A Brief Explanation of Private Mortgage Insurance (PMI)

For people wanting to have a home, sometimes the 20% downpayment is one factor that prevents them from owning their dream home.

There are options for you if you don’t like to pay rent and wish to have your own property but don’t have enough for a 20% downpayment. That’s where Private Mortgage Insurance comes in.

What Is Private Mortgage Insurance (PMI)?

Private mortgage insurance (PMI) is an insurance type that a borrower buys. Lenders usually require it if the borrower puts down less than 20% of the property value.

When a borrower is asked to buy PMI, it means that the lender considers the risk profile of the mortgage as high risk. That happens because if the downpayment is less than 20% of the home’s purchase price, the loan-to-value (LTV) ratio of the mortgage will be over 80%. So, the higher the LTV ratio of your mortgage is, the more high risk you are as a borrower.

What You Need to Know About PMI

One thing that makes PMI different from other types of insurance is that PMI doesn’t directly benefit the buyer. PMI protects the lender’s investment even though it’s the borrower who pays for the insurance.

The advantage that a borrower can get from a PMI is that it makes owning a house faster. Purchasing a PMI will allow you to get financing even if your downpayment ranges from 5% to 19.99%.

How Much Does It Cost?

Depending on your insurance provider, annually, PMIs can cost from 0.25% to 2% of your loan balance. It depends on several factors like downpayment and mortgage, your credit score, and the loan term.

The more high risk of a borrower you are, the higher the premiums you’ll have to pay. Also, since your PMI depends on your downpayment and mortgage, you’ll pay more if you borrow more.

Why Should I Get a PMI?

You’re probably wondering why you should get an insurance policy that you’ll pay every month and protects your lender’s investment instead of yours. Although getting a PMI is an addition to your monthly expenses, it can help you save money in the long run by helping you get your own place faster.

That means you won’t have to pay rent anymore. You also won’t have to wait anymore for getting your dream home because you’re still saving up for a huge downpayment. In real estate, the more you wait, the more you miss out due to property appreciation.

How Long Should I Pay for a PMI?

Another advantage of PMI is that you don’t have to pay for it for as long as you pay your mortgage. The federal Homeowners Protection Act requires lenders to cancel a PMI once the LTV ratio drops to 78%, as long as your mortgage payments are up to date. You can also request for it to be removed once your LTV ratio goes below 80%.

Paying for private mortgage insurance every month in addition to your monthly expenses can make some borrowers hesitant to purchase one. However, the advantage of having your own home and not having to pay rent is worth it. Also, you won’t have to wait for a long time and save up for your dream home as market prices continue to go up. If you look at it from a long-term perspective, you’ll see that it benefits you more.

For more information, contact us now.

The Difference Between A Fixed Rate And An Adjustable Rate Mortgage

The loan’s interest rate should be among the essential things to think about while looking for a mortgage loan to finance your home purchase. In terms of choices, you have two types of mortgages to choose from: those with fixed interest rates and those with variable interest rates. These two types vary. One has a constant interest rate for its whole life, while the other fluctuates over time.

You will have to weigh the benefits and drawbacks of each loan kind before deciding which one is right for you. Let’s start with the basics by defining the different types of loans:

  • A fixed-rate mortgage has an interest rate that remains constant during the financing tenure. It is an installment loan compared to a personal or student loan with a set monthly installment.
  • With an adjustable-rate mortgage, the interest rate may vary at any time. Initially, the interest rate is lower than a fixed-rate mortgage since the introductory period is short. However, when the introductory term expires, the interest rate becomes a “floating” rate, meaning it is subject to fluctuation depending on the state of the market at the time.

What Is The Difference Between An ARM And A Fixed-Rate Mortgage?

There are a few significant differences between fixed-rate loans and ARMs. Let’s find out more.


The interest rate on your mortgage can never go lower than the set margin in your loan documents. Whereas if the margin is set at 3%, it is applied to the existing index number that day of your rate adjustments.

Caps On Interest Rates

Rate caps on ARMs set a restriction on how much your interest rate may increase or fall in a given period and throughout the life of the mortgage. If your loan reaches its limit, it may not rise or fall in lockstep with the markets.

