Of course, everyone wants a clear answer. But the reality is that it’s not so cut and dry.

Some believe that the high interest rates are a good enough reason to put off a home purchase for now. But others think that the ease of buyer competition could make it the perfect time to find the home of your dreams.

Housing market: A current look

At the macroeconomic level, most prospective home buyers are aware that mortgage rates have increased dramatically in recent years.

Although average mortgage rates have started to dip after hitting a recent high of 7.79% for a 30-year fixed-rate mortgage in late October 2023, rates are still significantly higher than they were in 2021. As of writing in December 2023, the average interest rate on a 30-year fixed-rate loan is 6.61%, which is higher than buyers are used to seeing for the last twenty years.

Higher interest rates can take a bite out of anyone’s home purchase budget. The possibility of lower rates is tangible, with the Fed indicating it might not raise interest rates again. But even if the Fed stops its string of rate increases, some experts predict mortgage rates will remain above 6% for the foreseeable future.

In addition to high interest rates, buyers are facing high home prices. A recent report from the National Association of Realtors found that the median price for existing home sales was $387,600 in November 2023, which is up 4% from the same time last year. Of course, that’s just the median. Buyers in some areas are facing significantly higher prices based on a relatively low supply for a higher demand.

2024 housing market predictions

As we move into the New Year, prospective buyers who want to make a home purchase this year cannot help but consider the question of is it a good time to buy a house?

In terms of mortgage rates, many expect these to fall a bit in 2024. However, the expected drop is relatively slight and buyers should expect to see elevated rates throughout 2024. Since a higher interest rate eats into your home purchase budget, it could force buyers to consider more affordable options. For example, buyers might need to consider smaller homes or less desirable locations to find a property that suits their budget.

How to know if it’s a good time for you to buy a house

When it comes to buying a house, the macroeconomic factors might not be as relevant as you think. Of course, interest rates and housing supply play into your ability to afford the home you desire. But the reality is that the decision to purchase a home requires as much introspection as it does monitoring interest rate trends.

Below are some things to consider before moving forward with a house search.

Personal financial situation

First and foremost, prospective buyers should consider their personal financial situation. Before you purchase a home, it’s important that your finances are in a stable position to accommodate the costs of homeownership.

Take a look at your income, savings, and current debts. Buying a house often involves taking on a relatively large loan, in the form of a mortgage. It’s best to avoid taking on this debt if you already have a lot of high-interest debt acting like a drain on your budget.

For prospective buyers with lots of debt, like credit card debt, consider paying off this debt before pursuing a home purchase. Not only will this improvement to your balance sheet come in handy on your mortgage application, but it can also free up necessary cash flow to support your homeownership endeavors.

It’s important to note that homeownership comes with lots of hidden costs. While you’ll definitely need to keep up with your mortgage payment each month, other expenses can sneak into your budget. For example, you might need to pay for lawn care and other maintenance. Additionally, repair bills can add up. It’s a good idea to expect extra costs beyond your mortgage payment. If you don’t have any extra wiggle room in your budget, your finances might not be ready for the responsibility of homeownership.

In addition to room to support ongoing homeownership costs, consider the fact that you’ll likely need to make a significant down payment. While you may not need to make the traditional 20% down payment, you should expect to make a down payment of at least 3% to 10%. If you don’t have a down payment available, start saving now to set the stage for homeownership.

Homeownership goals

Homeownership is a long-term financial commitment that can have a significant impact on your lifestyle. Before diving into a home shopping journey, consider what your goals are.

One top consideration is determining how long you plan to live in a space. For example, someone who wants to live in the same location for at least five to seven years might find a lot of value in homeownership. But someone who is planning to leave the area in one or two years might be better off renting.

Additionally, consider your family size and expectations. If you are planning to grow your family, finding a place with the space you need can pay off in the long run. Since homeownership is usually a long-term commitment, it’s a good idea to consider your lifestyle goals before moving forward.

If you think you’ll live in a place long-term, homeownership might be the right move for you.

Credit score

The right credit score can make all the difference to your home buying experience. A higher credit score not only offers you higher approval chances, it also unlocks the potential for a lower interest rate.

Take a minute to check your credit score. If you have a great score, you can move forward confidently. If you have a poor credit score, it’s worth taking the time to improve it. You can prioritize improving your credit score by committing to on-time payments, paying off credit card balances, and checking your credit report for any errors.

Understanding of the current market

The real estate market is constantly changing. A combination of high interest rates and relatively high prices has made this a difficult time for home buyers. But if your finances are ready for the commitment of homeownership, then it can still be a good time to buy.

Consider talking your options over with a local real estate agent to understand the current market conditions in your area. With more information about your location, you can start the home shopping process with your eyes wide open.

FAQ

Should I buy a house now or wait for a recession?

While it’s tempting to wait for home prices to drop dramatically before buying a house, there is no guarantee that will happen in the near future. If you are ready to buy a house based on your lifestyle goals and financial situation, it makes sense to move forward with your home purchase.

Will 2024 be a good time to buy a house?

Mortgage rates are expected to stay relatively high in 2024, which means it might not be the best time to make a home purchase. However, by purchasing a home, you’ll have the potential for home appreciation in the future.

Is the housing market going to crash in 2024?

Based on the current forecasts, it seems unlikely that housing prices will crash in 2024. In contrast, home prices are expected to remain stable or increase slightly.

The bottom line: Is now a good time to buy a house?

It’s impossible to predict the future of the housing market. However, you can evaluate your own financial situation to determine if you are ready for homeownership.

If you decide you are ready for homeownership, explore your mortgage options today.

The post Is it a good idea to buy a house in 2024? first appeared on My Mortgage Insider.

Let’s take a look at these low- and no-down payment home loan options.

Check your home buying eligibility. Start here (Sep 16th, 2024)

First-time home buyer loans with zero down payment

There are two types of home loans that enable first-time buyers to put zero money down on a new home: USDA loans and VA loans.

USDA loans: 0% down

A USDA loan is a mortgage program backed by the U.S. Department of Agriculture and guaranteed by the agency’s Rural Development Guaranteed Housing Loan Program. Created in the 1990s, USDA loans offer competitive interest rates and allow for down payments of as low as zero percent.

USDA loans are intended to help homebuyers in suburban or rural areas. These loans are offered to qualified home buyers in towns with a population of 20,000 or less (or 35,000 or less in special cases). About 97% of the nation’s landmass is eligible for USDA loans. You can check the USDA’s website to see if your area is eligible.

Typically, home buyers need a credit score of 640 or higher to qualify for a USDA loan. Also, your income cannot exceed your area’s median income by more than 15%. For instance, if the median salary in your town is $65,000 per year, you could qualify for a USDA loan with a salary of $74,750 or less. (15% of $65,000 = $9,750 → $65,000 + $9,750 = $74,750).

Check your USDA rates. Start here (Sep 16th, 2024)

VA loans: 0% down

A VA loan is a mortgage backed by the U.S. Department of Veterans Affairs that gives active-duty service members, veterans and surviving spouses the opportunity to make a home purchase with a zero percent down payment.

