The Benefits of Having a Larger Down Payment

Consumers face many decisions when looking to purchase a home. One of these many decisions include how large of a down payment to put down. Their down payment is the sale price less the loan amount. In the vast majority of cases, the potential home buyers must have their financial assets, at a bare minimum, be as large as the down payment they will make. Many consumers, despite having the capacity to put down more, put down as little as they can because they view a down payment as a loss instead of looking at it as the investment that it is. The nice thing about down payments is that the return on investment is 100 percent risk free. It is an investment that yields a return far surpassing anything else available to consumers. For Example: If Bob is planning on purchasing a home for $200,000 financed, a mortgage of…

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Should you Include your Spouse on an Application?

When deciding whether or not to include a spouse on an application for a mortgage there are a few things you need to take into consideration. Let’s say that you are looking to purchase a $450,000 home and you make $84,000 a year and have a credit score around 800. Your spouse, on the other hand, has a credit score around 680. You also have about $25,000 of financial assets in your name and no debts. Your spouse has $32,000 and zero debt and both of you plan on residing in the home for about 7 years. When applying for a mortgage jointly, both of your incomes are combined as well as any financial assets you may have as individuals. When combining both assets and incomes, it strengthens your application thus making it more probable that you’ll qualify for the mortgage you’re wanting. On the flip side, filing jointly will…

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Average U.S. Mortgage Rate Drops This Week

The average rate for a fixed mortgage in the U.S. fell, yet again, this week making it the fifth week in a row for the drop. Although the home-buying season for spring has gotten off to a slow start, the low rates might just help. On Thursday this week, Freddie Mac said that the “average rate for a 30 year loan came down to 4.12 percent from 4.14 percent last week. On a 15-year mortgage, the average rate dropped to 3.21 percent from 3.25. With Spring in full swing, the warmer weather actually has yet to increase home sales as it usually does. The higher interest rates and rising prices that began mid-2012 made home sales an unattractive market for potential home buyers. However, we find that there are actually less homes with available to purchase with new construction redirecting their focus from single-family homes to rentals. The price of…

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New Welcome Home Illinois Program for First Time Chicago Area Homebuyers

Govenor Quinn came to Aurora Friday May 16th, 2014 to the recently purchased home of Ryan and Jessica Chrisman-Denegri to announce his newly launched “Welcome Home Illinois” mortgage loan program for first time homebuyers and to congratulate the new homeowners. Ryan and Jessica were among the first buyers to close under the new program. This new program from the Illinois Housing Development Authority is being rolled out just in time for the spring market. The Welcome Home Illinois program provides homebuyers with a $7,500 grant to use toward their down payment, and a below market rate on a 30 year fixed loan. The program assists buyers with the cash needed to become homeowners. You must be a first-time homebuyer to qualify. The home must be purchased in the state of Illinois, must be a primary residence purchase only(no refinances), must contribute 1% or $1,000 of the purchase price(whichever is greater),…

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Do the Benefits of Buying Outweigh Renting?

According to the first quarter Zillow breakeven horizon analysis, in over half of the metros areas in the U.S., purchasing a home is a better decision financially than renting for those homebuyers who plan on residing in their home at least two years. During this first quarter 35 of the largest metro areas where analyzed.  The following cities had the shortest breakeven horizon: Miami –Fort Lauderdale (1.2 years), Tampa (1.1 years), Orlando (one year), and Riverside (less than one year). The cities with the longest breakeven horizon included: Minneapolis and Baltimore (both 3.1 years), San Diego (3.2 years) Phoenix (3.3 years), Boston (four years), and Washington D.C. (4.2 years). Since there are many varying factors for buyers within the same city, Zillow makes breakeven horizons down to the neighborhood in order to give potential homebuyers as well as renters the most accurate information in regards to the specific area in…

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How to Keep Your Credit Score Up

Most of us know that skipping payments, paying late, or filing for bankruptcy are some obvious ways to destroy your credit. On the flip side of this, there are also some much more subtle and often overlooked things that borrower’s do that can damage their credit scores just the same. These things can in turn trigger a downward spiral of financial consequences that range from loan rejection, to higher interest and insurance premiums, to having to shell out a much higher security deposit.   One of these subtleties is when shoppers are drawn in by too many in-store credit offers. Like the ones that would make a promise of 10 percent or more off of your purchase just for signing up. First of all, creditors may view these people who are opening so many accounts in such a short time frame as being in financial trouble. Subsequently, opening up that…

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Alternatives to Low Down Payment for Chicago Area Home Buyers

Have a young new family? The chances that you have 20% to put down on the purchase of a home aren’t very likely. Without a large sum of money, non-veterans will be heading to the FHA (Federal Housing Administration) for their mortgage, or paying for private mortgage insurance on a conventional loan. Both of these options definitely have their drawbacks one of which being that the fees are substantially high and the hikes in FHA fees have only made the outlook grimmer.   Taking a look at different options and government programs for borrowers without large bank accounts can offer some hope. People who have less than 5 percent to put towards their down payment or people with bad credit probably won’t be able to obtain a conventional loan. So for them, FHA is the way to go. FHA’s mission is to get people with a small savings and bad…

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Weaker Pending Home Sales May actually be Stabilizing

In February the NAR (National Association of Realtors) Pending Home Sales Index (PHSI) confirmed a still slowing home housing market. This morning, PHSI showed the eight consecutive month of decline of contract signings.   PHSI is a good future indicator predicting home sales over 30 to 60 days. In February the index was down .8 percent to 93.9 from a revised 94.7 in January. Originally it was estimated that January would show 95.0. This February showed a level 10.5 percent below the index for February 2013, the lowest since October 2011 when it was 92.2.   NAR chief economist Lawrence Yun was optimistic about the import of pending sales data. He commented that he believes the recent slowing of home sales may be in the past while home prices continue to increase. “Contract signings for the past three months have been little changed, implying the market appears to be stabilizing”,…

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Some green ways to efficiently boost up your home

When choosing home improvements to enhance your curb appeal to potential buyers instead of asking yourself who’s the fairest, try asking “Who’s the greenest?” In this day in age, home improvements that boost owner satisfaction and reduce your average utility costs will in turn make your home much more appealing to prospective buyers. As it turns out, buyers are actually willing to pay up to 10 percent more for new homes certified green, because of the long term savings that will come and in turn this is a better investment, according to the real estate report by Harvard University. Replacing older, less efficient doors and windows would be a great return on investment and sellers would recoup much of the initial cost of the improvement when they sell the home. Five eco-friendly, money saving, home improvements: 1) Solar Water Heater– Making the switch to a solar power heater can be…

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Should Chicago Area Home Buyers get FHA Loans?

Mortgages with low down payments, the most popular type of mortgage, keeps getting pricier and less appealing as buyers question the worth of obtaining an FHA loan. On loans backed by the Federal Housing Administration, the mortgage insurance premium has nearly tripled since 2008. Recently FHA changed the rules so that now borrowers must pay for mortgage insurance for the entire life of the loan. “FHA loans really used to be a first option for homebuyers with a low down payment,” says Scott Schange, a branch manager for Broadview Mortgage Katella in Orange County California, “Now I see people doing them because they have to and not because it’s their first option.” The Federal Housing Association allows buyers to obtain a mortgage with a down payment that can be as low as 3.5 %. The underwriting requirements to qualify for FHA loans are general less strict than that of a…

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