5 Things That Can Affect Your Housing Loan

housing loanEvery year, the number of new homeowners dwindles.

There are several reasons why. It could be due to outlying student debt or diminished general appeal. Or maybe it’s simply the daunting task of trying to get a housing loan.

Becoming eligible for a loan can seem difficult, but no home seeker should let that stop them. We’re here to help you learn the things that can affect the approval of your loan.

Let’s get into it.

Credit Score

Banks and other lenders will take a look at your credit score to know whether giving you a loan will be a risky investment on their part or not. The amount of income you make doesn’t have much of a say on this. You could make a lot of money and still have a bad credit score.

Your credit score can have an effect on how much of a loan you can get, as well as the interest rate.

Take some time to find out your own credit score before approaching any lenders. Be certain to check your credit report for errors or flaws. You don’t want any wrong information to affect your rates or chance to secure a loan.

Being Self-Employed Can Deny You a Housing Loan

Regardless of how much you make in a year through your self-employment endeavors, the fact remains that it can look poorly to banks and other lenders. Self-employment can look far too variable in their eyes and can make you seem like a risky investment.

Unfortunately, there isn’t much you can do about this, but it is good to know about so that there aren’t any surprises coming your way.

A good thing would be to bring any pay stubs with you when meeting with your potential lenders. This could help you get a quicker approval.

Never Had a Loan

Strange as it may sound, sometimes being loan-free can be a bad thing. Because you’ve never taken a loan before, banks and other lenders can’t easily decide if you are a trustworthy client or not.

Are you the type of person to pay on time? They have no way of knowing and it’s likely they aren’t willing to take that risk.

One way around this predicament is to take out a small personal loan or credit card a year or two before. If you make the payments on time or are able to pay the loan back, you will build up your credit score and show banks that you can be trusted.

Debt to Income Ratio

A lot of the time, people will try to get a loan for far more than they can actually afford. This will, in turn, plummet their credit score and end up being more trouble than it needs to be.

Knowing your Debt to Income Ratio is a good way to figure out how to make a loan’s payment reliably with your monthly income, all while factoring in all of your other due payments as well.

Take a moment to look at your numbers before deciding how much to ask for your housing loan.

Being Dishonest

It could be tempting to try and hide a particular debt in order to get a housing loan, or maybe make a bad set of debt seem a little better. But honesty is definitely the best policy when it comes to dealing with banks and lenders.

Being dishonest in any of this will risk you being charged with fraud, and it will make it much more difficult to ever find a bank or lender that will want to work with you in the future.

Conclusion

We hope that this has helped you understand more about the process and that you’ll find it easier to expect what will affect your loan. We wish you all the luck in the world for the future.

The feeling of owning that perfect house is way too precious. And we want to help you!

If you have any questions or concerns, please feel free to contact us!

5 Essential Facts About USDA Home Loans

usda home loans

Buying a home or getting a mortgage loan may feel like it’s becoming increasingly harder as the years pass. Because of this, if you’re branching out, you may want to consider USDA home loans.

USDA loans come with their own sets of qualifications and are usually geared for rural or low-income buyers. However, there are a number of benefits to taking out this type of loan. Let’s take a deeper dive and explore 5 of those benefits!

Purpose

The purpose of USDA home loans is literally to assist low-to-moderate income buyers in rural areas in purchasing a home.

When you don’t have a lot of money, sometimes it can seem like actually owning a home is a pipe dream. USDA home loans help give people who aren’t wealthy a chance at affording a home.

This can help promote prosperity, according to the US Department of Agriculture. USDA loans exist to promote happiness, harmony, and improve the quality of life.

Types

There are two types of USDA loans: direct and guaranteed. Direct loans have more requirements to use. Your property has to qualify as “modest in size” for your area, and it cannot have a market value that exceeds your loan limit. There are also limitations put on your home itself.

Direct loans are aimed at low-income families, so the requirements can be strict.

