Apr 10, 2018 | Mortgage, Real Estate
When you are a homeowner looking to reduce your carbon footprint, there are a number of steps you can take to make your home earth-friendly. From passive solar heating to solar panels, you can make a difference in the impact your home has on the environment.
Even when you aren’t building a new home, changes can be made to an existing property to increase efficiency and reduce reliance on utility systems.
Invest In Solar Power
Solar panels are one of the most popular ways to reduce your carbon footprint, and with good reason. Solar panels often produce enough electricity so that you have energy to sell back to the energy grid every month. Over time, solar panels on your property can earn you money instead of costing money in utility bills.
Consider Passive Solar Designs
Passive solar is heating your home with the sun by using the right design. For example, certain materials such as slate holds heat. If you have a room that gets plenty of sunlight during the day, a slate floor can help keep the room warmer once the sun sets. If the floor is made from a material that dissipates heat, such as ceramic tile, your home won’t benefit from the sun once it sets.
Radiant Floor Heating Saves On Energy Costs
Heat rises, and those that invest in radiant floor heating find that it is easier to heat up a room. Radiant floor heating uses coils below the surface of your floor, creating heat. The heat rises into the room instead of getting blown in through a heating vent. This reduces the amount of energy you need to heat your home.
Invest In Energy Efficient Appliances
Every appliance that you use in your home has an impact. Consider investing in energy efficient appliances when you are trying to make your home more earth friendly. You will save money on utility costs and help the environment at the same time.
Consider a Clothesline
The energy used to heat your clothes and dry them can be eliminated if you simply hang everything outside to dry. While this adds to your workload, it is a free way to reduce your carbon footprint.
When you have a home, there are a number of ways you can help reduce your impact on the environment. Set up a recycling area in your home, have a vegetable garden if possible, and use electricity only when necessary.
Enjoy your space and don’t be afraid to try new ideas to reduce waste within your home.
Apr 6, 2018 | Mortgage
Owning a home is important to military veterans just like the majority of other consumers. The Veteran’s Administration has provided an exceptional benefit for those who have served (or are currently serving) in any of the armed forces. And this VA Loan Program is helping thousands of service members achieve the goal of home ownership.
There are a number of questions that come up regarding the fees and qualifications of the VA Loan Program.
What Are The Specific VA Fees?
Many veterans and active military personnel like the fact that VA loans don’t require private mortgage insurance (PMI). PMI has served as a thorn in the side countless home buyers who couldn’t manage a 20 percent down payment. The good news is that VA loans don’t requre mortgage insurance, even with no down payment at all.
To compensate for the absence of mortgage insurance, the government charges most borrowers a VA Funding Fee. Depending on individual circumstances and the type of funding you need (first-time home purchase versus refinance, for example), this fee can range from.5 percent to 3.3 percent of your mortgage amount.
Fortunately, applicants on disability and surviving spouses may be exempt from this requirement.
Are There Any Administrative Concerns Regarding VA Home Loans?
VA loans are generally as easy to attain as any other government or conventional mortgage loan products, but they do have some unique qualifications to consider. These issues just need to be known and addressed appropriately throughout the transaction to ensure it goes smoothly.
For instance, if you and your spouse both serve in the military and you want to buy a home together, each of your VA entitlements must go through separate processing and approval procedures.
A VA loan also calls for a specific type of home appraisal called a Minimum Property Requirements (MPR) inspection. This should not be confused with the traditional home inspection. The MPR is the required appraisal by an independent VA appraiser. These appraisers typically dig into the home’s tiniest details, which can also be helpful by uncovering potential issues with the home.
Any home improvement or construction work currently under way may delay the approval process. You can minimize these issues by making sure that both your lender and your REALTOR have extensive experience in working with VA loans.
How Can A VA Loan Save Me Money?
Properly finessed, a VA loan for the right amount, and at the right interest rate, can edge out conventional loans. For instance, that VA Funding Fee, unwelcome as it might seem, could cost substantially less than the down payment you might otherwise put down on a conventional loan — without the need to pay mortgage insurance premiums for the first several years of your home ownership.
While the monthly mortgage payments might not look dramatically different on paper, even a savings of $100 a month can make an enormous difference to your financial health over the life of your mortgage loan.
VA loans can indeed provide some important benefits and buying power for our nation’s past and present military service professionals. Take the time to examine all your options so you can obtain the mortgage loan package that best serves your specific needs and goals.
Ultimately, however, you should probably sit down with your trusted real estate professional who can advise you on your wisest course of action.
Mar 22, 2018 | Mortgage
When you are purchasing a home, your lender may recommend you obtain a mortgage pre-approval before you find the home of your dreams. There are some benefits to being pre-approved before you find a home, but oftentimes, people confuse pre-qualifications with pre-approvals.
So the question many buyers have is what exactly is a mortgage pre-approval? In a nutshell, it’s when the lender provides you (the buyer) with a letter stating that your mortgage will be granted up to a specific dollar amount.
What Do I Need For Pre-Approval?
