Category: News

Buying a home is a big milestone, but with it comes the responsibility of choosing the right homeowners insurance. This key step in the homebuying process protects you from financial loss in the event your most expensive investment is damaged or destroyed. As a new homebuyer, understanding the nuances of homeowners insurance is crucial for safeguarding your property and peace of mind. The Importance of Adequate Coverage On average, homeowners spend about $1,687 annually for insurance on a property valued at $250,000. However, standard policies may not cover all risks. It's important to explore policy endorsements or add-ons for more comprehensive coverage, especially for specific risks like flooding or earthquakes. If you're in the process of buying a new home, need an endorsement your current carrier doesn't offer, or are…

When we had historically low interest rates, people didn't ask about ARM loans as much but today we hearing more questions, so a good explainer always helps even if you're a mortgage pro - here's a refresher. Adjustable-rate mortgages (ARMs) offer upsides and downsides, providing homeowners with an opportunity to capitalize on initially lower interest rates. Among the various ARMs available, the 5/1 ARM has emerged as a popular choice. This post delves into the mechanics of a 5/1 ARM, its advantages, disadvantages, and how it compares to other mortgage options. What is a 5/1 ARM? A 5/1 ARM is a specific type of adjustable-rate mortgage. The "5/1" denomination signifies two critical components of the loan: the first number (5) represents the duration in years of the initial fixed-rate period,…

Understanding Mortgage Proof of Funds (POF) Letter: A Key Document for Homebuyers When you're stepping into the world of homebuying, especially with a mortgage, a critical piece of paperwork you'll encounter is the Proof of Funds (POF) letter. This document is not just a formality; it's an essential part of the buying process, assuring lenders and sellers of your financial readiness. Let's dive into what a POF letter is, why it's needed, and how to obtain one. What is a Proof of Funds Letter? A Proof of Funds letter is your financial passport when buying a home. It demonstrates that you have the necessary liquid assets – be it cash, checks, or money in accounts – to cover the purchase costs, including the down payment and closing fees. For cash…

For many homeowners who opt for a conventional mortgage with less than a 20 percent down payment, Private Mortgage Insurance (PMI) becomes a necessary part of their monthly expenses. PMI is an additional charge on your mortgage payment, primarily designed to protect the lender in case of default. However, there are several ways to eliminate this extra cost, which can save you a significant amount over the life of your mortgage. When Does PMI Go Away? The Homeowners Protection Act of 1998 set forth guidelines for the automatic termination of PMI. According to the Act, PMI must be removed by the lender once the borrower attains a 78 percent loan-to-value (LTV) ratio. This means that when you have paid down your mortgage to 78 percent of the original purchase price…

Homeowners often overlook the financial potential of their home equity, a valuable asset that can be used to purchase a second home. This equity, calculated as your home's value minus any outstanding mortgage, can be accessed through two primary methods: a home equity loan or a Home Equity Line of Credit (HELOC). A home equity loan offers a lump sum with a fixed interest rate, ideal for significant one-time expenses. In contrast, a HELOC provides a flexible, revolving line of credit with variable interest rates, akin to a credit card. Using home equity to buy another home offers several advantages. It enables you to access substantial funds without depleting personal savings and allows you to retain ownership of your current home. Additionally, it can position you as a more competitive…

In 2024, new homeowners are seeing mortgage interest rates have more than doubled since 2021, making the dream of home ownership with the traditional down payment of 20% seem like a bridge that is very far. However, there are many options and programs that don’t require 20% down. Some loan programs now allow for a much lower down payment, requiring as little as 3 percent in cash. This development significantly eases the burden for homebuyers, especially first-timers. Understanding 3 Percent Down Mortgage Options These low down payment mortgages are often part of special programs, typically targeting first-time homebuyers or those who haven't owned a home in the recent past. Here’s a closer look at these options: 1. Conventional 97 • Backed By: Fannie Mae • Key Features: Only 3% down…