Some may tell you that all homes appreciate in value over time – or that it doesn’t matter, because you’re buying a home to have a home, not an investment.

The truth is, most Americans do move every few years, so thinking about that house as an investment as well as a home is a smart financial move.

1. Choose your location wisely.

In fact, don’t even look at homes that are in the “wrong” location for you. You need first to consider your own situation and gravitate toward neighborhoods that will allow you to spend time at home rather than on the road.

In terms of appreciation, look for neighborhoods that are well-maintained and/or going through multiple upgrades. And then, whether or not you have children, consider the school district. Parents across the country are paying more for a home in order to get their children into top schools.

Do drive through the neighborhood looking for “For Sale” signs – too many is a good sign that others are finding it less than desirable. Keep looking.

2. Search for the smallest, least-updated home in a neighborhood of nice homes. (Never choose the largest home in a neighborhood of small to medium sized homes.)

If you’re able to find the only home on the block that doesn’t have a deck or hasn’t had a kitchen upgrade lately – but you can afford to make those improvements – you’ll add instant value. In addition, pay attention to the size of the lot, since you may want to build an addition later on.

3. Look beyond the lipstick and rouge – or lack of it

Curb appeal: Savvy home sellers go to lengths to create “curb appeal” to draw you in and cause you to expect to love the house before you walk in the door. And it works, many buyers completely pass over homes with poor curb appeal.

So go against the norm and take a look. While it’s true that neglect outside might signal neglect inside, it’s also true that it might not. You don’t know that homeowner’s circumstances. They may be physically unable to do yard work and may not have the budget to pay for it. The interior may be impeccably maintained.

Take a close look – are YOU able to turn that yard into a thing of beauty? If so, you’ll immediately increase the value of your new home.

Décor: Ignore the gaudy paint colors and leopard-print carpet. Forget the ugly couch and the velvet art on the walls. Those things can be changed immediately. Meanwhile, they’ve sent other buyers scurrying out the door, so the price might more than compensate for the cost of getting fresh new paint and flooring. Make sure that proper painting over dark colors has been done as light colors make a house look more prominent and pleasing.

Instead, look at how the home functions and flows. Check to see that the number of bedrooms and baths fit your household, and that the room sizes will accommodate your furnishings. Look at the closets and the other storage spaces, and then…

Inspect for water pipe damages and get plumbing services at affordable prices.

4. Get an inspection.

So many hidden things can be wrong with a house, that it makes a home inspection just about the best insurance you can buy. The inspector checks everything from top to bottom and will give you a written report outlining any and all issues.

Some, of course, are small issues. The inspector may point out that they don’t even need to be addressed. Others, however, can be major. Structural problems, pest infestations, polybutylene piping, a failing septic tank, or foundation failures fall under that category.  Repair of these items can come with huge price tags.

Once the inspection is finished, go over it with him or her and ask questions. Find out which issues are major and which are minor. Then talk it over with your real estate agent. He or she may be able to get repair estimates so you can get a true picture of costs.

5. Don’t over-pay

Experts say the way to make money on a home is at the purchase, not the sale. That means – never over-pay. Your agent will help you compare prices and values so you don’t make a huge mistake. He or she may also be willing to do a comparative market analysis to give you a clear picture of the home’s value in the current market.

In addition, never pay all the bank allows.

Leave room in your budget for unexpected expenses and for things your lender didn’t consider – like the fact that your kids like to go to summer camp, you like a skiing vacation every winter, or you love dining out or attending concerts.

The First Step

When you’re ready to find that home, the first step is to get pre-approved for your loan. So call Homewood Mortgage, the Mike Clover Group, and let’s get started.

Reach us today at 469.621.8484.

Consumer advocates have long been pushing for improvements in the accuracy of reports from the credit bureaus, and now they’ve met with success. Equifax, Experian, and TransUnion are applying new, stricter rules to the information they gather from public records.

