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.

Have you had your house appraised, whether you are buying, selling, or refinancing, and it appraised at a lot lower than you expected? That is very unfortunate if it happens. But this is okay! You do have some options, no matter what boat you are in. The appraised value of your home is very important as it affects quite a few things – and what it affects does depend on the type of loan you have. The loan-to-value ratio dictates how much the lender will finance. This ratio must stay within certain limits.

There are a few options as a buyer, if the the home you want appraises for less than what you are going to purchase it for. To start, you can renegotiate the price of the home. This is something that should be looked at from the start as it is only fair! You also have the option to cancel the contract if both the buyer and the seller cannot come up with some sort of agreement. Most contracts have an appraisal contingency in the off chance this type of situation happens. As a buyer, you want to make sure you have an appraisal contingency in your contract as it definitely has the ability to help you.

If you are the seller, you have a few options if your home appraises less than expected. To start, you may want to lower the price you are asking for. Potential buyers will not want to purchase a home for more than it is worth. You also have the ability to order another appraisal. But you do risk not getting the answer you are looking for. Since we are currently in a buyer’s market due to inventory being low, you do have that on your side!

One of the great things about this potentially happening is that you do have options! You are not stuck buying or selling the home if it appraises at lower than anticipated.

Have you heard of a “green mortgage” before? Well, if you have not, now you have! It is considered to be an energy efficient mortgage. It is a home loan for an environmentally-friendly home…that is, a home that meets energy-efficiency standards. You can even qualify for this type of mortgage if you are improving a home you currently own.

There are many reasons you may want to make these types of improvements in your home. One of the biggest reasons is that you will save money on energy costs. Okay, another reason is that you will be reducing adding pollution into the world. It has also been found that these types of homes are typically rated better – which means if you were to sell it in the future, you are adding value into your home.

Some of the newer homes that are available are already compliant according to Energy Star.  Energy Star is a program that is sponsored by the government. You may have seen their logo on lightbulbs.

All of the major home loan agencies offer an energy efficient mortgage program. Depending on the program, depends on the rules and guidelines for each. For the most part, the process is relatively similar. 

As mentioned earlier, you can save money with these energy efficient upgrades. It will depend on where you live and how much energy is there. In some reasons, the monthly savings may not be grand but when you add it up throughout the year, it may be a few hundred dollars! When making the decision, make sure you factor in the long-term savings.

Also, stay firm in not paying a higher mortgage rate just because you are purchasing an energy efficient home. That should not play a factor at all. As always, be sure you weigh both pros and cons into your final decision. 

Closing costs come as a huge surprise to some people – especially first time homebuyers. If you are saving for a down payment you may wind up dedicating a large chunk of what you saved to the closing cost. There are some grants and loans available that are dedicated to closing costs specifically. These grants and loans may be on the local, state, and even federal level. These grants and loans may be up to thousands of dollars!

We would recommend you ask your real estate agent or loan officer for what types of programs may be available in your area. Do not dismiss looking into these options – they are not for first time home buyers only. They are also not specific to low or moderate income buyers, either…especially in cities that are very expensive. 

You can also look at options at your Housing Finance Authority in your state. Through the Housing Finance Authority, the options are usually for first-time home buyers, but again, that is not always the case. And if that is how it is in your state, they may be able to give you other resources or places to take a look. Some of the fine print may also be that you have not own a property in the last three years. 

If you are unable to find any assistance, you may want to think about asking the seller if they would b willing to pay for some of the closing costs. This is actually a common practice. If this is what you wish to do, work with your real estate agent so they can negotiate – they may have experience in it as well.

Another option, which some do not like, is to have your lender add the closing cost into your loan. If you decide to do this, keep in mind that your interest rate will likely be higher. This option is known as lender credit.

We would be happy to help you explore these types of options if it is something you are wanting to explore!

Some people have been asking us if there was a “magic number” for how much income they need in order to buy a home. (Not a super expensive home – but an average, every day home.) According to the National Association of Realtors, the average cost of a house is close to $340,000. That can seem unrealistic and overwhelming for many people. 

We have some good news for you though! And it may ease some of your stress. If you have a great credit score, a minimum of 20% as a down payment, your income can be just about $46,000. If both your credit score and down payment is less, you will need more of an income.

Did you know that in just the first quarter of this year, the cost of a house has risen by 3.5%? And within the last year, it has risen 12.6%! Many people have been wanting to purchase a home – that is what has led to the increasing of prices. Another factor that has played into this is the fact that over the last couple of years, the interest rates have been the lowest in quite a long time.

There really is no minimum income requirement to purchase a home. Most mortgage loans are very flexible. So like we mentioned earlier, if your income is not very high, you can compensate in other ways. Having a debt-to-income ratio that is low, can play a part in affording a more expensive mortgage.

The loan program you decide to go with also plays a large part in what you will or will not be qualified for. We will be there for you every step of the way – this includes finding out which loan program would be the best fit for you. When you come to the initial meeting, bring all of your questions with you as well!