The lowdown on down payment assistance
If you’re looking to buy a home, don’t let the fear of a big down payment hold you back. In today’s market, there are so many programs to aid you in the home buying process. So, even though a 20% down payment is typical, it isn’t always necessary. Keep in mind that you’ll pay more interest with a lower down payment, but make the choice that best suits you and your situation. Every home buying experience is different.
Learn about Georgia’s Own Mortgages
What are your options?
For starters, your credit union may offer special programs to help you purchase a home. Georgia’s Own has programs for first-time homebuyers and offers up to 100% financing on mortgage loans. There are also federal, state, and local first-time home buyer programs you may be eligible for, including:
- Dekalb First-Time Homebuyers Assistance Program
- Gwinnett Homestretch Down Payment Assistance
- Fulton County HOP (Home Ownership Program)
- Georgia Dream Homeownership Program
- U.S. Department of Housing and Urban Development
For more ways to save, try cutting out vacation time and expenses that you can afford to do without for a while. Set a strict budget and consider meeting with a financial advisor. It’s important not to empty out your savings completely to pay for a down payment, so explore all of your options before making a decision.
Are you really ready?
Regardless of how much you’ve saved for a down payment, buying a home is a big commitment – consider these factors before making a down payment so you’ll know that you’re ready.
- You won’t be clearing out your savings or emergency funds
- You’ll be staying at this home for at least five years
- You have a good credit score (720 or higher is best)
- You’ve paid off other loan debt (student loans, credit card bills, auto loans, etc.)
- Know all of the fees that come with buying a house rather than just the monthly mortgage payment
If you’ve got all your financial ducks in a row and now’s the time to buy, know that you don’t have to go it alone. Whether you’re still feeling a little overwhelmed or just want more personal help, contact a mortgage specialist to help find the best – and most affordable – way to get into your first home.
Want to know what a potential monthly mortgage payment might look like? Try out our mortgage payment calculator on our mortgage page.
How to plan and budget for a kitchen renovation
Whether you’re updating your home for comfort, safety, or to simply increase its resale value, it can cost a pretty penny. While experts say you can expect to recoup, on average, 56% of a renovation’s cost, the amount varies widely among projects.
Since modern families spend most of their time in the kitchen, updating its functionality is a popular investment. Minor remodels are estimated to pay an 81% return, while higher-end remodels are closer to 59%. Whichever you choose, it’s important to think about a few things before you give your contractor the go ahead:
Your timeframe
How long do you plan to stay in your home? If it’s less than five years, keep your renovation costs at a minimum. But, if it’s longer than five years, give more thought to what would make it more comfortable for you and your family. Spending a little more now and being able to enjoy it for a considerable amount of time in the future may justify a bigger budget. While you may recoup less of its cost, the value of your enjoyment is worth something, too.
Your neighborhood
You don’t want to have the most expensive house in the hood, so a top-of-the-line kitchen in a modest neighborhood might be a mistake. While you want a quality remodel that improves the value of your home, it’s critical not to over-improve so that it significantly sets you apart from the rest of the neighborhood.
Your priorities
Making a list of your wants and needs will help you decide where to spend your money. You should choose quality cabinets and appliances, but might think twice about a wine fridge. Is crown molding a must? Do you absolutely need a double oven and a warming drawer? Remember that buyers won’t pay extra for “niceties” so unless they’re important to the overall functionality of the kitchen, they may need to be closer to the bottom of your list. Your priorities list will also come in handy if you run into some unexpected expenses and need to revise some choices or remove some improvements from the project.
Your budget
In any home renovation, it’s critical to set a budget and stick to it. Remodels have the potential to cost more than you anticipated, but without a spending limit, you’re almost guaranteed to be overextended. As a general rule, labor will account for 20% of your project cost, Allow 35% for cabinets, 20% for appliances, and 5% for fixtures. The remaining 20% should be earmarked for other items, including unexpected issues that need to be resolved.