The changes primarily affect two major sources of inaccuracies in credit reports – tax liens and civil judgments. You can go here for a full unbiased review via Debited.com. These are two areas over which hundreds of lawsuits have been filed and thousands of individuals have vainly fought to have incorrect information removed from their files.

From now on, in order to be included on a credit report, records must include the subject’s name, address, and either their date of birth or their Social Security number. This move should eliminate the possibility that your credit report will contain information about some other person who happens to share your name.

Since nearly half of all tax lien records and nearly all civil judgments do not meet this requirement, they will be stricken from credit reports, raising credit scores for approximately fifteen and a half million people in the U.S.

Changes in credit bureau policies have been happening for the past two years, when 31 state attorneys general got together to crack down on the credit bureaus. Following a deal that was negotiated, credit bureaus had already ceased including traffic tickets and court fines in their files.

According to Fair Isaac, FICO scores will typically increase 20 points or less, but that could be just enough to allow some people to buy a home or a car, get a school loan, or obtain a credit card. For others, it could make a difference in the amount of interest they’ll be required to pay.

Those individuals who have been battling to get incorrect information removed from their files will now be spared the frustration and the endless hours of trying to prove they are NOT the Joe Jones or Suzie Smith with a tax lien or a civil judgment.

Naturally there are those who fear that the result of this change will be loans granted to individuals who are not credit-worthy.

If you’ve been plagued by an inaccurate credit report and are ready to see how these changes have affected your own ability to purchase a home, call us at Homewood Mortgage, the Mike Clover Group.

Whether you’re ready for pre-approval or simply have questions, just call.  Reach us today at 800-223-7409.

If you’ve just had a wonderful family vacation at the beach or in a mountain cabin, you may be thinking how nice it would be to own your own vacation home.

You’d have all your own things right there. You wouldn’t have a hassle with booking a rental for the days you want. And, in addition to taking your annual 2 week vacation, you could steal away for long week-ends throughout the year.

It sounds ideal, but before you begin searching the Internet for vacation homes, stop and ask yourself two important questions.

First, of course, is “Can we afford it?”

The expense of a vacation home comes in two parts: The purchase and the upkeep. If you can answer “yes” to these 5 questions, you’re good to go on the purchase end:

1. Is my primary residence already paid for?
2. Am I putting away 15% of my income each month for retirement?
3. Am I saving for my kids’ college expenses?
4. Do I have an emergency fund equal to 3 to 6 months’ income?
5. Do I have the cash to purchase a vacation home?

Question #5 is all-important. Specialists of commercial property management Chicagoland believe no one should ever go into debt to buy vacation property.

It also a terrible idea to dip into retirement funds, especially if they’re in an IRA.

Be aware that withdrawing funds before the agent of 59 ½ means you’ll take a 10% penalty hit. Then you’ll owe taxes to the IRS – and possibly to the state. What that means in real numbers is that if you withdraw $100,000 from your IRA you’ll only receive about $70,000.

At the same time, you’ll be forfeiting the compound interest on that account.

Sure, that vacation home will likely grow in value – but as we’ve seen in recent years, that’s not guaranteed, and even in the best of economies it will dependent upon how well you maintain the house during your ownership.

Now consider upkeep.

You’ll need to maintain that home just the way you maintain your primary home, and some of the expenses may be higher.

Homeowner’s Insurance, for instance, costs more for a home that is virtually unoccupied. And, if you’ve chosen a beach home, you’ll probably be required to have flood insurance.

Property taxes may be higher because it isn’t your primary residence.

Monthly expenses – Depending upon the kind of home you choose, you’ll be responsible for utilities, internet/cable TV, garbage service, HOA fees, or lawn maintenance. It’s never good for a house to have utilities and heating/cooling turned off for extended periods of time, so don’t plan on just turning everything off while you’re gone. (The exception would be your cabin in mountains with snowy/cold winters – do pay to have the water system drained and winterized during the months it won’t be in use.)

Property management. Yes, this is an added expense, but it will give you peace of mind to have someone keeping an eye on your property on a regular basis.

