Posts Tagged ‘how much home can I afford’

Changes to minimum down payment loans

January 10, 2020

It’s a new year! With a new year, always expect changes in the mortgage industry. This blog discussed some changes last month:

Why stop there?!? We will keep it going for a conventional loan programs with small down payments. I’ll touch base on the new guideline compared to the previous requirements.

NEW: When making less than a 5% down payment on a conventional loan, if all borrower’s on the loan are first time home buyers, one of the borrowers must complete a homeownership education course.

Previously there was no education requirement for those putting less than 5% down to purchase a home. Note if one of the buyers has previously owned a home, then there is no education requirement regardless of the down payment amount.

For those keeping score at home, a “first time home buyer” is defined as anyone who has never owned a home OR has not owned a home in the past three years. If the last home you owned was more than three years ago, then you are now a first time home buyer.

NEW: Home Ready loans no longer require the homeownership education course if one of the occupying buyers has previously owned a home (again, means has owned a home in the past 3 years).

Prior to the change, one borrower had to complete the education course even if they had previously owned a home.

NEW: The homeowner education course is free if the borrower’s use this link – https://educate.frameworkhomeownership.org . Note if using another accepted education course, there may be a non-refundable fee of $75.

Prior to this change, the cost of the course was $75 to everyone regardless of where the course was completed.

New years… new changes… a lot to keep up with… your head spinning? Don’t worry! It is my job to keep up with the changes.

The Spring Market is upon us. If you are ready to get out and purchase a home in 2020, contact me  today. If the property is in Georgia, I can get you ready to make an offer in just a few minutes. You can be well on your way to owning a new home faster than you’d ever expect!

Conforming loan limits rise again

December 3, 2019

For the fourth consecutive year, the conforming loan limit is rising for 2020!

Historically, this is the normal trend of conforming loan limits as the maximum conventional loan amount increased almost every year from 1980 to 2006. Then 2007 arrived…

From 2007 to 2016, the conventional loan limit remained steady at $417,000. With the housing crash and slow recovery, FHFA held the maximum amount steady for a decade. We experienced a modest increase in 2017 followed by more substantial increases for the next few years.

  • 2017 max limit was $424,100 (up from $417,000 for only about a 2% increase)
  • 2018 max limit was $453,100 (about a 7% increase)
  • 2019 max limit was $484,350 (another increase of about 7%)
  • the new 2020 maximum conventional loan limit will be $510,400, which is just over a 5% increase from this year.

Since one only needs a 3% down payment to qualify for a conventional loan, this means buyers can purchase a $526,000 home with only a $16,000 down payment! With 2020 just around the corner, we can begin using the new limits.

With the conforming loan limit increase, we can also expect the maximum FHA loan limit to increase as well (currently at $379,500 for metro Atlanta). Once FHA makes their formal announcement, The Mortgage Blog will update you on it too!

Ready to get a jump on the spring market for 2020? The spring market is already starting! If you are looking to purchase in the state of Georgia, contact me today. I can get you prequalified and ready to make an offer on your new home in minutes!

Owning Makes More Financial Sense than Renting

December 3, 2019

A recent Census Bureau report showed that construction began for 11,000 single-family built-for-rent houses in the second quarter of 2019.  Mind you, these are not apartments, but single-family homes built specifically to rent.  A recent National Association of Home Builders blog post stated that renting by choice is gaining popularity among millennials.   

The CEO of a build-for-rent developer stated, “What we were shocked to find out was it was people that had great credit, they had money for down payments, they had great incomes but they just didn’t want to own a home.”  So their renter clientelle does not consist of people experiencing job loss, credit challenges, etc.  They could buy a home, but they choose to rent instead.  It’s a lifestyle decision.

Here’s a negative consequence of this choice.  William Wheaton, a MIT housing economist, recently made said to NPR, “Owning still makes much more sense.  If prices continue to rise, buying will be a money tree.”  Even home price appreciation occurs at low levels, that growth serves to build personal wealth for the home owner.  So home price appreciation builds homeowner equity.  In addition, the principal component of every mortgage payment also builds homeowner equity.  A tenant’s monthly rent checks are expense only – there’s no wealth building when it comes to paying rent.

From a long-term wealth perspective, owning builds wealth better than renting (especially with today’s low interest rates and strong home affordability).  If you are renting in Georgia now and wonder if owning would benefit you financially, give me a call.  We’ll run some numbers and see if home ownership is better for you financially.

A good time to buy a home!

November 6, 2019

The holiday season is upon us! We are on the other side of Halloween, headed toward Thanksgiving and then the month full of holidays – December. Guess it is time to stop looking at homes…

Not true!

This time of year is a great to both sell a home and purchase a home. Here are some reasons why someone should consider purchasing a home now.

  • There is less competition on the market for sellers during this time of the year. The same is true for buyers as there are fewer people looking to buy a home.
  • This means both buyers and sellers are serious about making a real estate sale – no tire kickers this time of year. Everyone is buys with holiday planning and events.
  • Thinking spring market? Well, a lot of buyers and sellers are thinking the same thought. Meaning, by the time the new year rolls around, there will be plenty of more homes and buyers out – more competition on both sides.
  • Rates are still low. Mortgage rates are lower now than last year and close to their yearly lows of 2019.

