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Qualify and be comfortable with your house payment.
What will be a comfortable monthly installment or house payment (P.I.T.I.)
for your family? Remember the mortgage qualifying number may be higher
than you feel comfortable with. Talk it over with your family and remember
that your home is your castle, but living only to pay a house payment that
is leaving your family short at the end of the month is not the way to
live. Life is short, be comfortable with your payment and you’ll also have
extra money to keep your house in the condition it deserves. In some cases
real estate agents have been known to show homes that were way higher than
the family wanted to spend. When this happens house after house showing
and you were hoping to see homes at a lower price, it may be good to see
the market and compare, but it’s no sense in losing time when you are not
going to invest at that price. If this continues your agent may need to be
informed so you can move on to the homes that will fit your families
budget. When you contact your mortgage company, information that they will require in most cases are your credit report, amount of down payment, your employment history. Qualifying information is different for everyone and your options of loans will depend on where you line up to follow the guidelines of each loan. These guidelines are what mortgage bankers call conforming to the rules that each loan requires. There are government loans and state loans that sometimes allow lower rates and down payments. You may try to work with a mortgage banker who does not offer these loans. Surprise, this mortgage banker does not qualify to work this loan, so your family will never have the option of receiving this lower monthly payment, which can equal $$$ thousands of dollars of savings over the life of the loan. The mortgage banker can only offer loans that his company is certified to offer. So make sure you ask if this lender also offers government and state loans, ask for the information. If the lender is not certified to work these loans, your family may be paying $$$ thousands more because you did not know that you could of called one that did. Can I Afford to own a home and will my payment be comfortable? Your mortgage banker will review with you the options that will best suit your family. This will include pointing out that certain bills that you may have that will be paid off sooner than others. Although the pay off dates may allow for you to have a higher monthly house payment, remember that often for example when your car payment is ready to be paid off, that is also the time when you are looking toward another monthly bill with a new car payment. Keep your bills low, remember it’s not how much you make it is how much you owe. In major metropolitan areas there are families that are making over $400,000 + a year, but they owe just about that much each year as they are trying to keep up with the other neighbors and friends an expression you’ve heard before, (keeping up with the Jones). Did you ever wonder why they drive so fast in the well to do areas of major metropolitan area. They have to drive with the pressures each day of paying a higher cost of living, working 3 times as hard and driving around the metro areas as fast as they can, only to keep up with their higher standard of living if you want to call that living. Yet in the smaller cities and towns and country areas, the pace of life is easier. The incomes may be far less in many cases but the cost of housing is much lower and affordable. Life is at a pace much slower than in the larger metro areas as you find in the bigger cities. Ask your mortgage banker about no money down loans, you may qualify if you are a veteran. Also you may also qualify with a family member or a friend. The larger your down payment, over (20%) on non government loans, called conventional loans will eliminate mortgage insurance. Also if you have a loan that has a mortgage insurance premium because at the time you bought your home you did not have 20 % down, once you pay the loan down to less that 80% loan to value, that’s like have a 20% down payment, after you pay for an appraisal the mortgage company will remove this monthly fee. But you have to be the one to call the mortgage company, no mortgage company has ever had the time to call any client to eliminate this fee, you have to pay for an appraisal, send it in to them certified letter and then hope they reduce your payment in a timely manner. For first time home buyers consider this: Why rent in a area with a friend and you may find out that you can put your incomes together and own this property. When you go to sell it you will then divide the equity, or you can keep the property and continue to rent it to someone else. Both of you can also have an income deduction instead of a rental payment. Buying or selling, Our Tenth Degree Master Plan for Real Estate Excellence will work for you.
