Cove Real Estate



Posted by Cove Real Estate on 10/19/2018

If you’ve been considering taking the next step toward homeownership, you’ve likely heard about FHA loans. Offered by the Federal Housing Administration (hence, “FHA”), these loans are great for a number of people hoping to purchase a home but who don’t have a large down payment saved.

There are many misconceptions about FHA loans since they’re often advertised by large, private mortgage lenders but are technically a government program. In order to clear up some of the confusion, we’ve provided answers to some frequently asked questions regarding FHA loans.

Read on to learn about FHA loans and how they might help you purchase a home.

Who issues an FHA loan?

FHA loans aren’t issued by the government. Rather, they’re issued by private lenders but insured, or “guaranteed,” by the government.

Since lenders want to make sure they’ll see a positive return from lending to you, they typically want you to have a high credit score and a large down payment (typically 20%). However, not everyone is able to meet those requirements. In this situation, the FHA is able to help you acquire a loan by giving your lender a guarantee.

Are there different types of FHA loans?

Yes. In fact, there are nine distinct types of loans guaranteed by the FHA. These include fixed rate mortgages, adjustable rate mortgages, refinance loans, reverse mortgages, VA loans, and more.

What do you need to qualify for an FHA loan?

It’s a common misconception that you need to be a first-time buyer to qualify for an FHA loan. However, if you have previously owned a home that was foreclosed on or if you’ve filed for bankruptcy, the foreclosure and bankruptcy have to be at least three years old.

You’ll also need to demonstrate a stable employment history, usually including two years of employment with the same employer.

Finally, the FHA will ask you for your current and previous addresses, the last two years tax returns, and the W-2 forms from any of your recent jobs.

What is the most I can borrow with an FHA loan?

The FHA sets mortgage limits on loans depending on the state and county you’ll be living in. For a single-family home, the limit ranges from $275,000 to $451,000. So be sure to check the limits for your state and county.

Can you refinance an FHA loan?

Refinancing a loan is a great way to receive a lower interest rate or to shorten the term of their mortgage to save in the total number of interest payments. In fact, the FHA typically only allows refinancing when it will result in lower interest payments on a loan.

What is the minimum credit score needed to qualify for an FHA loan?

While you don’t need excellent credit to qualify for a loan, the FHA will require you to have a score of at least a 580. You can check your score for free online from a number of companies, such as Mint or Credit Karma. Be aware, however, that scores vary between credit bureaus. So, it’s a good idea to check your FICO score once per year, which is the score used by mortgage lenders.




Categories: Mortgage   FHA Loans   First Time Buyer   FAQ  


Posted by Cove Real Estate on 12/22/2017

Many Americans who purchased their home when they had lower credit, a shorter employment history, and less money stand to gain from refinancing their mortgages. However, most miss out on this opportunity or don’t realize it in time to save potentially thousands in interest payments.

According to recent data, 5.2 million Americans could save, on average, $215 per month if they refinanced their loan. But many homeowners are hesitant to refinance.

Whether it’s because of the inconvenience, the cost of refinancing, the worries about something going wrong, or uncertainty about whether they’ll actually save money if they go through the process, millions of homeowners are missing out.

So, in this article, we’re going to talk about some reasons it may be a good idea for you to refinance. If you’re one of the millions of Americans with a mortgage who are thinking about refinancing, this post is for you.

Riding the wave of the economy

Interest rates on home loans are historically low right now. As a result, homeowners can save by refinancing simply due to changing tides of the real estate market. Although mortgage rates have increased slightly over the past two years, they’re still on the low end, so this could be your last chance to save.

To consolidate your debt

Credit cards, auto loans, and other forms of debt can add up quickly. If you have a high-interest rate on your other debts, refinancing could be a good way to consolidate and save.

This can be achieved through a home equity loan or by refinancing with a cash-out option. This means you refinance your mortgage for more than you currently owe and take the remainder in cash to pay off your other debts with high-interest payments.

Typically, you need to have at least 20% equity (or have paid off 20% of your mortgage) to be eligible for this option.

Small percentages count for more now

It was once said that refinancing only made sense if you would receive a lower interest rate of at least 1-2%. However, with the prices of homes increasing over the years, sometimes even a small change, such as .75% is enough to save you substantial money on your repayment.

You’re able to repay early

One of the best ways to save on a home loan is by refinancing to a shorter term. Going from a 30-year loan to a 15-year loan can save you thousands. There are several calculators available for free online that will enable you to estimate how much you could save by refinancing to a 15-year mortgage.

You got a raise

One of the best times to refinance is when you can be certain that you can afford to pay off your loan sooner. As people progress in their career, it isn’t uncommon for them to refinance their loan so that they can spend more each month but save in the long run.

Since you have a higher income, and likely higher credit, you can also refinance a variable rate loan to lock in a lower fixed rate.