Yes – you can use your vacation home as a rental. However, if you do, you run the risk of it being destroyed by tenants. You also have to adhere to rules set down by the IRS. If this is your plan, be sure to talk seriously with your tax accountant before making the move. And finally – check with your REALTOR® to make sure that using your second home as a rental doesn’t violate any subdivision or HOA regulations.

Second – “Do we really want to be locked in to the same vacation spot for the foreseeable future?”

When you own your own vacation home and you’re paying for it all year long, you’re pretty well committed to returning to it each year. That might be fine for the first year or two, but after that some other destination might catch your eye, and you’ll be sorry that you’ve made such a commitment.

Consider renting someone else’s vacation home. This is a short-term commitment that will cost you far less than owning your own. If you really love it, you can book ahead for the next year. If not, you can begin researching other destinations that might be even more fun.

You may have gasped when you read that a former President paid $7,000 per week for use of a vacation home in Hawaii. Many did. However, if you think about it, that’s a drop in the bucket compared to owning such a home for a full year.

See related: Manuel Antonio Hotel Nestled in Costa Rica’s Rain Forest | Jungle Vista Inn.

The house and the neighborhood you choose are important, but even more important is buying it correctly. You want that house to be a joy. If you make mistakes in buying, it will be a burden.

So start at the beginning – with getting your finances in order.

We know, looking at homes is more fun than doing math, but the math does need to come first. Become financially ready for this giant step by putting your credit in the best possible shape, paying off old debt, and saving at least 3 months’ worth of living expenses in an emergency fund.

Remember that when you become a homeowner, responsibility for repairs and maintenance are all yours. If the furnace goes out on a cold winter’s night, you can’t ignore it and you can’t postpone it – you’ll have to get it fixed. If your roof is damaged or leaks, you will have to hire asphalt shingle roofers. If you experience sewer line problems, you will need Septic service near Jefferson. And unless you took out a good home warranty plan, you’ll have to pay for it.

The emergency fund is also good insurance in the event that you should become ill or injured and be without income for a short time.

Next, save money for your down payment, closing costs, moving expenses, and any updates you’ll want to make before you occupy a new home.

How much money does that take?

Save at least 10% of your eventual purchase price for a down payment – 20% if you can. Paying 20% down means you won’t be paying mortgage insurance, and that can save you thousands each year.

On average, closing costs will cost about 3% of the price of the home. These are the fees charged by the title company, your lender, and the “prepaids” that cover property taxes and homeowners’ insurance reserves.

Moving costs can range from just enough to cover gasoline to several thousand dollars. It depends on how far you’re moving and whether you hire a professional.

What about updates? Can you move in now and make improvements later, or do you really need to repaint and install Orlando flooring first? Allow for that cost.

Next, get preapproved for a mortgage loan.

This is the step that will show you just what you can spend and what it will cost you to borrow the money. It’s completely different from a loan pre-qualification, so don’t get the two confused.

To obtain pre-approval you’ll go to your lender with the same documents and verifications that you would take if you’d already found the home and were ready to get the loan. He or she will verify everything, then send the file to preliminary underwriting.

At the end you’ll be better off in two ways: You’ll know your limit, so you won’t spend starry-eyed days looking at homes that are beyond your reach. (Once you’ve looked at homes you can’t afford, the ones you can afford don’t look very appealing.) Second, when you have a pre-approval letter in hand, your home offer will be taken seriously, and will probably be accepted over any offers that come without a letter.

After all, no seller wants to take a house off the market and wait to see if the buyer will qualify for a loan. They’d much rather see it there in writing that “Yes, you can buy this house.”

Choose the loan option that’s right for you.

For many people, a fixed-rate loan is the best option. It gives you the security of knowing your payment will never increase due to fluctuations in interest rates. However, there are times when it’s wise to choose a Lender Paid Mortgage Insurance loan.This is an issue to discuss with your lender.

Most borrowers also choose a 30-year loan, but for those who can afford it, a 15-year term is better. You’ll own the house in half the time while spending many thousands less on interest. The difference between 30 years and 15 years at 4% is $262 per $100,000 loan. ($477.72 at 30 years, and $739.69 at 15 years.)

