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Category: About Mortgages

  • The Impact of Seasonality on the Real Estate Market

    Seasonality has a significant impact on the real estate market, influencing both buyer and seller behavior. Here are some key points to consider when discussing the impact of seasonality:

    1. 1. Demand and Inventory: The number of buyers and sellers in the market fluctuates throughout the year. Generally, the spring and summer months see increased activity, as families prefer to move during warmer weather and before the new school year begins. This results in higher demand and more inventory during these seasons.
    2. 2. Pricing: Seasonality can also affect home prices. During the peak season, when there is higher demand, sellers may be able to command higher prices for their properties. Conversely, during the off-peak season, sellers may need to adjust their prices to attract buyers.
    3. 3. Competition: The level of competition among buyers and sellers can vary based on the season. In a seller’s market, when demand exceeds supply, buyers may face more competition and multiple offer situations. On the other hand, in a buyer’s market, when there is an excess of inventory, sellers may need to be more competitive in pricing and marketing their properties.
    4. 4. Market Trends: Real estate market trends can vary throughout the year. For example, in areas with vacation or second-home markets, there may be a surge of buyers during the holiday season or summer months. Additionally, areas with strong university or college presence may experience increased rental demand during the start of the academic year.
    5. 5. Regional Differences: It’s important to note that the impact of seasonality can differ based on the region. For example, in colder climates, the winter months may experience a slowdown in real estate activity due to weather conditions. Conversely, in warmer climates, the winter months may be considered the peak season.

    Understanding the impact of seasonality on the real estate market can help both buyers and sellers make informed decisions. Real estate professionals should be aware of these patterns and adjust their strategies accordingly to maximize their success in any given season.

    Contact Gulf Life Real Estate and start working with a professional who can help you navigate all aspects of the home buying process!

  • Debunking Myths To Home Buying

    Finally ready to make the transition into home ownership? Great! During this exciting time you may be turning to friends and family for insight into the process. However, there seems to be a circulation of misinformation, so we’re here to clear up a few myths.

    1. THE FIRST STEP IS SEARCHING FOR A HOME

    You know the saying, “don’t put the cart before the horse,” well that is very important to remember when it comes to buying a home. You don’t want to start looking for a house until you have discussed with a lender what the bank will qualify you for. If you fall in love with a house that’s $250,000 and come to find out you’re only qualified for $200,000, you can get your hopes crushed and waste a lot of time. Don’t start the process on the wrong foot and make sure the numbers line up.

    2. YOU DON’T NEED A REAL ESTATE AGENT

    When buying a home, 99% of the time the buyer’s agent gets paid by the sellers. That random 1% can be for odd circumstances. You’re getting to use the services of a real estate agent for free. Having a real estate agent on your side means you’ll get to see homes that aren’t as readily available on public searches, you can avoid outdated listings and scammers (there are lots of them), and you have protection when it comes to navigating the legalities of contracts and buying a home. Why wouldn’t you want an awesome negotiator working to ensure you get the best from the transaction? For FREE!

    3. YOU CAN’T BUY A HOME WITH BAD CREDIT

    Fortunately for some, this is a myth. Lenders and banks come by the hundreds of thousands and although there are a few loan options, a lot of lenders can work with credit scores down to the low to mid 500’s. Get in touch with an agent to help you connect with the right lender who can help you potentially get approved. There are a lot of factors that go into approvals, but your credit doesn’t have to be a sore thumb during the process. However, you will be doing yourself a favor if you connect with a credit repair specialist to at least get those numbers in the 600’s. A better score will lower you interest rate.

    4. YOUR DOWN PAYMENT HAS TO BE 20%

    Think you have to sell an arm and a leg to buy a home? Not at all! An FHA loan only requires 3.5% while a conventional loan only requires 5%. There are a lot of programs that can potentially help you with down payment assistance or a 0% down mortgage. USDA and VA loans are the most popular 0% down programs. If you qualify, this can take a big chunk off the amount of cash you have to bring to the closing table.

