CENTURY 21 CUDDY



Posted by CENTURY 21 CUDDY on 5/10/2020

If youíre hoping to buy a house in the near future, youíll want to focus on saving for a down payment.

Down payments are a way to let a lender know that you are a low-risk investment, and a way to save money on interest over the term of your loan.

If you have your other finances in order--a good credit score and stable income--thereís a good chance that making a 20% or more down payment will land you a low interest rate that can save you thousands while you pay off your loan.

How large should my down payment be?

The larger the down payment you can afford, the more money youíll likely save in the long run. While there are ways to get a loan with no or very small down payments, these arenít always ideal.

First, if you put less than 20% down on your home loan, youíll be required to pay private mortgage insurance, or PMI. These are monthly payments that you make in addition to the interest that is accrued on your loan.

So, if you donít put any money down on your home, youíll accrue more interest over your term length and youíll pay PMI on top of that.

What affects your minimum down payment amount?

Lenders take a number of factors into consideration when determining your risk. If youíre eligible for a first-time home owners loan, a veteranís loan, or a USDA loan, your loan can be guaranteed by the government. This means you can likely pay a lower down payment while still receiving a reasonable interest rate.

When applying for a mortgage, be sure to reach out to multiple lenders and shop around for the rates that work for you. Many lenders use slightly different criteria to determine your eligibility to pay a lower down payment.

Other things that affect your minimum down payment include:

  • Credit score

  • Location of the home you want to buy

  • Value of the mortgage

Saving for a down payment

Youíll get the most value out of your mortgage if you put more money down. However, if youíre currently living in a high-rent area, it could mean that itís in your best interest to get out of your apartment and start building equity in the form of homeownership.

If you want to buy a home within the next year or two, there are a few ways you can help increase your savings.

First, determine how much you need to save. Depending on your housing needs and the current market, everyone will have different requirements. Do some home shopping in your area online and look for homes that are within your spending limits. Remember that you shouldnít spend more than 30% of your monthly income on housing (mortgage, property taxes, etc.)

Next, find out what a 20% down payment on that home would be, adjusting for inflation.

Once you have the amount you need to save, remember to leave yourself enough of an emergency fund in your savings account to last you a month or two.




Tags: Mortgage   down payment  
Categories: Mortgage   down payment  


Posted by CENTURY 21 CUDDY on 1/26/2020

Image by Shutterbug75 from Pixabay

With a mortgage, a buyer is applying for financing to purchase the property in its entirety. They're relying on their credit and assets for approval before assuming responsibility of the full property. In a land contract, you're cutting out the need for a formal lender and relying on the seller to approve or deny your application.

The seeming simplicity of the transaction may make some people discount the importance of negotiation. However, there are a few things to keep in mind so both the buyer and seller are comfortable with the terms of the agreement. 

Talk to the Seller 

With a land contract, you may be more beholden to the seller than you would be to a lender in a traditional mortgage. If the seller thinks of you as a tenant rather than an owner of the place, you'll need to discuss their exact involvement over the course of the contract.

Because the seller won't receive the full value of the property upon sale, their financial insecurity is entirely understandable. They may want to check up with you over the phone, in-person, or through a third-party. If you're uncomfortable with the level of oversight, you may need to speak up or find a different property. 

Make sure you understand your obligations during this time. Some buyers are treated as a renter of the property — until it comes time to make significant and costly repairs. If you're responsible for all upkeep, you may be able to negotiate more freedom in exchange for the additional expense. 

Think Through the Finances 

One of the starkest differences between a traditionally financed home and a land contract is the speed of repayments. Even if you do find a seller willing to extend the contract, it can still be a major strain on your finances. As you factor in your current assets and credit score, you should also consider the future.

If the final payment is large enough, it may still require a substantial loan. If your credit hasn't improved enough by the time the contract nears the end, it could be a significant blow to your savings. And if you can't meet the terms of the contract, the seller will get to keep the money you've already paid them (as well as the property). 

Negotiating a land contract means thinking through the repercussions of each clause. While the terms may seem looser than a standard mortgage, there may be strings attached that aren't as obvious at first glance. Ensure that you understand your financial and practical responsibilities before signing on the dotted line. 




Tags: loans   Financing   home loan   finance  
Categories: Mortgage  


Posted by CENTURY 21 CUDDY on 9/29/2019

As the workforce changes and a growing number of companies seek out contractors and freelancers, many Americans find themselves in a gray area when it comes to their income. They may put in full-time hours, but on their taxes they work for themselves.

Mortgage lenders are cautious about who they lend to. They want to make sure you are a low-risk investment who has reliable, predictable income to ensure that theyíll earn money off of your loan.

This can sometimes make it difficult for freelancers, contract workers, or the self-employed. Not only might your taxes be unconventional, but your income could vary depending on the time of the year and the amount of business you receive.

Itís easy to see why many people would be anxious about applying for a mortgage under these circumstances. However, if youíre self-employed, thereís no need to worry. You can still get approved for a mortgage at a fair interest rate--you just need to do a bit of work to provide the right documents to your lender.

In this article, weíll show you what documents and proof of income youíll likely need and how to present it to a lender to make the process run as smoothly as possible to get you approved for your mortgage. Hereís what you need to do.

Organize your records

Before applying for a mortgage, itís a good idea to take a look at your record-keeping process. As a self-employed worker, youíre probably already used to tracking your own income. However, this will help the lender analyze your income easier and move the process along more quickly.

Having a master spreadsheet of your dated invoices, paid amounts, and the names of your clients is a good place to start. Youíll also want detailed, easy to read information for your previous employers, landlords, references, and any other information you think will be pertinent.

