Speedy Home Sales: Top 5 Things Buyers Were Looking for in 2017

Are you are curious to know what it takes for your community to see speedy home sales in 2018? In order to determine what makes home sales happen quickly, as agents, we look at the patterns. We compile the data and compare it, year over year. So if you are wondering what it takes to sell your home quickly in 2018 or “What did the homes that sold in Petoskey in 2017 in 30 days or fewer have in common?” we can tell you that.

Without further ado, let’s take a look at the top five things buyers were looking for these past 12 months.

1. Square Footage

Twenty-seven homes sold in Petoskey in less than 30 days in 2017. On average, these homes were built at around 1,500 square feet. Median square footage was 1,470 square feet. About half of the homes had basements (not included in the square footage measurements).

According to an article by the National Association of Home Builders, the NAHB, national averages in new builds has been around 2,600 square feet since 2016 and on a steady increase.

The article stated that: “The post-recession increase in single-family home size is consistent with the historical pattern coming out of recessions. Typical new home size falls prior to and during a recession as some home buyers tighten budgets, and then sizes rise as high-end home buyers, who face fewer credit constraints, return to the housing market in relatively greater proportions.”

For our purposes, the homes we are talking about that sold in 2017, were not new builds. In fact, at least one of the homes was built as far back as the year 1900, 5 homes were noted as being built in 2002 or sooner. The ages for most of the rest of the homes, however, were unknown. All that said, it appears that national averages and averages here in Petoskey don’t necessarily correlate. To further make that point, in a study of the 1,789 homes sold since 2011, only 42 were built in 2010 or sooner with an average of 2,250 square feet. Of those 42 homes, only 4 sold in less than 30 days. Furthermore, the average day on market was 180 days over the course of 7 years.

2. Bedrooms and Bathrooms

According to the National Association of Home Builders, homes are most often built to include 2.56 bathrooms and 3.38 bedrooms. These figures coincide with what buyers were looking for in 2017. The vast majority of homes that sold were 3 bedroom, 2 bath homes. These homes are usually preferable because they can accommodate growing families, guests, or retirees all the same.

Nationally speaking, master bedrooms trend at making up 12% of the square footage space. Second and third bedrooms account for nearly 17% of the home space. Lastly, bathrooms account for approximately 12% of the square footage. Most of the floorplans are dedicated to living spaces, family rooms, dining, and kitchens — totaling nearly 40%. The remaining square footage is dedicated to spaces such as foyers, closets, pantries, laundry, and garages.

3. Financing

When it comes to how homes are selling quickly, financing accounts for 37% of home sales. While most homes sold for cash (16 homes or 59%) the remainder of sales were done through a mortgage (10 homes or 37%). One home sold on a land contract.

Of the 27 homes sold within 30 days in 2017, the average sale price was $260,063. It is important to note that the highest sale price was $1,000,000 and the lowest was $60,000. Because there is such a disparity between the highest and the lowest sale price, knowing the median sale price is more indicative of the trend. The median sale price was $175,000, with the majority of homes (15) selling under $200,000.

Finally, the average price per square foot was $173, and the median price per square foot was $152.

4. Garages

It appears that if you want to see a speedy home sale, you should make sure you have a garage. Nearly all homes sold (with the exception of two) had at least a one-car garage and on average a two-car garage. It’s no wonder Petoskey residents want garages; with our harsh winters, it only makes sense to have a safe place to house a car. So if you don’t have one already, you may want to consider adding on a garage. It may help with a quicker sale, and it is also likely to increase your home’s value too. In fact, the data shows, that of homes sold in the same neighborhood with much of the same features, the 2 homes with garages sold at substantially higher prices than those without.

5. Stick-Built

Of all of the criteria that helped contribute to speedy home sales in 2017, having a “stick-built” home seemed to be on trend; 23 of the 27 homes were built on the site where they reside.

“Stick-built” or “site-built” homes tend to hold their value at a much better rate than manufactured homes. This is because the materials used for “site-built” homes tends to be of higher quality, making them more desirable. This fact coincides with the next, that site-built homes look better in the eyes of lenders. If an investment holds its value longer, simply put, it is the better investment.

