18 Apr 2023
By Kevin Gahagan

The Top Homeownership Expenses You Need To Know

Mortgage

The Top Homeownership Expenses You Need To KnowOwning a home can be an exciting and rewarding experience, but it’s important to be aware of the expenses that come with homeownership. Understanding these costs can help you prepare for and manage them effectively, ensuring a smoother transition into your new home.

The Mortgage Payment

The mortgage payment is typically the largest expense that homeowners face. This monthly payment consists of the principal and interest on your home loan. The principal is the amount you borrowed to purchase the home, while the interest is the cost of borrowing the money. The length of your loan term and the interest rate will determine the size of your monthly mortgage payment. Keep in mind that paying down your principal faster can reduce the total interest paid over the life of the loan.

Your Property Taxes

Property taxes are another significant expense for homeowners. These taxes are levied by local governments and are typically based on the assessed value of your property. Property tax rates can vary widely depending on the location of your home and the quality of public services in the area. Be sure to factor in property taxes when determining the affordability of a home, as they can make a substantial difference in your overall housing costs.

Homeowners Insurance

Homeowners insurance is an essential expense that protects your investment in your home. This type of insurance covers damage to your property and belongings, as well as liability in the event someone is injured on your property. The cost of homeowners insurance can vary depending on factors such as the value of your home, the amount of coverage you choose, and the location of your property. 

HOA Dues

If you live in a community governed by a homeowners association (HOA), you may be required to pay monthly or annual dues. These fees cover the maintenance of common areas, amenities, and services provided by the HOA. It’s important to understand the costs associated with HOA dues and what services they cover, as they can add to your overall housing expenses. Be sure to review the HOA’s rules and regulations before purchasing a home in such a community, as they can impact your ability to make certain modifications to your property or how you use the common areas.

Budget For These Expenses Accordingly

Understanding and preparing for the top expenses of homeownership is crucial for a smooth and successful experience. By considering the mortgage payment, property taxes, homeowners insurance, and HOA dues, you can better anticipate the costs associated with owning a home and make informed decisions about your budget and financial planning.

 

14 Apr 2023
By Kevin Gahagan

Buying A House With No Money Down

Mortgage

Buying a Home with no money down.If you dream of owning a house one day, you have probably realized that one of the biggest challenges is saving money for a down payment. You have already found your dream property, but then the lender asks you to put 20 percent down, which can be tens of thousands of dollars. Fortunately, there are alternative options available, and you may be able to purchase a home for no money down.

VA Loans

One option for qualifying borrowers is a VA loan. As the name suggests, this is a loan that is backed by the Department of Veterans Affairs, and eligible veterans may be able to qualify for a home loan with no money down. You still need to have a credit score that is high enough, and you must have a solid debt-to-income ratio. You will also need to reach out to a lender that has experience with VA loans to see if you qualify.

USDA Loans

Another option that could allow you to purchase a home for no money down is a USDA loan. This is a specific loan program that is available for borrowers located in rural areas who are going to use the property for a specific purpose. Borrowers need to have a credit score of at least 620, meet certain qualifications for debt-to-income ratios, and not learn more than 115 percent of the median income in the area.

FHA Loans

While you may not be able to purchase a home for no money down through an FHA loan, this can make your home loan much more affordable, and you don’t necessarily have to be a veteran or located in a rural area. An FHA loan could allow you to purchase a home for 3.5 percent down as long as you are a first-time home buyer. You may still have to purchase private mortgage insurance (PMI) until you build up a certain amount of equity in your home, but it could make it easier for you to purchase a house for the first time.

Consider exploring some of these options if you are interested in buying a house. 

 

07 Apr 2023
By Kevin Gahagan

A Home Equity Loan Versus A HELOC

Mortgage

A Home Equity Loan VS HELOCIf you are looking for a quick source of cash, you may have been told that you can tap into the equity in your home. If you have at least 20 percent equity in your home, you can borrow against that equity at a relatively low interest rate for a quick source of funding. You might be deciding whether to apply for a home equity loan or a home equity line of credit, which is usually shortened to HELOC. 

Home Equity Loan

A home equity loan is a loan that you will receive based on the equity you have in your home. It is often termed a second mortgage, and it comes with a fixed interest rate. This could make it more predictable when compared to a HELOC, which has a variable interest rate. A home equity loan will also provide you with a lump sum, so it could be a great option if you know exactly how much money you need to borrow when you apply for the loan. In general, you should be able to borrow up to 80 or 90 percent of the equity in your home. 