After your fixed-rate term ends, an initial cap is the highest percentage rise or reduction your rate may be in a single month. The most effective interest rate may vary between one adjustment period and is limited by a periodic cap.

A lifetime cap restricts the amount by which your interest rate may rise or fall from the introductory offer throughout your loan. Lenders shall represent initial, periodic, and lifetime ARM caps as a sequence of three integers distinguished by forwarding slashes. These numbers are what you refer to as your “cap structure.” So, an ARM with a 2/1/5 cap structure implies loan interest rates that may rise or decrease by up to 2% on your first adjustments up to 1% each subsequent adjustment. Finally, your interest rate cannot increase or fall by more than 5% up or down the actual rate throughout the loan.

Interest Rates

The interest rates on adjustable-rate mortgages (ARMs) are lower than those on fixed-rate mortgages, at least in the short term. Fixed-rate loans have a higher rate of interest because financial institutions must anticipate interest fluctuations over time. Lenders may be more indulgent with ARMs since their rates adjust to the changing market regarding initial loan fees.

Qualification Ease

To determine your eligibility for a loan, your lenders will compare how much money your family makes each month to how much money you spend. Such a ratio is known as your debt-to-income (DTI) ratio, and it has a significant impact on your ability to get a loan. An ARM may be more accessible if your debt-to-income ratio is high compared to a fixed-rate loan.

What Are The Similarities Between Arms And Fixed-Rate Mortgages?

There are a few similarities between adjustable-rate mortgages and fixed-rate mortgages that you may not expect.

Length Of Term

Both adjustable-rate mortgages and fixed-rate loans have the exact maximum loan term durations, regardless of their structure. The term duration refers to the number of years it will take you to repay the loan. For instance, both ARMs and fixed-rate loans typically have a 30-year duration.

Credit Requirements

Lenders look at something other than your income when determining whether to grant you an adjustable-rate mortgage (ARM) or a fixed-rate mortgage (FRM). Your credit rating has a significant effect on the capacity to get a loan of any kind. Your credit score is a number that represents your credit history—a three-digit number that shows how reliable you are in repaying your loan. 

Generally speaking, a credit score of 700 or above is regarded as “good credit.” Higher credit scores increase your chances of getting an adjustable-rate mortgage (ARM) or a fixed-rate mortgage (FRM).

Is A Fixed-Rate Mortgage Right For You?

Here are a few advantages of going with a fixed rate:

Fixed Rates Are At An All-Time Low 

Right present, both fixed and adjustable rates are at historically low levels. Because low rates indicate an economic decline, they’ve been trending lower as the US has battled the coronavirus pandemic. However, many lenders are providing fixed-rate contracts at an even reduced premium than adjustable-rate mortgages.

You Retain Your Reduced Rate Even If Mortgage Rates Rise 

Because interest rates are at record lows, the odds are that if you select an ARM, your rate will increase later. Rates can’t continue to be this low indefinitely. However, with a fixed interest rate, you can lock in your low rate for the duration of your mortgage, even if interest rates in the United States rise.

Budgeting Is More Straightforward With Predictable Payments

Certain mortgage costs, including private homeowner’s insurance and property taxes, may vary over time. However, your interest stays relatively consistent each year, making budgeting for your monthly expenditures more straightforward.

Are Adjustable-Rate Mortgages Right For You?

ARMs have had some significant benefits for a long time. Lenders provided lower interest rates during the introductory range in length than typically provided for fixed-rate periods, making them an excellent option for individuals who only intended to remain in their house for a few years. If interest rates in the United States decrease, you may be able to get a better deal.

However, there aren’t too many advantages to selecting an ARM.

During the introductory rate period, lenders are pricing ARMs more excellent interest rates than fixed-rate mortgages. Considering interest rates are now so low, it’s doubtful that your ARM rate would drop in the future. Whatever else, it will almost inevitably increase.

Which Loan Is Right For You?

Fixed-rate mortgages are the superior bargain. However, if you’re thinking about getting an ARM, you must talk to your lender about your rates. Nevertheless, everyone’s circumstance is different; an ARM may still be a suitable match for you.

