Consider This Factor Before Invest Your Money on Property

Whether someone is a first – time home buyer, or someone who recently sold a house, and looking for another, real estate professionals, are often asked, whether the individual, should buy, or rent a place to live. Rather than providing a simplistic, basic, one – size – fits – all, answer or response, let’s review some of the considerations, factors, etc, will might affect one’s approach. In an attempt to remove the emotional factors (which is almost impossible, when it comes to the home – finding process), this article will review 6 factors, which might be relevant to one’s very personal decision.

1. Down – payment: Before considering anything else, one must consider finances, etc. The first consideration, therefore, must be, does the person have the down – payment? Understand, that while the percentage required to put down, to get a mortgage, in most cases, this is 20%. When one obtains a mortgage requiring a lower down – payment, it may bring with it a slightly higher interest rate, different qualifying terms, and most certainly, a larger monthly carrying charge/ expense.

2. Credit – worthiness; existing credit used; credit needs: Many factors go into what a lending institution might consider credit – worthiness. Of course, one’s credit score (also known as FICO, etc) is often a qualifying, or disqualifying factor. Unless that score is around 700, or higher, one will usually be unable to get the best rates available, if able to qualify for a mortgage, at all. Another factor, is the amount of total credit already approved for, and how much of that is used. Most banks have a maximum percentage for credit used, as a percentage of income, as well as a maximum figure, for the total credit, including other debt and the new mortgage. This figure is often somewhere around 36%. Obviously, the higher the down – payment, the lower the amount of mortgage needed!

3. What are your needs?: Before looking, determine your real needs. This should consider factors, such as affordability, and comfort level, location, size of house, and other relevant factors.

4. Your plans?: Are you planning on buying a starter home, or a keeper? How long do you expect to live here? Are you from the general area, and if not, are you sure, you’ll like this area? Many people from outside an area, considering relocating, often rent for a year, to be certain, it’s the right fit, for them. Also, the financial considerations/ expectations, depending on how long you plan to remain in this new location, are major determining factors, in terms of buying or renting.

5. Personal/ family circumstances: Are you planning, in the foreseeable future, to undergo some sort of major change in your family situation, such as marriage, divorce, children, etc? These are all factors which should go into your house – hunting considerations.

6. Market conditions: Sometimes, there is a buyer’s market, and sometimes, a seller’s. At other times, it’s somewhat neutral. Remember, most people, especially those seeking a somewhat permanent stay (10 years or more), should find a house, which will fit their needs. There are also advantageous times to buy, such as currently, with the low mortgage interest rates. Understand that as little as a 1% difference in interest rates, may make hundreds of thousands of dollars, of difference, over the life of the loan. It also makes a huge difference, in terms of the price home, one might be able to afford!

Whether you buy or rent, is a personal decision, each one must make for himself. A very short stay, anticipated major changes in one’s lifestyle, finances, or inability to find the right place, often suggests renting, at least for a short – term, such as a year. Don’t let anyone pressure you to make a decision you aren’t comfortable with!

 

How To Choose A Mortgage Lender

When you buy a home, you’re in for a long-term commitment. You’ll have a mortgage payment for 15 to 30 years, so it’s smart to find the perfect mortgage lender for your requirements. Consider the following tips when making your decision:

Decide what kind of lender you want – small or large. If you prefer a more personal touch and a lender who will know your name you will more than likely want to go with a smaller lender. If you are the type of person that cares more about the interest rate, a large lender may be your best bet.

Talk to your real estate agent. A top-notch agent will not limit their recommendations to their in-house lenders. And most importantly, savvy loan officers take especially good care of clients that are recommended by real estate agents. So definitely use this to your advantage. This personal connection can be a big help when it comes to reducing closing costs.

Know your potential lenders. The competition between lenders is fierce so it’s best to know what’s available. I highly suggest going local. Online lenders are plentiful, but a local company comes with the added benefit of knowing the neighborhoods, properties and the real estate professionals in your area. Here are the most common lenders you can choose from.

· Credit Union: Member-owned, offering favorable interest rates to their members.