Once you’re pre-approved and know what you CAN spend, consider what you WANT to spend.  

Remember that your lender doesn’t have any idea what you like to do in your spare time. He or she doesn’t know of your passions or your future goals. You probably do have a few ways you like to spend money – whether it’s sending your kids to a fantastic summer camp, attending concerts, or collecting antique cars.

Leave room in your budget for those things that matter only to you and yours.

Choose a real estate agent to help in the home-buying process.

Sure, you can search on line and get an idea of what’s available, but when it’s time to actually locate the home of your dreams, you need professional assistance.

First, they know how to sort through the listings to find homes in the neighborhood that’s right for you. Remember that the neighborhood is the one thing you can’t change once you’ve purchased a home.

Next, they sometimes know of homes that are just coming on the market. In a competitive market, that will give you an edge.

After that, they know how to write the offer to protect your interests, and to present the offer in the best light. After that, they employ negotiation skills to help you get the most favorable price and terms.

How to choose the right agent.

Look for an agent who has knowledge and experience in the area where you wish to purchase a home. You want someone who is familiar with values and trends in the area and who can answer your questions about services and neighborhood amenities. This is not the time to choose someone from another part of the city, or worse – from another city.

You also want someone who is enthusiastic about helping you and who answers or returns your phone calls or emails promptly. Don’t settle for someone who calls back in a day or two.

Next, choose an agent who takes the time to answer every one of your questions to your satisfaction.

Once you have your loan nailed down and have found a spectacular agent…

It’s time to find that house.

Before you begin looking at homes, create two lists. One is “Must have,” and the other is “Would like to have.” Share these lists with your agent, who will then pare down the list to include only homes that offer the features and amenities you must have. From there, he or she will attempt to put homes with your “Would likes” at the top of the viewing list.

The location is all-important.

Choose a neighborhood or neighborhoods that will put you in close proximity to your workplace, your school, your favorite recreational spots, or possibly to your friends and family members. In addition, choose a “good” neighborhood. That means one where the homes are well-kept, adding to the value of every house nearby. In fact, it’s wise to buy the least expensive home in the best neighborhood you can afford.

The location is the one thing that can’t be changed once you’ve made the purchase, so don’t compromise.

Have your agent look at market trends in the neighborhood. Are homes increasing or decreasing in value? Is there new development planned that will affect home values?

Investigate the school district. Even if you don’t have children, buying in a neighborhood served by a top school district is wise, because it will affect your future resale value.

Choose a layout and floor plan that works for your family and your lifestyle. For instance, if you love to cook, don’t settle for an apartment-sized kitchen. While it’s true that walls can usually be moved, it’s expensive. So choose a pleasing floor plan from the start. Choose a floor that is the best fit for you. For tile and grout cleaning perth, visit the link. Tiles do require some upkeep and they do a great job.

Look beyond the surface. Things like paint color and floor coverings are easily changed, and since most people can’t see beyond that surface, you just might get a great bargain buying a home with a lime-green shag carpet. The Gaines rug collection will offer you a whole range of carpets with intricate detail and design.

If you find any pest related problems while inspecting the house, then click on EZBugRemoval.com | PCBK and get experts to help you get rid of them before finally buying the house.

Once you’ve chosen the house, it’s time to submit an offer.

Your real estate agent will help you submit a solid offer – which entails a whole lot more than just the purchase price.

An offer consists of many pages, outlining everything from the type of financing and your down payment to the closing date and the contingencies your agent will recommend.

If yours is a good offer and you have no competition, it may be accepted as is. However, do be prepared for a counter-offer. Your agent will help you analyze that counter-offer and decide how to respond. Remember it is sometimes best to give a little on small things in order to obtain the prize: the house you want.

After you and the seller come to agreement, you’ll need a home inspection, an appraisal, and final mortgage approval.

