18
May
By First Rate Financial Group
Home Mortgage Tips

What Fees Are Involved With a Reverse Mortgage? Let’s Take a Look

What Fees Are Involved With a Reverse Mortgage? Let's Take a LookInvesting in a home may be one of the most significant purchases you’ll make in your lifetime, but many people forget that there are a number of other costs associated with buying a home. If you’re considering a reverse mortgage and want to be clear on all of the fees involved, here are a few things you can expect to come across.

Initial Home Appraisal Fee

In order to ensure that you qualify for a reverse mortgage, you’ll need to spend a lump sum up front to determine the market cost of your home. While the amount of this fee will depend on the size and age of your home, it generally runs from a couple hundred dollars to less than a thousand and will be paid to the appraisal company that you’re dealing with.

Mortgage Insurance Premiums

At the time that you close on your mortgage, you’ll be required to pay a mortgage insurance premium (MIP) in order to secure your loan. This amount will vary from lender to lender and will be calculated based on the lesser-appraised value of your home. In addition to this, annual mortgage insurance premiums will be charged throughout the entire period of the loan and will be a percentage of the outstanding balance of your mortgage.

Loan Origination Fee

In order to process and underwrite your loan, you will also be required to pay a loan origination fee, which covers the administrative costs. While this amount has come down in recent years, it is a sizeable lump sum that hovers around 2% of your home’s value up to $200,000. If the home’s value exceeds this amount, it will go down to 1% after the initial amount is charged.

Other Third Party Fees

Like any mortgage loan, there are a number of one times fees that you’ll need to pay in order to secure your mortgage. In addition to a monthly servicing fee, there will also be fees like surveying, title fees and credit checks that will be added on to the total cost of your mortgage product. It’s important before choosing this option to ensure that you know what costs you’ll be dealing with.

A reverse mortgage may be the right mortgage product for you, but it’s important to be educated of all of the costs before choosing this option. If you’re currently considering other mortgage products, you may want to contact one of our mortgage professionals for more information.

17
May
By First Rate Financial Group
Mortgage

Use A Fixer-Upper Mortgage To Expand Your Options

Use A Fixer-Upper Mortgage To Expand Your Options

Many people purchasing a home for the first time are running into the same problem. There simply are not enough starter or entry-level houses available in the current market that are ready for people to move into. One solution some home buyers are exploring is to buy a fixer-upper home. With a home renovation mortgage, prospective homebuyers can qualify for a home loan that combines the cost of home improvements with the purchase price of the house.

A Lack Of Affordable Homes

Regardless of whether they are brand new or resale homes, there simply are not enough affordable homes for first-time homebuyers. A significant number of new houses are built for people who are looking to purchase their second or third home. Furthermore, because there is a lot of demand for affordable entry-level houses, their prices have gone up. This makes it very difficult for first-time homebuyers to qualify for a mortgage for an entry-level home. 

Consider Fixing Up An Existing Home

With a lack of affordable homes, it only makes sense for first-time homebuyers to consider buying and repairing entry-level homes that might be in need of repair. Because a lot of people do not want to purchase a house that requires repairs, first-time homebuyers might be able to save money by going this route. 

There are two separate home renovation loans available. The first is the FHA 203k loan, which is insured by the Federal Housing Administration. The other option is guaranteed by Fannie Mae, and it is called the HomeStyle loan. These loans can cover the cost of most home improvements, regardless of how large or small they might be. Both of these loans can be used to cover cosmetic and structural renovations. With access to this loan, it is possible for first-time homebuyers to begin work immediately after the closing process is done. 

Consider Taking Out A Home Renovation Loan

The FHA 203k is for primary residences only. The Fannie Mae HomeStyle loan can be used for either a primary residence or an investment property. They require a minimum credit score of 620 and a down payment of at least three percent. These loans could make it easier for first-time homebuyers to afford a house. 

 

13
May
By First Rate Financial Group
Home Mortgage Tips

Wondering How Much Mortgage You Can Afford? Here’s How to Calculate It

Wondering How Much Mortgage You Can Afford? Here's How to Calculate ItMany people are aware of the financial commitment that is involved when investing in a home, but what that amounts to is different for every person. From what you can afford to what a lender will allow, there are plenty of details involved in determining the right home for you. If you’re not quite sure what the right price is, here’s how to approach home ownership and determine your debt-to-income.

Calculating Your Debt-To-Income Ratio

You may not know what your DTI ratio is, but it has a lot to with how much home you can afford. In order to calculate this amount, add together all the debts you owe each month and divide them by your monthly pre-tax income. For example, if your credit card is $150 and your rent is $900, your debt amount would be $1050. Divide this amount by your income, say $2500, to get 0.42. This means your DTI ratio is 0.42 or 42%.

What Your DTI Means

While a DTI in the high 20s or low 30s is good, anything that hovers above 43 percent may serve as a red flag to the lender. The lower your DTI ratio is, the more likely it is that a lender will approve your mortgage application since you’ll have the disposable income to deal with financial hurdles. If your dream home has you hovering close to this amount, it may be a sign that it’s a bit out of reach.

How Do You Want To Live?

It’s quite common to be taken over when you find your dream home and decide to commit. However, buying a home is a huge financial commitment, and if you’re buying more than you can afford it may drain your well-being over time. Instead of diving in, determine other expenses that are likely to come up in the next few years, whether it’s travel, a child or a new car. It’s important to have the home you want and budget when buying it, but you’ll still need to financial wiggle room in case something comes up.

There are a lot of factors involved in determining how much house you can afford, but by calculating your DTI ratio and being aware of your spending plans, you’ll be well on your way to an ideal price range. If you’re currently on the market for a home, contact one of our mortgage professionals for more information.