Monthly Archives: February 2016

Every month when that rent payment is due it can feel like you are just throwing money down the drain. This can get pretty discouraging after a while, it is important to know when buying a home tops renting. Let’s discuss a few times it would be better to buy than rent:

1. If you value owning assets. Every payment that you make on a mortgage increases your equity in your home and moves you closer to owning it outright. Homes can also appreciate in value, increasing your equity automatically. If you are looking for a way to invest your money even as you spend it on housing, buying can be a good move. Especially now with the mortgage rates being as low as they are.
2. How long do you plan to stay? This is a very important thing to consider when deciding to buy over rent. Do you love where you are at? Or have you always been dreaming of living somewhere else you are just waiting on the right time. If you can see yourself living in the same place for more than 9-10 years, then buying would be the best option because the initial fees can be spread out over a longer period of time.
3. You have the money. Buying a home is a financial commitment, so you have to be prepared for that. When buying a home, you will need enough money upfront for a down payment, as well as to cover closing fees. A healthy place to start is 20% of the home’s value, but you may need a minimum of at least 3% to 5%. On a $200,000 home, a 20% payment is $40,000, while 5% is $10,000. An addition, you have to factor in transaction costs, which […]
   

If you are currently in the market for a new home you probably have already started doing research on the different types of mortgages. Whether you have a large amount to put down or just a little bit saved up there are always options. Let’s see if the conventional mortgage is right for you.

A conventional mortgage refers to a loan that is not insured or guaranteed by the federal government. A conventional, or conforming, mortgage adheres to the guidelines set by Fannie Mae and Freddie Mac. It may have a fixed or adjustable rate.  These loans are offered by private entities such as banks, credit unions, private lenders and savings institutions. This is why conventional loans are only given to those in good financial standing.

The terms of a conventional loan are usually 15, 20 or 30 years. If you want to obtain a conventional loan you will need to have a larger down payment than for an FHA loan.

A conventional mortgage is ideal for the borrower with good to excellent credit. In addition to requiring higher credit scores, there are minimum down payments and lower debt-to income ratios required to qualify. However, conventional mortgages generally have fewer hurdles than FHA and VA loans and are usually processed faster.

So to recap, if you have excellent credit score, your debt-to-income ratio is low and can contribute up to 20% of the cost of the home towards a down payment then you are a candidate for a conventional loan. It is always important to talk to your mortgage lender about your options and what loan would be best for your unique situation. If you would like to talk to someone further about the different loan options, contact us here!