Preparing Financially for the Mortgage Process

Purchasing a home is exciting and adventurous. Home buyers, particularly first-time home buyers, typically don’t know a lot about the process of financing a home. To avoid making mistakes, you need to know what you should expect. It is important to consider the state of your credit, the additional costs besides just the down payment, and the important questions dealing with the future.

 

The Credit Aspect

Your credit score is one of the first things a lender will look at when you apply for a mortgage. To cut through all that confusion, here are five tips you can act on right now:

  • Check your credit reports for free once a year through the three credit bureaus: Equifax, Experian, and TransUnion. Why all three? Because the information in each of the three bureaus’ reports can differ. If one or all of the reports include mistakes, your credit score may be negatively affected, and you may need to address the errors before going house shopping.
  • Be strategic with credit card use. The percentage of your credit limit that you use every month can affect your score. Make sure your balance doesn’t come too close to your limit.
  • The simplest and most important tip? Pay off your balance each month. To maintain a healthy score, pay off the balance before the due date. Anything after 30 days past the due date can spell very bad news for your score.
  • Be consistent. Good credit behavior over the long term will keep your score high.
  • Don’t take on more credit. If you apply for several different credit cards, you’re sending a message that you may have maxed out your other accounts

 

Save enough for the down payment and other additional fees

You should plan to make a down payment of 3.5% – 5% at the very least when you are determining affordability. It is important to consider that down payments are not the only costs associated with the purchase of a home. Your lender should be able to provide you with a breakdown of your costs that you will be paying upfront and on a monthly basis. Here are some basic tips to help you save for the costs associated with buying a home:

  • Start a budget: Making a budget allows you to see your expenses, how much money is coming in, and what is left over to save or pay off debts. When you have a savings goal it, helps prioritize your money by eliminating or cutting down on unnecessary expenses.
  • Automate: Once you have created a budget and figured out how much you can comfortably save each month or paycheck, set up a specific amount or percentage of your paycheck to go to savings automatically. For some, it helps to open up an entirely separate savings account for their home’s down payment and expenses. This method allows you to see how much you are saving specifically for the home buying process and keeps you from accidentally spending this money on something other than your new home.
  • Increase your income: If you are worried about cutting back expenses, or just want to save for your down payment faster, consider finding ways to increase your income. Some ideas include working overtime, getting a second job, or finding alternative ways to making money such as selling items online.
  • Save any unexpected money: When you get a large sum of money, such as a bonus or your tax refund, itis all too easy to take on the extra cash and purchase that one expensive thing you’ve had your eye on for months. Instead of going on a shopping spree, take that money and put it into your savings right away to help you achieve your dream of homeownership sooner.

 

Affordability now and in the future

Regardless of the level of income you have today, you need to figure out what the future may hold before you sign on the dotted line. For example, if you’re planning to have kids sometime down the road, how will these happy additions impact your family income? What effect will job changes have on your current income level? And have you planned for monthly payments into your rainy day savings account?

Everyone who looks to buy a home will have a payment amount that is affordable today, but in the face of your answers to the questions above, will that number still work for you down the road? These are some questions to consider as you think about homeownership.

 

Feel free to talk with a loan officer in your area to determine if homeownership is the right path for you!

Mortgage Myths

Mortgage Myths

There is a lot of misinformation floating around regarding mortgages. By debunking the following mortgage myths we hope to help new home buyers better understand and approach the home buying process.

Mortgage Myths Debunked

1. Minimum Down Payment is 5% – There are a number loan programs available that allow home buyers to put down less than 5%. Contact a licensed mortgage loan officer to discuss low down payment options (including FHA) and no down payment options (USDA and VA).

2. Bankruptcies Not Allowed – Each loan program has specific requirements regarding the length of time that must have passed since the completion of your bankruptcy. Contact a licensed mortgage loan officer to determine which loan program is best for your unique financial situation.

3. Pre-Approvals Guarantee a Complete Loan Approval – While a pre-approval indicates you are qualified for a mortgage, a number of things can derail your financing before your actual closing date. During the formal loan process, underwriters thoroughly check your income, assets, and debt. If you run up credit card balances or lose your job before closing – your financing can fall through. Be careful with your finances during the loan process to ensure a smooth closing.

Addtional Resources for New Home Buyers

Are you a new home buyer in need of additional information? Check out first time home buying resources and additional information on mortgage myths below:

Inlanta Mortgage is proudly celebrating twenty years in business. Learn more about Inlanta’s twenty year history here.

Inlanta Mortgage offers Fannie Mae/Freddie Mac agency products, as well as a full suite of jumbo and portfolio programs. The company is fully delegated HUD-FHA including FHA 203K, VA, and USDA approved. Inlanta Mortgage also offers numerous state bond agency programs. Review Inlanta’s mortgage loan programs here.

Inlanta Mortgage is a multi-state mortgage banker based out of Brookfield, Wisconsin. NMLS# 1016. Inlanta Mortgage is proud to be a recent recipient of a 2012 Top Workplace Award.

Rent or Buy? You May Want to Decide Soon

Rent or Buy

If you are considering a home purchase and don’t have a ton of money for a down payment, now may be the best time to apply. Why now?

Changes to Mortgage Insurance

When buyers, especially first time home buyers, don’t have a lot for a down payment they often opt for an FHA loan. FHA loans are government backed loans that require borrowers to pay mortgage insurance. Mortgage insurance on FHA loans typically drops off once you have enough equity in your home and have a established a good payment history. So what’s the big change? On June 1, 2013 – mortgage insurance will no longer drop off. As of that date, mortgage insurance will be required for the life of the loan.