You’ll also need a little patience. Here at Homewood Mortgage, the Mike Clover Group, we strive to complete each purchase loan within 30 days. However, some lenders routinely take 45 to 60 days.

Your contingencies will probably include a home inspection, so get that out of the way first. You may have included a repair allowance in your offer, and if any called-for repairs come within that amount, you can proceed. If more money will be needed, it’s time for more negotiation. Again, your agent will help you.

This contingency is important to you, because if repairs are extensive and the seller won’t agree to have them done, you can back out without losing your earnest money deposit.

Your offer may have called for other inspections, such as checking for insect infestation or determining the condition of a well or septic tank. These are equally important.

The Appraisal.

Your lender will order the appraisal just as soon as you’ve approved the condition of the house and the underwriter has approved your loan. This is to ensure that the bank does not lend more than the value of the house. If the appraisal comes in too low, you have three choices:

• You can pay the difference out of your own pocket.
• You can have your agent challenge the appraisal.
• You can cancel the transaction and retrieve your earnest money.

The final mortgage approval.

Within a day or so of closing, the bank will take one more look at your financial picture – and here is where far too many buyers destroy their own dreams of home ownership.

How? By doing something to change their credit scores or their overall financial picture. At this time it is crucial that you do not:

• Apply for a new credit card or credit at a retail store.
• Buy a new car.
• Co-sign a loan.
• Increase the balance on an existing credit card or retail account.
• Use your credit card to make a reservation of any kind.
• Quit a job.
• Change jobs.
• Drain your savings or checking account.

Doing any one of those things could cause your loan to be denied, so don’t do them!

Finally – the closing!

Prior to the big day you should receive a copy of the closing documents for your review. These documents will outline the terms and conditions of your loan and will itemize the costs you are paying.

If you have questions about anything, don’t hesitate to contact your agent and your lender to get an explanation and clarification.

When you go to closing, remember to take along your ID and the cashier’s check for your down payment and closing costs, and be prepared to spend an hour or so. You’ll have pages and pages to sign, and the closer will explain each of them to you one more time as you go through the stack.

Here at the Mike Clover Group, we enjoy helping future homeowners take that first step by getting them pre-approved for a mortgage loan.

Whether you’re ready for pre-approval or simply have questions, just call.  Reach us today at 469.621.8484.

While the most common home loan is the 30-year fixed rate mortgage, it may not be for you.

This loan was first established as #1 when the Federal Housing Administration embraced it back in 1954. It gave homeowners a longer time to pay, so their payments could be lower than they would have been with a 15-year loan.

In addition, people were happy with the predictability. They knew that the principal and interest portion of their mortgage payment couldn’t change for the duration of the loan.

It’s the most popular loan today for the same reasons. But that doesn’t mean it’s the right loan for you.

Here are 4 good reasons why you may want to choose a different loan:

You don’t have 20% to put down. Yes, you can get FHA loans and even some conventional loans with far less down payment, but then you’ll pay a steep mortgage insurance premium for the life of the loan.

Most conventional 30-year fixed-rate mortgages will require 20% down to avoid mortgage insurance premium.

You have the 20%, but you don’t want to spend it. You might prefer to put the money into a retirement account or keep it on hand for a business opportunity. You may want to consider a lender paid mortgage insurance loan. You pay a little higher rate to avoid mortgage insurance premium fees. This loan is ideal if you are going to be in the house for a minimum of 4 –  5 years.

You want to build equity quickly. If you can afford a higher monthly payment and want to build equity in a hurry, a 15-year fixed-rate loan could be best for you. The 15-year loan offers two advantages: Faster equity build-up and lower interest rates. Thus, each payment will go more toward principal and less toward interest.

You’re planning to sell the home within a few years. Perhaps this is a starter home and you plan to “move up” within a few years. Maybe you’re making giant strides climbing a corporate ladder and expect to be transferred to another city before too long. Or, perhaps you plan to retire to a different climate in just a few years.

In this case, a lender paid mortgage insurance loan is ideal, you can just right off the interest being paid. Also in most cases the payment is less even though the rate is higher because no mortgage insurance premium is required.