Of all the things that helped to push faster sales in 2017, it should be noted that location, correct pricing, and marketing are also factors that can contribute. Because each home is unique, it is important to get a professional market analysis from a real estate agent who knows your market area. Perhaps there are some things you can work on to help your home sell such as staging or small repairs, but you won’t know until you get a professional opinion. Call an agent today.

Source: CB Blue Matter Blog

Posted on December 19, 2017 at 8:46 am
Kappel Gateway Realty | Category: Buyer's Market, Buyers, buying, closing costs, real estate | Tagged , , , , , , , , , , , ,

First-Time Homeowners: Everything You Need to Know About Homeowners Insurance

Oh my…this is a MUST READ for First Time Home buyers!  Don’t leave home without it!

What exactly is home insurance and do I really need it?

Ready to buy your first home? Before you dot the I’s and cross the T’s on your mortgage, it is important to understand the ins and outs of homeowners insurance.

Without homeowners insurance, a property buyer is unlikely to secure a house. Homeowners insurance protects a residence and the items stored in a residence against disasters. Therefore, if your home is suddenly destroyed in a hurricane, tornado or other natural disaster, homeowners insurance guarantees you are fully protected.

Homeowners insurance should be simple, but there are many factors to consider as you evaluate all of the coverage options at your disposal.

Now, let’s take a look at five common questions about homeowners insurance.

  1. Why Do I Need It?

There are two reasons why homebuyers must purchase homeowners insurance:

  • It enables you to protect your assets. Homeowners insurance safeguards the structure of your home and your personal property. It also protects you against liability for injuries to others or their property while they are on your property.
  • Your mortgage lender probably requires you to have it. Most lenders will require you to maintain homeowners insurance for the duration of your mortgage. A lender usually will require you to list the company as a mortgagee on your homeowners policy. Moreover, if you let your homeowners coverage lapse, your mortgage lender likely will have your home insured at a much higher premium and with less coverage that what you had in the past.

Homeowners insurance is a must-have for homeowners, without exception. If you allocate the time and resources to find the right homeowners coverage, you should have no trouble protecting your house and personal belongings for years to come.

  1. How Does It Work?

Generally, homeowners insurance is considered a package policy because it includes a combination of coverages. The package policy focuses on the following areas:

  • Dwelling: Covers the costs associated with damage to your home and structures attached to it, including any damage to electrical wiring, heating systems or plumbing.
  • Other Structures: Ensures you’re protected against damage to fences, garages and other structures that are on your property but not attached to your house.
  • Personal Property: Guarantees you’re covered for the value of possessions like appliances, clothing and electronics if they are lost or damaged. This coverage applies even when your personal property is stored off-site, like in a storage unit or college dorm room.
  • Loss of Use: Provides financial assistance to help you cover some of your living expenses if you need to temporarily vacate your house while it is being repaired.
  • Personal Liability: Offers protection against financial loss if you are sued and found legally responsible for injuries or damages to someone else.
  • Medical Payments: Covers the medical expenses for people who were hurt on your property or by your pets.

Clearly, there’s a lot to consider as you evaluate a homeowners policy. Review your coverage options closely, and you may be better equipped than other homeowners to secure your house and personal belongings effectively.

  1. Are There Homeowners Coverage Limits?

You should get homeowners insurance that covers the full replacement cost of your home, not just the market value of your residence.

The replacement cost and market value of a residence may seem identical at first. But upon closer examination, it becomes easy to understand why you’ll want to purchase a homeowners policy that offers protection for the full replacement cost of your house.

For homeowners, the replacement cost refers to the total amount it would cost to rebuild or replace your home if it was completely destroyed. This cost may vary based on your home insurance provider and usually accounts for the plans and permits, fees and taxes and labor and materials that you would need to replace your house. However, the replacement cost does not account for the value of the land associated with your home.

