Home financing tips Archives - Columbus Ohio Real Estate | Buyer's Resource Realty Services

Columbus Home Buyers, Shop Around for your Mortgage!

RealSupport — Wed, 06 Dec 2023 09:13:39 +0000

When it comes to getting a mortgage, Columbus home buyers don’t always shop around for the best deal. But you should! According to Freddie Mac, home buyers who obtain and compare at least 4 mortgage offers save an average of $1,200 a year on financing costs.

When comparing loan offers, few borrowers look beyond the interest rate and the origination fee, but there is more to consider. Mortgage costs include underwriting fees, document preparation fees, processing fees, tax service fees and courier fees. During your comparisons, you may find that a nominal difference in interest is not worth the tradeoff of more expensive fees.

Also check for any “points” in the loan estimates. A point is a form of pre-paid interest, which buys a reduction in the interest rate. A full point is basically one percent of the loan amount. You are not required to pay points, but if you choose to do so, be sure your mortgage comparisons are working with the same point value. (Full point, half point, etc.)

To simplify matters, Bankrate suggests comparing the APR, or annual percentage rate, on your mortgage offers. The APR includes all fees involved with the financing, as well as the interest rate itself. Comparing APR’s on your mortgage offers can give you a look at the bottom line.

Most lenders allow you to roll some, or all, of the closing costs into the loan. Use caution. Rolling in your closing costs will increase your principal balance, and your interest will be charged on that balance.

Before you begin shopping for a mortgage, it pays to have your own financial condition in the best possible shape! The better your credit score and the stronger your down payment, the better your mortgage offers will be. Learn more with our free e-book, “How to Buy a Home like a Pro!” There is no cost and no obligation.

And, if you choose to become our Buyer-Client, we can help you evaluate and compare your mortgage offers, because we provide a fiduciary level of service to our clients!

As Exclusive Buyer’s Brokers, we serve your best interests at all times! Unlike real estate agents and brokerages who represent sellers, as an Exclusive Buyer’s Broker, we only represent you, the buyer, getting you the best price and terms with no conflict of interest at all times.

Understanding this distinction could literally save you thousands of dollars not only on the purchase price and terms, but also on seller concessions and home inspection issues, whether you are a first-time homebuyer or an experienced homeowner!

Andrew Show
Exclusive Buyer’s Broker, CEBA-M, MCNE, CSP, PSA,e-PRO, CREM, ABRM, AHWD
Buyer’s Resource Realty Services www.BuyersHome.com
Serving Metro Columbus, Ohio with Exclusive Buyer’s Agents
7100 North High Street, Suite 204, Worthington, Ohio 43085
614-888-4110 | 888-888-4110 Toll Free | 614-839-4110 Fax

The post Columbus Home Buyers, Shop Around for your Mortgage! appeared first on Columbus Ohio Real Estate | Buyer's Resource Realty Services.

What Columbus Home Buyers Should Know About Mortgage Buydowns

RealSupport — Tue, 17 Jan 2023 13:19:47 +0000

Rising interest rates have revived some mortgage options, and Columbus home buyers could find them useful. One such option is the mortgage buydown. This is similar to paying “points” on a mortgage, but it’s a bit more complex.

First, the basics: paying points on a mortgage is pre-paid interest. One point is typically 1% of the amount borrowed. By paying a point, a home buyer can reduce the effective interest rate on their mortgage. The corresponding reduction in the monthly mortgage payment may be nominal, given a 30-year amortization.

With a mortgage buydown, the points are applied to a specific period. For example, there is a “3-2-1” buydown. This means the mortgage payments would be temporarily lower for the first three years. During the first year, the payments would be at their lowest; during the second year, the interest rate would go up by 1%; and during the third year, the interest rate would go up another 1%. At the fourth year, the full, locked-in interest rate would resume.

Another option is the 2-1 buydown. In this scenario, the interest rate is only reduced for the first two years of the mortgage, but the first year has a bigger discount in the payments. For example, the rate would be 2% lower during the first year, then just 1% lower the second year, and then resume the full rate by year three.

Here’s why buydowns are getting attention: if the lender allows it, sellers may pay for the buydown as a concession to the home buyer. Depending on the math and the situation, it can be more advantageous for a seller to contribute points to the buyer’s financing than to reduce the price of the home. For the home buyer, a buydown could reduce their mortgage payment more effectively than a reduction in the home price.

These are very individualized calculations, and Columbus home buyers should examine buydown options carefully. As your Exclusive Buyer’s Broker, we provide a fiduciary level of representation to you, which enables us to provide you with objective, honest advice about your mortgage options!

