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

Obtaining Cash From Your Columbus Home – Equity Options to Consider

RealSupport — Wed, 11 Dec 2024 10:47:44 +0000

Equity is the difference between the market value of your Columbus home, and what you owe on it. As you pay down your mortgage and your home’s market value improves, your equity can reach an impressive sum! If you find yourself in need of cash, borrowing against your home equity can be an attractive solution. Here are a few ways you can borrow against your home value without selling – and some considerations to keep in mind!

1. Home Equity Loan

A home equity loan allows you to borrow a lump sum of money against the equity in your home. This type of loan usually comes with a fixed interest rate and a set repayment schedule. It’s often referred to as a second mortgage. Your original mortgage would not be affected.

2. Home Equity Line of Credit (HELOC)

A HELOC functions more like a credit card. Instead of receiving a lump sum, you’re given a line of credit based on your home equity. You can draw from this line of credit as needed, and you only pay interest on the amount you borrow. HELOCs typically have variable interest rates, but they are generally more attractive than credit card or unsecured loan rates. The downside: your home is collateral, so borrow wisely.

3. Cash-Out Refinance

With a cash-out refinance, you replace your existing mortgage with a new one that has a higher loan amount. The difference between the old and new mortgage amounts is given to you in cash. This option allows you to access your home equity while potentially securing a lower interest rate on your mortgage. Caution: if your new interest rate is higher, and you are borrowing most of your equity, you could end up with a higher mortgage payment than before. Also, if you are starting over with a new 30-year term, it will take some time for your home equity to build up again.

4. Reverse Mortgage

For homeowners aged 62 or older, a reverse mortgage allows you to convert part of your home equity into cash without having to sell your home. Instead of making monthly mortgage payments, the loan is repaid when you sell the home, move out, or pass away. Homeowners should consider all their housing options and think long-term, however. Depending on your situation, selling your current home and collecting your equity in a lump sum, could be the better option!

5. Shared Equity Agreements

In a shared equity agreement, you sell a portion of your home equity to an investor in exchange for cash. The investor then shares in the future appreciation or depreciation of your home’s value. This option doesn’t require monthly payments, but you will need to settle the agreement when you sell the home or after a set period. These can be risky agreements – have an attorney look things over!

We hope this information helps! 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

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Mortgage Pre-Approval Tips for Columbus Home Buyers

RealSupport — Sun, 01 Dec 2024 10:07:41 +0000

Having a mortgage pre-approval in hand is the best way to be taken seriously as a Columbus home buyer! Obtaining a mortgage pre-approval goes smoothly when you prepare in advance. Here are several tips from Buyer’s Resource Realty Services!

Get a free copy of your credit history from annualcreditreport.com. This will not show your credit score, but it will show all of your credit accounts and payment histories. It also contains information about your address history and other identifiers. If there are errors in any of this data, contact the bureau supplying the report, and request corrections. Allow 30 days for updates, then re-check your history.

See your credit score at MyFico.com. A “good” FICO score is in the eye of the beholder, but generally you’ll get the best mortgage offers with a score of 740 and above. Scores of 680 and above are good. A score in the mid-600’s to high 500’s can mean an expensive mortgage – or a denied application. Much depends on the type of mortgage and the lender involved. Fortunately, the MyFico site includes an Education tab with tips on improving your credit score! On-time payments and low debt balances are key.

Put a financial file together. Gather your employment information, recent pay stubs, last 2 years of tax returns, recent bank statements and investment account statements. List your monthly debt obligations too. Having this information ready, and keeping it updated, will save you time and hassle when you begin your mortgage application.

Start, or improve, your down payment savings. Consider using direct deposit to automate your savings plan. Set up a monthly budget for routine expenses, and look for ways you can save on costs. Getting in good financial habits now will help you manage the costs of home ownership!

Get an Exclusive Buyer’s Broker on your side! We can refer you to expert mortgage lenders in the Columbus area. When you become our Buyer-Client, we can review your mortgage offers, and help you find the ideal financing for your needs.

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Mortgage Rate Tips for Columbus Home Buyers

RealSupport — Fri, 31 May 2024 09:37:25 +0000

Are high interest rates holding you back from buying a Columbus home? Don’t be discouraged! With good planning and comparison shopping, you can save considerable money on mortgage interest. Here’s how!

Raise your FICO score. If you don’t have a FICO score in the range of 800+, there’s room for improvement! The best mortgage rates go to borrowers with the best credit scores. If you have outstanding debt balances, reduce them or pay them off as much as possible. The amount of debt you carry is a major factor in your FICO score, second only to timely payments! Check your credit history at the official credit bureau website, annualcreditreport.com. Visit MyFico.com for credit score info.

Look for mortgage buydowns. Motivated sellers may offer a buydown as a buyer incentive. A buydown is basically pre-paid interest, paid by the seller. It lowers your mortgage interest rate for a temporary period. For example, a 2-1 buydown reduces your interest rate for the first two years of the mortgage. The rate would be 2% lower during the first year, then 1% lower the second year. The rate would reset to the full locked-in rate by year three.

Make a larger down payment. There are mortgages allowing down payments of 3%, or even zero percent! But when you make a larger down payment, you have “more skin in the game,” leading to better mortgage offers. Also, a down payment of 20% eliminates requirements for private mortgage insurance (PMI), and the costly premiums that go with it.

Consider paying points. Points are pre-paid interest. If you pay points up front, you can obtain a lower interest rate for the life of the loan. Each point represents 1% of your total loan amount. On a $300,000 mortgage, one point would cost $3,000.

Be sure to understand how much of a discount you’re getting for the money. Paying one point may only provide a 0.25% reduction in your interest rate, depending on your mortgage type and lender.

Consider an Adjustable-Rate Mortgages (ARM). Adjustable-rate mortgages have a fixed interest rate for a set period, which could be 3 years, or 5 years, or more. Afterwards, the interest rate resets each year according to a specific benchmark in the financial markets. This presents a risk if rates are higher in the future – because your mortgage payments could go up.

You could potentially escape the ARM loan’s annual reset by refinancing into a fixed-rate mortgage, which would eliminate rate surprises.

Wait for lower rates. This is a reasonable strategy, but timing the market is tricky! Rates could come down in the future, but exactly when, and by how much, is impossible to predict. Meanwhile, home prices may continue to rise, eating away at your purchase power. And once rates drop, other home buyers who waited out the market will flood back in, increasing home buying competition.

Comparison shop for your mortgage. Seek out mortgage pre-approvals from at least three lenders during the same timeframe. Compare not just the rates, but the fees and costs of your financing.

When you work with Exclusive Buyer’s Brokers, you receive a fiduciary level of service. We help you review your mortgage offers, and help you identify the best financing for your needs! It’s one of the many ways we are different from other brokerages.

Before you begin your home buying journey, give yourself the advantage of expert insights and strategies! Read our free e-book, “How to Buy a Home like a Pro!” There is no obligation, and the wealth of knowledge is yours to keep.

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

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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!

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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.

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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.

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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!

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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!

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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

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