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How to Know How Much House You Can Afford

Jul 11

2:32

Category | FM Lending News

If you’re in the market for a home, probably the very first step you’re going to take is determining your price range. And unless you’ve got a nice nest egg in the bank, that amount is going to come down to the monthly mortgage payment you can afford to make.

Or is it?

The mistake many homebuyers make - especially first-time buyers - is only taking the mortgage payment into consideration when deciding the price of the home they can afford. In reality, however, a lot of other expenses need to be factored into your monthly costs as a homeowner before you settle on the price range. So in addition to your monthly mortgage payment, make sure to calculate these other costs and add them into your budget before you start shopping for your dream home:

Utilities: The bigger the house, the more you will spend on electric, heat, internet, etc; make sure you have an idea of these costs based on square footage. Your real estate agent should be able to provide you with these estimates

Taxes: Property taxes vary among cities, counties and states, so hone up on these differences and factor them into how much home you can afford based on where you want to live.

Insurance: Do some research and get a realistic price range on what homeowners insurance is going to cost you for the type of home and properties you’re looking at.

Repairs and maintenance: Are you looking at older homes or new construction? The former may save you money on the purchase price, but you’ll need to increase your budget for repairs and maintenance in the short and long term.

Landscaping: If a big yard is one of your must-haves, make sure you’re budgeting for landscaping costs, or are ready, willing and able to do the work yourself.

Furniture and design: Is your heart set on furnishing and designing the interior of your home to perfection? Or are you willing to live with a slightly outdated kitchen and your old apartment furniture for a few years while you slowly chip away at improvements? Make this decision up front as it will factor into how much you can afford on the purchase price.

While taking the above into consideration may mean looking for a home in a lower price range, you’ll be better off in the long-run - living in a home you can comfortably afford and enjoy.

To help you determine a comfortable price range, check out our Affordability Mortgage Calculator or contact a local mortgage consultant.

All first mortgage products are provided by Prosperity Home Mortgage, LLC dba FM Lending Services. (877) 275-1762. Prosperity Home Mortgage, LLC products may not be available in all areas. Not all borrowers will qualify. Licensed by the NJ Department of Banking and Insurance. Licensed by the Delaware State Bank Commissioner. Also licensed in District of Columbia, Florida, Georgia, Indiana, Maryland, Michigan, North Carolina, Pennsylvania, South Carolina, Tennessee, Virginia, and West Virginia.

NMLS ID #75164 (NMLS Consumer Access at http://www.nmlsconsumeraccess.org/)

Introducing HomeSense

Jun 27

10:26

Category | FM Lending News

New Home Loan Option Offering No Income Restrictions

So you have decided to buy a home, but you are looking for a mortgage option with a low down payment, flexible sources of funds, and no income restrictions. Good news! FM Lending Services now offers HomeSense, a program that may make sense for home buyers in North Carolina.¹ HomeSense presents a responsible path to homeownership for first-time home buyers and low-to-moderate income borrowers that includes stable fixed-rate options.

Here are some advantages of HomeSense:

No income restrictions
Flexible down payment sources with as little as 3% down
Down payment does not need to be from borrower’s own funds
Reduced, cancelable Mortgage Insurance (MI)
No credit score required with a 5% down payment
Boarder/Rental income allowed
Up to 6% interested party contributions allowed

“As a mortgage company, we are committed to offering stable, responsible financing options to our customers,” said Tim Wilson, CEO of Prosperity Home Mortgage (Prosperity), parent company of FM Lending Services. “That’s why we are pleased to offer HomeSense—a competitive, fixed-rate loan that matches a variety of clients’ needs and helps prospective home buyers become more confident about jumping into the housing market.”

In addition to a low down payment and fixed interest rate, qualified buyers who choose HomeSense financing will also have an opportunity to receive homeownership education and counseling to help them prepare for the responsibility of owning a home.

Randy Krout, president of sales at Prosperity, expanded on Wilson’s thoughts. “For customers who have limited credit or funds, making sure they are comfortable with their monthly mortgage payment is our top priority,” said Krout. “HomeSense may be a great opportunity for certain customers to obtain financing and enjoy homeownership for years to come.”

To learn more about HomeSense, contact your local mortgage consultant.

HomeSense may not be the best mortgage product for all borrowers. Please consult your mortgage consultant to discuss your financing options.

1. HomeSense is available in Florida, Georgia, Maryland, North Carolina, Pennsylvania, and Virginia only. Ask a mortgage consultant for the maximum loan amount in your area.

NMLS ID #75164 (NMLS Consumer Access at http://www.nmlsconsumeraccess.org/)

How to Save on Mortgage Costs

May 23

1:35

Category | FM Lending News

While a myriad of expenses go into buying and owning a home, the biggest expense for most is the mortgage payment. Here are five great tips from Bankrate for reducing mortgage costs—both before and after you purchase a home.

