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7 03, 2017

Use your tax Refund to Purchase/Finance a Home

March 7th, 2017|Blog, Buying a home, General, Home Finances|

Use your tax Refund to Purchase/Finance a Home

It is tax season which also means refund season! Tax refunds help people either become homeowners or make an extra mortgage payment or two. 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! Sometime a tax refund may actually cover the whole 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 it straight into savings, you will have that down payment before you know it! Tax returns may be used as assets so down payment right away.

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 the final underwriting approval.

Do you already have a mortgage loan on your home?

That is […]

22 07, 2016

Everything you need to know about Escrow

July 22nd, 2016|Blog, Buying a home, General, Home Finances|

A house with an in escrow sign.

What is Escrow? Recently first time home buyers have joked about either not knowing what Escrow is or being thrilled with themselves for finally learning about it. It is your lucky day, if you are unfamiliar with escrow; you are going to learn now. If you don’t remember anything from this article, remember the concept of the impartial third party – someone with nothing to lose or gain from your real estate transaction.

Now let’s dive further into it. Escrow is not a term we hear every day. The term gets confusing because it has several different meanings in the real estate world.

  1. Weeks ago when you made an offer on your new home, you wrote a check that has to be placed in “escrow” which meant it was to be given to an impartial third party while you and the seller negotiated a purchase contract. A real estate agent probably took care of creating the escrow.
  2. Now your lender is talking about creating an “escrow” account, also called a “reserve” or “impound” account, where money for property taxes and homeowner’s insurance will be held.
  3. To throw more words into the mix, there is such thing as the “closing of Escrow”, which is described by someone called an escrow officer.

All three listed above are accurate uses of the word. An escrow is something of value such as your earnest money check, or documents such as your purchase and sales agreement, that are given to an impartial third party to hold until specific conditions are met. When everything is finished – everybody paid and the deed recorded with the county, the escrow will close.

They will also juggle all incoming paperwork and money from buyers, sellers, agents, lenders and anyone […]

5 07, 2016

Home Inspection vs. Home Appraisal

July 5th, 2016|Blog, General, Mortgage 101|

House and key shaped paper cutout, calculator and magnifier on wooden table.

Some future home buyers may be confused about the difference between a home inspection and a home appraisal. While they sound like they are the same thing, they are very different in reality. The two serve different purposes. A home inspection is optional; while an appraisal is required by a mortgage lender. An appraiser is more concerned with the value or a property, and a home inspector is more concerned with the condition of the property. Here is a closer look at the differences between the two.

Home Inspection

It is the inspector’s job to take a more in-depth look at the home than the appraisers do. Home inspectors are optional. Everything from the foundation to the roof will be thoroughly evaluated to make sure the buyer knows exactly what they are getting. Unlike an appraiser, home inspectors do not place a value on the home. Inspectors create a report that lets the buyer know the overall condition of the home. They inspect things that you do not necessarily see in a walk-through of the property. They will check the plumbing (pipes), radon, possible lead paint exposure, any signs of structural issues, ventilation, heating, air conditioning, electrical, drainage, etc. Inspectors will also advise you to contact a professional, such as a structural engineer, plumber or electrician if they feel there are any major issues to be addressed. The inspector will provide you with a clear understanding of what is going on with the home and if they foresee any future problems.

Home Appraisal

An appraisal is an evaluation of a property’s value based on its condition, features, and similar home sales in the area. Appraisals are conducted by trained, certified professionals who are licensed to […]

5 09, 2015

Selling Your Home? Here is What You Need to Know

September 5th, 2015|Blog, General, Mortgage 101|

Happy couple outside a house with moving boxes. Couple are relaxed and leaning on cardboard boxes in casual clothes. Holding a sold sign. House door is visible in the background. Happy couple outside a house with moving boxes. Couple are relaxed and leaning on cardboard boxes in casual clothes. Holding a sold sign. House door is visible in the background.

Maybe you have outgrown your current home or you just accepted the job offer of your dreams but now  you have to move across town! Whatever the reason may be for your need to sell your home, we know that there are a lot of questions that you might want to know when it comes to your mortgage and selling your home. We have outlined a few of these common questions for you!

Is there a prepayment penalty?

