You are probably aware that your debt-to-income ratio is very important in order to qualify for a mortgage. It also play a part into finding out how much of a loan you can afford. There are many available mortgage programs out there, with many of them being flexible, so you will likely not have trouble finding one that you qualify for. Keep in mind that your debts must not be ridiculous.

It is hard to say what a good debt-to-income ratio is, as different programs have different requirements. Roughly speaking, we would say that between 36% and 43% debt-to-income ratio is what you want to aim for. This is not a hard number or set in stone as there other factors that play apart as well. Also, some programs will accept you if your debt-to-income ratio is higher than 43% if you meet other requirements of the program. For instance, if you have a high credit score or a significantly large down payment, you may be more likely to qualify if your debt-to-income ratio is more than 43%. Other factors would include having a significant amount of money in your savings account or being able to prove you have made loan payments back on time.

There are some simple ways to decrease your debt-to-income ratio. For starters, do not overuse your credit card! This may seem like common sense, but for some people, they seem to have forgotten about this simple rule. Live within your means. If you are unable to pay a credit card back by the end of the month and you are spending money unnecessarily, take a step back and think about if you really need to be spending that money. In past posts, we have recommended you to not take out any new loans before deciding to purchase a home. We want to remind you of this again! Avoiding any new monthly payments before qualifying for a mortgage is a good idea.

There is a number of people who would be more comfortable and happier with living in a condo. Depending where you live, a condo may be easier to get to stores and your place of employment – this holds true if you live in a city. Living in a condo is also a lot less maintenance and upkeep when it comes to lawn care, outside maintenance, etc. If you decide that living in a condo instead of a regular house is the right decision for you, you then need to make a decision if you should rent or buy the condo.

A lot of these reasons will hold true with buying VS renting, period. For example, if you have a stable job and income, buying is a good idea. If you are able to afford the down payment, closing cost, and mortgage payment, owning a home is a good investment. If you know you want to stay in the same place for a minimum for the next three years, put another check mark down for buying a condo! If your current life situation will stay the same (for example, you will not need to downsize or upsize due to a change of family structure) living in the same condo will be a good idea. In the long run, deciding to purchase a condo may save you some money in the long run and all be less stressful! You can do what you want with the property.

If you decide to purchase the condo, make sure you can afford any HOA fees you may be responsible for. If you are renting, you will likely not be responsible for those fees and the owner will be. Make sure you are aware of any of the HOA rules as well – some tend to be strict!

We would recommend when you are finalizing your decision to find out how much money you would spend in the next three years whether you purchase or rent the condo in the long run. Also look into all of the ins and outs of living there for an extended period of time VS just a year lease.

Unfortunately, we have some bad news for those of you who may have been looking into getting an investment property or a vacation/second home. This holds true for Fannie Mae. It is likely that Freddie Mac will become more difficult as well. (Thankfully this will not affect any customers who already have an agreement set in stone…this will start on April 1.)

The Federal Housing Finance Agency (FHFA) is who set this new rule into place. They are decreasing the amount of Fannie Mae and Freddie Mac investment or second home loans in half. Once Fannie Mae and Freddie Mac have 7% of their loans being second homes, they will not be able to purchase any loans from anyone after closing.

For those borrowing money, this means that the loan cost will be increased. This is because lender will be more at risk. Penny Mac is a company that holds many second home loans currently. They have already added a 2.25% fee onto their loan amount for second home loans. This even holds true for those who have made a 25% (or more) down payment! If someone put down less than 25%, they have an additional 5% fee that will be added to their loan.

At this moment, we are unaware of the rules to qualify for an investment property mortgage will change, but we have a feeling that it will. Since lenders will not be able to have as many of these loans as they once had, the requirements will likely be more strict since the lender will have to be more selective.

Keep in mind this will not hold true for all options available out there. But for the main ones where Freddie Mac and Fannie Mae are involved, we can guarantee that those will be affected. It is possible that there may be some new programs available to complete. (This is completely conjecture!)

There are quite a few available options out there to purchase a home in the least expensive way. Isn’t that what we all want, anyway? As you likely already know, the housing market is on fire right now! With that being said, it is unfortunate that cheap houses are not readily available like they once were. In order to embrace this changing time, we have some ideas to share with you as to how you can find cash for a down payment and closing cost if you do not have enough saved up. There are even some ways you can finagle to have very little out of pocket expense.

