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Feb. 2021

Am I Ready to Buy a House? 8 Questions to Help You Decide

February 8, 2021 by Emily Huddleston

So lately you’ve found yourself asking, “am I ready to buy a house?” Homeownership is a major milestone that many people dream of reaching one day. However, there are a variety of factors to consider when making one of the biggest financial decisions of your life.    So, if you’ve been thinking about becoming a homeowner, but aren’t sure if you’re prepared, you’ve come to the right place. We’ve laid out 8 questions to help you decide if you’re finally ready to buy a house. See how many you can answer yes to and if now is the right time for you to begin your homebuying journey.

1. Do you have money for a down payment?

Although the common perception is that  first-time homebuyers  need to have a 20% down payment to purchase a home, that’s simply not the case. Typically you’ll need a minimum down payment of 3.5% to 10% for an FHA home loan, and a minimum of 3% to 5% for a conventional loan.   For example, let’s assume you’d like to purchase a home that costs $300,000. Your lender will require a downpayment of at least 3% of the sale price of the home, depending on the type of loan you choose and qualify for. In this example, 3% of $300,000 equals a $9,000 down payment.   It’s important to remember that the larger your down payment, however, the lower your monthly payments will be and the less interest you will pay during the life of your loan. Another drawback to a low down payment is that you’ll have to pay private mortgage insurance (PMI), which protects your lender in case you can’t pay your mortgage. If you put down less than 20%, you’ll probably have to pay for PMI, which is added to your monthly mortgage payment.

2. Do you have a solid savings and emergency fund?

While you may have saved enough for your down payment, don’t forget to account for closing costs which include legal fees, lender fees, taxes, etc., and usually total 2% to 5% of the home’s purchase price. Also, during the home inspection, you may find a few home maintenance items that you’ll want to take care of sooner rather than later, such as a leaking septic tank or cracks in the walls or ceilings. This is when additional savings will come in handy.  You should also make sure you have some emergency funds set aside. When you’re renting, you have the wonderful luxury of calling up a landlord whenever there are issues with the property. So when the heater stops working in the middle of winter, you don’t have to spend thousands of dollars to fix it. Or, when your washing machine breaks during a cycle, you won’t be responsible for calling a repairman to take a look. But once you become a homeowner, all of that responsibility falls on you. So, if you’re going to burn through your savings on a down payment, hold off on buying a house until you have a larger safety net. 

3. Is your credit score in pretty good shape?

Many potential homebuyers worry that they won’t be able to buy because of a low credit score. However, you actually don’t need perfect credit to buy a home and there are many loans and  first-time homebuyer programs available for buyers without perfect credit. That being said, a higher score will help you qualify for a lower mortgage rate, saving you money in the long run.   One of the most common questions first-time buyers ask is, “ what credit score is needed to buy a house ?” While there’s no hard-and-fast rule for this, you’ll likely need a minimum credit score of 600 for approval. To qualify for the most favorable rate, however, work on improving your credit score and wait until you have a score of 700 or higher.

4. Do you have a handle on your debt?

Don’t panic – you don’t have to be completely debt-free to buy a home. Between student loans, car payments, and other bills, most mortgage companies know that it is unrealistic to expect borrowers to be totally debt-free these days. They primarily want to know that you’ll be able to afford your mortgage payment based on how much money you have coming in versus what you need to pay out to other debts.   To figure this out, lenders will look at your debt-to-income ratio, which is an estimation of how much of your monthly income goes towards debt payments. To find your current ratio, you can use a  debt-to-income ratio calculator. So long as your debt ratio is at least 43% you can still qualify for a mortgage.

5. Have you crunched the numbers to make sure you can afford the monthly expenses?

To figure out if you can afford the monthly expenses, you’ll first need to calculate your mortgage payment. An  online mortgage calculator  can estimate this for you, however, affording a home is so much more than just the mortgage payment. Other financial aspects of homeownership may include:

• Property taxes and insurance
• Home Owner Association (HOA) fees, if applicable
• Home expenses (sewage, garbage, internet, etc)
• Utilities (water, electricity, etc.)

Before you decide to make the transition from  renting to buying a house , make sure you’ve done the math and can afford all of the monthly expenses that come with being a homeowner.

