Month: September 2021

How to Stage Your Home for Sale

Posted on by Emily Gregory

When selling your home, you want it to look its best for potential buyers. Staging is a great way to accomplish this. Staging your home is the process of preparing a property for sale. In doing so, you want to show off the home’s best features and entice buyers to ensure a quick sale. Read on for some home staging tips!

Depersonalize and Declutter

When selling your home, you want prospective buyers to see it as a clean slate where they can imagine themselves and turn the house into a home. The less personalized décor you have, the better. It is harder for a buyer to connect with a property when there are lots of reminders that someone else currently calls it home. Avoid family photos and monograms as much as possible. Similarly, you should aim to minimize clutter as it can distract buyers from the main fixtures and character of your home and can even make it appear smaller. Get rid of things you don’t need (which can help you get a leg up on downsizing and packing when the time comes for you to move) and store away anything else taking up unnecessary space. When storing those additional items, try not to stuff your closet as many buyers like to look at a home’s storage space.

Make Updates

Whether you’ve lived in your home for 5 years or 35 years, odds are it could use some sprucing up to make it more desirable to potential buyers. Take this opportunity to make some updates. It could be as simple as moving around the placement of your furniture or adding some new décor. A few new coats of paint can work wonders in refreshing a space. You may even want to consider replacing outdated appliances and fixtures. For example, upgrading to stainless steel kitchen appliances and installing granite countertops can really increase the value of your home in the eyes of house-hunters.

Don’t Forget About Outside

The outside of your home is the first thing potential buyers see, so you want to make a good first impression. Make sure your yard and landscaping have been tended to and are not overgrown. Think about power washing your siding and maybe even updating your shutters or front door. Make sure your windows are clean and if you have a garage, declutter that, too.

Consider Consulting a Professional

If you are busy and feel overwhelmed by the staging process, it may be in your best interest to hire a professional stager. Professional stagers have experience staging homes and know what works and what doesn’t. With an eye for detail, they may pick up on things that would have otherwise been overlooked if you were taking a fully DIY approach. The cost of professional staging depends on what services you want and how in depth they go, but the money you spend could be worth it in the time and stress it saves you.

Go Virtual

These days, most buyers’ first look at a home online before they do in person. This is even more true now in the wake of the COVID-19 pandemic. You want to make sure photos taken of your home are crisp and clear with proper lighting and do not mislead the buyer with added filters. You should be thorough and include images of all spaces in and around your home from varying angles. Beyond typical online listings, you can even do 360 virtual walkthroughs.

Are you considering selling your home and buying a new home? Contact one of our Loan Officers today to explore your home loan options!

What to Know About Paying Off Your Mortgage Early

Posted on by Emily Gregory

A mortgage is a large, long-term expense and the prospect of taking on that kind of debt for years to come can be daunting. Just because you start out with a set repayment term for your loan doesn’t mean you can’t pay it off ahead of schedule. It is possible to pay off your mortgage early, but whether it’s the right decision for you depends on a variety of factors. Read on to learn more about paying off your mortgage early.

Pros

The obvious pro of paying off your mortgage early is that you will eliminate that outstanding debt. You can say goodbye to monthly payments. Paying off your loan ahead of schedule saves you money on interest as well; the faster you pay it off, the less interest you will have to pay on top of the principal. Once your mortgage is paid off, you own your home outright and do not have to worry about foreclosure. By no longer needing to pay for your home, you can allocate that money elsewhere and do things like saving for retirement, starting or adding to a college fund, bulking up your emergency savings, invest, or simply enjoying the new disposable income you have each month without a mortgage payment.

Cons

There are some potential downsides to paying off your home loan early. Once your mortgage is paid off, you are no longer able to claim the mortgage interest tax deduction which uses the amount you pay in interest to reduce your taxable income. Some lenders charge a prepayment fee if you refinance, sell your home, or pay off your mortgage within a certain period of time following closing. You should check to see if your lender does charge this kind of fee and, if so, determine whether the cost incurred is worth it versus waiting to pay off your loan until the stated time range has passed. Something to bear in mind when paying off any kind of loan is that it can actually hurt your credit score. This is mostly important to think about if you are trying to secure some other kind of loan at the time you are thinking about paying off your mortgage. However, your credit score can always be improved upon, so this should not necessarily deter you from paying off the loan if it is beneficial to you in other ways.

