Category: Homebuying

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Which Type of Mortgage Loan Is Right For Me?

Getting a mortgage loan can be a daunting task. However, the greater understanding you have about these loans as you begin your home buying journey, the easier it will be. 

There are many types of mortgages available to choose from. They differ based on requirements, interest rates, and availability. In this blog, we list the most common types of mortgage loans, and for which type each homebuyer is best suited. 

Conventional Mortgages 

Conventional mortgages are home loans not insured by the federal government. This type is best suited for borrowers who have a strong credit score, stable employment history, and can make a down payment of at least 3% of the home’s cost. 

Read more about conventional mortgage loans here!

Government-Insured Mortgages

Although not a mortgage lender itself, three government agencies back mortgages: the Federal Housing Administration (FHA loans), the U.S. Department of Agriculture (USDA loans), and the U.S. Department of Veterans Affairs (VA loans). 

  • FHA Loans are for borrowers who don’t have a large down payment saved up and do not have the highest credit. 
  • USDA Loans are for moderate and low-income borrowers. Borrowers must purchase a home in a USDA-eligible area but often are not required to make a down payment.
  • VA Loans are flexible, low-interest loans for those serving in the military, both active duty and veterans. These do not require a down payment. 

Fixed-Rate Mortgages 

As per the name, these mortgages keep the same interest rate over the life of your loan. They also provide a consistent monthly payment on your mortgage and come in 15-year, 20-year, or 30-year loans. 

Adjustable-Rate Mortgages

Adjustable-rate mortgages have flexible interest rates that change with market conditions. These come with a certain level of risk but are beneficial if the home is temporary. 

Jumbo Mortgages 

Jumbo mortgages are for when the home price exceeds the federal loan limits. These are best suited for affluent buyers with good credit, a high income, and who can offer a substantial down payment. 

Read more about jumbo mortgage loans here!

Making Mortgages Easy

If you have more questions about mortgages, don’t worry! We put together this helpful guide featuring frequently asked questions and their answers. Check out the blog here! 

We are in the business of ‘lending as it should be’! Check out our home page to get a quote or pre-approval letter, or email us at contact@belair.mortgageright.com for any questions. 

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Buying a Vacation Property? What to Consider When Investing in Your Home-Away-From-Home.

As the number of people purchasing vacation homes is on the rise – many a result of the social limitations caused by the coronavirus pandemic – we offer this helpful guide for those looking to buy a getaway property of their very own. 

Benefits of a Vacation Home

If you’re a frequent traveler and enjoy escaping to one very special spot each year, investing in a vacation home can save you money in the long run. Even better, properties in popular vacation areas often increase in value over time. 

Making such a purchase all the more attractive, you may also be eligible for a tax break from the mortgage on your second home. 

And should you choose to move when you retire, your vacation home could become your primary residence in that special location you already know and love. 

Simply put, vacation homes are a great idea. But what should you consider before investing in one? 

What’s Your Budget?

We aren’t saying it’s all about the money, but, of course, the cost of a second home is one of the most important factors to consider. In addition to a second mortgage, you will also need to factor in the cost of taxes, insurance, utilities, possible HOA fees, and furnishings for the home. 

And that’s just the beginning. As you maintain your vacation home, you may want to consider how it will be cared for when you’re away. Will you need landscaping services? Will you want a security system to protect your unattended home? And don’t forget the cost of traveling there and back. 

While these costs aren’t supposed to discourage you from investing in a vacation home, they are essential considerations when looking for the home that’s right for you and your budget. 

To get a better idea of what your payments will look like, check out our mortgage calculator! 

Where Do You Want to Rest and Relax?

Location is another essential part of finding the perfect vacation home. Where do you picture yourself escaping for a week away? Where do you want to spend your weekends? You may love the beach, or the city, or the mountains, but do you like that locale enough to spend the majority of your vacations there? You want to choose a place that won’t lose its appeal after a visit or two. 

The second consideration with the location regards distance – in addition to how much it costs to get there, consider travel time. You may choose a vacation home in your DREAM location, but if it takes a half day’s drive to get there, or you need to catch a flight every time you want to visit, then you may not end up spending as much time there as you intended. So, the takeaway here? Decide on a getaway that’s not too far from home!

Is Rental Income a Must?

Many people consider buying a vacation home and then look to rent it out when they aren’t using it. While renting can bring in extra income, it does offer a few challenges. For instance, sometimes renting out your property can have implications for financing and taxes, or homeowner associations may have rules and limitations for renters. 

Also, if you plan to occupy the home during the typical vacation months, consider that there may be fewer available renters during the “off-season.” Renting your property also comes with additional considerations, like how to advertise and who will take care of any significant issues that occur while guests are present. 

If consistent rental income is a must, then do your research on what to expect given your budget and vacation schedule. 

