Home Finances

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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 […]

15 12, 2016

Buying in 2017: Be Prepared

December 15th, 2016|Blog, Buying a home, Home Finances, Tips & Advice|

Are you planning to buy a home in 2017? If so, you have probably already taken a couple steps to prepare. If you haven’t, that is okay too! We are going to discuss a few things that you can be doing now to get ready to buy a home. There is plenty to do to keep busy!

  1. Check your credit score. A credit score is a number that represents your credit report. FICO scores range from 300 to 850 and the higher the score the better. The better the credit score, the better the chances are that you will get a lower mortgage rate. If you credit score is not where you would like it to be, then start repairing it. Pay bills on time, limit unnecessary purchases, do anything you can financially to make sure you pay your credit card bill on time or even over pay it.
  2. Don’t open new credit cards. The holidays are tempting time for credit card holders. Almost every time you step up to check out at a store, someone is offering you a credit card. The savings sound great, but opening more accounts create more lines of credit. That credit line and what is borrowed, can change the application numbers and jeopardize your application. Also, don’t over spend during the holiday season and rack up more credit card debt.
  3. Suggest financial gifts. You are going to need to prepare for the down payment and also the closing costs and moving costs that are associated with buying a home. You should also consider setting aside money for unexpected repairs and costs. So instead of getting gifts this holiday season, ask your family to give you cash towards your potential new home. It will help in the long […]
22 09, 2016

Why you should buy a home this Fall

September 22nd, 2016|Blog, Buying a home, Home Finances|

Driveway to front walkway view of partial front of residential home during early autumn season.

Everyone loves fall. The leaves are changing, the temperatures start dropping, football season, pumpkin flavored everything, are some of the reasons why fall is so lovable. One of the other awesome things about fall is the housing market slows down, which is good news for buyers. There are a couple reasons why fall is a good time for home buyers, let’s take a look at some.

  • Less competition. As summer comes to an end and the school year starts up, there are fewer families who want to move because they do not want to have their children change schools or school districts during the middle of the year. This is one of the reasons why competition for buying homes drops off in the fall. Fall is considered to be off-season realty. Don’t be discouraged by that though, in some cases there is just as much inventory in the fall as there is in spring and summer. This puts you in a great position to negotiate especially because some sellers will definitely want the move and sale to happen before the holidays.
  • Sellers are worn out. Sellers that still have their homes on the market during the fall might have priced their homes higher than what buyers have wanted to pay in the spring and summer months. After months of no actions, these sellers are often ready to make a deal. Sellers are going to be worn out after months of work. They are likely to take a smaller offer rather than wait another six months for spring to be back around.
  • Sellers means business. Just because a home is on the market in the fall doesn’t necessarily mean that […]
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 […]

28 06, 2016

Jumbo Loans 101

June 28th, 2016|Blog, Buying a home, Home Finances, Mortgage 101|

Rhinebeck, NY, USA - November 5, 2007: Elegant private residence located in Rhinebeck; This area is in the Hudson Valley area of Upstate New York.

Since this is a 101 about jumbo loans and when you should use one, let’s start with the basics. A jumbo loan can also be referred to as a non-conforming mortgage. This is a loan that does not conform to the guidelines of Frannie Mae and Freddie Mac. Created by Congress in 1938 and 1970 respectively, Frannie Mae and Freddie Mac provide stability and affordability to the mortgage market by buying “conforming” mortgages from lenders, giving lenders liquidity to make more mortgages.

Frannie Mae and Freddie Mac only buy mortgages meeting their guidelines for down payment, credit score, post-closing reserves and loan amount. As of 2016, the conforming loan size limit for a one-unity home is $417,000 with exceptions as high as $625,500 in certain high-priced markets.

When should you use a jumbo mortgage?

You would use a jumbo mortgage when you are seeking a loan amount that is greater than the conforming loan limit in your area. In most of the country, that means you will take out a jumbo loan if the amount of the loan is greater than $417,000. In certain areas that are deemed high cost, the conforming loan limit goes above $417,000. You can look up your area’s loan limited here: http://www.fhfa.gov/DataTools/Downloads/Pages/Conforming-Loan-Limits.aspx.