Next, gather your tax documents for the last three to five years. As a self-employed worker, you likely file a Schedule C (Form 1040) and a Schedule SE. Make sure you have copies of these forms.

Dealing with deductions

Many self-employed workers write off business expenses in their tax returns. Travel expenses, internet, and other costs associated with doing business are all ways to save by reducing your taxable income. Doing so can save you money, but it can also reduce your net income which is what lenders will see when you provide them with your information.

If youíre hoping to get approved for a bigger loan, one solution is to plan your taxes in the year prior to applying for a mortgage. Make fewer deductions than you normally would to increase your net income.

Be ready to clarify

When a mortgage lender is reviewing your information, make sure you are open and available to provide any information that can be helpful to them in considering your application. Being prompt and accurate with your responses will signal to your lender that you are willing to work with them.





Posted by CENTURY 21 CUDDY on 3/17/2019

Itís hard to overstate the importance of credit scores when it comes to buying a home. Along with your down payment, your credit score is a deciding factor of getting approved and securing a low interest rate.

Credit can be complicated. And, if you want to buy a home in the near future, it can seem daunting to try and increase your score while saving for a down payment.

However, it is possible to significantly increase your score in the months leading up to applying for a loan.

In todayís post, weíre going to talk about some ways to give your credit score a quick boost so that you can secure the best rate on your mortgage.

Should I focus on increasing my score or save for a down payment?

If youíre planning on buying a home, you might be faced with a difficult decision: to pay off old debt or to save a larger down payment.

As a general rule, itís better to pay off smaller loans and debt before taking out larger loans. If you have multiple loans that youíre paying off that are around the same balance, focus on whichever one has the highest interest rate.

If you have low-interest loans that you can easily afford to continue paying while you save, then itís often worth saving more for a down payment.

Remember that if you are able to save up 20% of your mortgage, youíll be able to avoid paying PMI (private mortgage insurance). This will save you quite a bit over the span of your loan.

Starting with no credit

If youíve avoided loans and credit cards thus far in your life but want to save for a home, you might run into the issue of not having a credit history.

To confront this issue, itís often a good idea to open a credit card that has good rewards and use it for your everyday expenses like groceries. Then, set up the card to auto-pay the balance in full each month to avoid paying interest.

This method allows you to save money (youíd have to buy groceries and gas anyway) while building credit.

Correct credit report errors

Each of the main credit bureaus will have a slightly different method for calculating your credit score. Their information can also vary.

Each year, youíre entitled to one free report from each of the main bureaus. Take advantage of these free reports. Theyíre different from free credit checks that you can get from websites like Credit Karma because theyíre much more detailed.

Go through the report line by line and make sure there arenít any accounts you donít recognize. It is not uncommon for people to find out that a scammer or even a family member has taken out a line of credit in their name.

Avoid opening several new accounts

Our final tip for boosting your credit score is to avoid opening up multiple accounts in the 6 months leading up to your mortgage application.


Opening multiple accounts is a red flag to lenders. It can show that you might be in a time of financial hardship and can temporarily lower your score.





Posted by CENTURY 21 CUDDY on 7/15/2018

If you plan to buy a house, you'll want to apply for a mortgage before you launch your house search. That way, you'll have your finances in order and can narrow your home search accordingly.

Ultimately, there are several steps that you should take prior to applying for a mortgage, and these are:

1. Check Your Credit Score

A bank or credit union likely will analyze your credit score as it reviews your mortgage application. However, you can find out your credit score free of charge before you kick off the mortgage application process.

You are eligible to receive a free copy of your credit report annually from each of the three credit reporting bureaus (Equifax, Experian and TransUnion). Submit a request for your credit report today, and you can receive comprehensive insights into your credit history.

2. Examine Your Earnings and Debt

How much you currently earn and your outstanding debt could play pivotal roles in your ability to acquire a favorable mortgage. Thus, you'll want to examine these factors closely so that you can better understand how lenders will view your mortgage application.

Also, if you have lots of outstanding debt, there is no need to worry. If you allocate the necessary time and resources to learn about your debt and pay it off, you can increase the likelihood of obtaining a favorable mortgage.

3. Establish a Budget

Although a mortgage may prove to be essential to buy a house, it is important to consider various homebuying expenses as well.

For example, you may need to pay closing costs, home inspection fees and other expenses throughout the homebuying process. If you're worried about having the necessary finances to cover these costs, you may want to start saving money for them as soon as possible.

It often helps to account for the costs associated with cable, electricity, internet and other home must-haves too. The aforementioned homeownership expenses can add up quickly, but those who plan ahead can ensure they have sufficient funds available to cover these costs.

As you prepare to search for a house, it usually is a great idea to hire a real estate agent. This housing market can help you prepare for each stage of the homebuying cycle and ensure you can achieve your homebuying goals.

Typically, a real estate agent will meet with you and find out what you want in a dream house. This housing market professional then can keep you up to date about residences that match or exceed your expectations.

Perhaps best of all, a real estate agent understands that no one should be forced to overspend to acquire their ideal residence. As such, this housing market professional will make it simple for you to discover a terrific house at a budget-friendly price.

Lastly, don't hesitate to reach out to a real estate agent for guidance before you apply for a mortgage. With a real estate agent at your side, you can learn about lenders in your area and find one that can provide you with the financing that you need to purchase your dream house.




Tags: Mortgage   Buying a home  
Categories: Mortgage   Buying a Home  




Tags
© 2020 CENTURY 21 Cuddy, CENTURY21® and the CENTURY 21 Logo are registered service marks owned by Century 21 Real Estate LLC.
Equal Housing Opportunity. Each office is independently owned and operated.