Do keep in mind, however, that in order to recoup your purchase price, you need to own a home for 3 to 5 years before selling. We realize that wasn’t true during the boom years before the crash, but in a normal market, such as we have now, that’s the rule of thumb.

Why? Because you’ll have selling costs. Plan on those taking at least 10% off the top of your eventual selling price. Talking about selling your house and eliciting the right price for it from your potential customer, make sure that your property has been sanitized and cleaned of bugs and pests. Call a pest control company like that of BBEA – ExcellentPestGuys.com – Bed Bug Exterminator Austin for the job.

If you plan to move within just a year or two… don’t get any loan at all! You’ll be financially and emotionally better off just renting. Remember that selling a house is a lot of work – not just for the real estate agents, but for the homeowners who need to keep everything in “show-ready” condition, be ready to vacate for showings at inconvenient times, and endure the stress of negotiating, waiting for appraisal and inspection results, etc.

Unless you have the ability to pay all cash for your new home, you’ll need a mortgage.

What is a mortgage? It’s a loan from a financial institution used to pay off the home’s sellers. It comes with a lien against your new home, and with your promise to the lender to make timely payments of both principal and interest, and to keep property tax and homeowner’s insurance payments up to date. In many cases, taxes and insurance are added to your monthly payment and held in escrow for the bank to make those payments.

Unless you made a down payment of 20% or more of the purchase price, your payments will also include mortgage insurance – which does not protect you, but protects the bank in the event of your default on the loan.

When planning to buy, first take a look at your credit score and debt-to-income ratio.

Low credit scores and high debt to income ratios can either destroy your chances of getting a mortgage loan, or put you into a high interest bracket. So get a copy of your credit report and scores.

If you need to do some work to get those scores up, get started right away. If you’re not sure where to start, please feel free to call us at the Mike Clover Group. We’ll be happy to give you tips and advice. Meanwhile, be sure to make every payment on time, and don’t take on any new debt.

Look at your debt to income ratio. You’ll find it by dividing your monthly debt by your gross monthly income. If the number is more than 43%, you need to begin paying off some obligations and reducing your debt.

Next, get mortgage pre-approval.

The maximum amount of  interest you will pay on that loan will depend upon your financial picture at the time of application. So before you begin to shop, it’s wise to get pre-approved for your mortgage loan.

You may have already been pre-qualified, and that can be helpful to you in your planning, but note that pre-qualification is not the same as pre-approval, and it carries no weight with banks or will home sellers. It is based only on a conversation between you and the lender, with no verifications.

Pre-approval consists of a lender getting the same information from you and doing the same verifications that he or she would do if you were making the actual loan application. Your income, your employment history, your assets, your debts and obligations, and your credit scores will all come into consideration.

Pre-approval, which should take no more than 2 or 3 days, gives you two advantages:

1. You’ll know what you can afford, so you’ll look at the right houses. Beginning the search with homes that are out of your range is disheartening. Once you’ve seen, and fallen in love with, a home you can’t afford, the houses you can afford will have little appeal.
2. You’ll have a far greater chance of having your offer accepted, or at least considered, than you would with no letter of pre-approval. Sellers aren’t interested in waiting to see if you can get a loan.

Don’t jump at the first mortgage loan you see – shop around.

Research the different types of mortgages and the programs offered by different mortgage brokers and banks before you decide.

First, there are two basic types of mortgage loans – fixed rate and adjustable. With a fixed rate loan, the interest rate will not change for the duration of the loan. The only time your payment will change is when your taxes and insurance change. This is a good loan for a borrower who likes the security of knowing the amount of their payment for the next 15, 20, or 30 years.

An adjustable rate mortgage generally starts out with a lower interest, but is subject to change after a pre-set number of years. (Usually 5 years) The interest rate will have a ceiling, or cap, but can still rise substantially. The difference between a 4% and a 5% interest is about $60 per month per $100,000 owed.

