How to Run a Quick Financial Health Check Before You Apply for a Mortgage

How to Run a Quick Financial Health Check Before You Apply for a MortgageAre you planning on using a mortgage to help cover the cost of a new home? If so, you will want to prepare your finances and figure out how you will manage all those wallet-draining monthly expenses. Let’s take a look at how to run a quick financial health check to ensure you are ready to apply for a mortgage.

Update (Or Start) Your Monthly Budget

First, it is essential to get the basics out of the way. If you haven’t already, it’s time to start a monthly budget to keep track of your income and expenses. Once you have a mortgage, it will be important to prioritize your monthly payments so that you don’t end up falling behind.

Starting a budget is easy and can be done with mobile apps, software, a spreadsheet or a pen and paper. List all sources of income so that you know exactly how much cash you are working with. Then, list out every one of your expenses. It can be tough to remember them all, so consider using debit and credit card statements from the past few months as a reminder.

Get A Copy Of Your Credit Report

Next, you will want to get a copy of your credit report so you can see what potential mortgage lenders will see when assessing your financial history. This is a free service that you can request once per year, so be sure to take advantage. Note that you will want to use government-approved websites for requesting your credit report. Be wary of scams.

Do You Have A Down Payment?

A down payment is not required for every home purchase, but having one saved up can make the buying process easier. The amount you will want to have saved up will depend on the cost of your home, whether you plan on carrying private mortgage insurance and a variety of other factors. If possible, try to save up an amount close to (or more than) twenty percent of the home’s purchase price.

Ready? Chat With A Professional

Now that you have run a quick financial health check, it is time to meet with a mortgage professional to discuss your options. Contact us today to book an appointment with one of our friendly expert advisors. We are happy to help you with financing so you can buy your perfect dream home.

Mortgage 101: Understanding ‘PITI’ and What Goes in to Your Monthly Payments

Mortgage 101: Understanding 'PITI' and What Goes in to Your Monthly PaymentsAsk any friend or family member that owns a home and they will share that it takes a bit of management to keep all the expenses under control. Let’s explore the concept of PITI and why it is vital to have a clear picture of how much your home is costing you each month.

Just What Is PITI, Anyway?

PITI is an acronym that stands for “principal, interest, taxes and insurance,” which are the four main components that make up your housing costs.

Principal – this is the amount that you are paying against the total amount that you borrowed when you purchased the home. For example, if you used a mortgage to cover $200,000 of the home’s purchase price, the remaining balance of that $200,000 is the principal. A part of your monthly mortgage payment goes to paying down the principal.

Interest – this is the extra cost that the lender charges for the service of lending you the principal amount. For most mortgages, you will see this expressed as an “interest rate” which is a small percent charged on the loan. A portion of your monthly mortgage payment goes to paying down the interest owed.

Taxes – tax costs are not included in your monthly mortgage payment, but will be added by your lender as part of your yearly expenses when calculating your debt-to-income ratio (see below). Property taxes and other assessments will need to be paid each year.

Insurance – this is the cost of insuring your mortgage and your home. Like taxes, your mortgage lender will typically include some insurance costs in your DTI ratio calculation.

How Lenders Use PITI

Many mortgage lenders use some form of PITI calculation when determining your debt-to-income ratio. This ratio helps the lender understand your ability to manage your monthly mortgage payments without being at risk of missing one. The lower the ratio, the more likely you can afford all your monthly expenses.

Don’t Forget Your Other Monthly Expenses

Finally, don’t forget that along with PITI you will have a variety of other monthly expenses that need to be budgeted for. Leave some space for utilities, repairs and other renovations that need to be made throughout the year.

Once you have the full picture of what is coming in and going out each month, managing your expenses is easy. When you are ready to discuss or apply for a mortgage, get in touch with us. Our friendly team of mortgage professionals is happy to help.

How Do I Know If It’s a Good Idea to Refinance My Mortgage?

You Ask, We Answer: How Do I Know If It's a Good Idea to Refinance My Mortgage?Are you interested in paying less per month on your mortgage? Or perhaps you would prefer if your mortgage was paid off a couple of months – or years – faster? If you are a homeowner with a mortgage, one option that is open to you is refinancing.

How Does Refinancing Work?

In short, refinancing is a process in which you pay off your existing mortgage and borrow a new mortgage under a different set of terms. In most cases, homeowners will use the funds from the new mortgage to pay off the old one. Depending on the terms of your new mortgage, there may or may not be cash left over which you can use to invest, pay down debts, make renovations or for other purposes.