As Exclusive Buyer’s Brokers, we serve your best interests at all times. Unlike real estate agents and brokerages who represent sellers, as an Exclusive Buyer’s Broker, we only represent you, the buyer, getting you the best price and terms with no conflict of interest at all times.

The post What Columbus Home Buyers Should Know About Mortgage Buydowns appeared first on Columbus Ohio Real Estate | Buyer's Resource Realty Services.

Columbus Home Buyers, Prepare for Cautious Lenders

RealSupport — Mon, 02 Nov 2020 09:47:09 +0000

For the past 3 months, mortgage interest rates have been averaging below 3% for 30-year Conventional loans. But Columbus home buyers may find that lenders are feeling less generous these days, making any advertised, ultra-low rates difficult to obtain.

Even as rates have declined, lenders have been increasing their credit score requirements. The Mortgage Bankers Association reports that the Mortgage Credit Availability Index (MCAI) dropped by 6.1% in September, indicating that loan approvals are down. The median FICO score for mortgage approvals nationally is 700. In “hot” markets, the median FICO score on approved mortgages is over 750.

What’s going on? Simply put, lenders have enough applications for home purchases and refinances that they can afford to be picky. Another concern is the economy. So far, economic damage from COVID-19 has struck certain industries much harder than others; yet lenders fear the snowball effect that a prolonged pandemic could cause.

Still, you won’t necessarily be denied for a mortgage if your FICO score is below 700 and your down payment is less than 20%. But the interest rates you are offered may be higher than the “teaser rates” shown on lender websites.

To get the lowest possible mortgage rate in the Columbus area, you’ll need the best possible credit score and a strong financial picture! Being financially prepared with limited debt obligations, a considerable down payment and a solid work history helps.

It’s also a good idea to work with Columbus area lenders who know our market! We can refer you to local lenders who will work hard to get you the best options. And as our Buyer-Client, you will get our help in evaluating your mortgage offers, to compare not only rates, but also the fees and costs that are part of your overall financing.

As your Exclusive Buyer’s Broker, we serve your best interests at all times! Unlike real estate agents and brokerages who represent sellers, as an Exclusive Buyer’s Broker, we only represent you, the buyer, getting you the best price and terms with no conflict of interest at all times.

The post Columbus Home Buyers, Prepare for Cautious Lenders appeared first on Columbus Ohio Real Estate | Buyer's Resource Realty Services.

Columbus Home Buyers Could Find Mortgage Approval Tougher

RealSupport — Tue, 05 May 2020 06:04:57 +0000

Columbus home buyers could be surprised by loan denials in the wake of quickly-changing mortgage guidelines. The economic impact of COVID-19 is causing lenders to raise credit requirements nearly across the board.

The evolving underwriting standards vary by lender and mortgage type, but examples include the following:

Higher credit score requirements
Lower debt-to-income ratios (the less outstanding debt the applicant has, the better)
Larger down payment requirements

Lenders are getting tougher on Jumbo mortgages, too. Jumbo borrowers can expect to see higher cash reserve requirements in addition to the above.

The cautious approach comes as interest rates hover at historic lows. This has kept lenders busy with refinance applicants. The surge of refi business allows them to name their own terms somewhat as applicants clamor for cheap interest rates.

If you have a mortgage pre-approval in hand, be extra careful with your credit and finances! Lenders are going to re-verify your employment, income and credit score right up to closing.

If you are ready to seek a mortgage, we can put you in touch with excellent lenders in Metro Columbus! And as our Buyer-Client, you can get our advice on the mortgage offers you receive. Please contact us for more information!

The post Columbus Home Buyers Could Find Mortgage Approval Tougher appeared first on Columbus Ohio Real Estate | Buyer's Resource Realty Services.

Columbus Home Buyers and Homeowners Should Review Credit Reports

RealSupport — Tue, 05 May 2020 05:53:33 +0000

Monitoring your credit report is wise for everyone, but especially for Columbus home buyers and homeowners, who are attractive targets for scammers. According to data by Experian, Ohio ranks as the 14^th-highest state for credit fraud, based on the 2017 per capita rate of reported incidents.

Today there is a fresh wave of phishing attempts. Scammers are impersonating the IRS and state benefit agencies. They are also pretending to be from credit card companies and mortgage lenders. Wherever there’s money, there’s a scammer attempting to get it!

Thankfully, the three main credit bureaus are making it easier for you to monitor your credit report. From now through April 2021, you can obtain your credit history every week, for free! To access your free credit report, visit AnnualCreditReport.com. This is the official consumer webite authorized by Federal Law.

Please keep in mind that not every lender reports to all three bureaus. For this reason, you’ll want to pull a report from each bureau.

