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Buying a Home? Don’t Make These Mortgage Mistakes

Clearing up 9 Misconceptions about the Recent  Real Estate Settlement

Are you ready to make your dream of homeownership a reality? If so, you'll want to explore the fantastic option of Temporary Buy Down, which can offer you significant benefits during the initial stages of your mortgage. What is a Temporary Buy Down? It's a fantastic way to lower your initial mortgage payments, whether buying or selling a home. There are two types: seller/borrower paid and lender paid. Seller/borrower paid involves setting aside funds to lower payments for a set period. This can be a great incentive for buyers, as it lowers their monthly payments and can even be rolled into the price of the home. Plus, it helps sellers without reducing the home's sale price. On the other hand, lender paid involves the lender covering the buy down fee. While this may result in a slightly higher long-term rate, it offers a lower start rate during the buy down period, making it attractive when interest rates decrease. What are the benefits? Here's a quick rundown: Lower initial mortgage rates, allowing you to have a lower monthly payment Improve cash flow during the buy down period Save money in a declining rate environment Great for when interest rates are high If you have questions or want to learn more about how Temporary Buy Down can work for you, please to reach out anytime. I'm here to help you! © JVDreamHomes2024

A home is a big purchase. Because it’s such a big purchase, it can take a long time to pay it off, oftentimes as long as 30 years. But it doesn’t have to take that long! You can pay off your mortgage in a shorter time frame if you use the right strategies. A recent article from realtor.com outlined strategies homeowners can use to pay off their mortgages quickly — without going broke in the process — including: Make one extra payment per year. It may seem like making a single extra mortgage payment per year wouldn’t make much of a difference, but those single payments add up. Making one extra payment per year can help you knock about four years off of a 30-year mortgage. Pad each monthly payment. Another strategy that can knock some time off your mortgage is to add a bit extra to your payment each month. For example, let’s say you have a $200,000 30-year fixed-rate mortgage with an interest rate of 4 percent. Over the course of that loan, you’d pay more than $143,000 in interest. However, adding $100 to your monthly payment would allow you to pay off the loan about five years sooner—and save almost $27,000 in interest in the process. Refinance to a shorter-term loan. If you bought your home when interest rates were higher than they are today, then refinancing to a shorter-term loan (like a 10 or 15-year fixed-rate mortgage) can not only help you pay off your home faster, but also save a significant amount of interest in the process. Just keep in mind that your monthly payments will likely increase because you’re shortening the length of time to pay off the balance, and you’ll also have to pay closing costs when you refinance. Before you refinance, talk to a lender to make sure that the pros outweigh the cons. © JVDreamHomes2024

A home inspection is an important part of the buying process, which is why there are certain things that home inspectors wish they could tell buyers before the inspection to make the process easier, smoother, and less stressful for everyone involved.  So what, exactly, are those things? A recent article from realtor.com outlined the top things home inspectors wish buyers knew, including: Expect problems. Many buyers panic when they get an inspection report and see a list of issues with the home. But, according to inspectors, many of these issues aren’t a reason to panic. Even homes that are in great shape will have at least some problems come through on the inspection, so don’t panic when those problems come through. Instead, remind yourself that almost everything is fixable, and once you know what the issues are, you can then take steps to address them, or have the sellers address them before the sale is finalized. Take care of water ASAP. While many maintenance issues can be dealt with on a somewhat flexible timeline, according to inspectors, one issue that needs to be dealt with ASAP is water. While water-related issues don’t have to be a dealbreaker, it’s important to deal with them before (or immediately after) moving in; otherwise, you could find yourself dealing with significant water damage and the expenses that go with it. Home inspectors can’t predict the future. Often, buyers want inspectors to speak in certainties. For example, they want to know exactly when a home’s roof will need to be replaced. But inspectors can’t predict the future. What they can do is give you insight into the current condition of the property and, in certain cases, a rough estimate of how much longer different elements (like a roof) will last. So, while it’s fine to ask your inspector to explain or expand on their findings, don’t ask them to tell you exactly what’s going to happen with the home in the upcoming years, because they can’t read the future any better than you can. © JVDreamHomes2023