Allow Blake Mortgage to help you explore the possibilities available. You can rely on our expertise and experience to provide solutions to your financing needs—from home buying loans, refinancing deals, debt management, one-time close renovation, rehabilitation financing to bridge loan repayments, and reverse mortgages. Reach out to us and let us know how we can help.

Loans for Self-Employed Individuals

Self-employed individuals have always had a hard time getting a mortgage. Most lenders like to see income in steady, scheduled payments, and self-employment income is anything but that. If you’re self-employed, one option that you have is bank statement loans.

What Is a Bank Statement Loan Program?

A bank statement loan program is a type of mortgage that uses your bank deposits as income versus traditional proof of employment. Bank statement loans are different from conventional loans that look mainly at paystubs, W2s, and tax returns.

Many business owners have the problem that they can easily afford a mortgage but don’t have the income on paper to prove it. You may have been very aggressive with your business expenses and other tax deductions. That can reduce your net income on your tax returns, not indicative of your actual cash flows. Since you’re not an employee, you also don’t have pay stubs to fall back on.

How Are Bank Statement Loans Different from QM Loans?

A QM loan, or Qualified Mortgage loan, is a traditional mortgage. Employed borrowers qualify by showing their pay stubs, W2s, tax returns, credit scores, and assets (bank accounts, 401Ks, etc.) Qualified mortgage in this context isn’t restricted to mean employed mortgage. A self-employed person might qualify for a mortgage with the standard requirements. The problem is simply checking all of the boxes.

The main difference in applying for a bank statement loan is that your bank statements are used in lieu of tax returns, pay stubs, and W2s. Maybe the mortgage you’re applying for requires at least $60,000 in annual income, but you don’t show that amount on your tax return. You do have $5,000 in deposits per month coming into your bank accounts. The lender can qualify you based on that bank activity.

How Do You Apply for a Bank Statement Loan?

You will usually need to show 12 or 24 months of bank statements to qualify. This shows your lender that you have good cash flow over time, even if some months are higher than others.

The mortgage lender will usually want to check both your personal and business bank statements. The reason for checking business bank statements is to see where your money is going. If you have to pay monthly business rent, the lender will usually subtract that from your available cash since you wouldn’t be able to use that money to make mortgage payments without going out of business. If your tax return income was lower because of discretionary or one-time purchases, the lender might add that cash back since you could temporarily stop that spending if you needed to pay your mortgage.

What Additional Requirements Are There for a Bank Statement Home Loan?

If you’re trying to buy a home, one of the most important requirements is still going to be having a good credit score. The lender wants to see that you can responsibly make your payments on time. Your credit score is just as important as your deposits with a bank statement loan. That’s because the lender is already using an alternative way of verifying your income.

In addition, the lender will want proof that you’re actually in business. They don’t want to lend to people who set up other bank accounts and transfer money to inflate their income. You might need to show a business license or professional certification. If you don’t need one, the lender might ask for 1099s, invoices, or some other proof of self-employment.

What Are the Down Payment Requirements?

There is no set down payment requirements for bank statement loans. Some lenders will always want a higher down payment than a traditional mortgage. Others are more flexible depending on your income and credit.

Keep in mind that you are not applying for a traditional real estate loan. So if you’ve looked at things like FHA loans or first-time buyer programs, those down payment requirements generally won’t apply.

Do You Need to Show Proof of Assets?

Some lenders may ask for proof of assets. Again, this varies by lender. It also varies based on the loan you’re asking for and how well qualified you are.

Assets help mortgage lenders evaluate self-employed borrowers in two ways. First, they show you have the money you can rely on if business slows down. Second, building up assets proves that you can make financially responsible choices and aren’t simply wasting the cash you earn.

Is a Bank Statement Loan Always the Right Choice?

Which type of loan you use depends on your situation. Many self-employed borrowers can still qualify for traditional mortgage programs that may or may not have better rates, lower down payments, or other beneficial terms. It would be best if you looked at all of your mortgage options to see what’s best for you.