Another perk: VA loan borrowers don’t have to pay private mortgage insurance (PMI), which can represent considerable savings over the life of the loan. And VA loans typically have lower interest rates than conventional mortgages.

While VA loans have no official credit score requirement, VA lenders typically require a minimum credit score of 640 — though some lenders may allow for a score as low as 620.

Check your VA home loan eligibility. Start here (Sep 16th, 2024)

Pros & cons of low- and no-down-payment home loans

Low-down payment first-time home buyer loans

The following types of home loans allow for low-down payments.

FHA loan: 3.5% down

Federal Housing Administration (FHA) loans are aimed at low- and moderate-income borrowers. Down payments can be as low as 3.5%. That means on a $250,000 house, you’d need to put $8,750 down for an FHA loan. FHA loans typically require a minimum credit score of 580 — though borrowers with a score of 500 to 579 may qualify if they make a 10% down payment.

Remember though, with an FHA loan, you’ll pay a mortgage insurance premium (MIP) to offset some of the lender’s risk.

Check your FHA eligibility. Start here (Sep 16th, 2024)

HomeReady & Home Possible loans: 3% down

Both Fannie Mae’s HomeReady and Freddie Mac’s Home Possible loan programs are low-down payment options that allow borrowers to purchase a house with as little as a 3% down payment. But they have different credit score requirements: borrowers must have at least a 620 score to qualify for a HomeReady mortgage, and at least a 660 score for Home Possible. Note that Fannie Mae and Freddie Mac both require borrowers of these loan types to complete an educational course about homeownership if they’re first-time buyers.

Conventional 97 loans: 3% down

A Conventional 97 loan allows you to put 3% down on a conventional mortgage. (The program is named for the 97% of the home value that’s financed by the lender.) You need a credit score of at least 620 to qualify, since Conventional 97 loans conform to Fannie Mae’s underwriting rules.

As with many other low-down payment mortgage loans, the downside is that you must pay private mortgage insurance (PMI) if you put less than 20% down on a conventional home loan. On average, PMI ranges from 0.58% to 1.86% of your loan amount per year, depending on your credit score and the size of your mortgage. But you can stop paying PMI once your loan balance reaches 80% of the appraised value of your home.

Check your home buying eligibility. Start here (Sep 16th, 2024)

Piggyback loan: 10% down

A piggyback loan — also called an 80-10-10 mortgage — is when you take out a first and second mortgage for a home simultaneously. The second loan “piggybacks” on the first loan to cover a bigger percentage of the home’s purchase price. The first mortgage is for 80% of the home’s purchase price, the second loan is for a value of 10% of the price, and you make a down payment for the remaining 10%. As a result, a piggyback loan allows you to avoid paying PMI.

Benefits of private mortgage insurance (PMI)

While private mortgage insurance makes a home loan more costly, PMI allows you to qualify for a mortgage without forking over a 20% down payment. This enables you to stop renting sooner and start building equity in a home. This can be especially valuable if you live in an area with a booming real estate market, where prices are rising faster than you can save a down payment.

It’s worth mentioning that PMI premiums were tax deductible in 2021 and 2022, and Congress may expand the deduction into the 2023 tax year. However, you should consult with a tax professional to see how the rules apply in your specific situation.

Low down payment mortgage options for bad credit

If you have a subpar credit history, you may still be able to qualify for a low-down payment home loan. That’s because FHA mortgages require a minimum credit score of only 500 (with a 10% down payment), while VA and USDA loans typically require a minimum credit score of 640 with zero down payment.

Remember that while many of these loan programs have minimum requirements, individual mortgage lenders set their own thresholds. That means if you are having trouble qualifying with a particular lender, you may be able to shop around.

Buy a second home with a low down payment loan

Government-backed loans, such as USDA, VA, and FHA loans, are intended to help borrowers purchase a primary residence and cannot be used for a second home. Conventional 97 loans also can’t be used to buy a second home or investment property.

Standard conventional mortgages and piggyback mortgages allow you to purchase a second home with a down payment as low as 10%.

Down payment assistance programs

For borrowers struggling to accrue the money for a down payment, many federal and state down payment assistance programs can help to bring home ownership into reach. Depending on where you live and your financial situation, you may qualify for down payment grants, reducing your out-of-pocket down payment cost. Or, you could qualify for a low- or no-interest loan toward your down payment. Many of these loans are forgiven over time, so you don’t have to repay them if you stay in the home for five to 10 years.

Check your mortgage rates. Start here (Sep 16th, 2024)

Low down payment mortgage FAQ

What is the minimum down payment for a mortgage?

The minimum down payment for a home loan depends on the type of mortgage you’re applying for. Minimum down payments could be zero down (USDA and VA loans), 3% down (conventional loans), or 3.5% down (FHA loans). Buyers with a little more cash can choose to put 5% or 10% down.

Are there zero-down mortgage loans?

Yes, VA loans and USDA loans allow eligible buyers to put zero money down.

Are there income limits on no-down payment mortgages?

Yes, there are income limits for no-down payment mortgages. To be eligible for a USDA loan, your income cannot exceed your area’s median income by more than 15%. VA loans don’t have official income requirements, but they typically require a debt-to-income ratio of 41% or less.

Which loan programs do not require a down payment or private mortgage insurance?

Only the VA loan requires no down payment and no private mortgage insurance. The USDA loan also allows zero down payment but comes with upfront and monthly mortgage insurance fees. Some lenders create their own proprietary mortgage programs with no down payment and/or no PMI, but these typically charge higher interest rates.

Do I have to be a first-time home buyer for a low- or no-down payment mortgage?

Generally, you don’t need to be a first-time buyer to qualify for a low- or no-down payment mortgage.

How much does a down payment lower a mortgage?

Naturally, how much you put down directly affects the size of your home loan. For instance, if you’re planning to make a 10% down payment on a $300,000 home, your mortgage would be $270,000 (90% of $300,000 = $270,000), while a 15% down payment would reduce your mortgage to $255,000 (85% of $300,000 = $255,000). A smaller loan amount will have lower monthly mortgage payments.

What is a low-down payment mortgage?

A low-down payment mortgage is any home loan that allows you to make a down payment of less than 20%. The FHA loan, Fannie Mae HomeReady loan, Freddie Mac Home Possible loan, and Conventional 97 loan are all examples of low-down-payment mortgages.

What type of mortgage has the lowest down payment?

VA and USDA loans have the lowest down payment requirements — both allow qualified borrowers to make down payments as low as zero percent. However, these programs have special eligibility requirements. Borrowers who don’t qualify for USDA or VA loans can often use a conventional loan with just 3% or 5% down.

Can I get a mortgage with 5% down?

Yes; most mortgage lenders allow you to use a conventional loan with just 5% down and no special eligibility requirements.

How low of a down payment can you put on a house?

You can put as little as zero percent down on a home if you qualify for a VA or USDA loan. If you don’t qualify for a zero-down mortgage, the lowest down payment option is typically 3%.

