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Buying a home requires more than just money for a down payment
You also have to be committed to taking control of your surroundings and your finances. We will work with you throughout the home-buying process to help make owning your first home as easy as possible. Together, we can help you understand how owning a home is more attainable—and easier to understand than you may realize.
Home ownership means you no longer pay monthly rent for the roof over your head. Now you own it, you can get an equity build up – not the landlord. You can do what you want with your house. Here are just a few benefits of homeownership:
Interest Tax Deductions
You may be able to deduct the interest on your home loan, as well as the federal (and sometimes, state) real estate taxes you pay annually. Be sure to consult your tax advisor. Because of this tax advantage, it may actually be cheaper to own than rent.
If the value of your property increases as you pay down your mortgage, you build equity that can be used to finance other major purchases, or as a down payment on a future home.
A Protection Against Inflation
Home ownership could help you counteract rising inflation. Although past performance cannot guarantee future trends, real estate has historically appreciated at a higher rate than inflation in most regions.
Let's start your home-buying journey today
Secure Your Rate
Should you lock your mortgage loan interest rate now? Learn more about options like rate locks and float downs. One of our purchase loan experts can help you finalize your decision, would you like to speak with someone now?
Here is some important information regarding your credit
Credit reports are kept by the three major credit agencies, Experian, Equifax, and TransUnion. Among other things, they show your credit payment history.
A credit score is a number calculated by Fair Isaac based on the information in your credit report. You have three different credit scores, one for each of your credit reports. We can help you through that process, we are not a credit repair agency, but we can help you understand the issues, and learn more about credit.
Know what you can afford
We will look at your income, debt and credit to determine the kind of loan that best suits your needs and goals. The size of your down payment will also determine how much you can afford. We will walk you through each step.
Line up cash
You will need to come up with some cash of your own. We will pinpoint that number for you as we work through the process. Items we will consider are the proper down payment, fees and closing costs. These may include the appraisal fee, loan fees, attorney's fees, inspection fees, and the cost of a title search. Again, we help you arrive at the best possible scenario to fit your needs and goals. There are many options available such as withdrawals from your IRA account without incurring penalties, etc. We will help you analyze your finances to come up with the best solution.
The following three terms will help you better understand the rest of this scenario:
Loan-to-Value (or LTV)
This is the loan amount as a percentage of the purchase price or appraised value (whichever is less). If you are buying a $150,000 home with $15,000 down payment you have a 90% LTV. Loans over 80% LTV require either PMI (Private Mortgage Insurance) or a combination of a 1st and 2nd mortgage which avoids the PMI.
This is your total monthly housing expense (principal, interest, tax, insurance, and PMI and homeowners dues (condos if applicable) divided by your gross monthly income. Note "gross" income is "before" deductions. If you have a "W2" job your income is easy to determine. If you are self employed, please note your gross income is what you bring from your Schedule C onto line 12 of your 1040. Also, a 2 year history of consistent self-employment income is generally necessary.
This is your total monthly housing expense plus your monthly payments of your installment and revolving debt. Some details here: this would include child support, alimony or separation maintenance. Any debt with fewer than 10 months to go does not count. A debt such as a "buy furniture now, make no payments until more than a year from now" does not count as long as there are 12 months to go without payments. The same applies for student loans.
Your income and credit will determine the size of the loan you can qualify for. You will need cash for 3 things:
• The "Down Payment"
• Closing Costs
This is where many people get off track. You need to cover your one time or "non-recurring" closing costs, your "recurring" closing costs: prepaid interest, insurance, impounds if there is PMI and potential prorated property tax.
You need more than $10.00 left in the bank after you purchase. We need to see 2 months (PITI) of your total monthly housing expenses in reserve. You will want to be sure that you get together all of the cash necessary to close.
Once we have determined what size loan you will be able to qualify for and where the money is coming from we can determine how expensive a home you can afford.
MOST IMPORTANT - get pre-approved BEFORE you shop
Getting pre-approved will you save yourself the grief of looking at houses you can't afford and put you in a better position to make a serious offer when you do find the right house. Pre-approval is quite different from pre-qualification. Pre-qualification is merely a cursory review of your finances, pre-approval is based on your actual income, debt and credit history.
Good credit will get you more home and a better interest rate.