For example, let’s say you qualify for a conventional mortgage, but your taxable income is just barely above the minimum while your bank statement income is much higher. The traditional mortgage lender may evaluate your loan as riskier. That could increase your interest rate or down payment. Since you look better qualified to the bank statement loan lender, they might offer you better terms. Blake Mortgage connects you with a wide variety of mortgage options. Whether you’re worried about qualifying or want to make sure you’re getting the best deal, we can help. Give us a call or make an appointment to learn more.

Commercial Refinance Loans

Have you ever met someone in the commercial real estate industry who somehow was successful in growing their portfolio in such a short period of time..

Have you ever met someone in the commercial real estate industry who somehow was successful in growing their portfolio in such a short period of time?

You may have wondered how they coped up with the expensiveness of commercial real estate and how they managed to come up with up-front capital for purchasing the property. On top of that, how do they manage to stay on top of their monthly mortgage payments?

Well, commercial mortgage refinancing may be the answer!

What are Commercial Refinance Loans?

Unlike residential mortgages, commercial loans are either short-term loans of three years or less or long-term varying between 5-20 years.  

The former is usually used for building a property or making significant improvements to it. Long-term loans generally reduce over a period of 30 years, just like residential loans.

Commercial refinance loans mature fast and you’re required to make a balloon payment at the end. Basically, what happens is that you continue to pay incrementally over the 30-year period but at the end of the loan duration, you’ll be done with only a fraction of the principal amount and the rest of the amount will become due. This means that the last round of payment is typically very high.

Refinancing is the Way to Go

When a balloon payment is about to become due, you have the option of refinancing the property. Doing so will help you pay off the old loan, covering you from the upcoming balloon payment. This will also restart the clock on a new loan albeit with new terms and conditions.

Benefits of Refinancing

Here are a few benefits that property owners get to enjoy from refinancing their commercial property.

Extra Cash on Hand

Refinancing commercial property offers property owners some extra cash on their hands – and the best thing is that the cash is tax-free and can be used for any purpose.

Investing in Property Improvements

After you’ve just purchased a commercial property, you probably won’t have the money to make property improvements.

However, after you collect rents and pay down your original mortgage, you may refinance the property to generate cash and then, invest in property improvements.

Now obviously, with all those improvements, you’ll be able to charge more when you rent it out to new tenants. This is a smart trick to improve our cash flow and overall net operating income (NOI).

Favorable Loan Terms

Refinancing your commercial property is a great way to obtain more favorable loan terms. Some investors take this path when they want to dodge their upcoming balloon payment.

Expand Your Investment Portfolio

Many commercial property owners refinance their property when they want to expand their investment portfolio.

Our experts will be happy to assist you in finding the best commercial refinance loan options. If you’re looking to refinance your 1-3 million commercial property that’s spread over 10,000-20,000 square feet and whose balloon payment is due in the next few days with mortgage that is 51% owner-occupied and 49% tenant-occupied, get in touch with us today!

VA Cashout Refinance

The Exciting Possibilities of a VA Cash-Out Refi
If you’re a veteran, you have several options for refinancing –ones that work differently than a streamline refi. With a VA cash-out refi..

The Exciting Possibilities of a VA Cash-Out

If you’re a veteran, you have several options for refinancing –ones that
work differently than a streamline refi. With a VA cash-out refi,
veterans like you can take out some of the equity and use it however you

Just like any other big financial decision, you’ll want to understand
it fully to see if a VA cash-out refi is what you need to reach your
financial goals. Read over this guide for a quick overview and contact
our office for more details.

Not a veteran? No problem! There are many refi programs available.
Contact us today to find out how we can lower your rate or your monthly
payment, or get some cash out from your equity to help pay for those
future college expenses.

Why you should consider a VA cash out refinance

The biggest draw of a VA cash-out refi is the cash, of course! How much
cash depends on how much equity you have on your home. For example, if
your mortgage is $200,000, but you’ve paid off $60,000, then the full
$60,000 is available to you (less closing costs).

It gets even better! Refinancing your loan could also mean getting a
lower rate or even lowering monthly payment. You aren’t required to take
out the full amount with a VA cash-out refi. You can take out much
less. Perhaps 10k is all you need, and that’s okay!

How do veterans use their cash-out equity?