On a personal note, I’ve personally purchased a few homes. The time I purchased during the holidays was easier than when I’ve looked and bought homes during the spring/early summer. Less inventory means a more focused search for finding a home. Fewer buyers meant the seller only had a few offers to consider instead of a dozen or more!

While the year is coming to an end, the housing market never really does end. It just keeps going and going. Now is a great time to get out there and find that home. If you are buying in the state of Georgia, contact me today. You can get prequalified in a few minutes, and a pre-approval in just a few more minutes. You’ll be ready to make an offer on a home in no time at all!

Home Affordability at its Highest Point in Years

November 1, 2019

According to a recent report by Black Knight, Inc., home affordability reached its best level in years in August 2019.  This follows a consistent decline in home affordability from late 2016 through late 2018.  Home affordability hit a nine-year low in November 2018, as mortgage rates rose to the 5% range.  At that time, the national home payment to income ratio rose to 23.7%.  According to Black Rock, this led to an extended slow down in home price growth.

Since November 2018, mortgage rate declines plus this slower home appreciation has greatly improved home affordability.  The national payment to income ratio has dropped to 20.7%.  This ratio means that the monthly principal and interest (P&I) payment on an average-priced home now requires only 20.7% of the national median income.

Put another way, interest rate declines between November 2018 and August 2019 has increased home buying power by about $46,000. In August 2019, a home buyer would pay the same P&I amount on a $246,000 home mortgage as she would have paid on a $200,000 home mortgage in November 2018.

On the other hand, I found websites and recent articles showing that Atlanta-area rents have risen around 4% in the preceding 12 months.  In short, owning a home in Atlanta has gotten more affordable while renting has gotten more expensive.

Do you rent your home in Georgia?  Has your rent increased making money tight?  Give me a call and let’s talk about mortgage affordability.  You don’t need perfect credit to buy a home, and you will need only a minimum 3% to 3.5% for your down payment.  (Military veterans can obtain VA loans with a 0% down payment.)  With the current low mortgage rates, you might be able to buy more home than you thought you could, for a lower monthly payment than you thought you would have to make.  And with buying a home, you will get the equity / wealth benefits from potential home appreciation.  It’s a GREAT time to buy a home in Georgia!!

Changes to the VA Funding Fee

October 31, 2019

There are a few certainties in life… death, taxes, leaves changing colors in the fall, and loan guidelines changing. Well, we have some new changes with VA loans pertaining to the funding fee. 

Currently the VA funding fee is as follows:
– 2.15% of the loan amount for first time usage and 3.3% subsequent use when making less than a 5% down payment. 
– 1.5% of the loan amount for first time usage and subsequent use when making a 5% down payment. 
– 1.25% of the loan amount for first time usage and subsequent use when making a 10% (or larger) down payment. 

The funding fees are slightly higher if the buyer is part of Reserves/National Guard vs being part of the regular military. 

Beginning in November the fees change to:
– 2.3% for first time use and 3.6% for subsequent use when making less than a 5% down payment. 
– 1.65% fee when making a 5% down payment
– 1.4% fee when making a 10% down payment. 

Some notes on this:
1. The increase is roughly 0.15 across the board. 
2. There are still funding fee exemptions for disabled veterans. 
3. There is now no difference between being in the regular military, reserves or national guard. 

Now I know a thought that may be going through the reader’s mind… the funding fee is going up. What is a funding fee?… great question!

VA loans do not have a monthly mortgage insurance payment. They do have an up front premium for obtaining the loan (similar to FHA loans). VA loans still do not have monthly mortgage insurance payments, the the funding fee (required on all VA loans unless the borrower is considered disabled) is going up. 

Are you a veteran living in Georgia looking to buy a home? Never considered using your VA eligibility? Maybe it makes sense. Maybe it doesn’t.  To find out, contact me today. There’s only one way you’ll know which loan program makes the most sense for you – asking the question. 

American Homebuying Power Grows

September 26, 2019

Overall economic circumstances keep improving for potential homebuyers.  First American’s Real House Price Index (RHPI) shows that Americans’ homebuying power increased consistently from January through July 2019.  The index tracks single-family home price changes adjusted for mortgage interest rate changes and personal income changes.

Mortgage interest rates trended downward during the first half of 2019, and they are even lower now compared to mid-year.  First American reported mortgage rates in January were 4.5%, and rates moved into the 3’s over the summer.  Average household income increased over the same time period.

Decreasing mortgage rates combined with increasing household incomes provide a double boost to Americans’ home buying power.  The Index’s “house-buying power” for consumers increased roughly 10% from January through July.  According to First American’s Chief Economist, Mark Fleming, “House-buying power is at the highest it’s been since we began tracking it in 1991.”

That means now is a great time to buy a home!  Even though home prices have been increasing, the decrease in mortgage rates coupled with household income growth make right now the best time to buy a home in almost 30 years, based on the RHPI measures.