On the other hand, the market value reflects what your home is worth today. It fluctuates based on the current condition of your house, the real estate market and various economic factors.

The market value of your home commonly proves to be great indicator of what your house may be worth if you intend to sell it in the near future. Conversely, when it comes to homeowners insurance, it is always better to err on the side of caution. If you calculate the full replacement cost of your home, you can insure your residence appropriately.

  1. Are There Optional Homeowners Insurance Coverages?

Believe it or not, a standard homeowners policy won’t cover everything. As such, you may want to consider adding some of the following optional coverages to supplement your homeowners policy:

  • Flood Insurance: Floods rank among the top natural disasters in the United States, and even an inch of water can cause severe property damage in a short period of time. The National Flood Insurance Program (NFIP) offers flood insurance coverage that will protect your home for up to $250,000 and your personal property for up to $100,000. Keep in mind that there often is a 30-day waiting period before a flood insurance policy goes into effect. This means if you want to buy flood insurance in the days leading up to a hurricane, you may be out of luck.
  • Earthquake Insurance: Many Western states are prone to earthquakes. In California, Oregon and Washington, earthquake coverage is available from multiple insurance providers. Or, if you live outside these states and still want to purchase earthquake coverage, your state’s Department of Insurance can help you find licensed earthquake insurers.
  • Daycare Coverage: If you take care of a friend’s children and are unpaid, your homeowners insurance offers limited liability coverage. Comparatively, if you provide daycare in your house, you will need to purchase insurance to cover the related liability.
  • Additional Liability: You can purchase additional liability coverage any time you choose. These add-ons may require a nominal premium but sometimes makes a world of difference for homeowners.

Of course, if you’re unsure about which coverages you need, it always helps to consult with an insurance agent. This insurance professional will be able to respond to your homeowners insurance concerns and queries and help you get the coverages you need, any time you need them.

 How Much Will It Cost?

 There are several factors that will affect your homeowners insurance premium, including:

  • Attractive Nuisances: If you have an attractive nuisance like a swimming pool or trampoline, you may have to pay more for homeowners insurance than other property owners.
  • Coverage Options: Adding flood insurance, earthquake insurance and other coverages may cause your homeowners insurance premium to rise.
  • Home Protection System: If you have a home burglar alarm, security devices for windows or deadbolts on doors, you may be able to lower your insurance premium.
  • Pets: Some insurance providers won’t offer homeowners coverage if you own certain types of pets.
  • The Home Itself: Your house’s age, condition, construction and distance from a fire department and water source may impact your homeowners insurance premium.

Homeowners insurance premiums will vary from person to person. But those who take an informed, diligent approach to homeowners insurance can boost their chances of getting the best homeowners policy at the lowest rate.

Homeowners Insurance Tips

Let’s face it, homeowners insurance can be confusing, particularly for those who are searching for coverage for the first time. Lucky for you, we’re here to help you discover the right homeowners policy.

Here are five tips to help you secure homeowners insurance that meets or exceeds your expectations:

  • Shop around. Meet with various homeowners insurance providers and learn about different types of coverages so you can make an informed homeowners insurance decision.
  • Bundle your homeowners and car insurance policies. In some instances, you may be able to save between 5 and 15 percent if you purchase your homeowners and car insurance from the same insurance company.
  • Minimize risk across your house. Homeowners insurance offers immense protection, but you also can install storm shutters, enhance your heating system and perform assorted home upgrades to reduce risk across your home.
  • Look at your credit score. With a good credit score, you may be able to lower your homeowners insurance premium. If you don’t know your credit score, you can request a free copy of your credit report annually from each of the three credit reporting bureaus (Equifax, Experian and TransUnion). Keep in mind that only some carriers use credit scoring.
  • Stay with an insurer. If you find an insurance company that you like, stay with this company for several years, and you may be able to reduce your homeowners insurance premium over time.

There is no need to settle for inferior homeowners coverage. If you use the aforementioned tips, you can purchase homeowners insurance that guarantees your home and personal belongings are fully protected both now and in the future.