HELOC

A home equity line of credit is a type of credit that allows you to borrow against the equity in your house up to a certain limit. In general, a lender should allow you to borrow up to 80 percent of the equity you have in your home, but it may vary depending on your financial situation. The lender should give you a certain amount of time within which you are allowed to withdraw money against the equity in your home. This is usually several years. Then, there will be a repayment period, within which you need to pay back the interest and the principal. This period could last 20 years. With this option, you can withdraw money, make monthly payments on it, and then withdraw more money if you need it. 

Decide Which Is Right For You

These are just two of the many options available, so consider reaching out to a professional who can help you decide which one is right for your needs. 

 

05 Apr 2023
By Kevin Gahagan

How To Successfully Use Your Down Payment to Achieve Your Home Buying Goals

Mortgage

How To Successfully Use Your Down Payment to Achieve Your Home Buying GoalsWhen you are considering purchasing a home, understanding the lending guidelines regarding a down payment is important. 

Here are a few key tips to consider:

Gifting of a Down Payment

There are some programs that will allow you to use a gift for your home down payment. However, before you assume this, make sure you talk to your loan officer. Generally speaking, the lender will require the person making the gift to provide a letter stating the money was a gift and does not require repayment.

Windfalls as a Down Payment

When people hit the lottery or come into money through an inheritance, one of the first things they may consider is buying a new home. However, it is important ot keep in mind that lenders will typically want to know exactly how you came up with your down payment.

Borrowers still need to show a “paper trail” of how they came into money. If your down payment amount has not been “seasoned” the lender may not accept your loan.

What is a Seasoned Down Payment?

Generally speaking, your loan officer will want a “paper trail” to document your down payment. Most lenders require down payment funds to be at a minimum 60 days old. For example, let’s assume a borrower did win the lottery: If they deposit the funds into their checking account and leave it there for 2 months or more, the funds would be considered seasoned.

However not all lending guidelines are the same. Some lenders require even more seasoning to consider the money in your account truly yours. So it’s a good idea to plan well ahead of your purchase date to get your down payment funds in your account if you plan on getting money from another source.

Lender restrictions on down payment funds are fairly common. If you are uncertain if your funds meet the lender’s criteria, talk to your loan officer. In most cases, a lender will require at least one-half your down payment fall into the category of seasoned funds.

The One Place You Can Borrow For Your Down Payment

Some borrowers may use their retirement account or other savings to make their home down payment.  And most lenders are perfectly fine with you borrowing against your own savings in a 401(k) or IRA account. Of course you will likely want to discuss the tax implications with your accountant or financial advisor before making these withdrawals.

Don’t wait until the last minute to discuss your down payment with your real estate agent because you may wind up disappointed. Keep in mind, your real estate professional is available to help guide you through the whole process of buying your new home.

31 Mar 2023
By Kevin Gahagan

White Lies That Could Make It Harder To Buy A Home

Mortgage

White Lies That Could Make It Harder To Buy A HomeRight now, the real estate market is very competitive, and you might be tempted to use a few white lies to make your offer seem more competitive. No matter how much you want to purchase a home, you need to make sure you are completely honest and open when you go through the process from start to finish. What or a few examples of common white lies that people tell that could jeopardize your application or your mortgage as a whole?

Lying About Your Primary Residence

If you plan on living in the house full-time, make sure you say so. You might get a lower interest rate if you tell the lender you are going to use the house as your primary residence. On the other hand, if you plan on renting out the house, you need to be honest on the application. If you lie about living in the house, it could be considered mortgage fraud, which is a crime.

Not Disclosing The Source Of Your Assets

Lenders have a legal duty to make sure money laundering is not taking place. If the source of your down payment is coming from someone else, such as a parent, there is certainly nothing wrong with that. On the other hand, you need to be honest about where the money came from. If you look like you are hiding the source of your money, it will only make the application process more complicated. 

Omitting Sources Of Debt

No matter how small you might think your debt might be, you need to disclose every single source. A few examples include student loans, car loans, and credit card debt. There is a detailed underwriting process that has to take place, and if your mortgage lender finds out that you lied on your application, they could deny your application outright, no matter how competitive you might be. 

Be Honest When You Apply For A Mortgage

Lenders have a legal duty to review each application in full. Every question has a purpose, and you need to be honest when you answer them. If you need help applying for a mortgage, you should reach out to an expert who can help you put your application in the best position possible to be successful.