6. Do you have a steady job?

Stable employment and income show lenders  how much house you can afford  and are important indicators for qualifying for any mortgage. But even if you can demonstrate financial stability on paper, you should only buy a house if you think your income will remain steady for the foreseeable future.   A nightmare scenario for most homebuyers is losing their job just after they close or move into a new home. So if there’s any uncertainty about your income or employment, wait until things settle down before buying a house.

7. Do you need more space?

While money is obviously an important consideration, there are many other factors to think about when asking, “am I ready to buy a house?” One of which is the thing we all seem to need more of currently – space. 

With so many of us spending most of our time at home, maybe you desperately need a designated home office or an extra room for a home gym? You may want a larger backyard or an area for a garden. Do you have kids or are you expecting a baby soon and you need more room? If this sounds like you, then now may be the time to consider buying a home.

8. Are you planning on staying put for a while?

There’s no rule barring you from moving shortly after buying a home. But as a homeowner, you’ll have a chance to build equity. The longer you own your home, the more equity you build, and the more money you’re likely to make when you sell it. Ideally, you should live in a house long enough to make a profit. So, if you can’t commit to an area, continue renting until you’re ready to put down roots.

Figuring out if you are ready to buy a house is a personal decision and one that means taking a hard look at different aspects of your life: finances, lifestyle, job situation, and long-term goals. But if you’ve answered yes to all of the above, you might just have an answer to the big question, “am I ready to buy a house?”  If you’re still unsure or you have specific questions relating to your situation, reach out to a mortgage lender or real estate agent who can give you professional advice. 

Credits and written by Emily Huddleston

 

December 22nd 2020

When It’s A Good Idea To Refinance Your Home Mortgage Loan

 

Over the years, the refinancing activity has surged dramatically, indicating that more and more people are now aware of the benefits that refinancing a home mortgage loan can offer. Usually, refinancing a loan brings down the monthly payment providing more cash available on a monthly basis.  It usually makes sense to refinance if the rate is .5% lower or more as the monthly savings will pay for the cost to refinance in a short period of time.

When it’s a good idea to refinance your home mortgage loan

It makes sense to refinance your mortgage loan if it lowers your monthly payment by either increasing your loan term or reducing your interest rate. It’s also a good option, if there is enough equity in the home, to eliminate Private Mortgage Insurance (PMI) With lower interest rates, even those with fairly new mortgages can also benefit.

You should consider refinancing your home mortgage loan if it lowers the interest rate by one-half to three-quarters of a percentage point, which can significantly reduce your monthly payment. If the interest rates drop low enough, you can even reduce the loan term along with the interest rates, which will help save even more. However, make sure that your monthly savings after refinancing should offset the cost of refinancing. And if you plan to move in the next two to three years, its important to determine the length of time the cost of the refinance will be covered by reduced payment each month to ensure you at least cover the cost prior to selling the home.

Interest rate isn’t the only factor that should be considered when refinancing. Your credit score is equally important when it comes to securing the best refinance home mortgage loan. Generally, the best rates go to those with good credit. Other factors that should not be overlooked are the equity that you have in your home, how long you are planning to stay in your home, and your overall financial condition. It is only after you have considered these factors that you are able to get the best returns after refinancing.

How long does it take to recoup the refinancing cost?

Many people weigh only the interest rate when deciding whether to refinance their home mortgage loan or not. However, there are also costs to close the refinance loan, which can be high. Often, the closing costs go up to 2 to 5 percent of the principal amount of the mortgage loan. Then comes the new refinancing fee, which is effective from December 1, 2020. While loans below $125,000 are exempt from this fee, those with higher than $125,000 will have to pay .05% of the total loan payout. However, this doesn’t apply to VA or FHA loans.

To determine whether it’s a good idea to refinance your home mortgage loan or not, calculate how long it will take to pay for the total refinance the cost, which includes your closing costs, new refi fees, and monthly payments. You also need to determine whether you will be able to save more than what you will pay for the refinance cost.

If you want to refinance your home mortgage loan in Alpharetta, GA, and get the best rates, feel free to call Good Friends Mortgage today and let us help you in the best way possible.