In order to obtain a pre-approval for your home purchase, you will have to provide your lender all of the same information you would need to show for qualifying for a mortgage. This means providing tax returns, bank statements and other documents that prove your net worth, how much you have saved for your down payment and your current obligations.
What Conditions Are Attached to a Pre-Approval?
Generally speaking, a pre-approval does have some caveats attached to it. Typically, you can expect to see some of the following clauses in a pre-approval letter:
- Interest rate changes – a pre-approval is done based on current interest rates. When rates increase, your borrowing power may decrease
- Property passes valuation and inspection – your lender will require the property you ultimately purchase to come in with a proper appraisal and meet all inspection requirements
- Credit check requirements – regardless of whether it’s been a week or six months since you were pre-approved, your lender will require a new credit report. Changes in your credit report could negate the pre-approval
- Changes in jobs/assets – after a pre-approval is received, a change in your employment status or any substantial assets may result in the pre-approval becoming worthless
What Items Can Change My Mortgage Pre-Approval Status?
One of the major issues that affect some borrowers as they are preparing to purchase their new home is financing large ticket items before the home purchase loan is completely funded. Even if you are buying new furniture or other items for the home, it’s best to wait until after your home loan is entirely complete before purchasing any of these new items.
Work changes can also drasitically affect your pre-approval status. Make sure your loan professional is well aware of any changes well in advance of them happening in order to plan effectively. There are ways to work with job changes but it is a delicate matter during the mortgage underwriting process.
Getting pre-approved for a home mortgage may allow you more negotiation power with sellers and may help streamline the entire loan process. It is however important to keep in mind there are still things that may have a negative impact on actually getting the loan.
It is important to make sure you keep in contact with your trusted real estate professional, especially if interest rates increase or your employment status changes after you are pre-approved.
Mar 20, 2018 | Mortgage
Several generations ago, lenders required home buyers to have a 20 percent down payment in order to get a mortgage. While there were a few options out there for people who couldn’t save this substantial amount, the reality was that for the majority of people, the 20 percent down was a requirement.
It was the way to show that you were financially responsible enough for homeownership. And it was a strong way that the banks felt secure in making a home loan.
Today, however, homebuyers have many options available to them as they shop for a new home, and those mortgage options mean that the 20 percent down payment is no longer as much of a requirement. For most buyers, especially those who do not have the equity of an existing home to help with their purchase, the 20 percent down payment is not even a possibility.
Yet for those who can do so, putting 20 percent down carries some benefits worth considering. Here is a closer look at when the large down payment makes sense, and what the potential drawbacks are that buyers should consider.
How The 20 Percent Down Payment Helps
When it is possible for the buyer to save enough, the 20 percent down payment does have some benefits that are worth considering. First, when you are able to save 20 percent, you can get a mortgage that has no private mortgage insurance or similar fees. Because lenders consider a borrower with less than 20 percent for the down payment to be higher risk, they charge additional fees to serve as insurance on these loans.
Putting 20 percent down also means you are borrowing less. Because every dollar you borrow will be charged interest, the less you borrow the lower your repayment costs should be over the life of the loan. If you have the ability to save 20 percent, this is a benefit worth considering.
The Drawbacks Of 20 Percent Down
While saving 20 percent does have some benefits, it also has drawbacks that you must also consider. First, 20 percent of a home loan is a significant amount of money. On a modestly priced $100,000 house, that means you have to save $20,000. For the average home buyer, this represents years of saving. And you could be giving up years of price appreciation on the home that you could have purchased earlier by using one of the other financing options.
Also, if you are putting all of that money down as your down payment, you may find yourself cash strapped for other home buying costs, like new furniture or closing costs on your mortgage. The Consumer Financial Protection Bureau warns that this can be a significant downside, especially for first-time buyers who have a lot of expenses as they make the move into their first homes.
Many people find themselves digging into their other investments, like their 401(k), to come up with the money for the down payment. When mortgage interest rates are low, this can be an unwise move. Paying a bit more in interest over the life of a mortgage is often better than creating a serious financial bind for your future needs. Digging into your retirement also means you are not getting that vital compounding interest.
Finally, saving 20 percent often means you can’t buy a home quite as quickly. Since home prices historically tend to rise, not fall, the longer you wait, the more you may spend on your home. If home prices rise by 5 percent a year, which is fairly standard, waiting two years to purchase the home means $10,000 in extra costs for a $100,000 home. The higher purchase price counters any savings you may have when you put down 20 percent.
Can You Buy With Less Than 20 Percent Down?
So can you buy a home with less than 20 percent down? The answer to that question is yes, and often it makes more financial sense to do so. In fact, according to Freddie Mac, 40 percent of homebuyers in today’s markets are making down payments of less than 10 percent. So if you are going to buy a home without saving the 20 percent, what are your options?
If you have strong credit, many lenders are still offering piggyback loans. These loans allow you to take out a smaller loan for part of your down payment, then a traditional loan for the rest of the purchase price. You may still need about 5 percent of your own money to put down on the purchase. Then you can work with your lender to borrow 15 percent with a smaller, and many times shorter-term loan, and the remainder with a conventional mortgage.