Monitoring your credit history helps you spot any unauthorized credit accounts that were opened in your name. It also allows you to address any errors in your personal info. If you see any issues in payment history or other data, you can file a dispute with the reporting bureau, which will investigate and respond within 30 days.

We hope you find this information helpful! As your Exclusive Buyer’s Broker, we serve your best interests at all times! Unlike real estate agents and brokerages who represent sellers, as an Exclusive Buyer’s Broker, we only represent you, the buyer, getting you the best price and terms with no conflict of interest at all times.

The post Columbus Home Buyers and Homeowners Should Review Credit Reports appeared first on Columbus Ohio Real Estate | Buyer's Resource Realty Services.

Credit Score Changes May Affect Some Columbus Home Buyers

RealSupport — Tue, 04 Feb 2020 04:04:15 +0000

The most common credit scoring model in the country, FICO, will soon be changing how it calculates credit scores. This new change is predicted to affect over 8 million consumer credit scores, and not everyone will be happy with the results. Here’s what Columbus home buyers should know!

A key element in the current FICO model is the “debt utilization” ratio. Simply put, the less debt you carry, compared to your available credit limits, the better. Under the new FICO 10 model, this ratio will become a larger influence on your score, primarily in the evaluation of credit card usage and unsecured loans.

Another aspect of FICO 10 is the use of “trending debt” scoring. This will consider whether your debt load has increased or decreased during the past two years. If you have reduced your debt during the past 24 months, your score will improve under the new calculations. But if you have increased your debt obligations, your score may drop by 20 points or so, even if you are making on-time payments.

FICO says that its new scoring model helps lenders identify high-risk debt patterns, which can lead to loan defaults and bankruptcies. Making on-time payments still matters, of course, but indebtedness levels and debt accrual habits are under greater scrutiny than ever before.

According to industry reports, FICO 10 will not be used in Freddie Mac and Fannie Mae mortgage underwriting in 2020. But as a rule of thumb, home buyers should avoid increasing their debt loads and pay down their debt obligations wherever possible. This will improve your credit score under FICO 10, and save you money in the long run!

The post Credit Score Changes May Affect Some Columbus Home Buyers appeared first on Columbus Ohio Real Estate | Buyer's Resource Realty Services.

Mortgage Pre-Approval Remains Essential for Columbus Home Buyers

RealSupport — Sun, 05 May 2019 02:14:13 +0000

Quick! How much home can you afford to buy? The answer might seem simple, but it isn’t! Columbus home buyers need to understand the difference between a mortgage pre-approval, and a mortgage pre-qualification.

A mortgage pre-qualification is an informal estimate of your home buying power, based on unverified information you give to the lender. Lenders sometimes market “instant pre-qualification” to buyers, in the hopes of attracting new business. At best, a pre-qualification can give you a frame of reference for your potential home buying power. There is no commitment by the lender to actually loan you money in any amount.

A mortgage pre-approval takes you through a full application and underwriting process. In this situation, all of your employment, financial and credit information will be verified. You’ll need to provide copies of your last 2 years of income tax returns, plus 2 months of bank statements, a month’s worth of pay stubs, and authorize a review of your credit report.

Due to automated underwriting, the pre-approval process doesn’t take is long as it once did. Depending on the lender and the type of mortgage you seek, you might have an answer in a matter of weeks, days, hours – or even minutes. The reply you receive will be one of the following:

Approved
Approved with conditions
Suspended (more info/documentation/verification required)
Denied (reasons for denial will be provided by lender)

While no one wants to receive a mortgage “pre-denial,” it’s far better to discover an issue with financing before you make an offer on a home! It gives you the opportunity resolve issues – and reapply – before you have a home on the line.

If you’ve done your homework, such as reading our free e-book, “How to Buy a Home like a Pro,” you will likely have performed some financial preparation prior to your mortgage application. Things like a steady employment history, consistent income, good credit, good savings habits, and modest debt levels will help your chances of approval.

Once you have a mortgage pre-approval in hand, you can browse homes for sale in the appropriate price range. You can submit a confident offer when you find the right property.

Home buyers who write offers with a mortgage approval contingency, without showing any reasonable proof of financing ability, are not taken too seriously by home sellers.

When you are ready to begin your mortgage pre-approval, we can help! We will refer you to local, highly reputable mortgage lenders in Central Ohio, who will explain your financing options. When you become our Buyer-Client, we can also help you evaluate the mortgage offers you receive!

