How to Know if You’re Ready to Buy a House

Home SignBuying a house should never be entered into lightly – and often many potential buyers may not realize the process involved. Doing as much research as possible can help determine exactly what is needed and required to make a home purchase happen.

Here are 10 great ways to help you identify the point at which making a home purchase becomes feasible for you:

1) Reduce Card Debt
When you’re trying to obtain a mortgage, perhaps the most important aspect of doing so is getting your credit card debt reduced as close to zero as possible, according to Money Under 30. That’s true for two reasons. First, the size of your credit card balances relative to your limits makes up a significant portion of your credit score. Second, lenders look at debt-to-income ratio. As long as you’re carrying relatively small balances from one month to the next (or ideally, not carrying a balance at all), you’ll be in good shape.

2) Pay Off Loans
One of the biggest hurdles (for the Millennial generation) when it comes to being financially capable of buying a home is student loans. It doesn’t mean loans have to be paid off in full, but they certainly need to be somewhat small relative to your income.

3) Having Savings
If you’re trying to buy a home in today’s market, you’ll almost certainly need to make a down payment. While it’s possible to get mortgages with down-payment requirements as low as three percent, the added long-term expense could end up costing you significantly over the life of the loan. Making as large a down payment as possible is going to keep your borrowing costs down. (Don’t forget to look into sponsored programs that help with a down payment!)

4) Rainy-Day Fund
In addition to the money that will go toward your down payment, it’s vital to have some additional money saved just in case something goes wrong with the home. As a general rule, having about $1 per square foot – or one percent of the purchase price – in the bank will help cover some basic expenses you’re likely to encounter after your home purchase.

5) A Long-Term Plan
Whether you’re buying a home as a single person or for a whole family, you need to consider what your situation is going to look like two, five, 10 or even 20 years down the road. If your housing needs are going to expand or shrink in the near future, this will affect to size and kind of home you’re looking to purchase now. (For example, it is best not to buy a small home now if you know you’ll need a larger one in a few years when you have kids.)

6) Reliable Income
Lenders also want to make sure you’re going to be able to keep up with your mortgage payments in the long term, so a steady job is a must. While no one can predict their employers’ future with 100 percent accuracy, it might not be a good idea to go house hunting at a time of turmoil. As long as you’re fairly confident in your position, home shopping should be no problem.

7) A  Comfortable Cushion
One issue some homeowners encounter after buying a home is they’ve pushed themselves so far financially trying to get ready for the real estate sales process that they come out the other side in rough financial shape. Being “house poor” means people own a house but otherwise struggle financially because of the cost of that property. You’ll need to make sure you’re not buying too much house or else risk running into other financial problems even if you can technically afford the mortgage and other costs.

8) An Understanding of What Constitutes Affordability
Along similar lines, it’s vital to not only factor in the cost of the mortgage and taxes for your home budget, but also other expenses. This may include higher electric and heating bills that come with living in a bigger space or more costly insurance coverage.

9) A List of Must-Haves and Nice-To-Haves
When people actually start shopping for homes, it can be easy to fall in love with certain properties, according to Forbes. However, while it would be nice to have a state-of-the-art kitchen with stainless-steel appliances, it’s probably going to be expensive and not necessary for your happiness in the home. Having a list of things that you will absolutely need out of your new property – big backyard, finished lower level or a home office – will help you get a better idea of what you can actually afford.

10) Your Real Estate Agent
The key role of real estate professionals in every portion of the process cannot be overstated. They will be able to help first-time buyers as well as those who have previously been through the process get as prepared as possible so they can maximize their understanding and the value they get out of buying a home.

Need help qualifying for a mortgage? Contact Sibcy Cline Mortgage Services. They have professionals who will guide you through the entire lending process.

Brought to you by HMS Home Warranty.  HMS is an industry leader with over 30 years of creating success for clients and providing peace of mind for customers.  To learn more: www.hmsnational.com

 

Avoid these Seven Credit Mistakes before Applying for a Mortgage Loan

Home on a Stack of CashCredit history is an important factor when applying for a mortgage loan. Your FICO® score (a measure of consumer credit risk) plays an important role in your mortgage’s loan terms.

Your goal is to have a high FICO® score (700+) to achieve a lower interest rate loan. The higher your score, the lower your rate will be.  (Note: People do qualify for mortgage loans with lower scores.)

If your score is not in a higher range, you can work on boosting it higher by responsibly managing your credit over time.