The choice is yours! Everything from remodeling your kitchen to buying a
car to taking a vacation to paying for school expenses is allowed with a
VA refi. If you have a lot of credit card debt and the interest rates
are higher than your refi rate, you may even want to use that cash to
pay off your debt.

Here’s another benefit: if you’re a veteran with a conventional or
FHA loan, a VA cash-out refi can erase the mortgage insurance that is
required with those types of loans. Mortgage insurance isn’t required
with VA loans and veterans are eligible to get a VA cash-out refi
regardless of what their current home loan is.

What if you don’t need the cash?

If you don’t need the cash but are looking to lower your rate, then
take a look at an IRRRL. Interest rates with this type of refi tend to
be lower, potentially saving you money in the short term as well as the
long run.

The goal of an IRRRL is to refi into a lower rate and it’s also a
requirement. So if your current home loan rate is lower than an IRRRL,
then you will not qualify. Note that with a VA cash-out refis don’t have
that “lowered rate” requirement.

Things you’ll need to apply for a VA cash-out refinance:

A VA appraisal may be required as well as a current copy of your credit.
Of course, you’ll also want your VA certificate of eligibility. The
only thing left is to apply! We’ve made it easy. You can get started
right on our website. Click on the “apply now” buttons found throughout
our site, and we’ll take care of the rest!

Doctor Mortgage Loan: How to Buy a Million-Dollar Home without Enough Down Payment

After so many sleepless nights, tiring days, and a plethora of hard work, you’ve finally become a doctor – a neurologist to be specific…

After so many sleepless nights, tiring days, and a plethora of hard work, you’ve finally become a doctor – a neurologist to be specific.

Now, you can finally fulfill your dream of buying that million-dollar property for you and your family! You’ve seen so many physicians who went on to earn a six-figure salary right away, and then in just a few months, they were living in a lavish property.

You can’t wait to see your life taking the same turn, can you?

Well, first of all, congratulations!

Secondly, as much as we hate to say this, here’s a reality check:

Having taken out all of the unsubsidized loans you qualified for as a medical student, you have a little bit of money left. Besides not having a down payment, you also have a huge student loan burden. Even if you have a contract, you may not have proof of your earnings, which makes it even more challenging to secure a conventional mortgage.

So, does it mean you have to delay your dream of buying your own house?

No! Doctor mortgage loan or physician mortgage loan is here to your rescue!

The best way to go about this phase is by focusing on paying off your student debt and starting with a small doctor mortgage loan. It will ensure that you don’t have any burden of debt on your shoulders later on in life.

Consult with Professionals

To eliminate stress, frustration, and risks from the equation when it comes to managing the burden of debt, you should consider working with a Certified Financial Planner and a Certified Mortgage Consultant. Not only will they guide you pay off your student debt fast but also assist you in getting a doctor home loan to purchase a property. The financial professional will thoroughly evaluate your current financial situation and come up with a repayment plan that works best for you.

Always remember, the faster and the more efficient you’re in paying down your student loan, the more secure your financial future will be in the long-term.

The next step is to find funding for your new home. That’s where a doctor mortgage loan comes in!

One of the main benefits of a doctor mortgage loan is that you can put less than 20% down and still avoid Private Mortgage Insurance (PMI).

This loan allows doctors to buy a home sooner than they otherwise would. It is an excellent option for doctors who are in a long-term professional situation and have to pay student loans.

The bank knows that they’re lending money to a high-earning professional who isn’t likely to default on the loan. Moreover, the bank gets an opportunity to build long-term relationships with physicians who may like to use the same bank for their savings, HELOCs, investing, insurance, and real estate needs as well as for future mortgages.

Features of a Doctor Mortgage Loan

The stellar features of a doctor mortgage loan are:

  • No PMI even with a down payment of 0-10%
  • A contract is accepted when you don’t have a paystub as proof of your future earnings, meaning it’ll close before you even start working
  • Special treatment for student loans; only the required payments are taken into consideration

Apart from this, below are some additional features and requirements of doctor mortgage loans.