With mortgage rates hovering in the 7% range, being able to snag yourself a mortgage with a much lower interest rate probably sounds very appealing. This is why a new company called Roam has been all over the news recently, after recently launching a platform to help home buyers find mortgages they can assume for as low as 2%. You’re probably thinking that sounds a little too good to be true, but certainly worth looking into if it’s even remotely possible. And you’d be right on both accounts. Assumable mortgages aren’t a new thing; they’re no more available now than they were last week, last month, or last year. Roam is just trying to make it easier to find houses that are for sale and the owner has an assumable mortgage at an interest rate that’s lower than current market rates. As you can imagine, they’d like to get paid for connecting you to a sweetheart mortgage rate. So be ready to pay them a fee of 1% of the mortgage you assume. For example, if the mortgage you assume is $400,000, you’d have to pay them $4,000, which isn’t bad considering the savings you’ll reap over the life of the loan. The real catch is that their service is currently only available in five states: Georgia, Arizona, Colorado, Texas, and Florida. So if you’re not looking to buy in any of those states, it’s no easier to find a house you can buy with an assumable mortgage. Even if you do, you’re probably not going to find an all-inclusive list of homes that you can buy with an assumable mortgage, because it’s new to the market, and it relies on homeowners registering their house on the site. You Don’t Need Roam To Buy A House With An Assumable Mortgage Even though Roam may not be the solution for you that doesn’t mean you can’t find an assumable mortgage and buy a house at a lower interest rate! In fact, it may be better to do it without relying on a website with limited inventory. If you were to only focus on houses being listed on a site like Roam — even if they did service your area — there’s a good chance you’d be missing out on other houses on the market that you like more, or better fit your needs. If you want to try and buy a house with an assumable mortgage, here’s a simple step-by-step approach: Look for homes in your price range and find one you like. In other words, do what every home buyer does and just shop for a home you truly want. Find out if the owner has an assumable mortgage. When you find one you want to buy, have your agent ask the seller’s agent if the owner has an assumable loan and if they’d be agreeable to letting you assume theirs. Not all mortgages are assumable. FHA, USDA, and VA loans typically are (as long as both parties meet the criteria) but conventional loans — even if they’re backed by Freddie Mac and Fannie Mae — typically aren’t. Keep in mind that some owners may not be interested in going through the process or risk of working with a buyer to have their mortgage assumed, especially if they have other interested buyers who are going more traditional routes with their mortgage, or paying cash. They’ll also most likely expect you (and the lender) to sign paperwork releasing them of any responsibility for the loan moving forward because even if you assume their mortgage, they’d still be responsible for the debt if you default. Find out if the rate and terms they have are worth assuming. Just because they have an assumable mortgage doesn’t mean they have a rate or terms that would be agreeable to you! It may seem like every current homeowner has a 2% mortgage rate, but not all do. And while most terms of the mortgage are likely to be fairly boilerplate, you still should review the entirety of the terms of their mortgage before investing time or energy into assuming it. A ssess if it’s even financially doable for you. When you assume a mortgage, you take over the amount they still owe, not the purchase price amount. So, for example, if you were buying a house for $400,000, and the owner had a remaining mortgage of $100,000, you either have to have $300,000 cash to give to the seller, or take out a second mortgage to make up the difference. On the other hand, if you were purchasing for $400,000 and they still owed $360,000, then that’s equivalent to a 10% down payment which many buyers have and are expecting to put down on a house. NOTE: If you do need a second mortgage to make up the difference, know that the original lender and/or the secondary lender may be hesitant to approve you for a loan because they don’t like taking a “back seat” to each other in case the buyer defaults. If you default, one of the banks is first in line to recoup their money, while the other has to hope there’s enough equity for them to get paid back. Make your offer contingent upon approval of the assumed mortgage. Just like any other mortgage, you’ll need to apply with the homeowners lender and get approved by them to assume the loan. So make sure you have a mortgage contingency in case you’re not approved by the lender. Apply for the mortgage and go through underwriting. You still have to apply for the loan through the sellers’ lender and qualify and get approved by the lender, as you would with any other lender. Trying to find a house that even has an assumable mortgage takes some effort, and there’s still no guarantee that the owner will agree to let you assume it, or that the bank will approve you. But it’s at least worth a shot if it means saving a lot of money on your monthly mortgage payments, and the life of the loan. The Takeaway: A new company called Roam recently launched a platform to try and connect buyers with sellers who have assumable mortgages, which aims to help buyers obtain a mortgage at lower rates than most loans are currently at. However, they only serve a limited area and do not have an all-inclusive inventory of homes on the market. Fortunately, you don’t need a company to help you find and obtain an assumable mortgage. You can always find out if the owner of a home you want to buy has an assumable mortgage, and if they’re agreeable to letting you assume it, you can apply for the mortgage through their lender. While it may take some effort, and there’s no guarantee that an assumable mortgage will be available on the home you truly want, it’s at least worth looking into in order to try and save money on your monthly payments, and the life of the loan. © JVDreamHomes2023

