Tip #1: Get Pre-approved for Your Loan
Pre-approval gives you the buying power of a "cash buyer". It has been estimated that the buying power of a cash buyer can save you as much as 3-5% when negotiating a contract!!
Pre-approval gives you a significant amount of "peace of mind" in knowing that you are fully approved for your purchase price range.
Pre-approval avoids you wasting time looking at properties which are either above or below your approved mortgage range amount.
Sellers will take your offer more seriously than a non-approved buyer.
Tip #2: Consider Re-financing
Refinancing can provide a niche financial benefit:
1) You have multiple children in college
2) You have debt other than your home debt and your home has increased in value
A real-life example was a home equity loan we did for a client:
> They had credit card debt of $20,000; with a 1.5% minimum payment, or $300
> They had a car loan of $15,000; regular monthly payment was $470
> They had a 7% home loan balance of $85,000; the market value of the home was $155,000 (Principal & Interest only); regular monthly payment was $565
=Total payments (excluding escrows) per month was $1335
We put them in a new loan with an interest rate of 6.5% for $124,000 (Principal & Interest only); monthly payment of $784. They paid off their $20,000 in credit card debt and their car loan of $15,000, leaving them with $89,000 to pay off their previous mortgage balance of $85,000.
This resulted in $551 savings per month from their previous scenario!Additionally, if you add in the tax benefits of refinancing - during the early years of the loan most of the $784 is tax deductible (the interest portion).
If you assume a 28% tax bracket: $784 x 28%= $219; $784 - $219=
The after tax cost of the monthly payment is: $564!
Get an "Annual Mortgage Fitness Check Up" to make sure you are still in the best loan program to maximize your unique financial needs.
Invest 15 minutes of your time to see if a refinance gives you financial benefits or not. LegacyCare offers a free consultation to accomplish your goals.
Tip #3: Rent vs. Own
If you are thinking of buying a home, take some time to seriously consider the pros and cons of home ownership.
Questions to ask yourself are:
Do I really want to own a home?
Can I afford to buy a home?
How much money do I need to bring to closing?
If You Rent:
Little initial investment when moving in
Little to no responsibility for maintenance or repairs
Not committed to staying in one place for an extended period of time
Can move quickly
No tax or special financial benefit
No investment in or from the property
No equity build-up
"Nothing to show" for your money
Fluctuations (increases) in rent payments
Possibility of eviction
Paying someone else’s mortgage instead of your own
If You Own:
One of the best long-term investments in today’s marketplace – plus you can live in it!
Pay your own mortgage – not your landlord’s
Tax advantages – 25%-30% of mortgage
Build stronger credit history when timely payments are made
Stable monthly payments with a fixed rate
Strong sense of community involvement
Place for family and relatives to live or visit
Greater individuality, independence and privacy
Increased sense of stability and security
Fulfill the "American dream"
If You Own:
Responsibility for maintenance and repairs
Property taxes and insurance
Less mobility (i.e. "Can’t move quickly")
Long-term financial commitment
Cash is tied up into home’s equity
Usually have to sell before moving
House can lose value if not properly maintained
Possibility of foreclosure and loss of all equity
Tip #4: You Don’t Need As Much Cash As You Think…
Down payment assistance programs - there are many
100% financing programs
Combination 1st and 2nd liens
Possible forgivable grants for down payment assistance
Possible extended ratios to allow you more purchasing power
Possible extended loan programs and better rates to give you more purchasing power
Tip #5: Understanding the Homebuying Process
A home provides us with one of the basic necessities of life – shelter. The type of shelter we have affects the quality of our daily lives.
But, the home buying process can be confusing and intimidating.
We are here to educate you how a home purchase can be to lessen the mystery!
Tip #6: Mortgage Insurance
*Protects the lender if the borrower defaults
*It is NOT life insurance
*It is NOT homeowner’s insurance
*It is not tax deductible
*MI may entice a lender to make a higher loan to value loan
*It is a waste of your hard-earned wages
A 7% loan on $102,000 loan balance (Principal & Interest only) - monthly payment of $705
Had Mortgage Insurance at $60 per month
Total payment (excluding escrows) was $765
Their property had increased in value from $108,000 to $122,000
We put them in a $97,600 1st lien loan at 6.5% (P&I); monthly payment of $616
We put them in a $4,400 2nd lien loan at 7.5% (P&I); monthly payment of $40
Total new payments (excluding escrows) was $656
Total savings per month: $109!
For more information on your home loan, please contact a LegacyCare loan consultant at 817-860-3232 or you may email us at Joy.Bates@myccmortgage.com.