Things to Consider

In some cases, pursuing other investments can bring in more money than paying off your mortgage early. It may be worth looking into alternative investment opportunities that you can put the money towards rather than paying your mortgage off ahead of schedule. This is more likely to be the case when you have a lower interest rate and therefore are not accruing as much interest on top of your principal. This is a nuanced issue, and one worth discussing with a financial professional or your lender. When it comes to debt, you should generally focus on paying off higher-interest debt ahead of lower-interest debt, so if you have loans with an interest rate higher than that of your mortgage, you may want to prioritize that. You also want to make sure that paying your mortgage off early doesn’t deplete your cash reserves or savings. Paying off your loan early may be beneficial in some ways, but if it leaves you without any money for paying bills or emergency expenses that come up, it can cause more problems than it solves.

How to Pay Off Your Mortgage Early

Arguably the most common way to pay off your mortgage early is to make extra payments, usually by going from monthly to biweekly payments or making an extra monthly payment. Biweekly payments break up your monthly mortgage in half and result in you making what equates to 13 months of payments in a given year rather than 12. An extra monthly payment is when you pay more each month. When you do this, it is important that you specify that the payment go towards principal, not interest. Alternatively, you can refinance your mortgage to secure a lower rate which may enable you to make additional payments by spending less on interest. You can also refinance to a shorter term (e.g. from 30-year to 15-year), thereby setting you up to pay off your mortgage earlier. If you find yourself with extra money to spend at once, you could also contribute lump-sum payments outside of your monthly payments in order to chip away at the principal. There are a variety of options for paying off your loan early, and you should consult your lender to determine the best course of action for your unique situation.

Are you thinking about paying off your mortgage or buying a new home? Contact one of our skilled Loan Officers today to learn more about your options!

What Are Construction and Renovation Loans?

Posted on by Emily Gregory

When most people think about mortgage loans, they think of the standard, long-term financial commitment to purchase a home. But did you know there are mortgages available specifically for building or renovating a home too? Keep reading to learn exactly how you can benefit from a construction or renovation loan.

Construction Loans

Construction loans are short-term loans used to finance the building of a new home. Once the home is built, the borrower must refinance into a permanent home loan. Construction loans often have a term of one year. They are used to cover the costs associated with building a custom home, such as building materials, land, labor, permits, and even sometimes permanent fixtures like landscaping and appliances (though home furnishings are generally not covered).

Renovation Loans

Renovation loans are used to finance home renovations, repairs, and remodels. Renovation loans are a good option if you want to renovate your current home or want to purchase a home that needs significant remodels. There are several options for renovation loans; two of the most common are FHA 203(k) loans and FNMA Homestyle loans. FHA 203(k) loans are offered by the Federal Housing Administration. They fund repairs in one mortgage on a primary residence and have a minimum down payment of 3.5%. There are two types of 203(k) loans: Standard FHA 203(K) loans which allow borrowers to finance rehabilitation costs starting at $5,000 and have no maximum. Streamline FHA 203(k) loans provide renovation and repair financing for up to $35,000. Alternatively, there are FNMA Homestyle loans which are offered by Fannie Mae and allow you to purchase and renovate a second home, primary home, or investment property with a minimum down payment of 3% in one mortgage up to the lending limit.

Is a Construction or Renovation Loan Right for You?

Whether a construction loan or renovation loan is right for you is dependent on your unique situation. There are some questions you should ask yourself. If you’re considering renovations, is it the right time? Are the renovations going to significantly increase your quality of life and the value of your home? Can you afford a renovation? If you’re considering building a home, do you know what your needs versus wants are? Does your current financial situation allow you to move forward with building rather than buying? What kind of timeline do you have for getting into a new home? It’s best to discuss your finances and goals with a First Home Mortgage Loan Officer in order to determine the best option for you.

How to Get a Construction or Renovation Loan

Once you’ve decided you want to take out a construction loan or renovation loan, it’s important to take a look at your current financial standing. Do you have a good credit score? If not, you may have to wait until your score improves; credit score requirements vary based on specific loan type, but the higher yours is, the better off you’ll be. Do you have enough money for a down payment? Like credit scores, the amount you are required to put down is dependent on the loan product you use. You’ll want to make sure you have enough money to put down. How is your debt-to-income ratio? Ideally, it should be below 36%. If you want a construction loan, you should find a licensed builder to work with first. Your lender is going to want to know that you are working with a qualified, experienced builder who will be able to complete the construction of your home successfully and properly. Whether it is a construction loan or renovation loan, you’ll want to get pre-qualified. Pre-qualification gives you a solid estimate of how much you can afford to borrow and can help you temper your expectations and begin planning with a concrete budget in mind.