Refinancing To A Lower Interest Rate

Mortgage interest rates tend to fluctuate over time and because of this, refinancing to a mortgage with a lower rate is quite popular. If you initially borrowed your mortgage when interest rates were at 5%, you may be able to lock-in a new mortgage at a lower rate. Note that it can be tough to try to “time” the mortgage market, so check in with your mortgage professional to find out if the time is right.

Refinancing For Lower Monthly Payments

Another great use of refinancing is to reduce the monthly payment required on the mortgage. If you have ten years remaining on a 20-year mortgage, refinancing to extend the payments out to 15 years will lower the monthly payment.

Refinancing To Eliminate Other Debts

Finally, many homeowners will refinance their mortgage to use some of the home’s equity to pay off other debts. For example, a family might have $25,000 in debts that are being charged a higher interest rate than their mortgage. If they have built up enough equity, they can refinance and draw out $25,000 from the home’s value. This shifts the debt from the higher interest areas into the mortgage, where it can be paid off over time.

As you can see, there are many reasons why you might want to refinance your mortgage. To learn more about the refinancing process, or to discuss your options, contact us today. Our professional team of mortgage advisors is ready to help you choose the path that best suits your financial needs.

Driverless Cars: Will They Reshape How We Design and Use Our Homes?

3 Key Ways That Driverless Cars Are Going to Reshape How We Design and Use Our HomesAre you ready for the coming shift to driverless cars? While it might seem like some sort of futuristic vision, the truth is that driverless vehicles will be on the road within a few short years. Let’s explore three key ways that driverless cars are going to help to shape how we think about our homes in the very near future.

#1: Goodbye, Garages

It might seem a bit strange to think about now, but many people are likely to get rid of their cars entirely. Car ownership is expected to shift to entrepreneurs and services who offer vehicles for on-demand use. We are already starting to see this transition take place, especially with city dwellers who are becoming familiar with Uber, Lyft and other ride-sharing services. So, if you do not own a car, having a garage attached to your house does not make much sense.

Consider the many uses that a family can get from the space currently occupied by a garage full of cars. Your house footprint can be that much bigger, or you can convert that area into more yard space.

#2: Get Used To Smaller Streets And More Efficient Land Use

The second significant change you are going to see is a complete re-imagining of how we design and use our streets. Fewer people will own cars that need to be parked along the side of the street. Also, self-driving cars can move elsewhere for storage when they’re not needed. This combination will allow city planners to thin streets, freeing up land use for bike lanes, boulevards or larger yard areas. If you are the type that enjoys having a beautiful big front lawn, the coming shift to driverless cars will benefit you.

#3: More Space Means More Green Space

Finally, expect to see a lot more green space around your house in the future. You will have more space for landscaping, flower beds, gardens, trees and other yard fixtures. Even if you do end up owning a driverless car in the future, it’s likely to be electric. The most substantial commitment you will need to make is either a charging plug and wall fixture or a large ground pad that the car sits on when it needs to top off the batteries.

There are few who doubt that driverless cars are going to cause a major shift in how we live, work and move from place to place. If you’re looking to take advantage of this shift when you buy your next home, contact us. Our team of mortgage professionals will be happy to help you.

The Pros and Cons of a Large Down Payment When Buying a Home

The Pros and Cons of a Large Down Payment When Buying a HomeIf you are in the market for a new home, one of the considerations you will need to make is how much to invest in your down payment.

A Large Down Payment Has Its Benefits

If you have the funds available, you may find a bit of an advantage in a large down payment. The following are a few potential benefits that you may realize.

You Can Afford More ‘House’ – if you are aiming for a large, luxurious home a significant down payment can help you get there. As long as your credit is in line with your needs, a large down payment leaves more room in your mortgage.

You May Pay Less Interest – conversely, if you don’t need to carry a big mortgage you can choose a shorter amortization period for your mortgage. A shorter loan period means that you are likely to pay less in interest.

You Might Not Need PMI – if you can afford to invest more than 20 percent of the home’s value in your down payment, you may not be required to purchase private mortgage insurance.

A Few Of The Downsides

Of course, there are some potential downsides to using a large portion of your available cash as a down payment:

Do You Have The Money? – a large down payment doesn’t make a lot of sense if your finances can’t tolerate that hit right now. If you have your down payment and little else, you might want to reconsider.

You Will Be Less Liquid In The Short Term – keep in mind that once you sign the closing paperwork, your down payment cash is gone. This will leave you a bit less liquid in the short term since you would need to sell your home to get that cash back out.

You Can’t Invest That Money Elsewhere – you won’t be able to use these funds for other investment purposes. Of course, real estate is an investment itself so this may be less of a concern.