To keep your budget as low as possible, you may be able to handle some of the prep work yourself. We’ve all seen Fixer Upper—there’s no reason you couldn’t remove the cabinets, pull up the floor, and remove the appliances instead of paying a contractor to do it.
You’ll also want to keep a spreadsheet of all your expenses and check-in with the contractor regularly. While they should keep you informed of any overages, you don’t want to be caught off guard.
Your finances
Consider how you’ll pay for your kitchen remodel. You may have money in savings or might be thinking about a home equity loan. You might also consider refinancing your home or even applying for a personal loan. Whichever you decide, be sure to have the funds available at the start of the project. You’ll likely need to pay your contractor for materials and pay for labor as the project progresses.
If your kitchen will be under construction, don’t forget to factor in the cost of eating out and maybe even another place to stay until the renovation is completed.
A kitchen renovation can bring new excitement into your home, but it can also be stressful. Create a budget, follow the plan, and closely monitor the project’s progress. In the end, you’ll have a kitchen that works for you and your family and the funds to comfortably afford it.
Ready to “List It?” Here’s what you need to know before selling your home
Late spring or early summer is arguably the best time to list your home, according to Zillow. School’s out so families are ready to relocate, the warm sun is shining, your lush landscaping is in full bloom, and the longer days invite the opportunity for more showing time. The winner of peak home sales is June, so you’ll be perfectly positioned for the mad rush of eager buyers.
Timing, however, is not the only thing you need to factor into a successful sale. If you’re getting ready to put your home on the market, there are some other important things to consider:
Choose a listing agent
While many sellers would love to avoid paying a real estate commission and list their home on their own, it can be risky. Unless you have considerable experience and understand real estate law, listing your home “For Sale by Owner” could cost you significant time and money. Do your research and find a few licensed real estate agents who are experienced and well versed in your specific market. Interview each one and choose the agent who you feel has the most comprehensive marketing plan, can attract the most qualified buyers, is an effective negotiator, and who can be upfront an honest with you.
Gather important docs
Buyers like to see that a house is well maintained and that repairs and upgrades are done timely and by licensed contractors. A real estate agent should also be aware of any details that can be included in marketing your property. Gather warranties, instruction manuals, and receipts for repairs. Know the age of your home’s appliances, roof, furnace, air conditioning and hot water heater. Include the dates of any home improvement projects such as a bathroom or kitchen remodel, new carpeting or hardwood floor installation, room additions, and window replacements.
Order a pre-listing inspection report
When you’re selling your home, there’s nothing more disappointing than securing a contract and being surprised during the inspection process. Buyers have an easy out if anything of significance or too many items are found to be in need of repair. Hire a licensed inspector to perform a pre-listing inspection, and you’ll know about and have the opportunity to make repairs in advance. This will also alleviate much of the anxiety that accompanies the due diligence period.
Prepare your home for potential buyers
You want potential buyers to oooh and ahhh over your home, not comment on the mess and the clutter. Clear countertops, tables, windowsills, and all other visible areas. Also, don’t forget to straighten closets, cabinets, and drawers since buyers are always curious. You might even consider removing some furniture to make the space feel bigger. Rent a temporary storage unit, donate it, or sell it. You’ll have to decide what to do with it sooner or later, so why not now?
Depersonalize your living areas, too. Potential buyers want to envision themselves living in your home and not be distracted by family photos, keepsakes, or finger paintings. Try to create a blank canvas so they can project their own ideas and visions of a home.
Consider repainting for a fresh, crisp, and neutral look, touch up scuff marks, and make sure your home is clean–especially the kitchen and bathrooms. It’s also a good idea to ask your most honest, unbiased friend to perform the critical odor test. While not necessarily offensive, any distinctive smell in your home can be a deal breaker.
Consider staging
Staging can be a valuable service when selling your home. Professional stagers are design and space experts who evaluate your current furniture and accessory placement and recommend adjustments. They can rearrange what you already own or suggest that you rent or purchase some new items. In the end, they’ll help you take your decorating style to a new level while consciously making choices that are appealing to potential buyers.
