halls had to deal with the common pitfalls of renting such as application fees and strict rules around pets, nonrefundable security deposits and decorating improvements such as painting and hanging photos.

In comparison, while the benefits of homeownership are well understood for most people– a predictable monthly payment with a fixed mortgage, potential tax benefits, wealth and equity accumulation and security, to name a few – often the main reason that first-time homebuyers (FTHB) give for pursuing this major purchase is simply the desire to own a home of their own.

Purchasing a home is an important decision and has major benefits that renting just cannot provide. Like one-third of the homebuyers last year, the Halls were FTHB and needed help to navigate through this process. When the Halls’ real estate agent sat down with them, he explained some significant facts:

  • Stability: first and foremost their house is their home, not a landlord’s property. It’s a place FTHB will call their own.
  • It’s an investment in their future. Each month that they make a payment, they are one step closer to paying off the mortgage loan, while continuing to build equity along the way.
  • Their purchase may provide a tax deduction. Each year, buyers may be able to write off their mortgage interest payments and property tax on their personal residence. There are other potential tax deductions tied to owning a home too. For some, this can be a significant tax savings. The real estate agent advised the Halls to consult their tax professional to determine what makes sense for them.
  • Market Value Appreciation. While not all home values rise and fall at the same rate, over time, property values have kept up with inflation and can provide some price appreciation, which is helpful if a homeowner wants to sell to move to a new location or into a bigger home. The combination of equity build up and the appreciation in the home value will start them on the path to wealth creation.
  • They get to make it their own. Paint, decorate, remodel….when it’s their own home, they decide what improvements they want to make.
  • No more rent increases. When homebuyers purchase a home with a fixed rate mortgage, the payment for the principal and interest on their mortgage stays the same for the life of the loan, unlike rent, which typically increases every year (sometimes significantly!).
  • Loan payoff means no more mortgage payment! When they pay off their mortgage, which will happen over time, they will wake up one day and realize the joy of no more mortgage payments!

Even with all of the benefits of homeownership explained, of particular concern to the Halls was how much was needed for a down payment. For many FTHB, while they want to say "Au Revoir" to renting and “Bonjour” to homeownership, the downpayment is a major financial hurdle. There is a misconception that homebuyers need 20% of the home price as the down payment.

At Radian we want all FTHB to be prepared, so we provide tools to help them understand how buying their first home could be within their reach. A key part of a buyer’s educational journey includes a discussion about the benefits of mortgage insurance -- a financial tool that creates a path to homeownership by allowing buyers to purchase sooner with less money down.  Sometimes, eligible buyers can secure a conventional mortgage with as little as a 3% down -- a much more feasible option for many FTHB. When thinking about how much they had to pay for their apartment and comparing it to how much they would have to put down to secure a loan, the Halls felt more confident about the idea of homeownership.

To help simplify things for both real estate agents and FTHB, Radian’s home buying tools help prospective buyers make an educated, financial decision. Some homebuyers don’t even realize that in many areas of the country, buying a home can actually be more affordable than renting.

A great resource is Radian’s homebuyer website, AchievetheDream.com. The website is an excellent source of information and makes it easy to get familiar with the home buying process. With their agent’s help, the Halls discovered a helpful Rent vs Buy interactive calculator on the Achieve the Dream website, giving them the opportunity to compare the true cost of renting versus owning a home to help determine which would be most cost effective for their family.

The calculator compares things such as rental payments and insurance, utilities, security deposit and max rent increase to a home’s sale price, credit score, interest rates, down payment, taxes and property insurance, closing costs and annual appreciation rates. The Halls plugged in their personal information, watching the numbers change as they compared renting to buying a home. The numbers showed that financially it was a better investment to purchase a home than rent. 

Seeing actual numbers is a big wake up call for wishful homebuyers. However, helping them understand the possibilities and how to financially get there ultimately makes for happy and successful first-time homebuyers.

Source: To view the original article click here   

 

Apply to Refinance              Apply to Buy a Home

Posted by Jackie A. Graves, President on June 19th, 2018 6:52 AM

If you’re looking to Refinance or Buy a Home click here before rates rise.

 

What is a hard money lender?

The term “hard money lender” is used to describe lending outside of traditional banks or credit unions to an individual or a business. Hard money loans are usually funded by an investor or a group of investors.

Hard money borrowers secure their loans through equity rather than creditworthiness. This is why these types of loans are also referred to as equity-based loans. Instead of borrowers submitting financial documents and going through credit checks, they put up a large down payment, which helps offset the lender’s risk.