What does that mean to you? More money out of your pocket.

House Prices on the Rise

Home affordability continues to remain high – but home prices have begun their inevitable rise with high demand and scarce home inventory levels. Home prices rose 9.7 percent in January from a year ago, according to data released today by CoreLogic. This is the biggest annual gain since April 2006.

Why should you care? The obvious answer is that you will pay more for a home. Another reason to care is that once that home is yours – you will appreciate the increasing value of your property in the form of long term wealth accumulation.

Rent or Buy –  Which is Better?

Ultimately, the decision to rent or buy is based upon a number of factors. Maybe you’re ready to be a home owner, maybe your not. However, it never hurts to understand your options. Consult a licensed mortgage loan officer today to discuss your specific home financing needs. Consultations and mortgage loan pre-approvals are free.

Inlanta Mortgage is proudly celebrating twenty years in business. Learn more about Inlanta’s twenty year history here.

Inlanta Mortgage offers Fannie Mae/Freddie Mac agency products, as well as a full suite of jumbo and portfolio programs. The company is fully delegated HUD-FHA including FHA 203K, VA, and USDA approved. Inlanta Mortgage also offers numerous state bond agency programs. Review Inlanta’s mortgage loan programs here.

Inlanta Mortgage is a multi-state mortgage banker based out of Brookfield, Wisconsin. NMLS# 1016. Inlanta Mortgage is proud to be a recent recipient of a 2012 Top Workplace Award.

What is PMI?

 

What is PMI?

What is PMI?

If you are embarking on a new home buying adventure – you will soon encounter the term “PMI.” So, what is PMI?

PMI stands for private mortgage insurance. PMI is required of buyers who put down less than 20 percent on their home loan – which is usually the case for most home buyers.

What is the point of PMI? While home owners’ insurance protects your investment, private mortgage insurance protects lenders’ investments and encourages and enables lenders to help more first time home buyers. Essentially, if PMI didn’t exist, lenders would require a higher down payment to mitigate the inherent risk in lending to first time home buyers. Many of us, especially first time home buyers, are not in a position to put down a 20% down payment.

PMI is available in a variety of premium plan structures and offers payment options that can usually be tailored to the borrower’s needs. There are a number of private mortgage insurance providers and each structure their offerings a bit differently. PMI can be canceled after a stated LTV achieved and favorable payment history has been established.

As a quick note, don’t confuse monthly insurance premiums (MIP) for PMI. MIP is the government-administered mortgage insurance program for the FHA that has certain restrictions and has undergone a number of changes recently. Read more about MIP, FHA Mortgages & FHA Streamline Refinancing.

Are you a first time home buyer with more questions about the home buying process and what loan programs are available to meet your home financing needs? Contact a licensed mortgage loan professional near for more information.

Inlanta Mortgage offers Fannie Mae/Freddie Mac agency products, as well as a full suite of jumbo and portfolio programs. The company is fully delegated HUD-FHA including FHA 203K, VA, and USDA approved. Inlanta Mortgage also offers numerous state bond agency programs. Review Inlanta’s mortgage loan programs here.

Inlanta Mortgage is a multi-state mortgage banker based out of Brookfield, Wisconsin. NMLS# 1016. Inlanta Mortgage is proud to be a recent recipient of a 2012 Top Workplace Award.

Inlanta Mortgage Donates $1,000 to HRI

Inlanta Mortgage donates $1,000 to Housing Resources, Inc.

Pictured from left to right: CFO John Watry, HRI Director Trena Bond, Brookfield Manager Adam Deputy, EVP Nicholas DelTorto, President John Knowlton, COO Jean Badciong, and HRI Board Member Tammy Maddente.

Housing Resources, Incorporated (HRI) is a nonprofit organization dedicated to helping individuals and families purchase their own homes. Inlanta Mortgage is an organization dedicated to helping people realize the dream of home ownership.

On Tuesday, June 19, members of both organizations met to discuss the struggles many new home buyers are facing in South East Wisconsin with today’s economy and tighter lending environment. Executive Vice President Nicholas J. DelTorto welcomed HRI Executive Director Trena Bond and HRI Board Member Tammy Maddente (also of First Weber Group) to Inlanta’s Brookfield, Wis. headquarters for a working lunch to discuss how Inlanta can support the efforts of HRI as it helps potential homeowners with the challenges they face. lnlanta Mortgage affirmed its support of HRI’s initiatives with a $1,000 donation. Additionally the company will be available to participate in many of the first time homebuyer seminars sponsored by HRI in greater Milwaukee, Racine, and Waukesha.

“The challenges facing many first time homebuyers are tougher than ever since the mortgage market meltdown,” DelTorto said. “The underwriting guidelines and documentation requirements have become very strict with little to no flexibility, so it is more important than ever to have strong technical knowledge of the loan programs to serve the first time homebuyer. The loan officers at Inlanta are the best and most knowledgeable in the industry because mortgages are all they do every day.”

Inlanta and Bond look forward to further developing a relationship and finding new ways to help area residents realize the dream of home ownership. Inlanta Mortgage – Brookfield Manager, Adam Deputy was on hand to pledge his support and offer the assistance of his experienced team of mortgage loan professionals.

Bond and her team at HRI currently offer a number of services for homebuyers and homeowners including: post-purchase education and counseling, reverse mortgage counseling, a tool loan program, and down payment and closing cost grant assistance. HRI operates offices in Milwaukee, Waukesha, and Racine and be found online at www.hri-wi.org.