Archives for October 2014
Private mortgage insurance was designed to protect the lender; however, there are also benefits for the home buyer.
Private mortgage insurance (PMI) is an insurance designed primarily to protect the lender in the event that a home loan is defaulted on. In most cases it is mandatory that PMI be part of the mortgage package if the buyer puts less than 20% of the value of the home as a down payment. As a borrower, it is important to understand how PMI insurance can benefit you when you want to secure a home loan.
When Is PMI Insurance Required?
Many lenders will insist on PMI when a low down payment is made on a house. The PMI premium will be built into the monthly payment as part of the mortgage. As a borrower builds equity in the home, they can eventually have the PMI premium removed as part of the monthly payment.
While the insurance is designed to protect the lender, it is also allowing borrowers to buy a home that they would not be able to afford. It is not easy to come up with 20% of a home’s value, but with PMI insurance, it is possible to buy a home with less money down. When you consider the low monthly premium you are subject to for the privilege of owning your home with less money down, the PMI insurance premium makes sense.
Asking for PMI to be Removed
PMI remains on most FHA loans until the mortgage is paid off or refinanced. On conventional mortgages you have the right to ask that PMI insurance be removed once you have at least 20% equity in your home. This could come as the result of timely payments, or if a renovation has changed your home’s value. Once you have reached 22% equity in your home, the lender is required to allow you to remove the PMI insurance.
So many people are fixated on having today’s lowest interest rates when the more important question to ask is “What are the PMI cost?” because an .125% increase to the rate is only about $7 per 100k, while PMI could be $100’s per month!
The Sean Z Mortgage team is dedicated to educating every home buyer to be set up for success. In addition to seeking the best mortgages rates available, we also look for the lowest PMI premiums. Our mortgage clients have the best loan options available in St. Louis. If you are a first time home buyer, it is important to work with an experienced professional that you can trust.
Call us today at (314) 361-9979!
Take advantage of all of the hard work you have put into your home.
A reverse mortgage allows you to tap into the equity of the home you have worked hard for and use the money for repairs, medical expenses, or even a trip around the world.
What Is a Reverse Mortgage?
With a typical mortgage, monthly payments are made to the lender to pay the loan back. With a reverse mortgage there is no obligation to pay the money back until you no longer live in the home. The money you receive is tax free and there are typically no income restrictions. The amount you receive is entirely dependent on the value of the property. A Home Equity Conversion Mortgage (HECM) is part of a federally insured reverse mortgage program that is backed by the U.S. Department of Housing and Urban Development (HUD). These loans are widely available and have no income or medical requirements.
Qualifying For a Reverse Mortgage
To qualify you will first be asked to meet with a financial counselor from an independently operated, yet government approved, housing counseling agency. The cost of the loan and its financial implications will be explained to you in detail. Follow this link for FAQ’s about reverse mortgages. You will also be shown other types of mortgage products to help you understand the differences in structure and cost. If you choose an HECM mortgage, you will be given four options to choose from.
- Term loan – This allows you a fixed cash amount for a specific amount of time.
- Tenure loan – Fixed monthly cash advances for as long as you are living in the home.
- Line of credit – This gives you more flexibility as you can withdraw the amount you want anytime you want. This is a good option if you plan on using the loan to fund a trip or make renovations on your home.
- You may also choose a combination of the two.
How to Use the Funds From a Reverse Mortgage
No matter which form of payment you decide on, the money is yours to spend however you see fit. The amount you receive is based on how much your home is worth minus any existing mortgages you may still be paying on it. The amount you receive is not taxable and will have no bearing on any aid you receive, such as social security or medicare. The title to the house remains in your name and there is no obligation to make any repayments. The full amount you borrowed will be paid once you no longer use the home as your primary residence.
A mortgage representative from Sean Z Mortgage can help you go over all of the points to make sure that this is the best option in your circumstance. Many Missouri homeowners use this as a way to supplement their income after retirement in order to continue with the quality of life they are accustomed to. You have spent many years working on building equity into your home. Now is the time to let your hard work pay off for you!