Here are seven things to avoid with your credit before applying for a mortgage loan so that your FICO® score is as high as possible.

1–Not Checking Your Credit

Mistakes can occur on credit history that can affect a FICO® score. It is important to check your credit report to ensure it is accurate. There are three major U.S. credit bureaus to check: Equifax, Experian and TransUnion. If you do find mistakes, you can dispute any errors and get them fixed. Be sure to check first with your loan officer before disputing items as this can sometimes have a negative affect on your credit.

2–Applying for Credit

When you apply for credit there will be an inquiry on your credit report. This new credit application can cause a small dip in a FICO® score.  If you have a “hard” inquiry – meaning you have applied for credit or a loan, the issuer of that credit or loan will pull a report (that you have authorized) on your credit history. If your score is on the edge, this could cause you to then qualify for a mortgage loan at a higher interest rate. (Inquiries will remain on your report for two years, but FICO® scores only count for the past 12 months.)

3–Over-Using Current Credit Cards

Mortgage lenders look at debt-to-income ratios and this will include outstanding credit card balances. If you have a large monthly credit card balance, you might not receive the lower mortgage interest rate. The good news is that over-using your credit cards does not have a long-term impact on your FICO® score.

4–Falling Behind on Payments

Late payments will lower your credit score. Always be current on all of your accounts.

5–Consolidating Credit

If you move outstanding credit balances, your new credit card could appear to have too high of a ratio of debt. Your goal is to keep the balance on all credit cards as low as possible.

6–Making Large Cash Purchases

Part of your loan approval will be verification of cash in the bank. If you use this cash for a large purchase, it will lower your reserves and impact your  score and loan approval.

7–Making Large Deposits

All deposits need to be documented and accounted for. You will need to explain where the money came from.

Need help applying for a mortgage? Contact Sibcy Cline Mortgage Services. Our loan officers can guide you through the entire mortgage process.

How to Get Ready to Buy Your First Home

花火8When preparing to buy a home, it’s important for buyers to work with a real estate professional who can advise the best possible strategies for getting a mortgage and finding an affordable home. This partnership can make the real estate sales process go a lot more smoothly.

Perhaps the most important part of getting into the housing market for the first time is to do as much homework as possible before diving in. That means first determining what homes in a given area are selling for, and what that cost would mean in terms of monthly mortgage payments, mortgage insurance, homeowners insurance, property taxes and so on. Closing costs should also be considered.

A Strong Financial Profile
Buyers not only need to have savings available to make a sizable down payment, but  have the ability to afford the long-term cost of a home on an ongoing basis. Having a strong credit score will not only result in a good rating and unlock mortgage availability, but will also bring down mortgage rates (and thus the cost of a home.)

Additionally, larger down payments will reduce the principal of the loan. When buyers combine a high down payment (preferably in excess of 20 percent) along with good credit, they may position themselves to save tens of thousands of dollars over the life of their loans.

Keep in Mind
When trying to determine how much home buyers can afford, they should try to remember a few basic rules of thumb about housing costs. Generally speaking, experts advise that a mortgage payment should not cost more than one quarter of one’s monthly income. While there may be a little bit of wiggle room here, this is a good anchor point at which to set expectations for affordability.

Of course, some home buyers may have their sights set on properties that are more expensive than they can currently afford, especially with the way prices are rising in today’s market. This simply means they will need to put in more work to improve their credit score (to get a better rate) or put more into savings (to increase the size of a down payment).

Working with a real estate professional will help buyers truly understand what they should be looking for in the market and how they can best approach their home-buying efforts.

Interested in becoming pre-approved for a mortgage loan? Start with Sibcy Cline Mortgage Services.

Brought to you by HMS Home Warranty. HMS is an industry leader with over 30 years of creating success for clients and providing peace of mind for customers.  To learn more click www.hmsnational.com

First-Time Buyer? Tips to Follow to Get Pre-qualified for a Home

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It is important for first-time home buyers to know the best ways to navigate the mortgage market. Taking time to better understand the real estate sales process and how to qualify for the best possible mortgage terms will go a long way in reducing stress. Plus, getting the right type of home loan could save a buyer tens of thousands of dollars over the life of the mortgage.

