Advantages Of Buying A Home In The Winter

Winter brings a different perspective to buying a home. Although the winter has it's challenges when it comes to buying a home it can be a very a good time to buy for several reasons.

There are fewer buyers out looking with most of them sitting by the fire trying to keep warm. Many don’t want to brave the rain and snow looking for a home. It’s hard enough in the summer, right? It may be more difficult but well worth your time and effort to find the perfect home at a great price.

With fewer buyers out looking you are less likely to come across a multiple offers situation.

Sellers are highly motivated, if a house is listed during the winter months the seller’s circumstance could be to your advantage. They could have a new job and need to relocate. Financial problems or a divorce. Depending on the seller’s situation they may be more acceptable to negotiating.

A home listed in the winter may have been listed for a long period of time. If a home is listed for several months you may be able to offer less. Don’t be afraid to make an offer below asking price. But be careful not to offend the seller with a low-ball offer either.

Very important is the home itself, during the winter is an excellent time to see how a home performs when it is cold, after a good snowfall or rain storm. You can see if the home has leaks or a problem with insulation or lack of it, check for cold corners or rooms. A well-built home will not have icicles hanging from the eves or snow collecting on the roof.

Another advantage is finding a Realtor in the winter months is much easier because most of them are not as busy. They can spend more time with you and help you find the perfect home.

The same could be said for your mortgage professional.  

Another great motivator is your loan and what interest rate is available. Lender’s are less busy during the winter and we often see lower rates during the winter months. Take advantage of this, it could save you thousands over the duration of your loan just by buying during the lull in the market. We never know when rates will go up.

I have given you some great reasons to buy this winter, do your homework and due diligence before you buy your home. Talk to professionals and get the knowledge you need to make your best choice and then put your knowledge to action. Go for it! It’s fun and who doesn’t like moving into a new home no matter the season.

If I can help in any way with questions or your financing I am always available and just a phone call away.

Thank you for visiting my blog, I encourage you to leave a comment or questions. Let me know if my blog has helped you. I would love to hear your thoughts and any ideas for future posts. 

Roxy Redenbaugh

ACMC Loan Consultant

roxy@roxyredenbaugh.com

Mortgage Coach

Branch Manager

NMLS #269926

www.roxyloans.com

Mortgage Insurance Explained

There are two different types of mortgage insurance. 
    1. Mortgage Insurance Premium or MIP

          2. Private Mortgage Insurance or PMI

Mortgage insurance is required on any real estate loan that has a loan to value (LTV) above 80%. Not everyone can save up 20% for a down payment so MIP or PMI allows a buyer to put less down and pay insurance to protect the lender against default and foreclosure.

To explain the difference between MIP and PMI:

MIP is used for FHA loans that require a small down payment of 3.5%. You pay MIP in the form of an annual up-front mortgage insurance premium or (UFMIP) this can be financed into your loan and the current amount is 1.75% of the principal balance. In addition to this UFMIP is a monthly premium of .55% added to your mortgage payment each month.

Example:   250,000 Loan Amount x 1.75% = $4,375 Annual UFMIP 

                   250,000 Loan Amount x .55% = $1,375 /12 = $114.58 Monthly MI

FHA MIP is on your loan until the loan is paid in full or you refinance into a conventional loan and remove it after you have 20% equity in your home.

PMI is for conventional loans when you put less than 20% down. The rate factors are based on the individuals credit history and risk factors. Typically ranging from .35% to 1% of principal balance. Most insurance companies require a 660-fico score before they will cover your loan.

There are different ways to pay this type of PMI, you can choose to pay it all upfront at time of closing or as a monthly premium or a combination of both.

Lender’s also offer a slightly higher interest rate to cover the cost of the insurance called lender paid MI. I don’t recommend this if you plan to stay in your home for more than 5 years, because the higher rate is for the life of the loan and the best part about this type of PMI is you can request to have it removed after you have 20% equity in your home.

When you request your PMI to be removed you must do it in writing and they will require an evaluation of value to done on your home to establish your LTV and confirm you have 20% equity. You may have to pay for an appraisal to confirm value.

The Homeowners Protection Act of 1998 became effective in July 1999 and is known as the PMI Cancellation Act.  It was enacted to protect homeowners from the difficulty of cancelling PMI from their home loan. Now if you forget to request removal the lender is required to remove your PMI automatically when your LTV reaches 78%. I still recommend you keep track of your home’s value annually if you have PMI.

How you can avoid PMI and MIP is with a VA loan. Veterans who qualify can get 100% financing. With a VA loan there is a funding fee that is normally financed within the loan but no monthly mortgage insurance. 

Thank you for visiting my blog, I encourage you to leave a comment or questions. Let me know if my blog has helped you. I would love to hear your thoughts and any ideas for future posts. 

Go for it give me some ideas!

Roxy Redenbaugh

ACMC Loan Consultant

roxy@roxyredenbaugh.com

Mortgage Coach

Branch Manager

NMLS #269926

www.roxyloans.com 

Piggyback Loans are Making a Come Back!

A piggyback loan is used when a buyer doesn’t have 20% down. This loan is considered a purchase money loan and goes in second place after the first lien. In most cases we are seeing a combination that is 80/10/10 meaning you get an 80% loan, a 10% piggyback/second loan and you put 10% down payment. Other combinations are 80/15/5 and an 80/20. All making a comeback..

By doing this it eliminates the requirement for principal mortgage insurance (PMI)

We are seeing more lender’s in 2017 take on this risker scenario not seen since before the 2008 mortgage crisis. These loans are an alternative for the buyer who doesn’t want to pay mortgage insurance.

Mortgage insurance is paid on any loan that exceeds 80% loan to value (LTV) there are several different ways (PMI) can be paid. I’ll go into mortgage insurance on my next blog post.

Piggyback loans are typically at a higher rate than the first loan and often made by the same lender.

I have seen some lenders match the rate of the first if the borrower’s risk factors are low. Meaning the borrower has a higher credit score and low debt to income ratio.

The only loan above 80% LTV that avoids PMI is a VA loan for our military folks. The VA loan for purchase and refinance is 100% financing and the ability to add their VA funding fee and closing costs to the loan, so the Veteran has no out of pocket money required. Great deal for our veterans. 

I am not sure if bringing back the piggyback is a good idea or not, they did cause their share of problems for both homeowners and lenders, causing many foreclosures which is why they disappear for so many years. I see an ever changing environment in the lending industry with lenders taking on more risk. Good or bad not sure!

I think it’s important to make sure that you research the difference between paying PMI or getting a second lien and the rates offered on the piggyback vs the factor used for the PMI.

Other things to consider is the tax benefit of each and with this new tax plan being introduced by our current president. Most of us can deduct our mortgage interest and mortgage insurance but that is likely to change if the new plan passes, at least to some degree depending on the size of your mortgage.

Thank you for visiting my blog and I encourage you to leave a comment or questions. Let me know if my blog has helped you to answer any questions you had. I would love to have ideas about what you all would like to learn about regarding financing or real estate.

Go for it give me some ideas!

Roxy Redenbaugh

ACMC Loan Consultant

roxy@roxyredenbaugh.com

Mortgage Coach

Branch Manager

NMLS #269926

www.roxyloans.com