Tina McManus' Blog
When considering becoming a homeowner, one of the decisions you can make that will be beneficial to you is to deposit a down payment. However, the question is how do save up that hefty down payment?
One of the biggest roadblocks for prospective home buyers is securing a down payment. Fortunately, though, technology seems to be playing a huge factor in shrinking the burden of down payment. The whole saving process has become quite a bit less rigorous.
Below is a list of how you can overcome the down payment hurdle and ensure you have enough money when it’s time for you to buy.
Save A Fixed Amount Every Month
Saving a fixed amount is the simplest and most convenient way to save money. Open a savings account and discipline yourself to pay in a certain sum into the account every month. Discipline yourself not to use the money for any other purpose aside for your down payment.
Save a lot more than you spend, review your expenses and cut down on items that are not necessary. Whatever money generated as a result of this should be added to your down payment account.
Skip Vacations for A Year
I know going for a vacation during the year is something you are looking forward to and you have it all planned out. However, if you are looking to save up enough money for your down payment, then you should consider scrapping out vacation until you have enough money for your down payment.
Reduce Your Debt
Having a credit card with a high interest rate can limit your ability to save. Pay off your interest debt starting with the highest; after that, you can close off that card while you proceed to pay off the next.
Borrow from Your Retirement Plan
You can ask human resources or your payroll officer if it’s possible to borrow against your savings to buy a home. Many profit sharing setups make provisions for employees to loan a certain amount from their retirement plan to become a homeowner.
Borrow from A Relative
When it comes to getting a home of your own, most family members and relatives would be willing to help; they can grant you loans without interest, gifts and other non-monetary items that will help you in your down payment quest.
Get Another Source of Income
Getting a second job would mean you would probably be working round the clock, but in the long run, it would pay off. Getting another job means another source of income and more money to save into your down payment accounting.
Obtaining a mortgage can be overwhelming, particularly for a first-time homebuyer. Lucky for you, we're here to help you streamline the process of analyzing various mortgage options and choosing one that matches or exceeds your expectations.
Now, let's take a look at three tips to help first-time homebuyers secure the ideal mortgage.
1. Assess All of the Mortgage Options at Your Disposal
Both fixed- and adjustable-rate mortgages are available, and homebuyers who understand the pros and cons of these mortgage options may be better equipped than others to make the right mortgage decision.
A fixed-rate mortgage ensures a homebuyer will pay the same amount each month. For example, a 30-year fixed-rate mortgage enables a homebuyer to budget for monthly home payments over the course of three decades. And in many instances, a homebuyer may be able to pay off a fixed-rate mortgage early without penalty.
On the other hand, an adjustable-rate mortgage may start out with a lower monthly payment that escalates over the course of a few years. An adjustable-rate mortgage, for instance, may allow a homebuyer to acquire a home that surpasses his or her initial budget thanks to a lower initial monthly payment. However, after the first few years, the monthly mortgage payment may increase, and a homebuyer will need to plan accordingly.
Assess your mortgage options closely – you'll be glad you did. By doing so, you can boost your chances of selecting a mortgage that works well based on your current and future financial needs.
2. Evaluate Your Credit Score
Believe it or not, a first-time homebuyer's credit score may impact his or her ability to get the right mortgage. Fortunately, a first-time homebuyer can analyze his or her credit score without delay.
You can request a free copy of your credit report annually from each of the three credit reporting agencies (Equifax, Experian and TransUnion). Then, with your credit report in hand, you can better understand how potential lenders may view your mortgage application.
Of course, if you receive a copy of your credit report and find glaring errors, be sure to let the credit bureau know immediately. This will enable you to get any mistakes corrected and ensure these problems won't slow you down as you pursue your dream residence.
3. Consult with Potential Lenders
Although getting a mortgage may seem like an uphill climb at first, consulting with potential lenders may prove to be exceedingly valuable, especially for a first-time homebuyer.
Banks and credit unions employ friendly, knowledgeable staff who are happy to educate you about assorted mortgage options. These lenders can teach you about the ins and outs of various mortgage options at your convenience.
Lastly, if you need extra help in your search for the perfect mortgage, real estate agents may be able to offer assistance. These housing market professionals can provide honest, unbiased recommendations about lenders in your area so you can move one step closer to securing your ideal mortgage.
Ready to get a mortgage for the first time? Use these tips, and you can accelerate the process of obtaining a mortgage that suits you perfectly.
Filling out a mortgage application may prove to be a long, exhausting process. Fortunately, we're here to help you streamline the mortgage application process so you can move one step closer to acquiring your dream house.
Now, let's take a look at three tips to help you approach the mortgage application process with confidence.
1. Be Thorough
A mortgage application likely requests a lot of information about you, your finances and your employment history. However, it is important to answer each mortgage application question to the best of your ability. Because if you fail to do so, you risk delays in getting approved for a mortgage. Or, perhaps even worse, a lender may decline your mortgage application.
In addition, be honest in all of your mortgage application responses. This will ensure that if your mortgage application is approved, you will receive a mortgage that corresponds to your finances.
2. Ask Questions
There is no need to leave anything to chance as you complete a mortgage application. Thus, if you're uncertain about how to respond to various mortgage application questions, reach out to a lender for assistance.
Remember, there is no such thing as a "bad" question, especially when it comes to filling out a mortgage application. Lenders employ friendly, knowledgeable mortgage specialists who are happy to assist you in any way possible. Work with these mortgage specialists, and you can get the help you need to finalize your mortgage application.