    5. DOWN PAYMENTS ARE THE ONLY UPFRONT COST

    This is one of the biggest misconceptions. There is a lot of cost that goes into buying a home, and that includes upfront costs. Some of the mandatory ones are a termite inspection and appraisal. If you are getting a mortgage, the home will have to be appraised and you will need to get a letter stating there are no termites in the home. Termite inspections can range between $25-$75 dollars. An appraisal can range from $300-$700 dollars. Aside from your down payment, you then have to pay for closing costs. And NO, they are not the same thing. Closing costs can range anywhere between 3-6% of the purchase price. In certain markets, this can be negotiated for sellers to cover by rolling into the offer price, but whether that decision is the right choice when it comes to landing your dream home will need to be discussed with your agent.

    Now that you have some knowledge to get the process started, get in touch with an agent who will help you get through the process as smoothly as possible.

  • 6 Ways Home Buyers Mess Up Getting a Mortgage

    Getting a mortgage is, by general consensus, the most treacherous part of buying a home. Many homebuyers said they found the mortgage experience stressful and complicated. Even lenders agree that it’s often a struggle. If you’re out to buy a home, you have to be vigilant. To clue you into the pitfalls, here are six of the most common ways people mess up getting a mortgage.

    Waiting until you can make a 20% down payment

    A 20% down payment is the golden number when applying for a conventional home loan, since it enables you to avoid paying private mortgage insurance (PMI), an extra monthly fee of 0.3% to 1.15% of your total loan amount. But with mortgage rates where they are today—in a word, low—waiting for that magic 20% could be a huge mistake, since the more time passes, the higher mortgage rates and home prices may go!

    All of which means it may be worth discussing your home-buying prospects with lenders right now. To get a ballpark figure of what you can afford and how your down payment affects your finances, punch your salary and other numbers into a home affordability calculator.

    Meeting with only one mortgage lender

    According to the Consumer Financial Protection Bureau, about half of U.S. home buyers only meet with one mortgage lender before signing up for a home loan. But these borrowers could be missing out in a big way. Why? Because lenders’ offers and interest rates vary, and even nabbing a slightly lower interest rate can save you big bucks over the long haul.

    In fact, a borrower taking out a 30-year fixed rate conventional loan can get rates that vary by more than half a percent So, getting an interest rate of 4.0% instead of 4.5% on a $200,000, 30-year fixed mortgage translates into savings of approximately $60 per month, or $3,500 over the first five years.

    So, to make sure you’re getting the best deal possible, meet with at least three mortgage lenders. You’ll want to start your search early (ideally, at least 60 days before you start seriously looking at homes). When you meet with each lender, get what’s called a good-faith estimate, which breaks down the terms of the mortgage, including the interest rate and fees, so that you can make an apples-to-apples comparison between offers.

    Getting pre-qualified rather than pre-approved

    Mortgage pre-qualification and mortgage pre-approval may sound alike, but they’re completely different. Pre-qualification entails a basic overview of a borrower’s ability to get a loan. You provide a mortgage lender with information—about your income, assets, debts, and credit—but you don’t need to produce any paperwork to back it up. In return, you’ll get a rough estimate of what size loan you can afford, but it’s by no means a guarantee that you’ll actually get approved for the loan when you go to buy a home.

    Mortgage pre-approval, meanwhile, is an in-depth process that involves a lender running a credit check and verifying your income and assets. Then an underwriter does a preliminary review of your financial portfolio and, if all goes well, issues a letter of pre-approval—a written commitment for financing up to a certain loan amount.

    Bottom line? If you’re serious about buying a house, you need to be pre-approved, since many sellers will accept offers only from pre-approved buyers.

    Moving money around

    To get pre-approved, you must show you have enough cash in reserves to afford the down payment. (Presenting your mortgage lender with bank statements is the easiest way to do this.) Nonetheless, your loan still needs to go through underwriting while you’re under contract for your loan to be approved. Because the underwriter will check to see that your finances have remained the same, the last thing you want to do is move money around while you’re in the process of buying a house. Shifting large amounts of money out or even into your accounts is a huge red flag. So if you’re in contract for a home, your money should stay put.

    Applying for new lines of credit

    If you apply for a new credit card or request a credit limit increase a few months before closing, watch out: Credit inquiries ding your credit score by up to five points. So, don’t let the credit inquiries add up.

