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Mortgage Payment Breakdown

Jun 27
5:00
PM
Category | General

Mortgage Payment Breakdown

 

If you are like most homeowners, come the first of the month you probably mail out a check or pay your mortgage online and never think twice about where your money is going.  You’re not alone.  In fact, a large percentage of homeowners don’t remember their interest rate or loan balance on their mortgage.  They spend weeks before closing on their home, trying to get the best possible loan terms, only to quickly forget about everything once they get into their house. 

 

Your mortgage payment is comprised of four parts, principal, interest, taxes, and insurance.  Let’s break down each of these components.

 

Principal

The principal is the repayment of the amount of money you borrowed.  The larger the balance, the higher the mortgage payment.  When you pay principal, it reduces the balance you owe.  You can request an amortization schedule to see the breakdown of every payment. 

 

Interest

Interest is the percentage charged for the use of borrowed money.  During the first seven years of your loan, your payment will mostly go toward interest.  Most banks use this method to protect themselves in case of default. 

 

Taxes

Taxes are decided by the municipality you live in and are based on the property’s value.  Usually your tax payments will go to a holding account called escrow and the escrow company will pay them.  If your taxes aren’t paid, they can take lien priority over everything else and begin the foreclosure process.  Taxes may change from year to year, which can change your monthly payment.  If you mortgage payment has increased and you don’t know why, take a look at the tax portion of your payment.

 

Mortgage Insurance

If you buy a home and put down less than 20% you may be required to have mortgage insurance.  PMI (Private Mortgage Insurance) ensures the investor against losses if the homeowner defaults on the mortgage.  Like your property taxes, insurance is typically escrowed into your monthly payment.

 

Home Owner’s Insurance

Home owner’s insurance is a form of property insurance that covers losses and damages to an individual’s house and to the belongings in the house.  Home owner’s insurance also provides liability coverage against any accidents in the home or on the property.

 

Home ownership is exciting, especially as you get closer to owning a house that’s free from a mortgage.  A lot can happen during the lifetime of your loan.  If questions arise during your loan repayment, never hesitate to speak with your Loan Officer.  We’re here every step of the way.

 

 

 

This ad is not from HUD, VA, or FHA and was not reviewed or approved by any government agencies.


First Time Home Buyer Pitfalls

May 30
4:42
PM
Category | General

First Time Home Buyer Pitfalls

Common mistakes and misconceptions to avoid

 

Lack of Credit

Check or monitor your credit and fix any problems before you start looking at houses.  You typically need a credit score of 620 to qualify for a mortgage.  We can help you today with free credit counseling.

 

Not knowing how much they can afford

Come on in to find out what monthly payment you can qualify for at today’s mortgage rates.  We’ll head you in the right direction when house hunting.

 

Lack of cash to work with

You’ll need enough cash put away to cover most if not all of the following:

  •    Down Payment
  •    Earnest Money Deposit
  •    Inspections and Appraisal
  •    Closing Costs
  •    Prepaid Interest
  •    Up Front Escrows for Property Taxes and Homeowners Insurance

 

Stuck in a lease agreement

Don’t let a long lease drag you down.  You can try to negotiate an early exit from the lease, but you’ll probably end up paying about 1.5 months’ worth of rent plus lose your security deposit to break the lease.  Try to avoid finding sub-leasers.  They may bail on you and then leave the payment in your hands.

 

Less than full commitment

Finding a home isn’t a weekend “honey-do list” type of project.  On average it takes 12 weeks of searching before finding the right home.  Keep communications active with your realtor and lender along the way.

 

Can’t find a home

Find a home that fits your needs, not just your tastes.  Make a list of the essentials that your home needs to have.  If you find the right home, pounce on it!

 

Small Down Payment

Determine a down payment that fits your budget.  If you put less than 20% down, you will have private mortgage insurance on the loan, which increases your monthly payments.

 

Lender Communication

Keep your Lender in the loop during the entire process.  And don’t make any large purchases or sudden career changes.  It could affect your credit poorly which could disqualify you.

