American Mortgage Resource, Inc.

Providing the Best Financial Resources for Boston and Massachusetts

Tag: home loan

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.

How to Tap Into Your Home Equity

Are you feeling strapped for cash and unable to expense the high priority responsibilities in your life? In this month’s blog, we outline several convenient and accessible remedies for this common concern and how homeowners can determine which option is best for them based upon their individual circumstances.  

Home Equity Loan

A home equity loan, also called a second mortgage, is a fixed or adjustable rate loan that is secured by the equity in your home. With a home equity loan you borrow a lump sum of money to be paid back monthly over a set time frame, much like your first mortgage. The process for a home equity loan is similar to a first mortgage except the closing costs are usually lower and, although the interest rate is higher on a home equity loan, the interest paid is tax deductible.

Refinance

Refinancing is the replacement of an existing debt obligation with another debt obligation under different terms. With interest rates as low as they currently are, refinancing today can grant homeowners the opportunity to lower their monthly mortgage payment more than they could’ve imagined possible. When refinancing it’s crucial to lock in a low, fixed-rate loan rather than an adjustable rate loan to ensure the monthly payment will not increase over time.   

Home Equity Line of Credit (HELOC)

A home equity line of credit is a line of credit backed by the equity of the home and gives homeowners a revolving credit line for that amount.  With these loans you only have to pay interest on the money you actually withdraw, but should feel confident in being able to repay that entire balance by the time the repayment period expires as per the terms.

Which Option is Best for You?

Determining the best way to tap into your home equity depends mostly on what you want to do with the money. If you’re needing to pay off a major expense all at once such as a debt consolidation, college, or medical bills, then a home equity loan is most likely your best option. To qualify for this typically your credit must be in good standing, you must be able to document your income, and you will need to have your home appraised to determine its current market value.

Refinancing is optimal for those who have at least 20% equity in their home and are seeking lower monthly payments or shorter loan terms. The best time to refinance is when interest rates drop, credit scores improve, or when annual income significantly increases.

Those looking to use their equity to expense a prolonged activity such as a major home renovation or building a business will need cash more sporadically, meaning a HELOC would be most suitable. These loans can be very cost efficient as they have lower interest rates and are free of closing costs. HELOCs are typically granted to those who have at least 15%-20% equity in their home, are in good credit standing, and have a low debt-to-income ratio.

Final Thoughts

Tapping into your home’s equity can be confusing and tough to navigate, but with help from the right lenders can be the most rewarding and money savvy decision you’ve ever made! American Mortgage Resource is recognized as one of the top brokers in Massachusetts, with reliability and professionalism at the forefront of their values. Visit our website or contact the team directly at (617) 972-8588 to discover the best way for you to finally tap into your homes equity for good!

Difference between Down Payments and Closing Costs

When it comes to buying a home, it’s important to be prepared for all the costs that may come up and making sure that you are able to afford it. Most future homeowners tend to focus on acquiring enough money to cover the down payment but are then taken back by the closing costs that they need to cover at the end. It’s critical to be aware of how much money you’ll need to fully close the deal on your new future home. In this month’s blog, we will discuss the difference between down payments and closing costs to help better prepare you for the home buying process.

Down Payments

A down payment is the portion of the money you must pay upfront when you begin the process of purchasing a home. It is the minimum amount that you need to put towards the total cost, while the remaining amount is funded by your mortgage loan. This is basically your first investment into your future home and the price may vary depending on what type of loan you have. Another important thing to remember is that your down payment will be due at closing, which is the final step for buyers when the sale is finalized.

Closing Costs

Closing costs occur when the title of the property is transferred to the buyer and the total amount will depend based on the location of the property and its value. The amounts associated with your closing costs consist of an assortment of taxes and fees from entities and services handling your loan. All of your closing cost fees will be listed on your loan estimate. These costs are completely separate from your down payment and are paid at closing. They can also be paid on the same check as your down payment.

Closing costs can be incurred by both the seller and the buyer and the fees can be split depending on the negotiation and contract. A mortgage lender can help decrease these costs by negotiating the sales contract.

Conclusion

Overall, the process of buying a house as a first time homeowner can be tedious and stressful. There are many fees associated with it and the terms can be confusing. That’s why at American Mortgage Resource, Inc., we dedicate ourselves to helping homeowners while providing worry-free solutions that best fits their needs. To consult with an expert, please contact us at (617) 972-8588 or visit our website for more information about our services.  

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!

Home Equity Loans: The Answer You’ve Been Looking For

Qualifying for certain loans and credit cards can be a difficult and confusing process for many of us. Homeowners have a unique advantage when it comes to borrowing money in a pinch as they may be able to qualify for a home equity loan. Follow along below as we discuss home equity loans and their pros and cons.

What’s a Home Equity Loan?

A home equity loan is a fixed or adjustable form of credit secured by how much equity you have in your home and enables you to borrow against that equity. Essentially this type of loan is a second mortgage as you will have to continue paying your primary mortgage while simultaneously making payments on your new home equity loan.

Pros

Home equity loans can save the day when you need help repaying higher interest debt elsewhere or funding home renovations. A distinctive benefit these loans offer is that while their interest rates may be slightly higher, any interest paid on them is tax deductible.