    Applying for multiple lines of credit while you’re buying a house can make your mortgage lender think that you’re desperate for money—a signal that could change your mortgage terms or even get you denied altogether, even if you’ve got a closing date on the books.

    Changing jobs

    Mortgage lenders like to see at least two years of consistent income history when pre-approving a loan. Consequently, changing jobs while you’re under contract on a property can create a big issue in the eyes of an underwriter.

    Your best bet? Try to wait until after you’ve closed on your house to change jobs. If you’re forced to switch before closing, you should alert your loan officer immediately. Depending on the lender, you may simply need to provide a written verification of employment from your new employer that states your job status and income.

  • 6 Ways Home Buyers Mess Up Getting a Mortgage

    Getting a mortgage is, by general consensus, the most treacherous part of buying a home. Many homebuyers said they found the mortgage experience stressful and complicated. Even lenders agree that it’s often a struggle. If you’re out to buy a home, you have to be vigilant. To clue you into the pitfalls, here are six of the most common ways people mess up getting a mortgage.

    Waiting until you can make a 20% down payment

    A 20% down payment is the golden number when applying for a conventional home loan, since it enables you to avoid paying private mortgage insurance (PMI), an extra monthly fee of 0.3% to 1.15% of your total loan amount. But with mortgage rates where they are today—in a word, low—waiting for that magic 20% could be a huge mistake, since the more time passes, the higher mortgage rates and home prices may go!

    All of which means it may be worth discussing your home-buying prospects with lenders right now. To get a ballpark figure of what you can afford and how your down payment affects your finances, punch your salary and other numbers into a home affordability calculator.

    Meeting with only one mortgage lender

    According to the Consumer Financial Protection Bureau, about half of U.S. home buyers only meet with one mortgage lender before signing up for a home loan. But these borrowers could be missing out in a big way. Why? Because lenders’ offers and interest rates vary, and even nabbing a slightly lower interest rate can save you big bucks over the long haul.

    In fact, a borrower taking out a 30-year fixed rate conventional loan can get rates that vary by more than half a percent So, getting an interest rate of 4.0% instead of 4.5% on a $200,000, 30-year fixed mortgage translates into savings of approximately $60 per month, or $3,500 over the first five years.

    So, to make sure you’re getting the best deal possible, meet with at least three mortgage lenders. You’ll want to start your search early (ideally, at least 60 days before you start seriously looking at homes). When you meet with each lender, get what’s called a good-faith estimate, which breaks down the terms of the mortgage, including the interest rate and fees, so that you can make an apples-to-apples comparison between offers.

    Getting pre-qualified rather than pre-approved

    Mortgage pre-qualification and mortgage pre-approval may sound alike, but they’re completely different. Pre-qualification entails a basic overview of a borrower’s ability to get a loan. You provide a mortgage lender with information—about your income, assets, debts, and credit—but you don’t need to produce any paperwork to back it up. In return, you’ll get a rough estimate of what size loan you can afford, but it’s by no means a guarantee that you’ll actually get approved for the loan when you go to buy a home.

    Mortgage pre-approval, meanwhile, is an in-depth process that involves a lender running a credit check and verifying your income and assets. Then an underwriter does a preliminary review of your financial portfolio and, if all goes well, issues a letter of pre-approval—a written commitment for financing up to a certain loan amount.

    Bottom line? If you’re serious about buying a house, you need to be pre-approved, since many sellers will accept offers only from pre-approved buyers.

    Moving money around

    To get pre-approved, you must show you have enough cash in reserves to afford the down payment. (Presenting your mortgage lender with bank statements is the easiest way to do this.) Nonetheless, your loan still needs to go through underwriting while you’re under contract for your loan to be approved. Because the underwriter will check to see that your finances have remained the same, the last thing you want to do is move money around while you’re in the process of buying a house. Shifting large amounts of money out or even into your accounts is a huge red flag. So if you’re in contract for a home, your money should stay put.

    Applying for new lines of credit

    If you apply for a new credit card or request a credit limit increase a few months before closing, watch out: Credit inquiries ding your credit score by up to five points. So, don’t let the credit inquiries add up.