Finding the Vacation Home That’s Right for You

Purchasing a vacation property is an exciting venture, and the professionals at MortgageRight are dedicated to making the home-buying process an easy one – whether it’s for your primary residence or that perfect vacation getaway. Whether you’ve just started looking or you’re ready for a quote, we can help!

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Silver Linings: How to Make the Best of Buying a Home During a Recession

We are seeing the economic effects of COVID-19 in real-time. This “new normal” is going to be far-reaching, long-lasting, and will likely result in a lengthy recession. It’s not all gloom and doom, though. Markets fluctuate, but they are resilient. There are great ways to make the best of this bad situation, particularly if you plan on buying a home. 

If you have been patiently waiting for housing prices to go down, boy do we have news for you. There has never been a better time to buy. Historically low mortgage rates combined with motivated sellers make this a great buyer’s market. Job instability is a concern, but if you have a stable job situation and a little bit of money saved right now, it could be an opportune time to purchase a home. With less competition from other homebuyers and sellers willing to negotiate, this could be your chance to find your dream home. 

Here are some tips to put you in the best position to buy a home during a recession:

  1. Get pre-approved for a mortgage. Homebuyers who already have financing in place are in a better negotiating position. Having savings is always a bonus, but go ahead and get pre-approved before you start shopping so you can enter every conversation with confidence.
  2. Organize your finances. Don’t get too excited – just because a house is a good deal doesn’t mean you can afford it. Work on your budget. Make sure you take stock of all your assets and debts before you make any big decisions. 
  3. Do your research. With unstable markets, housing prices can fluctuate and give a false sense of value. Make sure you research your neighborhoods well! Knowing historic pricing for an area can give you a sense of objectivity when evaluating an offer.
  4. Get a home inspection. In uncertain times, sellers may be trying to offload homes with problems that are costly to repair. Be very thorough and make sure you’re not buying the home equivalent of a lemon! 
  5. Clear the title. Start with a clean slate. Sometimes the home of your dreams can be the property of your nightmares. Make sure that the property doesn’t have any liens from a contractor or a lending institution. Have a lawyer run the title of your new home to verify it will be transferred without risk.
  6. Use your bargaining power. Watch for motivated sellers. If the price has been reduced on the home several times over the last few months, it may be a signal that they have already moved and are holding the mortgage on two properties. In this situation, the seller may be willing to negotiate to cover closing costs and other fees in order to quickly complete the sale. 
  7. Avoid unnecessary fees. It’s your market right now! When houses move slowly, realtors will sometimes take a few percentage points off of a commission in order to get the deal signed. Negotiating these fees down before closing can benefit both the buyer and the seller, leaving everyone happy.
  8. Use logic. Have the emotional stability to walk away if it’s not the right deal for you. Wait until the right opportunity comes along before you commit.

Even with all these tips in mind, there is no such thing as a foolproof approach to the housing market. An unstable economy means there is risk involved in major purchases like a home, but fortune favors the bold. If you pay attention to these 8 tips, you may be able to find a tremendous deal by acting decisively while others are afraid to move.

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MYTH: Now is Not a Good Time to Buy

Real Estate has appreciated a lot lately and we have heard many potential homebuyers say they’re thinking about waiting until prices come down to buy a home. If rising home values are keeping you on the sidelines, you may be waiting longer than you ever intended.

For instance, should you try and wait it out, the market may have gone up 20% before there is a 10% correction. And while you’re waiting for months or years, you may still pay 10% more for your new home after paying rent when you could have started paying off a new mortgage.

The right time to buy your first home is when you are ready; both financially and emotionally. And significant life events (getting married, relocating, landing a great new job, having children) generally drive the decision to consider purchasing instead of continuing to rent.

At MortgageRight, our experience tells us you cannot time the real estate market when data becomes available many months after market events take place. This, along with so many other variables, makes pinpointing a perfect time to buy nearly impossible.

If you are ready to buy your first home, this may be the right time to buy a home. Competitive interest rates and a variety of home loan programs are currently available that will can meet your needs today.

Don’t let this myth is deter you. Instead of continuing to make rent payments to a landlord, start making payments on your own home.

Contact MortgageRight. Our helpful loan associates area always ready to explain the process and your options.

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Defining the First-Time Homebuyer

The U.S. Department of Housing and Urban Development (HUD) describes a first-time homebuyer as someone who meets any of the following conditions:

  • An individual who has not owned a principal residence for three years. A spouse is also considered a first-time homebuyer if he or she meets the above criteria. If you’ve owned a home but your spouse has not, then you can purchase a place together as first-time homebuyers.
  • A single parent who has only owned a home with a former spouse while married
  • A displaced homemaker who has only owned with a spouse.
  • An individual who has only owned a principal residence not permanently affixed to a permanent foundation in accordance with applicable regulations.
  • An individual who has only owned a property that was not in compliance with state, local or model building codes – and which cannot be brought into compliance for less than the cost of constructing a permanent structure.

