Tackling Debt and the Mortgage Process

Football season, fall and “back to school” days are here!

With this being a busy time of year for many, you may be wondering how you’re going to “do it all”. Especially when it comes to paying down debt and saving for a home and other financial goals simultaneously.

When it comes to home buying, people often wonder if they should pay down their debt first or save up for a down payment.  The following information should give you a better idea of how to answer the complicated question of tackling debt and the mortgage process.

Average Down Payment

First, it is wise to understand how much money is needed for a down payment. Most mortgages will ask the borrower to pay between 3.25% and 10% up front as a down payment. For a home priced at $250,000 this would translate to a down payment between $8,125 and $25,000.  The differences in the down payment requirement will depend on the type of mortgage loan as well as the borrower’s credit history.

For most people, it will take at least a year, if not more, to save up for this much of a down payment.  But that is not the full answer. With options available like low or no down payment programs, gift funds, and more, you may need less than you think to purchase your dream home. Contact your local Inlanta loan expert today to find out how close you are to obtaining homeownership.

Paying Down Debt Will Improve Ability to Borrow

When people apply for a mortgage loan, the lender will examine the borrower’s credit history as well as their debt ratios. The debt ratio compares the borrower’s current income and current obligations, such as credit cards, car payments, student loan fees, and any other debt.  The lender will also compare the borrower’s income to their current debt as well as adding in the amount for the proposed home payment.  If the ratio is too high, the lender will likely decline the borrower for the mortgage.

Therefore, many lenders recommend paying down some of the debt for borrowers that are contemplating a home purchase.  The less debt they have, the easier it will be to get approved for a home loan.

In fact, the best advice regarding debt reduction is to focus first on credit card debt.  By making the payments on time and getting the balances as low as possible, the borrower should see a noticeable improvement in their credit score.

Save While Paying Down Debt

Many mortgage experts recommend that potential homebuyers use a double strategy; pay down debt while saving for a down payment.  Instead of using all of their extra income to do one or the other, it would be easier and psychologically beneficial to chip away at the debt while also building up a down payment.

For example, if a young married couple had a total of $11,000 in credit card debt and no savings, along with an extra $400 per month coming from an extra job, it would be real enticing to spend all the $400 towards the credit card bills.  That would take approximately 27 months to pay off the balance.  However, at the end of those 2+ years, the young couple would have nothing saved for a down payment.

Conversely, if that $400 was split between the credit card balances and savings, the couple would have $5,400 plus interest in savings at the end of 27 months as well as having almost half of the credit card paid off.

There is no perfect answer to the question about paying off debt or saving for a down payment, but attacking both at the same time will likely help people reach their goal of home buying much faster.

Mortgage 101 – A Beginner’s Guide to Mortgages

So, you want to buy a house but don’t know where to begin? Maybe you’ve heard of a mortgage loan before, but have no idea what it entails or how to get one. If this sounds like you, you’re not alone. Almost everyone who buys a home for the first time has many questions and is clueless about the process.

To assist in your search, here’s a crash course in the basics of mortgage that answers the most common questions to help you feel more confident about the process and what it involves:

Q: What is a mortgage loan?

A: A mortgage is a loan used to finance the purchase of your home. It’s essentially a contract in which a borrower’s property is pledged as security for a loan that is repaid on an installment basis. There are many different types of mortgage loans available, so it’s important to talk to a mortgage advisor who can help you find the right loan program for your specific financial situation.

Q: How do mortgage rates work?

A: Mortgage rates are important and complex. Your rate, along with many other factors, determines your monthly payment cost. Things like inflation, government bonds and state of the economy also contribute to the rise and fall of mortgage rates.

Q: How do I qualify for a mortgage?

A: First, you will need to apply with a lender who will gather all necessary information about your income & debts to determine how much you can afford for a home and what you qualify for.

Q: What is the first step in the process?

A: The first step in the purchase process involves working with a loan advisor to apply and be pre-approved. This means that your loan advisor will need to collect documentation like bank statements and W2s to verify your income and determine your ability to repay the loan. It’s important to keep in mind that there are no rules carved in stone for this process, and that each applicant is handled on a case-by-case basis. This means that even if you come up a little short in one area, your stronger point could make up for the weak one, so don’t hesitate to apply.

Q: Why do I need to get preapproved?

A: Getting a pre-approval from a trusted lender is a powerful tool for homebuyers for many reasons, and is recommended before you even begin home shopping. This way you know your budget and gain peace of mind in the process. Plus, you can get ahead of your competition and increase your buying power to expedite your closing. Click this link to apply to get your free pre-approval with Inlanta today.

Q: What credit score do I need?

A: Minimum credit score needed depends on the type of loan you qualify for. Certain loan programs accept FICO scores as low as 581. Contact your loan advisor directly for more on credit requirements and what goes into determining creditworthiness.

Q: How long does the mortgage process take?

A: The national average for the mortgage process falls around 40 days, however, certain factors can make the process move faster than average and help you close sooner on your home.

Q: How much do I need for a down payment?

A: You may have heard the myth that you need 20% down to purchase a home. In reality, the down payment amount needed to buy a home will depend on multiple factors such as loan program type, credit score, home price/loan amount and more. Certain loan programs, such as VA loans, offer the benefit of low or no down payment options, and others like FHA loans offer as low as a 3.5% down payment.

Understanding the loan process and knowing the mortgage basics will increase your confidence, making the process less complicated overall to purchase a home. For more on home buying basics, contact your local Inlanta Mortgage loan expert today!