Hard money loans come with shorter terms (around two to five years), higher interest rates and hefty processing fees.

Why get a hard money loan?

People typically pursue a hard money loan because they either don’t qualify for a conventional loan or they need the money quickly.

Unlike conventional loans, which can take weeks to process, hard money loans can be ready in a couple of days.

Types of borrowers who tend to get hard money loans include:
  • Property flippers.
  • Borrowers who don’t qualify for traditional loans.
  • Homeowners facing foreclosure with substantial equity in their home.

Property flippers

Individuals who buy properties, renovate them and resell them for a profit, known as property flippers, will often get hard money financing, says Julie Aragon, a Los Angeles-based mortgage expert.

“Property flippers like hard money loans because they can get the cash fast,” Aragon says. “This expediency is beneficial when they’re bidding on a property. They will have the advantage over someone who might need a month to close.”

Borrowers who don’t qualify for traditional loans

There are many reasons some borrowers don’t qualify for a traditional loan, such as a 30-year fixed-rate mortgage from a bank. These reasons might include a recent divorce that affected their credit score or the inability to document their income. For business owners, proving income can sometimes be challenging, which might make it impossible to secure a traditional loan, Aragon says.

“Self-employed people who write everything off might be able to afford a mortgage, but their taxes don’t reflect that,” Aragon says. “For them, hard money loans are their only option.”

Homeowners facing foreclosure with substantial equity in their home

Although this group is a less common borrower type than the other groups, there are people who have a lot of equity in their home but are at risk of getting foreclosed upon.

Hard money lenders would consider lending to these people if they can be assured that, if the loan goes into default, they can sell the house, pay off the first mortgage and still earn a profit from the sale.

Pros and cons of hard money loans

Depending on your situation, a hard money loan can be a helpful tool or it can be a costly mistake. Most experts agree that hard money loans are a short-term solution, not a replacement for traditional mortgages.

Pros

  • Accessible to people who have equity but are not eligible for traditional loans.
  • The money is available quickly, usually within two days.
  • Hard money lenders usually do not require credit checks or financial disclosures.
Cons
  • The interest rates are much higher than conventional loans.
  • The processing fees are costly, up to three points or more.
  • There are usually pre-payment penalties for paying off the loan early.
  • The down payment requirement is large, usually 30 percent or more of the total value of the loan.

Regulations for hard money lending

Hard money lenders are subject to federal and state laws, which bar them from lending to people who cannot repay the loan. By law, hard money lenders have to establish that a borrower has the means to make both the monthly payments and any scheduled balloon payment.

Source: To view the original article click here   

 

Apply to Refinance              Apply to Buy a Home

Posted by Jackie A. Graves, President on June 18th, 2018 5:33 PM

If you’re looking to Refinance or Buy a Home click here before rates rise.

Details matter, especially when it comes to the all-important Loan Estimate and Closing Disclosure.

After all of the components of the home buying process — negotiations, appraisals, inspections, and insurance — it’s very exciting to (finally) get to closing. But do you know what really happens during this final appointment? Closing on a home can be nerve-racking simply because many first-time buyers don’t  know what to expect or what to bring along.

Here, we’ll walk through all the details of what to expect at closing.

Scheduling & Closing Attorney Selection

The date of closing is typically set in the offer letter as most sellers will want to know when they can expect the closed sale once the home is under contract. Typically, closing is set 30 to 60 days from when offer is accepted, although this can change depending upon a variety of factors, including inspections and paperwork processing with the lender.

Depending on the state you live in, closing may take place at the closing attorney’s office or the title company. It’s the buyer’s right to choose the closing attorney. This person acts in the interest of the buyer and takes care of the “housekeeping” items of the closing, such as preparing paperwork, making sure all paperwork is properly signed, conducting a title check on the property, and receipt and distribution of money, among other things. The fee for the closing attorney is often included in the closing costs.

If you’re buying a home with an FHA loan, a mortgage loan option backed by the Federal Housing Administration that allows home buyers to put as little as 3.5% down, many lenders may recommend one of their pre-approved attorneys. If you (as the buyer) don’t have an attorney, the lender can also choose one for you, but you’re not required to use that recommendation.

Paperwork You’ll Receive

There are two pieces of paperwork home buying consumers should familiarize themselves with: the Loan Estimate and the Closing Disclosure. Both of these tools explain the loan terms, like interest rate and other costs associated with the loan (taxes, recording fees, etc.). The Loan Estimate should be provided to you no more than three days after your loan application. Keep the estimate in a safe place to compare with your Closing Disclosure and check for any discrepancies. 

