24
Sep
By First Rate Financial Group
Mortgage

Getting Your Mortgage Application Approved As A Self-Employed, First-Time Homebuyer

Getting Your Mortgage Application Approved As A Self-Employed, First-Time HomebuyerA significant number of people are self-employed, which means they might be relying on this income to apply for a mortgage. It is true that people who are self-employed may face additional challenges when trying to get approved for a home loan when compared to someone with traditional W2 income, these are obstacles that can be overcome. With the right qualifications and documentation, even first-time homebuyers who are self-employed should be able to qualify for the home loan they need.

Lenders Assess Someone’s Ability To Repay The Loan

First, lenders are trying to make sure the person will repay the loan. Lenders believe that someone with W2 income has a stable job and a guaranteed salary, which means they are more likely to repay the loan; however, someone who is self-employed has other ways of demonstrating that he or she can repay the loan. Self-employed individuals can use tax returns, payroll receipts, and records from financial institutions that serve as documentation of the applicant’s income or assets. This means standard W2 forms and pay stubs might no longer be necessary.

Navigating Eligibility Requirements

Next, self-employed individuals need to meet the eligibility requirements. This includes two years of self-employment, a reliable income, a strong credit score with a clean credit report, cash for a down payment, and a low debt to income ratio. It is possible for a first-time homebuyer to get a loan for less than five percent down; however, closing costs can be significant. Realistically, first-time homebuyers should plan on spending close to five percent of the home’s value to get approved for a first-time home loan.

Understanding Mortgage Options

Finally, self-employed first-time homebuyers should be aware that there are multiple loan options available. For example, there are FHA and VA loans for those who qualify. USDA loans and jumbo loans might also be an option. There are bank statement mortgages and conventional options available as well. Self-employed individuals might have to visit several of these programs to see which ones work the best. The programs vary in terms of their down payment, minimum credit score, and credit history requirements. It is prudent to work with a professional loan officer who has experience helping self-employed, first-time homebuyers get approved.

23
Sep
By First Rate Financial Group
Mortgage

Reviewing The Basement Options For Homeowners: What To Know

Reviewing The Basement Options For Homeowners: What To KnowEven though not every home has a basement, those that do usually fall into one of three categories. The most common examples of basements include poured concrete, masonry block basement, and precast panels. What do homeowners need to know about the different types of basement construction? 

Concrete Basements

Concrete basements are the most common examples. There are several advantages of going with a concrete basement. First, concrete basement walls are resilient. They can resist possible cave-ins, standing up to natural pressure created by wind, water, and soil. Furthermore, concrete basements are also fire-resistant while creating joint-free basements that can increase property values.

Even though concrete basements are water-resistant, hydrostatic pressure can allow water to permeate over time, creating mold and mildew issues. Homeowners need to keep a close eye on the humidity of a concrete basement to make sure this is not happening in their homes.

Block Masonry Basements

Another popular type of basement is called a block masonry basement. This structure is created with cinder block or masonry units that are connected to one another. Ultimately, this creates a waterproof structure. This is a highly resilient, cost-effective construction option that is much easier to install. Therefore, homeowners can save money on labor and materials. The walls are also more durable if they are reinforced using a steel rebar. 

Precast Panel Basements

Finally, homeowners may also encounter a precast panel basement. These usually involve concrete panels that are molded in a different location before being transported to the construction site using a crane. Typically, these walls are strong and resilient. They do provide waterproof qualities, but if the joists have been neglected, they can develop moisture penetration issues. These panels also have to be treated with boric acid to prevent pest infestations. 

Options For Basements: Homeowners Should Work With A Professional

Ultimately, there are plenty of options available when homeowners are looking to construct the basement. Examples include full basements, partial basements, walkout basement, and crawl spaces. Homeowners need to work with a construction professional who has experience building basements. Each option has its individual benefits and drawbacks, so homeowners need to inquire about permits and environmental factors that might make one type of basement superior to another. 

 

17
Sep
By First Rate Financial Group
Mortgage

Is An Escrow Account Right For You?

Is An Escrow Account Right For You?When someone is looking at purchasing a home, they usually focus on the purchase price of the home and the potential monthly payment. At the same time, there are other costs that need to be included as well. This includes home insurance and real estate taxes.

As a result, many homeowners find themselves asking if they should use an escrow account or not. What do homeowners need to think about and how can they make the right decision?

What Is An Escrow Account?

First, it is important to define an escrow account. An escrow account is an account that contains money for items such as insurance and taxes. That way, homeowners are not blindsided by a major bill at the end of the year. Some people may be required by the lender to have an escrow account, but those who are putting 20 percent down may have an option to use an escrow account or to handle this on their own. With an escrow account, the money that is required for real estate taxes and homeowners’ insurance is broken up into 12 months. That way, homeowners can pay a little bit every month instead of paying it all at once, when the money might get tight. When should homeowners use an escrow account?

Savings Habits And Risks

First, some homeowners would rather handle real estate taxes and home insurance on their own because they want to be in control of their finances. While this is fine, some lenders might see this as an increased risk. If they view that homeowner as a risk, then they could use this as an excuse to raise the rate on the loan. Homeowners need to make sure they do not have to pay more for the loan simply because they are not using an escrow account.

Next, homeowners also need to think about their individual saving habits. Because home insurance and real estate taxes are often paid as one lump sum, this could be a lot of money leaving the account at once. If homeowners do not have appropriate saving habits, they might not set this money aside when the payment is due. If they fall behind on their real estate taxes, they could place themselves at risk of losing the home.