    Applying for multiple lines of credit while you’re buying a house can make your mortgage lender think that you’re desperate for money—a signal that could change your mortgage terms or even get you denied altogether, even if you’ve got a closing date on the books.

    Changing jobs

    Mortgage lenders like to see at least two years of consistent income history when pre-approving a loan. Consequently, changing jobs while you’re under contract on a property can create a big issue in the eyes of an underwriter.

    Your best bet? Try to wait until after you’ve closed on your house to change jobs. If you’re forced to switch before closing, you should alert your loan officer immediately. Depending on the lender, you may simply need to provide a written verification of employment from your new employer that states your job status and income.

  • Debunking 5 Home-buying Myths for First-time Homebuyers

    Buying a home is an exciting process that buyers should enjoy. Unfortunately, many first time homebuyers can feel overwhelmed with all of the advice they receive from family members or friends who have already gone through the process. While it’s nice to hear different perspectives, it is important to remember that every buyer has a unique experience — and there are some myths circulating about buying a home that everyone should ignore. Today, we’re debunking five of these fallacies so first-time homebuyers can feel more confident in taking the plunge!

    Myth #1: You Should Wait Until You Have 20% For Your Down Payment
    This myth has been perpetuated for years, but it’s simply not true in the current market. With low interest rates and plenty of mortgage options, first time homebuyers don’t need to wait until you have saved up 20%. In fact, there are plenty of mortgage programs available that only require 3%-5% down payments. Talk to your lender and see which option works best for you.

    Myth #2: You Need To Have Perfect Credit
    Again, this myth is false and can be easily debunked by speaking with your lender. While it does help to have a good credit score (650+), many lenders will work with first time homebuyers who have lower scores as well. The key is finding a lender who understands your current financial situation and can offer guidance on how to improve your credit score over time.

    Myth #3: You Need To Buy A House As Soon As Possible
    This might be the most dangerous myth on our list because it puts unnecessary pressure on first time homebuyers before they even begin their search! There’s no rush when buying a house – take your time and look at all of your options before making any decisions. After all, this isn’t just any purchase – this is one of the biggest investments you’ll make in your lifetime!

    Myth #4: You Can Skimp On Getting A Professional Inspection
    While it may seem like an unnecessary expense upfront, hiring a professional inspector for an inspection before closing on a home is non-negotiable. It doesn’t matter if you think the house looks perfect – inspections are designed to uncover hidden issues like mold or structural problems that could become expensive headaches down the line if left unchecked. Make sure you get an inspection before closing on any property!

    Myth #5: Location Is All That Matters When Buying A Home
    While location certainly plays a role in determining how much value homeowners can expect their property to retain over time, other factors are also important when shopping around for properties. Don’t forget to factor in things like schools, taxes, neighborhood amenities like parks or shopping centers nearby — those all play into whether or not you love where you live after settling into your new home!

    Conclusion: Taking advice from family members or friends about buying a home can be helpful but ultimately each buyer’s experience is unique – so take any advice with a grain of salt! We hope this post helped debunk some common misconceptions so that first-time homebuyers can make informed decisions about their future homes without feeling overwhelmed by misinformation or outdated real estate practices!

    If you are a first time homebuyer and want expert help please Contact Us Today

     

  • What is a reverse mortgage?

    A reverse mortgage is a loan based on the current paid-up value or equity in your home. Instead of making a monthly mortgage payment, your lender can use your equity to pay you a set monthly amount, provide a credit line for you to draw upon as needs arise, or pay out a lump sum to you. While gaining access to this money sounds great, it’s essential to understand how a reverse mortgage works to avoid any pitfalls.

     

    How does a reverse mortgage work?

    When you have a regular mortgage, you pay the lender every month so you can eventually own your home outright. With a reverse mortgage, you get a loan in which the lender pays you. Reverse mortgages use part of the equity in your home and convert it into payments to you. You do not need to pay back this loan until you move, sell the home, or pass away. When you (or your heirs) sell the home, the reverse mortgage loan balance is deducted from the proceeds of the sale. Any balance remaining from sale proceeds reverts to you or your heirs.

