Coming up with 20% for a down payment helps you avoid having to buy private mortgage insurance (PMI). For down payments less than 20% of the purchase price, the mortgage lender will require you to buy PMI. Why is the 20% important? It is a measure to indicate that you Read more…
As an incentive for buying newly constructed homes, developers are likely to offer buyers a mortgage rate buydown to finish the deal. This action is similar to paying off a point upfront. However, it is the developer who is subsidizing part of the loan to lower the buyer’s monthly payments, Read more…
The borrower would want to compensate the family member for lending the money. This interest rate could be a fair rate that is lower than what the traditional banks charge and higher than the Applicable Federal Rate (AFR). A good rate would be “AFR plus 1/2(Bank Rate minus AFR).” Propose Read more…
Owning a home comes with a big financial responsibility such as mortgage payments. Lenders like to see a debit-to-income ratio under 43%. The best recommended route is to tighten up your debts such as credit card balances. Clear any loans you may have outstanding. You don’t want to have outstanding Read more…
Putting a larger down payment onto a home purchase helps lower the loan-to-value (low LTV) ratio. It also means the borrower is less likely to walk away from making mortgage payments if they already put down a large sum of money. Lenders like to see that borrowers have more skin Read more…
If a home has been on the market for longer than average, then a seller might be motivated to offer seller financing to entice a buyer who may not be interested in the house without the seller financing. In this particular situation, the seller financing acts as a motivation tool Read more…
Interest rates fluctuate daily, and lenders will offer you a chance to lock-in rates for 30 or 60 days as you are completing the purchase of your new home. If it is something that you want to lock-in and are willing to pay a little extra for the peace of Read more…
Fixed rate mortgages offer stability where your monthly payments are always the same for the full life of the loan. 30 year fixed rate mortgages are popular with home owners who want to borrow more and pay a smaller monthly payment. However, it usually comes with a higher interest payment, Read more…
Down payment is the money that you put towards buying the home which the lender likes to see as your collateral in the home purchase. The higher amount you put in, the more confident the lender will be in approving and providing you with the mortgage loan. Having a good Read more…
One of the biggest hurdles of buying a home is making the down payment. Besides cutting back on daily expenses and downsizing on living arrangements to save for a year or two, there are other options to consider. Secure a gift from family or friends. Loan officers prefer to see Read more…