Monthly Archives: May 2018

31 05, 2018

Closing Costs Explained

May 31st, 2018|Buying a home|

What are closing costs?

Closing costs are fees associated with your home purchase that are paid at the closing of a real estate transaction. Closing is the point in time when the title of the property is transferred from the seller to the buyer. Closing costs are incurred by either the buyer or seller.

What fees can you expect at closing?

Closing costs vary widely based on where you live, the property you buy, and the type of loan you choose. Here is a list of fees that may be included in closing. The list is inclusive of fees you may see, but it’s not likely that your loan will include all of the fees listed here.

 

  • Application Fee: This fee covers the cost for the lender to process your application. Before submitting an application, ask your lender what this fee covers. It can often include things like a credit check for your credit score or appraisal as well. Not all lenders charge an application fee, and it can often be negotiated.
  • Appraisal: This is paid to the appraisal company to confirm the fair market value of the home.
  • Closing Fee or Escrow Fee: This is paid to the title company, escrow company or attorney for conducting the closing. The title company or escrow oversees the closing as an independent party in your home purchase. Some states require a real estate attorney be present at every closing.
  • Courier Fee: This covers the cost of transporting documents to complete the loan transaction as quickly as possible.
  • Credit Report: A Tri-merge credit report is pulled to get your credit […]
16 05, 2018

4 Important Facts You Need To Know About FHA Loans

May 16th, 2018|Mortgage 101|

Less severe 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.

Why homebuyers like FHA mortgage loans

Because they are government-backed, FHA home loans have attractive interest rates and less rigid qualifications. FHA loan applicants must meet credit-score and down-payment requirements, show proof of employment, and a steady income. An appraisal of the home by an FHA-approved appraiser also is required.

You don’t need perfect 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. People with credit scores under 500 generally are ineligible for FHA loans. The FHA does make allowances, under certain circumstances, for applicants with nontraditional credit history or insufficient credit if other criteria are met.

The minimum down payment is 3.5 percent

For most borrowers, the FHA requires only 3.5 percent of the purchase price of the home as a down payment. FHA borrowers can use their savings to make the down payment. Other sources of cash allowed for a down payment include a gift from a family member or a government grant for down-payment assistance.

There are two types […]

10 05, 2018

How To Buy a House With Student Loan Debt

May 10th, 2018|Buying a home, Tips & Advice|

For many consumers, buying a house is a major financial and life milestone. However, student loan debt is preventing some millennials from making home purchases.

Having student loans won’t keep you from buying a house, although you should be comfortable with the idea of taking on a large amount of debt while still dealing with your student loans. Carefully consider your options, and decide what makes sense for your own financial situation.

You can still get a mortgage

If you’re bogged down in student debt, that doesn’t mean you can’t get a mortgage. You just have to be aware of your options. Improving your financial profile is one key step to getting there. For example, paying down that high-interest credit card balance is a great place to start. Or, if you don’t have the cash to pay down a big chunk of your debt, consider refinancing or consolidating your other debt to reduce the amount you have to pay every month.

Consider government help

If you have federal student loans, you may want to explore an income-driven repayment plan. With this option, your monthly payments can be reduced to a percentage of your discretionary income. This can be a huge help for those whose income is absorbed by high loan payments. Lower monthly student loan payments can help improve that important debt-to-income ratio.

In April 2017, Fannie Mae introduced three new policies aimed at helping homeownership become more achievable for those with student debt. The policies are:

  • Student Loan Cash-Out Refinance: Offers homeowners the flexibility to pay off high-interest student debt while potentially refinancing to a lower mortgage rate.
  • Debt Paid […]
2 05, 2018

How to Set a Budget For Home Renovations

May 2nd, 2018|Tips & Advice|

If you don’t plan your renovation budget appropriately the process can become stressful and unpleasant. So before you start envisioning your dream space, determine how much you can afford to spend, and then breaking it down into sections so that you can figure out how much of your money needs to go into each part of the project. Then you can determine the quality of the finishes you can put in the finished space.

Estimate home renovation costs

As a general rule, you should not spend more on each room than the value of that room as a percentage of your overall house value. For example, a kitchen generally accounts for 10 to 15 percent of the property value, so spend no more than this on kitchen renovation costs. If your home is worth $300,000, for example, you’ll want to spend $45,000 or less.

Figure Out How Much You Have to Spend

Once you’ve decided on a project, the next question is whether you have the money. If you’re paying cash, that’s easy. But if you’re borrowing, you need to assess how much a bank will lend you and what that loan will add to your monthly expenses.

There are three basic types of loan options:

  1. A cash-out refinance
  2. A home equity loan
  3. A home equity line of credit (HELOC)

For most homeowners, the best way to borrow for a home improvement is a home equity line of credit. A HELOC is a loan that’s secured by your home equity, which means that it qualifies for a lower rate than other loan types, and you can deduct the interest on your taxes. Since a HELOC is […]

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