No later than three days before closing, your lender must provide you with a Closing Disclosure, which will look very similar to your Loan Estimate. Double check the interest rate information, address, and all other relevant information for accuracy. If something appears different than what you thought, reach out to your mortgage broker or lender for clarification.

The Closing Disclosure will detail information about your mortgage loan and the exact amount you’ll need to bring to closing to cover closing costs. 

On the day of closing, you’ll receive the following paperwork:

  • Mortgage note stating you agree to repay the loan

  • Deed of trust to secure mortgage note

What to Bring

  • Cashier’s check for closing costs (or paperwork confirming wire transfer of funds from your bank)
  • Proof of homeowners insurance (likely already verified, but bring a copy to closing just in case)
  • Copies of any paperwork you’ve received from contract to close (again, just in case, for your reference)

Common Mistakes to Avoid


Given the length of time between contract and closing, most closings should be fairly routine and go smoothly because all of the legwork has been done prior to this date (such as checking the title, inspecting the home, loan underwriting with the lender, etc.) Unfortunately, hiccups can happen, which is why it’s best to avoid the common mistakes below:

  • Try to avoid closing on the last day of the month. In the event something goes wrong, you’ll want time to correct. This is because pre-paid interest on the loan accrues and is due at closing, and if pushed to a new month, the interest will continue to build.  
  • Don’t skip the final walk-thru. Buyers should do this to ensure no new damage has been made to the home shortly before closing. If buyers opt not to do this, they cannot hold seller responsible for damages after transfer of property at closing.

     

  • Don’t make any big financial purchases in between contract and closing. The bank loaning the money for the mortgage has financed the home based on the most current financial information available. If you finance a car, an appliance, or any other big purchase, this affects your financial information and can delay closing on the home significantly. Unless it is the most dire of circumstances, hold off on big purchases to get into your first home as quickly as possible

  • Don’t skim the closing documents. You want to check for typos on names and addresses.

 Armed with the information above, first-time buyers should feel comfortable going into their first closing. Once the closing is over, you should receive keys (unless otherwise negotiated with the seller) and you’re officially the owner of your new home!

Source: To view the original article click here    Apply to Buy a Home     Apply to Refinance


    Posted by Jackie A. Graves, President on June 17th, 2018 8:22 AM

    If you’re looking to Refinance or Buy a Home click here before rates rise.

    The Federal Reserve lifted the federal funds rate on Wednesday by a quarter percentage point to a range of 1.75 percent to 2 percent. Two more rate hikes are expected this year.

    If you’re a homeowner with a fixed-rate mortgage, rest easy. If you’re a homebuyer and are shopping for a fixed-rate loan, don’t panic. But if you have an adjustable-rate mortgage or took out a home equity line of credit, pay close attention.

    ARMs and HELOCs will be more costly

    Borrowers with adjustable-rate mortgages that are past the fixed-rate period or home equity lines of credit can expect to see higher rates very soon.

    “Based on what we know about the recent past and on what we expect, we know that we’re in a rising interest rate environment,” says Mark Hamrick, senior economic analyst at Bankrate. “That means anyone, including those who have adjustable-rate mortgages and HELOCs, which tend to be variable, will be facing higher payments in the future (if they haven’t been already).”

    These loans are typically tied to the prime rate. When the federal funds rate changes, the prime rate does as well. That means a quarter-point Fed increase means a quarter-point increase on HELOCs within the next couple of statement cycles.

    The best course of action for HELOC and ARM borrowers is to prepare for refinancing. That might mean actively improving your credit score or working with a financial institution. The sooner you refinance out of adjustable-rate loans, the better for your bottom line, Hamrick says.

    “Without being focused on the precise number of rate hikes, most consumers, borrowers, savers and even investors would be well-advised to be aware of the likely direction of rates, meaning higher, and to prepare and act accordingly,” Hamrick says.

    Rates on longer-term mortgages to gradually rise

    Interest rates on 15-year and 30-year fixed-rate mortgages don’t move in lock-step with the federal funds rate. These loans are tied to 10-year Treasuries, so borrowers looking to get a 30-year mortgage aren’t directly affected by the latest Fed hike.

    However, the federal funds rate does contribute to the longer-term trends of the 10-year Treasury, and long-term fixed mortgages as a result. With the Fed likely lifting rates multiple times over the next couple of years, the trend for long-term mortgage rates is up.

    Some experts predict that the Fed’s rate hikes, along with a strong economy and growing deficits, will push the average 30-year fixed mortgage rate to 5 percent in the next couple of years. It would be the first time it’s hit the 5 percent mark since April 2011, according to Bankrate data.