Please contact MortgageRight at 205.776.8401 or Contact@belair.mortgageright.com for more information.

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Budgeting Down Payment Homebuying Homebuying Tips Mortgages Purchase

Mortgage Loans Offering Down Payment Assistance

Assistance for First-Time Homebuyers

Many first-time buyers think they need to have 20% saved up for a down payment, plus funds to cover closing costs. But if not having these funds is the only thing standing between you and buying your first home, don’t worry. Gift funds, down payment assistance, and specialty programs tailored specifically for first time buyers can help you move forward to get the home today.

First-time homebuyer programs are designed to help new buyers achieve their goals of homeownership. These programs generally help remove one of the largest obstacles first-time buyers must overcome when purchasing a home – The Down Payment.

There are even opportunities to qualify for a first-time program even if you have purchased a home before.

A larger down payment is generally recommended for buyers who want to avoid paying mortgage insurance, but saving those funds can take time. For many buyers, the money needed for a down payment can be one of the biggest hurdles to buying their first home.

Fortunately, there are loan programs that contain down payment assistance programs specifically designed to help first-time buyers who have little, or even no cash saved for a down payment.

So, if you have been worrying about where to find the funds needed to purchase your very first home, take a look at a few of the first-time homebuyer down payment assistance programs currently available today:

Loan Products

FHA Loans – FHA loans are insured by the Federal Housing Administration, and these government backed loans have been designed specifically to help buyers achieve their goal of homeownership. FHA loans have lower down payment requirements compared to conventional (private lender) mortgages. With an FHA loan, your down payment can be as low as 3.5% and can be gifted to you from a family member or friend. FHA loan guidelines are also more lenient, and allow for lower credit scores and lower debt ratios. They will also allow the seller to contribute towards closing costs.

USDA Loans – The only government backed loan program that offers 100% financing for all qualifying borrowers, a USDA loan is a great option for first-time buyers looking for a zero down payment option. USDA loans do have some very specific eligibility requirements, including the location of the property. USDA 100% financing loans are intended for buyers who want to purchase rural property outside of major metro areas.

VA Loans – The U.S. Department of Veterans Affairs insures VA loans and helps veterans, active military persons, and surviving spouses purchase their dream homes. VA loans are available with up to 100% financing, have no mortgage insurance requirements, and offer more flexible eligibility guidelines.

From help with closing costs to 100% financing, MortgageRight can help you understand the many programs available to help first-time homebuyers achieve their goal of homeownership.

Buying your first home is exciting and you have many loan programs and options available to you. Partnering with an experienced mortgage loan officer is an important part of buying your first home. From help with closing costs to 100% financing, MortgageRight can help you understand the many programs available to help first-time homebuyers achieve their goal of homeownership.

Contact MortgageRight at 205.776.8401 or Contact@belair.mortgageright.com for more information.

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Myth: 20% Down Payment Requirement To Purchase Your First Home

You Do Not Need a Large Down Payment to Qualify

According to a recent survey, nearly half of renters overestimate the up front costs of buying their first home. Too many believe they need to put 20% or more toward a down payment when buying a home.

That was most likely the case when your grandparents purchased their first home, but that is no longer the case.

While a 20% down payment is still considered standard, it is not the only option. Fortunately, there are loan programs that contain down payment assistance options that are designed to help first-time buyers who have little, or even no cash saved for a down payment.

In fact, there are many programs that allow buyers to put down as little as 3%. Statistics show that 7 out of 10 first tie homebuyers make a down payment of 5% or less and some first-time homebuyer programs offer NO MONEY DOWN. And as many as 15% of those who have purchased homes within the last 2 years have financed with 0% down.

Perhaps the reason for this supposed myth is due to Private Mortgage Insurance. When you finance a home with less than 20% down, you also have to pay PMI every month until you reach the required equity of 20%. This is true of regular conventional loans, but not for FHA loans which can go as low as 3.5% equity.

At first glance this may seem risky, but the Government wanted more Americans to be able to achieve the American dream. To achieve this and boost homeownership, they created the Federal Housing Administration (FHA) and began offering government backed loans that were insured against default (insurance to the mortgage company or bank in case the borrower ever defaulted on the loan). This made lending to borrowers with a lower down payment and credit scores a reality.

For instance, the FHA will back a loan for a borrower with a 500-579 credit score and a 10% down payment. If the borrower has at least a 580 credit score, they only need a 3.5% down payment to qualify for an FHA mortgage (borrower may pay more over time). Conventional loans programs offer down payments between 3% and 5%. Veterans, military service members and eligible surviving spouses can get mortgages with a down payment as little as zero.

