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Archive for the ‘Uncategorized’ Category

Conventional Loans

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A conventional loan is a type of mortgage loan that is not insured or guaranteed by the government. Instead, the loan is backed by private lenders, and its insurance is usually paid by the borrower. Conventional loans are more common than any other loan that would be backed by the government. In fact, in 2018, conventional loans were the most popular of loans used amongst Americans. Though conventional loans offer more flexibility, they can be riskier due to the fact they aren’t backed by the government.  (more…)

Weighing the Pros and Cons of Building a New Home

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building houseFor those looking to join the ranks of homeownership, the question about whether to buy an existing home or to have one built can be a big one. There are pros and cons to either option and which will be better for you depends on your situation. Finances, tastes, family needs, and several other factors will have an influence on whether it’s best for you to build a new home or buy an existing one. (more…)

Understanding How to Pay Down the Principal on Your Mortgage

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loan blocksWhen considering which kind of mortgage to you want, a 15-year mortgage has a lot of upsides. You will, after all, eliminate your house payment in half the time. The downside to a 15-year is that you’re committed to a higher monthly payment, even if your financial situation changes. 

Because of this, many borrowers decide to go with a 30-year mortgage option in order to safeguard against the future. The good news is that you don’t have to take 30 years to pay off your mortgage just because you chose the 30-year option. Paying a little extra to the principal each month can reduce the term length on your mortgage and allow you to pay off your mortgage early. (more…)

Understanding How Escrow Works

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escrow documentEscrow is an account opened with a third party during the mortgage closing process that protects the interests of the buyer, the seller, and the lender. It can be compared to placing a friendly bet and asking an impartial third friend to hold the money until the outcome is determined. The escrow officer will take possession of and manage certain documents and funds that pertain to your mortgage until the closing is over. If the sale falls through, all of the documents and funds are returned to the indicated parties. (more…)

Halloween Safety Tips

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Our kids and grandkids look forward to Halloween almost as much as Christmas. They start thinking months in advance about cool costumes and which neighbors have the best treats and scary decorations. While some of the scary parts of Halloween can be fun—costumes, decorations, spooky noises—parents are often scared about all the dangers to their kids that can be “out there.

Common Dangers or things parents worry about include: Falls, fire hazards, unsafe treats, choking, encounters with strangers, getting hit by cars or bikes, getting lost, getting cold, and not being able to sleep because of a seemingly inevitable sugar high

General Tips include following any rules your town may have about how early or late kids are allowed to be out; setting a return-home time or a place to meet if they get separated from you or a group; just to be on the safe side—remembering to take your cell phone, house keys and ID with you when you accompany your kids; and if you can’t go with your kids, arranging for them to be part of a group, for safety-in-numbers’ sake.

Tips to Counteract 10 Common Halloween Dangers or Worries:

