Mortgage Archives - Collins Home Mortgage, LLC

How Much Income Should People Spend On A Mortgage?

October 30, 2020 by Collins Home Mortgage

How Much Income Should People Spend On A Mortgage? When people are looking for a home, this is an exciting process. There is always something fun about looking at potential homes and envisioning a future there. This is a big decision. At the same time, it is just as important for people to think about how much of their money they should be spending on their mortgage. There are a few rules of thumb that people should keep in mind.

The 28 Percent Rule

One of the most common rules that financial advisors and lenders are going to talk about is going to be the 28 percent rule. This rule states that people should not be spending any more than 28 percent of their pre-tax income on their monthly housing payments. This includes not only the mortgage but also any potential homeowners association fees, real estate taxes, and home insurance payments. Once people figure out how much they can afford on their monthly mortgage payment, they can work backward to see how large of a house they can afford.

The 36 Percent Rule

The other rule that homebuyers are going to hear is the 36 percent rule. This is a rule that pertains to all debt. Therefore, this rule includes not only the monthly mortgage payments but also any car payments, credit card payments, utilities, and student loans. In general, no more than 36 percent of someone’s pre-tax income should be going toward debt. This is very important for taking out a home loan because it is going to impact someone’s debt to income ratio. If the debt to income ratio is too high, then potential homeowners are going to have a hard time getting a great deal on a mortgage. Furthermore, they could even be denied completely.

Find The Right House

For those who are looking for a home, this is an exciting time. At the same time, it can also be hard to find the right home when people don’t know exactly what they’re looking for. When potential homeowners understand what their budget is, this process gets much easier. Therefore, everyone needs to think about how big of a monthly mortgage payment they can afford. This will help them make the right decision.

The Top Questions Everyone Should Ask Before Renovating A Home

October 23, 2020 by Collins Home Mortgage

The Top Questions Everyone Should Ask Before Renovating A Home There are a lot of people who are looking to improve the home in which they live. One of the top ways to do this is to renovate the building; however, it is also important for everyone to make sure they know exactly what they are doing before they get started. There are several questions that everyone should ask before they start a home renovation project.

Is The Home Worth Renovating?

One of the top reasons why people renovate a home is that they think this is going to increase the value of the home. While this is certainly possible, everyone has to run the numbers and make sure they are either going to recoup their investment when they sell the home or that they are going to be in the home for a long time before they sell it. If the home is worth renovating, then it is fine to proceed.

What Is The Budget On The Renovation Project?

Next, it is also important for everyone to know what the budget is one the renovation project. Remember that there are always going to be expenses that are not foreseen, so be sure to include some room at the top in case the contractors come asking for a budget increase. They almost always do.

What Are The Offers On The Home Renovation Project?

Finally, it is also important to collect multiple offers. Talk to designers, contractors, and architects. Collect a few referrals. Then, talk to all of these individuals and see how much money it is going to cost to complete the project. This is one of the top ways that everyone is able to save money on their home renovation projects and make sure they get exactly what they asked for when the project started.

Answer These Questions Before Starting A Home Renovation Project

By planning ahead of time, everyone is able to plan accordingly, making sure they know what they are doing before the project gets started. When homeowners take the time to plan a home renovation project, they increase the chances of the project being a success. This includes not only an aesthetically pleasing project but a wise financial investment as well.

Are Home Warranties Worth The Money?

October 20, 2020 by Collins Home Mortgage

Are Home Warranties Worth The Money Those who own homes might regularly receive mail advertising something called a home warranty. Many people end up tossing these leaflets away because they think this is just another form of home insurance, which many people get through their mortgage lender. In reality, a home warranty is not home insurance. Therefore, some people might be wondering whether or not a home warranty is worth the money.

There are a few important points that people should know.

What Is A Home Warranty?

A home warranty is similar to insurance is that people are going to pay a set premium per year to protect them against the risk of larger expenses down the road; however, people need to know what a home warranty is going to cover. This is where people need to read the policy.

Typically, a home warranty is going to cover the cost to repair or replace certain appliances or home systems is they are damaged or break down. If someone needs to file a claim, this is usually done online or over the phone. Then, the homeowner is going to bring out a professional and pay a service fee (which is similar to a deductible) to get the repair completed. In some cases, the homeowner will have to pay the entire bill and get reimbursed later.

Is The Home Warranty Worth It?

In general, if someone has purchased a brand new home, this policy simply isn’t necessary. In many states, the builder is required to repair defects for a few years after the home is built. The common time-frames range from two years to ten years. Therefore, a home warranty might be duplicate coverage and, thus, unnecessary. Furthermore, brand new appliances are almost always protected by one or two-year warranties. Again, a home warranty might be duplicate coverage.

On the other hand, if someone has an older home or older appliances, the home warranty might be worth it. Older appliances are more likely to break down and, thus, require repairs. Therefore, people need to think about their own individual circumstances and weigh the risk of a broken appliance against the cost of the policy. A home warranty may be right for some people but not others.