Guaranteed loans are similar, but they open a few more doors and aren’t quite as strict.

Qualifications

Direct and guaranteed loans have different sets of qualifications. To qualify for a direct loan, you must not own a home. You also must not be able to obtain a loan elsewhere, and you have to legally be able to handle a loan.

If you’ve been suspended from participating in federal programs, you will not be able to apply.

Guaranteed home loans have income-eligibility requirements. To get a guaranteed loan, you must also be a US citizen or otherwise qualified, and you need to be able to pay your credit obligations in a decent amount of time.

Down-payments

The great thing about USDA home loans is that they don’t require a down payment.

If you’re a qualified borrower and have been approved for the loan, there’s no down-payment required. This can wind up saving you thousands in home-buying costs and upfront expenses.

Insurance

USDA loans do not have private mortgage insurance, also known as PMI. Instead, your USDA loan will have a premium for your mortgage insurance wrapped up in the cost.

Typically, this is about 2% of your entire loan cost. However, it’s also not a separate payment, and it’s included in the cost of your loan.

USDA home loans: the right choice

USDA loans are a great choice for people looking to purchase in rural areas. Additionally, if you’re a low-to-moderate income homebuyer, it’s very likely that you qualify for one of these loans.

A USDA loan can help you save thousands of dollars in homebuying expenses because they don’t require down payments. However, you do need to make sure that you qualify.

If you have questions regarding home loans and the home buying process, please don’t hesitate to contact us!

How to Determine Your Home Loan Eligibility

home loan eligibility

Are you looking to take that next step in your life? Have you finished browsing the net looking for that perfect place to call home?

Are you ready to become a homeowner?

Before you can actively start looking to purchase a property, the first sensible thing to do would be to check out your home loan eligibility.

Why?

Because knowing how much you can borrow not only helps you understand your own financial situation but also it stops you from getting your heart set on a place, only to find it out of your budget.

Let’s take a look at the best ways to check on your maximum home loan potential.

Calculate your Home Loan Eligibility Early To Set Your Search In the Right Area

When it comes to a home loan, the math is actually quite simple. You look at what you have coming in – your income – and you deduct your outgoings each month – your expenditure. The rest is just a matter of seeing how much you can realistically afford to pay back each month.

There are plenty of home loan calculators out there that can help you get a ballpark figure.

The main criteria that get looked at when applying for a home loan are:

Age – As harsh as it sounds, age plays a role in your home loan calculations.

Employment Status – if you are in a stable full-time job, then that is a big check in the plus column because a regular income shows the bank that you are in good standing to make your payments every month. The amount you are earning will also directly influence the amount you can borrow.

Credit Rating / Credit Card History –  If you have been living a debt free life, or at least maintaining your credit card by paying off your purchases in a simple large lump sum each month, then you score maximum points. The better managed your credit card history, the better image you produce for the banks looking to lend you money.

Choosing the Right Home Loan for You

There is more to finding a home loan than just understanding your home loan eligibility. Loan types and duration are also deciding factors.

The core loan types you should be looking at:

Fixed Interest –  The simplest loan. All you need to do is set your interest rate for 15-30 years and simply let your payments run. A great loan for those that are buying with the intention of staying put, and want to know exactly how much they will be paying for the foreseeable future.

Adjustable Rate Mortgages – If your credit rating is working against you, then you can counter balance this to some degree by taking a flexible interest rate loan. Here, the rate is set for a shorter period of time and will then be adjusted.

Federal Housing Administration Loan – For many people, being able to save the average 20% needed for a downpayment on a home, can be tough. With FHA home loans, you can put down as little as 3.5% on a down payment and move on with a fixed interest rate.

The only caveat with this is that you need to take out mortgage insurance, which you can spread over the life of the loan. This totals to approximately 1% of the full loan value.

Buying a Home is the Biggest Decision You Will Make

Making the decision to buy a home is one of the biggest things you will do in your life. To do so without due care and attention can be problematic.

