Category Archives: Home Buying

How PMI can make your dream of home sweet home a reality

(BPT) – In the 2017 housing market, those who choose to pursue the dream of owning a home face several important decisions, such as how much to put toward a down payment. Twenty percent down is typically recommended by most lenders.

While 20 percent is not a requirement, paying less can have a big impact on the amount you pay monthly. It is important for home buyers to know that when seeking a conventional loan with less than 20 percent down of the sales price or appraised value of the home, lenders will often require Private Mortgage Insurance (PMI).

This article takes a deeper look at PMI by answering the most common questions on the topic.

What is PMI?

PMI is a type of mortgage insurance. Like most other types of mortgage insurance, it protects the lender in the event the borrower is unable to repay the remainder of the loan. In many cases, PMI is required on conventional loans when the buyer has a down payment of less than 20 percent.

Some lenders may offer conventional loans that require a smaller down payment without PMI, but the tradeoff can typically be a higher interest rate.

How does PMI affect your loan?

PMI can affect your loan in several different ways depending on the loan type and the lender. In some cases, the PMI will be required in a lump sum at the time of closing. This PMI payment type is called an upfront premium.

Other PMI plans call for monthly payments where the total value of the PMI is divided and factored into your monthly mortgage payments. The PMI can generally be cancelled under certain conditions once 20 percent of the amount borrowed has been reduced from the principal balance, or amount borrowed.

Finally, the lender may also opt for a plan that requires both upfront and monthly PMI payments. In this case a portion of the PMI is paid at the time of closing, and then the remaining PMI is paid as part of the monthly mortgage payment.

Alternatives to PMI

Some government-backed loans offer alternative options to buyers paying less than 20 percent down on a home loan. There are several of these loans and each has a different approach to handling down payments and mortgage insurance. By being educated on the different types of loans you will have an easier time finding which best suits your needs.

Learning more about PMI

While PMI is an additional fee, it helps those with less than a 20 percent down payment realize their dreams of home ownership.

To learn more about financing options that can make your dreams of homeownership a reality, visit VMFhomeloan.com.

NMLS Disclosure

Vanderbilt Mortgage and Finance, Inc., 500 Alcoa Trail, Maryville, TN 37804, 865-380-3000, NMLS #1561, (http://www.nmlsconsumeraccess.org/), AZ Lic. #BK-0902616, Loans made or arranged pursuant to a California Finance Lenders Law license, GA Residential Mortgage (Lic. #6911), Illinois Residential Mortgage Licensee, Licensed by the NH Banking Department, MT Lic. #1561, Licensed by PA Dept. of Banking.

Have You Outgrown Your Current Home? Here Are Five Easy Ways to Tell if It’s Time to Upgrade

house_property_real_estate_for_sale_signYour home is your castle, your own little piece of the American dream. But lately, your little corner of the world has been feeling cramped and you find yourself eyeing those larger homes. Is it time to pull up stakes and move on from your starter home?

Growing Family

If you’ve added to your family in recent years, you may have more bodies than bedrooms. A two-bedroom home may have been a great idea when it was just you and your spouse, but with two kids, you’re starting to have turf wars over the play area.

Overflowing With Stuff

From an overflowing toy chest to closets packed so tightly with shoes and coats you risk an avalanche every time you open the door, your home just doesn’t have the space to keep all your things. You may have even had to move some things off-site, spending money to rent storage space to keep that antique dresser your grandmother left you or the set of state spoons you carefully collected during your college years.

No Rest For The Weary

You’d love to spend an afternoon soaking in the tub, but before the warmth of the water can take you away, there’s a banging on the door of the only bathroom in the house and a chorus of “hurry up!” invading your quiet time. And the man cave you dreamed of? Those visions of a big screen television were shattered by the realization you needed somewhere for the kids to sleep.

No Room For Extras

When you first moved in, the two-car garage doubled as your woodworking shop. Now, the equipment has been sent to storage to make room for the family’s second car. You’d love to take up organic gardening, but your tiny yard barely has room for a grill and a lawn chair. You’d love to host your friends visiting from out of state, but there is hardly room for their luggage, much less them.

Changes In Career

You may have opted for a starter home when you first entered the market because you had a smaller income. Now, thanks to changes in careers or promotions at work, you can afford a home with greater square footage and room for your growing family that will provide the space you need for many years of happy memories.

Home prices around Central Ohio are starting to rise. Contact Teresa today and take advantage of the opportunity to give your family the most space at the best price now.

 

Retirees Choosing to ‘Upsize’ Homes

Americans traditionally have c20801433_webhosen to downsize in retirement, but that may no longer be the case. A wave of retirees are choosing to upsize and enjoy the best home of their lives in retirement, according to a recent Merrill Lynch and Age Wave retirement study of more than 3,600 respondents. In fact, 65 percent of retirees recently surveyed say they’re currently living in the best home of their lives.

Within the next decade, the number of age 65-plus households in the U.S. is expected to bloom by nearly 11 million.

As more Americans move into retirement, they are also looking to move into a new home. The study found that 64 percent of retirees are likely to move at least once during retirement. For retirees who do move, only half have downsized, and many are moving into larger homes, according to the study.

Indeed, the study showed that 49 percent of retirees say they didn’t downsize in their last move and 30 percent ended up moving into larger homes. Retirees’ top reasons for upsizing were wanting a home large and comfortable enough for family members to visit (33 percent) or even live with them (20 percent). One out of six retirees – or 16 percent – say they have a “boomerang” child who has moved back in with them, according to the study.