What is this, you ask? A mortgage prepayment penalty is a fee that a mortgage lender might charge for paying off your mortgage loan early. You are more likely to have this fee if you obtained your mortgage loan before 2008. There are mortgages obtained after 2008 that do charge a prepayment penalty if the loan is paid off within the first three years of the loan. An example of a prepayment penalty fee structure is a six month interest on your balance. If you have $275,000 left of your loan with a 4.25% interest, your prepayment penatly would be $5,483.75. You want to make sure to carefully review your mortgage note where it will explain how your prepayment penalty works or if there is one. Make sure you review your paperwork carefully and ask any questions you may have.

Can I buy a new home without selling my current home? 

Maybe you have to move quickly and need to get a […]

6 06, 2015

Building Credit after College Graduation

June 6th, 2015|Blog, General, Tips & Advice|

 

Cheerful Students Throwing Graduation Caps In The AirIf you are a recent college graduate first off, congratulations, that is an accomplishment to be very proud of! We know how difficult it can be to go to school full-time all while working a part-time or even full-time job. Kudos to you! So now that you have officially joined the “real world” as many people put it, it is time to get serious about some other really important things in life, you know, getting your first home, paying your student loans, and all those other “adult” things you have always been told about. Well here is another really important thing that you may or may not know much about, building your credit. Your credit score plays into a lot when it comes to your finances and it is best to get a good grip on the basics early on. This will save you hundreds of thousands of dollars throughout your life. Here are some great tips on building credit after graduation.

#1 Start Paying Your Student Loans

We know there is that six month grace period after graduation that essentially gives you some time to get on your feet with your career before the payments kick in, but if  you can start paying something on these before then that is great! Since student loans are considered a form of debt these loans are taken into account as part of your credit score. Do not be too concerned over the amount of loans you are currently carrying, instead be conscious of making timely payments each month.

#2 Know Where You Stand

We cannot stress the importance of knowing where you stand when it comes to your credit score and report. You want to make sure that all the information on your […]

23 05, 2015

Considerations to Make Before Converting Your Current Home Into a Rental Property

May 23rd, 2015|Blog, General, Tips & Advice|

 

A home is being rented during tough economic times. A home is being rented during tough economic times.

Outgrowing your home is something that happens often with many families. Whether you have decided to have more children, you have a hobby or business that requires more space to be used in your home, or you just feel like its too small, it requires some serious decision making as to whether you sell or rent your current home before moving. For many home buyers, particularly those with a great deal of equity in the current home, it presents the question: “Do I have to sell in order to buy?” Since real estate is meant to be a long term investment it is actually a good idea to keep your current home while purchasing another if you can do so. If this is the route you are looking to take there are a few steps you will need to take. First determine if it is financially feasible for you to own two homes.

Determine your purchasing power

If you were to sell your home and take out the equity, how much could you afford to spend on a purchase and what type of home would that get you? If  you choose to keep the old home as a rental property, you may not want to use all of the equity from your old home. You have to decide if this is a route you want to take. Keep in mind that renting out your current home can be very lucrative, especially since apartment renting is in high demand.

Understand monthly income and expenses

Next step is to run the numbers and get an understanding on your new financial reality. First you want to research the rental market and see what […]

11 04, 2015

Tax Benefits of Owning a Home

April 11th, 2015|Blog, Buying a home, General, Home Finances, Mortgage 101|

 

Tax Benefits of Owning a HomeWe all can agree that owning a home can be an investment. Gone are the days when you could call your landlord when the air conditioner went out or the water heater was on the fritz. As a home owner those responsibilities now fall on you and while they can be expensive repairs, the benefits of owning a home are far greater. One particular advantage that lures many people into home ownership is the tax benefits that they can receive. Here are few ways that owning a home can really pay off come tax time.

Mortgage Interest

If you are the in the majority of Americans who have financed their home with a mortgage loan then there are two parts to your mortgage payment; the principal and the interest. As an incentive for home ownership the federal government provides a tax benefit for the interest portion of the loan. For the sake of numbers lets say that your salary was $85,000 and your mortgage payment was $1,200 month. Lets say the interest on this loan was $800 month. At the end of the year the home owner will have a $9,600 tax write off. This simply means that their taxable income drops from $85,000 to $75,400.

