Monday, October 31, 2016

Considerations In Financing Your New Home

Before you purchase your first home and finance your very first mortgage there are a few things to consider.  Consider the following as you embark on your new life journey into homeownership.
Before you hire a realtor or start looking at homes it is important to meet with a mortgage broker.  Once you have met with a mortgage officer you can determine if you have credit problems that need to be solved prior to looking for a home.  This meeting will also allow you to know exactly how much you can afford to spend on a house and an estimate of your monthly payment.
It is also important to pay off as much debt as you can before embarking into the great wide open of homeownership.  It is important to get a grip on your income to debt ratio.  Take into account all of the money that is coming in and the debts that you have going out.  Make sure to consider all forms of income and debt.  If the monthly house payment is more than forty three percent it is unlikely to get a mortgage.  It is best to keep the monthly payment to thirty percent of your monthly income.  The lower your debt to income ratio the more likely you will be approved for a mortgage and a lower interest rate then borrowers with a higher debt to income ratio.
It is important to get into good credit habits before you purchase a home.  If you find that you are constantly missing payments on student loans or constantly paying bills late it will lower your credit score and hurt your chances at obtaining a home loan.  When bills end up going into collections it can take months to clear up the mess.
Before you look into finding your first home take time to look into consolidating student loans.  Refinancing student loans can decrease the monthly payment.  It may make sense to increase the length of time you pay on your student loans in order to buy a home sooner.
It is important to present work history that shows consistency.  If you have just graduated from college it may be best to take some time and establish yourself in your career before you look into purchasing a home.   After you establish a pattern of working for two or more years you will look more appealing to home loan lenders. 
When you apply for your first mortgage be prepared to document your finances.  You will need to have copies of the past two years tax returns, bank statements, brokerage account documentation and documents that verify all sources of money that you have coming in.  Mortgage brokers will verify employment, income and debt.   This will occur at the beginning of the home loan process as well as a few days before the closing. 
While you are applying for a home loan avoid putting anything on credit or applying for any new credit.  Don't start buying things for a new home until you have the home.  Once the process begins don't spend a dime on anything you don't have to.  Avoid adding to your debt as any added expenses can jeopardize the process.
Meet with a mortgage broker that is willing to shop around for lenders that are offering the best rates, loan options and more.  Work with brokers that present you with all of your options including loans where you pay fees upfront in the form of points, interest rates, no closing costs and more.
Before you buy a home or consider meeting with a mortgage broker be sure you have enough cash on hand to cover all of your costs.  You will want to have enough money to cover the fees charged by the lender and closing agent as well as the expense of having the home inspected, appraised and surveyed.  It is also important to note that most lenders require the first years home insurance and property taxes to be paid up front. 
As a first time home buyer you may also consider looking into an FHA mortgage.  When looking into this type of loan option it is important to understand that not only will you have to qualify so will the home.  The house will need to meet certain criteria to get approved for a FHA mortgage as well.
It is important to be open throughout the process of getting a mortgage and buying a home.  The process is not simple and will have bumps along the road but the journey will be well worth it when you walk through that open door into your brand new home.
Cross Country Mortgage in Brighton, Michigan provide mortgage services for clients including new home loans, refinancing, reversed mortgages, new purchase home mortgages and home equity loans to the entire Livingston County area including Brighton, Howell and Livingston County. Cross Country Mortgage Brighton, MI at

Tips For Finding The Perfect Mortgage

Finding the right mortgage or home equity loan is not as simple as it sounds.  It is a task that should not be taken lightly.  In this installment on home loans and mortgages we will take a look into considerations homeowners need to make before, during and after the process. 
Never base your mortgage options solely on the interest rate.  You will end up incredibly disappointed if this is the sole determination for your mortgage.  The entire process of obtaining a mortgage needs to be based on establishing a relationship in which you enter into an honest agreement that benefits both parties while navigating throughout the transaction. 
A mortgage is one of several financial communications that should not be made solely through online transactions.  Getting a mortgage is nothing like buying a new rug or planter; there are too many variables that arise throughout the process that can’t be effectively addressed online.  This is not to say that mortgage seekers should exclude the internet in their search to find the best rate, calculate your potential loan and get other helpful information.  It is not a wise option to work with an internet-only based mortgage specialist.
It is best to avoid interest only loans unless you are planning on moving shortly or that the home loan is a short term bridge loan or construction loan.  When you take out an interest only loan you essentially never build any equity in your home.  You are only paying interest without building ownership in your home.
Fees in home loans are normal.  Just how much you can expect to pay will be dependent upon the loan option and the company which you get your mortgage through.  Some fees in home loans are unavoidable while some are unnecessary and junk.  Before agreeing on a mortgage and the fees that you will pay get a good faith statement that shows all of the fees associated with it. 
Here are some fees to ask about:
Application Fee:  The amount it will cost to process your mortgage application.
Points: The fees that are paid directly to a lender at the closing in exchange for a lower interest rate.  One point basically equates to $1,000 for every $100,000. 
Credit Evaluation: This is a fee that is paid to determine the borrower’s ability and willingness to pay.
Loan Processing:  The loan processing fee is charged to cover the costs of processing the application including credit checks, property appraisals and admin expenses. 
Appraisal Fee:  This is the cost for a professional to come in and estimate the value of the home.
Title Search:  The cost of a title search is typically between $75 to $100 dollars.  The title search company will research the history of a title on the home.
Title Insurance:  There are two forms of title insurance: lender's title insurance policies and owner's title insurance policies.  This protects both you and the lender. 
Documentation Fees: This is a fee for processing documentation for the mortgage.
Underwriting Fees: This is a series of loan fees, most often wrapped together including origination fees, appraisal fees, credit report fees and such.
Escrow Fees:  Lenders require the borrower to include taxes and insurance premiums within their mortgage payments.  These fees are placed in escrow, which is basically a holding account, until the payments are due.  The fees are then paid out by the lender to the appropriate parties.
Look deeper into "junk fees" that some lenders will try to sneak in including: amortization schedule fee, trustee fee, financing statement fees, appraisal review fees and such.    
Cross Country Mortgage in Brighton, Michigan provide mortgage services for clients including new home loans, refinancing, reversed mortgages, new purchase home mortgages and home equity loans to the entire Livingston County area including Brighton, Howell and Livingston County. Cross Country Mortgage Brighton, MI at