Still Have Questions? Get In Touch

Choosing the right amount for a down payment is a decision best made with professional help. Contact your trusted mortgage professionals and we will be happy to share our experience and insight.

Why New Construction Homes Are A Top Choice For Today’s Home Buyer

Did You Know: Why New Construction Homes Are A Top Choice For Today's Home BuyerAre you in the market for a new house? If so, you may have been comparing your options when it comes to open listings on the local market. One decision you will need to consider: do you want to purchase an existing home or build a new one? Let’s explore a few reasons why new construction homes are a popular choice for today’s home buyer.

A Home Designed (By You) With The Future In Mind

Ask anyone who has recently invested in a brand-new home, and many will share that all of the built-in technology was an essential factor. Today’s homes are designed with the future in mind. High-speed networking, better wireless connectivity, high-tech security and other features are all benefits that typically can’t be found in older homes.

Of course, don’t forget that you play a role in the design choices in a new construction home. It is your chance to design all of the features you would want in a dream house.

Energy And Cost Efficient

As you might imagine, homes constructed with modern designs and materials are vastly more energy than older homes. Tighter seals, better insulation and more efficient heating and cooling all translate to lower utility costs. Moreover, while the savings per day might seem small, over time, they add up. Leaving more money in your pocket for investment, saving or other purposes.

If you want to take it a step further, you may even decide to expand your new construction home with solar panels or other high-efficiency upgrades.

Less Maintenance Means More Free Time

Finally, you can sleep soundly knowing that a new construction home needs far less maintenance work than an older home. Of course, there will still be the occasional job that needs taking care of. So you will want to be diligent in fixing up any damage or issues that do occur so that the problem does not spread. But overall, you can expect to spend less of your free time repairing things and more of it relaxing and enjoying life.

These are just a few of the many great reasons to invest in a brand-new home. To learn more about financing a new construction home, contact us today. Our professional team is happy to discuss your needs.

Buying in 2018? Get Your Down Payment Ready Now by Tapping These Helpful Sources

Buying in 2018? Get Your Down Payment Ready Now by Tapping These Helpful SourcesAre you in the market for a new house or condo in 2018? With the new year just around the corner, now is the time to get all of your financial details in order. As you may know, buying a home is a significant financial transaction. But it all starts with your down payment, which is the lump sum that you invest in order to purchase the home. In today’s blog post we will share a few sources of funds that you can tap into for help saving up your down payment.

Peer Into Your Financial Future

A helpful first step is to map out your financial future. Do you have any lump-sum payments such as an annual bonus or a tax return coming up? If so, those are excellent sources of funds to help build up your down payment.

Put A Stop To Unnecessary Spending

Anytime you want to save money, an obvious step is to cut as much unnecessary spending as you can. Invest the time in creating a strict monthly budget which includes setting money aside for your down payment. Be sure to watch for any daily habits that are eating away at your savings, such as high-priced specialty coffees or eating out regularly.

Research Local Homebuyer Assistance Programs

Don’t forget that you’re not alone in your quest for home ownership. There are numerous federal, state and municipal homebuyer assistance programs that offer financial help when buying a home. Your local real estate professional will be happy to share some insight.

Check In With Your Employer

Finally, don’t forget to check in with your employer to see if there are any home ownership grants or subsidies. Down payment and home-buying assistance programs are becoming more popular with companies as an extra perk to offer employees. Send a quick email or stop by the human resources department to let them know you’re in the market for a home and to see if any programs are on offer. If your workplace does have a program like this, it’s the perfect time to take advantage.

Having your down payment funds ready will make the buying process faster and show your mortgage lender that you’re prepared for home ownership. For more information, contact your trusted mortgage professionals. We’re happy to share some amazing listings that perfectly suit your needs.

Make 2018 the Year You Escape the ‘Rental Trap’

Make 2018 the Year You Escape the 'Rental Trap' by Buying Your Own HomeAre you growing tired of paying rent each month and not building your net worth? Being stuck in the ‘rental trap’ isn’t much fun, but if you are determined, you can break out. Let’s explore some of the steps that you can take to make 2018 the year that you become a homeowner.

Rent Money Is Lost Money

First – why homeownership? As you may already understand, money spent on rent is ‘lost’ money. Each month you pay your rent, but you do not build any equity, own any property or get any other benefits in return. When you own a house, the money you spend each month is being invested in the home. You are building value in the home over time which you can then realize if and when you decide to sell.

Choose Your Home And Location Wisely

Do you know where in the local area you want to live? And what kind of home you want to live in? If you are a single young professional, a condo or apartment might be the perfect starter home. However, if you are married and have a family, there will be other factors such as schools and amenities to take into consideration. Invest some time in going through local real estate listings and making a short list of communities that seem like a good fit.

