Tag Archives: Home Buying

Home Ownership : 5 Questions to Guide Your Decision

This article was developed as part of USAgencies Credit Union’s partnership with EverFi, Inc.

As winter melts into spring, you’ll likely start to see “For-Sale” signs popping up in your neighborhood.

Buying a home can be an exciting milestone in your life, and it’s important to educate yourself on the financial implications of home ownership before you make an offer. Whether you’re a first-time home buyer or a current owner looking to sell or refinance, there are a few key questions that should help guide your decision:

5 Questions About Home ownership

1.What are the pros and cons of owning vs. renting?

Owning a home is a long-term commitment. Recent studies show that the average buyer expects to live in their new home for 13 years before selling. While home ownership allows you to build equity and take advantage of tax benefits, owning also comes with risks.

2.Am I ready for the responsibilities of home ownership?

While property is generally considered an appreciating asset, home values are tied to economic conditions. Having your financial house in order is an important first step to buying a house! Are you confident in your ability to pay your bills on time? Are you able to budget for unanticipated costs?

3.How much home can I afford?

Determining how much home you can afford goes beyond the list price of a property. Other factors that will affect your monthly payment include interest rates, taxes, insurance, income, debt, and future monthly expenses – to name just a few. While there are numerous “affordability” calculators out there, it’s important to first understand the whole picture.

4.How will lenders evaluate my mortgage readiness & make loan decisions?

Are you familiar with the “Four C’s of Loan Credit?” – Capacity to pay back the loan, Capital, Collateral and Credit. Lenders evaluate these different factors to determine your eligibility and the terms of a mortgage loan.

5.How will my credit score impact my ability to buy?

Your credit score and the information in your credit report are key factors in whether or not you’ll be approved for a mortgage and at what interest rate. When was the last time you checked your credit?

No matter what stage of home ownership you are exploring, expanding your knowledge about the key financial questions to ask when buying a home will help you make a long-term decision that benefits you!


Have questions about Buying or Refinancing, or ready to get your application started? Connect with us at 503.275.0300 Option 2 or visit our website. 

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USAgencies Credit Union
NMLS#: 441193

Homebuying 101: Investment Properties

Throughout the next several weeks we’ll be posting articles and info on various aspects of the home buying process. Topics will cover everything from saving for a down payment, to refinancing, to purchasing investment properties, and more. We encourage you to connect with us on any questions you might have, and to share this information with friends and family.

With mortgage rates near all-time lows, now might be a good time to consider purchasing a rental property. The process of purchasing a rental home will vary depending on your circumstances, but here are a few considerations involved with the process:

What type of down payment will you have for the property?

Your down payment will impact how much home you can afford and can influence your rate, depending on the loan-to-value (LTV) of the property. Typically, one can get a better rate with a 75% LTV ratio, compared to one of 85% (loans greater than 80% LTV will also require mortgage insurance). The interest rate will vary based on the percentage of down payment (25, 20, 15). In addition to your required down payment you will need to have the equivalent of six months of PITI (principal, interest, taxes, and insurance), based on the property, in savings as a reserve.

Is this your first rental property?

Borrowers who have demonstrated income from other rental properties in their past two years’ tax returns are treated differently than those who are purchasing their first rental property. A soon-to-be new landlord will need to qualify for the new loan using their existing resources (assets, income, etc.) and will not be able to use anticipated rental income from the new property. Those with past rental income, as demonstrated in their past two years’ tax returns, will be able to claim a portion of the   income derived from the new rental property to qualify for the new loan.

I want to purchase a different home and want to rent out my current home. What do I need to know?

As mentioned in the previous question, you will need to have a certain amount for the down payment for the new primary home and that will depend in part on the purchase price of the home. Additionally, you will need to qualify for both the old payment (PITI) and the new payment (PITI) unless you have a documented landlord history. With landlord history you can use a portion of the estimated rental income from the new rental property to assist in qualifying for the new loan.

What if I am looking at a Vacation Home that I will be using as a Second Home?

There is different treatment for vacation or second homes that are not used as rental properties. Treatment for second or vacation homes tends to be more favorable and is typically treated the same as your primary residence.

I’ve heard that if I buy a home with all-cash, I can get a better deal. Is that true?