By first understanding your home loan eligibility you can get yourself started on the next phase of your life with a clean conscience, knowing that you are not getting yourself into financial trouble.

If you need help with arranging your home loan or are looking for a quote, get in touch with us today. We are here to help.

A Complete Guide to VA Loans For Veterans

loans for veterans

I’m sure it comes to no surprise to you that today’s economic climate is difficult to navigate when looking to buy a home, perhaps especially for veterans.

It can be overwhelming considering that many types of loans for veterans that are out there.

We know what to do and what not to do when buying a home. A VA mortgage loan can be a great option for veterans and their families, and we’ll help explain why.

What are VA Loans for veterans?

A VA (Veterans Administration) Loan is a mortgage loan provided to American veterans of the armed forces.

This loan is popular amongst other types of loans for veterans because there is no required down payment as well as no private monthly mortgage insurance.

This loan can be used towards:

  • purchasing a home
  • building a home
  • refinancing an existing mortgage

Benefits of a VA Loan

I’ve briefly mentioned a couple of the benefits of VA loans, but let’s look at those benefits a little more in depth.

No required down payment

Down payments can often amount to 5% of the loan, which can be extremely costly to provide upfront.

No required down payment is a great option for veterans and military families who cannot afford to provide a down payment on a mortgage, or who might want to save that cash for something else.

This doesn’t mean that you can’t provide a down payment (in fact, if you do anyway it could decrease the funding fee), but it’s a great option for those looking to own without a lot of cash on hand.

No required mortgage insurance

Many conventional loans require borrowers to have expensive private mortgage insurance.

Instead of this, VA loans have an upfront funding fee that goes to supporting the VA Loan program.

Low interest rates

VA loans have a lower average interest rate than other types of loans, which will save you money in the long run.

Limited closing costs

“Closing costs” is a general term for a myriad of extra charges you can face as a loan borrower as you are finalizing a loan.

The great thing about VA loans is that the VA loan program actually limits the amount of closing costs you as the buyer would have to pay (even not allowing certain fees to be paid by VA loan borrowers).

Getting Approval

Once you’ve reviewed all the information and have decided this is the loan for you, it’s important that you are both eligible and are able to get approval for the loan.

First, you should get a certificate of eligibility from the VA. You should also have a sufficient, steady income as well.

Finally, they will check your credit score.

Be careful to not spend too much right before you apply for the loan, as this can negatively affect your credit: stay away from other large purchases (like a car for example) until after you’ve secured the loan.

Conclusion

VA loans can be an excellent option for veterans looking to own a home, especially considering this program’s success.

We understand that loans and mortgages can be daunting and overwhelming.

Hopefully this information has helped you to understand one option for you and your family.

Share this article if you found the information helpful, and if you have any questions, feel free to reach out to us!

Existing Home Sales Report Shows Highest New Home Inventory Since January 2012

Existing Home Sales: Highest New Home Inventory Since January 2012The National Association of REALTORS reported that existing home sales for July came in at 5.39 million on a seasonally adjusted annual basis. July’s reading exceeded both expectations of 5.21 million existing homes sold and June’s reading of 5.06 million homes sold.

This suggests good news for home buyers who’ve been constrained by limited supplies of homes for sale.

As home prices continue increasing in many areas, more homeowners are likely to list their homes for sale. Existing home sales for July rose by 6.80 percent year-over-year.

The Federal Housing Finance Agency Home Price Index reported a 7.70 percent year overyear increase in prices for homes financed by Fannie Mae or Freddie Mac.

This reading was slightly higher than May’s year-over-year reading of a 7.60 percent increase in home prices.

New Home Sale Inventories Also Growing

New home sales for July dropped by 13.40 percent to a seasonally adjusted annual reading of 394,000; this was lower than expectations of 485,000 new homes sold, but this expectation was based on June’s original reading of 497,000 new homes sold. June’s reading has been adjusted to 455,000 homes sold, which likely would have resulted in a lower expectation.