Source:  CB Blue Matter

Posted on May 30, 2017 at 7:49 pm
Kappel Gateway Realty | Category: buying, Dogs, first time buyers, Homeowners, insurance, Pools, real estate, security, Uncategorized | Tagged , , , , , , , , , , , , , ,

10 Questions For Mortgage Lenders

The most frustrating part of your homeowner purchase if you are not paying cash?  The mortgage application and approval hands down!  Start off your journey with some great advice!

Prepare for your meeting with your mortgage lender by showing up with these 10 questions.

Buying a home starts with finding the right mortgage lender. Here are the questions you should ask mortgage lenders, before you sign on with one.

Steering clear of homebuyer’s remorse requires more than just picking the right home in the right neighborhood. According to a 2016 survey by J.D. Power, 27% of new homeowners ultimately came to regret their choice of lender. One major reason for the dissatisfaction was overall poor customer experience, including lack of communication and unmet expectations. Another factor? Pressure from the lender to choose a particular product or loan. You can remove some of the tension and turmoil of house-hunting by carefully vetting potential lenders. Here are some questions to ask potential lenders before you commit.

10 Questions to Ask Mortgage Lenders

  1. 1. What mortgage programs do you offer?

    In many cases, choosing the best loan for your specific financial situation requires working with a lender who offers a wide array of loans. You don’t want to work with a lender who tries to push you into one loan simply because that’s the only option from their limited selection.

  2. 2. Do you regularly handle the type of loan I’m looking for?

    If the type of loan you’re looking for is more specific than, say, a conventional fixed-rate mortgage, a little more expertise is useful and in some cases, it might be necessary. An uncommon home loan like a United States Department of Agriculture loan, for instance, must go through an approved lender.

  3. 3. What are the qualifications for the loan I’m seeking?

    Even when two lenders offer the same type of loan, their minimum requirements could differ. For instance, Department of Veterans Affairs loans require a minimum credit score of 620, but a lender might require a minimum score of 640. So comparison-shop. Don’t assume the same type of loan means the same terms.

  4. 4. Do you offer down payment assistance programs?

    If you’re concerned about meeting down payment requirements for a loan, this is an important question to ask. Some lenders offer assistance programs. Putting more down generally lowers your interest rate. Even paying just a half-percentage point less in interest can make a huge difference in the lifetime costs of your mortgage.

  5. 5. Can you give me an estimate of the rates and fees I might expect to pay?

    While an initial estimate doesn’t guarantee your final, out-of-pocket expense, it can be a solid jumping-off point for evaluating lenders. However, rates fluctuate, so try comparing lenders on the same day to get the most accurate mortgage rate comparisons.

  6. 6. Can you quickly provide an in-depth preapproval lender letter to my real estate agent?

    If you’re house-hunting in a hot real estate market like Jacksonville, FL, or a home for sale in Colorado Springs, CO, time is of the essence. Make sure the lender can quickly provide an in-depth preapproval letter to your real estate agent. You want a preapproval letter that makes the seller confident you qualify for the home — and, ideally, you want it to be delivered before competing offers arrive.

  7. 7. Will you be able to do a mortgage rate lock?

    Since a small change in rates can cost thousands in the long run, check to see if the lender offers a mortgage rate lock. Be sure to ask about the associated fees, including how much it costs to extend the lock should it expire before closing.

  8. 8. Do you handle mortgage loan underwriting in-house?

    There’s a big reason to ask this one. If the loan underwriting is completed in-house, loans can be processed quicker and questions answered more efficiently. And that means fewer potential complications or delays that could push back a closing date a situation that can sometimes cause a sale to fall apart.

  9. 9. What is the time estimate for processing my home loan?

    When you’re coordinating the end of a current lease or timing a home sale with a new home purchase, knowing the estimated time it will take to process your loan is key. Of course, it’s always a good idea to build in a small buffer if you can and not just because loan preparation can take longer than expected. Surprises sometimes pop up during the final walk-through before the home sells.

  10. 10. Can I expect communication in a straightforward and timely manner?