Do you have some loose or missing shingles on your roof? Are your gutters pulling away from the house causing rain to pool at your foundation? Got any annoying leaks in your kitchen or bathroom? Or is there a bit of mold on your bathroom ceiling because of the steam of long hot showers? If you have any of these, or other things that need to be fixed around your home, you’re not alone. Homeowners often learn to live with certain problems around their house, promising themselves they’ll get around to it eventually, for any number of reasons, such as: They just don’t have the time to fix things. They don’t have the ability to fix things on their own. They can’t spare the money it’ll take for materials or to pay someone to fix it. It can be difficult to find a contractor who is responsive or willing to deal with smaller jobs. It’s not all that appealing to spend money on things that don’t have a “wow” factor or give you pleasure, like a new kitchen or bathroom renovation. Unfortunately, ignoring smaller issues around your home can snowball into a bigger problem than you might think. Insurance Covers Unexpected Events… Not Ones You Let Happen According to Simply Insurance, recent statistics show that over 95% of U.S. homeowners have homeowner’s insurance. This is in part due to the fact that it just makes good sense to protect yourself from large catastrophic losses, but it’s also in large part due to the fact that anyone who has a mortgage is likely required to have homeowner’s insurance by their lender. (In fact, if you don’t maintain payments on your own policy, they’ll buy a policy of their choice and make you pay for it… and it’s usually more expensive than one you would have gotten on your own.) So, while you might be aware that the longer you ignore problems with your house the more damage can be done, you might be comfortable taking that risk, since you most likely have insurance. Some people might even think that putting it off until it gets even worse and causes major damage could work to their advantage, thinking they can just file an insurance claim and get the work paid for that way! While it might be appealing to get your money’s worth from your homeowner’s policy, it could easily backfire and cost you more than just taking care of issues before they get worse. Kiplinger recently published an article about how delaying repairs can actually put your homeowner’s insurance policy at risk. Within the article, Beth Riczko, president of Nationwide’s P&C Personal Lines was interviewed and said: “As a homeowner, it’s important to protect your property from further damage when there is a known issue. When a claim is filed, there are many factors reviewed during the investigation that may impact whether the claim is covered, including if the insured followed policy conditions. For example, when shingles are damaged on a roof and aren’t repaired causing interior damage, there could be coverage impacts.” In other words, not only will your insurance not cover the loose roof shingles the homeowner ignored for some time, it won’t cover the damage done to the inside of the house because of it! So the homeowner now has to pay for the roof and all of the interior damage. On top of that, now that the insurance company is aware of the issue, they may demand that you fix the problems immediately, or threaten to cancel your coverage. So if you notice that work needs to be done around your house, and it’s something your insurance company or their adjuster could reasonably expect that you would have noticed and ignored, you ought to take care of the issue before it becomes a bigger problem. Here are a few tips on how to fix any issues you come across: If you’re handy, roll up your sleeves and get it done. No matter how busy you are, carve out some time as soon as you become aware of an issue. Not handy? Perhaps it’s easier than you think to become handy! Check out some how-to videos on YouTube; you’ll be amazed at how easily some things can be fixed with a little know-how you can find for free online. Find a contractor or “handyman” you can rely on in your area. Ask friends for recommendations, or look at local forums on social media to find posts about who people recommended and hired in the area. It’s not only a good way to find out who you can trust to do good work, but also to hear from other people about how their pricing is. Reach out to your favorite real estate agent. He or she can be an incredible source of information on who to hire, and might even have some insights into how to add some pizzazz or value to your home when getting the work done. The Takeaway: If you have some minor issues around your house that you’ve been ignoring, make sure to address them as soon as possible. Otherwise, your homeowner’s insurance may not cover any bigger damage that is caused due to you not fixing the smaller issues over time. © JVDreamHomes2023

Want to buy a new home, but don’t want to let go of your super-low mortgage rate? Depending on your loan and situation, there may be something you can do to buy a new property and retain your mortgage rate — a practice known as “porting” a mortgage. But what, exactly, is a mortgage port, and how do you know if you qualify? A recent article from realtor.com answered frequently asked questions about porting a mortgage, including: What is mortgage porting? When you port a mortgage, you transfer your existing mortgage to a new property, which means you get to keep the same interest rate on your loan. However, in order to port a mortgage, you’ll generally need to reapply and get approved for your current loan again. What mortgages are eligible for porting? Porting a mortgage can be a great way to buy a new home without sacrificing your competitive interest rate. But, unfortunately, not all mortgages are portable. For example, some lenders allow porting while others don’t. You’re also unable to port a mortgage if you have a variable rate loan, or if you’re buying a home that costs less than the balance of your existing mortgage. What homeowners are eligible to port a mortgage? In addition to your mortgage being eligible for porting, as a homeowner, you also need to qualify by meeting your lender’s eligibility criteria, and showing a reliable payment history on your mortgage. © JVDreamHomes2023

It’s extremely important to pay your mortgage on time every month. But sometimes, things don’t work out that way, and you may not have the cash needed to pay your mortgage when it’s due. So what, exactly, happens if you’re late making a mortgage payment? A recent article from realtor.com answered common questions around what happens if you’re late paying your mortgage, including: Will you get hit with a late fee? While all loans offer a grace period to help borrowers avoid late fees — which are typically between 7 and 15 days — if you submit your payment after the grace period ends, you’ll likely be hit with a late fee, which is usually anywhere between 4% and 5% of the amount of the overdue payment. Will a late mortgage payment impact your credit score? Generally, mortgage lenders won’t report a late payment until it’s 60 days past due. So, as long as you pay your missed mortgage payment before that two month mark, it shouldn’t impact your credit. However, if your payment goes beyond 60 days past due, and it gets reported to the credit bureaus, it could cause your credit score to drop anywhere between 60 and 110 points, depending on your prior credit history. Will the bank attempt to foreclose on your home after a missed payment? Your lender won’t go after your home after a single mortgage payment. However, that changes if you fail to make your payment for three months, as your mortgage is considered in default when your payment is more than 90 days past due. If you get to that point, the bank will send you a letter that your mortgage is in default, and generally give you another 90 days to repay the missed payment. If you still can’t cover the missed payment, the lender will likely start the foreclosure process. ©JVDreamHomes2023