  1. Falls: Masks can block a child’s vision, especially on the sides. Try face paint or other makeup instead, but be sure it’s hypoallergenic and doesn’t get in their eyes. Little princesses, pirates and witches can also trip over costumes that are too long.
  2. Unsafe Costumes: Besides being the right length for walking, costumes should be flame-resistant. Unfortunately, yard decorations sometimes include candles in bags or pumpkins. Only allow accessories like swords, wands or guns that are made of soft plastic and won’t hurt anyone.
  3. Unsafe Treats: Go through your children’s “loot” before you allow them to eat anything. Throw out treats that aren’t wrapped. If you have a child with allergies, especially to peanuts, be sure treats don’t contain nuts. Really gooey or hard candy can stick to or even break teeth. Especially with younger kids, be sure the candy isn’t so small or so big that it’s a choking hazard.
  4. Darkness: Dark streets and sidewalks with uneven surfaces pose a number of hazards, especially for little goblins who are in a hurry to get to the next house. Try to go out early and carry a flashlight. If kids are going out without you, make sure they only go on streets where they’ve been before. Going with a group is also a good idea. Remind them to stay on sidewalks and cross streets only at corners &/or crosswalks.
  5. Strangers: Probably well-meaning people might invite your kids to come in to show off their costumes. Make going in an absolute No-No! Tell them not to go to houses where the porch light isn’t on. Little kids should stay away from big kids who might think it’s funny to give them a scare. Tell them to run, if anyone seems scary in a bad way.
  6. Moving Vehicles: Cars or even kids on bikes might run into trick-or-treaters in dark clothing, or who suddenly dart into the street. Have them wear something that reflects light or carry a glow stick. Remind them to stay on sidewalks, listen and watch for kids on bikes, scooter or skate boards and yield to them.
  7. Getting Lost: If your neighborhood has lots of trick-or-treaters, it might be easy for the younger ones to get confused and feel lost in the crush. As in #4, if kids are going out without you, make sure they only go on streets where they’ve been before and pair a younger child with an older one.
  8. Getting Cold: Keep an eye on the forecast for the night of Halloween and dress your kids accordingly. When buying or making costumes, make sure a coat will fit over or under them. Warm underwear, heavy socks, gloves, a hat or ear muffs and hand warmers will all help to keep your child comfortable. Don’t forget to dress the same way yourself!
  9. Unsafe neighborhoods: If you don’t feel safe sending your kids out at night in your neighborhood, consider an alternative. Some neighborhoods, churches or businesses host a “Trunk-or-Treat” activity in a parking lot. The kids dress up and go from car to car to get their treats from people they know. Some malls have treats in their stores for kids in costume. Some businesses allow employees to invite their kids in during the afternoon to get a treat from employees who want to participate. And you could always host your own Halloween party.
  10. Sugar high: Teachers dread the school day after Halloween, because most of the kids are on a “sugar high” and have lots of extra energy. To keep your kids from being the culprits, have an early dinner first, and don’t let them eat anything while you’re out. When you get home, go through the candy to weed out any of the risks in #3. Then divide it up into little bags of what they are allowed to eat per day after Halloween. Include the bags in school lunches or dole them out as rewards for helping & other good behavior. They will expect you to let them eat more candy than usual on that night, so you might have to let them stay up a little later in order to calm down enough to sleep.

Have Fun!!

 

The Main Purposes of Refinancing

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Refinancing documentMortgage rates hit a historic low last year, but now we see them creeping up again. This has many homeowners thinking about refinancing before rates get any higher, and it’s not a bad idea. Refinancing is a great way to save yourself some money each month, and it has its other advantages too. Different types of refinancing can be used as tools to help you to meet your financial goals. (more…)

Mortgage Insurance

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Many first-time homebuyers have never heard about mortgage insurance, and yet, may find themselves needing it down road. The following is a small breakdown of how it works, and when you may find yourself required to carry it.

What is mortgage insurance? Mortgage insurance, also commonly referred to as private mortgage insurance, is a type of mortgage insurance that companies offer in tandem with conventional loans. Private mortgage insurance, or PMI, protects the lender if you were to abruptly stop making payments on your home.

What are the varying types of PMI? When it comes to insurance of any kind, there are variations of packages based on your specific needs. In general, when it comes to mortgage, you can either receive insurance provided by the government, designed for those with FHA loans, or, buyers follow the route of private, conventional loans, that are administered by private sector companies. In essence, your mortgage loan type will be determined by the type of home loan you receive.

Am I required to have mortgage insurance? Not necessarily, however certain lenders are more likely to require PMI depending on your extenuating financial circumstances. Typically, if your down payment is less than 20 percent of the value of the home, lenders will require you to carry PMI. Lenders prefer to finance buyers who are low risk, furthermore, a buyer who is unable to make a down payment of 20 percent will be categorized as a higher risk client. Therefore, PMI acts as a fail safe to lenders, when they choose to cover higher risk clients. At first glance, PMI’s appear to be solely beneficial for lenders, however, they give buyers the opportunity to receive financing if they are unable to conjure up a traditional down payment sum.