Get Pre-Approval
One of the smartest things inexperienced home buyers can do to make themselves eligible to buy a home as quickly as possible is to get pre-approval on a mortgage. Your loan officer will be looking for the best type of mortgage loan to meet your needs with the lowest rate possible. A pre-approval helps the first-time home buyers better understand the true cost of homeownership: beyond the mortgage payment there is the cost for mortgage insurance, homeowner’s insurance and property taxes. Plus, with pre-approval, an offer on a home is taken more seriously by the home seller. 

Down Payment
The larger the down payment buyers can put together, the better off they will be going forward. This will not only increase chances of qualifying for a mortgage in the first place – and in doing so, getting a better rate – but also reduce their payments going forward, making homeownership more affordable. In some cases, it will also eliminate the need to pay private mortgage insurance altogether.

Work on Your Credit Score
It is also important that potential buyers
make sure their credit is up to snuff before they even think about actually applying for a mortgage. The higher an applicant’s credit score, the more likely to get approved and lock in a low rate. However, that may mean months of work to improve the financial conditions that go into a credit score, including paying down outstanding credit card balances and keeping up with all payments. (When you are buying a home it is really important NOT to make large purchases such as furniture, appliances or a new car. These type of purchases are reported to credit bureaus and can add a blemish to your credit.)

Save Money
At the same time, it’s important for new home buyers to make sure they’ve put aside additional savings to help cover closing costs and other expenses that typically crop up after moving into a home such as additional furnishings and unexpected repairs. Keep in mind that property taxes can rise. 

Talk to a Loan Officer and Real Estate Agent
Be sure to meet with a loan officer and real estate professional for guidance and valuable advice on how to proceed in the market and get the best possible deal out for your home purchase.

Brought to you by HMS Home Warranty. HMS is an industry leader with over 30 years of creating success for clients and providing peace of mind for customers. Learn more here.

 

 

Tips to Help You Prepare Financially to Buy a Home

House_Money.jpgWith the spring home-shopping season right around the corner, potential buyers are encouraged to begin preparing their finances. Working with a real estate professional will provide the proper guidance for home buyers to be prepared at to what is expected during the buying process (especially with a competitive seller’s market).

Homeownership is a dream shared by millions of Americans, but it’s not always easy for those with little or no experience in buying a home. One of the most important aspects of readiness for homeownership is having the money to support that home purchase.

Where to Begin
It is important for potential home buyers to eliminate as much debt as possible prior to buying a home. The debt-to-income ratio is often the biggest issue a lender will look at because would-be borrowers are about to add hundreds of thousands of dollars to their obligations. Generally speaking, home buyers should pay no more than 28 percent of their gross monthly incomes for their mortgage bills, and if a big chunk of that income is already going to other debts, lenders are unlikely to approve an application.

Hopeful buyers should also determine just “how much house” they can afford based on available properties in their areas. A buyer’s real estate agent or mortgage loan officer can provide that information.

Laying the Groundwork
Once the research and financial analysis has been completed, it’s time to think about credit standings and ability to make a sizable down payment. These two issues often go hand-in-hand with debt-to-income ratios because less debt means more money can go into savings as credit scores naturally start to rise. Usually the larger the down payment, the better the mortgage deals home buyers are likely to get, both in terms of getting approval on an application and lowering the ongoing costs associated with a home loan (i.e. lower interest rates and no requirement for mortgage insurance).

In addition, home shoppers will have to start putting together all their necessary financial documents that are typically associated with the mortgage process. These include pay stubs and bank statements – to prove income and savings – as well as tax returns for at least the past few years and other supporting documentation that lenders will use to verify claims made on a mortgage application.

It’s strongly encouraged for would-be buyers to get pre-approval on their mortgages, rather than house hunting first because that will help them expedite the bidding process

Need to be pre-approved for a mortgage loan? Contact Sibcy Cline Mortgage Services.

Brought to you by HMS Home Warranty. HMS is an industry leader with over 30 years of creating success for clients and providing peace of mind for customers. To learn more click www.hmsnational.com.

2018 Tax Reform Mortgage Updates

Businessman Notepad Property Value ConceptThe mortgage tax laws have been reformed for 2018. Here are some highlights to be aware of:

  • Interest from Home Equity Lines are no longer tax deductible
  • PMI will not be tax deductible
  • State/local/property taxes are limited to a maximum aggregate of $10,000
  • Mortgage interest deductions are limited to $750,000

If you have a HELOC Second Mortgage:
Prime is now up to 4.5% (compared to 3.75% a year ago) and the Federal Reserve is
expecting to raise short-term interest rates potentially 3 times in 2018. Now might be the time to roll your HELOC into a fixed mortgage with a refinance while first mortgage rates are still low!