  • The rate and fees are usually higher than that of a conventional mortgage loan
  • May require the physician to open an account in the bank that’s offering the mortgage
  • Might be restricted from condos but in general, these loans can be used for any types of homes
  • The rate remains competitive whether the loan amount is higher or lower than the ‘jumbo loan’ depending on a specific area
  • Some programs may allow doctors to use gift money for a down payment for closing costs or required reserves
  • Requires cash reserves equal to principal interest, taxes, and insurance, a good credit score, and a loan payment to income ratio below 38%

Where Can You Get a Doctor Mortgage Loan?

Many banks and independent brokers offer doctor mortgage loans.

Blake Mortgage will be happy to assist you in finding the best option for you. You’ve worked so hard to reach where you’re today – you deserve to buy that million-dollar property that you’ve always dreamt of living in!

Bridge Loans: Everything Home Buyers Need to Know

After a long session of visiting different properties, you finally think you’ve found your ‘dream’ home…

After a long session of visiting different properties, you finally think you’ve found your ‘dream’ home.

Congratulations, you’re ready to achieve one of the biggest milestones of your life!

The thought of selling your current property and moving into a new house gets as exciting as ever until you realize that finding a buyer for your property is easier said than done.

Now obviously, you can’t risk losing your dream property to some other buyer just because you can’t find a suitable one for your current house. In the competitive real estate market, the one who snoozes simply loses!     

That’s where bridge loans come in!

What Are Bridge Loans?

As the name suggests, bridge loans are temporary loans that help in ‘bridging’ the gap in your finances.

You may borrow money against your existing property and the new one. This type of financing is secured by a real estate asset and tends to have a floating rate and a relatively higher interest rate than permanent loans.

The Size of the Loan

Typically, the loan size is determined by adding the value of the new property to your current mortgage and then subtracting the value of your existing house.

You’ll be left with the ‘end debt’ i.e. the principal of the entire loan. Please note that the end debt will determine your ability to repay the loan.

The lender will use both properties as security. This means that you’ll have to cover both the existing debt as well as the cost of the new property until you sell your current house with one home loan called the peak debt.

Once your property is sold, you can simply continue repaying the home loan with the added interest of the bridge loan on the new loan. Please note that the interest is compounded monthly. So, the longer it takes to sell the property, the higher the interest amount you’ll have to pay.

Important Things to Consider

You should keep the following things in mind when applying for a bridge loan.

  • Make sure you have a realistic timeline for selling your existing property
  • Have your property assessed professionally so that the selling price you set is realistic

What Are the Advantages of Bridge Loans?

Here are the top five advantages of bridge loans.

  1. Bridge loans are quick. You don’t have to miss out on an opportunity just because the traditional lender (your bank) is slow on closing the deal.  
  2. You don’t have to wait until you sell your current property to buy your new home. A bridge loan will fill the financial gap.
  3. These loans allow you to buy out an investment partner who is no longer interested in the real estate partnership, setting you up for long-term benefits.
  4. There are no strict specifications for getting bridge loans as compared to conventional loans. It mainly depends on the judgment of the lender.
  5. You may get to enjoy the option of flexible payback. While you’ll likely have to give proof of a secure income source, you might be allowed to utilize an interest reserve given there is sufficient equity in the property for a larger loan.

Bridge loans are indeed an easy and convenient option for buying a new home quickly while eliminating stress and frustration from the equation. To learn more about the right financing option for you, schedule a consultation appointment with an expert at Blake Mortgage!     

4 Things You Should Know When Deciding to Get a Home Improvement Loan

Are you ready to take on a home renovation project but don’t have enough savings…

Are you ready to take on a home renovation project but don’t have enough savings?

Whether you want to give your kitchen an ultra-modern makeover or finally get done with your unfinished basement, your finances shouldn’t get in the way! 

It’d take you years to save the cash needed to carry out the remodeling project you have in mind.

This is exactly where a home renovation loan comes in.

Here are a few things to consider when deciding if it’s the best option for you.

Choose the Best Option

Out of a range of options available, you should choose a home renovation loan that aligns with your renovation needs and financial status.  

Typically, if your renovation project falls into the mid-range size category, it’ll require approximately $15,000-$50,000. An unsecured or home improvement loan will be your best bet in such a case!