    If your communication thus far hasn’t been efficient and helpful, that could be a bad sign of things to come. Find out if you’ll have a single contact who you can count on or just a general customer service line.

    Source:  Trulia Blog

 

Posted on May 30, 2017 at 7:20 pm
Kappel Gateway Realty | Category: buying, credit score, debt, financing, first time buyers, mortgage, real estate, research, Uncategorized | Tagged , , , , , , , , , , , ,

I Can’t Get a Traditional Mortgage… What Are My Alternatives?

 

Quandry: You are faced with circumstances that may prevent you from obtaining a traditional mortgage. Don’t panic…you have alternatives!

You want to buy a house, but your credit history isn’t in tip top shape, or you cannot show a consistent cash flow even though you have a lot of money saved in the bank making you an undesirable candidate to borrow in the eyes of the lenders.

What are your options? When it comes to real estate, here are some of the most common alternatives to a traditional mortgage for you to take into consideration:

Borrow from a Self-Directed Individual Retirement Account (IRA). Self-Directed IRAs are different from Roth IRAs and traditional IRAs. A Self-Directed IRA gives you the freedom to invest in many nontraditional assets, such as mortgages, real estate, promissory notes, tax liens, precious metals, private businesses, etc. With a Self-Directed IRA you get asset protection and tax advantages as they are government-sponsored retirement plans. Due to the self dealing rule, the IRS does not allow you to borrow against your own self-directed IRA, or those of your lineal relatives and business partners. This means that you would need to know someone who has a Self-Directed IRA to borrow from, or a third party financial company that facilitates those types of transactions. For more information on how to get private lending with a Self-directed IRA, read more on Self-directed IRA Lending.

Borrow from your Whole Life Insurance policy. Whole Life Insurance is a basic cash-value life insurance. When you pay the regular premium on a Whole Life Insurance policy, you are essentially accumulating wealth through the equity growth that you are contributing which goes into a savings account. If there are dividends or interest in this account, it is tax-deferred. Don’t mistake Whole Life Insurance for Term Life insurance. Whole Life Insurance protects you for your entire life, and allows you to borrow against the cash-value of your policy. A pro tip to borrowing against your Whole Life Insurance is that it increases your borrowing potential however, should you not pay back the loan the face value of your policy reduces. If this is the strategy you choose to implement to buy your dream home, be sure to thoroughly research this option. Ask yourself and your insurance company the following:

1. What would the Pros and Cons be to borrowing against Whole Life Insurance?
2. How long will it take to repay the loan and what would be the interest rate?
3. What would happen if you pass away before the loan is payed off?
4. What are the consequences to dependents who are beneficiaries?
5. How does it affect the annual dividends?
6. Are withdrawals of the Whole Life Insurance taxable or deferred?
7. In what scenarios would the Whole Life Insurance policy lapse if you barrow from it?

There are many things to consider when borrowing against your Whole Life Insurance policy, so be sure that your decision to buy your home outweighs some of the drawbacks of borrowing against your life insurance.

See if you can get Seller Financing. Seller Financing is a great way to skip the whole mortgage approval process. However, it is quite difficult to get for the following reasons:
(1) The seller does not own the house outright, and for the seller to give you a financing option, the seller must have paid off his/her mortgage in full.
(2) Most sellers do not want the hassle and additional risks of being a lender even though they could profit more by being the financier. With that being said, sellers don’t necessarily have to be a lender. The seller can arrange to resell the promissory note to an investor.

Buy a rent-to-own home. Rent-to-own, lease-to-own, or lease-to-buy are all the same. Often times, homeowners who want to sell off their homes but can not, those home owners may list their homes as a rent-to-own. If you and the seller sign a lease contract and you pay the Option Consideration section of the lease contract, the seller is agreeing to rent his/her home to you for a specific amount of time. Once that time ends and you have been paying the rent on the lease agreement in a timely manner and building equity towards the purchase of the home; you will have the option of going through with the purchase or not. For more details about renting-to-own a home, read Pros and Cons of Renting to Own a Home.