Maybe, but that is not guaranteed. Keep in mind that if you pay cash up front, you will need to wait a minimum of six months before you can potentially qualify for a loan on that property. You will need a new appraisal on the property if you choose to explore refinancing that property after you purchase it with all cash.

What is the process for getting a pre-approval for a Rental Home?

You will need to go through the same process as you would for purchasing any home. Documentation needed includes:

  • Paystubs dated within the last 30 days
  • W2s for two years. If you are self-employed or if you have rental income from existing rental properties, you will need to submit your tax returns for the past two years. If you are retired, you will need to submit any award letters from Social Security and/or your Government Annuity Letter
  • Bank statements (savings/checking) for two months
  • TSP, 403B, 401k, IRA and any other retirement account statements (last quarter)


Next Steps…

Whether you’re considering your first investment property, or your 10th, one of the best ways to understand your lending options is for you to speak with an experienced mortgage loan officer, like Steven Raymond, VP of Residential Lending at USACU. Steven can help guide you through the process and present you with the best options for your individual needs.

 

Questions?

Steven Raymond, VP or Residential Lending at USAgencies Credit Union, has over 30 years of experience in the mortgage industry. Steven’s seen it all, as far as mortgages go. If you have questions—about purchasing costs, getting pre-approved, or anything else mortgage-related—talk to Steven!

Steven Raymond 
Vice President of Residential Lending, NMLS#: 234025
Direct: (503) 275-0329
Toll-free: (800) 452-0915 x329
Email: sraymond@usacu.org

Ready to go?
Apply for a mortgage online now.

Equal Housing Lender Logo blog

USAgencies Credit Union
NMLS#: 441193

Homebuying 101: Purchasing Costs

Throughout the next several weeks we’ll be posting articles and info on various aspects of the home buying process. Topics will cover everything from saving for a down payment, to refinancing, to purchasing investment properties, and more. We encourage you to connect with us on any questions you might have, and to share this information with friends and family.

You’ve decided to buy a home. Congratulations! That’s a big step.

The next step? Gaining a full understanding of the costs associated with your purchase. People often assume the only cost of buying a home is the price of the home, and that’s it. Unfortunately, that’s not the case- there can be a lot of other costs you should be prepared for. Here’s a quick overview of some common purchasing costs you should expect when buying a home…

Down Payment
The down payment is a percentage of the purchase price. It could be anywhere from as low as 0% down for veterans and those in rural areas, to 3 to 3.5% for first time homebuyers, to as much as you would like. However, if you put less than 20% down, most lenders will require Private Mortgage Insurance (PMI), which is an insurance fee that protects lenders against loss if a borrower defaults.

PMI Discontinuation

  1. Borrowers may request cancellation when the loan amortizes to 80% Loan-to-Value (LTV) or is paid down to 80% LTV, if certain other requirements are met.
  2. If you’re current on your loan payments, PMI will automatically terminate on the date the principal balance of your loan is first scheduled to reach 78% of the original value of the property.

Pre-Paids
Pre-paids consist of property taxes, homeowners insurance, daily interest through the end of the month and the amount needed to establish an escrow account for paying property taxes and insurance. Therefore, pre-paids will vary depending on the price (value) of the home as both property taxes and insurance are based first on the value of the home and the value will vary from county to county and the state that the property is in.

Closing Costs
Closing costs are made up of services and/or products that are required to complete a home loan. These items will include appraisals, credit reports, title insurance, escrow, county recording, flood determination, tax service, processing, underwriting and other fees and points.

Many of the closing cost items are a fixed amount and will be consistently the same for all loans. However, some of the items of closing costs are based on the purchase price and/or loan amount. Therefore, closing costs will vary with each transaction.

Next Steps…
Buying a home involves more than just the cost of the home itself. Fortunately, there are a few different ways to go about paying these costs – for instance, the seller may be able to pay the pre-paids and closing costs. The most reliable way to discover your payment options is for you to speak with an experienced mortgage loan officer. They can offer suggestions and help guide you through the process.

 

Questions?
Steven Raymond, VP or Residential Lending at USAgencies Credit Union, has over 30 years of experience in the mortgage industry. Steven’s seen it all, as far as mortgages go. If you have questions—about purchasing costs, getting pre-approved, or anything else mortgage-related—talk to Steven!

