The Benefits of Home Ownership

Why pay the same amount for rent when you can pay that much with a mortgage while gaining equity? Most people do not think that they can afford a home and would be pleasantly surprised to find out that it is very possible. With a mortgage, the initial payments go toward paying the interest. However, over time, your mortgage payments go to reducing the principal and increasing your equity. Increasing your equity allows you to plan for future goals or for your retirement. Your equity even increases as your home value increases.  As a further bonus, your mortgage interest and property taxes are tax deductible. This is extremely beneficial in the early years since most of your mortgage payments go towards paying off interest. This can mean significant tax savings for you. For further details, consult your accountant.

The allure of renting is very understandable. Your landlord handles repairs and you are not fixed to one locale. However, before looking for apartments, talk to a loan officer to see what you qualify for and you may be surprised to find out you have more options beyond renting and can begin to search for your dream home.

What is a QM and how does it affect a borrower?

According to the Consumer Financial Protection Bureau, 92% of all current mortgages meet the QM requirements. What does this mean? Borrowers who get a Qualified Mortgage (QM) are presumed to meet the ability-to-pay rule. The ability-to-pay rule is what mortgage lenders use to make sure borrowers can actually afford their loans, over the long term, by weighing their income, assets, savings, and debt against their monthly house payments. But what are the QM’s tighter guidelines? According to Julie Schmit’s “Mortgage rules aim to halt risky loans,” a qualified mortgage cannot: 

·         “Contain risky features, such as terms that exceed 30 years, interest-only payments or payments that are less than the full amount of interest so that the home loan debt grows each month.

·         Carry more than 3% in upfront points and fees for loans above $100,000.

·         Push a borrower's total debt load above 43% of his or her monthly income, unless the loan is eligible to be backed by Fannie Mae or Freddie Mac, or a federal housing agency such as the FHA, or is made by a small lender that keeps the loan on its books.” 

With this in mind, are lenders still willing to make non QM loans? Yes and some even think non QM loans are a good idea. However, with a QM loan, there is an added risk of less protection for the lender should borrowers fail in the future even though the lenders had to make sure borrowers could afford the loan. 

How to Get Your House Sold Quickly For the Best Price

Do you want to sell your house quickly?  The best approach is to view the house from the perspective of a potential buyer. Make the house move-in ready. Depersonalize your house by removing excess photos and artwork from the refrigerator. You want the buyer to see the house with their belongings. De-clutter your house to make it more open and spacious looking. Make repairs, paint and clean. A simple fresh coat of paint can make a world of difference. Look at your house and see what home inspector or appraiser will see and fix it before time of inspection. Make sure all electrical outlets are covered; there are no exposed wires or chipped paint. If you have a pool, make sure you can see the bottom of the floor. And finally, add to the curb appeal to your house by trimming the grass and hedges and adding colorful plants by the entryway or driveway.

Home Repair Scam Alert

Beware of home improvement scammers that come day after day, knocking on your door to repair never-ending problems with your home. One day, they will offer to trim trees. Progressively, they will point out additional yet needless problems that need attention, such as repairing roofs or sealing driveways. These scammers usually request funds upfront for needed materials and most with your cash in hand do not come back to finish the jobs. Most are not even qualified to perform such tasks. Most reputable contractors are too busy to knock door-to-door for your business. However, if you do choose to engage in such services, make sure the contractor is licensed, insured and bonded to do the work in your county if license is required. Also, if a permit is necessary, make sure they pull up the correct permits. If they say they do not do that, then skip the company and find a contractor that does.