Monthly Archives: July 2015

//July
25 07, 2015

What is Mortgage Insurance and Why Do We Pay It?

July 25th, 2015|Blog, Mortgage 101|

House insurance concept using a hand holding a piece of paper on white background

Taking a risk is something we are all familiar with in life. Whether you take a risk by accepting that new job offer or by going sky diving as a thrill seeker, it is a risk. Just as we take risks in our personal lives mortgage lenders also take risks when lending money to their customers. As a way to mitigate the risks that comes with lending such a large amount of money, lenders usually charge a fee, or mortgage insurance, when a lender puts less than 20% down on a home loan. There are some loans that start out with a mortgage insurance premium and then can be removed over time, some loans however require the mortgage insurance to be paid throughout the life of the loan. The cost of the mortgage insurance can vary depending on the type of loan that is acquired.

Why Do We Require Mortgage Insurance? 

At one time it was common for people to have the 20% down payment that was needed to put down on a house loan. As the economy changed over the last 50 years, that became less feasible for many people looking to own a home therefore it discouraged many to pursue home ownership. With the creation of the Federal Housing Authority (FHA) came the option to borrow with less than 20% down. This also made lending mortgage loans with less than 20% down riskier to lenders. Because of this risk to the mortgage lenders, they began charging mortgage insurance to borrowers (which is usually about one percent of the loan amount per year). By charging mortgage insurance to the borrowers putting less than 20% down, it reduced the loss that the lenders […]

18 07, 2015

When Buying a Home Is a Better Option Than Renting

July 18th, 2015|Blog, Buying a home|

 

Buy or rent on BlackboardThere has always been a pretty divided ground when it comes to people who favor owning a home versus people who favor renting a home. Maybe you have always dreamt about the house with the white picket fence as the epitome of your American dream. Over the years the financial benefits of owning vs. renting has changed. For example, from 2004 to 2006 it was more favorable to rent, but buying made a comeback from 2009 to 2011. If you find yourself sitting on the fence about which is better for you, let us show you four circumstances in which buying a home may be a better option.

1. You Want to Own Assets

While there are some benefits that come from renting, most of the time it can feel like you are pouring money down the drain. However, every mortgage payment that you pay increases the equity in  your home and moves you closer to owning it outright. Because a home is considered an asset it can appreciate in value therefore increasing your equity automatically. Owning a home is a great way to invest your money, even if you are spending it on a mortgage payment each month, because the price of homes typically rise over the long term.

2. You Plan on Living There Long-Term

The length of time you plan to stay in a certain location can make a difference when it comes to deciding if you should rent or buy. In certain places, buying beats renting only if you plan to stay in the home for at least ten years. If you do intend on staying in a certain place for the long haul, you will find more benefit in buying a home. There are some Rent v. Buy […]

11 07, 2015

4 Ways to Avoid any Delays When Closing on your New Home

July 11th, 2015|Blog, Buying a home, Tips & Advice|

Happy couple with real estate agentClosing on your new home is usually a very exciting time for most people, that is unless there is a hiccup along the way that causes a delay in the process. This of course is when the stress usually kicks in. Most of the time when buyers and sellers agree on a closing date it is done in good faith, meaning that they both are trusting one another to come through on the day-of. When you go to set a closing date with the seller there are some steps to you can take to ensure that the process goes smoothly and doesn’t get delayed.

Keep your Lenders in the Loop!

 We cannot stress this one enough. As a buyer it is very important to check up with your lender on a regular basis. With all of the paperwork that goes into the mortgage process sometimes certain pieces of information are needed multiple times and if your lender cannot get a hold of you, it can delay the process. If you are asked for any follow-up documentation get it to your lender right away as even a missed signature on one paper will delay the closing. The worst-case scenario is if you have a rate lock and a delay occurs then you could lose your rate and be forced to re-lock at a higher rate.

Have Your Agent Keep an Eye out for Any Problems

Once the contingent property is under contract, your agent (buyers agent) should be checking with both the sellers and the buyers at least once a week, if not more. A good agent will know of what to be on the lookout for as far as an surprises or changes that can or might occur. If your agent does […]

4 07, 2015

What is TRID and How Does it Apply to My Loan?

July 4th, 2015|Blog, Buying a home, Home Finances, Latest News|

 

iStock_000058510168_LargeIn the world of finance there seem to be a lot of acronyms because, well, let’s face it, it would take much longer to go through paperwork if having to use the long versions! Just because we use the acronyms and understand what they all mean, doesn’t mean we expect you to as well! After all, you have enough stuff to remember in your personal life instead of wondering what TILA and RESPA mean. Thank goodness you are in good hands when you come to First Ohio. We fill you in on every detail and explain all of those acronyms to you and what they mean!

One of the acronyms in home finance industry that you may have heard about is TRID or the TILA RESPA Integrated Disclosure Rule. Breaking it down further it means, Truth in Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA). Have we lost you yet? Stay with us! Now you see why the simple TRID works just fine when discussing this. As you can see it is essentially consolidates four existing disclosures into two new disclosure forms known as the Loan Estimate (LE) and the Closing Disclosure (CD). The current documents have been around for about 40 years and it is time that they are made more current!

The first new disclosure form is the the Loan Estimate, or LE form, which contains details such as the loan term and projected payment must be put in the mail and sent to the consumers who apply for mortgages no later than the third business day after receiving their application. An application is triggered when the lender receives six key pieces of information,

  • Consumer’s name
  • Consumer’s income
  • Consumers SSN (to obtain a credit report)
  • Property address
  • Estimated property value
  • Loan amount

If the consumer wishes to proceed […]

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