4 Must-Follow Rules for Buying a First Home In Your 40s or 50s

4 Must-Follow Rules for Buying a First Home

Conventional wisdom says that if you want to buy a home, you do it when you’re young. After all, if you’re going to be paying on a mortgage for 30 years, it’s better to get a jump on it sooner rather than later. For some would-be homebuyers, however, making a move to buy isn’t something they tackle until later in life. Maybe you’re trying to pay your student loans or credit card debt down first. Maybe you didn’t hit your peak earning years until after your 40th birthday. Whatever the reason for putting off a first home purchase, one thing doesn’t change: buying a home is still stressful. It means jumping through certain hoops, regardless of how young or old you are. If you’re prepping to buy a home for the first time and you’re in your 40s or 50s, your financial situation may look a little different than a twenty-somethings. I’ve got some pointers that can help make navigating the process as smooth as possible so you don’t have to put off your dream of owning a home any longer. 1. The rules for buying don’t change Mortgage lending standards have gotten tighter over the last decade or so

Read More...

Is Mortgage Sharing a Good Solution for Cash-Strapped Homebuyers?

Shared Mortgage

When you’ve got your mind set on buying a home, one of the first things you have to ask yourself is: can I really afford it? After all, you’re committing to making a mortgage payment for the next three decades, so there’s no room for doubt. If you’ve crunched the numbers and found that you’re coming up a little short, you don’t have to give up on the idea of buying altogether. Sharing a mortgage--and a home--with a friend or family member is another path to homeownership. Taking on a mortgage jointly with someone other than a spouse isn’t that different from buying a house on your own but there are some special considerations to keep in mind. If you’re interested in exploring this option, I’ve got some insight into what you need to know before diving in. Mortgage sharing: How it works Sharing a mortgage is similar to sharing a lease agreement for a rental except you both have an ownership interest. Both of your names appear on the loan and you’re both equally liable for paying the mortgage. When you go through the application process, you both have to meet the minimum credit score requirements and share your

Read More...

5 Questions Home-Buyers Forget to Ask

5 Questions Home-Buyers Forget To Ask

As someone who recently went through the home-buying process I can tell you from experience it’s no piece of cake. Between the endless piles of paperwork and the constant back and forth with my agent and lender, I felt like I’d run a marathon twice over by the time I finally reached the closing table. When you’re caught up in buying your first home, it’s easy to get overwhelmed by all that it involves but it’s important to stay focused on the details. Forgetting to ask any of these key questions along the way could lead to big headaches down the line. What Kind of Rate Will I Qualify For? Before you commit to any mortgage loan, the first thing you need to know is how much you stand to pay in interest. The rate on your loan ultimately determines how much your mortgage will cost by the time the home is fully paid for. Even a fraction of a percentage point can add thousands of dollars to the final interest total so it’s important to be clear about what kind of rate you’re eligible for. That way, you’ve still got an opportunity to shop around for a better deal

Read More...

The Pros and Cons To Refinancing Your Home Loan

Home Refinancing Means Refinanced Refinance And Housing

You can’t turn on your television or fire up a browser without seeing some sort of advertisement for a low cost mortgage loan as an alternative to whatever you’re currently paying for your home. The question is, however, is refinancing a good idea and does it always make sense? Or, is it simply better to keep your current mortgage loan in place? What's Involved? First things first… what exactly does it mean to refinance your home loan? Refinancing simply means you’re taking out a new loan that will pay off your existing loan. You’re not changing the terms of your current mortgage but are instead paying it off with a new loan that has new terms. You can certainly refinance with your current lender or you can refinance your home loan with an entirely different lender. It’s completely up to you. The process is relatively simple. As you did for your current loan, you’ll visit a mortgage broker or a mortgage lender who will ask some basic questions about your credit and financial situation and then attempt to get you qualified or “pre-qualified” for a new loan. The new loan, however, would be subject to the normal underwriting procedures that

Read More...

6 Smart Negotiation Tips For First-Time Home Buyers

6 Smart Negotiation Tips For First-Time Home Buyers

You’ve spent months looking at listings and then one day, you find it: the perfect home in the perfect neighborhood. Problem is, there’s just one catch--the asking price is outside your budget range. While you could just move on, you shouldn’t count yourself out until you’ve flexed your negotiating muscles. Haggling over a home isn’t always easy, but it can be worth it when done properly. If it’s your first time jumping into the home-buying rodeo, here are some tips for becoming a master negotiator. 1. Take The Temperature of the Market Before you attempt to negotiate anything, you need to know what kind of position you’re starting from. Negotiating in a buyer’s market is very different from wrangling a deal in a seller’s market. If the odds are in favor of the seller, for instance, you’re going to have less wiggle room when it comes to snagging a home below asking price. On the other hand, if homes are selling at a slower pace in the area you’re buying in, that can give you a little more leverage at the bargaining table. 2. Base Your Offer On The Home’s Value, Not The Sale Price What a home is worth

Read More...

