Monthly Archives: September 2019

//September
26 09, 2019

Types of Loans

September 26th, 2019|Blog, Buying a home, Loan Products, Mortgage 101|

When it comes to buying a home, there are many types of loans. Let’s take a quick look at a few of the choices you have when it comes to a home loan when starting your first-time home buying process. Figuring out which loan is best for you may seem difficult but your mortgage professional at First Ohio Home Finance will help you choose the right option.

Conventional Loans

A conventional loan is the most common loan type. A conventional loan often has lower interest rates for those with good credit. This loan adheres to guidelines set by Fannie Mae and Freddie Mac, two agencies responsible for regulating the mortgage industry. The main difference between this loan and others is that a conventional loan is backed by a private lender instead of a government agency. With a conventional loan, there may be additional costs such as private mortgage insurance to back the lender if you were to miss any payments on your loan.

FHA

Federal Housing Administration, or FHA loans, are issued by an approved lender but insured by the government. FHA loans allow lower down payments and lower credit scores to qualify.  FHA loans are often popular with first time home buyers due to their flexible down payment options. The FHA loans often come with two types of insurance premiums, an Upfront Mortgage Insurance Premium (UFMIP) and an Annual MIP (paid monthly). Aside from the traditional first-time buyer loans, there are other types of FHA loans as well.

VA

A Veterans Affairs loan, or VA loan, is available to past or present members of the military and select military spouses. Similar to the FHA loans, a VA loan is issued by an approved lender and backed by the Department of Veterans Affairs. This type of loan may require no down payment. VA loans […]

25 09, 2019

What is Private Mortgage Insurance?

September 25th, 2019|Blog, Mortgage 101, Uncategorized|

Private Mortgage Insurance, or PMI, is an insurance that may be required to get a conventional home loan with a smaller down payment. PMI protects the lender if you default on your mortgage payments. As the borrower of the loan, you pay the premium and the lender is the beneficiary.

Why Would I Need Private Mortgage Insurance?

PMI may be required if your down payment is less than 20% or during a refinance if there is less than 20% equity in the home. PMI may give you a chance at being approved for a loan that you may not be approved or otherwise. The insurance policy does not protect you, but protects the lender if there is a failure to pay.

Can You Avoid PMI?

PMI may help get your home loan if you cannot put down 20% and keep you from paying a higher interest rate. If there is no other loan option for you, such as a FHA, VA or other loan type then you may not be able to avoid having PMI. However, you may be able to have PMI removed once you reach a certain percentage of equity on your home.

If you can save a bit longer and put down a 20% down payment, this will be beneficial to you. PMI may add more to your monthly mortgage costs but help get you approved and into home ownership quicker than saving for a larger down payment.

Your mortgage professional at First Ohio Home Finance will give you detailed options and help you make the best decision for your finances.

18 09, 2019

Advantages of a Pre-Approval

September 18th, 2019|Blog, Buying a home, Mortgage 101|

With guidelines becoming stricter in the past few years, most mortgage professionals and realtors recommend getting pre-approved for a loan before looking for homes.  A pre-approval will not only give you a guideline for how much you’ll be approved for but also gives you an early look at any obstacles that could arise. Let’s take a look at the advantages of being pre-approved.

Allows You to Set Real Expectations on What You Can Afford

A pre-approval will give you an idea of the amount you could borrow. It is recommended not to borrow the maximum. Use the pre-approval to set a budget you’re comfortable with, how much you’ll need to close and what your maximum monthly payment will be.

Makes You More Desirable to Sellers

When you are pre-approved, a seller is more likely to consider your offer as a sure thing. While you can still be denied after a pre-approval, this shows sellers that you have looked at your current financial situation and have begun interacting with lenders. A pre-approved buyer will have a leg up on those who have not been through the process at all.

Alerts You to Potential Problems

Whether it’s improving your debt-to-income ratio, correcting errors on your credit report or saving for a larger down payment, most people have some work to do before they commit to buying a home. A pre-approval allows you to see these issues ahead of time and improve them before it throws a wrench in your home buying process.

First Ohio Home Finance will walk you through the entire loan process. From a pre-approval to closing, we guide the way. Contact us to get started on your pre-approval.

11 09, 2019

Why Do I Need an Appraisal?

September 11th, 2019|Blog, Buying a home, General|

Whether you’re buying or selling a home, you’ve probably heard the word appraisal thrown around. But why do you need an appraisal? An appraisal is an estimation of a property’s market value by a professional to ensure the loan amount a person is asking for is appropriate for the home. Since an appraisal is required for all mortgage approvals, it is important to schedule an appraiser to come out quickly after applying to keep the loan process moving.

During an appraisal, many factors are looked at to determine the value of the home. The interior and exterior condition of the property, any amenities such as pools, finished basements or extra buildings and the layout of the property are some of the main points an appraiser will look for. After looking over the property, an appraiser will look at the neighborhood and market value of the properties to better determine the value of a specific home.

Once the appraisal is finished, the results will be available to you and your loan officer. Be sure to keep a copy in your files. If the amount of the appraisal is equal to or less than the loan requested, the process can move forward. If the appraisal values the home at a lower value than the loan requested the buyers have three options:  ask the seller to accept a lower price, pay more out of pocket or renegotiate the contract offer.

Appraisals are regulated to keep them unbiased and fair. While all appraisals need to be done by someone knowledgeable and reputable, you typically cannot choose an appraiser yourself. First Ohio Home Finance will provide an appraiser who is experienced with the areas and neighborhoods you’re looking, have at least five years of experience and are insured. Learn more about appraisals with First Ohio Home Finance.

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