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So far First Ohio has created 160 blog entries.
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 […]

23 04, 2018

Mortgage Pre-Qualification vs. Pre-Approval: What’s the Difference?

April 23rd, 2018|Buying a home, Mortgage 101|

When buying a home, cash is king, but most folks don’t have hundreds of thousands of dollars lying in the bank. Of course, that’s why obtaining a mortgage is such an important part of the process. And securing mortgage pre-qualification and pre-approval are important steps, assuring lenders that you’ll be able to afford payments.

However, pre-qualification and pre-approval are vastly different. How different? Read on to find out why one is better than the other in the long run.

What is mortgage pre-qualification?

Pre-qualification means that a lender has evaluated your credit and has decided that you probably will be eligible for a loan up to a certain amount.

However, the pre-qualification letter is an approximation, not a promise, based solely on the information you give the lender and its evaluation of your financial prospects.

A pre-qualification is merely a financial snapshot that gives you an idea of the mortgage you might qualify for.

It can be helpful if you are completely unaware what your current financial position will support regarding a mortgage amount. It certainly helps if you are just beginning the process of looking to buy a house.

Why is mortgage pre-approval better?

A pre-approval letter is the real deal, a statement from a lender that you qualify for a specific mortgage amount based on an underwriter’s review of all of your financial information such as credit report, pay stubs, bank statement, salary, assets, and obligations.

Pre-approval should mean your loan is contingent only on the appraisal of the home you choose, providing that nothing changes in your financial picture before closing.

The reliability and simplicity of your offer stand out from other offers. And pre-approval can give […]

23 04, 2018

How To Consolidate Debt To Qualify For A Mortgage

April 23rd, 2018|Home Finances, Tips & Advice|

Use debt consolidation to qualify for a mortgage carefully

Consider the use of debt consolidation to qualify for a mortgage very, very carefully. Follow these tips to avoid being one of the 85 percent who fails debt consolidation.

Debt consolidation can lower your debt payments, allowing you to qualify for a larger mortgage

  1. Debt consolidation can be a home equity loan, debt management plan, or unsecured financings like personal loans or balance transfer credit cards
  2. Consolidating your debts can extend your repayment and increase your costs
  3. Debt consolidation works for a small percentage (about 15%) of those who try it. Be careful out there.

Debt-to-income ratios

Lenders are very concerned about debt. Typical guidelines say that as much as 43% of your gross income can be used to repay monthly debts like your housing, credit card, and auto payments.

Dividing these bills by your monthly income determines your debt-to-income ratio or DTI. If you have a household income of $7,000 a month, 43% equals $3,010. That’s your limit for housing plus other account payments. But not living expenses like food and utilities.

If you have two car loans at $500 each, $400 a month in student debt, and $200 for credit cards, that’s $1,600 a month, leaving just $1,410 a month for mortgage principal, mortgage interest, property taxes, and property insurance.

In a lot of markets, that leaves less than $1,000 a month for the mortgage itself. At 4.5% over 30 years, a borrower qualifies for about $200,000 in financing.

How debt consolidation works

If you already own a home, a home equity loan for debt consolidation is probably […]

10 04, 2018

Programs for Ohio First-Time Homebuyers

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

The state of Ohio works with mortgage companies, lenders and credit unions to offer home loans to people with low and moderate incomes, including first-time home buyers.

The Ohio Housing Finance Agency (OHFA) helps low- and moderate-income borrowers get 30-year, fixed-rate conventional, Federal Housing Administration, Veterans Affairs and U.S. Department of Agriculture Rural Development mortgages with relaxed income and purchase price limits. OHFA also has a number of programs that assist first-time buyers and others buying a home. Benefits include lower mortgage rates, down payment assistance, tax credits and combined financing for buying and renovating a home. Besides basic eligibility rules, each program may have additional requirements.

About OHFA and eligibility requirements

  • A free homebuyer education course is required after borrowers submit a mortgage application
  • Down payment assistance is available for first-time home buyers and is forgiven after seven years unless the home is sold or refinanced during that time
  • There are limits on purchase price and borrowers’ incomes, which vary by county and the number of people in a family
  • A minimum credit score is 640 for conventional mortgages and USDA, VA, and FHA 203(k) home loans
  • A minimum credit score is 660 for other FHA loans
  • Each type of loan has its own debt-to-income requirements
  • Veterans who’ve been honorably discharged are eligible for VA loans. They do not have to be first-time home buyers.
  • Eligible property types for these programs include existing single-family homes, duplexes, triplexes, fourplexes and condominiums; one-unit existing modular homes; and newly built single-family homes.

4 04, 2018

Home Buying Help: Should I Lock in a Rate on My Mortgage?

April 4th, 2018|Buying a home, Mortgage 101, Tips & Advice|

Mortgage rates change daily, making it difficult to spot the perfect moment to lock in a mortgage rate. To simplify the decision, keep these things in mind:

  1. Timing is everything.
  2. Have a few options to compare.

What is a Mortgage Rate Lock?