Capital Gains

If you are a home owner and you sell your home you are able to receive a tax break. Lets say that you purchased your home for $300,000 and you sell it for $400,000, you now have a $100,000 profit, or gain-which is income. If you make income through a job, contract work, or the sale of stocks and mutual funds you have to pay tax on that but with home ownership it is different. If you are single and have lived in the […]

4 04, 2015

Tips for Managing your Personal Finances

April 4th, 2015|Blog, General, Tips & Advice|

 

Money-1024x768We are always talking about ways to save money for a home, or mortgage trends and tips when you are buying a home but what about your personal finances? Having a grasp of your personal finances is extremely important in every aspect of your life whether you are buying a home, car, or just applying for a small loan . So maybe owning a home is in your future but you would like to figure out how to get your finances in order first, maybe you are a college student who is just starting out with this process? Whatever category you might fall in we want to help you understand the importance of responsibly managing your own money.

Tracking Monthly Spending

In today’s society practically everyone is paying with their debit card or credit card therefore many people do not know what they actually spend on food, clothing, and entertainment. Many people do not monitor their daily uses but instead log on to their accounts only a few times a month and that is when they usually notice how much was actually spent. Getting into a habit of monitoring your daily spending will help you stay within a set budget. There are many great tools out there that you can sync with your accounts and it will help you set up budgets and monitor spending habits. LearnVest is a great budgeting and finance tool for that.

Create a Household Budget

While we are on the subject of budgets, lets talk about creating one for yourself. Using the data you have compiled by tracking your monthly spending will show you where you are spending more and where you might need to cut back. Once you assess these areas of your spending create a budget with your monthly expenditures and […]

18 02, 2015

Understanding How Your Credit Score Affects Your Mortgage

February 18th, 2015|Blog, General, Mortgage 101, Tips & Advice|

 

Approved Credit report form with paperwork Approved Credit report form with paperwork

Have you ever taken the time to check your credit score? If not, it may be worth doing. Your credit score determines so much when it comes to buying a car, financing a home, obtaining lines of credit, and much more. Knowing your credit score will help you better understand what kind of mortgage you might qualify for or what steps you need to take to fix your score.

Where does a credit score come from?

Your credit score is different than your credit report. Just like a report card from school, you have a final letter grade but the report itself may show you how you came to get that grade. A credit score is based on your credit report. Your credit report shows your payment history, length of credit history, amount of debt owed, and any other factors that may play a role in determining your score. FICO or Fair Isaac & Co. then assigns you a number based on these factors. Since there are three different credit-reporting bureaus you will usually have three different credit scores, although varying slightly.

What is considered an A+ rating? 

FICO scores, or credit scores, can range anywhere from 350-850. An 850 is the ideal number as this is considered a perfect score. A 723 is considered a median score for the U.S., but it is fair to assume you can expect good rates when you have a score anywhere from 720 and up. If you are a first time home buyer you might be considering an FHA loan. These loans require a borrower to have at least a 620 score or higher if you are looking for an approval.

 Obtaining your credit report

Nowadays your credit reports is […]

9 02, 2015

Mortgage Tips for The New Year- Part #2

February 9th, 2015|Blog, Buying a home, General, Mortgage 101, Tips & Advice|

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Last week we covered part one of our two part series on ‘Mortgage Tips for the New Year’. This week we will continue with more useful tips that will help to save you time and money when you are ready to get your first mortgage.

Tip#6 – Prepare to Write Letters

Most lenders today will want to know every detail of your financial life. If something looks odd, or doesn’t make sense they will want to have some sort of explanation. This means that you will have to write letter explaining everything. For instance they may want to know why a credit card issuers pulled your credit three months ago when you were trying to apply for store credit, or why you changed jobs a few months ago or why you have moved from job to job over the last couple years. It’s best to write them and explain everything in full detail and move on. They do this simply to verify your financial stability and it is usually something that is requested from time to time.

Tip# 7- Receive any Financial Gifts Early

If you are receiving any sort of financial assistance or even a financial gift for your down payment from someone make sure that you are depositing it into your account at least two months prior to applying for your mortgage. That way the bank will not need to source the large deposit. If this is not done then the gifter will have to write a letter stating that the money was truly a gift and not a loan. If you are needing a loan for the down payment the lender may see this as a sign of financial dependence and it may hurt your chances of obtaining a loan.

Tip# 8- Self Employed? […]

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