Since you most likely will need to get a mortgage to buy a house, you must make sure your credit history is as clean as possible. A few months before you start house hunting, order a copy of your credit report. Make sure the facts are correct. Should any problems appear, handle them quickly – see our credit repair section.
Down payment? Don't worry if you don't have the usual 20 percent.
Loans may be available today not requiring a 20 percent down payment, those loans do carry slightly higher interest rates, but they can be a great tool for first time homebuyers who anticipate increasing income potential and equity appreciation. If those loans don't fit, not to worry, there are various combined first and second mortgages plus many more variables. This might be a good time to contact one of our loan professionals.
Have kids? Buy in a district with good schools.
In most areas, this advice applies even if you don't have school-age children. Reason: When it comes time to sell, you'll learn that strong school districts are a top priority for many home buyers, thus helping to increase property values.
Real Estate Professionals.
We can help you find the best agent to represent your interests in your search. We'll set you up with what's known as an "exclusive buyer agent." A buyer's representative has the same access to homes for sale that a seller's agent does, but their responsibility is dictated by law to you.
Silver Fin Capital Group LLC maintains professional wholesale relationships with a multitude of lenders. There are several different loan types, each suitable for different home buyers. First we'll help you determine whether you want a fixed-rate or an adjustable rate mortgage.
Loan Programs and costs
With a fixed rate, you lock in a monthly payment amount that will remain constant throughout the life of the loan, even if interest rates rise. If interest rates fall, you can either continue paying your higher preset rate, or you could refinance your loan.
An adjustable rate mortgage (ARM), on the other hand, has an interest rate that rises or falls with various loan indexes, such as the one-year or three-year Treasury rate or a Treasury average such as the MTA. An ARM is a great loan if you plan to sell your home within four or five years, especially if you choose on that is fixed for that period of time. During that short period of time, you will almost certainly pay less than you would with a fixed-rate mortgage
Points or no points?
The longer you plan to stay in your home, the more you may want to consider paying points. Points (one point equals one percent of the loan amount) are used to “buy” a lower interest rate.
When you actually start touring homes, bring a notebook and a digital or Polaroid camera to help you remember details. Your real estate agent should supply you with a description of each house and the lot it sits on, the property tax assessment, the asking price, and sometimes a diagram of the rooms. Your camera and notebook are there to record other details, ranging from the cost of heating to the view out the rear window.
An important note: Don't necessarily reject a house because it doesn't measure up to your current needs and goals, either in features or price. You may find added equity with a reasonable investment in an updated kitchen, or bath, etc.. Since the asking price is just a starting point for negotiation, you will be making offers and counteroffers as both parties seek an acceptable price.
When you've found the home of your dreams, move quickly.
Try to line up data on at least three houses that have sold recently in the neighborhood. Calculate the difference between the original list price and the final price of the homes sold. If the average difference is, say, 5 percent below the asking price, then you know you can make an offer 8 percent to 10 percent below, leaving yourself a little room to negotiate. If you really want the house, don't lowball. The seller may get insulted and/or give up in disgust.
There's no foolproof system for negotiating a fair price. Be creative about finding ways to satisfy the seller's needs. Remember, too, that your leverage depends on the pace of the market. In a slow market, you've got muscle; in a hot market, you may have none at all.
Once you reach a mutually acceptable price, your agent will draw up an offer to purchase that includes an estimated closing date (usually 30 to 60 days from acceptance of the offer).
A good agent will make your purchase contingent upon:
• your obtaining a mortgage, and obtaining it at a desirable rate;
• a home inspection that shows no significant defects (make sure you're clear on the definition of "significant");
• a guarantee that you may conduct a walk-through inspection 24 hours before closing. This last clause allows you to check the home after the sellers have moved out so that you have time to negotiate payment for repairs, just in case the movers cause any damage something, or damage shows up after items are moved out, etc.
About two days before the actual closing, you will receive a final HUD Settlement Statement from your lender that lists all the charges you can expect to pay at closing.
Review it carefully. It will include things like the cost of title insurance that protects you and the lender from any claims someone may make regarding ownership of your property. After all this rigmarole, the actual closing should be nice and smooth.
Home Inspection by a Professional — Good Idea!
Q. WHAT IS A "HOME INSPECTION"?
A home inspection is generated by a visual examination of the physical structure and systems of a home, from top to bottom. An inspection is similar to a physical check-up. If problems or symptoms are found, the inspector may recommend further evaluation.
