Dec 8, 2017 | Home Mortgage Tips
Did you recently graduate from college or university? If so, you may still be dealing with a financial hangover in the form of student loan debt. The vast majority of today’s students have to borrow to invest in their education, which can affect financial plans once school is finished. In today’s post, we will explore buying a home with a mortgage when still dealing with outstanding student loan debt.
Your Situation Is Common, But Unique To You
First, try to keep in mind that you are not alone. Many former students are moving on with life, working hard to build a career and a life while juggling past student loans. However, your situation is unique, and thus, you need to plan it that way. For example, are you single or married? Are you in a stable career or are you potentially shifting jobs? Do you have children or are you planning to in the near future? Your financial needs are unique and need to be prepared and budgeted accordingly.
Understand Your DTI Ratio
Have you heard of the debt-to-income or ‘DTI’ ratio? When you take out a mortgage to buy a home, this ratio is one factor in determining how much you can borrow. In essence, it is a ratio of your monthly debt payments versus your monthly income. As you are paying off student loan debt, that will increase your DTI ratio. Adding a mortgage, car or other monthly payments on here will as well. You will want to ensure that you maintain a healthy debt-to-income ratio or it can be challenging to stay solvent.
Balancing Your Mortgage With Your Other Loans
You may have heard this saying: “life happens.” It is rare that anyone can spend years with everything going according to plan. If you run into a temporary health or job-related issue, you may need to do some juggling to keep your mortgage and other payments fully managed. For this reason, it is worth trying to save at least a few months of your monthly expenses in a ‘rainy day’ fund. Just in case of an emergency.
Challenging, But Not Impossible
Balancing a monthly mortgage payment with student loan repayment can be challenging, but it’s not impossible. If you would like to learn more about purchasing a home as a recent graduate, contact us today.
Dec 6, 2017 | Home Mortgage Tips
Are you starting to tire of paying your monthly rent to someone and never building any equity? Renting forever can be a significant pain, especially as you’re contributing to someone else’s financial well-being. The good news is that there are affordable real estate options out there for those investing in their first home. Below we will share a few excellent reasons why an apartment or condo might be the best choice for a first-time home buyer.
A Manageable Monthly Payment
In most markets across the country, condos and apartments are available at a significantly lower cost than a full-sized house. Buying a less-expensive home means that your monthly mortgage payments will, in turn, be lower. If you are single or a young professional trying to start a family, that extra money can be a massive boost to your monthly budget.
Note that while your monthly mortgage payment may be lower, you are still responsible for other maintenance and upkeep fees. The most common is known as a homeowners’ association fee, to which all condo owners in the same development contribute. These funds are used to upkeep the building or property as well as things like landscaping, a pool or gym, and other amenities.
A Smaller Down Payment
In the same vein, buying a less-expensive home also means that you can put a smaller down payment on it when you close the sale. In many cases you are required to place a certain percentage – typically 20 percent – down to avoid having to purchase private mortgage insurance. Having to commit less in your down payment leaves more money in the bank for other purposes.
An Excellent Future Investment Property
Don’t forget that when you are ready to upgrade and move into a larger house, you can keep a condo as a rental or investment property. Once your mortgage is paid off, you are only responsible for the monthly maintenance fees and taxes. So if you can rent the condo out to a tenant, you will have an excellent source of cash flow that can help to pay for your new home or fund other activities.
The above are just a few of the many reasons why a condo can be a great starter home for first-time buyers. To learn more about your home buying options, contact us today.
Dec 1, 2017 | Home Mortgage Tips
Have you decided that it is time to move on from renting? If you are single and living alone, you may be wondering whether or not homeownership is right for you. Let’s have a look at a few key factors that you will need to be aware of when taking out a mortgage as a single person.
It’s A Commitment – But Not For A Lifetime
Some single people shy away from the idea of buying a home as it is a significant financial commitment. When you are single, especially if you are young and early in your career, flexibility can be valuable. You might decide to move to a new city to take a new job, or you may find a partner and decide to start a family.
Keep in mind that homeownership – and your mortgage – aren’t permanent. If you decide to buy a house, condo or apartment, you can always sell it later if you need to move or upgrade to a larger home.
You’ll Need To Be Disciplined
As you will only have one income stream coming in to support you in managing your monthly finances, you will need to be disciplined. Living paycheck to paycheck is not really an option as you will end up in trouble if an emergency occurs. Some financial experts advise having at least 6 to 12 months of monthly expenses saved up, in case of a job loss or an unexpected health issue that takes you out of work.
Don’t forget that there are also mortgage insurance products that can help to cover some of your costs in the event of an emergency. These may be an option to consider as a backup plan.
Starting Small Versus Going Big
Do you need a lot of space? If not, investing in a small ‘starter’ home is an excellent option. You can buy just enough home to suit your needs without buying anything extravagant. A helpful advantage that you gain purchasing a less-expensive home is that it comes with a smaller mortgage that can be paid off faster.
Questions? Get Professional Advice
If you have questions about purchasing a home as a single person, you’re not alone. Give our professional real estate team a call. We will be happy to share our guidance and expertise.
Nov 8, 2017 | Home Mortgage Tips
In the market for a new home in 2018? With the new year just a few short weeks away, that leaves you with precious little time to get your finances in order. Let’s explore a few tips that will help you get a jump on improving your credit score before the end of the year.