What’s the Minimum Credit Score Needed to Get a Mortgage?

minimum credit score

Buying a home takes more than just a big enough down payment or a steady income to get approved for a loan; you’ll also need a solid credit score. As someone who recently went through the home-buying process, I’ve been schooled firsthand on how credit scores affect your odds of being approved. Before you approach the bank for a mortgage, read this to learn what kind of scores lenders are looking for. Conventional Loans A conventional loan is what most people think of when they think of a mortgage. This is a loan that’s backed by either Fannie Mae or Freddie Mac. The minimum credit score you’ll need to qualify for a conventional loan ultimately depends on how large your down payment is and your debt-to-income ratio. At the low end, a borrower with a 620 FICO score could qualify for a Fannie Mae loan as long as the loan-to-value ratio is less than or equal to 75%. That means you’d need to pony up at least 25% of the purchase price for the down payment, assuming your total debt-to-income ratio is 36% or less. On the high side, you’d need a FICO score of 700 or better if you’re

Read More...

Private Mortgage Insurance Explained

Private Mortgage Insurance

One of the most important things you’ll need to plan for if you’re buying a home is how much you’ll pony up for the down payment. If you’re getting a conventional loan, the standard 20% of the purchase price is what you’ll need if you want to get around paying private mortgage insurance or PMI. If you’re clueless about what PMI is or how it affects the cost of buying, read this first before you sign off on a mortgage. What Is Private Mortgage Insurance? Homeowner’s insurance protects you and your property against fire, theft and natural disasters while PMI is a policy that covers the lender. Specifically, private mortgage insurance is designed to reduce the loss to the bank if you default on your loan and the house ends up in foreclosure. As the homeowner, you’re responsible for paying the premiums but you don’t actually gain any benefit from having the policy. Private mortgage insurance premiums are normally built into your monthly mortgage payment. The amount you actually have to pay is based on a few different factors, including: The length of your mortgage loan The type of loan you have Your credit score The minimum coverage required by

Read More...

How Fannie Mae’s HomeReady Program Helps Low Income Home-Buyers

fannie mae

Wanting to buy a home and being in a position to do so are two different things. When you’re bringing home a smaller paycheck, home ownership can seem like an impossible dream but Fannie Mae is helping to change that. The recently launched HomeReady Program is aimed at helping low income buyers get the financing they need. Here’s a quick rundown of how the program works. What is HomeReady? The HomeReady Program is an initiative from Fannie Mae, a leading source of mortgage financing in the U.S. This program is designed for credit-worthy low and moderate income buyers who want to buy homes in designated low income, minority or disaster-impacted communities. In that way, it’s similar to the USDA loan program, which is meant to help lower income buyers who are shopping around in rural areas. What are the benefits for buyers? Compared to a conventional loan or even FHA financing, the HomeReady Program offers some unique benefits that are geared towards buyers who aren’t making a ton of cash. For example, qualified buyers can take advantage of competitive pricing, which means you’re not going to be stuck with a higher interest rate on your mortgage just for using the

Read More...

Can New USDA Refinance Rules Make Your Mortgage Cheaper?

Measuring Mortgage

Refinancing your mortgage can save you big bucks if you’re able to snag a lower interest rate or reduce your monthly payments. If you’ve got a USDA loan, your financial life may be about to get a little bit easier. The Department of Agriculture has revamped its refinance guidelines for rural home loans so if your mortgage was issued through the program, keep reading to find out how it can help. What the new rules are designed to do USDA loans already have the advantage of being fairly low-cost for buyers because they don’t require any sort of down payment. You do, however, still have to pay for closing costs and private mortgage insurance. The updated refinance guidelines are intended to make the refinance process less expensive and more efficient for homeowners who qualify. According to the USDA’s estimates, the program has the potential to save homeowners $150 a month on average. In a pilot program, some participants were able to shave as much as $600 off their payment each month. How the program helps homeowners The main purpose behind the new rules is to streamline the refinance process and one of the way the USDA is doing that is

Read More...

How Down Payment Assistance Can Help You Buy a Home?

Down Payment Assistance Programs

Buying a home is a major expense and if you’re taking out a mortgage, one of the things you need to plan ahead for is your down payment. For a conventional loan, 20% is the target amount buyers are encouraged to aim for if they want to avoid paying private mortgage insurance. For an FHA loan, you’re only looking at a 3.5% down payment, but that can still add up to some serious cash. Down payment assistance programs are designed to ease some of the financial burden for qualified buyers. According to RealtyTrac, 87% of homes nationwide qualify for some kind of down payment help. If you’re planning to buy but you’re strapped for cash, here’s what you need to know about down payment assistance options. How down payment assistance programs work The idea behind down payment assistance programs is simple--they help buyers who otherwise wouldn’t be able to raise down payment funds on their own. There are three basic ways these programs can work. First, there are programs that offer you a cash grant that you can use for your down payment. In exchange for the money, you’re required to live in the home for a certain number of

Read More...