Source:  Dream Casa

 

 

 

Posted on May 23, 2017 at 12:33 pm
Kappel Gateway Realty | Category: buying, credit score, debt, financing, first time buyers, real estate, Uncategorized | Tagged , , , , , , , ,

Pop Quiz: How Well Versed Are You in Home Mortgage Loans?

If you are in the market for a new home, then you’d better read up!  No matter how much you know regarding mortgages, its never too late to learn.

A lot of Americans are caught up in a mortgage nightmare simply because they didn’t dive into the process with some preparation. With a little studying and education, getting a home mortgage can become a far less stressful endeavor.

Here are a few questions that can help you go into the home mortgage process with more knowledge and confidence. Although this quiz doesn’t cover everything you should know,  it’s certainly a good start:

Question 1: What is the difference between pre-qualification and pre-approval?

Answer: Pre-qualification is the first step in the mortgage process that involves supplying a bank or lender your financial information in order to find out how much you can borrow on a loan. Pre-approval is when you and your mortgage banker review your credit report to determine if you’re worthy of qualifying for a particular loan amount.

Question 2: What are the two big cash expenditures that require having money on hand to buy a home?

Down payment and closing costs.

Question 3: Generally, a monthly mortgage payment is made up of four different components commonly referred to as “PITI.” What are they?

Answer: Principal, Interest, Taxes, and Insurance.

Question 4: Why is it recommended to make one extra payment a year for people on 30-year fixed mortgages?

Answer: Since extra payments cut down the principle of your loan (and not interest), giving one additional payment a year can shorten your loan term by a decade.

Question 5: What is the downside to a subprime mortgage?

Answer: Although subprime mortgages come with lower introductory interest rates, they increase significantly after a number of years.

Question 6: What does LTV stand for and how do you determine it?

LTV stands for loan to value ratio. To find out an LTV, divide the loan amount by the appraised value of the house. So if your home is worth $200,000 and the loan amount is $100,000, then the LTV is 50%.

Question 7: There are three term lengths you can get for a fixed-rate mortgage. What are they?

Answer: 15 year, 20 year, and 30-year terms are your options for a fixed-rate mortgage.

Question 8: Of the mortgage rates mentioned in the last question, which one do most people find the easiest to qualify for?

30-year mortgages since a longer term means lower, more affordable payments. The fact that longer terms also mean bigger tax deductions also plays a role.

Question 9: Is it a good idea to get an ARM (adjustable-rate mortgage) if you plan on owning a home for a long time?

Answer: No. Since the interest rate on ARMs change along with market rates, they are unpredictable. An ARM is only recommended if you’re staying in a home for a short period of time.

Question 10: Lenders will look at your job history when considering offering you a loan. A red flag for them is if you haven’t been at your current job for at least how many years?

Lenders like to see that you’ve kept the same employment for at least two years. This also applies to people who are self-employed and part-time employees.

Question 11: What is it called when you owe more than your house is worth?

Answer: Owing more than your house is worth is called being “upside-down” on your mortgage.

Question 12: Is it OK to open a new credit account during the mortgage process in order to help pay for moving expenses, new furniture, etc?

Answer: No. Since everything must be documented with payment amounts and account statements, doing so can affect your debt-to-income ratio.

Source: DreamCasa.org

Posted on May 7, 2017 at 3:51 pm
Kappel Gateway Realty | Category: credit score, financing, first time buyers, mortgage, real estate, Uncategorized | Tagged , , , , , , , , ,

What You Need to Know Before Buying Mortgage Insurance

If you’re like many borrowers who have less than 20 percent of a home’s value in equity or saved for a down payment, you need to know how mortgage insurance affects the cost of buying a home.

