American Mortgage Resource, Inc.

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Tag: fha loans

How to Buy a House in 2022

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Buying your first home can be a roller coaster of emotions. This is especially true in these times of a competitive market, making 2022 a rough year to buy a home. It is imperative to understand the basics of the entire process thoroughly. This will help you and your family make an informed decision in the right direction. It is better to have the knowledge for the sake of your family and your financial situation. We have made a step-by-step guide for how to buy a house in 2022.

Step 1: Figure out your financial situation.

Before you start looking for a house, make a detailed and thorough analysis of your financial situation. It will help you make certain decisions easily. For example, you must ask yourself what your price range is, how much you are willing to pay as a down payment, what installments plan you will take, and so on. With all the basic questions answered you will have a clear vision of what you can afford.

Step 2: Obtain a pre-approval for a home loan.

For the first time home buyers, there is an excellent initiative that you can take advantage of including special mortgage plans like FHA Loans. They come with lower interest rates and down payments. With a credit score of 580, you can qualify for a down payment to be as low as 3.5%.

For example, through FHA Loans, you can get a $200,000 house with the installment as low as $7,000. That is better than the traditional 20% down payment rule.

Step 3: Get yourself a real estate agent.

An excellent real estate agent will get you through the technicalities and legalities of the home buying process. They will also show you around other properties in their listings that fits your requirements and agreed upon rates. A once arduous task will now be easy with the help of an experienced professional. The agent will also be taking care of all the paperwork for you, so you can just relax and look for your dream home.

Step 4: Make in-person visits to potential properties.

You can easily look up all the available properties on the internet, but we recommend attending open houses and checking out your potential home in-person. This will broaden your understanding of the market and you might discover some new things along the way. Going in-person to houses might help you get a great deal.

Step 5: Make an offer they can’t refuse.

At this step, we assume you have already landed on your favorite property. It is just a few steps away from being your dream home. This is where your agent comes in to assist. They can help with negotiating the price down. To be concise, make the homeowner an offer that they can’t refuse while still keeping your budget in mind.

Step 6: Close the deal.

It is time to close the deal. You have finally decided on the mortgage plan that you will opt for and have had the house appraised. Schedule a closing date with the home seller. Keep in mind that closing costs are approximately between 2% to 5% of the price of the house. Once it is all said and done, you will be handed over the keys to your new house and that’s how you become a homeowner.

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Conclusion

Buying your first home can be a tedious and nerve-wracking experience. All the technicalities and paperwork involved in the process are time consuming. It is better to have a professional take care of this entire procedure. American Mortgage Resource, Inc. is a licensed home mortgage broker with the best loan options and deals in the market. We will take care of everything in your home buying journey. The only thing that you will do is choose your favorite home. Check out our website or give us a call at (617) 972-8588 to avail our services.     

Home Loans and Fixer Uppers

There are countless reasons why fixing up old homes has turned into one of the most colossal real estate trends over the past decade. While it seems everyone talks about fixing up an old home one day, not many people are speaking about what it’s like to finance such a project. Fixer upper loans combine the purchase or refinance of a property with the cost of renovating it. This unique mortgage option addresses the challenge buyers often face when figuring out how to finance a fixer upper. Follow along below as we discuss why you should invest in a fixer upper and what loan options may be available to you.

Reasons to Purchase a Fixer Upper

  • You can build the custom home of your dreams
  • You can flip it for a profit
  • It’s typically cheaper than purchasing a newer home
  • There’s less competition when purchasing it
  • You fell in love with the property or neighborhood, but not the home itself

Loan Options

  • FHA 203(k) Loan – This government backed loan will require that you to adhere to FHA guidelines and limitations when completing renovations. In some cases this loan will not allow for much DIY work, as the government will require that licensed contractors complete most major tasks.
  • VA Renovation Loan – Some eligible service members, veterans and qualifying spouses can use this loan to combine a VA purchase loan or VA cash-out refinance with their renovation costs. Other major advantages of this option include not having to pay a down payment or any closing costs on the property at the time of purchase. In some cases the VA accommodates a higher purchase price based on the home’s expected value once renovations are complete
  • HomeStyle Loan – Referred to as a Fannie Mae convention loan, a HomeStyle loan is a fixer upper loan similar to a FHA 203(k) loan, but with increased limits for borrowers. Due to the fact that this is a conventional rehab loan, homebuyers finance their home directly with private banks or mortgage companies that offer this product, and Fannie Mae purchases the loans from lenders.
  • CHOICERenovation loan – Also dubbed the Freddie Mac loan, CHOICERenovation can be used to finance a fixer upper project through traditional means in conjunction with the refinancing of a separate existing property. This option is great for those who plan on purchasing the fixer upper as a second home or as an investment property.