New home sales were lower in all four U.S. regions:

-16.1 percent in the West

-13.4 percent in the South

-12.9 percent in the Midwest

– 5.7 percent in the Northeast

While this isn’t great news for developers and home builders, supplies of new homes for sale jumped from a 4.30 month supply of new homes in June to a 5.20 month inventory of available new homes in July. This was the highest inventory of available new homes since January 2012.

Monthly New Home Sales Continue Upward Trend

Month to-month sales of new homes tend to be volatile, but July’s year-over-year home sales were 6.80 percent above new home sales in July 2012.

Higher mortgage rates likely stifled sales, but slower sales would increase inventories of available homes. More homes available would help ease constraints on buyers and level then playing field for home buyers who have been competing for few homes in strong seller’s markets.

Rising mortgage rates could continue, especially if the Federal Reserve begins tapering its $85 billion in monthly bond purchases, a program known as quantitative easing. The Fed has announced that it may start reducing the QE program before year-end.

When QE purchases are reduced, securities prices can be expected to fall due to less demand, and mortgage rates can be expected to rise.

Existing Home Sales: Second Highest Level Since 2009

Existing Home Sales Second Highest Level Since 2009

According to the National Association of REALTORS®, national sales of existing homes in June came in at 5.08 million.

June’s reading was reported to be the second highest since November of 2009; this should calm concerns about a lapsing recovery in housing markets.

Summer typically produces the highest prices for existing homes sold, as families seeking larger homes frequently move during summer months.

The June inventory of existing homes improved by 1.90 percent to 2.19 million homes or a 5.20 month supply. June’s number of available homes was 7.60 percent lower than in June 2012.

The shortage of available homes has been causing buyers to turn from existing homes to new homes in areas where both available homes and/or land for new construction are in short supply.

Average Home Prices Continue Their Climb Nationally

So the news of more existing homes for sale is good news for home buyers and housing markets that have been held back by an excess of buyers seeking a short supply of available homes.

NAR chief economist Lawrence Yun noted that inventories of existing homes are expected to “broadly favor sellers and contribute to above-normal price growth.”

This trend was supported by June’s national average price for existing homes at $214,200, which represented a year-over-year increase of 13.5 percent. Rising home prices and mortgage rates continue creating financial challenges for first-time buyers and others seeking affordable home prices and mortgage loans.

Distressed home sales were down from 18 percent in May to 15 percent in June; this is the lowest market share since tracking began in 2008. June sales of distressed homes were significantly lower than in June 2012’s reading of 26 percent of existing homes sold.

The National Association of REALTORS® noted that falling levels of distressed sales are contributing to higher prices for existing homes.

FHFA Reports Home Prices Rise In May

The Federal Housing Finance Agency (FHFA) reported Tuesday that prices for homes financed by Fannie Mae and Freddie Mac rose by 0.70 percent in May as compared to April’s downwardly revised 0.50 percent increase in home prices.

According to the FHFA Housing Price Index (HMI), home prices were up by 7.30 percent year-over-year in May, and are roughly equal to home prices reported for January 2005. May’s home prices remained 11.20 percent below peak prices reported in April 2007.

May’s FHFA data demonstrated steady growth of home prices for all nine census divisions on a year-over-year basis with home prices increasing from 2.70 percent to 15.80 percent in May.

Four Quick Tips To Buying Your Next Colorado Springs Home

Buying a home doesn’t have to be stressful! Here are four quick tips to make the process stress free!

1. Find a reputable, experienced real estate pro. Today’s Realtor will not only help you find a home, but also guide you correctly through the whole buying process.

2. Understand the process. Research as much as possible and know what to expect from beginning to end.

3. Know how much you can afford – Eliminate surprises by establishing a budget.

4. Don’t wait to buy real estate…. buy real estate and wait. Real estate is a long-term investment so take your time and find the right home for you and your family!