If you are eligible for a VA loan or USDA loan, there will be no down payment required. The requirements for both of these loans are very specific so before you get your hopes up, we recommend you find out if you qualify and what is entailed with them.

If you do not qualify for these loans, there are other loans out there that have a low down-payment mortgage. These down payments can be as low as 3% or 3.5% of the purchase price of the home. If your credit score is not substantial, do not be discouraged as you may still qualify! There are programs available where you can qualify for a grant or loan to pay for your upfront costs. Also, if you are gifted money toward a down payment from a family member, you will save a lot of money as well. (It must indeed be a gift, though…no hidden agenda of it actually be a loan as the giver must write a letter saying it is indeed a gift with no strings attached.)

Some people also get the seller or even the lender to pay for any closing costs. You really have to know what you are doing to make this happen. We would be happy to help if this is an area you might wish to pursue.

No matter which option you choose, if you do not have funds for a down payment or closing cost, do not worry…there are possibilities out there. You may just have to get a little creative!

You may have heard of a cash-out refinance lately, as a great number of people are doing it when they need to borrow a lot of money. However, this only is an option if someone has a lot of home equity available to them. A cash-out refinance is when you take a loan out on the value of your home. This type of loan usually has a lower interest rate than other loans since your house is used as collateral.

If you decide to do a cash-out refinance, you have the ability to decrease the loan term or even change the type of loan program you are using. You also do not need to let anyone know what you are doing with the funds you receive – they can go into other areas of investment or even put into an emergency fund if needed. The funds can also be used for home improvements which would increase the value of the home when/if you decide to sell. You may wind up earning more money by the sale of your home.

Keep in mind that a cash-out refinance really only makes sense if you need cash for something and there would be a benefit for you in refinancing the loan you currently have. Keep in mind that when you do a cash-out refinance, you will have to pay a closing cost. Make sure the money would make sense to you before deciding. The term of your mortgage would also start over. It is like you are purchasing your home for the first time – so make sure you look at it in the manner.

You also want to consider the potential that mortgage rates may increase, which might have an effect on your final decision. It could also decrease again – but more than likely that will not happen.

If you need help figuring out if this option is right for you, we are here to answer any questions you might have!

There are United States Department of Agriculture (USDA) construction loan options available where you can purchase your own land and build your own home on it. This type of loan can even have your long-term mortgage wrapped in it as well. That is a land, build out, and mortgage wrapped into one loan! This type of loan does not require any type of down payment, either. There is also only one set of closing costs instead of three. Unfortunately, these types of loans can be difficult to find as there are a lot of rules and requirements involved and particular eligibility requirements as well.

Like all other ares of life and important decisions that need to be made, make sure you look into all available options to be sure you find the right option that fits your needs. There may be other loan options that are easier to obtain since they have less requirements.

The fact that you can obtain 100% financing for this type of loan is attractive to many people – this even includes the downpayment…it is not required! You are also not required to make payments on the home during construction.

However, there are some drawbacks to this type of loan. Starting with the fact that it can be difficult to find…patience is a must when looking into this type of loan! There are many parties involved so if you have a deadline, you may find some difficulty. It is also likely that the interest rate will be higher than other loan options. (Keep in mind that it is possible you will not have this interest rate forever though!)

We wanted to make sure you were aware of this type of opportunity that may be available to you. It may not work for you or be beneficial – but at least you are aware this opportunity may be out there for you.

Refinancing your home can be a positive move for many people. Refinancing your home before you sell it can be a great move as well! As long as your home is not listed and on the market yet, you will likely have the ability to refinance. One of the reasons some people like to refinance their home before selling it is so that they can take out some home equity for repairs that need to be made before putting the home on the market.

Keep in mind that there are some clauses and rules you should look out for if you choose to refinance your home and then sell it. For example, some refinance agreements do not allow you to sell your home six to twelve months after you refinance. Each agreement is different so be sure to read the fine print! Some agreements may not even have this clause. Some agreements also have a prepayment penalty. This is something else we recommend you look out for in the fine print.