What credit score do I need to buy a house with no money down?

You usually need a credit score of at least 640 to qualify for a USDA loan. For a VA loan, you typically need a minimum credit score of 580.

Do you have to put a down payment on a house?

No. If you can qualify for a USDA or VA loan, you don’t have to put forth a down payment to purchase a home.

How much money do you need to put down on a second home?

You can put less than 20% down on a second home or investment property—potentially as low as 10%—depending on the type of loan you get. Note: Government-backed loans, including USDA, VA, and FHA loans, cannot be used to purchase a second home.

Do I have to put down 20% on a second home?

Typically, no. Many conventional loan lenders allow you to put as little as 10% down on a second home, but requirements can vary from lender to lender.

How hard is it to get a second mortgage?

To get approved for a second mortgage, you usually need a credit score of at least 620. Also, you typically need a debt-to-income ratio of no more than 43%, although some lenders may allow DTI ratios of up to 50%.

What does “owner financing available” mean?

When you browse properties for sale online, you may come across listing descriptions that say “owner financing available.” Owner financing is when a home seller provides you with the financing to purchase the house they are selling. This can help facilitate the transaction since closing costs are typically less with owner financing and there’s no formal loan underwriting process since no lender is involved in the sale.

Can I put less than 20% down on an investment property?

Yes. To qualify for a loan on an investment property, you typically need to make a down payment of at least 15%.

The bottom line: When is a low down payment mortgage the right choice?

A low-down-payment loan may be a good option if you’re able to afford the monthly payments of a home loan but haven’t yet accrued the savings needed for the down payment. It can also be the right choice if you want to keep more cash in the bank for emergency expenses or other investment opportunities.

Of course, you’ll make lower monthly payments with a large down payment, but a low-down payment loan can enable you to begin building equity sooner — particularly if you live in an area with a booming real estate market and rapidly increasing home prices.

Check your home buying eligibility. Start here (Sep 16th, 2024)

The post Can you buy a house with no money down? | 2024 first appeared on My Mortgage Insider.

See if you’re eligible for a Home Possible loan. Start here (Sep 16th, 2024)

Who is eligible for a Home Possible loan?

Since the Home Possible loan is for low-income homebuyers only, your household income will need to fall under 80% of the area’s median to qualify. You can use Freddie Mac’s eligibility tool to see if your income meets this threshold in your area. (In rare cases, areas may have no income limit.)

Beyond the income limits, there are several other requirements you’ll need to meet to use a Home Possible mortgage. These include:

• You must have a credit score of at least 660 and funds for at least a 3% down payment. These can be funds from savings, a gift from family, or a loan or grant received through a down payment assistance program
• At least one borrower (either you or your co-borrower) must occupy the home you’re purchasing as your primary residence. Homes up to four-unit properties are eligible.
• Your monthly debt-to-income ratio must not exceed 43%. Your projected housing expenses — including your monthly mortgage payment, taxes, insurance, and interest — typically should not exceed 35%.

If you’re a first-time homebuyer or you have a limited credit history, you also may need to complete a homebuyer education course.

Freddie Mac Home Possible income limits

The income limits are strict on Home Possible loans, as these mortgages are meant specifically for lower-income Americans. To be eligible, your annual household income can’t be more than 80% of the median income for your area.

The median income in Lansing, Michigan, for example, is $79,100. Since 80% of that is $63,280, you would have to make less than this amount to be eligible for a Home Possible Loan.

Freddie Mac’s map tool can help you determine the area median income. It can also help connect you to valuable down payment assistance resources if needed.

Low down payment alternatives to Freddie Mac’s Home Possible loan program

The Home Possible loan isn’t the only mortgage option for low-income homebuyers — or those short on savings. In fact, there are several other mortgage programs that offer low down payments. In some cases, you might be able to avoid a down payment altogether.

If you’re looking for an affordable mortgage program, you might consider one of these options:

• FHA loans: These are loans guaranteed by the Federal Housing Administration. FHA loans require anywhere from 3.5% to 10% down (depending on your credit). They also allow for very low credit scores, especially compared to other loan programs. The minimum credit score goes down to 500 with select lenders.
• Conventional 97 loans: Conventional loans require a minimum 3% down payment. Mortgage insurance is also cancelable on these loans, which can allow you to reduce your monthly payment later down the line.
• Fannie Mae Home Ready loans: Home Ready loans are Fannie Mae’s version of Home Possible Mortgages. They require just a 3% down payment and come with reduced mortgage insurance costs. They also allow for credit scores as low as 620.
• VA home loans: These are loans guaranteed by the Department of Veterans Affairs and are available only to military members, veterans, and their spouses. They require zero down payment, come with low interest rates, and limit the closing costs borrowers can be charged by their lenders.
• USDA loans: USDA loans are backed by the Department of Agriculture, and they’re for use in more rural and, in many cases, suburban parts of the country. Like VA loans, they require no down payment. These loans do have some property eligibility requirements. To see if a home you’re considering is eligible for a USDA loan, check this eligibility map.

Down payment and closing cost assistance programs can also help lower the upfront costs of buying a home. These programs vary by location, so check with your state housing agency to see what you might be eligible for.

Ready to buy your dream home? Start here (Sep 16th, 2024)

Eligible income sources for a Freddie Mac Home Possible loan

Freddie Mac is flexible in how your down payment and your income are sourced. Income can be from traditional W-2 earnings or contracted 1099 earnings (though you’ll need a tax transcript to document this). Keep in mind: The income of all borrowers on the loan will be considered, so if you bring in a co-borrower, their income will be factored in as well. The income cap is for the household’s total combined income.

If you plan to have someone rent a room or part of the property from you, you can also use your future rental income to qualify you for the loan. To do this, the renter cannot be on the mortgage, must have lived with you for at least one year, and cannot be your spouse or domestic partner. You’ll also need to provide documentation of paid rent for the last 12 months.

As for down payments, borrowers can use a variety of sources of funds, including cash, gifts from family, employer assistance programs, down payment assistance loans, and even sweat equity, which is when you physically improve the house and increase its value (in place of an actual down payment).

Freddie Mac Home Possible FAQ

What is Freddie Mac Home Possible?

Home Possible is a mortgage loan program sponsored by Freddie Mac. The loan is designed for low-income borrowers and first-time homebuyers with very little savings. Qualifying buyers need just a 3% down payment to use the loan.

Does Freddie Mac Home Possible allow boarder income?

Yes, you can use boarder income — or the future income you expect from a renter in the home — to qualify for a Home Possible loan. There are specific rules regarding this, and the renter must have lived with you for at least a year prior to your purchase of the home. They also cannot be your spouse or domestic partner, and you will need to provide documentation of paid rent for the past 12 months.

How do I apply for Freddie Mac’s Home Possible Advantage?

To apply for a Freddie Mac Home Possible mortgage, you’ll need to find a mortgage lender that offers conventional loans, and then fill out their application. You will also need to agree to a credit check and provide various forms of financial documentation (your lender will let you know exactly which ones).

