George Duarte, Author at George L. Duarte

What To Know About Home Loans for Renovation Projects When people are looking for a home, they are often looking for something that is move-in ready. While this might make the process easier, this can also make the home much more expensive. It is still possible to find a dream home even if the house requires a bit of renovation. This is also a great opportunity for homeowners to customize the home to meet their needs. What do potential homeowners need to know about taking out a mortgage to renovate a fixer-upper when compared to a conventional home loan? Take a look at some helpful information below.

When Buying A Fixer-Upper Is The Right Decision

There are several situations where buying a renovation project might seem like the logical decision. Remember that these projects are going to take time and money, so homeowners need to have both of these resources to complete the project. Of course, these projects are going to require a lot of construction skills, so it is important to either have the equipment and expertise or be willing to hire someone to do this. Furthermore, it is critical to look at the value of the property once the project is done. What type of return should homeowners expect after they finish the project? It should meet the needs of the homeowner while also providing a significant return.

Understanding The Financing Options

Homeowners are unlikely to have the cash to pay for all of these out of pocket, so it is important to take a look at a few financing options. An FHA 203k Mortgage is often a great option for those with a credit score of 580 or higher. These loans can cover a diverse array of construction projects.

There are also Fannie Mae HomeStyle Renovation Loans, which allow people to borrow up to 50 percent of the total value of the home for the project. Homeowners can also borrow against projected equity instead of having to wait to take out a traditional cash-out home refinance. This loan requires a credit score of 680 or higher and the renovation must be completed in less than 12 months.

These two loan options could be helpful for those who are looking to complete a home renovation project.

The Down Payment: Four Great Reasons To Make The Largest Down Payment You Can Afford If you’re looking for a new home, you’ve probably heard lots of advice about down payments. About how it’s okay to just have a five percent down payment – you’ll still get approved. About how you should make the down payment as small as possible to avoid cash flow problems.

In truth, you’re actually better off making the largest down payment you can possibly afford. Even if you have to slice up other areas of your budget, save for a few more years before you buy, or take a second job on the weekends, it’ll be worth it in the end. Here are just four reasons why you should make the largest down payment possible.

You Can Avoid Useless Insurance Premiums

Although you can buy a house with as little as a five percent down payment, it’s in your best interest to make a much larger down payment if you can. Mortgage insurance premiums can be as high as one percent of the loan’s value, which means until you’ve invested 20 percent of the home’s value in equity, you’ll have to pay an extra one percent every year. If you pay at least 20 percent of the purchase price upfront, you’ll be able to avoid having to get private mortgage insurance – so you keep more of your money in your own pocket.

You’ll Pay Much Less Interest

The less you have to borrow, the less you have to pay back – for more reasons than one.

When you take out a mortgage, the interest rate applies to the principal amount that you owe – and over time, the interest can run on top of interest, quickly outpacing the original sum. Having a larger down payment means the interest applies to a smaller sum. And that means it accumulates slower and ends up being a smaller amount over time.

You’ll Have More Ammunition In A Bidding War

Offering up a larger down payment is also a great way to make sure you get your dream house, especially if it’s a popular property with multiple offers. The seller isn’t just going to consider who offers the most money – they’re also going to consider which buyer is most likely to get a mortgage. After all, failing to get a mortgage is one of the most common reasons why real estate deals fail.

If you can show that you’re able to make a larger down payment, you’ll have a better shot at getting a mortgage – and that means sellers will prioritize you over other buyers.

You’ll Get A Great Start On Building Equity

Your home equity is equal to the difference between your home’s fair market value and the amount of debt invested into the home. If you don’t have enough equity in your home and home prices in your neighborhood fall, you may find yourself in a situation where you owe more money on your home than it’s worth – a phenomenon known as negative equity. By making the largest possible down payment you can, you’ll have a great head start on building your home’s equity – which may help you profit if you decide to sell in the future.

Buying a house isn’t easy, but making the largest down payment you can afford will give you a great financial head start on home ownership. Want to learn more about how to afford the home of your dreams? Contact your local mortgage professional today for practical advice to help you maximize your down payment.

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