The majority of homeowners have a thirty-year mortgage. However, when possible and if it makes sense for you, a fifteen-year mortgage is actually a great choice for many reasons, especially if you are able to afford higher monthly payments. By paying your mortgage off in half of the time, you have the potential to save thousands, if not tens of thousands of dollars in interest! It also decreases your amount of stress as well. If you feel like your income will be steady and reliable for the foreseeable future and you are able to afford higher monthly payments, a fifteen-year mortgage is something we would recommend you look into.

To brief you on the fifteen-year mortgage terms, while it is fairly self-explanatory, it is a fixed-rate mortgage that must be paid off in fifteen years. Also, each payment must be made on time. Since it is a fixed-rate mortgage, the interest rate and principal will stay the same for the duration of your mortgage.

Another positive is that with a fifteen-year mortgage, you also have the opportunity to gain more equity in your home quicker. This is something that would greatly benefit you in the long run. Especially since you are saving a great deal of money in the process!

Keep in mind that although this sounds nothing but positive, you have the potential to be purchasing a smaller home or purchasing a home in an area you may not find favorable, since your monthly payments will be more expensive than a thirty-year mortgage. It is possible that you may not afford the same house that you would if you were to take out a thirty-year mortgage on it, versus is being a fifteen-year mortgage.

What it really comes down to is if you can afford higher monthly payments without a shadow of a doubt for the next fifteen years. If your income is not predictable and things may change in the coming years, we would recommend you really look into whether or not a fifteen-year mortgage is the right option for you.

Due to what is going on in the world these days, many things are done virtually nowadays. This includes banking and mortgages. Digital mortgages are now something that is available for people. In the past, in order to get a mortgage, people would have to go to a bank to fill out a great deal of paperwork. Now, it is possible to do everything electronically online! No physical paperwork is involved in the process at all. There are automated systems that are out there now that prevents a potential personal bias when it comes to rejecting application decisions.

Another positive aspect of digital mortgages is that it does not matter where you are physically located! You are not tied to one specific location or another. With the digital aspect, you have many options to shop around with different lenders and different rates. You are also more likely to have faster access to options.

With the digital aspect, since there is no face-to-face communication between parties, the pressure for shopping for a lender decreases greatly. This eliminates some of the stress to the consumer.

The application process is similar to in-person application processes, as the requirements are the same. You will still need to be able to provide income statements, apply for a credit check, and possibly provide a debt-to-income assessment. Once you put all of the proper documentation and other required documentation, you will find out what mortgage rate you are eligible, if you are eligible at all.

The digital nature also allows more consumes to be served appropriately. You do not have to wait to make an appointment with someone as it is not necessary. However, if you do prefer to make an in-person appointment, you are certainly able to do so as long as the company you are working with has it available. Lucky for you, that is something we currently still do!

If you have a low credit score, do not let it discourage you from purchasing a home. You may still be able to qualify for a mortgage loan. Although it may be a little more difficult, it is possible! A low credit score is between 300 and 579. This is considered to be a poor credit score. A fair credit score is between 580 and 669. The most common type of home loan, which is a conforming mortgage, accepts credit scores starting at 620. Other programs require as low as 580. As you can see, it is possible! There is no magic number when it comes to a minimum credit score. It depends on the lender.

If you have a low credit score, there are some things you can do to increase your odds of purchasing the home of your dreams. One of these ways it so pay as much cash as you are able to! This cash would go toward the down payment. If you have a significant down payment, the odds of you being approved for a loan increase. You will not be classified as much of a risk with a decent down payment.

When you do get a home loan, your credit score will be increased as long as you make your payment on time and pay the correct amount. Once you have raised your credit score enough, you have the ability to refinance if that is something that would benefit you. This may help you lower both your mortgage rate and monthly payment.

If you do have a lower credit score, please realize that your mortgage interest rate will be more than someone who has a higher credit score. Make sure you budget this appropriately and keep this in mind. We are not telling you this to scare you but to be sure you are doing things to increase your credit score and plan accordingly. We want everyone to have the house of their dreams!

Do I purchase a home in 2021 or do I wait? We have heard that that is the question many of you have been pondering recently. Americans are purchasing homes right now in record numbers. Since 2006, the most amount of homes were purchased in 2020, despite there being a low supply and home prices constantly increasing.