In an analysis of historical loan data by Laurie Goodman, Jun Zhu, and Taz George with the Urban Institute shows why government-backed investors like Fannie Mae see relatively little risk in qualifying mortgage loans with down payments as low as 3-5%. The data shows that credit is a stronger indicator of default risk than down payment size. The percentage of defaults of 5-10% down loans versus 3-5% down is very similar.

“Of loans that originated in 2011 with a down payment between 3-5 percent, only 0.4 percent of borrowers have defaulted. For loans with slightly larger down payments – between 5-10 percent – the default rate was exactly the same. The story is similar for loans made in 2012, with 0.2 percent in the 3-5 percent down payment group defaulting, versus 0.1 percent of loans in the 5-10 percent down payment group.” – Urban Institute

If you’re in the process of buying a home for the first time, you probably have some questions about the best way to find and finance your dream home. At MortgageRight, our goal is to make sure you have the education and support you need. That starts with dispelling many common myths about mortgages and home buying.

Please contact MortgageRight at 205.776.8401 or Contact@belair.mortgageright.com for more information.

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Conventional Loans

Conventional (conforming) mortgage loans are financed and insured by private lenders and investors, rather than being insured by the Federal Government (FHA). Conventional loans are often sold to Freddie Mac (FHLMC) or Fannie Mae (FNMA), the largest source of loan funds in the United States, who purchase closed mortgages, freeing up funds so lenders can make more home loans. A conventional loan may also offer the choice to pay homeowners insurance and taxes directly, rather than be included in the monthly payment each month.

A conventional refinance can be a excellent way for FHA homeowners to cancel their FHA mortgage insurance premiums. Rather than refinance with the FHA, homeowners can opt to refinance with a conventional loan instead. This strategy is increasingly popular as home values continue to recover nationwide. The rules are basically the same for refinance as they are for purchase, but the results can prove to be a great way to save money on both the short and long run. Simply call MortgageRight for more info.

Disclosure: Even though a lower interest rate can have a profound effect on monthly payments and potentially save you thousands of dollars per year, the results of such refinancing may result in higher total finance charges over the life of the loan.

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VA Loans

The VA (Veterans Affairs) loan helps service members, veterans and their families become homeowners by providing a home loan guaranty benefit and other housing-related programs to help veterans obtain, retain, or adapt a home for personal occupancy.

VA guaranteed loans are provided by private lenders, such as banks and mortgage companies, and not by the VA directly. The U.S. Department of Veterans Affairs is not a direct lender, therefore the loan is made through a private lender and partially guaranteed by the VA so long as guidelines are met. Through the VA Home Loan Guaranty Program, VA guarantees a portion of your loan against loss and helps lenders provide you with more favorable financing terms.

The VA loan remains one of the few mortgage options for borrowers who do not have a down payment. VA loans are available to more than 22 million veterans and active military members.

Most members of the military, veterans, reservists and National Guard members are eligible to apply for a VA loan. Spouses of military members who died while on active duty or as a result of a service-connected disability may also apply.

MortgageRight is Veteran Owned and Operated and understands the needs and requirements of our veterans. We remain steadfast in honoring their dreams of homeownership.

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FHA Loans

A FHA (Federal Housing Administration) loan is a government-insured mortgage loan. An FHA loan has features that may make it easier for first-time homebuyers to achieve the dream of homeownership with low down payment options, flexible credit and income guidelines and a fixed-rate. FHA mortgage insurance protects the lender if a borrower defaults on the FHA loan.

Each FHA borrower pays a mortgage insurance premium. The premiums are collected and used by the FHA to reimburse the lender (not the borrower) should the borrower default and the lender must foreclose upon the loan and sustain a loss. This insurance enables a lender to provide loan options and benefits often not available through conventional financing. 

Fortunately, the Federal Housing Administration (FHA) requirements for credit scores and down payments are lower than for conventional loans. Borrowers may be able to qualify for an FHA loan with a credit score of at least 580 and a downpayment of just 3.5 percent. FHA loans may allow sellers to pay up to 6 percent of the loan amount to cover buyers’ closing costs.

Meet with MortgageRight.

Not all lenders can offer you a FHA loan, however MortgageRight is a Federal Housing Administration (FHA) approved lender.

  • You must prove that you have 2 years of steady employment, showing your income has remained the same or increased.
  • You cannot have declared bankruptcy in the past 2 years or had a foreclosure in the past 3 years. If you have, you may not qualify for an FHA loan.
  • You must also have the cash to pay the downpayment on your loan which is generally 3.5 percent of the total cost of the loan.

If you feel that you can or are close to meeting these requirements, call a MortgageRight loan officer today!

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