Qualifying for a Jumbo Mortgage

Jumbo mortgages have the same overall qualifying methodology as a conforming loan. Lenders will look at your credit score, down payment size,  total monthly debt obligations relative to income (called your debt-to-income ratio), and money left over after closing.

  • Credit score requirements are about the same for conforming and jumbo.
  • Money left after closing – This is often called reserves or […]
17 06, 2016

Smart Moves for First-Time Home Buyers

June 17th, 2016|Home Finances, Mortgage 101, Tips & Advice|

Shot of a couple moving into their new homehttp://195.154.178.81/DATA/i_collage/pu/shoots/805830.jpg

First-time home buyers, are you ready to buy? It is a seller’s market right now so we are here to prepare you with tips before entering the market. Your biggest challenge is that you are probably bringing less cash to the table, which makes it harder to compete with more season buyers. What YOU do have is flexibility-you’re not counting on selling your current place to fund the deal. Which means that you are a perfect answer for sellers who want to stay put until they land their next place.

  1. Lock up your financials. It is time to clean up your credit and save for a bigger down payment so that you’ll qualify for a better mortgage rate and avoid costly fees. Start paying down credit cards so your balance is less than 30% of the limit and avoid late payments. It is so important to pay your bills on time, even student loan payments. Student loans will not hinder your chance of getting a loan, as long as you are making the payments on time. Next, 20% is the golden number for down payments. Putting down 20% helps you avoid costly private mortgage insurance and can help you to beat competing offers. If you aren’t there yet, either change your spending habits to save up more or start looking at cheaper homes.
  2. Check Alternative Mortgage Options. If you can’t get close to that 20% down payment or your credit score is not where you would like it to be, that is okay too! FHA loans (read more about them here) let you put just 3.5% down, and offer better rates for those with less-than-pristine credit. It is important to know the tradeoff though, […]
25 05, 2016

Buying a Home with Student Loans

May 25th, 2016|Blog, Buying a home, Home Finances, Mortgage 101, Tips & Advice|

 

Young couple meeting financial consultant for credit loan

The housing market has been waiting for millennials to settle down and start buying homes instead of renting or remaining in their parent’s home for a few years now. If you ask any millennials, many of them will say these decisions are being prolonged due to the amount of student debt haunting them. The average Class of 2016 graduate has $37,172 in student debt, up six percent from last year according to https://studentloanhero.com/student-loan-debt-statistics-2016/. This is a huge financial burden to be facing, but we are here to tell you how you can still buy a home even with student loans.

Shop for a Home you can afford

This should be a rule of thumb for any purchase in life, if you can’t afford it, you probably should not be buying it. Home shopping can be tempting. You may be looking at multiple car garages, completely new appliances, high ceilings and much more. It is important not to get carried away. If you are a first-time home buyer, you may have to go with a starter home instead of your dream home but that will come with time.

Minimize Debt from Credit Cards and Car Loans

When applying for a loan these are the main factors taken into consideration:

  1. Income.
  2. Savings.
  3. Credit Score.
  4. Monthly debt-to-income ratio.

Your debt-to-income ratio shows the lender your total financial obligations including car payments, credit card debt and student loans in comparison to your income. To keep yours low, keep off as much debt as possible before applying for a mortgage.

Lower your monthly student loan payments

Even if you do not have any other types of debt, having a high student loan monthly payment could give you a high debt-to-income ratio. To lower that ratio […]

21 04, 2016

Components of a Mortgage Payment

April 21st, 2016|Home Finances, Mortgage 101|

Mortgage concept. isolated on white background 3d

Before you dive into buying a home, it is important to know what your money is going to each month. Your monthly mortgage payments are commonly referred to as a “PITI” or principal, interest, taxes and insurance. PMI and homeowner’s association dues may also make up a portion of your total payment.

Principal: The original amount of the loan.