Q. WHAT WILL IT INCLUDE?
The standard home inspection report contains a review and the condition of the home's heating system, central air conditioning system (temperature permitting), interior plumbing and electrical systems; the roof, attic, and visible insulation; walls, ceilings, floors, windows and doors; the foundation, basement, and visible structure.
Q. WHY SHOULD I GET A HOME INSPECTION?
The purchase of a home is probably the largest single investment people ever make. You should learn as much as you can about the condition of the property and the need for any repairs before you buy. Nobody likes unpleasant surprises and difficulties afterwards. Naturally, a home inspection will also point out the positive aspects of a home. After the inspection, you will have a much clearer understanding of the property you are about to purchase.
Q. WHAT DOES IT COST?
The inspection fee for a typical one-family house varies geographically, as does the cost of housing. Similarly, within a given area, the inspection fee may vary depending upon the size of the house, particular features of the house, its age, and possible additional services, such as septic, well, or radon testing. It is a good idea to check local prices on your own.
Q. CAN I DO IT MYSELF?
Even the most experienced homeowner lacks the knowledge and expertise of a professional home inspector who has inspected hundreds, perhaps thousands, of homes in his or her career. An inspector is familiar with the many elements of home construction, their proper installation, and maintenance. He or she understands how the home's systems and components are intended to function together, as well as how and why they can or may fail.
Q. HOW DO I FIND A HOME INSPECTOR?
The best source is a friend, or perhaps a business acquaintance, who has been satisfied with and can recommend a home inspector they have used. In addition, the names of local inspectors can be found in the Yellow Pages where many advertise under "Building Inspection Service" or "Home Inspection Service".
The interest rate market is subject to constant swings without advance notice.
Locking a rate protects you from the time that your lock is confirmed to the day that your lock period expires. Please note that we cannot be held responsible for any rates that may change prior to our written confirmation.
A lock is an agreement by BOTH you, the borrower, and the lender and specifies the number of days for which a loan's interest rate and points will be guaranteed by the lender. Should interest rates rise and you have met all of your conditions the lender is then obligated to honor the rate that they have locked on your behalf. Should interest rates decrease, the lock must still be honored by you.
When Can I Lock?
You can lock a rate once your application information has been reviewed. In some cases, your application will provide all the information needed and you will have the option to lock at the time you apply. Otherwise you will be invited to lock after you have returned your package and your documentation and credit information has been reviewed.
We recognize that you may not be available to request a lock during this time period; if so, please contact your Loan Agent for assistance. We are working with all of our lending partners to extend the lock-in period, and appreciate your understanding.
Lock-ins will vary from 10 days to 180 days. It costs more to lock in for extended periods of time.
Until we confirm in writing that your rate lock has been accepted by our lender, your loan is not locked in. When you request a lock, we contact our lender partner and secure the lock on your behalf. Unfortunately, the lock process is not yet automated within the mortgage industry, therefore, we must follow the lock guidelines of our lending partners. For this reason, we are not able to verify your lock request immediately but will do so ASAP after your lock request submission.
Silver Fin Capital is pleased to offer a full range of Federal Housing Administration (FHA) products, which can help borrowers with lower credit scores, smaller down payments or equity, and have generally more lenient income qualifications.
We also offer VA loans to our nation's veterans. VA helps Service members, Veterans, and eligible surviving spouses become homeowners. As part of our mission to serve you, we provide a home loan guaranty benefit and other housing-related programs to help you buy, build, repair, retain, or adapt a home for your own personal occupancy. VA Home Loans are provided by private lenders, such as banks and mortgage companies. VA guarantees a portion of the loan, enabling the lender to provide you with more favorable terms.
Silver Fin Capital also offers Home Affordable Refinance Program (HARP) loans, which are offered under a federal program set up by the Federal Housing Finance Agency in March 2009 to help underwater and near-underwater homeowners refinance their mortgages. Unlike the Home Affordable Modification Program (HAMP), which aims to assist homeowners who are in danger of foreclosure this program targets homeowners who are current on their monthly mortgage payments but are unable to refinance due to dropping home prices in the wake of the U.S. housing market correction.