Steven Raymond 
Vice President of Residential Lending, NMLS#: 234025
Direct: (503) 275-0329
Toll-free: (800) 452-0915 x329
Email: sraymond@usacu.org

Ready to go?
Apply for a mortgage online now.

 

 

Equal Housing Lender Logo blog

USAgencies Credit Union
NMLS#: 441193

Home Buying 101: The Housing Market

Throughout the next several weeks we’ll be posting articles and info on various aspects of the home buying process. Topics will cover everything from saving for a down payment, to refinancing, to purchasing investment properties, and more. We encourage you to connect with us on any questions you might have, and to share this information with friends and family!

 

Spring is in the air. Flowers are blooming, birds are chirping, and skies are clearing. Spring is also a time when potential homebuyers start to peek out of their doors and more actively pursue a new home. With the typical springtime bump in inventory, better weather for those heading from open house to open house, and kids heading towards summer break soon, this time of year can be the ideal time to buy for some. With all of the changes we’ve seen in the housing market over the last several years, you may have questions about whether or not this is the “right time” for you…

Should You Try to “Time the Market”?
One problem with attempting to time your home purchase to the business cycle is that no one can accurately predict the future. Another challenge is that interest rates are generally higher during a depressed market and income may not be keeping up. For that reason, fewer people can qualify for a home purchase than in more prosperous times.

The “wait-and-see” strategy generally works best for first-time buyers. People who already have a home usually need to sell it in order to buy their next one. If a “move-up” buyer wants to buy a home during a depressed market, that means they usually have to sell one during the slow market, too. If a seller wants to sell his home to take advantage of a hot market when prices are fairly high, they generally have to buy their next home during that same hot market, so it tends to equal out.

How Do Changes in the Market Affect Supply & Demand?
There are times when the economy is brisk and everyone feels confident about his or her prospects for the future. As a result, they spend money. People eat out more, buy new cars, and…they buy new homes.

Then, for one reason or another, the economy slows. Companies lay off employees and consumers are more careful about where they spend money, perhaps saving more than usual. As a result, the economy decelerates even further. If it slows enough, we have a recession.

During such a time, fewer people are buying homes. When the supply of available houses is greater than the supply of buyers, appreciation may slow and prices may even fall, as happened in the early eighties and the early to mid-nineties.

If you are lucky enough to purchase a home during a slow period, you can be reasonably certain the economy will begin to show strength again. At times, real estate values may even surge drastically. In many regions of the country, this is precisely what occurred in the late eighties and nineties.

What’s the Current Market Temperature?
The past few years have seen a major boom in housing sales. And it appears things aren’t changing anytime soon. Low rates and a relatively low amount of inventory make it a prime seller’s market. Sellers are oftentimes seeing multiple offers for over asking price. What’s the best thing someone can do to buy in the current market? “Get preapproved. Get all of your ducks in a row ahead of time so you know how much house you can afford and are ready to make a quick decision on a home,” says Steven Raymond, Vice President of Residential Lending at USAgencies Credit Union. “The market is very hot. And we’re just heading into spring, which can be prime home shopping time, so it can be pretty competitive out there. Getting preapproved ahead of time ups the chances of a closed sale for buyers.”

The Take Away
Markets slow and surge, as does housing inventory and buyer confidence. No matter what the situation in the market, or in your own family, it pays to be prepared. Knowledge is power. Knowing ahead of time what you’re pre-qualified and/or pre-approved for can help put you in a better position and allows you to make the best decision for you and your family.

 

Questions?
Steven Raymond, VP or Residential Lending at USAgencies Credit Union, has over 30 years of experience in the mortgage industry. Steven’s just about seen it all, as far as mortgages go. If you have questions—about the current market, getting pre-approved, or anything else mortgage-related—talk to Steven!

Steven Raymond 
Vice President of Residential Lending, NMLS#: 234025
Direct: (503) 275-0329
Toll-free: (800) 452-0915 x329
Email: sraymond@usacu.org

Ready to go?
Apply for a mortgage online now.

 

 

Equal Housing Lender Logo blog

USAgencies Credit Union
NMLS#: 441193