Top Tips to Remember When Moving to a New Home

Moving to a new home (at least, new to you) is usually an exciting time. Learning the layout of the home, enjoying the neighborhood and getting accustomed to a major change brings about a lot of emotions. Here are some handy tips and mistakes to avoid when you are ready for your next move.

Don’t Hang on to Stuff

Most of us acquire stuff throughout our lives and feel that we need to hold on to all of it. However, most people have items stashed in cupboards and closets that we don’t really need. Instead of packing it away and finding a hiding place for it at the next home, sell it online through sites like Craigslist or eBay, or donate it to a local non-profit.

Make Sure to Notify the Right People in Advance

Moving to a new place can seem like a nightmare if there is no electricity or running water. That is why it is a good idea to contact all the local utilities well in advance of the move and get on their schedule.  Each local agency, such as the internet provider, electrical utility and the water & trash agencies will have their own individual rules and schedules, so you will need to contact them all.

Also, get in touch with the post office and fill out a change of address card. This will help get mail diverted to your new location. Also, let all your creditors know of your new address.

Pack for Emergency

Regardless of how much planning you do, mistakes happen.  The water may be set to get turned on the day AFTER you move in, or the electricity may get turned on only to discover there is an issue with the fuse box.  Pack a small bag with an extra change of clothes and snacks.  If you are forced to spend the night with relatives, or at a hotel, you will have a bag packed and ready to go without the need for opening multiple boxes to search for a suitable outfit.

Change the Locks

If you are handy with tools, changing the locks on the exterior doors is always a good idea.  Since you don’t know who has had access to the home, you really have no clue how many extra keys are floating around to your particular place.  Setting up new locks will give you a little peace of mind and control over who has access to the place.

By following this advice and getting the movers lined up in advance of the big day, you should reduce the stress that comes from moving to a different home.

Looking for an Investment Property? Consider Shopping in your College Town

With the days of summer soon ending, it means “back to school” for millions across the country.

For college students, this means packing up to move into campus housing, which is often expensive and not necessarily homey. It also means investing dollars into housing that’s not tax-deductible, nor does it generate any equity.

For parents with college-bound students, or even investors looking for their next property, this presents a big opportunity to purchase rental property off-campus.

Buying a property near their school could a great investment when you consider:

  • If you have a student of your own, the cost of owning a rental could be cheaper than paying for a dorm or an apartment – especially if they share it with roommates who will pay you rent that you can put towards the mortgage
  • If you co-sign on a loan for your student on a rental property, you can help them build solid credit at an early age
  • By choosing a property located near a college or university, you’ll have a strong pool of renters who are looking for housing in that area even after your own student moves out
  • You could benefit financially with future value appreciation and accrued equity


For parents and investors alike, this opportunity presents the chance to diversify their portfolio as well as offers a large potential tenant pool in an area that is consistently in high demand.

If you’re interested in learning more about this opportunity, contact your local Inlanta Mortgage loan advisor today.

On behalf of Inlanta Mortgage, we want to wish all students a bright and successful school year ahead!

Mortgage Rates Remain Extremely Low

As of this August, all major mortgage rates have remained extremely low, thanks to recent economic indicators. The major trends in stock market indexes, oil prices, gold prices and Treasury’s indicate that rates will remain low for at least the near future.

General Rates

The 30 year fixed rate offered by conventional lenders is still at all time lows.  Recent economic news has indicated that rates will not be increasing in the short term.  This is great news for potential homebuyers and homeowners that wish to refinance their loans!

What is keeping Rates so Low?

Four major economic indicators are battling one another to keep the mortgage rates at historical lows.

First and foremost, the average price of oil per barrel has recently increased from $56 to $57 based on the watchful eyes of OilPrice.com. This slight increase reflects overall higher cost for energy, which tends to move prices up in general. Anytime that prices move up, mortgage rates could slightly increase with them.

On the flip side, the price of gold jumped up to $1,429 per ounce from the previous $1,420. Anytime there is a serious upward change in the price of gold, this shows that major investors have developed doubt in the overall economy. Doubt about the economy tends to push mortgage rates down. The latest prices in gold per ounce can be found at https://goldprice.org/

The 10-year Treasury yield, which is the single most indicative indicator of mortgage rates, has moved very slightly from 2.05% to 2.06%. When this yield starts to increase, it usually means that mortgage rates will also soon rise with it.

Global Trade Continues to Have Negative Outlooks

Along with the previous economic indicators, the overall global trade market has continued to keep pressure on lower mortgage rates. While the US and China work out their spat and come to an agreement about tariffs and other issues, many markets are holding their breath to see how the trade talks will affect prices of goods coming from China. This keeps mortgage rates low as some experts fear major price increases for imported goods may soon appear.

There are also talks that trade with Europe may be troublesome in the near future. Tariffs on goods produced in Europe have been threatened in a counter measure to a new rule from France that is imposing taxes on American based organizations within France. More tariffs mean higher prices which is applying pressure to keep mortgage rates at current levels.

Recommendations for Mortgage Rate Locks

Major markets shift up and down throughout the months and years. While it is impossible to predict exact details, broad generalizations can be made which allow people to make educated decisions on mortgage rates.

If you are buying or refinancing a home, and the expected close date is within the next 30 calendar days, then you should definitely talk to your mortgage lender and lock the rate now.  Rates are extremely low and while most of the market indicators show that rates should remain at this level for the next few weeks, you don’t want to gamble on some unforeseen event pushing rates up unexpectedly. Contact your local Inlanta Mortgage loan advisor today about rate locking, refinancing, or purchasing your home!