3. Get Multiple Quotes
It may seem like a good idea to complete a single mortgage application to request home financing from a single lender. Yet doing so may be problematic, particularly for those who prioritize affordability.
Ultimately, meeting with multiple lenders and getting several mortgage quotes is ideal. If you shop around for a mortgage, you may be eligible for a low interest rate that helps you save money when you complete a home purchase.
Once you finish a mortgage application, it may be only a matter of time before you find out if you have received approval. Then, if you receive a "Yes" from a lender, you can accelerate the homebuying journey.
Of course, for those who plan to buy a home soon, it may be beneficial to employ a real estate agent. This housing market professional can put you in touch with the top lenders in your area, as well as help you complete a home search in no time at all.
A real estate agent typically learns about a homebuyer's goals and crafts a strategy to help this buyer accomplish his or her aspirations. Furthermore, a real estate agent provides recommendations and tips to help a homebuyer make informed decisions throughout the property buying journey. And if a homebuyer ever has concerns or questions, a real estate agent is available to respond to them.
Ready to complete a mortgage application? Use the aforementioned tips, and you can finalize a mortgage application, obtain home financing and make your homeownership dream come true.
Refinancing your home can have many benefits. First, you’ll be able to take out money to address immediate needs in your home like improvement projects. These things can only benefit your home’s value in the long term. Before you take the leap to refinance your home, you should be sure that you’re actually ready to take this step. Knowing what you’re in for allows the entire process to go more smoothly. Read on for tip to understand more about the refinancing process and what you’ll need.
Know Your Finances
Just like when you initially purchase a home, refinancing your home will require you to have your finances in order. Take a look at your budget and needs and determine if it makes sense for you to refinance your home. For example, your employment status or distance from life goals like retirement could have a factor on the term of the loan you’re willing to take out. A 15-year mortgage may make more sense than a 30-year mortgage, but your monthly payments will also be a bit higher. You need to take all of this into consideration before you refinance.
Your credit score will also be a factor in refinancing your home just as it was when you initially bought your house. Check your score and see if any red flags pop up. Getting these corrected earlier rather than later can help you to get a better rate on the loan. There are plenty of free services that exist online that allow you to check your credit score.
Know The Value Of Your Home
If you know the value of your home and understand how much equity you’ve built up in the house, it will give you a better idea of your refinancing options. You can’t get more than 70% of what your home is currently worth as a cash-out refinance. If you owe more than your home is worth, you might be in a tighter financial situation than you realize. You can do plenty of things to increase the value of your home; it will just take some time. You may even consider selling your house, making a move, and starting from scratch. Financially, this could be the best option, and you could also end up with a better interest rate.
Getting your finances in order and the simple act of preparing for a home refinance could give you some insight into your financial picture after being a homeowner for some time.
Stay out of debt. Don’t open new accounts. Pay down any debt you may have. That is the standard advice for people who are trying to get in good financial standing before buying a home or refinancing a home.
Do some research and find the best home loan refinance rates around. Then, look into your own finances and decide what’s best for you regarding refinancing your home loan.
Many first-time home buyers are worried about all of the documents and information they’ll have to gather when applying for a mortgage. If you’re anything like me, you’re probably dreading having to dig through the five places that these documents might be. Fortunately, the process is now somewhat streamlined thanks to lenders being able to collect most of your information digitally.
In today’s article, we’ll talk about the documents you’ll need to collect when you apply for a home loan so that you feel prepared and confident reaching out to lenders.
Documents needed to pre-qualify
Before going into applying for a mortgage, let’s talk about pre-qualification. There are three types, or in some cases steps, of approval with most mortgage lenders: pre-qualification, pre-approval, and approval.
Pre-qualification is one of the earliest and simplest steps to getting pre-approved. It gives you a snapshot of the types and amount of loans you can receive. Pre-qualification typically doesn’t include a detailed credit analysis, nor do you need to provide many specific details or documents.
Typically, you’ll fill out a questionnaire describing your debts, income, and assets, and they will give you an estimate of the loan you might qualify for. Might is the key word here. Your pre-qualification amount is not guaranteed as you haven’t yet provided official proof of your information.
Documents needed for pre-approval
Getting pre-approved for a mortgage entails significantly more work on the part of you and your lender than pre-qualification. First, the lender will run a credit analysis. You won’t need to provide them with any information for this step, as they’ll be able to automatically receive the report from the major credit reporting bureaus. However, it’s a good idea to check your report before applying to make sure there aren’t any errors that could damage your credit.
Now is where the legwork comes in.
You’ll need to gather the following documents to get officially pre-approved or approved for a mortgage:
W-2 forms from the previous two years. If you are self-employed, you’ll still need to provide income verification, usually as a Form 1040, or “Individual income tax return.”
Two forms of identification. A driver’s license, passport, and social security card are three commonly accepted forms of identification.
Pay stubs or detailed income information for the past two or three months. This ensures lenders that you are currently financially stable.
Federal and State income tax returns from the past two years. If you file your taxes online, you can often download a PDF version that includes your W-2 or 1040 forms, making the process of submitting tax and income verification much easier.
Personal contact information. Name, address, phone number, email address, and any former addresses which you’ve lived in the past two years.
Bank statements from the previous two months. Also, if you have any assets, such as a 401K, stocks, or mutual fund, you’ll be asked to include those as well.
A complete list of your debts. Though these will likely be on your credit report, lenders want to ensure they have the full picture when it comes to how much you owe other creditors and lenders.