Next, different lenders have different programs and fees. Some, like the Mike Clover Group, can close your loan in 30 days, while others might take 45, 60, or even 90 days.

Apply for your mortgage loan

A common misconception is that once you’ve gotten a pre-approval and/or made a loan application, you’re stuck with that lender. Not so.

Once you’ve made application, you should receive a loan estimate that includes closing costs, the interest rate, and the monthly payment, including principal, interest, taxes, homeowners insurance, and mortgage insurance.

You have every right to take the same information to another lender in order to compare offerings and fees. We at the Mike Clover Group are proud of the fact that our interest rates and loan fees are among the lowest available in Texas.

Note that while letting a retailer check your credit at this time can harm your credit score, making multiple mortgage loan applications will not. The credit bureaus recognize that you’re not trying to take out two or three home loans – you’re shopping.

After you approve the loan estimate…

Your file will go to the underwriter for final approval, and as long as there are no mishaps, you’ll be on your way to closing.

Mishaps? What can happen after the loan is approved?

Your financial picture can change. You can apply for credit at a retail store or get a new credit card. You can co-sign a loan for a friend. You can change jobs or quit your job. You can buy a car or furniture for your new house. You can book a vacation, using a credit card as security. You can be late paying a bill.

The time between your loan approval and closing is critical. Do nothing to change your financial picture, and make no purchases beyond ordinary living expenses.

If you have questions, just call. Here at Homewood Mortgage, the Mike Clover Group, we’re always happy to answer. Reach us today at 800-223-7409.

Homewood Mortgage,LLC

O: 469.621.8484

C: 469.438.5587

F: 972.767.4370

18170 Dallas Parkway

Ste. 304

Dallas, TX 75287

NMLS# 234770

When you hear the term “Jumbo loan” you might think of loans in the millions, but that’s not so.

A jumbo loan is a home mortgage loan for any amount that exceeds the loan limit on conforming loans. In most areas, including Dallas / Fort Worth, that limit is $424,100. In high-home cost areas, the limit is $636,150. In areas outside the contiguous United States, the limits can be even higher. Limits are also higher when purchasing properties with 2, 3, or 4 housing units.

These limits are set by Fannie Mae and Freddie Mac, and are based on a county’s median household income.

Jumbo loans are available for primary homes, vacation homes, or investment properties, and can be either fixed-rate or adjustable rate mortgages.

After the housing crisis and the enactment of new regulations under the Dodd-Frank legislation, many mortgage brokers pulled out of the jumbo loan business, leaving them to the large retail banks. Homewood Mortgage, however, continues to offer Jumbo Loans, and – as with all of our offerings – at very competitive rates.

Requirements are a bit stricter…

Since lenders have more at risk, they need a bit more assurance that the borrower has the ability to repay their jumbo loans. Thus, while a conventional loan can be obtained with credit scores as low as 620, most lenders require a score of 700 for a jumbo loan.

Here at Homewood Mortgage, we can go as low as 680.

In addition, down payment requirements are higher. While some lenders require 25% down (or a loan to value of 75%) we at Homewood Mortgage require 20% down.

Debt-to-income ratios (DTI) are also lower. Your debt to income is calculated by dividing your minimum monthly debt by your gross monthly income. For most conventional loans, debt can equal 45% of your monthly income. For a jumbo loan, that number is generally reduced to 38%. We will go up to a 43% debt to income ratio.

As with all mortgage loans, a variety of risk factors are considered both for loan approval and for the interest rate, debt-to-income ratio, and the loan to value ratio that the lender will approve.

With housing prices rising across the U.S., the number of jumbo loans compared to conventional loans is also increasing. Numbers for last year are not yet available, but the Wall Street Journal reported that jumbo loans reached 24% of the total in 2015, up from 21% in 2014.

When a jumbo loan is what you need, call the Mike Clover Group at Homewood Mortgage. We not only have low interest rates, we offer low closing costs and a fast turn-around.

Reach us today at 800-223-7409

If your dream of home ownership is becoming more of an obsession than a dream, it’s time to take a look at your finances and see if you’re ready to make the leap.

