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!

Increase in Maximum Conforming Loan Limits

HomeInspection

Increase in Maximum Conforming Loan Limits

The Federal Housing Finance Agency (FHFA) recently raised the conforming loan limit from $417,000 to $424,100, marking the first increase since the year 2006. In certain high-cost counties, the loan limit will increase from $625,500 to $636,150.

“The Housing and Economic Recovery Act of 2008 (HERA) established the baseline loan limit of $417,000 and requires this limit to be adjusted each year to reflect the changes in the national average home price,” read a statement from FHFA. These changes and rising home prices indicate that the housing market has returned to pre-recession growth.

Best of all, these changes could help borrowers afford homes in more expensive areas or get more home for their money. Increasing the loan limit means that more homebuyers have the option of choosing a conventional loan over a jumbo loan which could result in more favorable loan terms.

These changes will only affect loans that close on or after January 1, 2017. However, since Inlanta Mortgage is a direct lender with Fannie Mae and Freddie Mac, we can start taking your loan applications or lock in your rate today! Contact your local Inlanta Mortgage representative for more details.

Edited: Original post was modified with updated and expanded information on 12/5/2016.

Rural Development Loans – USDA

USDA Rural Development Loans

What’s So Great About USDA Loans?

Answer: 100% financing.

The USDA rural development loan program is a program designed to make rural housing more affordable. USDA loan program eligibility depends upon applicant income and the purchase property location. With USDA rural development loans, you can finance 100% of the home value with no down payment.

USDA Program Changing Next March

On October 1, 2012, the USDA was expected to revise its definition of “rural”. This revision would have made USDA rural development funding more restrictive. Eligibility would have been limited to communities with a population less than 20,000 not located within a MSA (metropolitan statistical area). Half the rural population in America lives within a MSA and would be ineligible for the USDA rural development loan program if this change had been implemented.  These changes are now delayed until March 27, 2013.

Communities in Wisconsin that could be affected if the change is implemented next March include: Burlington, Hartford, Muskego, Port Washington, Portage, River Falls, Stoughton, Sussex, Vernon, and Waunakee. A very large number of Florida communities could be affected as well. For a complete list of communities that may potentially be affected by tighter rural development eligibility restrictions click here.

How do I check if my home is USDA / Rural Housing-eligible?

With the USDA Rural Housing Program, your home must be located in a rural area. However, the USDA’s definition of “rural” is quite liberal. Many small towns meet the USDA requirements, as do suburbs and exurbs of most major U.S. cities. Click here to check your home’s USDA loan eligibility.

What is the USDA program’s minimum downpayment?

The USDA has no down payment requirement. You can finance 100% with a USDA loan.

Is the USDA loan program limited to first-time buyers?

No, the USDA Rural Housing Program can be used by first-time buyers and repeat buyers.

What mortgage products are available with a USDA mortgage?

The USDA / Rural Housing Program offers 30-year fixed rate mortgages only. There is no 15-year fixed rate mortgage and no adjustable-rate mortgages.

Need more information on the USDA rural development loan program? Consult a licensed mortgage loan professional near you.

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 was named a 2012 Top Workplace in Southeastern Wisconsin.

Buying a Home

Buy a Home

 

Buying a home is a big deal. Where do you start?

How Much Can You Afford?

Look at your budget and determine how a house fits into it. Fannie Mae recommends that buyers spend no more than 28% of their income on housing costs. Go much past 30% and you risk becoming house poor. Visit our blog post How Much House Can You Afford? This post will help you understand how Inlanta Mortgage computes the amount you are pre-approved to purchase. Click here to learn more about the importance of getting pre-approved.

What Type of Loan Programs are Available?

There are a number of loan programs available – including no or low down payment options. An Inlanta Mortgage professional can help you decide which of the following programs is the best home financing option for you.

Conventional Mortgage Loans – Traditional program that usually requires 5% down and offers competitive interest rates.

Jumbo Mortgage Loans – A jumbo mortgage is a loan amount above conventional conforming loan limits. Consult an Inlanta Mortgage Loan Specialist to discuss if a jumbo mortgage is suited for you.

FHA Mortgages – FHA mortgages enable the borrower to put as low as 3.5% down and are available to borrowers with less than perfect credit.

USDA Mortgages – USDA mortgage loans are designed to help lower income individuals or households purchase homes in rural areas.

VA Mortgages – VA mortgage loans are federally guaranteed mortgage loans for veterans that don’t require a down payment.

Avoid First Time Home Buyer Mistakes

Review our blog posts on common first time home buyer mistakes:

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.

 

To Pay Off or Not To Pay Off


Guest blog written by Sam Parker, Vice President of Heartland Credit Restoration (formerly CreditAbility). For more information or further questions email Sam at sam@hcrepair.com or visit www.heartlandcreditrestoration.com.

Many people are under the impression that paying off a collection, charge off, or profit and loss will increase their credit scores. Unfortunately, not only will your scores NOT increase but they will actually GO DOWN! It seems a little backward right? You pay a debt and you get dinged for it.

Here’s why! Once a debt goes to collection, the balance is no longer a factor. This means that technically a $5 collection will hurt you just as much as a $5000 collection. The only real factors that matter to your credit scores once a debt has been placed for collection are the DATE OF LAST ACTIVITY and the M.O.P RATING attached to the item. (I’ll explain MOP ratings in the next discussion) .

For the sake of this discussion lets pretend that you have a collection which was last active in October of 2005, this item would have a “9” rating attached, which is negative.

As time passes between present day and the date of last activity this negative item hurts your credit less and less. When you pay this negative item it updates the date of last activity to the current month and year HOWEVER the 9 rating attached to this item remains the same. What does this mean for you and your credit score? It goes down because to the scoring algorithms it appears that a new 9 rated (negative) account just hit your credit.

