Homeownership is the number one way for Americans to build wealth. Renting, on the other hand, builds no equity and subjects tenants to an inexorable climb in the cost of rent. Before looking for a home, it's important to plan. Six months before starting a home search, check your credit report. Correct any errors and see if you can do anything to improve your score such as paying off a credit card.
Also, avoid financing any big purchases or increasing the balances on your credit cards. As the homebuying season approaches, create a homebuying checklist. This checklist will save time, define a realistic price range and help you find the perfect home.
Here are some important checklist items:
Many homebuyers become emotionally attached to a home only to discover they can't afford it. This wastes time and makes the experience unpleasant, causing them to start again from square one. To avoid this, define a budget based on your current income, then use a mortgage loan calculator to determine the price range that fits.
Remember that the mortgage isn't the only cost of ownership. Be sure your estimate factors in other costs, such as:
Never home shop without a mortgage pre-approval. The pre-approval shows the seller you are serious, which gives you leverage in negotiations. It also defines the maximum price you can consider.
Keep in mind that just because a bank approves you for a maximum amount doesn't mean you can really afford it. You have to look at your own budget, spending habits and upcoming potential expenses that the bank has no way of knowing. For example, if you plan to have children and will need daycare, will the increased costs of child-rearing put you in the red?
Finding the right loan officer makes all the difference. Good loan officers have access to many home loan options and can suggest the right loans for you. For example, HomeTown Lenders' loan officers provide all types of loans, from conventional/jumbo to FHA, VA and USDA.
HomeTown can help you find a great real estate agent in the area, you can be assured of working with an experienced agent who understands the nuances of the neighborhood and municipality you are considering. Real estate is very local, so you want someone who's plugged into the community.
List what's important, including items such as:
A column for wants and a column for needs work best.
The homebuying process takes time and effort, but it's always worthwhile to find the right house. Shopping online, visiting open houses and reviewing suggestions from your real estate agent should all be part of your checklist.
Buying a home can feel overwhelming. Many homebuyers find that getting advice from family members and friends helps them gain different perspectives and identify pitfalls. Organizing important steps in a checklist helps you stay organized and focused on finding your dream home.
HomeTown can help you with each step in the process. Click here to get connected and learn about the HomeTown Advantage.
Building a dream home tops many peoples' bucket list. It provides a chance to choose a design that suits their personality and provides the ideal functionality for their family. When you build your own house, you also don't have to spend a fortune buying a home and then endure an expensive rehab project. The house is perfect from the day you take up residence.
Most of us don't have hundreds of thousands or millions of dollars lying around, so crossing building your dream home off your bucket list requires financing. Here at Hometown Lenders, we offer what we feel is the ideal form of funding for new construction: construction-to-permanent loans.
These loans differ from other types of construction loans in that they automatically convert to a regular mortgage when construction is complete.
As you'll see in the following paragraphs, this saves money and secures your interest in the property.
Construction-to-permanent loans finance the new build and are then converted into a purchase loan at the end of construction. This differs from a construction loan. A plain construction loan finances the build only. Upon completion, you need to apply for a mortgage. This leaves you in danger of being forced to pay a higher interest rate or even losing the home.
Building even a small home takes months, and builders need years for some of the larger ones. With a plain construction loan, you are subject to the risk of interest rates rising, which could result in a much higher than anticipated mortgage payment. Your personal circumstances, such as your income, could also change, resulting in a higher interest rate or inability to qualify for a mortgage on your dream home.
A construction-to-permanent loan can reduce these risks. It is also based on the projected value of the home after construction. Construction-to-permanent loans are a construction loan and a purchase loan wrapped into one streamlined process.
Construction-to-permanent loans reduce risk by allowing you to lock your interest rate and enjoy steady payments. During construction, you make interest-only payments. The lender pays the builder in draws according to a pre-planned schedule, and you make payments only on money that has been disbursed.
The lender disperses loan proceeds according to a pre-planned schedule. This benefits the borrower because it contains costs. Your home has to be built within the loan budget, which prevents you from making costly mistakes and keeps the home builder honest. The lender also inspects the work along the way to ensure the project stays on track.
Though staying within budget is important, construction-to-permanent loans are flexible. No one can completely foresee every occurrence. Because of this, construction-to-permanent loans are adjustable within reason.
Hometown Lenders offers its services to help you build your dream home. Construction-to-permanent loans are a niche product that serve a specific need that not all borrowers may need. Hometown can work with you to ensure that you are in the best product for your needs.
Our loan pros are standing by to help you get the financing you need stress free. Please start your application at Hometown Lenders.
U.S. mortgage debt has surpassed the 2007 peak. Much of the rise comes from tech-boom cities. Before taking a mortgage, Hometown Lenders recommends its customers evaluate the local market carefully. It's also crucial to understand mortgage basics and calculate affordability.
The average mortgage balance in the U.S. has surpassed 2007 levels by 9.49 percent. Many economists are worried, while others believe the U.S. economy will continue to support even higher housing prices.
Before taking out a purchase loan or refinancing, Hometown Lenders, an Alabama-based mortgage lender with the ability to originate loans in 37 states, recommends its customers become educated on how to use mortgages to their advantage and avoid pitfalls.