· Mortgage bankers: These are bankers who work for a specific financial institution and package loans for the banks underwriters.

· Correspondent lenders: These types of lenders are often local mortgage companies that fund your loan but rely on other lenders such as Wells Fargo, Chase and others to sell your loan to as soon as it is funded.

· Savings and loans: These institutions were once the base of home lenders but are now very hard to find. S&Ls are smaller institutions that are very community-oriented and worth speaking to.

Always compare rates from several lenders. This is where your homework begins. As I noted above there are many lending options – neighborhood banks, commercial banks, credit unions and online lenders, so you have many options to consider.

Once you have several quotes, compare the rates and costs and decide which makes the most sense for you. Don’t forget, everything is negotiable so make sure you have the best rate available because a low rate can save you thousands of dollars over the life of the loan.

Think beyond the dollars. Keep in mind that finding a mortgage lender involves more than just obtaining a good interest rate. Make sure the company is staffed by professionals who will effectively steer you through the entire process. Choosing a lender that displays honesty, integrity and are committed to making you the best deal possible is of utmost importance.

Narrow your choices by asking your friends, family or even your real estate agent for referrals. Once you have some options make sure you ask them the right questions:

· How do you communicate with your clients – email, text or phone? And, how quickly do you respond to your messages?

· What are your turnaround times on preapprovals, appraisals and closing?

· Ask what fees you will be responsible for at closing and can any of those fees be rolled into the mortgage?

· Don’t forget to discuss the down payment requirements

Get Your Credit Score in shape, as it will largely determine the terms of your mortgage. The higher your credit score the more power you will have to negotiate better rates from your potential lenders.

It will be important to make sure your credit reports are accurate. Get your report from the three major credit bureaus: Equifax, Experian and TransUnion. Remember, they are required to provide you with a free copy of your credit report every 12 months.

Try to pay off your high-interest debt in an effort to lower your overall level of debt as quickly as possible. This will improve your debt-to-income ratio. Also, paying off credit cards and unsecured loans before you buy a home will free up more funds for the down payment.

Always read the fine print. Payments on a mortgage are not the only costs associated with homeownership. Make sure you ask your lender to line out all the additional costs – closing costs, points, origination fees and any transaction fees there might be. Ask your lender for an explanation of each cost.

Always examine the fine print of all your loan documents, especially the Loan Estimate and Closing Disclosure. These documents will tell you the exact finance rate, who pays the closing costs, contingencies, closing date and many other important details.

Just remember, there are throngs of mortgage lenders ready to accept your application. Just because a lender accepts your application doesn’t mean they’re the right option for you.

At allU.S. Credit Union, we care about our members – and that’s why we hope you will consider us when choosing a mortgage provider. Our goal is to make your home-buying process as seamless, stress-free and affordable as possible. When you work with us you will receive:
• Competitive rates
• Flexible terms
• Variety of financing options
• Simple application process
• Helpful guidance from start to finish

 

Tips To Get Pre-Approved Before Buy House

Prior to looking for a home, the first step you should take in the home buying process is to complete a mortgage pre-approval with a knowledgeable and trustworthy lender. Be sure to provide honest and accurate information to your lender. This will help the loan officer find the best mortgage options for you and ensure the fastest and smoothest loan approval process. The following suggestions will help expedite the loan process.

• Read All Documents – Make sure you thoroughly read all the loan documents. Ask your loan officer to explain anything that you do not understand. Never sign blank or incomplete documents.

• Be Truthful – Truthfully disclosure all your income sources and debts. Do not fabricate or alter any documents.

• Explain Your Employment History – Thoroughly explain and document any part-time employment or gaps in your employment history.

• Source and Document Your Funds – All gifts must be fully documented with a paper trail. Do not accept cash as a gift from a relative for the down payment. Only seasoned funds are acceptable as gifts.

• Credit Issues – Thoroughly explain and document all past credit problems.

• Educate – Ask your loan officers to explain the terms of the loan, including any prepayment penalties, variable rate features, and any stipulations on how to eliminate private mortgage insurance.