Posted by Cove Real Estate on 11/24/2017

A fixed-rate mortgage (FRM) offers one of many financing options for homebuyers. It enables homebuyers to lock in an interest rate on a home loan and pay a set amount each month for the life of a mortgage. As such, an FRM remains a popular option for homebuyers across the United States.

Ultimately, there are many benefits to choosing an FRM, including:

1. Easy Budgeting

With an FRM, your mortgage payments will always stay the same. Thus, after you get approved for an FRM, you can budget accordingly.

An FRM often serves as a great option for homeowners who struggle to maintain a budget. It ensures your mortgage payments will never rise or fall for the life of your loan, which may make it easier for you to map out a weekly, monthly or annual budget.

In addition, an FRM will stay intact regardless of market conditions. This means you won't have to worry about your mortgage costs rising even if interest rates increase nationally.

2. No Price Fluctuations

An FRM minimizes headaches for homebuyers, and for good reason. After you agree to FRM terms with your lender, you will know precisely what you'll be paying for your home.

Comparatively, an adjustable-rate mortgage (ARM) may be difficult for homebuyers to understand. This type of mortgage may fluctuate over time, which means the amount you pay in the first few years of your loan could escalate.

For example, a 5/1 ARM ensures that your interest rate will remain intact for the first five years of your loan. After the initial period, the interest rate may change annually. As a result, your monthly mortgage payments may fluctuate over the life of your loan.

3. Simple to Understand

Your lender will be able to outline the terms of an FRM with ease, as this type of mortgage ensures an interest rate is set in stone until your loan is paid in full. Plus, after you receive an FRM, you can focus on what's important – acquiring your dream home and enjoying this residence for years to come.

With an ARM, the interest rate for your loan may move up and down over the years. The factors that cause the interest rate to fluctuate are based on numerous market factors as well. Therefore, it can be tough to plan ahead for your monthly mortgage payments due to the fact that various factors may impact your loan's interest rate.

Determining whether an FRM is right for you can be challenging. Thankfully, banks and credit unions can define all of your home financing options and respond to any concerns and questions.

Furthermore, your real estate agent may be able to put you in touch with lenders in your area. This real estate professional also is happy to offer tips and recommendations to ensure you can get the financing you need to secure your dream house.

Examine all of your home financing options closely, and you should have no trouble obtaining a home loan that matches your budget.





Posted by Cove Real Estate on 8/28/2015

If you are in the market for a mortgage you will need to know how a lender determines if you are a good candidate for a loan. When you apply for a mortgage or look to refinance your current mortgage there is a mortgage loan underwriter who who has the job of reviewing your loan application and all of the accompanying documents. After you have completed all the paperwork on your end, you may be wondering what exactly is the underwriter looking for? Typically, the underwriter is looking for two things: 1.) your general creditworthiness and 2.) your debt-to-income ratio. How does an underwriter evaluate creditworthiness? Your creditworthiness will give the lender an idea of your willingness to repay your debts. The most common way to determine creditworthiness is to use your credit score. The lender usually uses your FICO (Fair Isaac Corporation) score. Your FICO score is based on an analysis of your various credit files by the three major credit repositories, Experian, TransUnion and Equifax. How does the underwriter determine debt-to-income ratio? The second thing the underwriter wants to determine is how the new mortgage payment will impact your ability to repay. The underwriter will use a calculation called debt-to-income ratio (DTI). When calculating DTI the underwriter compares your monthly gross income (before taxes) and your monthly debts. DTI requirements vary but typically the underwriter is looking to see if the ratio of debt to income— after the cost of your mortgage principal, interest, real estate taxes, insurance and any private mortgage insurance — is less than 40 percent. There are many other factors that go into whether or not you will be able to obtain a mortgage but these are two of the biggest factors.





Posted by Cove Real Estate on 5/9/2014

If you are thinking about buying a new home you are probably hoping to get the best value for your money on a house, but what about your home loan? The rate and terms of your mortgage can have a big impact on your wallet. This is why it is so important to shop for just the right home loan. There are two main factors to consider when shopping for a loan: the type of loan and the terms of the loan. Do your homework before looking at home loans. Even one half of a percentage point makes a big difference over the full term of the loan. A 30 year loan of $200,000 at a 5% fixed-rate, will cost you about $22,000 more in interest than if the interest rate was set at 4.5%. Other things to look at when shopping for a home loan are closing costs. Mortgage companies charge additional fees such as origination fees, title charges, appraisals and even credit checks. Make sure to consider these additional expenses when shopping for a home loan. You can also save money by not maxing out your budget. Just because you are pre-qualified for a loan doesn't mean you should spend the maximum loan amount on a home. Don't allow your total house payment (principal, interest, taxes and insurance) to exceed 28% of your gross monthly income.