Some might say it’s best to NOT pay collection then. Unfortunately if left unpaid for too long, most collections will go to a Judgment status, meaning that this debt is confirmed by a court and must be paid.

So what can you do to avoid a mess like this? Get it in writing! If you’re going to pay a collection first get something in writing from the creditor stating that once your debt has been paid, they will either remove this negative item from the credit or update the item to an “unrated status”.

I hope this helps! Feel free to ask questions!

As you’re looking through the credit report what you want to pay attention to is the “rating column.” As most of you know there is a rating system which goes 0-9. It will usually looking something like R9, I9, I1, I9, etc…. The letters before the number are referring to the type of account….R meaning Revolving, I meaning Installment, etc. The number following the letter refers to its status. Below I have listed what each number means.

R0 – Too new to rate. Approved but not used.
R1 – Pays within 30 days of billing or as agreed.
R3 – Pays in more than 30 days, but less than 60 or when next payment is due.
R4 – Pays in more than 60 days, but less than 90 or when two payments are due.
R5 – Account is at least 120 days past due but is not yet rated R9.
R6 – No rating exists.
R7 – Paid through a consolidation order, consumer proposal or credit counseling debt management program.
R8 – Repossession
R9 – Bad debt, or placed for collection or bankruptcy

If you would like to discuss home financing options and your credit status with a licensed mortgage loan officer, click here to find a Inlanta Mortgage branch near you.

 

 

Are You Ready to Buy a Home?

Interest rates have hit historical lows and homes are more affordable than ever before…so are you ready to buy a home? If you have a steady source of income and have been working on a regular basis for the last few years – now may be time. Other questions to ask yourself:

  • Do you generally pay your bills on time?
  • Do you have a limited amount of long term debts (like a car payment)?
  • Do you have money saved for a down payment?
  • Can you afford a mortgage payment every month plus additional costs for taxes and insurance?

If you said yes to most of these questions, you are probably ready. If you said no, you may want to consult with a licensed mortgage professional and see how to better prepare yourself for the home buying process. Inlanta Mortgage is also happy to work with borrowers with less than perfect credit. Contact a licensed mortgage loan officer today for a free mortgage loan consultation.

So You Are Ready – From Renting to Owning

When you purchase a home you are building equity – an investment. Although real estate moves in cycles – over the years real estate has consistently appreciated in value. Homeownership also comes with tax breaks. The mortgage interest you pay is deductible on your tax return.

Owning a home also provides protection from rent increases, the freedom to decorate or remodel (no need to ask the landlord’s permission), and security of knowing you will be in your house long term.

Buy a home and paint the walls any color you want  – because they are your walls!

Find a licensed mortgage loan officer near you with our Inlanta Mortgage Branch Locator.

Rates Keep Dropping…but for How Long?

According to Freddie Mac, rates on 30-year fixed-rate mortgages averaged 4.15 percent with an average 0.7 point for the week ending Aug. 18, down from 4.32 percent last week and a 2011 high of 5.05 percent in February.

These are new historical lows for 30-year fixed rate loans not seen since the week of November 11,  2010 when 30-year fixed-rate mortgages hit 4.17 percent. Rates on 15-year fixed rate loans haven’t been this low since 1991.

All these rate drops and the Mortgage Banker’s Association says that the demand for mortgages are down 13.5% from a year ago. Refinancing applications accounted for nearly 8 of 10 loan requests and up 8% from last week.  Some lenders are having a hard time keeping up with the refinancing boom – but not Inlanta Mortgage. Consult a licensed mortgage loan professional to discuss if refinancing is an the right option for you.

Mortgage Rates Fall – Refinancing on the Rise, Homes More Affordable

Many homeowners are taking advantage of record low mortgage rates. According to the Mortgage Bankers Association, refinance application volume has increased by 63% over the past month – up 21.7% from last week. If you own a home, have a good job, and can qualify for a mortgage – refinancing has the potential to reduce the amount you pay in interest over the life of your loan, reduce you monthly mortgage payments, and whittle down your principal mortgage balance faster. Obviously not every homeowner is in the same boat – so our licensed professional mortgage loan officers are ready to help you determine if you are in a good position to refinance.

S & P’s downgrade of the U.S.’s credit rating, the subsequent drop in stock market values, and European debt concerns have contributed to record low mortgage rates. Freddie Mac’s weekly survey of conforming interest rates lists 30-year fixed-rate mortgage rates at 4.32% for the week ending August 11th (today).  According to the National Association of Realtors affordability index – homes have never been more affordable than any other time since the group began keeping track.

Refinance? New Purchase? For more information, contact an Inlanta Mortgage Loan Officer here or locate a branch near you here.

Mortgage Rates are Historically Low!

Fifteen-year fixed rate mortgages and five-year adjustable rate mortgages hit record lows this week due to speculation that the U.S. economy is weaker than previously thought.

According to Freddie Mac, mortgage rates are averaging 3.54 percent compared to 3.66 percent last week and 3.95 percent one year ago. Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 3.18 percent, down from 3.25 percent last week and 3.63 percent a year ago. Rates on 30-year fixed-rate mortgages also fell, averaging 4.39 percent, their lowest level for 2011.

Many people aren’t taking advantage of low rates because they fear they will not qualify as a result of stricter financing requirements. Other people feel that prices have yet to bottom out. If you are considering a mortgage, it may be best to consult a professional mortgage loan officer to see what the scoop really is. Every person’s situation is unique and there are many mortgage loan products. A professional can help you discover what options are best suited to your needs.

Consult a qualified mortgage loan officer for more details on mortgage loans and rates. Rates are subject to change at any time.  To speak with an Inlanta Mortgage Loan Officer contact us here.