It’s an agreement the lender will deliver a specific combination of interest rate and points if the mortgage closes by a certain date. A point is a fee or rebate equal to 1 percent of the loan amount. Often times, rate locks last for 30, 45 or 60 days, but they can be shorter or longer. A rate lock protects the borrower from rate fluctuations during the lock period.

To begin, find out when your loan is expected to close and work backward to determine when to lock the rate. If you think you need 45 days to close your loan, find out what the interest rate would be if you locked it for a 60-day period.

Find the Best Combination For You

Look for the sweet spot when pricing out a rate lock. The sweet spot is the combination of interest rate, term, and cost you need to acquire the best deal. Most lenders won’t lock-in your rate for less than 30 days. An exception would be if you’re ready to close and offer the same rate for a 15- and 45-day period. There are different lock periods between 15 and 60 days. Anything longer than 60 days gets pricey, so it might be smarter to wait until you get closer to the closing date and check rates again.

When is the best time to lock in your rate?

For most homebuyers, it makes sense to sign a purchase […]

12 03, 2018

How to Compete Against All-Cash Home Buyers

March 12th, 2018|Uncategorized|

Couple Buying a Home

When buying a home, it can be a scary thought to think about competing against those who are making a cash offer on a house. Cash buyers can perform and close quickly and provide sellers with a sense of comfort. Does that mean to rule yourself out of the fight? Absolutely not.

If you can’t make a cash offer on a house? That is OKAY! There are a lot of people who cannot make a cash offer. Ask yourself these questions:

  • Do you have a 20% down payment?
  • Are you well employed?
  • Do you have cash reserves in addition to your down payment?
  • Do you have very little debt?
  • Do you have good credit?

If you answered yes to most or all of these questions, your offer should be just as good as the cash buyer.

Here is how to stay competitive:

  • Pre-approval. This will make you so much more competitive in the eyes of the buyer because pre-approval is proof to the buyer that you will be approved for the loan and can make the purchase. In addition to the pre-approval letter from your lender, be open to allowing your agent or lender to provide the financial information with your offer. If you bring a statement of how much you make, how much you have in the bank, credit reports, etc. then they will be able to see for themselves that you are the same as the cash buyer, financially.
  • Shorten the loan and appraisal contingencies. Ask your lender how quickly they can send an appraiser to the property and how long the loan would take to turn around. First Ohio Home Finance prides our company on how quickly we are able to turn loans around for our customers.
  • Inspect quickly. […]
6 03, 2018

Homebuyers: How to Compete in the Spring Buying Market

March 6th, 2018|Uncategorized|

It is no question that every year, the spring market is competitive. People usually take a break from home buying and selling in the winter then are ready to hit the ground running as soon as warmer weather is on the horizon. This is for many reasons: most people do not want to move during the winter, therefore buyers have trouble selling, many people do not want to move mid school year if they have children and frankly properties do not look as nice during those grey months.

So, spring is right around the corner and you want to jump into the market and most importantly, you want to be competitive. First Ohio Home Finance is ready to help you every step of the way, let’s check out how you can stand out among other buyers to help you get the home of your dreams. When you find the home, make an offer. Here are tips to help you win the offer:

Get Pre-Approved

If you get a lender to look over your financials ahead of time and they preapprove you for a mortgage, you will be able to show the seller you can buy their house. You will need to prepare documents, which can be done way in advance to the purchase. The documents you will need are:

  • Tax returns for the past two years W-2 forms paycheck stubs from the past few months
  • Proof of mortgage or rent payments for the past year
  • A list of all debts, including student loans, auto loans, credit cards and alimony
  • A list of all your assets, like auto titles, real estate, any investment accounts and bank statements.

Down Payment

By this point in the buying process, you probably know how much of a down payment you have thus […]

12 02, 2018

Using Your Tax Return to Fund A Down Payment

February 12th, 2018|Uncategorized|

Tax season is upon us, which means many people will shortly be receiving their tax returns. This is an exciting time for many, the much-needed extra money after the holidays or a chance to boost your savings. If you are looking to buy a house this year, take this opportunity to help you get closer to achieving your home ownership dreams.

For first time homeowners, one of the biggest obstacles is coming up with the down payment. So, there is no better time to qualify for a new home than now if you save your tax refund! If your tax refund is large enough, it may cover the entire down payment on a home purchase. If your tax refund does not cover your down payment, you will be in better shape financially than you were before you got the refund. If you put the refund directly into savings you will have that down payment before you know it!

If you are applying for a loan that does not require a down payment (click here to learn about those loan types) it is still smart to save your tax refund. You could use the tax refund for any of the following:

  • Pay closing costs
  • Pay off debts to help you qualify
  • Keep the refund in the bank as reserves. The more reserves equal better chance of approval
  • Pay down credit card balances to raise credit scores
  • Have money for furniture and emergency funds as a homeowner

It is perfectly fine to apply for a mortgage loan when you have not yet received your refund yet. When you are filling out the application, we can just assume the amount that you will be receiving. As long as we can prove that the funds are in your account prior to […]

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