Once your pre-approval has been issued by the lender, be sure to ask your loan officer to review with you all the loan programs your pre-approval includes. If you are a first time home buyer, you may qualify for down payment assistance, a zero down mortgage, or a special interest rate. While looking for a new house, you may find a property that needs a renovation loan or a condominium that can only be financed with a particular loan type. If you are looking a newer house, a construction or draw loan may be the best mortgage type for you. Be sure you thoroughly understand all your financing options before finding the house of your dreams. During the house-hunting process, keep an open line of communication with your loan officer and discuss financing options and inform your lender of any major financial changes that happen between the date your mortgage pre-approval was issued and the loan closing. If any changes occur to your financial situation, such as: a new job, new loans, or large gift that you intend to use towards the down payment, be sure to inform your loan officer so he is aware of these changes.

Keeping your lender updated will eliminate delays and the surprise of a possible mortgage denial. Having a mortgage denied due to changes in your financial picture, especially after telling your friends and family you bought a house can be embarrassing and heartbreaking. Be sure to talk to your lender, so you have a thorough understanding of the mortgage requirements and programs available to you.

 

Choose Your Home Before You Retire

If you’re considering retiring in the next 8-10 years then you might want to start considering to buy your retirement home! If you buy it early there can be significant financial benefits. This is especially true if you’re planning on getting a mortgage.

By doing so early you’ll be taking advantage of the current low-interest rates as well! 30 year fixed mortgages have dropped to approximately 3.4% currently. Not only are there some appealing saving options but there’s considerable financial benefit to putting money towards your retirement home while you’re still employed. So let’s jump right into some of the most important reasons you should consider buying your retirement home so far in advance.

Getting approved for a mortgage

When your loan application is being evaluated your debt-income ratio will be a very important aspect of that evaluation. This ratio will obviously be in a better position while you’re employed. Which means, you’ll have an easier time applying for your mortgage while you still have a reliable income.

If you waited to apply for the mortgage until you retired, it’s possible that you’ll minimize the size of the loan you could potentially apply for. Also, you can start chipping away at that mortgage ahead of time and take less of your allotted retirement income out of your pockets. Essentially, you’re getting well ahead of the overall financial impact a mortgage can have.

Renovations

Odds are when you finally pick your retirement home you’ll be looking to make some improvements. If you’re purchasing a newly built home or building your home from the ground up however, you can ignore this section.

It’s definitely recommended that you set yourself a budget for the renovations you might have in mind when planning to buy your retirement home. Referring back to the first point made about securing your mortgage early. It’s also very beneficial to have a steady income from working full-time during the renovation process as well. It’s always possible to uncover a random setback and this steady income can help you deal with it accordingly.

Chipping away at that mortgage

Like I said earlier, beginning to pay off your mortgage early will put you well ahead of the game once you buy your retirement home. The ideal goal is to obviously be debt free during retirement. For that very reason, some may choose to rent when they retire. However, if you’re choosing to become a homeowner, the sooner you can start paying off that mortgage the better!

Not only are you getting ahead of the game initially when you buy your retirement home, but you could make additional payments as well. Getting ahead 8-10 years on that mortgage is one thing but being able to possibly afford additional payments while you’re employed? You could cut your mortgage to a 15-year mortgage by the time you’re ready to move in.

Long term plans

Budgeting your living expenses for retirement and to buy your retirement home, can be rather unpredictable. However, if you already have your retirement home set aside you can get a very good idea of what it will cost on a monthly basis to live there. So owning your home in advance gives you years of planning in terms of financial allocation.

Your portfolio

Finances willing, if you can carry two mortgages at once after you buy your retirement home, you have the opportunity to rent out the house those 8-10 years before you actually want to move in. Essentially allowing tenants to cover the cost of the mortgage while you’re waiting to retire. Or you could allow yourself to retire early by utilizing the additional income from your potential tenants.

Additionally, you should look into the potential tax benefits of making it a rental property. There are a number of benefits to renting out your additional property after you buy your retirement home, before you actually decide to move in.

If you have any more questions regarding how to buy your retirement home, don’t hesitate to ask! Your retirement should be treated with careful planning. Living in comfort financially should be a very manageable task for you to accomplish.