Buying a Home

Millennials and Mortgage

Content couple eating pizza on floor

Content couple eating pizza on floorTimes are changing and so are the home buying options for millennials. Home ownership is a big stage to take. It means you are an adult and are responsible for making mortgage payments on your personal palace. A place to make memories with loved ones or witness your company flourishing (if you are acquiring property for business purposes), the investment is an exciting one.

According to Politifact.com, affordable housing is a challenge faced by many. In fact, less than 13% of millennials are proud to be homeowners nationwide. Nonetheless, homeownership options are being made available to millennials. Furthermore, financing is an option that could lead to you making the most important investment of your life.

Why are millennials such an integral component in the mortgage sector?

Everyone craves the American dream and millennials are no different. Home ownership for millennials aged 35 and under is decreasing, but things need to change. Younger people owning homes could mean fantastic things for the economy. Generally, a homeowner will have been born sometime between the 1980’s and mid-2000’s. For a huge chunk of them, now is the time to be starting a family and settling down.

Consider this – millennials account for approximately 80 million people in the U.S. alone. This is the largest population of them all! The more educated they are on the subject of financing, mortgages, and home ownership, the higher the chances of them standing out to a financing option for consideration.

Mortgage Facts Millennials Must Know

If you are on the fence about becoming a homeowner for the very first time, you should be up to scratch on your millennial mortgage knowledge. Property hunters aged in their 30’s are searching for a place to call “home” and this group of real estate-hungry people cannot be ignored. Take the following facts into account to ease your mind about mortgage approval for millennials:

Down Payments need not be huge. Millennials can get a chance at homeownership if they secure the investment by making a down payment on the purchase price.

Buying properties for lower prices could aid you in building equity. This equity can be put towards mortgage adjustments, should you wish to close one deal and start another.

Credit score does affect your eligibility. Nonetheless, there are a few ways in which you can build your credit score to avoid higher interest rates. Start making the smallest of repayments on any bills or outstanding debts you have to improve your chances at securing a home mortgage.

Separating the Myths from the Facts

Instead of becoming perplexed by the whole situation as a millennial in the home-hunting stage, know what is a myth and what is a fact. Below, we debunk some common myths:

Buying is more expensive than renting - No, it isn’t if you think long-term and select a low interest rate mortgage.

Payment for buying is higher - Not necessarily; some flexible loans have small starting interest rates.

The process is complicated – This is what financing experts are there for. They will guide you through the process seamlessly.

Since millennials are the biggest group of potential homebuyers out there right now, understanding what financing options are available is essential. In order for this to be achieved, not only do they need to be on top of their finances but also, they ought to proactively engage with lenders who can convince them to make that all-important transaction.

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Market trends on home equity: The top ROI home improvements that contribute to home equity.

Beautiful Kitchen in Luxury Home with Island and Stainless Steel

Home equity is the market value of your financial interest minus the debt balance against it. Typically, the largest debt against your home is your mortgage. As you make mortgage payments against the loan, the equity of your home increases. You may also gain equity as your property appreciates in fair market value.1 Understanding your home equity as well as larger home equity trends is key for making a sound investment in property and then increasing your equity in that investment.

Once you’ve invested in property, you must decide which home improvements to make to boost the equity of your home. Before you consider large home renovations, start with the basics. When a potential buyer looks at a home, he assumes that the basic systems are running smoothly.2 No one wants to buy a home and then immediately sink thousands of dollars into a new roof, plumbing infrastructure, or HVAC system. Taking care of the basics will minimize monthly maintenance expenses and put your home in prime condition for potential buyers.
After the home is in good working order, think about tackling a larger renovation. Two of the best rooms to invest in are the kitchen and bathroom. In a strong housing market, a top notch kitchen or bathroom remodel frequently returns over 100% of the cost. People spend a lot of time in their kitchens and bathrooms and will be able to tell whether or not money was well invested in these areas of a home.

Do you live in an older home with only one bathroom? If space permits, it makes more sense to add a second bathroom than to renovate the only bathroom. If your home has two, three, or even four bedrooms and just one bathroom, adding a second bathroom may increase the sales price as much as 8.7%, which is more than double the rate for adding another bedroom.4
If you’re not anticipating a move in the foreseeable future, be honest with yourself about whether you’d get more use out of a bathroom or kitchen renovation. Even if you don’t get quite as much money back doing the remodel that you really want, you’ll get a lot more enjoyment out of the home.

As you weigh varying home improvement projects, think about the value of your house, the average home value in your neighborhood, the general state of the housing market in your area, when you plan to sell your home, and the projects that interest you the most.5 For example, an $8,000 stove is fabulous, but it simply doesn’t make sense to install it in a home worth $220,000. You want to choose home improvements that offer the biggest bang for your buck.