The majority of large banks, credit unions, and lenders offer conventional loans, including Home Possible mortgages, but make sure you shop around for yours. Interest rates can vary widely from one to the next. Getting quotes from a few different companies can ensure you get the most affordable mortgage payment possible.

Is Freddie Mac Home Possible for first-time homebuyers?

First-time homebuyers can definitely use the Freddie Mac Home Possible loan, as long as they meet the program’s income requirements. To qualify, your household must make 80% or less than the area median household income. Freddie Mac has an eligibility tool you can use to determine this threshold in your area.

If you do plan to use the Home Possible loan as a first-time buyer, you’ll need to complete a homeownership education course first. Freddie Mac requires this if all borrowers on the loan will be first-time homebuyers.

What is a Freddie Mac Home Possible loan?

A Freddie Mac Home Possible loan is a mortgage for homebuyers with low incomes or little in savings. It allows for a 3% down payment, and mortgage insurance is cancelable once you have at least 20% equity in the home.

Is home possible a Fannie or Freddie loan program?

Home Possible is a Freddie Mac loan program. Fannie Mae does have a similar loan product, though, called the Home Ready mortgage program. It requires just a 3% down payment (like the Home Possible loan,) but does not have an income limit. It also allows for slightly lower credit scores.

How do I qualify for a Freddie Mac home loan?

To qualify for a Home Possible mortgage, you’ll need a household income that’s equal to or less than 80% of the area’s median. You’ll also need at least a 660 credit score and a 43% or lower debt-to-income ratio. For other Freddie Mac loan programs, the requirements vary. Your mortgage lender or loan officer can advise you on which programs you might be eligible for, as well as the exact requirements you’ll need to meet to qualify.

What is the max DTI for Home Possible?

With a Home Possible loan, your debt-to-income ratio, or how much of your monthly income your debt payments take up, can’t exceed 43%. That means at maximum, your debt payments (minimum credit card payments, car loan payments, etc.) can’t take up more than 43% of your monthly earnings.

When did Freddie Mac’s Home Possible income limits change?

Freddie Mac tightened its income limits on the Home Possible mortgage loan program in July of 2019 in an effort to focus more on in-need, low-income homebuyers. If you exceed the new income threshold on the Freddie Mac Home Possible loan, Fannie Mae’s Home Ready loan may be a better option. This program does not have an income limit and allows for lower credit scores.

I’m ready to apply for the Freddie Mac Home Possible Program

It’s a great time to see if you qualify. Checking your eligibility is a great way to start your homeownership journey.

Families and individuals will find the program much easier to qualify for than other programs. It could even be a great loan to compare if you’re also shopping for an FHA loan.

The program works for first-time and repeat home buyers. Check your eligibility now and get a free rate quote.

See if you’re eligible for a Home Possible loan. Start here (Sep 16th, 2024)

Freddie Mac’s Home Possible mortgage is a loan program designed for home buyers with low incomes or little in savings. It requires just a 3% down payment.

See if you’re eligible for a Home Possible loan. Start here (Sep 16th, 2024)

Who is eligible for a Home Possible loan?

Since the Home Possible loan is for low-income homebuyers only, your household income will need to fall under 80% of the area’s median to qualify. You can use Freddie Mac’s eligibility tool to see if your income meets this threshold in your area. (In rare cases, areas may have no income limit.)

Beyond the income limits, there are several other requirements you’ll need to meet to use a Home Possible mortgage. These include:

• You must have a credit score of at least 660 and funds for at least a 3% down payment. These can be funds from savings, a gift from family, or a loan or grant received through a down payment assistance program
• At least one borrower (either you or your co-borrower) must occupy the home you’re purchasing as your primary residence. Homes up to four-unit properties are eligible.
• Your monthly debt-to-income ratio must not exceed 43%. Your projected housing expenses — including your monthly mortgage payment, taxes, insurance, and interest — typically should not exceed 35%.

If you’re a first-time homebuyer or you have a limited credit history, you also may need to complete a homebuyer education course.

Freddie Mac Home Possible income limits

The income limits are strict on Home Possible loans, as these mortgages are meant specifically for lower-income Americans. To be eligible, your annual household income can’t be more than 80% of the median income for your area.

The median income in Lansing, Michigan, for example, is $79,100. Since 80% of that is $63,280, you would have to make less than this amount to be eligible for a Home Possible Loan.

Freddie Mac’s map tool can help you determine the area median income. It can also help connect you to valuable down payment assistance resources if needed.

Low down payment alternatives to Freddie Mac’s Home Possible loan program

The Home Possible loan isn’t the only mortgage option for low-income homebuyers — or those short on savings. In fact, there are several other mortgage programs that offer low down payments. In some cases, you might be able to avoid a down payment altogether.

If you’re looking for an affordable mortgage program, you might consider one of these options:

• FHA loans: These are loans guaranteed by the Federal Housing Administration. FHA loans require anywhere from 3.5% to 10% down (depending on your credit). They also allow for very low credit scores, especially compared to other loan programs. The minimum credit score goes down to 500 with select lenders.
• Conventional 97 loans: Conventional loans require a minimum 3% down payment. Mortgage insurance is also cancelable on these loans, which can allow you to reduce your monthly payment later down the line.
• Fannie Mae Home Ready loans: Home Ready loans are Fannie Mae’s version of Home Possible Mortgages. They require just a 3% down payment and come with reduced mortgage insurance costs. They also allow for credit scores as low as 620.
• VA home loans: These are loans guaranteed by the Department of Veterans Affairs and are available only to military members, veterans, and their spouses. They require zero down payment, come with low interest rates, and limit the closing costs borrowers can be charged by their lenders.
• USDA loans: USDA loans are backed by the Department of Agriculture, and they’re for use in more rural and, in many cases, suburban parts of the country. Like VA loans, they require no down payment. These loans do have some property eligibility requirements. To see if a home you’re considering is eligible for a USDA loan, check this eligibility map.

Down payment and closing cost assistance programs can also help lower the upfront costs of buying a home. These programs vary by location, so check with your state housing agency to see what you might be eligible for.

Ready to buy your dream home? Start here (Sep 16th, 2024)

Eligible income sources for a Freddie Mac Home Possible loan

Freddie Mac is flexible in how your down payment and your income are sourced. Income can be from traditional W-2 earnings or contracted 1099 earnings (though you’ll need a tax transcript to document this). Keep in mind: The income of all borrowers on the loan will be considered, so if you bring in a co-borrower, their income will be factored in as well. The income cap is for the household’s total combined income.

If you plan to have someone rent a room or part of the property from you, you can also use your future rental income to qualify you for the loan. To do this, the renter cannot be on the mortgage, must have lived with you for at least one year, and cannot be your spouse or domestic partner. You’ll also need to provide documentation of paid rent for the last 12 months.

As for down payments, borrowers can use a variety of sources of funds, including cash, gifts from family, employer assistance programs, down payment assistance loans, and even sweat equity, which is when you physically improve the house and increase its value (in place of an actual down payment).