They are not only easy to apply for but also don’t have any collateral requirements. However, their interest rates are likely to be higher than Home Equity Loans or Home Equity Line of Credit.

Know the Difference between Home Equity Loan and Home Equity Line of Credit

With a Home Equity Loan, you can receive funds all at once.

On the contrary, a Home Equity Line of Credit will allow you to withdraw money as needed. This may be a better option when your home renovation project falls toward the higher end of the mid-range size.

To decide which option will suit your project’s needs best, you should weigh the cost of financing and collateral risks against urgency and the timeline of the project. 

Be Informed

While the Home Equity Line of Credit is an adjustable-rate interest loan, you must know that some lenders offer an attractive promotional rate for a limited time period. This often means that the value offered is lower than a Home Equity Loan.

First Mortgage Cash-out Refinancing

Another option is to refinance your mortgage and cash it out for a home renovation loan.

However, it’s important to note that the closing costs may be significantly higher than those offered by home equity products. Hence, you must have an estimate of the cost of your home improvement project as well as the time it’ll take to repay the amount.

Home equity products usually help save money on short-duration projects as compared to a first mortgage cash-out. A Scottsdale refinance mortgage specialist may help you make the right decision.

Additional Tip

You should always invest in home improvements that will boost the value of your property. It’s best to do some research on which upgrades and renovations will boost property value in your neighborhood and never invest in something that is beyond the scope of the comparable market.

Now, we understand that choosing the best option for a home renovation loan may be overwhelming and confusing. It’s always best to consult with an expert regarding Scottsdale home loans to ensure you make a decision that’s profitable for you in the long run.

Our experts will be happy to assist you in finding the best mortgage option for your home improvement project. It’s certainly a milestone that requires careful investment – allow our specialists to eliminate stress, frustration, and risks out of the equation for a pleasant experience!

Mortgage Myths for Homebuyers

Entering the housing market as a newbie can be intimidating. Even more so when you hear rumors about how “difficult” or “expensive,” it is. But don’t believe it! As the experts in first-time home loans…

Entering the housing market as a newbie can be intimidating. Even more so when you hear rumors about how “difficult” or “expensive,” it is. But don’t believe it! As the experts in first-time home loans, we have all the answers and resources to make your home purchase happen with ease. 

Find out the truth about buying your first home, and for personalized answers, contact us! 

Myth #1:

You need 20% downpayment

While a 20% down payment means you won’t pay private mortgage insurance (PMI), you can buy a home with much less down. In fact, there are loan programs that require as little as 3% down. Are you a veteran, currently enlisted, or a spouse of a member of armed forces? Then you may qualify for zero down! 

20% down has its perks, such as no PMI and building equity a lot sooner. But that doesn’t mean you MUST have 20% now to buy a home. When it comes to how much you can afford to pay every month, an FHA loan with 3% may be the most affordable option.

Myth #2:

You won’t qualify for a home loan if you have student loans

Got student debt! So do most borrowers! Student debt and credit card debt are different “in the eyes of lenders.” So even if you have substantial student debt, buying your first home is still very much possible. 

Myth #3:

Avoid adjustable-rate mortgages like the plague

The 2008 housing crisis is still fresh on many buyer’s minds, and this may make you wary of adjustable-rate mortgages (ARMs). But you shouldn’t be! The bust was more of an issue of too-lax qualifying standards and less about the loan program itself. 

ARM loans are an attractive option because of the low fixed interest rate it offers for the first few years. An ARM is a great option if you plan on refinancing or selling within 10 years. In fact, it could potentially save you thousands.

Myth #4:

You won’t qualify for any government home loan program 

Government-sponsored loans from Fannie Mae and Freddie Mac offer numerous affordable lending options. Eligibility is much easier than other loan programs and could be based on the location of the home, your income, your military status, and even your first-time homebuyer status! 

Curious as to which government loan you qualify for? Contact us today to get started!

Myth #5:

Your pre-approval can be used on ANY home

The property itself may impact how much you’ll ultimately be able to borrow, especially when it comes to the final cost. So even if you were approved for a specific amount, your pre-approval might not be work in that particular property. This is most often the case when it comes to properties like condos and townhomes that may have higher final cost due to property tax rates and homeowners association fees. 

