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The Home Buyer’s Guide to Preparing for a Mortgage

by Courtney Soinski

Have you checked your credit and decided that it’s time to buy your first home? Well, it’s no surprise that making a home purchase can be an overwhelming process. Fortunately, there are ways to stay ahead of the game while keeping your stress under control. Before you jump into a new mortgage, let’s learn some preparation techniques to achieve the best possible outcome.

mortgage

1. Check your credit report.

As soon as you apply for a mortgage loan, this is the first thing that lenders will look for. It’s always a good idea to check and monitor your credit score, and keep an eye out for any factors that may be harming your scores. Make sure that your credit report is as accurate as possible, and that no one else is getting access to your credit. Remember, the ultimate goal is to prove your creditworthiness to the lender in order to get the best rates.

2. Correct any inaccurate information in your report.

If you see any inaccurate information on your credit report or if you notice any accounts that you didn’t open or addresses that aren’t yours, dispute it with the credit bureaus. Three of the major credit bureaus are Equifax, Experian, and TransUnion.

3. Research, research, and research!

Buying a home is one of the largest financial decisions you will make, so it’s important that you gather all information and research multiple loans, rates and brokers before making your final decision. If you get to work now and start researching all the options out there, you may even end up with better terms and a better rate.

4. The down payment: bigger is better.

Before you even decide how much to put down on your first house, be sure you’re also being realistic about what you can honestly afford. When setting your budget, keep one crucial thing in mind: the larger the down payment, the better your terms will be. Besides, wouldn’t it be nice to pay less every month that you spend in your new home?

5. Watch out for pre-payment penalties.

Depending on the type of mortgage you get, there may also be pre-payment penalties. Find out whether or not you’ll get penalized for paying your mortgage loan off early before making any sort of commitment.

6. Applying for multiple loans over a long period of time can hurt your credit score.

Every single time you apply for a loan, lenders make an inquiry that will be visible on your credit report. By dragging out loan applications over a month or longer, you can actually end up doing damage to your score, which in turn, can affect the type of rate you get on the mortgage. However, if you apply for a few loans over a series of 2 weeks, that only counts as one inquiry on your report, not multiple.

 

Making a huge purchase like your very first home can be very stressful, so every bit of information helps. Refer to this checklist as you prepare to apply for a mortgage loan. Knowing how to prepare makes all the difference in the world when it comes to getting the best rate.

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5 Benefits of Buying a Home in Tax Season

Tax time is almost here and many people, when they see their tax bills, will be wondering what they can do to pay less next year. Buying a home continues to provide great tax benefits as well as other advantages for Americans looking to build wealth. Below, top-ranked national real estate expert and consumer advocate Rhonda Duffy shares 5 benefits of buying a home.

Mortgage Interest Deduction

“If you’re caught in a renting rut or uncertain about joining the ranks of homeowners, you should consider the benefits of buying a home,” says Duffy. “Although home prices are slowly inching upward, now is still an excellent time to buy. This is especially true if you’re a first-time homebuyer. Here are five benefits of homeownership:”

1. Tax advantages

“When tax time rolls around, homeowners are entitled to deduct certain expenses related to their mortgage payments and owning a home. Mortgage interest is typically deductible. In the early years of your loan, this is a sizable amount because a large portion of your mortgage payment is interest. You can deduct mortgage points, which are fees you pay to receive a lower interest rate. You can also deduct your property tax, and you might be eligible to deduct your private mortgage insurance.”

2. Appreciation

“When you rent, your money goes to someone else. There’s no benefit to you other than a roof over your head. When you buy, you earn appreciation as the value of your home goes up. Instead of paying rent, you’ll pay a mortgage and invest in future returns. For example, if you buy a house for $150,000 and five years later, it’s valued at $200,000, you have a $50,000 return on your investment.”

3. Catching an upswing in home values

Although the increase in home prices nationally slowed last year, prices are expected to continue to rise this year. “If you want to buy before you’re priced out of the market, now is the time to make your move,” Rhonda says.

4. Low interest rates

“While mortgage interest rates are creeping upward, they remain at relatively low levels, especially compared to rates that were in the 8 to 9 percent range 20 years ago. Even as recently as 2007, rates were in the 6 percent range.

5. Pride of ownership

“Perhaps the most satisfying of all the benefits of buying a home is the sense of gratification you feel when you relax in your own home. You can remodel and update as you please, you don’t have to rely on a landlord for repairs, and you have a sense of stability.”

Reprinted with permission from RISMedia. ©2015. All rights reserved.

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Preparing Your Finances for Homeownership

 

by Courtney Soinski

vakilhousing.com

vakilhousing.com

Are you considering buying a new home this spring? With tax season in full swing, now is the perfect time to get organized. Buying a home is one of the largest investments you will make, so it’s important to be well prepared before taking the leap.

Follow these tips to prepare your finances for homeownership.

1. Get your credit in order.

Your credit is a large factor in determining whether or not you qualify for a mortgage, so it’s important that you determine your credit score at least three months before buying. The higher the score, the easier it will be to qualify for a mortgage.

To access your scores, either purchase them as you get your free reports from Annual Credit Report Request Service, or pay for them when you buy your reports from the credit bureaus:

Equifax  –  www.equifax.com / 800-685-1111

Experian  –  www.experian.com / 888-397-3742

TransUnion  –  www.transunion.com / 800-916-8800

2. Prepare for expenses before you buy.

Understand and plan for what you will need to spend before the actual purchase. According to a recent article, you’ll need enough cash for a down payment, closing costs, and a few months’ worth of mortgage payments. Figure out what you will need for extras like moving costs, furniture, and repairs.

3. Know how much you can afford.

Before you jump into a contract, you need to make sure it’s something you can actually afford. List and total your monthly expenses, then subtract that from your monthly net income. Here’s a good rule to keep in mind: your total housing costs should be no more than 30% of your net pay. Also, remember that a larger down payment of about 20% or more can save you hundreds and even give you more buying power.

4. Have trade lines.

Did you know what most lenders prefer if you have three of more trade lines that have been open for at least a year? These can range from credit cards and students loans to a car loan. You should also avoid closing them because it can hurt your credit score.

5. Do your research.

Above all, it’s crucial that you do your research before buying your new home. In addition to the price of the home, you must always consider other factors such as property taxes, homeowners insurance, utilities, maintenance, and repairs.

6. Consult a real estate professional.

The right real estate professional can walk you through all the steps for preparing to buy a home.  Whether it’s your first home, your forever home, or a vacation retreat, the right real estate pro can not only help you get ready, but negotiate the best deal and help you navigate through financing, contingencies and closing.  The best investment in buying a new home is in choosing the right partner to help you through.

Top agents advertise in The Real Estate Book.  Check here to find the best in your area.

Source: BalancePro

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