The duration of your mortgage insurance, will vary by case. There is no ‘one size fits all’ answer regarding how long you’ll pay for mortgage insurance. However, the industry standard usually has buyers paying mortgage insurance premiums until they have enough equity in their home to acquire a loan-to-value ratio, or LTV. To put it simply, this ratio is the amount of money you borrowed, divided by the value of the property you bought. Understandably, this ratio will vary drastically depending on numerous factors. If you are required to have PMI, your lender will be able to provide you with a far more definitive answer.

How much does mortgage insurance cost? Similarly, to the question of duration, there is no universal answer to questions regarding cost. Conventional mortgage insurance rates vary. Usually, they will be lower than your down payment. However, the lower your credit score, the higher you can anticipate your premium will be. For every $100,000 borrowed, buyers can anticipate paying anywhere between $30-70 per month. Therefore, it is impossible to provide reliable numbers, until your specific situation is assessed.

When you no longer need mortgage insurance, you can petition its cancellation. You have the right to request that your lender/servicer cancel your insurance when the principal balance of your mortgage is scheduled to fall to 80 percent of the original value of the home. When crafting a PMI agreement, this date should be provided to you by your lender. Furthermore, you can petition to drop your mortgage insurance earlier, if you are able to meet the requirements before the specific date contractually agreed upon. However, this can be a tedious process, and will require you to be in exceptional standing with your payment history. Your lender may ask for you to provide proof that no second mortgages exist on the home, or that the value of your home hasn’t decreased since its original appraisal at the time of closing. All that said, if you meet the requirements outlined in the agreement, by the specific date as provided in your contract, your PMI will automatically terminate.

If you’re nervous about being on the hook for mortgage insurance, it can be avoided. The best way to ensure you can bypass mortgage insurance, is to simply, be in ideal financial standing. This is why it’s universally encouraged for buyers to be cognizant of their financial standing before purchasing a home. The best way to indicate you are a low risk buyer? Putting 20 percent down. Even if you are able to avoid the initial cost of a 20 percent down payment, you will still be required to make financial restitutions by way of PMI or other fees in the long run.

Like always, the best course of action is to get your financial ducks in a row. Mortgage insurance is not the worst course of action if you’re unable to make an initial down payment, however, it’s still important to recognize the potential drawbacks of opting in to an insurance plan. Ultimately, you have far more to lose than the lender should you be unable to make payments on your home. In order to avoid these worst-case scenarios, be honest about your financial standing. If you are unsure of what to do next, speak with your lender before making any rash decisions. Lenders are here to help you make the best investment long term, and that can only be determined by mapping out your restrictions.

https://www.bankrate.com/finance/mortgages/the-basics-of-private-mortgage-insurance-pmi.aspx

https://www.zillow.com/mortgage-learning/private-mortgage-insurance/

https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/

 

When is the Right Time to Buy a Home?

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Feeling the itch to move lately? Whether you’ve outgrown your current space, or simply want a change of scenery, here are 5 reasons why it might be time to start looking into purchasing a larger home.

  1. Your finances are ideal for an upgrade. When it comes to buying a home, your financial standing will ultimately dictate what you can comfortably afford. A lot of people who are looking to size up, may find the urge arising because they’re in better financial standing than ever before. Perhaps you’ve recently acquired a generous raise, or landed a new, higher paying position. A good first step is to create an inventory of your finances, and decipher where exactly you stand. More income can translate into more housing opportunities, although, with a more expensive home comes more expensive payments, and a potential for new unforeseen costs. Buying a bigger home makes the most sense when your income is stable, and you suspect it will remain so. Jumping the gun too quickly can have potentially devastating side effects. While you’ll never regret erring on the side of caution, you may come to regret being careless. With this in mind, be diligent with your finances.