More information

How to Qualify for a USDA Loan

If you are planning to buy a home in a rural area, ask your real estate professional whether or not the area qualifies for USDA Home Loans.  For properties that qualify, you may be able to finance 100 percent of the purchase price of the home on a 30 year fixed interest loan.
Because the USDA loan program does not require a down payment, you can hold onto the money you would have put down on another property outside the USDA loan area. Or, you can use the down payment funds to repair or improve the property.  It’s your call under the terms of a USDA home loan.

How does it work?

USDA home loans are originated by the federal government, but serviced through direct lenders.  The repayment of the loan is guaranteed by the United States Department of Agriculture.  This means you can use any traditional mortgage lender, but the loan must meet the USDA loan guidelines in effect at the time of the mortgage origination.

The application process for a USDA loan is essentially the same as any other loan, but the lender must ensure that you and the property both qualify for the USDA program.  Eligibility of the property itself is determined not by the potential buyer, but by the location of the property.

Will you qualify?

Your ability to get a USDA loan is determined by your financial history. If you are a United States citizen and have a solid credit history (the usual qualifying score is between 620 and 640) and meet the usual income requirements, you can be qualified for USDA loan (presuming the home is located in a rural area covered by USDA loans). A steady job with a reasonable income is generally required for a loan approval.

You cannot qualify for a USDA loan if you have had a bankruptcy in the previous three years.  You won’t need perfect credit, to get financing through USDA, but the more you pay attention to your financial record, the more likely you are to get a USDA loan approved.

If you are first time home buyer or if you simply want to purchase a property that qualifies for a USDA home loan by virtue of its rural location, now is the perfect time to talk to your real estate professional about starting the qualifying process.  USDA home loans offer you the flexibility, stability and economy you need to make your plans for a new home a reality.

FHA Loan Limits for Teller and El Paso Counties, Colorado

If you are planning to purchase a home in either Teller or El Paso counties in Colorado, FHA loans may be available that can help you turn your dreams into reality. First though, there are some things you need to understand about Federal Housing Authority loans that can help you make smart financial decisions.

An FHA loan is designed to guard the interests of lenders against the potential of a loan default by the purchaser.  The federal government assumes the risk of the loan and in most cases, offers the buyer more favorable loan terms with a higher dollar limit than he/she could otherwise qualify for. So, generally everyone wins.

Advantages

There are some distinct advantages to using an FHA backed loan to purchase your home. While there are definite limits on what you can borrow, you may qualify for a down payment as low as 3.5 percent.  The loans are assumable, so if you decide to upgrade to another home before your mortgage has matured, the next buyer may be able to assume your favorable rates. That’s important, because the interest rates right now are close to the lowest they have been in decades.

FHA loans also offer some protection to the buyer should he/she come on hard times. This has the potential to protect you if you should lose your job or become ill.  You have the ability to set your payment terms and if needed, you may be able to fund some improvements to your property under FHA. It is important to read your loan terms completely and seek the advice a real estate professional to clarify what your loan offers.

Disadvantages

Is there a down side?  Well, it depends on your perspective, but FHA loans are often capped for specific areas. The insurance and premiums you pay may cost more than a private mortgage and you may or may not be interested in granting the government an interest in your home loan.  It’s really up to you to do the research and understand the terms FHA is offering.

Currently, Teller and El Paso County FHA loans are capped at $284,500 for a single family home, $416,050 for a duplex, $502,000 for a tri-plex and a four-plex is capped at $625,000.  So, if you have wanted to make your home dreams come true in either Teller or El Paso Counties, consider asking your lender for an FHA loan today!

FHA/VA What You Need to Know about Financing Rural Homes

Rural property guidelines that must be followed when financing with an FHA or VA mortgage home loan.

Rural Home Guidelines 1

Courtesy of Mortgage Currentcy

Rural Home Guidelines 2

Courtesy of Mortgage Currentcy

Rural, FHA and VA Home Loan Guidelines