Today we are going to discuss two common mortgage loan products, and the pros and cons of both FHA and Conventional Loans.
Many people are familiar with the 20% down, good credit 30 year fixed conventional loan scenario.
FHA loans on the other hand are designed for people who might have difficulty qualifying for a conventional loan to still get funding to buy a house. FHA Loans offer down payments as low as 3.5% and are more lenient on credit scores and past financial issues. Borrowers can qualify for FHA loans with as low as 580 credit scores. One of the downsides of FHA loans are mortgage insurance requirements, if you put down less than 10% you will be required to pay monthly insurance for the duration of the loan, as well paying Upfront Mortgage Insurance Premium. The best choice for you? Give us a call or apply online and we will analysis what programs suits your needs 😊

The home-buying journey usually starts with a preapproval. This preapproval not only reflects your seriousness about purchasing a house but also provides clarity about how much you can afford. However, as the home hunt progresses, you might need to increase the preapproved amount.

What is Mortgage Preapproval?
Mortgage preapproval is essentially a promise from the lender that you are likely to qualify for a mortgage, based on your financial situation. This involves a basic application where you submit details about your assets, income, and debts. This is not a guarantee, but a significant step indicating your creditworthiness.

Determining the Preapproval Amount
The preapproval amount is primarily influenced by factors like your credit score, income, debt load, and assets. An appraisal of the property ensures its value justifies the mortgage amount.

Enhancing the Preapproval Amount
If you need to increase the preapproved sum, the following strategies can be employed:

Boost Your Credit Score: A higher score can qualify you for a larger loan by lowering the interest rate. Timely payments and cautious use of available credit can enhance your score.
Present More Income: Besides your primary income, reliable secondary sources like dividends, rental income, or even alimony can be used to reflect a higher earning.
Pay Off Other Debt: A lower debt-to-income ratio can amplify the loan you qualify for. Reducing credit card balances or paying off loans can significantly help.
Increase Down Payment: Putting down at least 20 percent can save you from PMI costs, thus allowing a bigger loan.
Explore Varied Loan Types: While fixed-rate loans offer predictability, adjustable-rate mortgages might provide lower initial rates. If you’re planning to sell or refinance before the rate adjusts, ARMs might be beneficial. A temporary rate buydown might also benefit in today’s market.
Add a Co-borrower: A co-borrower can enhance the combined income on the application, potentially leading to a higher loan amount.
Accumulate Cash Reserves: Demonstrating financial responsibility by showcasing additional assets can boost lender’s confidence in you.
Ultimately, securing a high preapproval amount requires a combination of strong credit, a stable income, and low debt.

Getting Started
If you aren’t sure how much you can get pre-approved go to our website and fill out our 30 second pre-approval engine.

The dream of owning a home is a cherished one for many individuals and families across the United States. However, the soaring median existing-home price of around $400,000 can often make it seem like an unattainable goal, especially when faced with the prospect of a substantial down payment. Traditional mortgage loans typically require a 20 percent down payment, equating to a significant sum, but there is good news – down payment assistance (DPA) programs exist to help prospective homeowners bridge the financial gap. In this blog post, we will explore what DPA programs are, how they work, and the steps to access this valuable assistance.

What is a Down Payment Assistance (DPA) Program?

Down payment assistance programs are financial tools designed to provide aspiring homebuyers with the necessary funds to contribute towards the purchase of a home. In addition to assisting with down payments, some programs also extend their support to cover closing costs, which can amount to approximately 2 percent to 5 percent of the loan principal. This additional help can be particularly beneficial for individuals who have allocated their savings primarily for a down payment.

DPA programs are available across the country, with the majority of options offered at the local level through state, county, and city government initiatives. These programs can take the form of loans, grants, or matched savings, each with its unique set of eligibility criteria and repayment terms.