 

December 11th 2020

Steer Clear of These Mistakes to Make Your Mortgage Loan Application a Success – We Make Home Happen

 

Having a home of your own is something nearly everyone desires. Having the funds to purchase a home with cash isn’t common, so finding a financial solution to get the house of your dreams is important. Obtaining a quality residential Mortgage loan is a great way of achieving this goal. Many loan applications don’t get approved due to errors in the application itself, in documenting income, or other factors. What are the common errors or mistakes? Let’s find out.

• Having sufficient funds for down payment.  It is quite surprising to see that a lot of home buyers have not saved enough for a decent down payment. Yes, it is true that paying 20 percent of the homes purchase price can be daunting.  We recommend to put enough down to eliminate the requirement for mortgage insurance.  If that’s not possible, then we can shop for the lowest mortgage insurance for down payments as low as 3.5%.
   
• Accuracy in the application. Never make the mistake of completing the paperwork in haste, both the application itself and the supporting documentation. It’s the details the investors need. There have been countless cases in which home buyers only provided partial documentation (missing bank statement pages, missing paystubs, etc..) Incomplete documentation will cause delays in the processing of your mortgage loan application.  As we know, time is of the essence when making a purchase. So, if you do not want to face delays, make sure the application is filled out completely and the supporting documentation is complete also.
   
• Credit Score Management. Another common mistake that many home buyers make is that they do not inquire about their credit score and rating prior to applying for a residential mortgage loan. Doing this is important as it may take time to rectify credit issues and when purchasing a home, delays can jeopardize the purchase or mortgage loan application process.
   
• Do not incur new debt. It is not uncommon for home buyers to get excited about getting the home of their dreams. They make the mistake of purchasing new furniture, electronic gadgets, even a car in some cases. This can land you in trouble as all mortgage lenders and investors in Atlanta, GA take a final look at your credit before the closing. If they see new debt, it can change your debt to income (DTI) ratio and this can delay the closing or possibly have the loan denied.

Good Friend Mortgage is a well-reputed residential mortgage company in Atlanta, GA. We have provided thousands of home buyers residential mortgage loans as we have programs in place that are built to accommodate nearly every home buying scenario. People who are not local to our office can complete our mortgage loan application online. You can complete the application over a couple of days; there’s no need to finish it at once. If interested, you can get in touch with one of our Mortgage Consultants (Licensed Mortgage Loan Originators) and inquire more about our services in detail. https://www.goodfriendmortgage.com/TeamDirectory.html

 

October 8th 2020

Atlanta Fed President: 'Racism robs our economy'

The Federal Reserve Bank of Atlanta is taking on the topic of race and its role in the economy. It is collaborating with Federal Reserve Banks in Boston and Minneapolis in a series of virtual events. The first was on Oct. 7.  Good Friend Mortgage, a mortgage broker based out of Alpahretta, GA, supports these efforts.

"The conversations we hope to spur with this kickoff event, and the whole series, are critical because systemic racism has a deep cost to our country—not just in psychological or emotional terms, but also by limiting economic mobility, innovation, and educational opportunities," said Raphael Bostic, president of the Atlanta Fed.

"Plainly put, racism robs our economy of trillions of dollars in productivity,” said Bostic, the only Black president in the Federal Reserve system.

A CitiGroup  study  puts the cost of the racial gap between whites and Blacks at $2.7 trillion.

In addition to Bostic's fellow presidents Neel Kashkari (Minneapolis), and  Eric Rosengren  (Boston), the event included guests who challenged the central bank to think about how financial institutions contributed to the current state of race disparities, and the tools the Fed has at its disposal to dismantle long-standing practices.

Changing the status quo “is going to require our radical imaginations,” said  Angela Glover Blackwell, founder of PolicyLink. "It has been too many decades to tinker. We have to do something big."

Speakers proposed a variety of ideas including ways the Fed's regional banks could improve communication with their communities, and be more intentional about sharing research with policy makers. But it also became clear there are limits to what the central bank can do.