Interest: Just like with any other loan, this is the amount that you are charged for borrowing money. The amount of interest for the month is calculated based on the outstanding principal balance as well as the interest rate of your loan. As the term of the mortgage proceeds, the ratio between the principal and interest amounts shifts in each payment.

Taxes: The property assessment collected by your local government. Lenders typically collect a portion of these taxes in every mortgage payment and hold the funds in an account called an esgrow account until they are due.

Insurance: This offers financial protection from risk. Like property taxes, these are typically held in an escrow account and paid on your behalf to the insurance company. There are two main types of insurance that are typically included in your mortgage payment: homeowners insurance and mortgage insurance. Homeowners insurance is required financial protection you must maintain in case your property is damaged by fire, wind, theft or other hazards. Mortgage insurance protects your lender in case you fail to repay your mortgage.

Overall there are several factors that determine how much your monthly mortgage payment will be. Two examples are the amount you pay for a down payment and the mortgage program you choose.

It is important to take all four factors into consideration when determining what house you can afford. Use our mortgage calculator http://firstohiohome.com/home-finance-mortgage-calculators/ […]

1 04, 2016

Tips for a Quick Closing

April 1st, 2016|Blog, Buying a home, Home Finances|

iStock_000009315285XSmallIf you look at our reviews or testimonials, you’ll notice that so many of our customers have stated how happy they were with the timeline of their experience working with First Ohio Home Finance. The customer’s timeline is always a number one priority, it is important to be upfront with your Loan Officer about your timeline, it is also helpful to be realistic.

Current mortgage rates remain below 4 percent. Mortgage rates are so low, that many people are back to the “should I buy or should I rent” debate. Rent prices  are rising quickly and mortgage rates are not. The widespread availability of low down payment loans plus rising approval rates but today’s low mortgage rates have created a buyer’s market.

To help you compete in the fast-paced buying market, we have created a couple tips for closing on-time:

  • Get your purchase loan approved quickly: Typically the longest part of the process is exchanging documentation. As a home buyer, you can be prepared for the lender’s request by having your documentation ready to go. The complete list of documentation needed can be found here: http://firstohiohome.com/purchase-home/mortgage-checklists/. If you have those documents ready, that will reduce the numbers of days required to get your approval. Just like with most other things in life, it is important to be prepared.
  • Be open with your lender: Honesty is the best policy, the loan approval is no exception. If you are going on a trip or a big life event might be happening during the process, it is crucial to let your loan officer know that. If you are going to be out of contact they are going to need to know that. If there are any financial circumstances that are going on, you need to tell your Loan […]
4 03, 2016

What tax Season means for Homeowners

March 4th, 2016|Home Finances, Mortgage 101, Tips & Advice|

iStock_000040081762_Small

 

 

 

 

 

 

 

 

Tax season is upon us! Whether you already own a home or are looking to buy in the near future this is important information. For being a homeowner, there are many deductions you could receive when filing your taxes. Let’s check out a few:

  1. Mortgage Interest. When buying a home the interest payments can be pretty expensive but there is a silver lining to the situation. Interest that you pay on your mortgage is tax deductible, within limits. If you are married and filing jointly, you can deduct all your interest payments on a maximum of $1 million in mortgage debt secured by a first or second home.
  2. Points. There will be various fees when you first buy your home, one of which is called, “points.” One point is equal to 1% of the loan principal. One to three points are common on home loans, which can easily add up to thousands of dollars. You can fully deduct points associated with a home purchase mortgage. Refinanced mortgage points are also deductible, but only over the life of the loan, not all at once. Homeowners who refinance can immediately write off the balance of the old points and begin to amortize the new.
  3. Equity Loan Interest. You may be able to deduct some of the interest you pay on a home equity loan or a line of credit. However, the IRS places a limit on the amount of debt you can treat as “home equity” for this deduction. Your total is limited to the smaller of:
  • $100,000 (or $50,00 for each member of a married couple if they file separately), or
  • The total of your home’s fair market value – this is, what you’d get for your house on the open market – minus certain other outstanding debts against […]
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