     

    What can you pay for with a reverse mortgage? 

    Here is a shortlist of expenses you can pay for with funds from a reverse mortgage:

    • Medical debt
    • Living expenses
    • Debt consolidation
    • Home improvements
    • College tuition
    • Another home purchase
    • Or, you can use it as supplemental income

     

    There are no stated constraints for how you use the money. But that doesn’t mean you should run right out and get one. Be sure to read the pros and cons to understand if this financial tool makes sense for your situation.

     

    How do I qualify for a reverse mortgage?

    Prepare to shop around for the right type of reverse mortgage to suit your situation. If you meet all of these qualifications, a reverse mortgage might meet your needs:

    • The primary loan holder must be age 62 or older – your spouse may be younger.
    • You must own your home outright or have just one mortgage which you are the borrower.
    • You’ll be required to pay off the existing mortgage using the proceeds from your reverse mortgage.
    • The home must be your primary residence.
    • You must be current on all property taxes, homeowners’ insurance, and other mandatory legal obligations (like HOA dues).
    • You must attend a consumer information class led by a HUD-approved counselor.
    • Your home must be maintained and in good condition.
    • The home must be a single-family home, condo, townhouse, manufactured home built after June 1976, or a multi-unit property with up to four units.

     

    There are 3 reverse mortgage types

    1. Single-purpose reverse mortgages: These are offered by some state and local government agencies and nonprofits. For a single-purpose reverse mortgage, the lender specifies how loan proceeds must be spent. For example, you may only be able to use the funds for property taxes or home repairs. This is the least expensive type of reverse mortgage, and low and moderate-income homeowners can often qualify.
    2. Home Equity Conversion Mortgages (HECMs): HECMs are reverse mortgages backed by the Department of Housing and Urban Development (HUD). You can use proceeds from a HECM for any purpose. This type of loan will be more expensive than a single-purpose reverse mortgage or traditional home loan, including high closing costs. If you plan to stay in your home for a long time, the upfront costs are less of an issue.
    3. Proprietary reverse mortgages: These loans are offered by private lenders. You may be able to get a larger loan from a private lender if you own a high-value home over $500,000. These loans are more expensive than single-use loans and similar to HECMs.

     

    How much money can you get from a reverse mortgage?

    The amount of money you can access from a reverse mortgage will vary with the amount of equity you have in your home, your age, the home’s current market value, current interest rates, and the specific type of reverse mortgage. If you have another loan, lien, or outstanding balance on your home equity line of credit, you will be required to pay the outstanding balances first with any funds you received from a reverse mortgage. The obligation includes any property tax liens, or contractor, or other private liens.

     

    How much does a reverse mortgage cost?

    The costs and terms for a single-purpose reverse mortgage and a proprietary reverse mortgage can vary. You’ll want to shop around with different agencies and mortgage lenders to find the most favorable terms. Costs for HECM loans are well-documented since the government backs such loans. However, you will not need to pay loan costs out of pocket because the costs can be covered by loan proceeds, which will reduce the net loan amount available for expenses.

     

    HECM costs include: 

    • Mortgage Insurance Premium (MIP): This mortgage insurance guarantees that you will receive expected loan advances. You can finance the MIP as part of your loan. Initially, you will be charged 2% of the loan amount for MIP at closing. This is followed by an annual MIP equal to 0.5% of the mortgage balance over the loan’s life.
    • Third-party Charges: Third-party costs include an appraisal, title search and insurance, surveys, inspections, recording fees, mortgage taxes, credit checks, and other fees. These costs are paid at closing.
    • Origination Fee: Like any mortgage, the lender gets paid to process your loan. A lender can charge the greater of 2% of the first $200,000 of your home’s value + 1% of the amount over $200,000 or $2,500. All origination fees are capped at $6,000.
    • Servicing Fee: Service fees over the term of the loan cover services that include sending the account statements to you, paying property taxes and insurance on your behalf, and disbursing loan proceeds. If the loan has an annual adjusted interest rate or a fixed interest rate, the service fee caps $30 per month. If your interest rate adjusts monthly, the monthly service fee caps at $35.