First, get pre-approved for your mortgage, not just pre-qualified. Preapproval involves the lender doing their due diligence by pulling your credit report, verifying your income and taking other steps to determine your maximum loan amount. For a preapproval, the lender also commits to making the loan if you buy the home within a set amount of time. The lender doesn’t review your information for a prequalification and, therefore, there’s no guarantee the loan will be approved.
If you’re looking to buy a newly built home, ask about builder incentives, such as discounted upgrades or reduced closing costs when you use an affiliated lender. According to Bankrate, instead of cutting the price of a new home, the homebuilder will sometimes offer thousands of dollars in discounts as an incentive to use the builder’s preferred lender and settlement company.
Use the Loan Estimate, a three-page document you get after you apply for a mortgage, to compare loan offers. Specific information you should look for includes: estimated monthly payment; interest rate; estimated closing costs; how much you’ll need at closing.
Pay discount points to buy down the rate if you have cash available and want to lower your monthly payments. In exchange for more money upfront, lenders are often willing to reduce the interest rate, thereby reducing your monthly mortgage payment. According to Bankrate, a payment of 1 percent of the loan amount is called 1 point—and will usually decrease the mortgage rate by a quarter of a percentage point.
Negotiate fees to reduce closing costs. While some fees are charged by third parties, such as title companies, some lenders may be willing to negotiate their origination fees. Applying with competing lenders will give you some negotiating power, as well as the ability to do some comparison shopping with third-party fees. Be sure to shop around on home inspections and home insurance, too.

Questions? Contact a mortgage consultant near you!

Source: Bankrate.com

Know What Goes Into Your Credit Score

May 9

11:30

Category | FM Lending News

You’re probably well aware of how important your credit score is. A good score grants you access to loans and favorable interest rates, and opens up many different possibilities for a healthy financial future.

But do you know how your credit score is determined? Be aware of the factors used in credit-scoring models so you can work towards achieving a higher credit score. Here are some of the top factors, according to Credit Karma:

On-Time Payment Percentage
This is the percentage of payments you’ve made on time during your credit history. This plays a big role in determining your creditworthiness, so just a couple of late payments could significantly impact your score for the worse. An easy way to avoid late payments? Set up automatic bill pay or create calendar reminders for bill due dates.

Credit Card Utilization
This is a percentage that is calculated by taking the total of your credit card balances and dividing that number by your total credit card limits. This will show creditors how much of your total available credit you are already using. The lower your credit card utilization, the higher your credit score.

Average Age of Open Credit Lines
The longer your credit history and the older your accounts the better. That’s why it’s a good idea to keep older cards open and active, and to start applying for credit at a young age.

Total Accounts
Consumers with more accounts (or more lines of credit) often have higher credit scores because it indicates that more lenders are willing to give them credit. Having a good mix of different types of credit is good for overall credit health as well. But be prudent: Only apply for credit you actually need.

Hard Inquiries
When you apply for a credit card, mortgage or auto loan, a hard credit inquiry is initiated on your credit report. One hard inquiry will usually have little impact, but multiple inquiries can have a larger impact. A soft inquiry is when you check your rate to see what you qualify for. If you’re unsure, check with your potential creditor or lender before applying to see if they will do a hard or soft pull.

Derogatory Marks
Derogatory marks are negative items on your credit report like collections, tax liens or bankruptcy. These records can stay on your credit report for 7 to 10 years. If you have one on your credit report, it can show a lender that you may have mismanaged your credit in the past. The best way to overcome derogatory marks is to start rebuilding healthy credit again. This will gradually weigh in your favor.

Questions? Contact your local mortgage consultant.

The Assumable Mortgage: Taking Over a Seller's Loan

Apr 20

2:30

Category | FM Lending News

When interest rates rise, ask about an Assumable Mortgage.

What is an assumable mortgage?

An assumable mortgage is a loan that a buyer can take over from the seller of a home, often with little or no change in the loan’s terms, including the interest rate. After obtaining a lender’s approval, a qualified buyer agrees to make future payments as if they took out the original loan on the home.

What types of loans are assumable?

All government loans, such as FHA and VA loans
All conventional adjustable rate mortgage (ARM) loans
Some non-conforming ARM loans¹

Advantages of an assumable mortgage:

If the seller’s interest rate is lower than the rate a buyer can obtain based on current market rates or credit history, the buyer may enjoy significant savings.
Fewer closing costs are associated with an assumable mortgage.
Because not all mortgages are assumable, a seller may also benefit by marketing this advantage when competing with other homes on the market.

Considerations of an assumable mortgage:

A buyer will be required to qualify for the terms of the existing loan in order to assume the mortgage.
If the sale price of the home is more than the mortgage amount remaining on the home, a buyer will need to pay for the difference at closing out-of-pocket.
Certain conditions will need to be met based on the existing loan type.

If you have questions about an assumable mortgage, please contact a mortgage consultant near you!

1. Ask your local mortgage consultant to discuss assumable non-conforming loan programs for which you may be eligible.

NMLS ID #75164 (NMLS Consumer Access at http://www.nmlsconsumeraccess.org/)