Down Payment Assistance Eligibility Requirements

While eligibility criteria may vary among different DPA programs, the vast majority of assistance is aimed at first-time homebuyers. However, “first-timer” does not exclusively refer to someone purchasing their first home; it can also encompass individuals who have not owned a home in the last three years. Additionally, many programs exclude owners of rental or investment properties, emphasizing that the home should be your primary residence. Some programs may permit the purchase of duplexes or small multi-family properties if you intend to reside in one of the units.

Types of Down Payment Assistance Loans and Programs

Grants: Grants are a type of DPA that offers a one-time cash sum, often as a no-interest second loan. These funds can be used to cover part or all of the down payment or closing costs. The best part is that grants do not need to be repaid and are typically tailored for low- or moderate-income borrowers. Various grant programs are accessible through banks and state and local governments.
Forgivable Loans: Forgivable loans function like loans but can effectively become grants if certain conditions are met. Typically, this type of loan is forgiven after a specific period, provided that you continue to own the home and stay current on your mortgage payments. If you sell your home or move before the specified period, you may be required to repay a portion of the funds. Forgivable loans are often administered through state housing finance agencies.
Low-Interest Loans: Low-interest loans operate as second mortgages with interest rates below market rates. Unlike grants or forgivable loans, these loans must be repaid, usually over a few years. This means that you will have additional monthly payments in addition to your regular mortgage. You can find low-interest loans through various mortgage lenders.
Deferred-Payment Loans: Deferred-payment loans typically do not accrue interest, and you are only responsible for repaying the principal amount borrowed. However, these loans are not forgiven and must be repaid in full when you sell your home or refinance your mortgage. State and local homebuyer assistance programs often offer deferred-payment loans.
Individual Development Accounts (IDAs): IDAs, also known as matched-savings accounts, are special savings accounts where your contributions are matched by either private or public funding sources. These programs typically have income caps and employment requirements, and participants often need to complete financial literacy training. IDAs are usually available at the state level or through private nonprofits and can be used for down payments and closing costs.
Lender-Specific Down Payment Assistance Programs: Some mortgage lenders offer their own DPA programs. For example, Chase offers assistance ranging from $2,500 to $5,000 in many states, which can be used for closing costs and down payment needs. Eligibility for these programs may have specific requirements, such as obtaining a 30-year fixed-rate loan, living in the home as your primary residence, and attending a homebuyer education course.
How to Access Down Payment Assistance

Accessing DPA programs often involves exploring local resources and organizations. Here are some avenues to consider:

State Housing Finance Authority: Many state housing finance authorities (HFAs) offer homebuying assistance and education programs. Check with your state’s HFA for information on available DPA programs.
City and County Government Programs: Numerous counties and cities offer DPA programs as part of their efforts to promote homeownership, especially for first-time buyers. Visit your municipality’s website or consult your loan officer to learn more about local DPA programs in your area.
U.S. Department of Housing and Urban Development (HUD): HUD provides a wealth of information on local homebuying programs by state. Each state also has HUD-approved counselors who can guide you through the homebuying process and help you find financial assistance options.
Conclusion

Owning a home remains a significant milestone for many individuals and families, and down payment assistance programs play a crucial role in turning this dream into a reality. With various types of assistance available, aspiring homeowners can find a program that suits their unique financial situation and eligibility criteria. By exploring local and state resources and leveraging the support provided by DPA programs, more people can achieve the goal of homeownership, even in a challenging real estate market.

As we’ve seen large storms hit both coasts recently, it’s a good idea to use the old Boy Scout motto and “be prepared.” We are going to review general steps to take to prepare for something we of course never happens. Natural disasters, from hurricanes to earthquakes, wield a devastating power that leaves homeowners and entire communities grappling with significant property damage and high repair costs.