Freddie Mac Home Possible FAQ

What is Freddie Mac Home Possible?

Home Possible is a mortgage loan program sponsored by Freddie Mac. The loan is designed for low-income borrowers and first-time homebuyers with very little savings. Qualifying buyers need just a 3% down payment to use the loan.

Does Freddie Mac Home Possible allow boarder income?

Yes, you can use boarder income — or the future income you expect from a renter in the home — to qualify for a Home Possible loan. There are specific rules regarding this, and the renter must have lived with you for at least a year prior to your purchase of the home. They also cannot be your spouse or domestic partner, and you will need to provide documentation of paid rent for the past 12 months.

How do I apply for Freddie Mac’s Home Possible Advantage?

To apply for a Freddie Mac Home Possible mortgage, you’ll need to find a mortgage lender that offers conventional loans, and then fill out their application. You will also need to agree to a credit check and provide various forms of financial documentation (your lender will let you know exactly which ones).

The majority of large banks, credit unions, and lenders offer conventional loans, including Home Possible mortgages, but make sure you shop around for yours. Interest rates can vary widely from one to the next. Getting quotes from a few different companies can ensure you get the most affordable mortgage payment possible.

Is Freddie Mac Home Possible for first-time homebuyers?

First-time homebuyers can definitely use the Freddie Mac Home Possible loan, as long as they meet the program’s income requirements. To qualify, your household must make 80% or less than the area median household income. Freddie Mac has an eligibility tool you can use to determine this threshold in your area.

If you do plan to use the Home Possible loan as a first-time buyer, you’ll need to complete a homeownership education course first. Freddie Mac requires this if all borrowers on the loan will be first-time homebuyers.

What is a Freddie Mac Home Possible loan?

A Freddie Mac Home Possible loan is a mortgage for homebuyers with low incomes or little in savings. It allows for a 3% down payment, and mortgage insurance is cancelable once you have at least 20% equity in the home.

Is home possible a Fannie or Freddie loan program?

Home Possible is a Freddie Mac loan program. Fannie Mae does have a similar loan product, though, called the Home Ready mortgage program. It requires just a 3% down payment (like the Home Possible loan,) but does not have an income limit. It also allows for slightly lower credit scores.

How do I qualify for a Freddie Mac home loan?

To qualify for a Home Possible mortgage, you’ll need a household income that’s equal to or less than 80% of the area’s median. You’ll also need at least a 660 credit score and a 43% or lower debt-to-income ratio. For other Freddie Mac loan programs, the requirements vary. Your mortgage lender or loan officer can advise you on which programs you might be eligible for, as well as the exact requirements you’ll need to meet to qualify.

What is the max DTI for Home Possible?

With a Home Possible loan, your debt-to-income ratio, or how much of your monthly income your debt payments take up, can’t exceed 43%. That means at maximum, your debt payments (minimum credit card payments, car loan payments, etc.) can’t take up more than 43% of your monthly earnings.

When did Freddie Mac’s Home Possible income limits change?

Freddie Mac tightened its income limits on the Home Possible mortgage loan program in July of 2019 in an effort to focus more on in-need, low-income homebuyers. If you exceed the new income threshold on the Freddie Mac Home Possible loan, Fannie Mae’s Home Ready loan may be a better option. This program does not have an income limit and allows for lower credit scores.

I’m ready to apply for the Freddie Mac Home Possible Program

It’s a great time to see if you qualify. Checking your eligibility is a great way to start your homeownership journey.

Families and individuals will find the program much easier to qualify for than other programs. It could even be a great loan to compare if you’re also shopping for an FHA loan.

The program works for first-time and repeat home buyers. Check your eligibility now and get a free rate quote.

See if you’re eligible for a Home Possible loan. Start here (Sep 16th, 2024)

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While any savings are certainly a relief to homeowners, understanding the specifics of how this change may impact you is helpful. Let’s explore how these lower costs may impact your mortgage payments.

Check your FHA eligibility. Start here (Sep 16th, 2024)

Biden administration lowers premiums for FHA-insured mortgages

In late February 2023, the Biden administration announced a reduction to mortgage insurance premiums on federally insured mortgages.

Specifically, the action involves lowering the annual mortgage insurance premium tied to these loans by 0.30%. For most new borrowers, this means the annual mortgage insurance premium will be lowered from 0.85% to 0.55%.

The change to mortgage insurance premiums comes at a time when rising interest rates are cutting into the budgets of prospective homebuyers across the country. Regardless of the higher interest rates, these cuts can help homeowners save money every year.

“At a time when budgets are tight and homeownership is out of reach for too many, FHA’s premium reduction will allow more households to access the stability and wealth creation of homeownership, particularly the first-time homebuyers and families of color who rely heavily on affordable FHA-insured mortgages,” said Julia Gordon, the Assistant Secretary for Housing and Federal Housing Commissioner, in a press release.

Gordon continued, “For many families, the savings will make the difference in their ability to purchase the home of their choice.”

How this change could impact you

Whether you currently have an FHA-insured or plan to purchase a home using an FHA mortgage, the recent announcement will have an impact on your budget.

Here’s the breakdown of savings opportunities:

Current homeowners with FHA mortgage

As a homeowner with an FHA mortgage, you’ll see your annual mortgage insurance premiums decrease. You can expect your monthly payment to decline.

If you aren’t sure how much the reduced mortgage insurance will impact your payment, consider reaching out to your loan servicer. The loan servicer should be able to help you nail down the changes to your payment.

According to the Biden administration’s announcement, the premium reduction will take effect on March 20, 2023. In the coming weeks, your mortgage lender might reach out to you about the changes.

Future homeowners with FHA mortgage

If you are a prospective homeowner, you’ll see the lower mortgage insurance premiums baked into your original mortgage loan documents. For buyers closing on a home after March 20, there shouldn’t be any implementation issues.

When choosing a home to purchase, the lower mortgage insurance premiums might have an impact on your decision. For example, the lower costs could help you afford to purchase the home you really want. Additionally, the lower insurance premiums might help you qualify for the wealth-building opportunity homeownership provides.

Check your FHA eligibility. Start here (Sep 16th, 2024)

How much can you save

The exact amount you can save on mortgage insurance premiums varies based on the size of your loan. According to the White House, the average homeowner and homebuyer with an FHA-insured mortgage will save around $800 per year.

If you are one of the approximately 850,000 homebuyers and homeowners projected to see these savings, your budget might see a bit more wiggle room.

Here are some examples of how much a homebuyer might save:

• Homebuyers in Detroit with a $200,000 mortgage could save around $600 per year
• Homebuyers in Cincinnati with a $300,000 mortgage could save around $900 per year
• Homebuyers in Phoenix with a $400,000 mortgage could save around $1,200 per year
• Homebuyers in Austin with a $500,000 mortgage could save around $1,500 per year

As a homeowner or prospective homebuyer, the exact amount you will save varies. Depending on your situation, you might save several hundred or over a thousand dollars per year. It’s easy to see how this change will likely have a positive impact on your budget.

