02
Feb
By support
Home Mortgage Tips

Everything You Need to Know About Fannie Mae’s New Home Ready Mortgage

Everything You Need to Know About Fannie Mae's New Home Ready MortgageTraditionally, getting a mortgage requires you to have a level of income appropriate to the size of home that you’re buying. But for a lot of low-income and minority borrowers, a simple measure of one person’s income isn’t an accurate measure of whether or not that person can afford a home.

Now, with the Home Ready mortgage from Fannie Mae, multigenerational and extended households can have easy access to mortgage funds. How does the Home Ready mortgage work? Here’s what you need to know.

Flexible Down Payment Requirements Make Home Ownership More Accessible

Traditional mortgages require you to pay 20% of the home price upfront in the form of a down payment, or 5% if you register for Private Mortgage Insurance. And although 5% is a small down payment, it’s still a significant sum of money for a lot of low-income borrowers. But now, with the Home Ready mortgage, qualified borrowers can access financing with as little as 3% down, making it easier to become a homeowner.

Non-Borrower Household Income Is Now Counted As Income

Another big change that the Home Ready mortgage introduces is that lenders may now count all household income when determining affordability criteria (but not qualifying income). There’s no minimum requirement for funds to come directly from the primary borrower, which means that non-borrower members of the household can have their income counted when determining whether a mortgage is affordable. It’s also possible to use non-occupant borrower income – for instance, the income of a borrower’s parent – to be counted as income.

For extended and multigenerational households, this means mortgages are much more affordable as all household income can now be counted as eligible.

Eligibility Requirements: Who Can Qualify For A Home Ready Mortgage?

Home Ready mortgages come with certain eligibility criteria attached that homeowners will need to meet. In order to be eligible, a household must be below a certain percentage level of area median income (AMI) – that is, a household must fall somewhere in the lower half of their area’s income scale.

For properties that are located in “low-income census tracts”, there is no income limit. For properties in high-minority areas and designated disaster areas, borrowers at or below 100% of AMI can access Home Ready financing. And in all other census areas, borrowers can access financing if their annual household income is no greater than 80% of AMI.

The new Home Ready mortgage from Fannie Mae can make it easier for certain households to qualify for mortgages. Your local mortgage advisor can help you to understand how the program works. For more information, call your mortgage professional today.

27
Jan
By support
Home Mortgage Tips

Struggling to Get Approved Because of Your Income? 5 Reasons to Consider a FHA Loan

Struggling to Get Approved Because of Your Income? 5 Reasons to Consider a FHA LoanBuying a home isn’t cheap. But if you’re determined to become a homeowner, the FHA home loan program can help. This loan program, ideal for first-time buyers with low incomes, can help you to build your credit and make home ownership a reality.

So why should you consider an FHA loan? Here are just a few ways you’ll benefit from these government-backed mortgages.

You Can Get Approved With Just 3.5% Down

Traditional mortgage lenders typically require you to pay 20% down on your mortgage, or 5% if you have good credit and agree to pay mortgage insurance premiums. But for a lot of younger people with lots of debt and low incomes, even a 5% down payment is an unrealistic burden. With an FHA loan, you can be approved for a mortgage with a down payment as low as 3.5% – which means a $200,000 home can be yours for as little as $7,000 down.

You Can Get A Loan Even With A High Debt-To-Income Ratio

Standard mortgages are difficult to get if you have a high debt-to-income ratio. Typically, lenders will want to see that your mortgage costs will consume no more than 28% of your income, and your total payments toward debts from all sources will be no more than 36% of your income. But with an FHA loan, you can get a mortgage with a 29/41 ratio.

You Can Qualify With A Low Credit Score

If you have a credit score under 700, you’ll pay higher interest rates on typical mortgages – and if it’s below 660, you may not get approved at all. But with an FHA mortgage, you can get approved for a 3.5% down payment with a credit score as low as 580 – or lower, if you agree to a 10% down payment.

FHA Closing Cost Regulations Are Better For Low-Income Buyers

FHA loans have different closing cost regulations than traditional mortgages. With an FHA loan, you can bundle closing costs into the mortgage or even use gift funds for 100% of the closing costs. That means home ownership is more accessible for people with lower incomes.

An FHA Loan Can Help You Find A Good Home

With most mortgages, you’re free to buy any home you wish as long as you stay within a set price range. But with an FHA loan, any home you buy must be habitable, sanitary, and safe – otherwise the FHA won’t approve your loan. That means using an FHA loan will ensure you get a good home.

Buying a home with an FHA loan is a great way to become a homeowner if a traditional mortgage isn’t an option for you. Call your local mortgage professional to learn more.

26
Jan
By support
Home Mortgage Tips

A Guide to Financing Home Improvements and How Mortgage Refinancing Can Help

A Guide to Financing Home Improvements and How Mortgage Refinancing Can HelpIf you’re planning to remodel or renovate your home in the near future – whether to provide a better living environment or as part of a house flip – you’ll need to find a way to pay for your home improvements. There are several different possible sources of renovation money, each with their own advantages and disadvantages. One option that is gaining popularity is mortgage refinancing.

How does mortgage refinancing work, and how does it compare to other renovation financing options? How can you use a mortgage refinance to get the most out of your renovation? Here’s what you need to know.

Home Improvement Investments: Which Renovations Generate The Best Returns?

If you’re considering a mortgage refinance in order to fund your home improvements, you’ll want to concentrate on doing renovations that increase your home’s value. Otherwise, you’ll be taking on more debt without gaining anything in return.

If you want to max out your return on investment, re-finishing your kitchen is your best strategy. Remodeling Magazine’s annual cost-to-value renovation analysis shows that new appliances, a new coat of paint, and new surface finishes in the kitchen generate the biggest returns. Meanwhile, swimming pools and home offices tend to generate the lowest returns because they appeal only to a select group of buyers.

Your Options For Financing Home Improvement Projects

Financing for a home improvement project is a critical consideration. Unless you can afford to pay $20,000 out of pocket for a remodeling project, you’ll need to secure financing of some sort.

Your options for home improvement financing include home equity lines of credit, renovation mortgages, and refinancing. A HELOC may not be an ideal solution, as repayment requires discipline, while a renovation mortgage (or home renovation loan) is typically used only for foreclosures and other properties requiring major renovation work.

Mortgage Refinancing: A Smart Option For Savvy Borrowers

If you’re looking to simply make improvements to your existing home, a mortgage refinance is likely your best option. A straight refinance gives you a lump sum of cash that you can use to pay for renovations upfront.

There’s also a “refinance plus improvements” arrangement, which can provide you with extra capital as you need it. Under this model, you can get up to 80% of your home’s post-renovation appraisal value – however, you’ll only get the money as the renovations are completed and inspected. With a straight refinance, you’re not out of pocket for any length of time.

Making smart home improvements is a great way to boost your home’s value and improve your living conditions. An experienced mortgage professional can help you to find financing for those renovations without a hassle. Contact your local mortgage advisor to learn more.