Are you thinking about building your dream home or renovating your current residence? Learn more about our construction and renovation loan options and talk to a First Home Mortgage Loan Officer about which loan makes the most sense for you.

Using a Mortgage Calculator to Understand Your Home Loan Options

Posted on by Emily Gregory

When considering buying a home or refinancing your current mortgage, it can be hard to know where to start and how to tell what the right decision is. While talking to a mortgage lender is always going to be your best bet for truly figuring out how much your home loan may be or if it is the right time to refinance, mortgage calculators can provide insight into what your options are before consulting a professional.

What is a Mortgage Calculator?

Mortgage calculators are online tools that help you get a better sense of what you can afford, how a mortgage would impact your overall finances, and how refinancing your existing mortgage could save you money. By entering some information about your unique financial situation and mortgage specifics, you can see totals and projections that can help answer your questions. The goal of a mortgage calculator is to provide you with hypothetical scenarios that will help you make smart, informed decisions about buying a home or refinancing.

How Can a Mortgage Calculator Help?

Mortgage calculators provide you with potential outcomes based on the fields you input and can give you details on loan amounts, interest rates, mortgage terms, down payments. homeowner’s insurance, your income and expenses, etc. Mortgage calculators allow you to create different situations like what the difference would be if you went with a 15-year mortgage versus a 30-year mortgage? Or what if you wanted to purchase a $350,000 home compared to a home that is $250,000? By using a mortgage calculator, you can see the impact these different decisions would have on you financially.

Types of Mortgage Calculators

First Home Mortgage offers a number of different mortgage calculators that can help you make sound financial decisions including:

  • Calculate a Mortgage Payment
    • This is arguably the most common mortgage calculator. This calculator is used to show you how much you could expect to pay based on the specifics of a loan including purchase price, down payment, annual property tax, loan term, interest rate, and more.
  • Rent or Buy?
    • This calculator shows you the advantage of buying a home over renting or renting a home over buying depending on how much you pay in rent and renter’s insurance and how much you would pay with a mortgage over a certain term.
  • Proceeds from Sale of a Home
    • This calculator shows you how much you can expect to profit from your home sale. It factors in things like your mortgage balance, property taxes, and realtor’s commission.
  • Home Affordability
    • The home affordability calculator generates three key ratios: loan-to-value (LTV) ratio, housing ratio, and debt-to-income (DTI) ratio. Lenders look at these three ratios when determining whether you qualify for a home loan. LTV is the ratio of the loan amount to the home value, the housing ratio represents the percentage of your income that goes towards housing expenses, and DTI expresses your total debts and housing expenses as a percentage of your total income.
  • Compare Two Mortgage Loans
    • This calculator allows you to look at the estimated closing costs, home loan amount, and monthly payments for two loans side by side. This gives you an idea of which loan will cost more in the long run.
  • Adjustable Rate Mortgage Analyzer
    • This adjustable-rate mortgage loan analyzer helps you understand the long-term effects of choosing an adjustable rate and how much you can expect to pay as your rate changes over the term of your home loan.
  • Time to Refinance?
    • Deciding whether to refinance isn’t always a clear-cut decision. This calculator helps you see the total cost over the life of your current loan versus a new loan by seeing the loan amount and monthly payments based on factors including interest rate, closing costs, and term.
  • Compare a Bi-Weekly Mortgage to a Monthly Mortgage
    • This mortgage calculator shows you the payment, total interest, and total number of months it would take to pay off a mortgage loan with monthly payments versus bi-weekly payments so you can decide which option makes the most sense for you.
  • Debt-to-Income Calculator
    • As mentioned, debt-to-income ratio is an important factor that lenders look at when determining your loan eligibility. This calculator generates your DTI and says whether it is at a manageable level or needs to be improved.

Are you interested in crunching some numbers to see what life would be like with a new or improved mortgage loan? Check out First Home Mortgage’s range of mortgage calculators and contact one of our Loan Officers when you are ready to learn more and discuss your options based on your findings from these loan calculators.

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