    “What Federal Reserve officials say is true: Every meeting is live, meaning they can make a rate change almost any time, but they also don’t want to shock markets, unless facing truly extreme circumstances,” Hamrick says. “So they will continue to try to provide some degree of guidance regarding future likely rate moves, particularly going out about three years. For the foreseeable future, the Fed is telling us that we should brace for a continued rising trajectory of rising rates.”

    Consumers who are on the fence about getting a mortgage should act sooner rather than later to make sure they get the lowest rate possible.

    Source: To view the original article click here    Apply to Buy a Home     Apply to Refinance

    Posted by Jackie A. Graves, President on June 16th, 2018 8:04 AM
    If you’re looking to Refinance or Buy a Home click here before rates rise.

    What is a VA Loan?

    Veterans Affairs mortgages, better known as VA loans, make it easier for veterans to get financing to buy a home. VA loans do not always require a down payment and are available to military veterans and active military members. These home loans are made through private lenders and are guaranteed by the Department of Veterans Affairs, so they do not require mortgage insurance. There’s no minimum credit score requirement.

    The VA loan remains one of the few mortgage options for borrowers who don’t have the money for a down payment. VA loans are somewhat easier to qualify for than conventional mortgages.

    The U.S. Department of Veterans Affairs is not a direct lender. The loan is made through a private lender and partially guaranteed by the VA, as long as guidelines are met.

    If you think you may be eligible for a VA loan, here are some things you must know about the program.

    1. Eligibility requirements

    Most members of the regular military, veterans, reservists and National Guard are eligible to apply for a VA loan. Spouses of military members who died while on active duty or as a result of a service-connected disability also can apply.

    Active-duty military personnel generally qualify after about six months of service. Reservists and members of the National Guard must wait six years to apply, but if they are called to active duty before that, they gain eligibility after 181 days of service.

    “Most reservists are qualifying under active duty,” says Michael Frueh, chief of staff of the Veterans Benefits Administration of the VA.

    Reservists, members of the National Guard and active-duty members generally are eligible after 90 days of service during a time of war.

    “If you were on any type of foreign soil, more than likely you are eligible,” says Grant Moon, a veteran and president of VALC Enterprises Inc., a loan referral company.

    Potential VA loan borrowers must obtain a Certificate of Eligibility, or COE.

    “But you don’t need the Certificate of Eligibility in hand to start the mortgage process,” says Chris Birk, director of education at Veterans United Home Loans. “Lenders, in many cases, can get this document for borrowers during the preapproval phase.”

    2. Advantages of a VA loan

    Loans guaranteed by the VA can be obtained without any down payment. “That’s a huge plus,” Frueh says.

    Another plus: A VA loan doesn’t require mortgage insurance, as do Federal Housing Administration (FHA) loans and conventional loans with less than 20 percent down. The benefit translates into significant monthly savings for VA borrowers. For instance, a borrower who makes a 3.5 percent down payment on a $200,000 FHA-insured mortgage pays $100 a month for mortgage insurance alone.

    “And with a VA loan, you don’t have to save all the money you would have to save for a conventional loan,” Moon says.

    3. Funding fee

    Although the costs of getting a VA loan are generally lower than they are for other types of low-down-payment mortgages, they still carry a one-time funding fee that varies, depending on the down payment and the type of veteran.

    A borrower in the armed forces getting a VA loan for the first time, with no money down, would pay a fee of 2.15 percent of the loan amount, Frueh says.

    The fee is reduced to 1.25 percent of the loan amount if the borrower makes a down payment of 10 percent or more. Reservists and National Guard members normally pay about a quarter of a percentage point more in fees than active-duty members pay.

    Those using the VA loan program for the second time, without a down payment, would pay 3.3 percent of the total loan amount.

    “And if you receive disability compensation, the fee is waived,” Frueh says.

    4. Underwriting requirements

    The VA does not require a certain credit score for a VA loan, but lenders generally have their own internal requirements. Most lenders want an applicant with a credit score of 620 or higher, Moon says.

    “There are players that would go lower, but they would probably charge a higher interest rate,” he says.

    Borrowers must show sufficient income to repay the loan and shouldn’t have a heavy debt load, but the guidelines are usually more flexible than they are for conventional loans.

    “We always tell underwriters to do their due diligence, but this is a benefits program, so there is some flexibility,” Frueh says.

    VA guidelines allow veterans to use their home-loan benefits a year or two after bankruptcy or foreclosure.

    “We look at the whole credit picture, what was the reason for the credit bankruptcy and where the borrower is now,” says John Bell III, deputy director at the VA.