In this post, we'll explain the state of mortgage debt in the U.S., how to determine affordability, the pros and cons of second mortgages, and the mortgage approval process.
WHERE DO WE STAND
The 15 states with the highest average mortgage balances are responsible for most of the growth in mortgage debt. Washington, D.C. beats out every state with an average balance of $401,035. That surpasses hyper-expensive California's $347,652. Much of the debt growth is concentrated in states with tech-boom cities.
Real estate prices in Washington State have surged to levels that rival the largest bubbles of the previous decade's housing boom. Young workers have flooded Seattle hoping to score high-tech jobs.
The same technology boom has led to housing shortages in Denver and Portland. Propelled by giant price increases in the tech-boom cities, Washington, Oregon and Colorado have surpassed or caught up to New York State in average mortgage balances.
Real estate markets are local. Some regions have more power to support prices than others. The state of the local economy should always be factored into any mortgage decision. Though real estate prices in one part of a state may be inflated, other parts of the state may still offer down-to-earth prices.
KNOW BEFORE YOU SHOP!
It's easy to fall in love with a home you can't afford. This leads to the temptation of squeezing yourself into an unrealistic budget. The loose lending standards of the 2000s allowed borrowers to mortgage beyond their means by the millions.
People got caught up in a frenzy and forgot to apply two critical ratios that determine home affordability. Had they used the front-end- and back-end affordability ratios, they may have saved themselves from becoming house burdened and facing adverse credit impacts.
Determine this by dividing a theoretical mortgage payment into your gross income. For example, if your target mortgage payment is $1,000 and your monthly gross income is $4,000, then you have a front-end ratio of 20 percent.
20 percent is a healthy front-end ratio. Conventional loans require front-end ratios of under 28 percent. FHA loans cap front-end ratios at 31 percent.
Back-end ratios determine if you can afford the mortgage and your other financial obligations. In terms of affordability, this ratio is the most important. Lenders calculate your back-end ratio by adding the proposed mortgage payment to all of the obligations on your credit reports, such as vehicle loans, credit card payments and student loans.
They then divide this total by your gross monthly income. For example, if your gross income is $4,000, and the total of the proposed mortgage and other payments is $2,000, your back-end ratio is 50 percent.
A 50 percent back-end ratio is unhealthy, and most lenders would reject an application on that basis. Conventional loans require back-end ratios of under 36 percent while FHA loans cap back-end ratios at 43 percent.
THE APPROVAL PROCESS
Lenders consider your FICO score, debt-to-income ratio and income stability. They also evaluate life events, such as previous bankruptcies or foreclosures. Conventional loans require hefty down payments and have strict requirements.
At Hometown Lenders, we make the mortgage approval process as stress-free as we can. We're happy to meet with your family and help you determine the best options. Our experts have access to many loan programs and will do their best to put you in the product that fits your needs.
They also understand the approval requirements, so don't worry. Your home-loan specialist will gather all the needed documentation and manage the underwriting process on your behalf. This leaves you free to focus on important matters like what color you'll paint the new house.
Since the housing sector shortage has been worsening - a total disaster within the last decade alone - housing prices have only further skyrocketed. This has affected everything; from the number of listings on the market to their very stock quota price, and much more.
In fact, the Washington Post has further added that housing prices soared this year by nearly 10 percent in starter homes and nearly 8 percent in trader homes. Last year's total listings in the U.S. have fallen by another 8.1 percent.
Furthermore, CNBC further notes that this factor alone has indubitably made it far more difficult for one to get a loan. Ellie Mae's, for instance, has already closed its loan applications for the time being. CEO Jonathan Corr mentioned that, what one can drastically expect to see, with rising fluidity, is an unexpected shift from a seller's market straight into a buyer's market. The move is unstoppable. This year's second quarter alone indicates over 700,000 loan applications closed.
Hometown Lenders, Inc. has led the way for many years now, 19 to be exact, and continues to be an industry role model many other businesses seek to emulate. We help people achieve their dreams of homeownership through mortgage financing.
We help individuals consolidate their debt and pay off large bills, as well as reduce their existing mortgage payments by refinancing their current loan. We believe in people before profits. And to address this current housing shortage problem, our plan of attack is as follows: We provide a turnkey lending solution for consumers that need to finance their home purchase or consolidate debt by refinancing their existing home loan.
And you may already wonder what sets us apart from the competition. Our "people before profits" mentality, for one, says it all. The executives of our company created a 501(c)3 organization called Mission Firefly that is almost fully supported by the company.
This NPO conducts ministry work across Central America, mostly focusing on clean water filtration, but touching on all the spokes of the poverty wheel, including, but not limited to, food, housing, education, clothing, medical treatment and spiritual guidance.
So, whether you're a mortgage professional, sales recruit to the HTL team, seasoned military veteran, previous customer, or even first-time loan application candidate homebuyer or seller, we invite you to check us out.
And how do customers primarily reach out to us? Through outbound sales efforts, channel partners, referrals and word of mouth. We find all kinds of means to market ourselves, so that you may know we exist to serve you when the time calls for it.
Visit us and find out more: www.htlenders.com