Grab A Fresh Copy
The first step is to order a fresh copy of your credit report from one of the major agencies. The Fair Credit Reporting Act allows you to access a free copy of your credit report once every 12 months. So, if you have not ordered a copy recently, it is time to do so. You can access this free service through AnnualCreditReport.com, which is a website recommended by the Federal Trade Commission.
Clean Up Anything Outstanding
Now that you have a copy of your credit report, it’s time to go through it, line-by-line. You should recognize every current and outstanding account in the report. Any balances owing should be in order and reflect how much you owe. It’s critical that you flag any mistakes or old debts that you have already paid in full. If you come across anything that shouldn’t be on your credit report, call the reporting agency to let them know. If necessary, they will assist you with challenging the issue.
Pay Down Those High-Interest Debts
The final tip in today’s guide is to prioritize your outstanding debts so that you can pay them off more efficiently. The essential debt payments are your mandatory minimums, which you need to pay to avoid being sent to a collection agency. From there, try to pay off your debts with the highest interest rates first. Getting these paid off faster means that over time, you’re spending less on interest payments. Moreover, you can use that extra cash to pay your debts down further.
The above are just a few of the action steps that you can take today to start improving your credit score. When you’re ready to begin searching for your new home, contact your local real estate professionals.
Oct 11, 2017 | Home Mortgage Tips
While it is sometimes the best option to get your finances repaired, the bankruptcy and following discharge period can be tough. However, while it may delay things for a couple of years, the good news is that even a bankruptcy won’t stop you from borrowing a mortgage to buy a home. In today’s article, we will share some insight into how you can get a mortgage loan after going through bankruptcy.
Step 1: Get A Professional Credit Assessment
Once your Chapter 7 or Chapter 13 bankruptcy has been discharged, you will be required to wait for at least two years before you’re able to take out a mortgage. During this time, it is a good idea to sit down with a credit professional and get an assessment. Individuals and families with a bankruptcy on their credit file are going to go through a bit of extra scrutiny when taking out future loans. So spend a bit of time working on cleaning up your credit.
Step 2: Figure Out Your Monthly Budget
As you move closer to buying a home, you will want to start living off of a monthly budget. This will help to ensure that you are always prepared for your monthly mortgage payments and aren’t left short of cash when payment time comes. A budget can be as simple as a spreadsheet listing your monthly sources of income and expenses. Alternatively, you can use iPhone or Android apps which help to make budget tracking easier.
Step 3: Get Your Down Payment Saved Up
You will also need to start saving for the down payment that you’ll place on your home. The amount that you will need depends on a variety of factors including the city you’re buying in, the size of the home and much more. If you’re unsure about this, contact us and we’ll share some insight.
Step 4: Maintain Your Spending Discipline Until It’s Buying Time
Finally, it’s worth noting that you will need to be very disciplined in the period between your bankruptcy discharge and your mortgage application. Your credit report has to stay clean so that your mortgage lender does not doubt your ability to pay.
Don’t get discouraged if you have some work ahead of you to get your credit repaired. With a little time and effort, you can put your bankruptcy behind you and move on as a happy homeowner. To learn more about the financing process and to discuss your options, contact your local real estate professional.
Oct 4, 2017 | Home Mortgage Tips
As with any loan or line of credit, there are benefits to getting your mortgage paid down. You’ll pay less in interest, potentially saving thousands over the repayment period. Moreover, you’ll own your home outright that much quicker.
Let’s explore four money-smart strategies that will help you to pay your mortgage off faster.
Start With The Obvious And Increase Your Payments
It won’t come as a surprise that one of the easiest ways to get your mortgage paid off is to increase the amount you put towards your monthly payments. Most lenders will allow you to place any extra funds directly against the outstanding loan amount or “principal.” This is very efficient as it avoids having to commit any additional funds to interest.
One trick that many families use is to round the payment amount up to the nearest hundred-dollar figure. For example, if your mortgage payment is $652.32, you would pay $700 instead. This might be an easy burden on your wallet but still amounts to an extra seven percent of your payment.
Accelerate Your Payment Schedule
Another way to get your mortgage paid off as quickly as possible is to accelerate how frequently you make payments. For example, if you are currently making payments on a monthly basis, you can switch to bi-weekly payments instead. This means that instead of 12 large payments per year, you’re making 26 smaller payments. However, your interest will still compound on a monthly basis which means that over time you’ll end up paying less in interest. Not all mortgage products support this, so it is best to check with your mortgage professional to ensure it is an option open to you.
Dedicate Your Tax Refund To Your Mortgage
If you receive a tax refund or other large sum of money, consider using it to pay your mortgage down further. This is an excellent use for a spare block of cash as it gets you one step closer to owning your home, free and clear.
Refinance Your Mortgage To A Shorter Term
Finally, one last strategy is to look at a shorter term for your mortgage. For example, if you started with a 30-year amortization, you can refinance down to a 15-year loan instead. This will require having access to significantly more money to place against your payment, so be sure to carefully budget for this additional cost.
These are just four of the many ways that you can get your mortgage loan paid off faster. For more information or to inquire about a mortgage for your next home, contact your local real estate professional.