    VA loans are available only to finance a primary home. A VA loan cannot be used to purchase or refinance vacation and investment homes.

    The VA says there is no cap on the amount you can borrow. “However, there are limits on the amount of liability VA can assume, which usually affects the amount of money an institution will lend you,” the agency says. “The loan limits are the amount a qualified veteran with full entitlement may be able to borrow without making a down payment. These loan limits vary by county, since the value of a house depends in part on its location.”

    The limit on VA loans varies by county, but the maximum guaranty amount for 2018 is $453,100 and up to $679,650 in high-cost areas in the continental United States and even higher in parts of Hawaii.

    5. Help for struggling VA borrowers

    Another advantage of a VA loan is the assistance offered to struggling borrowers. If the borrower of a VA loan can’t make payments on the mortgage, the VA can negotiate with the lender on behalf of the borrower.

    “We have dedicated staff nationwide committed to helping veterans who are experiencing financial difficulty,” Bell says.

    VA’s financial counselors can help borrowers negotiate repayment plans, loan modifications and other alternatives to foreclosure, he says.

    Regardless of whether they have VA loans, veterans who are struggling to make their mortgage payments can call (877) 827-3702 for assistance.

    Source: To view the original article click here    Apply to Buy a Home     Apply to Refinance

    Posted by Jackie A. Graves, President on June 15th, 2018 5:44 AM
    If you’re looking to Refinance or Buy a Home click here before rates rise.


    Less rigorous lending standards and lower down-payment requirements make FHA loans popular among mortgage borrowers.

    What is an FHA loan?

    An FHA loan is a type of government-backed mortgage insured by the Federal Housing Administration, a branch of the U.S. Department of Housing and Urban Development, or HUD. FHA borrowers pay for mortgage insurance, which protects the lender from a loss if the borrower defaults on the loan.

    Comparing FHA loans vs. conventional mortgages

    Why homebuyers like FHA mortgage loans


    Because they are government-backed, FHA home loans have attractive interest rates and less stringent qualifications.

    FHA loan applicants must meet credit-score and down-payment requirements, and show proof of employment and a steady income. An appraisal of the home by an FHA-approved appraiser also is required.

    Fast facts about FHA home loans

    Here are seven facts that borrowers should know about FHA loans.

    1. You don’t need stellar credit to qualify

    Credit-score requirements for FHA loans depend on the down payment.


    • For an FHA loan with a down payment as low as 3.5 percent, the borrower’s credit score must be 580 or higher.
    • Those with credit scores between 500 and 579 must pay at least 10 percent down.


    Know your credit score before you borrow. Check it today for free at myBankrate.

    People with credit scores under 500 generally are ineligible for FHA loans. However, there may be some wiggle room there. The FHA does make allowances, under certain circumstances, for applicants with “nontraditional credit history or insufficient credit” if other criteria are met.

    Ask your FHA lender or an FHA loan specialist whether you qualify.

    You must be out of bankruptcy at least two years and not have had a foreclosure within the past three years to get an FHA loan. In addition, you must be current with payments on federal student loans and income taxes.

    2. The minimum down payment is 3.5 percent

    For most mortgage borrowers, the FHA requires only 3.5 percent of the home’s purchase price as a down payment. For example, if you bought a $200,000 home, the minimum down payment would be $7,000.

    If you had a conventional mortgage through a lender that required 20 percent down on that $200,000 house, you’d have to come up with $40,000.

    FHA borrowers can use their savings, a financial gift from a family member or a government grant for down-payment assistance.

    States, cities, counties, local housing authorities and nonprofits are all potential sources for down-payment help. The National Council of State Housing Agencies is a good resource for assistance programs.

    3. Closing costs may be covered

    The FHA allows home sellers, builders and lenders to pay some of the borrower’s closing costs, such as for an appraisal, credit report or title expenses. For example, a builder might offer to pay closing costs as an incentive for the borrower to buy a new home.

    Lenders typically charge more interest on the loan if they agree to pay closing costs. Borrowers can compare loan estimates from competing lenders to decide which option is the best for them.

    The total for closing costs will vary based on the state you live in, the size of your loan and whether or not you pay points to lower the interest rate.

    Lenders are required to give you a Good Faith Estimate, or GFE, within three business days of your loan application. The GFE will give you a good idea early in the process of what your closing costs will be.

    HUD holds FHA lenders to no more 3 percent to 5 percent of the loan amount for closing costs.

    4. The lender must be FHA-approved

    Because the FHA is not a lender, borrowers get their home loans from FHA-approved lenders. FHA-approved lenders have different rates and costs, even for the same loan.