Call the Sean Z Mortgage Team today at (314) 361-9979!
Why will a pre-approved mortgage help you successfully buy the home of your dreams?
Would you go to the supermarket to buy groceries without knowing how much money you had on your debit card to spend? Shopping for a new home without first knowing how much you will be able to borrow is doing the same thing. If you are on the fence about looking into Sean Z’s “TBD Mortgage Approval Program“, here are five reasons to help you reconsider.
Use your valuable time wisely; avoid looking at homes that you can not afford. With a TBD approval, you can be very specific with your realtor about the type of home you can afford, and insist that he or she save you time by only showing you homes inside of that price range.
Use your TBD mortgage approval to make sure that you do not fall in love with a home that you simply cannot afford to buy. Instead, prepare for success by looking at a potential home that will turn into a realty!
Increase Your Negotiating Power!
You look better to a seller who is deciding between various offers when you have a Sean Z “TBD Mortgage Approval Program.” They know that the offer is not conditional based on financing since you already have it. Many home sellers in St. Louis have lost thousands of dollars waiting for a closing that never happens because the buyer can not get a loan approval. Use this to your advantage and make it a selling point when putting in your offer.
It just makes more sense to have your mortgage pre-approved before you start looking at houses. The stressful part of finding a loan is behind you and now you can enjoy the entire house hunting experience with peace of mind. You get to choose the right home already knowing it is at the right price.
The majority of the criteria needed for a home loan approval is dependent on the borrower, and their financial status rather than the house itself. Use this to your advantage by establishing a good credit history, saving money towards a down payment, and getting your Sean Z TBD mortgage approval before you begin searching for the new home of your dreams.
Call us today at (314) 361-9979!
Build the dream house you have always wanted! It may easier than you think!
The dream of building a home from the ground up exists for many St. Louis residents, but to actually make that happen can be very difficult. An alternative is to buy a home in need of repairs and renovate it into the house of your dreams. The Fannie Mae HomeStyle Renovation Loan is the home mortgage that can make that happen.
Finding Money to Renovate an Older Home
The St. Louis housing market is abundant with homes that are sitting on nice sized lots in desirable areas of the city. Unfortunately, they may go unnoticed by home buyers who assume that a mortgage and the money to fix them up is unattainable. What many do not realize is that the majority of those homes are being offered at a discounted rate and that Fannie Mae will help fund the renovations.
The unique HomeStyle Renovation Loan allows you to make a purchase based on what the value of the home will be after your renovations are made. You make a 5% down payment on this assumed value and get the funding you need not only to buy the property, but to bring it up to that standard.
Qualified Renovations and Repairs
The Fannie Mae HomeStyle Renovation Loan has very few limitations on the type of renovation or repair that the money can be used for. The biggest stipulation is that the work done must be a permanent addition to the home. This includes a new roof, HVAC system, new floors, or anything else that brings value to the property. It even allows for what many would consider luxury items. The cost of swimming pools, upgraded patios, and even a hot tub can be factored into the loan allowing you to create the house you have always dreamed of.
Taking into consideration that you may not be able to live inside of the home until repairs are complete, Fannie Mae will even include up to six months worth of your monthly mortgage payments into the loan package so that your payments are covered while the renovations are underway. This allows you the time to make those repairs and settle your existing home loan. You can live in and pay for your existing home while your new mortgage is paying for the repairs and mortgage payments of the new one.
Using the HomeStyle Loan to Refinance
For those who are in love with their existing home but know it needs some work are also able to apply for the Fannie Mae HomeStyle Renovation Loan as a refinance. This can help you update your current home and bring its value closer to what you know it to be worth. Add energy efficient features like solar skylights or new appliances, or make additions to accommodate a growing family. The choices are endless.
Unlike home equity loans or lines of credit, there is no second loan or second interest rate to consider with the HomeStyle Renovation Loan. All of your needs are consolidated into one convenient loan package, making it a snap to convert an existing home into the one of your dreams. If there’s a house on your list that would be perfect if not for a few modifications, don’t dismiss it. Instead, apply for a HomeStyle Renovation Loan and make that house the home you want.