 

Too busy at work

Find ways to be available during the week for your lender and realtor.  Even if it means spending your lunch break returning phone calls.

 

Emotional attachment to a home

Don’t get emotionally attached to that kitchen too soon.  Stick to the facts.

 

Not getting an inspection

Home inspections are a no brainer.  Get one!  Make sure the home you want to buy is in good standing.  Get a true idea of what work needs to be put into it so you don’t get in over your head.

 

 

This ad is not from HUD, VA, or FHA and was not reviewed or approved by any government agencies.


The Path to Homeownership

Nov 6
8:40
PM
Category | General

Helping you understand the home buying process – It’s our job!

Your Mann Mortgage loan officer wants to help make your next home purchase as easy as possible.

 

Contact Mann Mortgage for Financial Pre-Qualification and Pre-Approval

               Your credit will be pulled, and we will specify how much we can lend you based on certain assumptions.  This is not a guaranteed loan offer.  By pulling your credit early in the process we can catch credit score issues and help you resolve them faster.

Establish Your Max Purchase Price

               To calculate your general affordability range, consider primary items, such as your household income, monthly debts (for example, car loan and student loan payments) and the amount of available savings for a down payment.  Make sure to budget for mortgage, taxes, insurance, HOA, utilities, repairs, plus monthly expenses. 

Select a Relator

               Take some time to research and conduct interviews before selecting.  Seek out reviews and testimonials online.  You don’t have to use a realtor but they can be a great asset.

View and Select Properties

               Finding the house of your dreams may take a while or it may take an afternoon.  Work with your relator and search for “For Sale by Owner” homes online.

Make an Offer

               It isn’t just about telling the seller how much you’re willing to pay.  It’s also important to provide proof that you’re able to pay the amount.  You do this by providing a pre-qualified letter from your lender tailored to your offer.  Your offer will also establish the expected closing date, and state how additional costs will be covered and what you expect of the seller leading up to closing.  When submitting an offer, you also need to be prepared to provide earnest money, which shows the seller you’re serious about buying the house.  This amount can range from $500 to 10 percent of the agreed-upon price.

Negotiate/Expect to Counter Offer

               Low inventory in many housing markets in the U.S. spurs competition among buyers.  In some markets you can expect bidding wars. 

Buyer & Seller Agree/Accept Contracts

               In general, an offer becomes a contract when both parties have signed.   Once this happens, the contract is binding for both the seller and the buyer.

Open Escrow

               This is when you pay your earnest money or deposit to the escrow or title company at the time the purchase agreement is signed.  The escrow officer will ensure that all conditions are met by both parties before any money changes hands. 

Home Inspection

               This is not required as part of the mortgage process, but it can discover any potential structural or safety concerns with the property.  If the inspection finds more problems than you’re comfortable dealing with, you can choose to back out of the sale or try to negotiate to have the seller make the repairs or lower the price.

Loan Review

               A processor verifies your paperwork and an underwriter reviews your file to confirm your loan fits the guidelines.  The title will be reviewed to make sure the land is not encumbered by any judgments, liens, or lawsuits.  They will also look for recorded easements and other discrepancies that could affect ownership of the property.  An appraisal is done.  An appraisal is a licensed appraiser’s opinion of a home’s market value based on comparable recent sales of home in the neighborhood.  They are ordered to make sure the buyer is not borrowing more money than the house is worth.  At this point, the entire purchase agreement can still fall apart if anything has changed substantially before closing.  Opening new credit or changing jobs can disqualify you for a mortgage.

Loan Approved

               All your information has been verified and we legally agree to fund the contract.  

Get the keys and move in to your new home!

               Funds have been disbursed according to the contract and your deed has been recorded at the county.  It’s time to move in!

 

 

This ad is not from HUD, VA, or FHA and was not reviewed or approved by any government agencies.


Buying Your First Home

Oct 9
3:34
PM
Category | General

Buying your first home?  A few things to consider.