The Financial Impact of Natural Disasters on Homes
In 2022, the Insurance Information Institute documented nearly $100 billion in insured losses stemming from natural disasters. Here’s a breakdown of the data:

Severe storms: These accounted for over $29 billion.
Earthquakes: About $14.7 billion per year, as per a joint study between the USGS and FEMA.
Floods: 15 instances in 2022 led to $3.3 billion in losses.
Wildfires: Resulting in a staggering $8.9 billion from 26 separate events.
Hurricanes: Three events led to a total loss of $53.2 billion.
Winter storms: Produced $4.1 billion in damages from 13 occurrences.
How Can Homeowners Prepare?
1. Reinforce Vulnerable Areas
Install wind-resistant doors and storm-proof shutters.
Use plywood to board up windows and doors when a storm approaches.
2. Know Your Utilities
Identify where water, gas, and electrical lines are and know how to shut them off.
3. Water Diversion
Use sandbags around entryways and flood-prone zones.
4. Secure Loose Items
Ensure outdoor furniture is tied down.
Move grills, tools, toys, and other items inside.
5. Tree Maintenance
Trim trees regularly to prevent overhanging branches from causing damage.
6. Furniture Safety
In earthquake-prone areas, attach heavy furniture to walls.
7. Landscaping Smartly
Choose fire-retardant plants like Rockrose and aloe, and avoid flammable trees like pines.
8. Guard Against Pipe Bursts
Wrap vulnerable pipes to protect them during extreme cold.
9. Have an Emergency Plan
Assemble an emergency kit with food, water, medications, chargers, and other necessities.
Keep both digital and physical copies of important documents, including evacuation routes and insurance policies.
What Does Home Insurance Typically Cover?
A standard homeowner’s insurance policy covers damage due to:

Thunderstorms
Hurricanes
Tornados
Wildfires
Blizzards
However, it’s essential to note that standard policies usually exclude flood or earthquake damage. Those living in vulnerable zones should consider supplemental policies to stay covered.

In conclusion, while the unpredictable force of nature cannot be avoided, homeowners can adopt a proactive stance. By understanding your insurance policy and taking preventive measures, you can shield yourself from the worst financial aftershocks of natural disasters.

This week we saw the release of Consumer Price Index (CPI) for June 2023, which recorded a rise of 0.2 percent, a slight increase from May’s 0.1 percent, according to the U.S. Bureau of Labor Statistics. Year-over-year, the all-items index experienced a 3.0 percent hike, a decrease from May’s 4.0 percent, indicating a sustained deceleration in inflation for the past 12 months. With the inflation rate now standing just one percentage point above the Federal Open Market Committee’s 2 percent goal, the inflation scenario, particularly its impact on the housing market, demands a closer look.
The slowing of inflation, however, does not translate equally into the housing sector. The Bureau’s data highlight the ‘shelter’ category, encompassing housing costs, as the most significant contributor to the CPI’s all-items increase. However, he also hints at potential stabilization in rents and home prices, a necessary step in addressing the critical issue of housing affordability in the nation.
Encouraging data from CoreLogic suggest a slowdown in the home price growth rate, while Fannie Mae’s Home Purchase Sentiment Index shows a meager increase, pointing to a potentially less heated market. However, with current high mortgage rates, potential home buyers might still hesitate. Lawrence Yun, Chief Economist at the National Association of Realtors, offers some optimism, “Low inflation means low mortgage rates. Therefore, decelerating consumer prices could steadily lift home sales and increase home production in a few months.”
If you are considering making a move, schedule a consultation with us on our website and we can recommend options based on your unique needs.

There are numerous benefits to being self-employed – you’re your own boss. However, when it comes to securing a mortgage, the process deviates slightly from traditional mortgages. It often involves additional requirements and more administrative procedures. Here are some tips to help you get organized and approved if you’re self-employed.

Apply for a mortgage when your income is high. We understand this is easier said than done, but lenders will focus most on your income from the last two years. If your income fluctuates, it’s best to apply in a high-income year. This strategy can help you qualify for a larger loan amount and a lower interest rate.

Lower your DTI. Your debt-to-income ratio is one of the critical factors in getting approved. Therefore, it’s beneficial to pay down both business and personal debts. Also, avoid opening new lines of credit a few months before applying.

