Monthly Archives: October 2012

What Percent Is The Best Down Payment?

Deciding what down payment to put on a home is one the first decisions to decide when choosing a home loan. This determines the amount of money the borrower will have to part with, how much house a borrower can afford, and it also determines whether the borrower will have to pay monthly mortgage insurance, or upfront mortgage insurance.

Of course, your financial situation will be a big determining factor for which scenario you can choose.

A 3.5% down payment is the most common, especially among first time home buyers. It’s the smallest amount a borrower has to part with. However, when doing a 3.5% down payment with a FHA loan, the borrower will have added costs consisting of upfront mortgage insurance, which is added to the loan balance, as well as monthly mortgage insurance. This ultimately increases the monthly mortgage payment.

The other option is to go the conventional home loan route and parting with a minimum of 5% down. In order for this scenario, credit scores must be good and the home loan has to be under $417,000 according to Fannie Mae and Freddie Mac guidelines. Monthly mortgage insurance is still added to the loan, but it is significantly less than the 3.5% down payment.

A borrower can also put 10%-20% down with a conventional loan in order to avoid mortgage insurance altogether.

Now, keep in mind there is not “wrong” down payment. It is all based on your financial situation, what is available in your savings for a down payment, and how much house you can afford. The main goal is for the borrowers to understand the different loan options available and choosing what works best for their circumstances. Discuss these options with a mortgage broker for more personalized assistance based on your financial situation.

Making The Home Buying Process Easier

Here is an article we would like to share, courtesy of By Referral Only. These are 5 great tips to help any home buyer make the process easier and less stressful.

In reality, there are only five things you need to know and do to make your home buying experience as simple as possible.

1.  Get pre-approved for your loan.

If possible, get “pre-approved” for a loan in the amount you’re willing to borrow.

With this pre-approval, you’re in a stronger position to buy a home when you’re ready – rather than finding your dream home, only to lose it to another buyer because you were waiting on the approval.

2.  Find a great real estate consultant.

Once you’ve decided to buy a home, find a great real estate consultant.  What you’re looking for is a Buyer’s Agent.

This means that the consultant represents YOU as the buyer, rather than the person selling the home. They will have YOUR best interests at heart.  Really good consultants know their markets, and will help you find the best match for your needs and wants. They can also recommend mortgage brokers with whom they’ve worked in the past.

3.  Look before you leap.

Drive around the neighborhood at different times of day.  Get out and walk around and chat with neighbors.  Some people like friendly neighbors, others think of them as nosy. Drive to the local grocery store, laundry, anywhere that you frequent.

Visit nearby schools and see for yourself how the kids behave and how the grounds look.  The point is to see if this is really the type of neighborhood you want to live in BEFORE you make an offer.

4.  Be prepared.

Make sure your contract has reasonable contingencies included to protect you as a buyer.  Reasonable can be things like approval by a home inspector, and title clearance. For the long-term investment, make sure that you buy homeowner’s insurance, and upgrade it as the value of your new home and its contents increase.

5.  Be reasonable.

No home will be without flaws.  Many times it’s these flaws that lend character to older homes, but nonetheless, it will take SOME work to personalize any home.

Preparing yourself with these five simple things – loan pre-approval, a great broker, getting to know the neighborhood, protecting yourself, and being reasonable – will help make the home buying process easier for you and your family.

Huge Savings With FHA Streamline Refinance

Own a FHA Loan? This may be the perfect time for you to refinance if you are stuck with a high interest rate. Rates are still at historic lows, and are providing great opportunities for homeowners to refinance and save a great deal of money.

We have many clients in line to benefit from this program. There are borrowers saving anywhere from $100-$600. The savings is amazing, and truly beneficial to homeowners.

There are many benefits to refinancing your FHA loan to the low interest rates. If you are comfortable with your monthly payment then consider refinancing to lower your rate,  but continue making the same payments and pay off your mortgage early!

If you are not comfortable with your payment and want to lower it, then you can do that as well.

If your current loan is a FHA loan, the refinance transaction is one of the most simple and hassle free processes. There is good news to those who owe more on their home than what it is worth– no equity is required. If you have lost equity in your home due to the housing down turn that has taken place, the FHA Streamline is still a possibility to save you money.  With a FHA Streamline Refinance, no appraisal is required. The purpose of the FHA Streamline is to reduce your interest rate.

The process is even simple in regards to  income verification — there is none. With a FHA Streamline Refinance, we actually leave the income section blank on the application because it is not required to refinance your loan.

Even better, this refinance program is no cost. A true FHA Streamline should be no cost to the borrower.

Right now is a great time to refinance. The word needs to spread to borrowers who feel stuck with a high interest rate and a high monthly payment. There are opportunities to refinance, and you should take advantage of them today.

If you are interested in a FHA Streamline you can contact our mortgage office, Stateline Funding Corp., to get started right away.

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