Coming up with a down payment in today’s economy can be difficult.  In most cases the down payment is expected to be 20% of the purchase price, and in some markets where housing prices are high that can be nearly impossible for the average person to save.  So are there ways to get around this?  Can you buy a home even if you don’t have the down payment?  There are a few ways to get into a home in spite of lacking the required 20%. The 80/20 Loan Also known as a piggyback mortgage, an 80/20 loan is a simple way to get a home without a down payment, but it can be a bit more expensive-or a lot more.  Basically, you take out a separate loan for the 20% portion of the purchase price.  You are financing your down payment.  You then take out a larger loan for the remaining 80%.  The interest rate on the 20% loan is usually a lot higher than the larger loan, so the best bet for any homeowner is to pay it off as quickly as possible. The 20% portion of the loan is usually on a shorter term than the larger portion […]
    Read More
    If you are a first time homebuyer, navigating all the new information about homeownership, the home buying process, and mortgages can seem overwhelming. If you are beginning the mortgage shopping process, but have no clue as to what information you’ll need and whether or not you’ll even qualify, here is some information that may make the process a little smoother. Will I Qualify For A Mortgage? There are essentially three things that lenders look at to determine whether or not you qualify for a mortgage. Income Verification When purchasing a property, all income of a homebuyer must be validated by a mortgage underwriter in order to receive a loan. Income verification can be done using several types of documents such as a W-2 statement, paycheck stubs, or income tax statements that show proof of income. These documents usually will have to span a period of two years or more to show you have a history of a steady income. Income proof can include such things as child support payments, disability payments, or income from the Social Security Administration. These additional monthly payments can increase your potential to qualify for a mortgage, as well as the amount you will qualify for, […]
    Read More
    With the financial markets in crisis and the cost of homes plummeting, the subprime loan options that were responsible for this crash in the first place are becoming less common. But there are still lenders offering these risky loans, and this article will convince you to avoid what may seem like an offer too good to refuse, especially if you are having trouble finding a traditional loan. Here are three reasons why you should avoid subprime lenders! High Interest Rates The most obvious reason to avoid subprime loans is the high interest rate that comes with them. In most cases, if you fall into the subprime category you represent a higher risk than normal for the lenders, and the increased rates protect their investment. Inevitably in this category a certain number of borrowers will default on the loans, and the higher rates ensure that the lender still makes money. This means that you will be paying more for your house than it may ever be worth, and it essentially no longer becomes an asset, but rather a liability. Questionable Business Ethics Another reason to stay away from subprime lenders is their track record of questionable business practices. The bailouts of […]
    Read More
    First time buyers can qualify for some helpful loan terms that make getting a loan a bit easier as well as make purchasing a home more attainable. The term “first time buyer,” however, is a little misleading. While these loans are certainly available to those who have never before purchased a home, there are other circumstances under which you may qualify. True First Time Buyers First time buyer loans are, as the name implies, made available to those who have never before purchased a house. These loans are designed to help ease the burden of down payments and other financial difficulties. There are a range of state and federal programs to help those who have never owned a home before; not all true first time buyers will qualify for every program. Previous Homeowners Under many programs, you can be considered a first time buyer again if you have not owned a home in several years—the common rule is three years. That means that even if you did buy a home before, but sold it three or more years ago and have used alternative housing, such as renting, ever since, you are considered a first time buyer. These programs are also […]
    Read More
    Most couples who purchase a home together choose to apply for the loan jointly and take out a joint mortgage. There are some situations, however, when it may be more beneficial to apply for the home loan singly, in only one person’s name rather than both. Should you consider having only one name on the mortgage? Give some thought to these important considerations. Facing Credit Problems When one person has good credit and the other has credit that is not so good, it might be best to have the spouse with better credit apply alone. In most cases mortgage companies will use an averaging system to qualify you for an interest rate, taking both party’s credit scores into consideration. If one person has credit problems it could mean a much higher interest rate and therefore much higher payments on the loan. This can often be avoided by having only one person apply for the loan. You can always refinance later, when the other person’s credit has improved, and apply jointly at that time. Pre-Nuptial Agreements When one person is going into the marriage with a lot more in assets than the other, or when both want to protect their assets, […]
    Read More
    Many people look to refinancing as a method of reducing monthly payments, taking advantage of low interest rates, pulling equity out for repairs and remodels, or consolidating first and second mortgages. And while refinancing can be a wise move, it’s not always the right time to make that move. Here are some instances in which you should avoid refinancing. If You Plan To Move Soon When you refinance, you will have to pay closing costs on the new loan, which take away from the financial benefits. So, if you’re refinancing to lower your payment, consider how long you plan to stay in the house. If you’re planning to move in the near future, those closing costs may not be recouped before you move on. Do the math quickly—how much are the closing costs and how much will the refinance save you each month? Add up the monthly savings until you reach the closing cost amount, and you’ll know how many months you have to stay in the house to break even. If you expect to move before that time, the refinance won’t save you money. If Your Credit Needs Work If your credit score is not as good as it […]
    Read More