Don’t mix business and personal finances. Keep your business and personal finances separate by maintaining distinct bank and credit card accounts for business and personal use. This separation helps lenders easily discern business income and expenses and demonstrates that you are managing your business professionally.

Please feel free to give us a call or contact us through our pre-qualification app, and we can determine which product best suits your needs. You may be a candidate for a Qualified Mortgage (QM) or a non-QM lender. Either way, we
can review and help you get started!

With recent market volatility we have good news for some new home buyers. Starting in March, those who are receiving FHA financing and paying mortgage insurance will see the monthly fee reduced from 0.85% to 0.55%. This is expected to affect 850,000 borrowers this year and result in an average savings of $800 annually. The savings will vary based on the loan amount, for example a person with a $500,000 FHA loan would save $1,500 annually.
If you are in the market for a new home, fill out our quick home qualifier on our website and we can help determine what loan best fits your needs and let you know how much you can pre-qualify for.

We don’t have to tell you that interest rates have gone up in the past year, so refinancing now may seem unusual but if you have a lot of debt, like credit card debt, those rates have gone up even more.The average American has nearly $40,000 in debt not including home loans so today we ask if you consider a cash-out refinance to pay off other debts like credit card debt. Credit card interest rates are normally much higher than mortgage interest rates and if you are carrying high credit card debt while making minimum payments, there is an opportunity to save a lot in monthly credit card payments that are primarily going to pay high interest rates on the debt. First you will need enough equity in your home to get a cash-out refinance. With real estate values increasing in recent years, many people have seen their home value rise so they may qualify for cash-out. You’ll still need to maintain equity in the home at 80-90% to avoid paying mortgage insurance and you will have to get an appraisal and pay closing costs which will be subtracted from the cash out amount. Of course, contact us to see if a cashing out to pay off your debt makes sense for you. And remember you’re not actually eliminating the debt you’re just saving on high interest payments so be careful not to start spending again

We are often asked about jumbo loans and when they are used, so here’s an explainer (or refresher). For conventional mortgages there are two general types conforming and nonconforming. Conventional conforming loans for most areas are $726,200 or $1,089,300 for select areas with high housing prices for 2023 as set by Fannie Mae and Freddie Mac. A jumbo loan would be a nonconforming loan that exceeds those limits.

If you are looking to buy a home that is high priced and don’t have a huge down payment you will likely need a jumbo loan. A jumbo loan with its higher loan amount is often going to have higher qualifying requirements than a conventional loan – including higher down payments and credit scores as well as lower debt to income (DTI) ratio.

In terms of conventional versus jumbo – it may be jumbo out of necessity if you are looking at a high priced home as previously noted. Complete our quick analysis and we can help you see what programs you qualify for and what fits your needs!

Is it cheaper to build a new home or buy an existing house? According to census data the median cost of a newly built house was
$534,600 in November 2022 versus $454,900 for an existing home in October 2022.
Of course, there are pros and cons to both buying and building.
If you are building a new home some the biggest pros will be you have a custom-built home, that is brand new and move in ready. You may also have lower bills with newer efficient appliances and systems. Some of larger cons are time – this means more of your time; you’ll likely have to be more involved and review construction decisions and options which can be a challenge if you have your hands full with work and family. Building also takes longer with an average of over seven months for new construction. You can also experience cost over-runs and contractor / sub-contractor delays.

Buying an existing home as we noted tends to be cheaper and you’ll be able to move in much sooner. You may also be able to negotiate for a lower price if a home has been on the market for over 30 days. Additionally, if you are looking to live in a specific area you may have more options. Of course, if you buy an existing home you will have to compromise on layout and features versus building your own home. Depending on the age of home you may also have older appliances and systems.

Building or buying are also going to have different financing options. Schedule a consultation with us on our website and we can review the options to give you a better idea of your specific options.