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On the other hand, for those who don't, or do not wish to escrow, a different situation often plays out. Once you bought your house, you paid the original tax bill and bought a homeowners policy with a check. Hopefully you set out with some type of plan to budget 1/12 of those bills in a special account so that when next years bills come do, you can just withdrawal the money, pay the bill and all is well. What sometimes happens is the "out of sight, out of mind" theory, followed by the "didn't I just pay that". Yes, you did...last year. Unless you have iron discipline, it can be challenging to try and save the money each year. Even if you are successful for a while, things come up. It's there to dip into for car tires, home maintenance, etc all with the good intention of replacing it as soon as you can because taxes arent do for a while yet.
My final word on this one, from my own experiences as both a homeowner who has done both and as a lender is, "When in doubt, go the escrow route." Get your FREE Quote Now!
Before applying for a Pa mortgage loan, Do Not make Major Purchases of any kind or take on any unnecessary debt if you can avoid it. Reason being that bills for appliances, jewelry, ,furniture, vacations, cars orany of these expenses that may show up on a credit report can affect your DTI. (debt ratio) A 0% interest free loan for a year on some appliances from Home Depot still may need to have a monthly figure attached to it on your credit bureau, often 5% of total balance. That seemingly insignificant amount could be the difference on what rate your lender is able to approve you at, or worse yet, whether you get approved for the mortgage loan at all. Better safe then sorry. Get the loan then buy the appliances (or whatever else) later. You'll be glad you did.
Keep your funds where they're at. That includes checking, savings, money markets, CD's, retirement funds, 401k savings, mutual funds or stocks. Remember that a loan officer may need a paper trail of each account and transaction you make and it can be very messy. All loans require proper documentation especially these days. Lenders, banks and credit unions triple check every loan file for quality control, accuracy and fraudulent activity so leave your cash parked where it's at until you get solid advice from your lending professional. And by the way, consider not changing banks either.
Tips for First Time Home Buyers
Hire a buyer’s agent to save you time and money
If you are considering buying a home, hire a buyer’s agent. An agent will save you time in finding a home that meets your needs. They can send you listings to view the details and photos before actually setting foot out the door. Also, agents often know of new listings that aren’t on the market yet. Besides, the seller is the one that will end up paying the commission, so take advantage of having some representation on your side, it doesn’t cost you anything.
Set up the financing for your new home purchaseThink about getting the loan before buying a home. It is smarter to go house shopping with a preapproval letter in your hand. When that day comes along that you want to make an offer, it will make your offer a lot stronger when the seller doesn’t have to worry so much as to you having to get financing. Get preapproved now!
Negotiate a successful deal that benefits both parties
Make sure your buyer’s agent gives you a list of comparable sales in the area. This will help you determine how much to bid on the home. The last 3 months sales are a good gauge for you to determine what to bid. Remember there are always more details to the offer than just the price. Examples are: how soon you want to move, having a pre-approval, seller’s assist, the items you want them to leave in the house. There are many details so be sure so sit back and think of the things that are important to you.
Make home inspections part of the plan
You may want to make your offer contingent on the home inspection. If you find out the home has foundation issues, you may decide against buying it. Having a home inspection will let you know exactly what you are getting into. Some people hate to spend another $300-$500 on the inspection, but it does give you the opportunity to address with the seller the problems of the home. Also, it lets you negotiate the items you would like them to address.
Remember buying a home is a step by step journey, there is no easy way there. There are many hurdles to go over to end up living in your dream home, but if you take them one step at a time, you’ll be well on your way to home ownership in no time. Get your FREE Quote Now!
The escrow company will order the payoff from your mortgage company. The interest is prorated to the day of funding/closing. There may be additional fees included in your payoff that the lender will charge, such as:
Often times, the escrow company will request the payoff with a few additional days factored in to act as a cushion. The escrow company may (should) order an updated payoff closer to the signing date in order to provide the most accurate figures possible. The lender being refinanced will refund any difference in your favor. In addition, if you have an escrow reserve account for taxes and insurance, you will receive a refund from the lender in approximately 6-8 weeks after closing.
At your signing appointment, ask to receive a copy of your payoff statement. Check to see how recently it was requested. If it was ordered at the beginning of the transaction and you have since made a mortgage payment, you can ask the closer to order an updated statement prior to closing (with a refinance, there is a three day right of rescission that takes place, so there should be enough time for this to take place with most lenders).
FHA loans are the new most popular mortgage loan. During the housing boom, subprime mortgages were all the rage. But as the housing market fell apart, lending standards tightened and the benefits of FHA mortgages are more prevalent. FHA is a good alternative to for first time buyers to be able to qualify and become a homeowner even though they don't have a large amount of cash to put down.You can borrow 96.5% of the value of the home. You only need to come up with a 3.50% downpayment. Minimum credit scores are typically lower, as well as you won’t be disqualified if you have a bankruptcy or foreclosure. With FHA loans, you can also refinance with them. You need to be current on your payments, but you may not need to get your home appraised. And typically there is a lot less paperwork involved. FHA currently allows sellers to contribute up to 6% towards the buyers closing costs. Lastly, FHA loans come with fixed rates. Many reasons homeowners got into trouble was their mortgages were adjustable rates and their monthly payments became very unstable.