    FHA loans are available through many sources — from the biggest banks and credit unions to community banks and independent mortgage lenders.

    Costs, services and underwriting standards vary among lenders or mortgage brokers, so it’s important to shop around.

    5. There are two types of mortgage insurance to pay

    Mortgage insurance is required when borrowers pay down less than 20 percent. It insures the mortgage for the lender in case the borrower defaults.

    All FHA loans require the borrower to pay two mortgage insurance premiums:


    • Upfront premium: 75 percent of the loan amount, paid when the borrower gets the loan. The premium can be rolled into the financed loan amount.
    • Annual premium: 45 percent to 1.05 percent, depending on the loan term (15 years vs. 30 years), the loan amount and the initial loan-to-value ratio, or LTV. This premium amount is divided by 12 and paid monthly.

    So, if you borrow $150,000, your upfront mortgage insurance premium would be $2,625 and your annual premium would range from $675 ($56.25 per month) to $1,575 ($131.25 per month).

    6. You can borrow cash for home repairs

    The FHA has a special loan for borrowers who want extra cash to make repairs to their homes. The chief advantage of this type of loan, called a 203(k), is that the loan amount is not based on the current appraised value of the home, but on the projected value after the repairs are completed.

    A so-called “streamlined” 203(k) allows the borrower to finance up to $35,000 for nonstructural repairs, such as painting and replacing cabinets or fixtures.

    Among the repairs an FHA 203(k) will cover:


    • Bathroom and kitchen remodels.
    • Flooring.
    • Plumbing.
    • Decks and patios.
    • Heating and air-conditioning systems.

    One big benefit of a 203(k) is that it allows you to buy a fixer-upper that you might not have been able to afford otherwise. However, not all properties qualify and applying for the loan can be difficult because a detailed proposal of the work and cost estimates are required.

    7. Loan limits are adjusted annually

    Every year the FHA changes the maximum loan amount (“ceiling”) that it will insure, and the minimum loan limit (“floor”) it will insure. This is in response to shifting home prices.

    Ceiling and floor limits vary according to the cost of living in a certain area. FHA limits can vary from one county to the next. Areas with a higher cost of living will have higher limits, and vice versa. Special exceptions are made for housing in Alaska, Hawaii, Guam and the Virgin Islands, where home construction is more expensive.

    For FHA home loans in high-cost areas in 2018:


    • The ceiling is $679,650.
    • The floor is $294,515.

    The loan limits either stayed the same or increased from 2017. There were no U.S. counties where loan limits were decreased. FHA ceilings are intended to be slightly higher than the median home price in a particular area.

    Source: To view the original article click here    Apply to Buy a Home     Apply to Refinance



    Posted by Jackie A. Graves, President on June 14th, 2018 5:12 AM
    If you’re looking to Refinance or Buy a Home click here before rates rise.

    Ninety percent of today's homeowners choose a 30-year fixed-rate mortgage. There are many reasons for its broad appeal, including affordability, stability and flexibility. What's more, it provides you and your family with “inflation protection.”

    That's right. The fixed-rate mortgage – whether it's a 10-, 20- or 30-year term – provides inflation protection, meaning that even if mortgage rates increase in the future, your mortgage rate will not change.

    While inflation touches virtually everything we purchase, from a pair of shoes to a meal at a restaurant, your mortgage principal and interest payment will remain the same for the entire term of your loan. This insulates you from payment shock that comes with other mortgage types, allows you to plan your future finances more easily, and lastly, your payment will become more affordable as your household income will likely increase over time.

    Be sure to visit My Home by Freddie Mac® to learn more about homeownership and follow our blog series, Why Homeownership Matters: The Triple Bottom Line, in celebration of National Homeownership Month.

    Source: To view the original article click here    Apply to Buy a Home     Apply to Refinance

    Posted by Jackie A. Graves, President on June 13th, 2018 6:23 AM
    If you’re looking to Refinance or Buy a Home click here before rates rise.

    Do you have mortgage questions? You aren’t alone.

    Mortgages can be complicated, but it’s important to understand your options. Knowing the answers to your mortgage questions can empower you to make smart decisions when you shop for a house.

    Common mortgage questions

    Whether you’re working with a real estate agent to purchase your first home or you’re looking to avoid mistakes you’ve made before, being smart about home loans—before you go to a lender—can help you get the best deal on a house that will benefit your family for years to come.

    Here are some common mortgage questions you may have during the home buying process.

    1. How do you qualify for a loan?

    The idea of meeting with a lender can be intimidating. After all, this is probably the biggest purchase you’ll ever make!