Reasons for the change

The FHA loan program is designed to encourage homeownership. Throughout the history of the program, the rules have changed periodically. The most recent rule change was spurred on by a desire to keep homeownership affordable.

Here’s a closer look at the reasons behind the change.

Keep homeownership affordable

Homeownership is an important way for households to build wealth over time. One goal of the FHA home loan program is to keep homeownership affordable for potential buyers. According to the White House press release, “this cost-lowering measure will make buying a home more attainable and affordable for more low- and middle-income borrowers.”

The program and these cost cuts are intended to help, “first-generation homebuyers and first-time homebuyers of color – who are less likely to have sufficient resources for a sizeable down payment due to a longstanding gap in intergenerational wealth transfers – have been particularly affected.”

Excess mortgage insurance fund

Lower costs for homeowners with an FHA-insured mortgage are enticing. However, the step was made possible by excess funds in the FHA’s mortgage insurance fund.

Mortgage insurance premiums are designed to protect the lender. In this case, the premiums help protect the FHA and the taxpayer from a loss when a borrower defaults on their home loan. The premiums are held in the FHA’s mortgage insurance fund, which must maintain a certain amount of reserves dictated by Congress.

Recently, the FHA’s mortgage insurance fund accumulated more than five times the required reserve levels. With the excess reserves, the FHA is in a very good position to shield the taxpayers from the fallout of borrower defaults.

Since the reserves have reached high levels, the FHA has more wiggle room in its costs. Ultimately, this means that the FHA is able to make do with lower mortgage insurance premiums without putting the taxpayer at risk or impacting the long-term sustainability of the FHA’s mortgage program.

When will premiums be reduced?

According to the Biden Administration’s announcement, the changes will go into effect on March 20, 2023. As a homeowner or prospective buyer, you can expect to see the savings from the announcement after that date.

For homeowners who have questions, don’t hesitate to reach out to your mortgage loan servicer. As a homebuyer, your lender should be able to provide the information you need about these lower costs.

The bottom line

Homeowners with an FHA-insured loan and homebuyers seeking an FHA-insured loan can expect lower loan costs. With lower PMI, homeowners can enjoy more flexibility in their budgets.

Prospective homebuyers might use this wiggle room to boost their approval odds or qualify for a larger loan. Current homeowners might funnel the newfound savings toward their mortgage balance or other financial goals.

Want to learn more about FHA loans? Explore this home loan option here.

Check your FHA eligibility. Start here (Sep 16th, 2024)

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An experienced real estate agent can help you walk through all the next steps to get successfully to your closing when you get the keys. But there are things you should know to make sure the process goes as quickly and smoothly as possible.

Check your home buying eligibility. Start here (Sep 16th, 2024)

Secure a mortgage

“Many new homeowners don’t know that just because you got a preapproval from one lender, doesn’t mean you are required to get the home loan from them,” says Margi Hamilton, a broker at RE/MAX Suburban, The Litsa Lekatsos Team, in Glen Ellyn, Illinois.

Shopping around for the perfect loan can save you thousands of dollars. You should meet with at least two or three lenders and compare their loan options and rates.

It’s not just about getting the best mortgage rates, too. Ask a lot of questions, and if you don’t feel comfortable with them, walk away. This is someone you will be revealing a lot of personal and financial information with for a few months.

You can also lock into a loan. Some closings can take from 45-60 days, and some can possibly take even longer. So, if your lender allows you to lock into a certain interest rate before they go up, then do it if you feel comfortable with that number. But only do it if you know it’s the best you can get and have checked around.

Check your mortgage rates. Start here (Sep 16th, 2024)

Schedule a home inspection

Even though you love the house you are about to buy, it still needs to go through an inspection. Also, lenders require an inspection before you buy the home.

An inspection usually takes place about 10 days after the offer is accepted. Hidden problems might be found on the roof, with the water pressure or the furnace – areas you wouldn’t normally check yourself. You may also want to pay for a termite or pest (such as rodents) inspection or a radon/asbestos inspection. Inspections are also your responsibility to pay for as the buyer.

But if the inspectors find something, sometimes you can use the estimates of fixing the problems to lower the price of the house or have the seller fix them before the deal goes through. This can be a big money saver.

Your real estate agent or lender might have some good referrals for you if they have been in the area long enough. No matter who you decide to go with, first see if they are members of the National Association of Home Inspectors, the American Society of Home Inspectors or the International Association of Certified Home Inspectors. Many states also have statewide associations.

Inspectors aren’t going to know if there is mold behind showers or bad electrical wiring in the kitchen unless lights flicker, but they’ll inspect is everything they can see, and as the buyer, you should follow them around to take notes yourself. The inspections can take several hours.

Schedule an appraisal

Most lenders require that the property be appraised, and usually the lender also finds that appraiser. You’ll get a report, just like you did from the inspector, showing the value of the home. If it is appraised less than what you have offered to pay, you might be able to negotiate with the seller to a lower price or make a bigger down payment to offset a higher appraised price.

Check your home buying eligibility. Start here (Sep 16th, 2024)

Hire an attorney

Some states require a real estate attorney for the closing. Others just use title agencies. But having an attorney who knows real estate law and has gone through home purchase documents many times can help you feel assured that everything is written correctly before you sign anything and will be there at the closing for you.

“Ninety-five percent of the time, our clients have really taken our references for attorneys. Real estate is their primary job, and they can hold things up and get the job done on time,” Hamilton says.

Purchase homeowners insurance

Before getting your mortgage, a lender needs proof that you will have homeowners insurance. You’ll need to secure an insurance policy and start paying it before the closing.

Like with mortgage rates, you should be shopping around for the best insurance rates. Also, check to see if you need to get flood insurance or insurance riders for things such as a swimming pool or trampoline at your new house.

Do one final walk through

You get one more chance to do a final inspection of the home you are going to purchase a few days before the closing. Just make sure everything is where it’s supposed to be and things are in the same condition you saw it before.

Many people don’t understand that their real estate agents can help them in many areas before a closing. They aren’t there just to show you houses.  

“I’ve gone to properties two or three times before the final walk-through to help the buyers get estimates for removing carpet, putting in new floors, and more. People want to move into their house but they want to get the stuff done quickly,” Hamilton says.

Hamilton helps her buyers, too, by giving them a little package of all the pertinent information they will need once they move into the house such as what day the trash is picked up, the email addresses and phone numbers to the utility companies available in that area, and information about their town, chamber of commerce and other stuff.

“What a lot of people don’t realize is there is a lot of communication between the buyer’s realtor and the seller’s realtor to keep things moving as fast as possible,” she says.  

Check your mortgage rates. Start here (Sep 16th, 2024)

The post What Happens After Your Offer Is Accepted first appeared on My Mortgage Insider.