Polish Up That Credit Score

Ask yourself: how is your credit score looking? Is it perfectly spotless? Or do you have some past issues that need cleaning up? It is worth checking in with one of the major credit reporting agencies to find out your credit score and if there are any blemishes that need to be taken care of. You can request a free credit report once per year, so take advantage today.

Get Your Down Payment Saved Up

Finally, if buying a home in 2018 is going to be realistic, you will need to ensure that you have your down payment saved up. Although it is possible to buy a house or condo with no down payment, there are pros and cons to this approach. If you can save 10 or 20 percent of the cost of the home, it will go a long way in helping to get your mortgage approved and the sale closed.

If you are ready to break out of the rental trap and start down the path to homeownership in 2018, contact us today. Our professional mortgage team is happy to share how we can assist you in becoming a homeowner.

4 Questions to Find Out If You Are Ready for Home Ownership

Are You Ready for Home Ownership? Find Out by Answering These 4 QuestionsHave you been dreaming about a larger, roomier or more luxurious living space? Or perhaps just want to experience the joy of owning your own home and building your net worth instead of renting? Let’s explore a few questions that can help to answer whether or not you’re ready for a new lifestyle as a homeowner.

Can You Realistically Afford To Buy A Home?

The first consideration to make is a financial one: can you afford it? Buying in a home is a significant financial investment. In most cases you’ll need to manage monthly mortgage payments for many years. The good news: owning a home is more affordable than you might think. If you’re already a stable renter then you’re most of the way there.

Do You Have Your Down Payment Saved Up?

If you’re confident that monthly payments are no problem, then the next step is saving up enough to cover your down payment. This is a lump-sum investment that you make when you buy the home. Typically your down payment is around 20 percent of the home’s cost, but there are assistance programs which can reduce this further.

Do You Know What Type Of Home You Need?

Once you’ve cleared all of the financial hurdles, you will next need to decide exactly what kind of home you need. If you’re a single young professional, a condo or apartment might be the perfect starter home from which you can upgrade later. Or you might prefer something more rural which comes with more yard space, perfect for pets.

Are You Ready To Set Down Some Roots?

Finally, it’s worth taking some time to decide whether or not you’re ready to emotionally and physically invest in your local community. Is your career stable enough that you won’t be moving for at least a few years? What about that of your partner or spouse? If you don’t already, do you envision having children in the future? All of these are considerations that will help you choose the right neighborhood.

When you are ready, our professional mortgage team is here to help you finance the home  of your dreams.

Four Pieces of Mortgage ‘Advice’ to Take With the Proverbial Grain of Salt

Four Pieces of Mortgage 'Advice' That You Should Take With the Proverbial Grain of SaltAre you in the market for a new home? If you have been talking to friends and family or researching online, you have likely come across quite a bit of mortgage-related advice. As with anything, there is low-quality advice out there which is essential to avoid. In today’s blog post we will share four pieces of mortgage-related advice that you should take with the proverbial ‘grain of salt.’

#1: Only Get A Mortgage From Your Bank

Have you heard that you should only get a mortgage from the major bank that you use regularly? Many people believe that working with a large bank that you have a history with provides advantages, but this is not always the case. The right advice here is to seek out a mortgage lender offering products that fit your current and future financial needs.

#2: Always Take The Lowest Interest Rate

The next piece of advice you might hear is to always take the mortgage product with the lowest interest rate. As you may know, rates vary based on a wide range of factors. Taking the lowest rate might mean that you miss out on some favorable mortgage terms. It is best to trust your mortgage professional to provide you with some options here.

Don’t forget that, over time, you will be able to refinance your mortgage if rates move in a way that is advantageous for you. So you can feel safe in choosing the right mortgage now and adjust later.

#3: Always Borrow As Much As You Can

Another questionable piece of mortgage advice is to always borrow as much as you possibly can. Keep in mind that a mortgage is a loan and that you are required to pay it back. The amount you borrow should be in line with your needs and financial goals.

#4: Don’t Bother With A Pre-Approval

Finally, you may have heard it suggested that you can avoid the mortgage pre-approval process. While it is possible, this is not a good idea. Many home sellers will require proof of your pre-approval before they will commit to selling their home. If there are other buyers trying to bid on that home, they are more likely to win the bid if they can prove their finances are in order. When you are ready to buy, a pre-approval can help.

These are just a few of the many bad pieces of mortgage advice that you might hear in conversation or read online. When you are ready to discuss your mortgage options with the experts, give our professional team a call. We would be happy to share our insight and experience to help you choose the best mortgage.