    Take a deep breath and relax—you don’t have to be stressed. Think of your first meeting with a lender as a get-to-know-you session. They’ll simply want to learn a few basics about you and your financial situation.

    Then comes the paperwork! Once your loan process gets started, be prepared to provide proof of:

    • Where you work
    • Your income
    • Any debt you have
    • Your assets
    • How much you plan to put down on your home

     

    A good lender will clearly explain your mortgage options and answer all your questions so you feel confident in your decision. If they don’t, find a new lender. A mortgage is a huge financial commitment, and you should never sign up for something you don’t understand!

    It’s likely that your lender will approve you for more money than you want to spend. But keep this in mind: Just because you qualify for a big loan doesn’t mean you can afford it!

    If you are you ready to get prequalified for a mortgage loan, we recommend talking with Churchill Mortgage.

    "Just because you qualify for a big loan doesn’t mean you can afford it!" —Chris Hogan

    2. Can you get a home mortgage loan without a credit score?

    This is one of the most commonly asked mortgage questions, and the answer may surprise you.

    If you’ve paid off all your debt—and we recommend you do before buying a home—it is possible you won’t have a credit score when you meet with a lender. That might make you nervous. But don’t worry; you can still get a mortgage.

    If you apply for a mortgage without a credit score, you’ll need to go through a process called manual underwriting. Manual underwriting simply means you’ll be asked to provide additional paperwork for the underwriter to review personally. Your loan process may take a little longer, but buying a home without the strain of extra debt is worth it!

    Not every lender offers manual underwriting. Do a little research on the front end to find the ones in your area that will.

    3. What’s the difference between being prequalified and preapproved?

    A quick conversation with your lender about your income, assets and down payment is all it takes to get prequalified. But if you want to get preapproved, your lender will need to verify your financial information and submit your loan for preliminary underwriting. A preapproval takes a little more time and documentation, but it also carries a lot more weight.

    "A preapproval takes a little more time and documentation, but it also carries a lot more weight." —Chris Hogan

     

    Which is better? Think of prequalification as an initial step and preapproval as the green light signaling that you’re ready to start your home search. When sellers review your offer, a preapproval means you’re a serious buyer whose lender has already started the loan process.

    4. How much home can you afford?

    Buying “too much house” can quickly turn your home into a liability instead of an asset. That’s why it’s important to know what you can afford before you ever start looking at homes with your real estate agent.

    "Buying “too much house” can quickly turn your home into a liability instead of an asset." —Chris Hogan

     

    I recommend keeping your monthly mortgage payment to 25% or less of your monthly take-home pay. For example, if you bring home $5,000 a month, your monthly mortgage payment should be no more than $1,250. Using our easy mortgage calculator, you'll find that means you can afford a $211,000 home on a 15-year fixed-rate loan with a 20% down payment.

    With a conservative monthly mortgage payment, you’ll have room in your budget to cover additional costs of homeownership, like repairs and maintenance, while saving for other financial goals, including retirement.

    5. How much should you save for a down payment?

    I recommend putting at least 10% down on a home, but 20% is even better because you won’t have to pay private mortgage insurance (PMI). PMI is an extra cost added to your monthly payment that doesn’t go toward paying off your mortgage.

    Saving a big down payment takes hard work and patience, but it’s worth it. Here’s why:

    • You’ll have built-in equity when you move into your home.
    • You can finance less, which means you’ll have a lower monthly payment.

    On the flip side, if you buy a home with little to no down payment and the market dips, you could be stuck until home values recover.

    If the goal is to pay off your home quickly, why not get a head start with a big down payment? Now that’s a good game plan!

    6. How do you know which home mortgage option is right for you?

    With so many mortgage options out there, it can be hard to know how each would impact you in the long run. Here are the most common mortgage loan types:

    • Adjustable-Rate Mortgage (ARM)
    • Federal Housing Administration (FHA) Loan
    • Department of Veterans Affairs (VA) Loan
    • Fixed-Rate Conventional Loan

     

    I recommend choosing a 15-year fixed-rate conventional loan. Why not a 30-year mortgage? Because you’ll pay thousands more in interest if you go with a 30-year mortgage. For a $250,000 loan, that could mean a difference of more than $100,000!

    A 15-year term does come with a higher monthly payment, so you may need to adjust your home-buying budget to get your mortgage payment down to 25% or less of your monthly income.

    But the good news is a 15-year mortgage actually pays off in 15 years. Why be in debt for 30 years when you can knock out your mortgage in half the time and save six figures in interest? I call that a win-win!