100% financing home loans

80-10-10 loan program 

Cancelling FHA mortgage insurance

Homebuying options for low-income households

Zero-down USDA home loans

Buying multi-unit properties

Conventional 3% down payment program

New FHA options for low-credit homebuyers

Current HARP guidelines

Refinance an FHA loan without an appraisal

FHA approved condos

Check your home buying eligibility. Start here (Sep 16th, 2024)

The post Trending Topics first appeared on My Mortgage Insider.

Check your home buying eligibility. Start here (Sep 16th, 2024)

What to consider as a seller

As a seller, there are a couple of things you need to consider when reviewing an offer with a contingency clause. The clause may read something to the effect of, “Our offer is $300,000 and contingent upon selling our existing home.” Should you accept such an offer? That’s between you and your real estate agent but there are a couple of things that should be cleared up.

First, review the quality of the offer. If the offer is fair, next look at the quality of your buyers. Have they been preapproved at their mortgage company? If so, do they have a preapproval letter they can provide? A preapproval letter from a lender will indicate that the buyers have applied for and have been preapproved for a mortgage loan and all that’s waiting is finding the perfect home. If your buyers have such a letter, then you need to tap into your real estate agent’s skillset and review your potential buyer’s existing home.

Is the property currently listed and if so, is the property listed at a fair price? Your real estate agent can tell you whether or not the home is priced aggressively for a quick sale or the price is a little too high for the area, meaning the home will take longer to sell.

If you discover that your potential buyers have yet to apply for a mortgage and don’t have a preapproval letter in your hand, all things being equal you may want to consider other offers. Second, if their home is not yet on the market or your agent feels it’s a bit overpriced, it will take longer to sell, if at all. Especially in the time frame indicated on your sales contract.

Is it worth it?

If either of these conditions is not met, or you don’t feel fully satisfied that they have been, take a long hard look at a contingency clause. If you have no other choice, you might consider one, but if there are other offers lurking, you may want to move to the next buyer.

Check your home buying eligibility. Start here (Sep 16th, 2024)

The post Should You Accept a Contingent Offer? first appeared on My Mortgage Insider.

Leaving your property vacant for an extended period of time can lead to some serious issues that you’ll need to deal with if you don’t close it properly. Use these 10 tips to help ensure your property remains in great condition.

Check your home buying eligibility. Start here (Sep 16th, 2024)

Clean your gutters

A lot of people tend to not think about their gutters unless a problem occurs. But what if that problem occurs while you’re far away? Gutters that aren’t draining properly can cause water to back up onto your roof and lead to the formation of ice dams, both of which can cause leaks and water damage. Cleaning your gutters before you go can help prevent these issues from occurring.

The average cost of cleaning your gutters is around $100 to $140 for a normal amount of debris. However, if you are comfortable getting on a ladder you can clean them yourself at no cost.

Drain your pipes

There’s nothing worse than coming back to your vacation home in the spring only to find that a pipe has burst and flooded your property. This can be easily avoided by draining the water out of your pipes at the end of the season. Find your home’s main water valve, turn it off, then open up all your faucets to drain the water out.

This simple task costs nothing to do. However, if you are unsure where your main valve is, or if you’ve drained everything, you can hire a plumber to do this for you at a rate of around $45 to $65 an hour.

Drain your water heater

While your water heater is unlikely to freeze solid in the winter months, it’s still a good idea to drain it if you’ll be leaving for an extended amount of time. Water that sits in the bottom of the tank can lead to sediment and erosion of the tank itself, which can lead to the need of a replacement sooner. Drain your tank by shutting off the valve and opening the spigot at the bottom to flush it out.

This task also costs nothing, but if you are having your plumber in to take care of other tasks, ask them to flush this tank at the same time.

House cleaning

Vacation properties are notorious for harboring things like sand and moisture after a summer of fun. Unfortunately, that moisture can lead to things like mold and mildew growth if not cleaned up at the end of the year.

At the same time, any dropped food crumbs may lead to rodent infestation while you’re away. A thorough cleaning eliminates these issues and makes sure the property is ready and waiting for you when you return.

The average cost of having your property cleaned is around $75 to $125 for an average-sized home. However, if you want to save, you can also tackle this chore yourself for free, or discuss getting a group rate with neighbors for having several properties cleaned at once.

Upholstery cleaning

Many people have the house itself cleaned each year, but may overlook other necessary tasks like cleaning the furniture. Your furniture and upholstery can take a beating each summer, becoming home to trapped moisture and food stains which can lead to problems over the long winter months.

Having your upholstery professionally cleaned can help eliminate any costly problems and prolong the life of your furniture.

The average cost to clean one piece of furniture is between $50 and $80. You can save by asking about bulk discounts for multiple pieces, however, as well as talking to neighbors about going in on a group service to have multiple pieces cleaned at once for a lower per-piece price.

Install a security system

If you don’t live near enough to check on your vacation property on a regular basis, you could find that your property is the target of break in’s over the winter months when the home is vacant.

Even if you don’t keep valuables in the home, squatters and thieves can still do serious damage if they aren’t dealt with. Having a security system installed can help to both deter thieves and give you peace of mind.

The average cost of having a security system installed is around $1500 to $2200 plus a $500 per year monitoring fee. To save, you can also install security lights, which turn on when motion is detected, or install simple window or door alarms that make noise without the monitoring system.

Open your windows

Believe it or not, you may want to crack open one or two windows in your home if you’ll be leaving it vacant for a few months. If there is a difference in temperature between the indoors and the outdoors, condensation could begin to build up inside.

This condensation can lead to water damage, mold and mildew, all of which you’ll have to deal with on your return. By opening a few windows in difficult to reach areas, you can help avoid this issue.

There is technically no cost to opening your windows, but you may want to purchase some window alarms that will go off if someone tries to open them further to gain entry.

Check and repair your roof

Minor roof problems have a way of growing into larger ones if left unchecked. That’s why it’s important to inspect your roof before you leave your property each year.

Look for things like cracked or broken shingles, missing shingles, or shingles that are curling at the edges – all of these are signs that your roof needs repair. Take care of any issues now to prevent leaks and water damage while you’re away.

The average cost of roof repair is around $630 for a 10 x 10 area. To save money, however, you can install new shingles yourself, or if you’re unsure if there is a problem or not, you can tack a tarp over the area to keep water out until you can afford to have it fixed in the spring.

Disconnect propane tanks

If your vacation property uses propane for heat or hot water, you need to make sure you disconnect the tanks before you leave for an extended amount of time. Not only will this help prevent squatters from camping out in your home, it can also help prevent dangerous gasses from escaping while no one is there.

This is a free service that most propane delivery companies will perform for you if you call them early enough to schedule.

Close dampers and vents

Make sure you seal up any dampers or vents in your home to prevent things like bird or rodent infestation and nests. Vacant properties can often become the home of small animals looking for shelter from the winter months. Close your fireplace dampers, dryer vents, and other ducts to ensure nothing moves in while you’re away.

This is a free and simple task to do that can help you save on exterminator fees when you return.

Care for your property

You want your vacation property to continue to be a haven year after year, so be sure to close it up properly each and every time. To find out more about what things cost, be sure to visit the Cost Guides.