“DOWNPAYMENT”
Savings Account: Your down payment can come from your savings or any account that you have. Selling your house: If you own a home now and you sell it for more than you bought it for, those proceeds from your sale can be used for you next down payment. Also your mortgage banker will give you options for using other funds and making those funds available prior to your settlement date. First home buyers: Parents can loan money to their children in the form of a gift letter which basically states just that, it is a gift. This gift is not looked at as an amount that will need to be paid back. So it will not count as a bill to qualify for the loan. Investor/Parent co signer: If part of the down payment is coming from an investor or a parent they will also have an equal share in the equity built up once the home is sold. If the profit on a home is $50,000, and it is agreed upon to divide it in half, $25,000 will go to the investor and $25,000 will go to the home owner.Stocks and Bonds and Life Insurance: You can sell your stocks and bonds or you may have an option of borrowing on the amount of value of the stocks and bonds. Your insurance company may have guidelines you must follow when borrowing from the total cash value from a policy you have. Profit Sharing: If you have a company with a profit sharing program many time they have guidelines that you also have to follow to borrow against the money in the account or withdrawal of the money for specific reasons. Most often, borrowing to own a home is one of them. Usually you will have to give a copy of your contract to your companies profit sharing plan program once you ratify it. Then the process can begin to have the funds available to be ready when you settle on your home. Make sure you ask how long it will take for your company to give you your money once you give them a copy of your contract. If you give them the contract a week prior to your settlement date and you find out that it takes three weeks to get your money, you will not be able to settle on the date that is on your contract. Surprise! Now you have a number of things that you and your agent will have to resolve since you cannot perform to the contract that you signed or ratified. A two week delay can cause many problems, one of which can be your interest rate that you and your mortgage banker agreed to. If the time limit for this interest rate expires during this two week period, you may have to take a different rate. Also the house you are buying has a seller that may also have an expiration date on their lock in for their next home. If you make them lose that lock in because you can not settle on the date you were suppose to, the problems could add up to a real big head ache and maybe cost you money you were not expecting to have to pay. If your agent takes time to make sure that your company profit sharing program gets a copy of the contract early so there will not be a surprise here. Buying or selling, Our Tenth Degree Master Plan for Real Estate Excellence will work for you. Private Mortgage Insurance (PMI) You may make a down payment of 5% or less when you obtain a conventional loan. You will be required to buy private mortgage insurance (PMI) through the lender if you do not have the 20% down payment. This is default insurance for the mortgage banker usually determined by the number of defaults averaged over a period of time from borrowers who have put down amounts less than 20% and have defaulted. Default is when a borrower cannot make the monthly payments required by the terms of the loan. If the borrower defaults that usually means he loses his home and any equity he has accumulated. The PMI coverage does allow you to put less than 20% down and that is a wonderful option that enables you still to become a home owner. Many years ago, bankers required such large down payments that many families were not able to become homeowners until they could save the required down payment, Later the government loans required less down payment and required also a monthly fee to offset the lower down payment. Conventional lenders began setting up companies that strictly deal with private mortgage insurance required to protect the banks interest in case of default. Your lender can show you options on paying this PMI depending on your family’s budget and savings. Make sure you find out the positives and the negatives on these options. Buying or selling, Our Tenth Degree Master Plan for Real Estate Excellence will work for you. “TOTAL INVESTMENT”
Now you have to decide to put down the 5%,10% or 20%. And of course the more you put down the lower your monthly installment will be. But remember to ask for an estimated cost for settlement report or a preliminary H.U.D. settlement statement. This will give you your total cost for settlement besides your down payment. This will include closing cost. Closing is changing legally all ownership from the seller to you the buyer. The H.U.D. settlement sheet will give you an estimated cost of closing which will pay the attorney, the title company to make sure that ownership is passed to you without any problems with the title. That means that the owner is selling you property that is verified by the Title company, that no one else has an interest in it once you move in. You don’t want anyone knocking on your door telling you that he or she also had owned part of the property and he did not sign the contract. Just give him your attorney’s phone number because you paid for title insurance and you will be protected by the terms of that title insurance company. Know these closing costs because you don’t want a surprise and find out that you put every effort to get your down payment and now you find yourself short for the cost of closing that you did not know about. Buying or selling, Our Tenth Degree Master Plan for Real Estate Excellence will work for you.
Mortgage Options with Flexible terms:
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