What Is Mortgage Insurance?
Mortgage insurance—also known as private mortgage insurance, or PMI—protects lenders from default on conventional mortgages in cases in which the borrower contributes a down payment of less than 20 percent of the home’s purchase price. PMI is different from homeowners insurance, which protects the home and what’s in it. It’s also different from mortgage protection insurance or mortgage life insurance, which is an insurance policy that pays off the mortgage loan if the borrower passes away. Mortgage insurance is beneficial to both lenders and borrowers. Mortgage insurance lowers a lender’s risk of giving a loan to borrowers with a low down payment. It also benefits the borrower, who, with mortgage insurance, might now qualify for a mortgage he wouldn’t otherwise get approved for.

What You’ll Pay for Mortgage Insurance
The cost of mortgage insurance depends on the type of home loan you have. You could pay anywhere from 0.3 percent to 1.15 percent of your home loan, according to realtor.com®.

Although insurance premium payments usually get paid monthly, you might have the option to pay it up front at closing or roll it into the home loan cost. Check with your lender.

Mortgage Insurance for Different Types of Home Loans
Mortgage insurance programs vary depending on the type of home loan. Generally, mortgage insurance is required when you get a conventional mortgage and put down less than 20 percent, or when you refinance a mortgage and your home equity is less than 20 percent.

Other types of mortgage insurance include:

  • Federal Housing Administration mortgage insurance (mortgage insurance premium): An MIP is required for all FHA loans. All borrowers pay their mortgage premiums directly to the FHA, and premiums are the same for everyone regardless of credit score—though if your down payment is less than 5 percent, you can expect to pay a little more. If you get an FHA loan, budget for both monthly MIP costs as part of your regular payment and an upfront payment included in your closing costs. FHA mortgage insurance rates are usually about 0.625 percent.
  • U.S. Department of Agriculture home loan insurance: U.S. Department of Agriculture insurance covers USDA home loans. It’s a lot like FHA mortgage insurance but less expensive. USDA home loan insurance requires making a payment both at closing and as part of your monthly payments. You have the option to roll the upfront cost into your mortgage, but if you do this, you’ll increase both your monthly payment and your overall loan cost.
  • VA home loan guarantee: VA loans come with a mortgage guarantee instead of mortgage insurance, but it provides similar benefits. Instead of a monthly mortgage insurance premium, you’ll pay a funding fee upfront. The fee amount varies depending on factors like your military service type, down payment amount, disability eligibility, whether you are purchasing or refinancing, and if you’ve had a previous VA loan.

Alternatives to Mortgage Insurance
Although there are benefits to mortgage insurance, having it adds to the cost of getting a home loan. If you want to cut costs or are ready to get rid of PMI, consider these five alternatives to mortgage insurance.

Pay a higher interest rate.
When financing a home, some lenders might offer the option to avoid PMI by accepting a higher interest rate. If you choose this option, the higher mortgage rate cannot get canceled, so you’ll have to refinance to lower your rate in the future.

Get your home reappraised.
If you believe you now have at least 20 percent equity in your home due to renovations or the rising local property values, get your home reappraised. You might have enough equity to cancel your mortgage insurance, but you’ll have to pay for the appraisal up front.

Get a piggyback loan.
Whether your lender calls them piggyback loans or piggyback mortgages, these home equity loans or credit lines enable borrowers with low down payments to borrow more money. Before applying or signing for one, review the fine print carefully to see if your total monthly cost is actually cheaper than paying for mortgage insurance.

Ask your lender about other programs.
Some lenders offer programs that don’t require mortgage insurance, even with down payments below 20 percent, though you’ll likely have to prove that you have excellent credit to qualify. Before talking to your lender, focus on building your credit history, especially if you or your spouse has bad credit.

Save more for a down payment.
Sometimes it pays to wait and save up or to choose a home that requires a down payment you can afford. If you save 20 percent of the home’s purchase price to use as a down payment, you might qualify for a conventional mortgage without mortgage insurance. A conventional loan comes with a lower interest rate, and you’ll be able to avoid the headache of comparing mortgage insurance rates altogether.
Source: Rismedia

Posted on February 28, 2017 at 7:43 pm
Kappel Gateway Realty | Category: buying, emptynester, first time buyers, insurance, mortgage, move up buyer, real estate, Uncategorized | Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,