Getting A Home Mortgage Through Virtual Lending

October 13, 2020 by Collins Home Mortgage

Getting A Home Mortgage Through Virtual Lending There are many people who are looking to buy a home during the COVID-19 pandemic; however, given the public health crisis that the pandemic has created, some potential homeowners are finding it difficult to go about buying a home in the traditional manner. As a result, banks and credit unions have woken up to a major shift in society as they have had to catch up to the digital age.

Right now, there are record numbers of people who are looking to buy a new home or refinance due to the massive rate cuts that the government has instituted in an effort to jump-start the economy. At the same time, without virtual lending options, banks and credit unions might miss out. This has led to a growth in virtual lending choices.

Lending Is Going Virtual

One of the major shifts that has taken place is that many homeowners and potential homeowners are taking advantage of virtual lending options. Some of the major benefits of this virtual lending process include instant pre-approvals, constant access to status updates, and even the ability to upload and sign documents in a virtual manner.

When potential homeowners are able to use the virtual world to compare offers on mortgages, this also allows them to find the best deals possible. In this manner, community banks and credit unions are all embarking on a new journey in the virtual world. There are a few points that potential homeowners should note.

Customers Are Making An Adjustment As Well

It is important to note that many customers are making an adjustment in the manner in which they pursue loans. Remember that many of the people who are going to be helping potential homeowners navigate the mortgage approval process are working virtually as well. Therefore, it is critical for customers to take steps to protect their data. When banks and credit unions place the safety and security of their potential borrowers first, this is going to lead to higher customer satisfaction rates.

The growing preference for this online approval process should let all lenders know that the virtual lending process is here to stay. It is quickly becoming the preference of potential homeowners and those looking to refinance.

Buying A New Car Impacts The Ability To Buy A New Home

September 16, 2020 by Collins Home Mortgage

Buying A New Car Impacts The Ability To Buy A New Home Those who are in the process of buying a new home need to be aware of some of the factors that might influence their ability to do so. Even though credit score, income, and assets will play major roles in whether or not someone might be approved for a loan, there are other factors that will play a role as well.

Buying a new car might even have an impact on the homebuying process.

Why is this the case?

The Debt Payments On The Car Will Play A Role

There are multiple ways to buy a car. Some people elect to pay cash for the entire vehicle. While this is a challenge for most families, this will prevent any new debt from being added to the family’s finances. At the same time, this could also reduce the amount of cash the family has on hand to put toward the new home.

Most families end up putting a down payment on a car and taking out a loan for the rest. While this is a financially responsible decision, this can also make it harder to purchase a new home. This is because the payments on the car are going to be added to the family’s existing debt. A potential lender is going to see these debt payments and reduce the amount of money they are willing to provide. This could make it hard for a family to purchase their dream home.

Factor In The Cost Of The Car

Those who need a new car need to factor the monthly cost of the car into the home buying equation. For example, if the monthly payments on the car are going to be $200, then this is $200 less that the family can afford for the mortgage payment. The same math has to be done by removing the down payment for the car from the potential down payment on the house.

Do The Math Carefully

People need cars to get around in most parts of the country. At the same time, the financially responsible decision is to take the cost of the car and deduct this from the assets that are available to pay for the home to avoid any surprises. The lender is going to do the same thing.

4 Ways COVID-19 Has Had An Impact On The Home Lending Process

September 16, 2020 by Collins Home Mortgage

4 Ways COVID-19 Has Had An Impact On The Home Lending Process The COVID-19 pandemic has impacted everyone and this includes the real estate industry. One of the biggest impacts that this pandemic has had involves the home lending process. Because many people are looking for ways to buy a home while engaging in proper social distancing measures, the industry has had to adapt. Learn more about some of the changes the COVID-19 pandemic has forced on the home lending process.

Homes Are Getting More Affordable

The demand for homes right now is high; however, homes are still more affordable than they have been in the past. Lenders are trying to find ways to encourage people to purchase homes because they have seen a drop in their business as well. As a result, many lenders are willing to provide potential homeowners with great offers and opportunities to purchase a dream home.

Online Applications Are Becoming More Common

Next, online applications are becoming more common as well. In order to help people buy a home while still engaging in social distancing, it is possible to complete the home application process online. This is usually provided through an intuitive system that provides clear instructions on what has to be submitted for the application process.

Buying Power Is Going Up

Because many homeowners and potential home buyers are realizing that now is a great time to buy, they are learning that they have a lot more power. They might be able to afford a larger home or carry out a home improvement project after buying their home. This provides more flexibility for homeowners.

Refinancing Is Becoming More Common

In addition to changes in the home buying process, there are changes taking place in refinancing as well. Many current homeowners are realizing that they have a unique opportunity right now as well. As a result, they are taking advantage of the opportunity to complete a refinancing deal to save money.

Home Lending Is Changing

These are just a few of the major changes that have taken place in the home lending process due to the COVID-19 pandemic. Anyone who owns a home or is thinking about buying a home should consider looking at their available options as well. There could be opportunities to save money.