Another important thing to note is that refinancing is not free of charge. It does indeed cost money. You will want to make sure you do the math and make sure you will not be spending more money on refinancing than the profit of selling your home.

One of the reasons refinancing has been such a hot topic lately is because the refinancing rates are at a historic low. (Just like interest rates.)

If you are not sure what the right move is for you, please give us a call and we will go over all of your options. And as with making any important decision, writing out a pro/con list will be very helpful to you. Also talking to someone who has refinanced is a good idea as well!

For some people, now is a great time to buy a home. The home buying market right now is not normal – it is a great time to buy! Mortgage rates are consistently at a record low. Due to the pandemic, many people are still working from home. This means that people can live where they want to with remote work. The downside is the obvious – it is difficult to purchase a home if you are unemployed.

Most people think that mortgage interest rates will continue being low for the next couple of years. Of course, anything can change in a moments notice, but all things point to low interest rates. The market is very competitive right now as low interest rates help people purchase more expensive homes. Getting prequalified for a loan may help you stay above the competition.

Having stable employment and stable income are two of the main checks to check off of your checklist if you are contemplating making the leap. If your employment was affected due to the pandemic, it may be more difficult for you to get a mortgage. Although, having an above average credit score can help.

Do not forget that you also need to be sure you have enough funds to afford not only a downpayment, but closing costs as well. These types of costs are often forgotten about. But they are important to remember and keep in mind as they often add up.

As mentioned before, many people are purchasing homes without seeing them in person. This has always been done but due to the affairs of the world, it is occurring even more often lately. This can be a huge benefit to those who may want to relocate somewhere on a whim due to transitioning to a remote job.

No matter the reason fo wanting to purchase a home in 2021, it is a great time to make the leap!

We are hearing from more and more people who are purchasing a home without looking at it in person. Supply and demand is talking right now! We have also heard about a number of bidding wars on homes that are going on the market. If you are aggressively hunting for a home, purchasing a home without seeing it in person might be a good tactic.

Most people who buy a home in a sight unseen type of manner are definitely looking at photographs and videos before making their final decision. Some people will have friends or family look at the home for them in person as well.

Although the affairs of 2020 were not normal by any means, 63% of those who purchased a home did not view it in person. The pandemic is one of the main reasons people are purchasing sight unseen – but not the only reason. The current increase in supply and demand is another huge reason.

With todays technology, photographs, 360 degree video tours, and FaceTimes provide quality images of the home. Although you will not physically be in the home, you will be able to get a very reliable idea of what the home is like.

Having a home inspection is always recommended, but it is definitely recommended in these sight unseen purchases. The home inspections is also a type of protection for you on the off chance there are more issues with the home than you realized.

We would also recommend using your real estate agent as your representative. If there are certain parts of the home that may be questionable for you, be honest with the agent and have them look into the situations further for you.

No matter what your reason is for wanting to purchase a home sight unseen, you are not the only one!

According to a 2020 Gallup report, there are about 44 million Americans who are self-employed. This number includes freelancers and contract workers. It is quite possible that due to the state of the world in the past year, that this number increases for 2021. Since this number is so high, there are a number of special mortgage programs that exist to help these individuals purchase a home or refinance their current home.

In order to qualify for a home loan, you need proof of at least two years of income. For some individuals, this may be difficult – especially for someone who only has one year of income as a self-employed individual behind them. Bank statement loans are an option for these individuals as neither a W2, nor past year’s tax returns are required. For a bank statement loan options, an underwriter will verify your monthly income by looking at your deposits from your recent bank statements. They will need a minimum of 12-24 months of bank statements, along with other required documentation.

Besides bank statements, you will also need to provide a significant down payment, prove you have savings, a good credit score, a debt-to-income ratio below 55%, a profit and loss statement, and a business license. The business license is only required if it is something needed for your line of work. You will also need a letter for either your accountant or a licensed tax professional that confirms you have filed your taxes properly while being self-employed.

Keep in mind that just because you are self-employed, does not mean this is your only option for a mortgage loan. You can apply just like someone who has a W2. Many self employed individuals tend to write a lot of items off for tax purposes – which is not helpful when applying for a mortgage.

If you fall in this category, we would be happy to help you!