Andrew Show
Exclusive Buyer’s Broker, CEBA-M, MCNE, CSP, PSA,e-PRO, CREM, ABRM, AHWD
Buyer’s Resource Realty Services, www.buyershome.com
Serving Metro Columbus, Ohio with Exclusive Buyer’s Agents
7100 North High Street, Suite 204, Worthington, Ohio 43085
614-888-4110 | 888-888-4110 Toll Free | 614-839-4110 Fax

The post Mortgage Pre-Approval Remains Essential for Columbus Home Buyers appeared first on Columbus Ohio Real Estate | Buyer's Resource Realty Services.

Home Buyers Should Compare 30-Year and 15-Year Mortgages

RealSupport — Sat, 16 Mar 2019 19:56:34 +0000

For most Columbus home buyers, the 30-year, fixed-rate mortgage is the loan of choice. The long repayment period makes home ownership more affordable, enabling you to buy more home for the money. But before you lock in 360 consecutive mortgage payments, you should give consideration to the 15-year term.

A 15-year fixed-rate mortgage will save you interest expense over the life of the loan. The interest rate on a 15-year mortgage is generally lower, and the faster amortization helps you build equity. If your goal is to own your home free and clear, the 15-year mortgage helps serve your plans.

The downside: the principal and interest portion of your monthly payment will be much higher than a 30-year mortgage. Once you are committed to this higher payment, there’s no turning back. (Unless you are able to refinance into a longer term mortgage, or sell your home.) 15-year mortgages work best for those who have confidence in their income consistency and financial reserves.

Here’s a comparison of a 15-year mortgage vs. a 30-year mortgage on a $300,000 principal balance. Please keep in mind that these examples are for illustration only; the difference in rates between the two mortgage terms can be greater or lesser, depending on conditions in the financial markets. The actual rates you are offered by a lender depend on your personal creditworthiness.

15-year fixed-rate mortgage, rate of 3.875%, loan amount of $300,000:

$2,200.32 principal and interest payment per month
$96,057.23 total interest over life of loan

30-year fixed-rate mortgage, rate of 4.25%, loan amount of $300,000:

$1,475.82 principal and interest payment per month
$231,295.12 total interest over life of loan

While the 15-year mortgage saves interest expense in the long run, homeowners who plan to sell in 7 or 8 years may not be concerned about this issue. Also, the hefty monthly payment on a 15-year mortgage can be unfeasible for buyers who need the lower payment – and leveraged buying power – of a 30-year mortgage.

Home buyers who take out a 30-year mortgage can save interest and pay off their loan sooner by making additional payments to principal. This gives you the flexibility to pay down the mortgage faster as your cash flow allows. We’ll be happy to refer you to local, trustworthy lenders who can explain all of your mortgage options!

Which mortgage term is right for you? We will help you explore the answer! As your Exclusive Buyer’s Broker, we serve your best interests at all times! Unlike real estate agents and brokerages who represent sellers, as an Exclusive Buyer’s Broker, we only represent you, the buyer, getting you the best price and terms with no conflict of interest at all times.

The post Home Buyers Should Compare 30-Year and 15-Year Mortgages appeared first on Columbus Ohio Real Estate | Buyer's Resource Realty Services.

Mortgage Strategies for Columbus Home Buyers

RealSupport — Sat, 24 Nov 2018 07:39:43 +0000

Making wise mortgage decisions can save you money as a Columbus home buyer! While you can’t control the direction of interest rates, you can put yourself in a position to receive the best possible mortgage offers. Here are mortgage tips and strategies every home buyer should know!

Strengthen your credit. Your credit score, loan-to-value ratio, and debt-to-income ratio are all considered by the lender. It’s easiest to look at it this way:

The higher your credit score, the better.
The larger your down payment, the better.
The lower your monthly debt payments, the better.

The lowest interest rates are awarded to borrowers who have the very best credit, and the lowest risk profile. Mortgage underwriting is complicated, and involves more than the items above – but this gives you a good start!

Pay attention to rates. Each week, Freddie Mac publishes the Primary Mortgage Market Survey (PMMS), which shows the national average for mortgage interest rates. This snapshot includes three main mortgage types. It includes the average points, if any, lenders are charging to issue those rates. As of November 21, 2018, the PMMS looked like this:

30-year fixed-rate mortgage = 4.81% with 0.4 points

15-year fixed-rate mortgage = 4.24% with 0.5 points

5/1 adjustable-rate mortgage = 4.09% with 0.3 points

These rates are subject to change daily, and are for example purposes only.

Consider your mortgage loan options. While the 30-year, fixed-rate mortgage is popular, you’ll enjoy a lower rate, and pay less interest overall with a 15-year mortgage. Keep in mind, the shorter term will mean a larger monthly payment.