If you can answer yes to these 5 questions, then it’s time to get serious about seeing a lender, getting pre-approved, and beginning the home search:

1. Am I planning to stay in the community for the foreseeable future?
   This has nothing to do with your finances, but it is the first consideration. It’s not wise to buy if you know you’ll need to sell in just a couple of years.
2. Am I debt-free and do I have money in the bank?
   Not only do you need money for a down payment, you should have an emergency fund equal to at least three months’ of routine expenses.

   This will ensure that you’ll be able to handle unexpected expenses and unexpected gaps in income. You don’t want to lose your home because of an accident, illness, or job lay-off.

   If you’re not there quite yet, get started! Pay off your debts one-by-one until they disappear. When one is paid off, add that payment to the account that’s next on your list. When you have them all out of the way, commit those funds to your savings account.

3. Do I have an adequate down payment saved?
   While some programs are offering extremely low down payments again, taking advantage of them isn’t always wise. Strive for at least 10% down – and go for 20% if you can. Once you reach the 20% mark you’ll be able borrow without the burden of paying mortgage insurance.

   That will not only feel good because you’re not throwing money away, it will mean you are able to spend more on the monthly principal and interest payments. After all, mortgage insurance adds approximately 1% of your loan balance to your monthly payment. (On a $200,000 mortgage loan, that’s $2,000 per year, or $166 per month.)

   Speaking of that payment, it’s wise to limit your payment to no more than 25% of your monthly take-home income.

4. Do I have enough extra to pay my closing costs?
   While it’s true that some sellers will agree to cover those costs, not all do. You should be ready to pay them yourself. These costs can amount to between 2 and 5% of your home’s purchase price, so for a $200,000 home you’ll need between $4,000 and $10,000.

What are these costs?

The loan origination fee

Home and pest inspection fees
Appraisal fees
Prepaid property taxes, homeowner’s insurance, and mortgage insurance
Title insurance to cover your lender
Recording fees
Underwriting fees

Different lenders charge different fees, so you won’t know the exact amount needed until you’ve made your loan application. Be prepared!

You are entitled to receive your final closing papers 3 days prior to closing, so be sure to read the fees carefully and do question anything that wasn’t in your original estimate and anything for which the amount has changed dramatically.

5. Can I afford the cost of moving?
   You may have friends with trucks and muscles who will help you do the actual moving, but even if they work for free you’ll be expected to provide refreshments. And if you don’t have those friends, you’ll need several hundred dollars to pay a commercial moving crew.

   In addition, you’ll need to purchase supplies such as packing boxes, bubble wrap, tape, marking pens, etc. You’ll also need cleaning supplies, and if you plan to do any painting or other fix-up before you move in, you’ll need those supplies.

   Now add in deposits on utilities and the cost of any appliances that weren’t included in your home purchase.

In order to plan ahead, get estimates for these items, then pad that budget a little to allow for something unexpected.

Don’t ignore this major money-saving move: Hire a buyers’ agent.

Hiring a buyers’ agent is one of the most important things you can do to ensure a smooth transaction.

Because agents are familiar with the houses in their market, and because they have access to both the MLS notes and the listing agents, your agent can shave days or weeks from your house hunt.

Because agents know the going prices in their markets, an agent can also guide you in making reasonable offers and protect your interests in negotiations.  They’ll also keep you out of trouble by making sure you’ve seen all the appropriate disclosures and have included the correct contingencies in your offer.

Except in special circumstances, buyers’ agents are paid by the seller through the transaction, so you get valuable protection at no additional cost to you. Don’t risk purchasing a home without it!

Are you ready to get pre-approved and start the search for your new home?

If so, or if you’re not quite sure, get in touch with us at Homewood Mortgage – the Mike Clover Group. We’ll be glad to answer your questions and do a pre-approval to let you know exactly where you stand.

We offer fast service and the lowest rates and fees available in Texas, so call the Mike Clover Group at 469.621.8484.