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What will Fannie Mae HomeReady do for Borrowers?

Blue Key and Great House

In August 2015, Fannie Mae announced a new option for would-be homeowners who have been turned down for conventional mortgages due to lower or moderate income levels: HomeReady. The goal of the program is to recognize that today’s households encompass several generations, all of whom contribute to the well-being of all residents. If you’re a borrower who has experienced difficulties in applying for a home mortgage, here’s what you need to know about this innovative program. 

Fannie Mae HomeReady Facts for Borrowers: There are a few key features of the HomeReady mortgage program that will appeal to borrowers.

  • Low Down Payment: Borrowers can obtain financing for up to 97% and there are flexible options for qualifying applicants.
  • Flexible Down Payment Source Options: An array of resources can be used for down payment and closing costs, with no minimum contribution requirement from the borrower’s own assets.
  • Educational Programs: Borrowers can learn from educational opportunities to help them understand the implications of home buying and ownership. These programs are required under the HomeReady program.

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Tips for First Time Homebuyers

loving couple looking at their home

It’s exciting to go house shopping; learning about the loan application, pre-approval and mortgage process isn’t quite as interesting. Still, educating yourself is an essential part of getting financing for your new home. Owning a home is one of the biggest financial investments you’ll make during your lifetime, so you might be feeling a little overwhelmed by the process. Check out a few tips for first time homebuyers that will make things easier once you do find the perfect property.

Run your credit report. Even if you regularly monitor your credit rating, you should run a report in the months before you decide to start house hunting. You want to have time to correct any errors or repair negative items well before you approach lenders for a mortgage. In addition, you should review your credit report to get an understanding of your credit rating. A score of 620 or more is probably enough to qualify for a mortgage, but you’ll get better interest rates the higher your rating. (more…)

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Mortgage Loans for Investment Properties

Purchasing an investment property can be a smart financial move for homeowners approaching retirement or anyone wanting to supplement their income. But acquiring a home for investment purposes isn’t the same as buying your primary residence: What you know from experience with mortgages is helpful, but there are additional factors when it comes to investment properties. Check out these tips before you start shopping.

Save up for the down payment. You can’t obtain private or lender-paid mortgage insurance for investment property purchases, so you’ll need at least 20% of the purchase price as a down payment. Plus, with an investment property mortgage, it’s also a good idea to save up a respectable sum of money for purposes of interest rates. If you can manage to put down at least 25%, you could qualify for lower rates to reduce your monthly payment. (more…)

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Pay off Mortgage or Invest?

It feels good to be in a financial position where you’re trying to decide whether to pay off your mortgage or invest in other assets, such as real estate. Either option can advance your financial stability and impact your future, but paying off your home loan may be more suitable in some cases; likewise, investment might be better for others. It’s important to weigh a few factors to determine which arrangement is best for your situation.

Tax Benefits: Your mortgage payments are tax deductible, so you’ll lose this benefit if you pay off your mortgage early. If you have a higher income and are able to itemize several other deductions, the impact of removing the tax benefit can be significant. Other homeowners falling into a lower tax bracket might consider investing their savings into real estate or other assets rather than a mortgage payoff, as the tax savings are likely negligible or even zero. (more…)

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Why You Should Buy Your New Home Instead of Renting

Why You Should Buy Your New Home Instead of Rent

Why You Should Buy Your New Home Instead of RentWhether you’re considering relocating across town or across the country, you’ll be making one major decision about your living arrangements: buying a new home or renting. Signing a lease is certainly convenient in that there are fewer worries about maintenance or repairs. You simply contact your landlord, and he or she will solve problems according to the lease. But convenience isn’t the only factor, as you’ll see when you look at the many reasons buying is a better option for most people.

You’re making an investment that increases in value. Real estate has an excellent return on investment as compared to other assets, even if you do nothing to the place. But there’s more incentive to improve upon it when that property is the house you live in – and when you renovate, you add value. Typically, you’ll gain more than what you put into home improvements and you’ll reap the rewards when you sell.  (more…)

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How a Good Realtor can Make or Break the Home Buying Process

Even after you’ve made the big decision to buy a home, there are still other choices you’ll have to make as you’re looking for the perfect place. One of the first tasks you’ll need to accomplish is finding the right realtor to assist you in your house hunting efforts. There are countless real estate professionals out there, but you must separate the good from the bad to make the home buying process run smoothly. Here’s why a qualified realtor is important and some pointers on what to look for.

A Good Realtor is Critical for Several Reasons  (more…)

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