Need more information? Contact Sibcy Cline Mortgage Services.

Have Student Loans? Yes, You Can Buy a Home!

Letter A, Report Card, Test Results.Thought about buying a home but are fearful that student loans will cause a problem with obtaining a mortgage? There is good news for you: Freddie Mac and Fannie Mae have loosened up 2018 guidelines on qualifying for conventional mortgages with student loans.

If you did not qualify for a mortgage in prior years, you may be able to qualify now with your income-based repayment schedule for your student loans.

Contact Sibcy Cline Mortgage Services to get pre-qualified today!

Creative Ideas to Save for a Down Payment for a Home

SaveMoney_DownPayment.jpgThinking about buying a home but do not have any savings for a down payment? Make a conscientious decision to start saving for that home. Here are some creative ways to save money:

Use Direct Deposit
Have money directly transferred from your pay check into your savings. You will not spend what you do not see in your checking account.

Monitor Daily and Weekly Expenses
Adjusting little spending habits can result in big savings. If you have a habit of buying coffee, lunch or even snacks from the vending machine, consider cutting those expenditures. That $2 (or more) cup of coffee ends up costing $10 in a work week or almost $500 in a year. Lunch out Monday through Friday at $7 is over $1800 in a year. Brown bag lunches will bring in a huge savings towards that down payment.

If you belong to an expensive gym, consider finding a more affordable membership or exercise for free in a park.

Loose Change
An easy way to save money is to empty your wallet weekly of loose change and dollar bills. Keep the money aside and turn it into savings every month or so.

No-Spend Day – A “Spend Diet”
Can you make it 24 hours without spending money? Challenge yourself! And if you are up to it, perhaps schedule several no-spend days throughout the month.

Avoid the ATM
If you tend to be a cash spender, allot yourself an allowance and stick to it. Some people like to take their cash and divide the money into envelopes – grocery, gas, entertainment, etc…

Stop Using Credit Cards
By always paying by credit card, you may lose track of how much you are actually spending. If you do prefer to pay via a credit card, keep a tally of how much you are spending on the side of an envelope that holds all of your receipts.

How Much Is Your Entertainment Costing You
If you monitor your budget, you should be able to easily analyze how much money you spend on entertainment: restaurants, happy hours, movies, concerts, cable television and such. Consider cutting this budget to save money.

Curtail that movie habit and enjoy films on Netflix and save about $500 for the year (two people going to the movies twice a month at $10 per person with no popcorn.) Or, if watching films in the theater is a passion – consider giving up the expensive concessions! Cut the cord with cable – and start saving your money.

If attending live performance theater is important to you, consider saving cash by sitting in less-expensive seats. (If you volunteer to be an usher, you can see performances for free!)

Plan social events that are free. Go hiking in a park with friends. Tour a museum on the free day. Take advantage of free outdoor concerts. Invite friends to socialize at your home and provide your own entertainment – cards, board games or movies. Read more from The Simple Dollar blog article titled 102 things to do on a money-free weekend.

Use the library and read books and enjoy DVDs for free. (Or swap books and DVDs with friends.) Cancel magazine subscriptions. Go to the library to read magazines instead.

Gifts and Windfalls
Giving gifts can add up. Set limits on your budget. Purchase gifts on sale by planning ahead. If you are on the receiving end of a gift (and if it is appropriate) ask for a “house funding” gift in lieu of a sweater or other item.

If you receive a windfall of money (work bonus, tax refund, etc…), be sure to add that unexpected money into your savings.

Avoid Big Purchases
Although you may want a new 50-inch television, if your current TV is in working order, don’t buy it. The same goes for your car. Instead of a luxury hotel for a week of vacation, consider a “stay-cation” and have lots of fun and no hefty hotel bills.

Change Shopping Habits
Be a smart shopper. Do not buy things on impulse. Look for sales and use those coupons. If you are tempted by store email lures, unsubscribe to them. If you have online retail accounts, remove your credit card numbers. Place a sticky note on your credit card that says, “Do I really need this?”

When going shopping, make a list and stick to it. Another way of looking at a purchase is to ask yourself: “How many hours do I have to work to pay for this item?”

If you tend to be a stress spender – find another way to decompress. Do yoga or meditate at home. “Pin” things on Pinterest instead of actually buying them.