One of the most important factors today in getting a Pennsylvania mortgage is knowing your credit score and history. Your credit is going to determine a lot of things, whether you can get a mortgage, how much you'll have to put down and what your interest rate will be.If you've had a blemish or two on your credit report (and who hasn't these days) here are a few tips toward improving your scores.
Many people consider this option since they don't have money set aside in their savings account. By withdrawing money from your 401k you will have to pay early withdraw fees as well as taxes on the money you take out. On the other hand, it may be worth it if you found the right house.
As a first time homebuyer you can often avoid the penalties, but you will have to pay taxes on the money. However, you can usually take the money out of your 401k without a penalty if you basically take out a loan on the money,( if your employer permits loans.)Get your FREE Quote Now!
Also, unless you are putting at least 20% down on the home purchase, you will more than likely have pmi insurance. Since there isn’t going to be a huge difference in the monthly payment on the insurance itself, it may be in your better interest to consider not borrowing from the 401k unless you have enough to put the entire 20% down to avoid the insurance all together.
If you have an accountant I would suggest you sit down with them and see what this impact would have on each situation in relation to your taxes. It is unique to every individual.
With a fixed-rate loan, your payment stays the same for the entire duration of the mortgage. The amount of the payment that goes to principal (the loan amount) increases, but your interest payment will decrease accordingly. Your property taxes increase, or rarely, decrease, and your insurance rates might vary as well. But generally monthly payments for a fixed-rate loan will increase very little.
Your first few years of payments on a fixed-rate loan are applied mostly to pay interest. The amount applied to principal increases up slowly each month.
You might choose a fixed-rate loan in order to lock in a low interest rate. People select fixed-rate loans when interest rates are low and they want to lock in at this lower rate. For homeowners who have an ARM now, refinancing into a fixed-rate loan can provide greater monthly payment stability. If you have an Adjustable Rate Mortgage (ARM) now, we can help you lock in a fixed-rate at the best rate currently available. Call Net Equity Financial Mortgage at (215)741-3131 to discuss how we can help.
Adjustable Rate Mortgages — ARMs, come in a great number of varieties. ARMs are normally adjusted every six months, based on various indexes.
Most ARM programs have a "cap" that protects you from sudden monthly payment increases. Some ARMs can't increase more than 2% per year, regardless of the underlying interest rate. Sometimes an ARM features a "payment cap" which ensures your payment can't go above a fixed amount over the course of a given year. Additionally, the great majority of ARM programs have a "lifetime cap" — this means that your rate will never go over the cap amount.
ARMs most often feature the lowest, most attractive rates toward the start. They guarantee that interest rate for an initial period that varies greatly. You've likely heard of 5/1 or 3/1 ARMs. For these loans, the initial rate is fixed for three or five years. It then adjusts every year. These loans are fixed for a certain number of years (3 or 5), then adjust after the initial period. Loans like this are best for people who expect to move within three or five years. These types of ARMs most benefit borrowers who plan to move before the initial lock expires.
Most borrowers who choose ARMs choose them because they want to get lower introductory rates and do not plan to stay in the home longer than the initial low-rate period. ARMs can be risky when housing prices go down because homeowners can get stuck with increasing rates when they can't sell or refinance at the lower property value.
Getting a mortgage loan, whether FHA, refinancing, or conventional can take a little doing, but here are a few tips to prepare for the process. Get your FREE Quote Now!
1) Gather all your financial information in one place. Current W-2's (or 1099's), at least last years tax returns, preferably the last 2 years, current mortgage statements, 1 month of current pay stubs for all borrowers,
2) Have an idea of what your credit score is. A lender will pull a trimerge report from 3 major credit bureau's and have some questions about these issues. The lender may also guide you in the right direction if your credit is less than perfect on what steps to take to improve it.
3) Be honest and provide accurate information on your application. Credit reports, bank accounts, and jobs are all verified. It's a lot easier to deal with an issue upfront than find out later in the loan process after you've paid for an appraisal and things are moving along.
4) Respond promptly to any requests for additional information so that you get your approval sooner.
One of the most important factors in determining if you can qualify for a mortgage is your credit score. Lenders typically use the “middle” score when qualifying your loan. There are 3 scores, but they use the middle score, regardless of which credit reporting agency it is. Most lenders have a minimum credit score these days with 620 as the lowest score you can have and still obtain a new mortgage or refinance loan. The lower your credit score, the higher your interest rate, the two go hand in hand. So in order to qualify for the best rates, make sure you check your credit for any errors that may be on your report, but most importantly make sure you pay your bills on time.
1) Gather all your financial information in one place. Current W-2's (or 1099's), at least last years tax returns, preferably the last 2 years, current mortgage statements, 1 month of pay stubs for all borrowers, a copy of your hazard insurance declarations page and agent number.
2) Have an idea of what your credit report looks like. Is your credit perfect, do you have a slow paying account, have you missed a mortgage payment in the last 12 months. A lender will pull your report from 3 major credit bureau's and have some questions about these issues. The lender may also guide you in the right direction if your credit is less than perfect on what steps to take to improve it.
3) Be honest and provide accurate information on your application. In today's mortgage market, everything is double and triple checked. Credit reports, addl sources of income, bank accounts, part time jobs are all verified. It's a lot easier to deal with an issue upfront than find out later in the loan process after you've paid for an appraisal and things are moving along.