Feb 18, 2016 | Home Buyer Tips
From mortgage to equity to debt-to-income ratio, there are many terms associated with home ownership that can be quite confusing if you’ve never been on the market for a home before. ‘Conforming loan limit’ may be a less familiar real estate term than the rest, but here are some things you’ll need to know about it and what it could mean for your biggest investment.
What Is The ‘Conforming Loan Limit’?
The Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) are legally required to provide loans for balances below a specific amount, and this amount is what is known as the ‘conforming loan limit’. While the loan amount is determined by credit history and income amount, these conforming loans that are less than the specific amount are considered lower risk. If a loan amount is above the conforming loan limit, it is known as a jumbo loan and usually comes with higher rates.
How The ‘Conforming Loan Limit’ Is Determined
The Federal Home Financing Agency determines any adjustments made to conforming loan limits and the decided-upon amount is based on the home prices from October to October for the previous year. This amount is released annually in November and is enforced the following January. While this limit was continued at $417,000 through 2016, the amount for regions like Alaska, Guam, Hawaii and the United States Virgin Islands is significantly higher than the standard amount due to the cost of housing.
Going Above The ‘Limit’ And Combination Loans
While jumbo loans carry more risk, there are ways to avoid going above the conforming loan limit. There is the option of acquiring a conforming loan for $417,000, the amount established for 2016, and then utilizing a second mortgage for the remaining amount that will ensure you do not have to take out a jumbo loan; however, the rates for a second loan will likely be higher. In the event that you would like to avoid jumbo loans or a combination loan, you may want to consider putting more money down on your initial down payment.
The conforming loan limit changes each year, but it may have a significant impact on your home purchase if it falls below a certain amount. If you are curious about real estate terms because you’re considering a home purchase in the near future, you may want to contact one of our local real estate professionals for more information.
Feb 9, 2016 | Home Buyer Tips
With the cost of rent going up across the board and becoming even less affordable in metropolitan centers, it’s never been a better time to seriously consider home ownership. While the price of a home and all the associated costs can certainly seem like a tight squeeze after years of renting, here are some reasons you may want to consider giving up your rental and springing for a home instead.
It’s An Automatic Savings
It’s a sure bet that the money you spend on rent is going down the drain as soon as the month is over, but investing your money into a home each month means that you’re actually putting it into something tangible that you can profit from later on. While there are no certainties that the price of your home will improve, there’s a good chance you’ll stand to make a bit of money in the end that will easily offset the cost of insurance and property taxes involved in buying a home.
The Insecurity Of Apartment Living
With apartments being bought up all the time and torn down to make way for new developments, it’s always a possibility that the day may come when your home won’t be your home anymore. The good thing about using your purchasing power to invest in a home is that it gives you the freedom of feeling like you really have something that belongs to you, and you probably won’t have to worry as much about your loud next door neighbors or a landlord that never completes the required maintenance on your apartment.
You Can Consider A Roommate
An apartment often means a smaller amount of space, but it’s possible that a home purchase may provide you with a little bit of extra room and a place for a renter who can help with the monthly bills. Whether you decide on a friend, relative or someone you don’t know, this can be a great way to make home purchasing a little bit more economical and still provide you with the equity you’ll need to make it a worthwhile, long term investment.
With rent becoming less affordable in so many cities, the idea of purchasing a home is becoming a more tenable reality for many people. If you’re interested in what is out there and are curious about your own possibilities for home ownership, you may want to contact one of our local real estate professionals for more information.
Jan 27, 2016 | Home Buyer Tips
The cooler months of winter often seem like the best time to hibernate into your house and wait for spring to appear, but it can actually be a prime opportunity to start looking for a new home. If you’re not interested in waiting until next season, here are a few reasons you may want to get started on your home search a little earlier than expected.
Opportunity For A Lower Price
With prime moving time occurring during the months of fall and spring, there’s a good chance that a home purchase will end up costing you less in winter than it will during other times of the year. Most home sellers are not going to want to keep their house on the market for an extended period of time, so if it happens that their house is still for sale when the winter comes, they’ll likely be willing to consider a lower offer.
More Attention From Your Agent
Since fewer people will be selling and buying in the winter months, it’s quite likely that your real estate agent will have a lot more free time on their hands and will be able to give you more of their attention. Instead of sitting back and waiting for the New Year to arrive, take the opportunity to redefine your needs to your agent so – no matter the season – you’ll have someone who’s truly prepared to tackle the market for you.
The Added Perks Of A Slower Season
Most home sellers will have been advised by their real estate agent that the winter market is a lot slower, so you may be able to get some added benefits along with your purchase that make for a better deal. Whether you can garner a better negotiation, a quicker closing date or provide an offer that includes updated home appliances, there will probably be a few opportunities which will make the cooler winter search worth the effort.
The winter months can be a great time to hibernate, but they can also be ideal for searching for a home if you’re in the market. With the slow selling season, you may be able to take advantage of lower prices and more perks along with your purchase.
If you’re planning on moving a little bit sooner than expected, you may want to contact one of our local real estate professionals to see what opportunities are on the market.