     

    At loan closing, the lender deducts the first servicing fee from your available funds and then adds each monthly servicing fee to your loan balance. Alternatively, lenders may include the servicing fee in the mortgage interest rate by charging a higher rate.

     

    Reverse mortgage pros and cons

    Pros: 

    • A reverse mortgage can give you financial options and additional income during retirement.
    • If the primary loan holder passes away, the spouse can stay in the house and continue to receive payments from the loan.
    • You don’t have to make monthly mortgage payments.
    • Depending on the type of reverse mortgage, your funds can be used for any expense.
    • It can be used as a way to stop or prevent foreclosure and loss of the home.

    Cons:

    • You will owe more over time due to interest on the loan.
    • You could lose your home if you don’t maintain payments for property taxes and insurance.
    • You reduce the equity in your home because you are, in effect, lending it to yourself.
    • The upfront cost of a reverse mortgage can be thousands of dollars.
    • Your heirs may not be able to keep the home if they can’t afford to pay off the loan.

    Is a reverse mortgage a good idea? 

    While a reverse mortgage involves certain complications, it can be an excellent way to supplement your income during retirement, pay for medical expenses, or home improvements that allow you to age in place. As with any loan, it makes good sense to shop around for the best terms and fees. Guidance from a HECM counselor can help you make the best choice.

  • Mortgage Misunderstandings That Can Cost You

    The spending season is upon us. But that doesn’t mean you should be spending in excess everywhere you go. Just like you may be waiting for the best deals on those perfect holiday gifts, you also should be aiming for the best deal if you’re shopping for a home mortgage.

    Unfortunately, just like the flurry of holiday sales can have you confused about what price is best, a few mortgage misunderstandings could confuse you also. Today, we’re debunking five common mortgage misunderstandings that could be costing you more money.

    1. “I don’t need loan pre-approval to find the right home.”
    Beginning to look for a home before you know what you can afford actually can cost you a lot more than just money. It could cost you the home of your dreams. In today’s competitive market, buyers who take the time to gain loan pre-approval before they begin searching for a home are seen as more credible than those buyers who just start looking. So, if you fail to gain mortgage pre-approval and happen to enter into a bidding war with a buyer who has already secured that lender “OK,” you may lose out on a home that seems to be just perfect for you.

    2. “As long as I’m approved, my credit score doesn’t matter.”
    When you go to buy a home, of course, mortgage approval is your main concern. So, if you know you have a credit score that is good enough to get your mortgage approved, you may not be worried about trying to boost it just a bit higher. But, in fact, you should! A higher credit score often means a lower interest rate, which means lower payments throughout the course of your mortgage. Ultimately, that means you pay less for your home. Your credit score matters – a lot!

    3. “Once I’m approved, I can stop looking for a mortgage.”
    Though gaining initial loan pre-approval is an immensely satisfying feeling, it does not mean that you can stop shopping around. If you do, you could miss out on the best rate. Instead, you can take that initial pre-approval and continue shopping for a better rate with peace of mind, knowing that your mortgage can only get better!

    4. “My home only costs as much as my mortgage payment.”
    Once you gain loan pre-approval, you may begin to try to determine what your monthly mortgage payments will be. But don’t be fooled into thinking that estimated payment will be the only monthly expense associated with your home. You need to include property taxes, insurance, and possible homeowner association fees as well. When you add in those necessary extras, you need to make sure you’re not pricing yourself out of your available budget.

    5. “I don’t need to put 20% down on my home.”
    Frankly, you’re right. You don’t. But this mortgage misunderstanding certainly can cost you. If you choose a conventional loan that is lenient when it comes to your down payment, you’ll probably be paying a little extra in other places. It is likely you’ll need to pay for private mortgage insurance, or PMI. You’ll also likely face a higher interest rate than a buyer who is willing or able to put more money down. If you can afford to put the entire 20% down on your new home, save somewhere else by making that payment!