Nineteen percent of retirees also said they upsized in retirement in order to have a more prestigious home and 16 percent say they wanted a larger home to have more room for friends to visit, according to the study.

For those retirees who did downsize, the majority said their top reasons for choosing a smaller home was to have greater freedom from financial and maintenance burdens.

Source: “Home in Retirement: More Freedom, New Choices,” Merrill Lynch

Smaller Homes Mean More First-Time Buyers

SONY DSCThe size of the typical home is shrinking, which may be a sign that a wider array of buyers, including first-timers, are returning to the market. The median size of a single-family home has decreased for the past two consecutive quarters, and it will likely continue to go down as more first-time buyers look to purchase, according to the National Association of Home Builders.

The median size of a single-family home dropped 2.3 percent in the third quarter over the previous quarter, falling from 2,472 square feet to 2,414. That marks the smallest size since the fourth quarter of 2012.

Home sizes were on the rise coming out of the recession, mostly due to a surge in the luxury market, NAHB notes.

“Typical home size falls prior to and during a recession as some home buyers cut back, and then sizes rise as high-end home buyers — who face fewer credit constraints — return to the housing market in relatively greater proportions,” NAHB notes on its blog, Eye on Housing. “This pattern has been exacerbated in the last two years due to market weakness among first-time home buyers.”

But the decline in square footage now indicates that entry-level buyers are on their way back.

The latest drop in the median home size “doesn’t reflect changes in preferences, necessarily. It reflects who’s buying new single-family homes,” Robert Dietz, an economist with NAHB, told The Wall Street Journal.

Indeed, building giant D.R. Horton Inc. posted a 38 percent surge in sales orders in the fourth quarter, attributing most of those gains to its new Express brand homes that are priced at $200,000 or less.

“I do know that bigger houses are not as in-demand as smaller houses unless you’re in a community where you’ve tapped into a niche,” notes Brian Johnston, COO of Mattamy Homes, a Canadian builder that operates in four U.S. states. “We would definitely be seeing more affordable product as the trend line.”

Source: “Single-Family Home Size Leveling Off as Market Recovers,” National Association of Home Builders’ Eye on Housing Blog and “Could the Decline in Median New-Home Size Herald Return of Entry-Level Buyers?” The Wall Street Journal

Millennials: How to make your home ownership dreams a reality

20838984_web(BPT) – Owning a home is part of the American Dream, yet standards on income, credit and debt are making it tougher to buy a home than it was 10 years ago. Even though requirements are relaxing, only three out of five borrowers get approved.

While stricter standards make it tougher for young families to qualify for a mortgage, millennials said they understand why these standards exist and think the tougher requirements won’t stand in their way of buying a home, according to a new survey commissioned by loanDepot.

In fact, millennials today are serious about doing what’s required to get a mortgage. The research surveyed 1,000 millennials who don’t own a home and found 35 percent plan to buy within five years. What’s more, millenials are taking steps now to turn their dreams into a reality by getting their credit in order, paying down debt and saving for a down payment.

“Income is a key to opening the doors of homeownership for millennials, and they’re more than committed to it; they’re actively planning for it,” says Anthony Hsieh, chairman and chief executive officer, loanDepot LLC. “Our improving economy is making it practical for millennials who want to own their own homes in a few short years to get ready now. Their strong desire to become homeowners, coupled with the commitment of getting their finances in order, suggests a renewal in first-time buyer demand may be possible if we sustain necessary economic and market conditions.”

With their prospects improving as the economy picks up, millennials are forming households faster and making more money compared to a few years ago. One in three millennials said an increase of 15 percent or less in income will be enough to turn them into homebuyers, a significant proposition for the economy.

Because mortgage lenders use debt-to-income to evaluate a borrowers’ ability to repay a loan, student debt is a growing burden on millennials interested in financing a home. Unlike medical debt, student debt carries an equal weight to credit card debt. Nearly half of those surveyed said it’s unfair to weigh both types of debt equally.

As for the tougher requirements to getting a mortgage, millennials do think the tougher standards guard against risky loans and will help prevent another mortgage crisis. More than half say making it easier to get a mortgage will result in more foreclosures.

If you have student debt and want to buy your first home, here are a few ideas and tips to help you prepare:

* Lower your debt-to-income ratio (DTI). DTI is your total monthly income as compared to your total monthly debt payments. Most lenders will only lend to you if your DTI is at or below 43 percent. So to lower it, try to increase your income by pursuing a promotion or raise, finding a higher-paying job or taking on part-time work. Decrease your required monthly debt payments by refinancing or consolidating student loans and paying down any credit card balances.

* Get your credit score in order. Analyze your credit report before you start the home buying process. Dispute incorrect derogatory information and ensure all three credit-reporting bureaus list all of your positive information. Pay all your bills on time, reduce credit card balances to 30 percent of the credit limit or lower, and don’t open new credit cards if you already have a few.

* Save for a down payment. Make a budget for each month before it starts, with a plan for spending and saving, and stick to it. Stash away extra money from bonuses, overtime or financial gifts on your birthday or holidays. Find a roommate to help pay your rent or move into a less-expensive rental. Do freelance or contract work on the side. Sell unneeded stuff on Craigslist.