We all know the old line about location, location, location, but buying a home also takes research, research, research!

All potential owners should take the time to truthfully answer these questions – it can help put you on the right track and ensure that the buying process goes as smoothly as possible.

 

How much can you comfortably afford?

Make a budget based on your income and include all homeowner expenses such as mortgage, PMI, taxes, insurance and repairs/upkeep.  Then meet with your lender to complete the pre-approval process, which entails full documentation and credit check.  It’s a good way to help narrow down the amount that you will qualify for and decide if that’s an amount that will fit your budget.  This can identify any potential hurdles and focus only on homes truly available to you.

 

How much cash will you need to close?

Knowing how much cash you’ll need to close and, ideally, consolidating those funds into one account will help to prevent stress and ease the process later.

 

What kind of property do you really want?

Single family, multi-family, condo, co-op, Victorian, colonial, cape, split, ranch, cottage, cabin, teepee… home types and legal distinctions are plentiful.  Whether you are open to several styles or have your heart set on only one, narrowing your search will save time and prepare you to act when the perfect home hits the market.

 

Preferred location, size and how long you want to live there?

You’ll want to strike a balance between buying what you can afford and buying what will accommodate your needs for longer than just the first few years.  Assess your plans for your growing family and how your income might grow to match.  Planning ahead is especially important in today’s market, when trading up tomorrow may mean both a more expensive home and higher mortgage rate.

 

Do I understand how the home buying process works?

Generally, the process will include:  Offer, Acceptance, Inspections, Contract, Loan Application, Appraisal, Title, Loan Approval, Closing/Funding and Moving In.  Many little steps can fall in between, and the process won’t always occur in a given order.  Ask your mortgage professional for more information on understanding the buying process.

 

I still have questions – how can I get answers?

It pays to speak with local experts early on I the home buying process.  The Internet doesn’t always have all the right answers because options vary for many reasons, including geographic location and a buyer’s individual circumstances. 

 

Reach out when you’re ready, and we’ll help you understand the nuances of your market today.

 

 

 

This ad is not from HUD, VA, or FHA and was not reviewed or approved by any government agencies.


Inspection vs Appraisal

Sep 27
4:09
PM
Category | General

Inspection vs Appraisal – What’s the difference?

Two different reports for two different purposes.

 

Home INSPECTION (optional)

Inspection Determines Property Condition

This is a report that is ordered by and completed for the home buyer.  It is meant to determine the condition of the property and its systems.  It is not required by Mann Mortgage, and is therefore optional.  In most circumstances, our lending professionals would highly recommend that a buyer do have an inspection done.

 

What is the cost? 

Varies, est. $350 - $500

Inspection costs vary depending on geographical location, as well as the complexity and size of home being inspected.

 

How and when is it ordered?

An inspection is ordered by the buyer or buyers agent.  The buyer may use an inspector of their choice.  The inspection is typically ordered after the buyer’s offer is accepted.  In many states, the purchase contract will stipulate that the buyer has 10 days from contract acceptance to complete the inspection and notify seller of any issues uncovered in the inspection.

 

When is the report delivered?

The inspection report is generally delivered to the buyer within 24 hours from the time the inspection was completed.

 

Home APPRAISAL (Required)

Appraisal Determines Property Value

The appraisal is required by most mortgage companies during the buying process, including Mann Mortgage.  It is used to determine the fair market value and general physical condition of the property.

 

What is the cost? 

Varies, est. $350 - $500

Appraisal costs vary depending on the size of the home and whether the home will be an investment property or primary residence.

 

How and when is it ordered?

Mann Mortgage typically waits to order the appraisal until after the home inspection is completed.  Government regulation guidelines dictate that an appraiser be randomly assigned from a pool of appraisers.

 

When is the report delivered?

Typically, an appraisal report is delivered within 5-7 business days from the time it was ordered.

 

 

 

This ad is not from HUD, VA, or FHA and was not reviewed or approved by any government agencies.


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