You can consider adjustable-rate mortgages, which offer low introductory rates. In the example above, the 5/1 ARM means your interest rate stays the same for the first five years. Afterwards, it will adjust every year for the remainder of the mortgage.

Do the math on mortgage points. A point equals one percent of the principal amount borrowed. When you pay points, you’re basically paying interest in advance. In return for this up-front money, the lender grants you a somewhat lower mortgage rate. As you saw in our PMMS rate examples above, points may be shown in any fractional amount.

Points are paid at closing with other out-of-pocket costs. If you wish, you can opt to “roll” your points into the mortgage loan with other closing costs. Remember that paying points at all is completely optional!

Lock the rate. A rate lock means your lender promises to honor the offered rate for a specific amount of time. This protects you from the daily changes in rates that happen in the financial markets. Generally, the rate lock gives you enough time to get through the closing process.

When you’re happy with the mortgage offer, and you don’t want to gamble with the future rate environment, lock it in! But if you think rates might be heading lower, you can opt to wait a bit, or try shopping rates with another lender. (Remember, your personal creditworthiness plays a large role in the rates you’ll be offered.)

Educate yourself! Our free e-book explains these matters in detail! Obtain your copy of “How to Buy a Home like a Pro” by clicking here. There’s no charge, no obligation, and we never share your email address with anyone else.

Andrew Show
Broker, CEBA-M, MCNE, CSP, PSA,e-PRO, CREM, ABRM, AHWD
Buyer’s Resource Realty Services, www.buyershome.com
Serving Metro Columbus, Ohio with Exclusive Buyer’s Agents
7100 North High Street, Suite 204, Worthington, Ohio 43085
614-888-4110 | 888-888-4110 Toll Free | 614-839-4110 Fax

The post Mortgage Strategies for Columbus Home Buyers appeared first on Columbus Ohio Real Estate | Buyer's Resource Realty Services.

Why Columbus Home Buyers Shouldn’t Fudge the Mortgage Application

RealSupport — Fri, 12 Oct 2018 04:49:22 +0000

Mortgage fraud is on the rise. But this time, it isn’t part of a bigger scheme orchestrated by white-collar thieves. Instead, there’s an uptick in home buyers who are attempting to cheat their way into a mortgage approval.

There are two main patterns: mortgage applicants who claim a higher income than what they report to the IRS, and applicants who create pure fiction.

In the first case, buyers may not realize that today’s lenders must follow strict criteria to calculate self-employed income. The buyers may have understated their income to the IRS to reduce their taxes, but this haunts them later when trying to obtain a mortgage. (Potential tax fraud aside.)

In next scenario, desperate home buyers have turned to fraud-enabling tools on the Internet to create falsified employment records. This includes completely fake pay stubs from make-believe companies, to modified pay stubs showing a higher income, or a longer length of employment. Some fraud-enabling websites even provide (for a fee) an employment verification to back up the fictitious info.

Other fraud trends include falsifying owner-occupancy, and creating fake “gift” down payment letters.

Even a so-called white lie can cause serious headaches. A buyer might think that a loan denial is the worst that could happen, so what is there to lose? And if the loan goes through, there’s nothing that can happen after closing, right?

Wrong. Deliberately presenting false information to a lender is bank fraud, which is punishable with fines and jail time – and possibly an acceleration clause on the mortgage, which would induce foreclosure. Mortgage applicants who try and cheat the process stand to lose much more than the house!

Fortunately, the vast majority of such fraud cases are caught during the underwriting or servicing process. The current fraud volume, while on the rise, is only about 1% of all applications. Today’s fraud attempts are fueled by an increasingly-automated mortgage process, and buyers who won’t take “no” for an answer.

Home buyers shouldn’t attempt to defeat the mortgage application or underwriting process. A mortgage denial isn’t a life sentence. A reputable lender will do their best to find the right mortgage for your situation, and help you qualify legitimately. If you are denied for the loan for any reason, a reputable lender will discuss the denial and offer suggestions to help you succeed in the future.

We only refer our Buyer-Clients to local, trustworthy lenders!

Andrew Show
Broker, CEBA-M, CNE, CSP, PSA, e-PRO, CREM, ABRM, AHWD
Buyer’s Resource Realty Services, www.buyershome.com
Serving Metro Columbus, Ohio with Exclusive Buyer’s Agents
7100 North High Street, Suite 204, Worthington, Ohio 43085
614-888-4110 | 888-888-4110 Toll Free | 614-839-4110 Fax

The post Why Columbus Home Buyers Shouldn’t Fudge the Mortgage Application appeared first on Columbus Ohio Real Estate | Buyer's Resource Realty Services.