A Side Gig! Earn Extra Cash
Consider side jobs to save money. Do you have a hobby or skill for which people are willing to pay? Earn cash by becoming a dog walker – and get exercise while earning money. House sitting is another way to earn money.

Have Stuff?
Sell your unwanted or needed items on Ebay or Craig’s List. Read more about selling unwanted items.

Drive and Make Money
If you have a car that qualifies, you can make money by turning it into a mobile billboard via a car wrap. Or, speaking of cars, become an Uber or Lyft driver!

Move Back Home
If your parents are willing, you may want to consider moving back home in order to save on rent and utilities.

Research Lender Programs
There are programs that offer lower or no down payment on homes. Sometimes these programs involve certain circumstances such as a cap on income or being a first-time buyer. A few programs will require a length of residency in the home in order to have the assisted down payment forgiven. It’s always a good idea to check with your mortgage loan officer to see what programs are available.

By following these creative tips, you should be saving money. In no time, you will have enough funds for the down payment on a home!

 

Sibcy Cline Mortgage Services has a New, Mobile-Friendly Web Site!

SCMortgageWebsite.pngSibcy Cline Mortgage Services has transformed its website with a new look that is also mobile optimized. The site looks very fresh and current. Here is what you will find:

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Mortgage Calculators
Five easy-to-use calculators are featured on the site: How Much Can I Afford; Monthly Payment; FHA Monthly Payment; Refinance; and Rent vs. Own.

Built especially for Sibcy Cline, these calculators are some of the most comprehensive tools on the market providing not only just a principal and interest payment, but a full PITI (principal, interest, taxes and insurance) including mortgage insurance if the down payment is less than 20%.

The Rent vs. Own calculator includes average rate of return, inflation, opportunity costs and closing fees into its design and is updated to stay current. This is a great tool for current renters.

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Shop Local
Sibcy Cline is all about being local and 100% of Sibcy Cline Mortgage Services’ loan process is local. The interactive regional map allows potential home buyers to easily find a loan officer in their own neighborhood who in turn will refer those buyer leads to our local Sibcy Cline agents.

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Loan Product
Browsers on the site can learn all about the various loan products available from Sibcy Cline Mortgage Services. They can “like” the products of interest and opt to have more information emailed to them.

 

The Surprising Benefit that Comes with Higher Mortgage Rates

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Homebuyers in today’s market definitely face some shifting conditions. The improving economy is bringing mortgage rates up from some of the lowest levels ever observed in the housing market, and more buyers are creating increased competition for a limited inventory, driving prices up as well. This declining affordability may actually be good news for buyers because it will encourage a major change among lenders.

How is That Helpful?
The good news for buyers is that as mortgage rates rise, it becomes more difficult for current homeowners to justify refinancing their mortgages. When rates were low – and they hovered in the three percent range for almost all of last year – it encouraged owners to cut their rates, keeping lenders in a steady mortgage environment without broadly making home loans more available to new buyers. As rates rise, lenders will see their origination numbers drop off, and experts have long predicted that this will lead to an increase in mortgage credit availability for buyers.

With the stronger economy bringing more buyers to the fore, it’s also important to note that even with higher rates and prices, today’s affordability is still competitive with pre-recession norms.

Loosening Credit in Action
The latest industry data shows that mortgage credit is becoming more widely available, in a way that it largely hadn’t before, according to the Mortgage Credit Availability Index from the Mortgage Bankers Association. In January – the most recent month for which data is available – the MCAI (Mortgage Credit Availability Index) rose to a reading of 177.1, up from 176 in December. That was the fifth straight month with an increase in the overall number.

In the recent past, credit access for jumbo loans (those much bigger than the national median home price) has been the biggest driver of these increases, which leaves many average Americans on the outside looking in. And while lenders continue to cater to more affluent consumers by easing that kind of credit access, availability for conventional loans is now creeping back upward on a consistent basis as well.

While mortgage credit availability will likely never return to the free and easy days before the recession (nor should they), continual easing of access will allow more buyers to come into the market and, potentially, encourage more real estate sales.

Interested in becoming pre-qualified for a mortgage loan to see how much home you can afford to purchase? Contact Sibcy Cline Mortgage Services.

Brought to you by HMS Home Warranty.  HMS is an industry leader with over 30 years of creating success for clients and providing peace of mind for customers.  To learn more click www.hmsnational.com.