"Expanding [quantitative easing] is no substitute for extended unemployment benefits," said  Neel Kashkari, president of the Minneapolis Fed. "There are things the Fed can do to support the economy as a whole, but we cannot put money in pockets of people who have lost their jobs, only Congress can do that."

During the two and a half hour event, guest speakers  Ursula Burns , former CEO of Xerox Corporation;  Geoffrey Canada , president of Harlem Children's Zone;  Carmen Rojas , president and CEO of Marguerite Casey Foundation; and moderator  Kai Ryssdal, host of the radio program "Marketplace," proposed ideas to help the Fed bridge the nation's racial divide during the first of a seven-part series.

"We at the Fed intend to do a lot of listening through this series," said Bostic.

The Federal Reserve Banks of Atlanta, Boston and Minneapolis will host additional virtual events on education, housing, criminal justice, health, wealth and financial services, and employment.

"The goal is to be solution-oriented and to identify actions that might be taken to reduce racism," Bostic said.

October 7th 2020

1,100-acre, $200M wellness resort proposed west of Atlanta. 

An investor hopes to transform more than 1,100 acres of forest west of Atlanta into a C-Suite wellness utopia.  Good Friend Mortgage, your local mortgage broker did not get this contract. (We wish)

A $200 million wellness resort is planned for the lower section of Douglas County, less than a half-hour drive from Hartsfield-Jackson Atlanta International Airport. Thanks to its proximity to the world's busiest airport, developers envision the proposed resort as a destination for people around the world seeking respite from their daily lives — and one that could tap into the huge global health and wellness industry.

Named the "Preserve World Center for Holistic Wellness and Applied Health," the center’s slogan is: “Connecting mind, body and soul.” The massive planned development comes from Preserve Life Corp. and could include up to 6 million square feet of commercial, retail, residential and farm space, according to a conceptual master plan.

Described as a “pause from high-profile corporate living,” the resort’s development would spread across approximately 700 acres, leaving more than 300 as woods. Plans are to build it in phases over 10 years.   

“The center is expected to become the gold standard in wellness therapy, sustainable living and in promoting healthy eating,” according to Preserve Life Corp. documents filed with the county.

The Preserve Life Corp. enclave would resemble a small city with its own streets, small-scale commercial and office spaces, an agricultural area, hospitality lodging, a congregation hall, aromatherapy and Zen gardens and dining areas. Only electric cars would be allowed on the property to limit pollution.

A restaurant open to the public would use food grown in the center’s organic garden. Easy access to the Dog River Basin and Chattahoochee River allows for kayak trips plus scenic views. About 350 for-sale or rental cottages and larger homes would be scattered around the site surrounding Basket Creek and the western shore of Dog River Reservoir.

 

October 6th 2020

CoreLogic: U.S. Home Price Appreciation Jumped to 5.9 Percent in August

CoreLogic® recently released its  CoreLogic Home Price Index  (HPI™) and HPI Forecast™ for August 2020. On a national basis, home prices jumped 5.9 percent in August 2020, compared with August 2019. The increase was up almost 1 percent compared to the last month, when home prices increased 5.1 percent year-over-year.

Consumer home-purchasing power has stayed strong due to record-low mortgage rates despite continued pressures caused by the coronavirus pandemic. Meanwhile, for-sale inventory has continued to dwindle, decreasing 17 percent YoY in August. This created upward pressure on home price appreciation, according to CoreLogic, “as buyers compete for the limited supply of homes.”

“Consumers who have not been as financially impacted by the ongoing economic pressures are taking advantage of low mortgage rates to either break into the market, upgrade their living situations or purchase second homes and investment properties,” said Frank Martell, president and CEO of CoreLogic. “With heightened activity putting a strain on the current for-sale inventory, strong demand should help spur new homebuilding activity.”

Despite the rapid acceleration of national home price growth, local markets continue to vary. For instance, in Phoenix, where there is a severe shortage of for-sale homes, prices increased 9.8 percent in August. Meanwhile, the New York-Jersey City-White Plains metro recorded an annual decline in home prices of 0.1 percent, as residents opt for more space and privacy in less densely populated areas. By state, Idaho, Arizona and Maine experienced the strongest price growth in August, up 10.8 percent, 9.7 percent and 9.6 percent, respectively.