Final Thoughts

Before you commit to spending your free time renovating a fixer upper, make sure you know exactly what to expect throughout the process financially. For free and honest advice from the pros, contact the team at American Mortgage Resource, Inc. in Boston, MA. Visit our website to learn more about the loans we offer or contact our team directly Monday – Saturday at (617) 972-8588.

Highlights & Drawbacks of FHA Loans

According to Bankrate, “An FHA loan is a government-backed mortgage insured by the Federal Housing Administration, or FHA for short.” These flexible loans allow you to have a better chance at qualifying for a home loan. From low-credit scores to a minimal down payment, an FHA loan gives you the opportunity to become a homeowner. How so? Follow along in our blog as we discuss the highlights and drawbacks of FHA loans.

The Highlights

When you are in the market to buy a home, it can be difficult to find a home loan if you have poor credit or a small down payment. However, with an FHA loan, you can qualify and even get a decent interest rate too.

  • Credit Score: Bankrate states that a FICO score of 500 to 579 is needed with 10 percent down. For scores 580 or higher, a payment of 3.5 percent down is required. If you’re someone with a credit score in this range, you can be approved. Even borrowers with a history of bankruptcy or foreclosure get approved.
  • Down Payment: Don’t have a lot of cash for a down payment? Then an FHA loan might be right for you. You can put little down and still have funds leftover for other financial investments.
  • Renovations: If your property needs renovations, FHA 203(k) loans allow you to fund home improvement projects and purchase a house at the same time. This loan is simple to qualify for and is relatively affordable.

The Drawbacks

Although FHA loans are attractive to many first-time buyers, they aren’t for everyone. It’s important to take a closer look at what this loan entails.

  • Mortgage Insurance: With an FHA loan, you will be required to pay an upfront premium and a monthly premium. The upfront premium costs can be included in the FHA closing costs OR rolled into the loan amount. For monthly premiums, this fee will vary.
  • Limited Loan Choices: There are two basic choices when it comes to FHA loans: 15-year or 30-year fixed rate loans. This may be fine for one borrower, but may discourage another borrower if they are looking for something adjustable/interest-only.

The Verdict

At American Mortgage Resource, Inc., let us discuss your loan needs together. From FHA loans to conventional loans, we want to find the perfect loan for you. Contact our team of professionals at (617) 972-8588 for more information about our affordable loan programs. We look forward to speaking with you soon!

Types of Government-Insured Mortgages

The U.S. government has made it easier for hundreds of thousands of Americans to buy homes through providing various government-insured mortgages. Many citizens have purchased a house with these mortgages when it wouldn’t have been possible with the other conventional home loans. For more information about these special mortgages, continue reading!

FHA Loans

FHA loans are backed by the Federal Housing Administration. These loans make it possible for you to buy a home, even if you don’t have a perfect credit score or aren’t able to provide a large down payment. This is because they have more lax requirements – borrowers must provide a 3.5% down payment (other loans require a down payment of 20% of the purchase price of the home).

These loans are available for anyone trying to purchase or refinance a primary residence, but are mostly popular with first-time homebuyers. They come with mortgage insurance in case the borrower is unable to repay the loan. FHA loans are usually fixed-rate loans with either 15 or 30-year terms, and 1% of what you pay goes towards the mortgage insurance.

VA Loans

VA loans, granted by the U.S. Department of Veterans Affairs, provide flexible, low-interest mortgages for members of the military (both active duty and veterans) and their families. They don’t require a down payment or private mortgage insurance, and they offer leniency with credit scores. You are expected to pay a funding fee that is added onto your monthly payments, or may be paid upfront at closing. These fees serve to offset the program’s cost to taxpayers.

USDA Loans

USDA Loans are given by the U.S. Department of Agriculture. They assist moderate- to low-income borrowers in buying houses in rural areas. To qualify, you must purchase a house in a specified USDA-eligible area and meet other income limits (for example, the amount of debt you have cannot exceed your income by more than 41%). Most of these loans require no down payment and offer discounted interest rates, but you will have to purchase mortgage insurance.

These loans are perfect for those who struggle financially and are looking to purchase a home in a small, rural town. “Rural” doesn’t necessarily mean “countryside farmhouse.” It simply means that the town is under a certain population count – it can even be a suburban community.

Pros and Cons

Pros: Government-insured loans require lower down payments and have lenient credit requirements. They make homeownership accessible to everyone – since they are secured by the government, sellers are more likely to sell homes to lower-income applicants who are seen as a risk. In addition, buying a home allows you to build equity and credit, which helps you strengthen your finances and progress with your other financial goals.

Cons: The mandatory mortgage insurance premiums can be expensive, and cannot be cancelled on most loans. You will also have higher overall borrowing costs. In addition, you will likely need to provide more documentation to prove your eligibility for the loan.

Conclusion

Government-insured loans have helped countless Americans buy houses. However, you need to find a specialized mortgage company that is registered by the government to provide you with these loans. At American Mortgage Resource, Inc., we are able to help you find the home loan options that will help you the most.