Many people have decided that now is the time to purchase a new home because mortgage rates are at a record low. Most research indicates that rates will likely start to rise and continue to rise significantly in the near future. Purchasing a home when rates are low give you more of an opportunity to your monthly payment being affordable and possibly having the ability to purchase a bigger home than you would have normally been able to. Right now, there are many different mortgage options as well. This means you can truly cherry pick with option would be the best for you.

With the good, always comes the bad. Right now there is low inventory on homes. This can become very frustrating to someone who is desperately in need of purchasing a new home. This low inventory market has created bidding wars!  There is a lot of competition out there right now. Some people are able to compete by making cash offers. Most sellers will choose someone who has the ability to make a cash offer over someone who needs a loan. Most mortgage lenders have also made it a little more difficult to purchase a home during this time. This is due to the fact that the financial risk has increase significantly with many people losing their jobs during this tough time.

Some people have chosen to rent a home instead of purchasing a home since it is easy and more affordable. Keep in mind that this is not universal and it still might make more sense to purchase a home. If you are having a tough time deciding which to do, speak with your real estate agent of your concerns. 

Purchasing a home directly with one (or both) of your parents or your adult child (or children) is something that more and more people are seeming to do. By doing this, you make homeownership more affordable. It can also be helpful to those you may be caregiving to or supporting. This way of purchasing a home can become complicated. If this is something you plan to do, we would recommend you work directly with your mortgage broker, lender, or realtor so you are taking all the proper steps and precautions.

This way of living has become more popular in the last couple of years due to what is going on in the world lately. Many people have lost their jobs or need additional help, so living with a loved one can make things less stressful. It will offset costs that are involved.

If you are able to, purchasing a home with cash can make it easier on all parties involved. If you are selling a home as well, those funds can go right into purchasing a new home. If you are able to pool funds from the multiple parties involved, there will be a lot less “fine print” you have to deal with. Remember, you can have multiple names on a deed.

As we have mentioned before, you can have multiple names listed on a mortgage application. The co-borrower does not necessarily even have to plan to live in the home moving forward. Having multiple people on the application make it easier for someone to qualify for a loan. You are pooling multiple sources of income together. If you do not want to have a co-borrower, you can have a co-signer. A co-signer will not have any rights to the home being purchased but they will be responsible for making payments.

A cash gift is also an option. The gift can be applied toward anything related to purchasing a home.

Multi-generational homes can be a great idea for many different circumstances!

We have more tips for you as to how you can decrease your costs when purchasing a new home! We love that some of you even contacted us with what you did to prepare for purchasing a new one. Please keep the communication coming in – we love hearing form you.

Last week, we reminded you of the important of shopping around for your mortgage and negotiating any fees that are involved in purchasing a new home.

Some of you may not be aware, but there are some options out there that give home buyers assistance with either their down payment, closing cost, or something even both! Every state has different options available. We would recommend you ask either your loan officer or who you are working with as a realtor for a list of options that may be available in your state.

Although this may be common sense, we want to make sure we do not forget to at least mention it! Improving your credit score can help you to get a lower mortgage rate when applying for a mortgage. As soon as you have the idea in your head that you want to purchase a new home, or even before it, start working on improving your credit! This does not have to be something that is difficult or scary to do. To start, begin paying any debts off that you may have. If you have any accounts with overdue or late payments, we would recommend you get those settled and taken care of right away as well.

Purchasing a home that may need some improvements or needs to be fixed will help you purchase a new home easily, too. These types of homes will be less expensive than other homes. Although you will need to put money into getting the house fixed, if you are a hand person or have handy people in your family, this will not be an issue.

Something else to keep in mind is that the cost of homes is seasonal. During the spring and summer time, homes are usually more expensive. If you can wait, try to wait until the winter to purchase a home. December, statistically speaking, is the best month to purchase a new home.

We would love to help you on a more personal level, or point you in the right direction of someone else who can! Purchasing a new home is a very exciting time.

Some reports are showing that homes in today’s market are significantly less affordable than in the past…by sixty one percent by some reports! We do not tell you this to discourage you by any means. We just want to make sure you are aware and share some tips with you. If you plan ahead and are financially smart, the affordability nature of buying a home is there for you.

To start, make sure you know what to expect when it comes to buying a home! This includes a down payment, closing costs, and earnest money. On average, your down payment will be three to twenty percent of the sale price. As you can see, this can vary significantly. On average the closing cost can be two to five percent of the loan. We have talked about this subject extensively in the past. The closing cost seems to come as a surprise to some people for some reason – especially what the cost can be. Earnest money, on average, can be one to three percent of the purchase price of the home. The earnest money is paid when you make an offer on a home and gets applied to the down payment. As the buyer, you actually have control over the costs. Especially by researching all of your options and what all of the lenders require. Doing this type of research can save you quite a lot of money.