Cons

Undoubtedly the biggest risk in taking out a home equity loan is that your lender may be able to force you to sell your home to resolve the loan if you are ever unable to make your payments. Additionally, your home will have to be appraised to establish its value and you will have to provide proof of sufficient credit and income.

Final Thoughts

When considering applying for a home equity loan or any other type of loan, be sure to shop around to compare the varying plans offered by banks, credit unions, and mortgage companies in your area. At American Mortgage Resource, Inc. we have relationships with over 20 different lenders and strive to make the process as simple and smooth as possible. Contact us here to learn more about our affordable services.

Private Mortgage Insurance (PMI)

When it comes to a mortgage, considering all of your options is crucial in finding the arrangement that best meets the continued needs of you and your family. Many private insurance companies will offer home buyers PMI, which is a deal typically established by the lender and paid for by the borrower, but can benefit both parties. Continue along with this month’s blog for more information about PMI and to find out if it’s right for you.

The Purpose of PMI

PMI is sometimes required of home buyers who have put down a deposit that’s less than twenty percent of their loans total value or who have taken out a conventional loan rather than a government assisted loan. Essentially PMI is insurance coverage for the lender to ensure they will be repaid the amount of the loan in full.

Pros of Having PMI

Agreeing to PMI can help home buyers who are struggling to qualify for a loan large enough to afford a home. It can also help them qualify for their desired loan much more quickly. As the prices of homes continue to soar every year, a prolonged plan to save for a larger deposit may not be the best option for some potential home buyers.

Cons of Having PMI

The biggest downside of PMI is that it’s an additional monthly expense or upfront cost that new home buyers are responsible for paying in addition to their mortgage. It’s also an expense for a service that doesn’t directly benefit those funding it. PMI will usually have to be paid until the borrower has compensated a predetermined minimum on their principle.

Conclusion

Private mortgage insurance can help countless families finally catch the break they need to afford a home. For more information on how to get approved for a loan, visit this article. For expert help through the loan and mortgage processes, contact our professionals here for guidance you can trust.

Why Your Credit Score is Important for the Loan Process

In order to get the best deals and rates on a home loan, you need to have a good credit score. Mortgage lenders are going to look to see if you are a responsible borrower and making your payments on time. Additionally, your credit score can provide the information a lender needs to determine your eligibility, including which rates they are going to offer and what type of loan you qualify for. Continue reading to understand how your credit score is important for the loan process!

Are You Credit Worthy?

Before you begin shopping for loans, have your credit score ready to go. Check online with an accredited website for the most accurate results. It’s important to mention that most lenders are going off of a FICO credit score, which ranges from 300-850. If your credit score falls under the category of “fair” or better, you’re in the average range for an American borrower.

Is Your Credit Enough for a Home Loan?

According to Meridian Banker, “the credit score needed to buy a house greatly depends on the type of home loan you apply for.” Some of the most common loans you are going to come across are conventional loans, FHA loans, and VA loans. These loans start at a minimum of 500-620 or higher. FHA loans are beneficial for borrowers with low credit scores, while conventional and VA loans are better if you’re in the “good” or “very good” range.

What about Rates?

The higher your credit score, the lower your rates are going to be. The amount you’re paying back on the loan is greatly affected by the rate at which it’s set. Essentially, a lower rate is going to save you more money over time. This is why having a good credit score can expand your loan options, while also giving you better rates in the long run.

Conclusion

For more information about the loan process and what it involves, the professionals at American Mortgage Resource, Inc. are here to answer your questions. We want you to be confident in your financial decisions, so call us at (617)-972-8588 or visit our website to send a message. We look forward to hearing from you!

Your Home Loan Guide to Getting Approved

Purchasing a home, especially as a first time buyer, has proven to be a long and difficult process. It’s stressful, a pain and a real headache to go through. In this article, we discuss what it takes to get a home loan approval and how to meet the minimum requirements to qualify. Let us help you with these simple tips!

Improve Your Score 

A good way to start the approval process is to improve your credit score. It’s important to make your score as high as possible before applying, scores of 740 or more are suggested; the higher the better. Once you feel it’s acceptable, you’ll need to grab a copy of your credit report from all three credit reporting agencies: Equifax, Experian and TransUnion. Be sure to check each report thoroughly for errors.

Get Pre-Approved

After getting your credit checked, don’t go shopping for a new home just yet. Another thing you’ll need is a pre-approval letter from a loan officer. During this process, they will check your credit and validate your finances. To get pre-approved, it is important to gather the following documents: W2’s and paycheck stubs, 2 years of tax returns, 2-3 months of bank statements and proof of down payment.

Know Your Type and Budget

There is no “one size fits all” home loan. Depending on your budget, you may qualify for loan programs that offer a variety of advantages. Since buying a home is such a major investment, it’s important to keep in mind your finances and budget costs for all home ownership expenses. Researching the different loans can help you know exactly what you’re getting into. If you’re a first time buyer, it’s beneficial to know the types of loans that are available for you such as a FHA (Federal Housing Administration) loan.

Conclusion

Home loans can be complicated and confusing for many first-time and even veteran home buyers. We can help guide you through this significant financial decision and get you approved for the home loan that works best for you! American Mortgage Resource, Inc. has the solutions you need to ensure that your loan application gets approved and the process runs smoothly.

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.