Don’t ignore your curb appeal
You only have one chance to make a first impression. Your home’s curb appeal is critical to getting potential buyers in the door. Make them want to see more by mowing the lawn, mulching the gardens, pruning trees, and planting flowers. Consider painting the exterior of your home if it’s been more than five years and pressure wash your sidewalk and driveway. Be sure your mailbox is in good repair and add a plant or two to your front porch. Buyers do judge a book by its cover.
While a professional real estate agent can offer more specific suggestions for your home, these tips will help you get started. The preparation process may not be quick and easy, but in the end, it’ll have more eager, interested, and serious buyers knocking on your door.
What is a Jumbo loan?
If you’ve ever purchased a home, you know that there are a variety of mortgage loans available to buyers. There are FHA, VA, construction, and subprime loans, fixed–rate, adjustable-rate, and interest only loans. There’s also one called a jumbo loan, which clearly implies it’s going to be huge. Wouldn’t you agree?
If you’re thinking about a jumbo loan, there are a few things you should know. After all, you’re investing in your dream home, and it’s important to be well educated on the type of debt you’re taking on to help fund it.
Conforming vs. non-conforming loans
A conforming loan is one whose loan amount falls within the servicing limits for Fannie Mae and Freddie Mac. In other words, it’s the maximum loan amount that can be purchased from lenders by Fannie Mae and Freddie Mac, two government-sponsored agencies, and sold to investors for the purpose of providing liquidity in the mortgage markets. This frees up the cash necessary for lenders to continue writing real estate loans for other borrowers.
Currently, the conforming loan amount is $453,100 for a single-family home in all States, except for Hawaii and Alaska and a few federally designated high-cost markets.
Regardless of its high credit quality, if the mortgage amount exceeds the conforming loan limit, it is considered a jumbo loan or a non-conforming loan. Jumbo loans are not eligible for purchase by Fannie Mae or Freddie Mac and the lender bears all the risk.
Jumbo loan requirements
Because jumbo loans have higher purchase limits, they’re typically used to purchase luxury homes, vacation homes, or even investment properties. While traditional mortgage loans have strict lending standards, jumbo loans have even more demanding requirements.
Jumbo loans pose an additional amount of risk for lenders, mainly due to the size of the loan. That’s one reason that the down payment requirement is typically 20%. Generally, if a jumbo mortgage loan defaults, a home of that caliber is unlikely to sell quickly and for full price. The lender mitigates some of the risk by requiring a certain amount of equity in the home. Interest rates for jumbo loans are typically a little higher than conforming loan rates as well. Most often, a 1/4 to 1/2 percent increase would be a fair expectation.
Borrowers will also be required to demonstrate financial strength, too. Their debt-to-income ratio should be roughly 45 percent, and they’ll need to plan on a required reserve amount that could potentially be as high as 20 percent of the value of the loan.
If you are able to meet the requirements, a jumbo loan might be the right fit for your financial situation. Of course, there are other options. Be sure to speak with your lender to help you decide which product meets your mortgage needs best.
Adding it up – how to determine what your total monthly payment will be
Ready to take the leap into home ownership? Hopefully, you’ve saved enough money for a down payment, met with an advisor at your local credit union to discuss your finances, and have already been pre-approved for a mortgage. If so, congratulations, you’re well on your way!
The process can be exciting, but let’s slow down for just a minute. Regardless of the amount for which you’ve been approved, you need to look at your monthly expenses and realistically think about what you can manage. A mortgage payment is a big responsibility.
One number new homebuyers focus on is what their monthly payment will be. Sometimes homebuyers are surprised when they close on a home and find out that their mortgage payment is higher than what they originally thought. Buying a home should be a happy time, so let’s take a look at what will make up your actual monthly payment.
What will my payment include?