 

  1. Your family has grown, and you’re ready to expand. The needs of a first-time homebuyer are often different than those of a growing family. One bathroom was probably ideal back when it was just you and your significant other, but after a couple of kids that extra space can start to look really appealing. You may find your family has simply outgrown the confines of your starter home. Perhaps you want a bigger backyard, or would like to add on a few new bedrooms. Whatever the case may be, if you’re starting to feel the strain of growing pains, it’s probably a good time to look into purchasing some additional leg room. If you’re not sure exactly what your family’s needs will be, you can start by mapping out your collective, future goals. Do you want more kids? What about space for pets? As your kids get older, what do you foresee your children’s needs as being? Don’t be afraid to do some brainstorming.

 

  1. You’ve outgrown your neighborhood and desire different things. Neighborhoods, much like families, can change over time. Families who outgrow their homes, also have a tendency to outgrow their neighborhoods. Better schools, or shorter commute times, are incentives to check out new areas. Safety also has a tendency to become a priority when families expand. Neighborhoods are constantly evolving, and realistically, you may not feel as comfortable in your community as you once did in years prior. On the contrary, a neighborhood that wasn’t desirable 10 years ago, may be up and coming and offer good potential for a profitable investment. Reputable realtors are able to predict the trends of neighborhoods, and help you decide where your dollar will go the furthest.

 

  1. Market conditions indicate a favorable time to move. The real estate market can be quite volatile, and will vary significantly depending on where you live. Like most any investment-based game, markets will ebb and flow accordingly. Essentially, certain times will prove more desirable than others when it comes time to play ball. Incidentally, if your market is experiencing a “slump” your realtor may recommend buying property. It may seem counterintuitive, but slumps aren’t inherently bad times to consider purchasing. In fact, during a “slump”, home prices experience a decline, and you may find your overall expected payments to be lower. This allows for the buyer’s dollar to potentially go further. For example, you may find sellers more eager to take lowball offers because the market isn’t currently saturated with eager buyers. However, it’s best to still consult your realtor before buying in a specific market, and get the full details to ensure your investment will likely yield returns down the line. Otherwise, you may find yourself facing the same problems down the line.

 

  1. Above all else, don’t make the move unless you’re ready. There are a lot of reasons people may feel inclined to buy a house before they’re ready, be it social pressures, or the feeling that you “must” be in a state of seeking constant upgrade. Buyers can easily fall victim to moving prematurely if they’re not careful. If you’re content with your current standing, there’s no need to move forward just because the timing is ideal. What’s more important is figuring out what the best decision is for you personally. This may mean you want a few more years to save up money, or potentially see how the neighborhoods in your area evolve before you go looking for new property. If you’re not ready to move, take your time and be practical. Just because the market is good now, doesn’t mean it won’t be good again later. Time is a resource you can never get back; therefore, the best course of action will always entail moving at a pace that makes sense for you.

 

https://www.hgtv.com/design/real-estate/how-to-know-you-re-ready-for-a-bigger-house

https://budgeting.thenest.com/right-time-buy-bigger-house-31497.html

https://wealthpilgrim.com/should-you-buy-a-bigger-house/

 

The Key Types of Construction Loans

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Home construction modelLots of people have an idea of what their dream home looks like, and for most of those people, the only feasible way to get that dream home is to build it themselves. In order to do that, though, a construction loan is generally needed. Construction loans can be complex, though, due to the fact that there is a much higher risk that is taken on for the lender (because what assets are left to take if the borrower doesn’t finish the home?). (more…)

When Are the Wrong Times to Refinance Your Home?

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Refinancing a home’s mortgage is a shiny option that homeowners have to tap into the equity that they have built up in their house, or to renegotiate the terms of their mortgage so that interest rates and monthly payments are significantly lower. However, while refinancing can look like an attractive option in the short-term, it is important to look down the road and consider the risks that could lead to a worse financial situation in the long-run. 

Here are some examples of a time where you should reconsider refinancing your home… (more…)