Jan 26, 2016 | Home Buyer Tips
When it comes to diving into home ownership for the first time, it can seem like there are so many things you just don’t know. Whether you’re getting advice from your real estate agent, your friends or your family, there are so many things that seem like common sense that they might be lost in the mix of details. Instead of having to squeeze it out of them, here are three tips that are easily forgotten but still essential.
Be Patient And Take Your Time
It’s certainly not the most popular advice, but one of the most important things when deciding to purchase a home is having the time and know-how to make the decision that is right for you. Since you’ll need to consider so many different things when committing to such a significant purchase, from the neighborhood to the local amenities to the future salability of the home, it’s always best to ask the questions so there will be less to regret.
Get More Than One Opinion
It’s entirely possible that you’ve found a home you love and there’s nothing that’s going to get between you and it, but getting someone else’s opinion may provide the criticism you need to take a step back from a home-buying mistake. Instead of going it alone, bring along a friend or family member whose opinion you trust that will be honest with you about the flaws they see. It’s possible that they may notice something you’ve missed that could make or break the entire deal.
Prepare For The Home Inspection
Until you do it, you never really know what you’re going to find out during the home inspection, but doing a little bit of research to determine things you should be looking for can go a long way in saving money down the road. It may seem like you should be able to rely on the inspector to assess things for you, but by asking the right questions you might be able to spot the water tank that’s about to give out or a leak that’s about to get much worse.
There are a lot of little details that go hand in hand with purchasing a home, but often the advice that is the simplest is the easiest to forget. If you’re curious about other aspects of purchasing real estate that go beyond the home inspection, you may want to contact your local real estate agent for more information.
Jan 21, 2016 | Home Buyer Tips
There can be many downsides to both renting and buying, depending on what side of the coin you are on, but if you’re leaning towards purchasing a home it can have added benefits for your bank account that renting does not. While renting can certainly alleviate many of the costs that go along with property ownership, here’s why purchasing a home can have positive monetary affects in the long run.
The Good Impacts of Inflation
While inflation is often seen as a dirty word, a real estate purchase can see the positive side of inflation with how your home purchase investment will grow over the years. Putting money into rent will mean that money is gone and out the window once you’ve paid for the month, but investing into a property will come back to you in future gains that are made in the real estate market. While buying a home will be more expensive in the short term, it can also provide you with greater financial flexibility and equity in the future.
Renovations Will Increase Home Value
While changing up the bathroom or the paint on the wall in your apartment isn’t going to add any extra lining to your wallet when you move out, making upgrades to a home that you own will have the very opposite effect! Renovations can certainly be unpopular while they’re taking place, but no matter how small or large, they can mean an easier sell and a higher profit when the home finally goes on the market.
The Opportunity For Rental Property
An apartment you rent won’t offer opportunity for investment if you’re away from your home for an extended period of time, but a home you own may serve as an ideal investment property at some point in the future. With the success of Airbnb and unique modern housing needs that may only require a home rental for a short period of time, being able to use your house as a rental property can be a significant boon for earning money you would have otherwise been without.
Buying a home can require a lot of number crunching in the beginning that rent does not, but it can also provide significant financial benefits down the road that might not exist without such a purchase. If you’re considering purchasing a home in the near future, you may want to contact your local real estate professional for more information.
Jan 14, 2016 | Home Buyer Tips
Whether or not you’re new to real estate, there’s little doubt that you’ve heard the term down payment as it relates to purchasing a home. There’s a lot of different information out there in regards to how much this figure should be and it can be hard to determine exactly what the importance of this payment is. If you’re trying to determine the ideal amount to put down, here are some things to consider.
Explaining Down Payments And Why They’re Important
The down payment is probably one of the largest single payments you’ll make for anything, and this is why so many people save for years. When you buy a home, the down payment is the amount of money that goes into the initial home investment, and this is taken off of the cost of the house. In essence, while this money qualifies as an asset, it is tied up in paying off the total cost of your home.
The Differing Amounts For Down Payments
It’s often the case that many figures are thrown around in regards to the ideal down payment percentage, and they generally vary from 3-20% of the home’s cost. If you are paying a percentage on the low side of the scale, this can unfortunately mean that you will have fewer mortgage options and will be stuck with an increased interest rate. The amount you should pay depends on your financial health and purchasing commitment, but the larger the down payment is, the more minimal your monthly payments will be.
Deciding The Perfect Percentage
Saving up 20% of a home’s total price may seem like a lot of time and effort, but this can be the ideal amount to put down. In addition to lowered monthly payments and a better interest rate, you’ll also be able to avoid Private Mortgage Insurance (PMI), which is required if you put down less than 20%. There is no right answer to the question of how much to put towards a down payment, but you may end up spending less in the long run if you can invest more in the beginning.
There are many figures thrown around when it comes to real estate, but the amount of a down payment should be economically feasible for you and enable you to make your monthly payments consistently. If you’re planning on purchasing soon and are looking for home options, you may want to contact one of our local real estate professionals for more information.