    "Why be in debt for 30 years when you can knock out your mortgage in half the time and save six figures in interest?" —Chris Hogan

    7. How do mortgage rate trends affect your home loan?

    High mortgage rates bring higher monthly payments and increase the overall interest you’ll pay over the life of your loan. A low interest rate saves you money in both the short and long term.

    Of course, just like you can’t time the stock market, it’s nearly impossible to time your home purchase with the best mortgage rates.

    The past five years have held some of the most affordable interest rates ever, according to the Federal Home Loan Mortgage Corporation, and their recent forecast predicts the trend will continue for 2018.(1,2) If you’re a prospective home buyer, you have a rare window of opportunity to secure a low mortgage rate that could save you thousands of dollars.

    8. What does your mortgage payment include?

    So what happens when you send in that mortgage payment every month? It’s nice to think the whole amount just reduces your principal, but your monthly payment actually goes toward a lot more.

    Here’s what the typical monthly mortgage payment includes:

    • Principal
    • Interest
    • Homeowners insurance
    • Property taxes
    • Private mortgage insurance (PMI), if you put down less than 20% on your home

    If you want to pay more on your mortgage, be sure to specify that you want any extra money to go toward the principal only, not an advance payment that prepays interest.

    "If you want to pay more on your mortgage, be sure to specify that you want any extra money to go toward the principal only, not an advance payment that prepays interest." —Chris Hogan

    9. What happens after you get preapproved for a home mortgage loan?

    Getting preapproved for a mortgage is just the beginning. Once the financial pieces are in place, it’s time to find your perfect home! While it’s one of the most exciting stages of the process, it can also be the most stressful. That’s why it’s important to partner with a buyer’s agent.

    A buyer’s agent can guide you through the process of finding a home, negotiating the contract, and closing on your new place. The best part? Working with a buyer’s agent doesn’t cost you a thing! That’s because, in most cases, the seller pays the agent’s commission.

    Why not partner with a real estate pro who can save you time, stress and money on your home purchase? I can connect you with a high-octane real estate agent in your area who’s earned my seal of trust.

    Have more questions about mortgages? Talk to a real estate agent!

    An experienced real estate agent can answer any mortgage questions you may have. Imagine looking back 10 years from now, knowing you made a smart home purchase that kept your financial goals on track! Wouldn’t that be a relief?

    It’s time to turn your home-buying dream into reality!

    Source: To view the original article click here    Apply to Buy a Home     Apply to Refinance

    Posted by Jackie A. Graves, President on June 12th, 2018 9:34 AM

    If you’re looking to Refinance or Buy a Home click here before rates rise.

    Have bad credit but want to buy a house? You might want to think twice about that

     

    Have terrible credit but still want to buy a home? You can get a mortgage, but it will cost you, according to a new lender survey by LendingTree.

    If you have bad credit, you could be looking at an additional $15,000 in extra costs over the life of your loan (numbers based off of a 30-year mortgage and the average purchase loan amount of $236,697). According to LendingTree’s report, you can chalk this up to higher interest rates and larger fees.

    With a credit score in the 620-639 range, lenders could slap you with an APR of nearly 5.6%. That’s up nearly 1 percentage point over last year at this time (see chart below).

    The average lifetime interest paid on an average loan like the example above is $221,783. With great credit (760 and above) that number slides to $215,025, but with bad credit, the average lifetime interest paid increases to $250,727.

    That’s a bleak picture, friend. Do everything you can to get your credit shipshape before getting a mortgage because $15,000 is a lot of bread to throw away. Here's what you've got to do, according to FICO:

    1. Start paying bills on time
      Even if you're only a few days late, late payments and collections can put a serious dent in your credit-worthiness.
       
    2. Reduce your outstanding debt
      Nothing says, "I'm turning this ship around," quite like beating your debt like it owes you money (oh, wait...). First, get your credit report, then make a plan, paying down the accounts with the highest interest rate while maintaining minimum payments on the other accounts in your name.
       
    3. Stop creating outstanding debt
      Obvious, right? But many people are tempted to open more credit accounts to increase their available credit. This can backfire in two ways. One, if you're already struggling with debt, you're probably going to be tempted to keep spending if you have the option. Don't give yourself the chance. Two, this can actually backfire and lower your credit score.

    Getting on the right side of the credit spectrum can be rough, but if you're in the market for a home these days, it is especially important to put in the work to get it right. 

    Source: To view the original article click here    Apply to Buy a Home     Apply to Refinance

    Posted by Jackie A. Graves, President on June 11th, 2018 6:40 AM

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