Down payment assistance is another option to consider. These programs, which are available through non-profit organizations or government-run programs, give homeowners a hand in coming up with the down payment they need to purchase the home.
Finally, consider the low down payment options that are out there. USDA loans, VA loans, FHA loans and similar loan products are designed for those with just a little bit to put down on the home. The FHA loan, for example, is a government-backed loan that requires just 3.5 percent down on the home.
Forbes indicates it is even possible to get a conventional loan with as little as 3 percent down. In some instances, like the USDA home loan program, you can even buy a home with no down payment.
While these home loans do have additional costs, like the funding fee for the VA loan or private mortgage insurance for conventional low down payment loans, they give you the ability to buy now without 20 percent down so you can start enjoying the benefits of homeownership sooner.
When buying a home, getting sound financial advice is always wise. Whether you choose to put down a large amount on your home or take advantage of these different loan options to buy with a smaller amount down, make sure you weigh your options before making your choice.
Mar 16, 2018 | Mortgage
Like credit cards or car loans, some mortgages allow borrowers to have co-signers on the loan with them, enhancing their application. However, a co-signer on a mortgage loan doesn’t have the same impact that it might on another loan. Furthermore, it poses serious drawbacks for the co-signer.
Mortgage Co-Signers
A mortgage co-signer is a person that isn’t an owner or occupant of the house. However, the co-signer is on the hook for the loan. Typically, a co-signer is a family member or close friend that wants to help the main borrower qualify for a mortgage. To that end, he signs the loan documents along with the main borrower, taking full responsibility for them.
When a co-signer applies for a mortgage, the lender considers the co-signer’s income and savings along with the borrower’s. For instance, if a borrower only has $3,000 per month in income but wants to have a mortgage that, when added up with his other payments, works out to a total debt load of $1,800 per month, a lender might not be willing to make the loan.
If the borrower adds a co-signer with $3,000 per month in income and no debt, the lender looks at the $1,800 in payments against the combined income of $6,000, and may be much more likely to approve it.
Co-Signer Limitations
Co-signers can add income, but they can’t mitigate credit problems. Typically, the lender will look at the least qualified borrower’s credit score when deciding whether or not to make the loan. This means that a co-signer might not be able to help a borrower who has adequate income but doesn’t have adequate credit.
Risks of Co-Signing
Co-signing arrangements carry risks for both the borrower and the co-signer. The co-signer gets all of the downsides of debt without the benefits. He doesn’t get to use or own the house, but he’s responsible for it if the mortgage goes unpaid.
The co-signer’s credit could be ruined and he could be sued (in some states) if the borrower doesn’t pay and he doesn’t step in. For the borrower, having a co-signer adds an additional level of pressure to make payments since defaulting on the loan will hurt him and his co-signer.
As always, it’s a good idea to speak with your trusted real estate professional for advice in your specific situation.
Mar 8, 2018 | Mortgage
Often times, home buyers can be disappointed when they find their dream home only to discover they are not able to get a mortgage to purchase the property. There are methods that potential buyers can use to ensure this does not happen to them.
One of the options is to ensure you obtain a pre-qualification from your lender. It is important to understand the difference between a pre-approval and a pre-qualification. While both are helpful, they do not carry the same weight.
What are the differences between these options?
A pre-qualification allows a borrower to determine how much money they may be able to borrow. For most borrowers, this allows them to start the house-hunting process with a mortgage amount in mind. Borrowers should understand, while the loan amount can be calculated, changes in interest rate as well as the borrowers credit are not evaluated in this process.
In general, the lender will request specific information from the borrower including income and expenses as well as ask about their credit. None of this information is typically verified by the lender through an underwriting process before sending a pre-qualification letter.
On the other hand, a pre-approval requires the borrower to provide a number of documents to the lender, typically the same documents borrowers need to apply for a loan. The documentation supplied to the loan professional is then treated as a full purchase loan application and run through underwriting to secure a conditional commitment from a bank or mortgage lender.
Oftentimes, this difference between the two options leads borrowers to speculate as to whether a pre-qualification is useful.
Why pre-qualification helps in your home hunting?
There are many valid reasons why potential homebuyers should ask about pre-qualifying for their mortgage. Some of these include:
- Home prices – if a borrower is eligible for a mortgage of $200,000 they will know they will have to seek homes in a specific price range. If a borrower is only able to put down 10 percent, they know the maximum home price they can afford is $220,000.
- Down payments – in most cases, borrowers who can afford to put down a large down payment will have more options available to them. In some cases, understanding how much mortgage a borrower may qualify for beforehand allows them to save additional money for a down payment.
- Estimates of dollars needed – another advantage to pre-qualifying is borrowers can get an idea of what additional closing costs they may need to qualify for a mortgage. This can be very helpful for a first time home buyer.
Pre-qualifying for a loan can save a home buyer from being disappointed. There are few things that are more upsetting than finding a home you love only to discover you are not eligible for the loan you need in order to purchase that home.
Typically, when you are seriously looking for your next home it would be a good idea to move to the full pre-approval process in order to get the most leverage when you find the home of your dreams.
As always, it’s a good idea to consult with your trusted real estate professional for advice when preparing to look for your new home.
