09
Nov
By First Rate Financial Group
Mortgage

What Potential Homebuyers Need To Know About Buying Their First Homes

What Potential Homebuyers Need To Know About Buying Their First HomesIt is exciting to purchase a house for the first time, but this is also a major financial decision. Therefore, potential homebuyers need to make sure they are prepared. What do potential homeowners need to know about purchasing a home for the first time? Learn more about this process below. 

Ask For Help From A Real Estate Agent

First-time home buyers always need to ask for help from a real estate agent. A real estate agent can help someone identify potential issues with a home that might have otherwise been overlooked. A real estate agent can also make sure potential home buyers do not overpay for a home. 

Always Get A Pre-Approval Letter

Potential home buyers also need to get a pre-approval letter from a lender. This is a letter stating that a potential home buyer has been approved for a specific loan amount for that specific property. A pre-approval letter will help someone’s offer appear more competitive, particularly if they are going up against a cash offer. This makes the seller more confident that the offer is not going to fall through on financing. 

Do Not Skip The Inspection

Some home buyers are tempted to skip the inspection because this costs more money. It is critical to get a home inspection done so that everyone is aware of the potential issues with the home. If there is a major repair identified, potential home buyers may ask to have this repaired before purchasing the home. 

Pay Down Other Debt

First-time homebuyers need to pay down as much of their debt as possible before applying for a home loan. This could make it easier to receive financing, and potential homeowners might receive a lower interest rate. Examples of other forms of debt include credit card debt, student loans, and car loans. 

Get The Money In Order

Of course, potential homeowners need to make sure they arrange their money prior to closing, but it is also important to get a down payment put together before looking for a home. Many sellers will ask for proof of funds before accepting an offer. Arranging funds prior to the search process can make this much smoother. This can also help first-time homebuyers compete with cash offers. 

 

29
Oct
By First Rate Financial Group
Mortgage

Important Relationships During The Home Buying Process

Important Relationships During The Home Buying ProcessPurchasing a home is an exciting time, but there is also a lot to manage. There are a lot of text messages, phone calls, and emails coming in. It is important for potential homeowners to keep them straight. Who are some of the most important people during the purchase process?

The Real Estate Team

First, there are going to be a lot of important people on the real estate side of this transaction. Every home buyer should work with a real estate agent who can help them assess the market, arrange showings, and find the right home. There might also be interactions with other agents along the way who represent sellers. Keep in mind that there may be assistants, secretaries, and other agents who are part of a real estate team.

The Mortgage Team

The vast majority of potential home buyers require financing. Therefore, there will be multiple people who work on the mortgage side of this transaction as well. There will probably be a loan agent, an underwriter, and multiple assistants who navigate this side of the process. The mortgage team might also be responsible for arranging a home inspection and asking for a home appraisal. Potential home buyers might have to work with these individuals as well. 

The Closing Team

If an offer is accepted, there will be a closing team as well. A real estate attorney will probably be required to process the documents. Therefore, a potential home buyer should be expected to work with multiple people from the law firm as well. The real estate attorney is responsible for collecting funds from all responsible parties and disbursing the money appropriately. There will probably be multiple assistants in the real estate attorney’s office who will be asking for information. 

Keep These Relationships Straight

There is a lot that happens during a real estate transaction, and it is important for a potential home buyer to try to keep these relationships straight. Remember that the real estate agent should always be the first point of contact with any questions or concerns. A real estate agent probably has connections throughout the area that can help home buyers make this process easier. Nobody has to go through this process alone. 

 

26
Oct
By First Rate Financial Group
Mortgage

When does an FHA Streamline Refinance Make Sense?

When does an FHA Streamline Refinance Make Sense?The FHA streamline refinance is not right for everyone, but if rates significantly dropped or you can afford a fixed-rate loan and want out of an ARM, it can make sense. If you’ll stay in the home for the foreseeable future, you can either save money on interest or have a more predictable payment.

Before you jump on board, ask yourself:

  • Am I saving enough money to make the cost of refinancing worth it?
  • Would I feel more at ease with a fixed-rate loan versus an ARM?

When Doesn’t an FHA Streamline Refinance Make Sense?

Like we said, sometimes it doesn’t make sense to refinance.

First, make sure you can afford the closing costs. Unlike most other loan programs, you cannot roll your closing costs into the loan. Make sure you have the money to cover the closing costs plus the FHA upfront mortgage insurance fee equal to 1.75% of the loan amount. You may get a credit for some of the insurance you paid already.

Next, make sure the interest changes are enough to refinance. Just because you get a lower rate, doesn’t mean it automatically makes sense. Look at the big picture. Is the payment lower? Are the over loan costs lower? Look at the loan’s total cost over the entire term to decide.

Pros and Cons of the FHA Streamline Refinance

Pros:

  • Simple to qualify for and use
  • You may be eligible for an FHA MIP refund
  • No appraisal necessary
  • No credit check or income verification needed
  • A simple way to lower your payment or change your loan’s term

Cons:

  • You owe closing costs upfront
  • You’ll pay the upfront MIP again
  • You’ll start your loan term over again

FAQ – FHA Streamline Refinance

Do you have to pay closing costs on the FHA streamline refinance?

Yes, you always have to pay the closing costs upfront on the FHA streamline refinance. Some lenders may offer a no-closing cost loan, but the interest rate will be higher. This may negate the net tangible benefits of refinancing.

Do you need an appraisal for the FHA streamline refinance?

No, the FHA doesn’t require an FHA appraisal. This also means you don’t have to worry about making specific repairs to meet the FHA minimum property requirements.

Is there a minimum credit score required for the FHA streamline refinance?

The FHA doesn’t require lenders to pull credit for the FHA streamline refinance. If your lender pulls credit, they’ll typically require between a 580 – 640 to qualify, though.

Final Thoughts

If you have an FHA loan and know rates dropped lower than what you pay now, look into your options. You don’t have to use the same lender, so shop around and get at least 3 quotes.

Look at your options, comparing the rate, closing costs, and overall loan term. To qualify, you must have an on-time mortgage payment history plus prove you benefit from the refinance. It can be a great way to save money on your loan if you look for the best loan possible.