There are five major reasons to consider refinancing an existing mortgage:
Decrease monthly payments from a higher fixed rate to a lower fixed rate
Example: If the rate is 7.5% now and a homeowner switches to a 6.5% rate, he or she will save 1% on the mortgage less the costs of refinancing. On a $200,000 mortgage, for example, the savings will be over $50,000 over 30 years by reducing the interest rate by just that one percentage point.
Improve monthly cash flow with lower payments
Cash flow may be tight after moving into a new home. Switching to an adjustable rate program where the rate is fixed for the next three to ten years could provide breathing room needed. Similarly, for those who are in a 15 or 20 year term loan, switching to a 30 year term can also increase monthly cash flow.
Switch to a fixed rate program to eliminate payment changes of adjustable rate mortgages (ARMs)
Homeowners with one year ARMs will see their rates rise as rates move up. Using programs that hold rates steady for three, five or seven years, you can refinance into a low fixed rate.
Withdraw funds from the equity in a home
If cash is needed for home improvements, college education or to consolidate debts, the borrower may be able to refinance 75% to 80% of the current value of the home if it has been owned for one year or more.
Shorter loan terms
Probably the best incentive to refinance is found by refinancing into a shorter term loan while keeping the loan payment stable. A borrower can save tens of thousands in interest by reducing the term of the loan.
No cost out of pocket purchases - A no closing cost out of pocket option can work extremely well when the rate market is declining and the borrower may anticipate refinancing fairly quickly. No closing cost out of pocket loans can be used effectively to free up more cash for repairs or other uses.
Potential tax implications - Purchases and paying points While tax deductibility is an important factor, paying points is only one consideration for a borrower. Paying points up front to secure a low rate, in a steadily declining interest rate market, may be simply throwing money away. If the borrower decides to refinance shortly after a purchase, the points and costs paid up front will be a wasted expense. A no closing cost out of pocket loan will not have points, and thus no deduction for that cost. Additionally, the other costs are paid for and no deduction is available.
Are there added costs involved with no closing cost out of pocket loans? No cost out of pocket loans always carry a slightly higher rate than a loan that does not pay all or some of your closing costs. In general, a no cost loan is the better strategy if you plan to keep your loan for the next year or two. Longer than that, you may want to consider paying the costs yourself to get a lower rate since over time the lower interest rate will save you more money. And if you plan to keep the loan for four to five years, it often makes sense to pay closing costs and points to get an even lower interest rate.
Points - The simple way to understand points is this: Points (one point is equal to 1% of your loan amount) are money you pay to BUY a lower interest rate — it's as simple as that.
If you have enough equity in your home, you can include the points in your loan amount. Your Loan Agent can help you determine what method is most beneficial to you.
Apply for one of the no-cost out of pocket loans and all your 'non-recurring'* costs will be rebated at the time of closing.
NOTE: All no-cost loans, regardless of the lender you use, require payment of 'recurring'** costs at loan closing.
* Non-recurring costs (rebated)
• Loan Originator fees
• Lender fees
• Title fees
• Government fees
• Credit and appraisal fees
** Recurring fees (not rebated)
• Property taxes
• Homeowner's insurance
• Mortgage insurance (if applicable)
If interest rates fall below your current mortgage rate, refinancing may be a great idea. The old idea that rates must be 2 full percentage points below your existing loan is not true. A drop of as little as 1/2% could save you thousands of dollars.
A variety of loan terms, no-point rate options and lower closing cost loans have greatly decreased the rate difference needed to make refinancing profitable.
We as consumers spend substantial amounts of time trying to make our savings and investments earn more. One avenue which is sometimes overlooked is seeing how much we can decrease our debt payments. Since a mortgage is usually the largest debt we have, it pays to concentrate most on reducing that payment first.
Silver Fin Capital Group LLC
185 Great Neck Road, Suite 304
Great Neck, New York 11021
NMLS ID: 12147
Serving Connecticut, Florida, New Jersey and New York
Silver Fin Capital is a Registered Mortgage Broker, NYS Dept. of Financial Services Licensed Mortgage Broker CT, FL and NJ Banking Depts. This material is not from HUD or FHA
and has not been approved by HUD or any government agency.
Please note all loans are provided by third party lenders and are subject to credit and lender approval. Mortgage brokers are not empowered to make mortgage loans. We seek out the best loan program for each borrower from our large network of wholesale lenders. Lenders pay our fees. In most cases there is no cost to you for services provided by Silver Fin Capital.
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