Myth #6:

You don’t need a real estate agent

Searching home listings via the internet is easy but presenting you a list of homes for sale isn’t the only thing a real estate agent does! They work as your advocate. They know the housing market well, know all the right questions to ask, negotiate on your behalf, and make sure that you are absolutely satisfied with your new home purchase. 

Whether you’re a first-time buyer or an experienced “flipper,” real estate agents offer an invaluable service in the homebuying journey. 

So what’s the truth about purchasing a home as a first-time buyer? It’s easier than you think! Contact us today to get matched with a home loan program that fits your budget and lifestyle. For the fastest response, use our contact form located on our site or give us a call. We look forward to serving your mortgage needs.

Should You Buy A Fixer-Upper? How To Tell If It’s Right For You

Buying a home that needs significant renovation sounds like a nightmare to some –and a dream come true to others. With renovation reality TV, America has romanticized the idea of buying a fixer…

Buying a home that needs significant renovation sounds like a nightmare to some –and a dream come true to others. With renovation reality TV, America has romanticized the idea of buying a fixer-upper and making over their home. But as satisfying as it sounds, remodeling shouldn’t be taken so lightly. After all –they don’t call it “sweat equity” for nothing!

There are some questions you should ask yourself and discussions you should have with your spouse before taking on a project home.

Is a fixer-upper really for you? Let’s get the conversations started!

What is it about a home renovation that makes it appealing?

Buying a home to flip because it looks like a fun project on “reality TV” is a big mistake. It takes a large crew, a big budget, and a whole lot of TV magic to make it look like a 30-minute walk in the park.

However, if you’re attracted to the possibility of making a profit, that may work! Having a solid plan, a budget, and wiggle room for surprises, buying a fixer-up for profit is reasonable. A study by ATTOM Data Solutions showed that home-flips in 2018 make an average of $65,000. Not bad!

The most popular reason for purchasing a home that needs renovation is to be able to design your dream home without having to build one from scratch. While costs can add up for significant home makeovers, generally speaking, it’s still more cost-effective than building one from the bottom up. If the home is vintage or is historical, then renovating it is the only way to have your dream home.

Where will you live during renovations?

Depending on how extensive the remodeling is, you may need to find temporary housing while the work is getting completed. Not only can this be an inconvenience, but it can be costly as well. Even rooming with another family for a week or two has its costs. If it turns out that you need to live in a hotel, you may need to factor in the cost of eating out, laundry, and extra storage for your furniture.

Renting instead? Plan on several months of double the utility bills and mortgage/rent payments in addition to your regular financial commitments and cost of renovation. This brings us to the next question…

What’s your budget?

The least expensive “fixer-uppers” are the ones that need cosmetic upgrades. Retiling the bathroom’s walls, refinishing the wooden floors, repairing the siding, or removing old wallpaper are all inexpensive relatively speaking. But still, even then, costs can creep up.

‘For more extensive renovations that require a contractor, get several quotes, and always plan for more. Rare is the renovation that goes as planned or stays in budget.

How will you finance the renovation?

After you’ve gotten several quotes, figured in the cost of supplies, the cost of living, and have added a bit more, it’s time to explore financing. Unless you’ve been planning several years for this remodel, chances are that you don’t have a mountain of cash from which to support your dream remodel.

The good news is that you can make it all possible with a home loan. Here are two of the most popular options:

An FHA 203(k) loan lets you put as little as 3.5% down, and you can pay it back in 15 or 30 years, similar to a traditional FHA loan. There are a few limitations to this loan, however. For example, “luxury” upgrades such as a swimming pool or adding a patio are not allowed. Also, all the work needs to be completed within six months.

The other popular loan is a Fannie Mae HomeStyle loan. It’s similar to a 203(k) loan, but it requires a little more down. There are fewer limitations to this loan. As long as the renovation is permanently attached to the home and it adds value, you’ll be able to finance it with this home loan.

There are more details and many more ways to finance your home remodel, please contact us! Whether you’re a homeowner or are shopping for a fixer-upper, there’s a loan for you. Contact us today to get matched with the home loan that can make your renovation dream come true, at a rate you can afford.