Some people forget that you also have the ability to negotiate any fees that may be associated with your mortgage. This can help you to lower closing costs and save all kinds of money. The loan origination fees is something that a lender has the ability to decrease. As with anything in life it never hurts to ask.

Next week we will give you more ideas to you as to how you can lower the cost of buying a home!

A jumbo loan sounds kinda cool, does it not? We think so! A jumbo loan is needed when you are looking to borrow more money than normally allowed. In most areas, this number is around $548,250. There are also new programs available where you do not need twenty or thirty percent down to get a jumbo loan anymore. This is great news for those of you wanting to purchase an expensive home!

Since a jumbo loan is considered to be a non-confirming loan, the requirements are different than other loans. Depending on the lender, the minimum credit score, minimum down payment, maximum debt-to-income ratio, and other criteria will be a little different for each lender. Since the requirements truly do vary based on the lender, we recommend you do your research and look at all of your options. These types of requirements not only differ and vary, but so do interest rates and other fees as well. When you do your research, be sure to look at all aspects of the lender you want to use. We cannot encourage you enough to be sure you shop around!

This may come as a surprise to you, but the mortgage rates of a jumbo loan can be similar to regular loans. As use, there are many factors that are involved when it comes to the mortgage rate.

If this has you thinking about getting a more expensive home now, be sure you would feel comfortable with what your monthly mortgage payment may potential be. You will need to make sure you have a steady and good income coming in every month in order to be comfortable in this. This is especially true if you do not plan to make a significant down payment.

We cannot encourage you enough to be sure you do your homework and look at all of your options in choosing who to work with your jumbo loan!

Last week we touched on the topic of seniors and retired people having the ability to qualify for mortgages, even if income is limited and they are on Social Security. There are many options available. We went through some options and ideas last week but some of you have asked for even more ideas. If you ask, we deliver! As you know, we are giving a very brief overview. Please get in touch with us if you would like to work with us one on one to discuss.

Fannie Mae has an option where someone can use their retirement assets to help them qualify for a mortgage. This can be 401(k)s or other types of retirement accounts. If they are using these accounts already, they must be able to prove that the income will be coming in for the next three years on a steady basis. If the person is not using the income, that amount can be included as a stream of income.

Freddie Mac also has some options available when someone has limited income but they may have substantial assets. These options make it possible for IRAs, 401(k)s, other retirement accounts, and money earned from a business sale to qualify for a mortgage. If it is decided to use these options, the borrower must be able to prove that there is no penalty to withdraw the money early.

Another option to qualify for a mortgage is to use investment funds. Most lenders will only use seventy percent of the value of these funds in an effort to qualify for a mortgage. So be sure to keep in mind that the full amount will not be used in the calculation.

We hope that we were able to give you more options and more ideas for helping a loved senior qualify for a mortgage!

There are many seniors and retirees who are taking out new home loans. One of the main reasons for this is the low interest rates and tax breaks that have been available lately. There are also many options available for those who are on just a Social Security income. Thanks to the Equal Credit Opportunity Act, lender do not have the ability to deny someone a loan or the opportunity to refinance a house due to age. This act means that anyone, at any age has the same chance to qualify. Seniors, however, may have to prove more than a younger person does. This has to do with providing proof of income – especially if there are various income sources the senior has.

As mentioned earlier, an income from Social Security or even long-term disability, can help a senior qualify for a mortgage. This type of income is not taxable. Since it is not taxable, the qualifying amount can be rounded up by ten to twenty five percent. This is huge! Be sure to ask your lender about other non-taxable income options as well. There are other non-taxable options other than just Social Security.

If a senior is having trouble qualifying for a mortgage, if they add a co-signer to your mortgage application, this can help significantly. This will be especially helpful if the co-signer has a significant income. Fannie Mae has even provided a new loan option specifically for co-signers being involved.

Seniors may also qualify for a property tax break. The rules and qualification of this depend on the state you are applying for a mortgage in. Each state is a little different. Be sure to get with your local tax authority or even financial planner to find this out.

If you need even more ideas for helping a senior in your life qualify for a mortgage, please let us know. There are other options and ideas available that we have not discussed yet.