Check your home buying eligibility. Start here (Sep 16th, 2024)

The post 10 Things You Should Be Doing To Close Your Vacation Home first appeared on My Mortgage Insider.

While it isn’t always easy, it’s not impossible to purchase a property either for personal use, an investment or a permanent residence. But research and comparison shopping are definite musts before delving into this endeavor.

“If you are thinking about a piece of property in another country, first take a step back, and decide why you want to make this purchase,” says Kathleen Peddicord, founder of the Live and Invest Overseas publishing group.

Peddicord is author of How to Buy Real Estate Overseas and How To Retire Overseas—Everything You Need To Know To Live Well Abroad For Less.

She lives in Panama City, Panama, and has lived outside of the United States for 18 years.

“If you are looking for a place to live because you want to move to a specific place, that’s one agenda. But if you are thinking about buying a piece of property for an investment, then that’s a whole different agenda and thought process,” she explains.

The best idea might be buying the home in a great tourist location, using it part-time for your own pleasure and renting it for profit when you aren’t using it, she says.

“If it’s purely lifestyle or retirement that make you desire to live in another country, then take another step back and figure out if you really need to buy a place or rent one for a while,” Peddicord says.

Let’s say you fall in love with the Cayo District in Belize, she explains. You sell your home and everything you own and buy a home in this quiet area of the country. Then at some point you realize that you miss living in the United States – at least some of the time.

“But if you simply rented a house, there’s no harm, no foul. You simply get out of your lease or run it out, and then leave,” she says. “But if you bought a house, then you have to sell it. And buying and selling real estate has a high cost in Belize. The transfer costs are relatively high.”

Here are some other things to consider if you want to buy a house overseas.

Check your home buying eligibility. Start here (Sep 16th, 2024)

You probably need cash

In many parts of the world you will need cash to buy a property. It will be hard, or maybe even impossible, to borrow money for a home in a country that you are not a resident yet in.

However, it’s always worth checking with lenders to see what the rules are with this, especially since most people don’t have tons of cash lying around.

Loans don’t normally last 30 years in other countries

If you do get a loan for your home overseas, you might be surprised at the terms or interest rates.

“Fixed rates are very rare outside of the United States, and the terms will be connected to your age in many places,” she says.

A life insurance policy may be expected to be purchased for the term of your mortgage. If you die before the mortgage is paid off, the insurance money goes to your lender. But in many places,  insurance agencies won’t write a policy past a certain age.

Don’t take the title for granted

Make sure to work with an attorney experienced in real estate transactions in whichever country you want to move to. They will have a better understanding of the nuances there.

Also, find someone that is experienced in working with foreign buyers and also speaks fluent English.

“When working with hundreds of thousands of dollars, you also need an attorney whose staff also speaks real English. You need an attorney to verify that the title is clean and clear,” Peddicord says. “In the U.S. we take that for granted because the bank won’t give you a loan without a clear title. “

Many agents and developers in emerging markets don’t care about things like clean titles because these markets aren’t regulated, she adds.

Check out the areas around the property

If you buy the home for your own residence or to rent out part-time, figure out if you’ll need to own a car or if your renters would need to rent a car to get around.

The ability to just walk to restaurants, attractions or even the beach can make things a lot more convenient and save you money. Also, if you are renting it out, being close to the action can lead to higher rent payments that tenants make.

Don’t buy anything on the first visit

You need to keep your guard up when purchasing property in another country.

Don’t get rushed into anything by smooth-talking salesmen who offer you an amazing free weekend at the condo resort. The last thing you want when you return from vacation is buyer’s remorse.

Check out the cars near the property

If you pull up to a gorgeous condominium development and there are only old rusty vehicles there, then you won’t want to purchase a property there.

Areas with nicer cars are bound to be safer, and it’s a sign that the property is valuable. Remember, this is another country, and safety can always be an issue – even if you’re in your own home.

Check your home buying eligibility. Start here (Sep 16th, 2024)

The post What You Need To Know To Buy a Home Overseas first appeared on My Mortgage Insider.

“It’s a live and learn career. Our first time out, we made the house too nice with high-level granite and too high quality of cabinets,” she adds. “But it is fulfilling and satisfying, and you give a lot of jobs for subcontractors.”

With a good strategy and some help, house flipping can be very profitable. But sometimes the hardest part is getting the money necessary to improve the house and to be able to continue on with more houses.

McKhann and her husband began their business with a lot of cash from profits he had made with a land development. But having a large savings of money isn’t the only way to get into house flipping.

One popular option for financing flips is through loans – and there are several options for home buyers.

Check your home buying eligibility. Start here (Sep 16th, 2024)

Home Equity Line of Credit (HELOC)

If you already have a home with sufficient equity, you might want to look into using that to buy an additional property to flip. By using a home equity line of credit (HELOC), you can take money out of your home to finance a flipper.

Every lender will have different rules on how much they will lend and rates tend to be a little bit higher than those found on normal mortgages.

Remember though that by using your home as the collateral that it becomes at risk of losing if something should go wrong.

Investment property loans through banks, etc.

McKhann, who is a CPA and has an MBA in finance, says for a first-timer, the best way is to just go borrow money for in investment property. This can be done through your current bank or through a number of other lenders.

“You will have to put 20 percent down or sometimes 25 percent. But it will be the cheapest money you can borrower at 4 percent,” she says.

You need a higher credit score and some money on hand to buy investment property this way, but it can be a simpler option for an inexperienced flipper.

Private lenders

A private lender can be any non-bank company or person loaning money. For some, this can be your mom or dad, your wealthy relative or a co-worker that recently fell into a lot of money.

The money is usually secured by a note and deed of trust, for the purpose of funding a real estate transaction. These types of transactions can move much quicker than a normal mortgage would through a bank, and it could cut out the need for appraisals and other small steps that increase the cost of a normal home loan.

You can also find better interest rates and terms through private lenders. But keep in mind that bringing your friends or family into investments doesn’t always end well.

Hard money

This can be the most expensive way to buy investment property with 10-12 percent interest rates with 2-5 points right now, McKhann says. But sometimes, it’s a necessary way to get the money needed quickly. The money is usually short-term at 12 months or so, and loans are made for less than 80 percent of the property value. Also, there is a minimum loan size you’ll need to follow.

Some companies are popping up that offer interest rates for hard money to property investors that are somewhere between conventional loans and more expensive hard money lenders. Check out all your options, McKhann says.

“Make sure you find a mentor, someone that’s done flipping successfully,” she says. “Don’t take them to lunch, but show them how you can help them in their own business. They are too busy to just have lunch with you.”

Understand the process

Before you commit to any type of loan or mortgage, keep in mind that flipping is not for the faint of heart as you’ll never know what you find in your flipper home.

The process can also be long and difficult. Without proper research, you could end up purchasing a home in a location that isn’t popular.

Check your home buying eligibility. Start here (Sep 16th, 2024)

The post How to Get a Loan to Flip a House first appeared on My Mortgage Insider.