Do you have a Georgia friend who complains about a landlord who won’t fix problems?  Let them know that their homebuying power is stronger than it has been in decades, and connect them with me.  I’ll help them obtain the best home mortgage for their unique situation as quickly as possible.  I’ll help your friend take advantage of today’s really low mortgage rates before they increase to 2018 levels or even higher.  Together, we will fire their unresponsive landlord!

Planning the move

September 10, 2019

At The Mortgage Blog, we talk often about making a plan for the mortgage. Today, let’s talk about a different type of plan – the move itself!

It makes perfect sense. I mean, we make plans to ensure the home loan goes smoothly. There is a plan for the home we look to buy (area of town, school districts, size of home, size of yard, etc.). I mean, why wouldn’t we tackle moving with the same concepts.

So here’s to planning the move! Where to begin? Let’s begin the same way we begin a home search, with a plan. Just like you’d sort potential homes by number of beds, baths, etc., let’s begin sorting our possessions into categories such as:

  • clothes
  • kitchen items
  • plates
  • glasses
  • decorative items
  • toys
  • important documents
  • toiletries
  • books

Looking at an entire house full of items is overwhelming. Sorting through each category becomes more manageable. With the categories in place, it makes the next step of sorting easier.

Once everything is sorted, it becomes obvious what to do with all of the possessions. Reviewing each category separately, you can begin to see what items you want to keep, what items to sell/donate/give away, and what items simply need to be recycled or thrown away.

The final step is to begin packing as soon as you are able to do so. Planning a summer move? Well, you don’t need winter clothes in the spring. Pack them up! Use the same logic for other items you don’t need access to all of the time. By getting a head start on packing, it will lessen the burden when it comes to packing up the entire house.

Still overwhelmed? Packing and organizing just isn’t your thing? No worries! Lots of people don’t like this stuff. If you want to consult a professional, how about Amber Blandford with Joyful Spaces. Amber owns and operates the professional organizing services provided by Joyful Spaces. When some people run screaming in fear of organizing, Amber feels a rush of joy! She’ll help you get going!

So there are some thoughts on planning a move. Still need to plan on how to pay for the home purchase? I’m always happy to help! Contact me today. If buying in the state of Georgia, I can get you prequalified in a few minutes and have you well on your way to making an offer on your new home!

More potential changes to FHA loans

August 6, 2019

I’ve thrown up a posts over the past couple of months (here and here) about potential changes for condo purchases using FHA loans. How about a change on FHA loans that is beneficial for everyone!

A new bill working its way through Congress would make mortgage insurance for FHA more like mortgage insurance for conventional loans.

Currently, FHA mortgage insurance is permanent unless the buyer makes a 10% down payment. When making a down payment as large as 10%, often buyers use a conventional loan. Maybe there is a case where someone still wants to do an FHA loan (for example, a foreclosure 3 years ago is OK on FHA loans but not OK for conventional loans), but often 10% down means a buyer is using a conventional loan for their purchase.

With FHA’s current permanent monthly mortgage insurance, it makes FHA loans much less competitive with conventional loans. The new bill looks to change this situation.

If passed, the bill would change the cancellation date on FHA mortgage insurance from “until the loan is paid in full” (meaning permanent for the life of the loan) to when the loan balance is 78% of the homes original value. Meaning, the mortgage insurance is no longer permanent.

The current set up with mortgage insurance on FHA loans really isn’t fair to the home buyer. They are way over charged paying mortgage insurance for the life of the loan, and the change could make FHA loans are more viable alternative for buyers making the minimum down payment on a home purchase.

Can’t decide if an FHA is right for you? Contact me and we’ll find out! If you are buying a home in the state of Georgia, I can also get you prequalified and ready to make an offer on your new home.

The mysterious case of home ownership

July 9, 2019

Home buyers continue to make assumptions (most of which are bad) when it comes to buying a home. Meaning, the options for education for buying a home are not as good as they should be.

That is why you have The Mortgage Blog!

This misinformation is undoubtedly holding some back from even looking to try and purchase a home. Let’s take a look at a recent survey by Fannie Mae to see some of the false assumptions buyers have about purchasing a home:

  • most buyers assume the minimum credit score is higher than what is actually required to qualify
  • most buyers assume the down payment is higher than what is actually required as a minimum down payment
  • few home buyers are aware of low down payment programs such as Fannie Mae Home Ready requiring only 3% down

Under these assumptions, many potential buyers assume home ownership isn’t even an option and therefor do not do any further investigating into possibilities of buying a home.

The Mortgage Blog has covered all of these topics and more:

The Mortgage Blog has your back! Reading over these, one will learn a large down payment is not needed to buy a home (as little as 3% down on a conventional loan and 3.5% on an FHA loan), perfect credit is not required (down to 620 on FHA and conventional and sometimes as low as 580 on FHA), and there are programs out there for first time home buyers.

Been wanting to own a home but confused at all of the misinformation out there? Just want a straight answer or two? Contact me! I will be happy to answer your questions about home ownership. If you are looking to buy in the state of Georgia, I can get you prequalified and on your way to owning a home!