  • Buying a Home with Friends: Conversations to Have Beforehand

    Some of them have been around since you were a child. Some you may have found in college. Some may even be in your neighborhood or at work. No, we’re not talking about your sweater collection—though sweater season is in full swing. We’re talking about your friends. You know, the people who you rely on, confide in and maybe even vacation withY

    You probably have no reservations about sharing secrets with your friends, but have you ever considered sharing a mortgage with them? It is not uncommon for friends to join forces to take on a second mortgage for a vacation home or investment property. It seems like a no-brainer, right? You’ve already vowed to be friends forever. A 15-or-30-year mortgage should be no problem

    However, even the most maintenance-free friendships can face some tough times when it comes to sharing a home purchase. That is unless both parties are prepared for what co-ownership may bring. If you’re considering buying a second home with a friend, here are three major conversations you must have first.

    How will you split the costs?
    Unless you and a friend are planning to pay for a second home with cash, you’ll both be responsible for making monthly mortgage payments on the property. And, no, splitting a mortgage is not like splitting the bill for a night out. Having a conversation about fees like the down payment, closing costs and monthly mortgage payment is crucial before you even begin to consider looking at homes together.
    While you’re chatting, don’t forget to include other monthly homeownership fees like utilities, regular maintenance, homeowner association dues or other services. It is also important to bring up potential scenarios like plumbing issues, roof leaks or other home damage. How will you split all of the certain costs that come along with owning a home?

    What will happen if someone is unable to hold up their end of the deal or wants to get out of the mortgage?
    Any conversation about the potential costs of owning a second home must be accompanied by a conversation about what will happen in the event that one or both parties is unable to make their payments or wants to leave the agreement altogether. Though this conversation may not be as fun as reminiscing about your old college antics, it is a must-have talk before you can confidently enter a home purchase with a friend.
    With all the excitement of potentially owning a vacation home or investment property, who wants to get mired down by thinking about the negative aspects of sharing a mortgage? Hard times happen for everyone. Before they happen in your blissful home-buying experience, have a plan. Will one person take over the entire mortgage payment? Will you be forced to sell the property? Make sure you consider the “what ifs” before you and your friend are forced into an uncomfortable situation.

    How will you use your new property?
    Once you get the tougher financial conversations out of the way, you can begin to consider the possibilities of what it will be like to own a second home with your friend. If you’re planning to purchase the home as a vacation property, you’ll need to decide if you’re going to split time there, vacation together or rent it out on a seasonal basis.
    If you and a friend are looking to buy a second home as an investment property (or if you’re planning to rent out that vacation home), you’ll need to draft a rental agreement, plus decide how you’ll deal with tenants and their issues. You’ll also need to map out a plan for marketing and maintaining your property so that it continues to be a worthwhile investment.

    Are you prepared to have a few tough financial conversations with a friend? Are you also prepared to face a few certain disagreements along the way to happy homeownership? If you confidently answered “yes,” you—and your friendship—may be ready to stand the test of owning a second home together!

  • 5 Mortgage Myths — DEBUNKED!

    MYTH: You must have a 20% down payment to buy a house.

    TRUTH: Different loans require different down payments—some as low as 0%!

    MYTH: Pre-qualified means the same thing as pre-approved.
    TRUTH: A pre-qualification is a quick assessment of how much money you can borrow based on info you provide—no documentation necessary. A pre-approval letter indicates you’ve provided financial information to a lender, and they have approved you for a designated loan amount. Serious about buying? Get pre-approved.

    MYTH: You need a stellar credit score to get a mortgage.
    TRUTH: For a conventional loan backed by Fannie Mae or Freddie Mac, the minimum score required is 620. The lowest credit score to buy a house with an FHA loan is 580. Mortgages are out there for folks with a wide range of credit scores. Plus, there are things you can do to improve it along the way.

    MYTH: You don’t need to shop for mortgage rates. They’re the same no matter where you go.
    TRUTH: Just like any major purchase, shop around! Not all mortgage rates are the same. Closing costs and other fees can vary from one lender to another.

    MYTH: It’s cheaper to rent a home than it is to own a home.
    TRUTH: Owning builds equity, offers potential tax benefits, and gives you a predictable payment year after year. Not to mention, buying now allows you to lock in historically low rates.

    Don’t be fooled by every mortgage myth you hear! Talk to folks who know the truth and can help make homeownership a reality for you.