There is more to your mortgage payment than simply the cost of your new home. Your payment can be divided into two components: principal and interest. The principal is the amount of money that you borrowed; the interest is the amount of money the lender charges for lending you the money. In the early years, the majority of your mortgage payment will be paying down interest, and only a small percentage will go to accumulating equity in your home. Over time, however, the principal portion of your mortgage payment will increase, and the interest portion will decrease.
Your total monthly payment might also include homeowner’s insurance and property taxes that may be held in an escrow account. You make the payments to the lender in your mortgage payment and when the bill comes due, the lender will make the payment from your escrow account.
An escrow account is an account that is set up by your lender on your behalf. A portion of each mortgage payment will be deposited into your escrow account to pay for certain property-related expenses that are only due once or twice per year. Because the lender is in charge of making the payment, they can make sure it’s made on time and the property is not at risk.
Was your down payment less than 20% of the purchase price of your home? If it was, your mortgage payment will likely also include mortgage insurance. Mortgage insurance lowers the risk to the lender, so you can be approved for a loan that you might not otherwise qualify. It protects the lender in case you fall behind on your payments. The cost of mortgage insurance varies, but your lender will be able to discuss it with you during the loan process.
No surprises here!
When you’re aware of all that’s included, you can better budget for your monthly expenses. No one wants to be surprised when it comes to their finances, especially when you’re locked into a 30-year loan. Visit your local credit union for more information, answers to your questions, or help calculating your estimated monthly mortgage cost.
Home Equity Loans: What questions should you ask before applying?
If your home’s current market is worth more than the total amount of your remaining mortgage payments, then you’ve built up equity in your home. Many people who have equity in their homes are able to apply for home equity loans and use that portion of equity–or ownership–as collateral for the loan.
Remember when home mortgages were upside-down? Home values are making a comeback after the Great Recession and borrowers are taking advantage of the opportunity to withdraw cash for major expenses or improvements. If you’re in the market for a home equity loan, here are some things you’ll want to consider before you sign on the dotted line:
Do you have enough equity in your home?
Your combined loan-to-value ratio (CLTV) plays a critical role in the approval of an equity loan. Your CLTV ratio is the calculation of your current loan balance plus the additional equity loan amount divided by the appraised value of your home. Generally, lenders require your CLTV to be 85% or less.
What type of home equity loan do you need?
Home Equity Loan
The traditional home equity loan offers the borrower a single lump sum to be repaid over a specific period of time, up to 30 years, at a fixed interest rate. Home equity loans are generally used for large expenses, like replacing a roof or paying off credit card debt, and are ideal for borrowers who need cash for a one-time event. It’s often referred to as a second mortgage, complete with closing costs and notarized signatures.
Home Equity Line of Credit
A home equity line of credit (HELOC) is another type of home equity loan where the lender approves smaller sums of cash up to a fixed amount, similar to a credit card. Its flexibility allows the borrower to withdraw cash as needed and pay interest only on the amount that is withdrawn. Although repayment doesn’t begin until a predetermined date in the future, there is often an annual fee. HELOCs are ruled by adjustable interest rates, but they can be converted to a fixed rate loan once the repayment period begins.
HELOCs are ideal for borrowers who need frequent access to cash to pay contractors during a remodel or even a recurring quarterly tuition bill. They also offer the benefit of not having to pay interest on the loan amount until it’s actually withdrawn.
A mortgage is a mortgage
Regardless of the outstanding amount, the term, or the interest rate, a home equity loan or a HELOC is still a second mortgage. Just as in your first mortgage, the interest you pay is usually tax-deductible, to a certain limit, and rates are generally lower than you’d be charged on a credit card.
You shouldn’t forget, however, that the second loan is secured by your home, which subjects your property to additional risk. You can be foreclosed upon if you’re unable to make your monthly mortgage payments. Be sure to treat your home equity loan or HELOC with just as much importance and seriousness as your first mortgage.
Applying for a second mortgage could be a wise financial decision and a step forward in helping to organize your finances. Consider all of your options and consult with a financial advisor to see if a home equity loan might be a good fit for managing some of your larger expenses.