Bank of America and Their 3% Down Payment Mortgage!

Wow! This is surprising and definitely a telling sign of the current market. In some pretty large, and important, news for potential home buyers, Bank of America has decided to offer mortgage loans with as little as 3% down. Now, as I have discussed in a previous post, low down payment mortgages are nothing new as you remember the FHA loan only requires 3.5% down. The surprising news comes in when it was revealed that Bank of America will not require the usual monthly insurance premium with this loan! Just so you have a better understanding, let’s talk about this insurance premium real quick.

Your typical conventional loan requires a 20% down payment. As we discussed, the FHA loan requires only 3.5% down, but with this low down payment comes a monthly insurance premium on top of your mortgage payment. This premium is required as a safety net for the bank basically in case you default on your loan. With such a low down payment, it is a higher risk for the bank if the home goes underwater with a shift in the market or if the borrower bails on the payments all together. This FHA insurance premium is currently at .85% annually. What this comes out to is an insurance premium of about $2,050/year or $170/month on a $250,000 home, on top of your monthly mortgage payment. This illustrates how significant the Bank of America loan is without requiring this mortgage premium.

Now the important question to consider here is, is this good news for the market and potential buyers? Or is this a sign of banks repeating the same mistakes as the previous housing bubble and allowing people to get into loans they may not actually be able to afford. With companies like Quicken heavily promoting their “Rocket Loans” it makes me a little nervous to think we may be seeing the same mistakes being repeated. I would love to know what you think about this topic. Please leave me a comment on here or anywhere on my social media and share your opinions with me.

For more information about this loan check out the article here:
http://money.cnn.com/2016/02/22/real_estate/bank-of-america-low-down-payment/index.html?iid=Lead

Why Rent When You Can Buy?

One of the misconceptions I constantly see, especially among first time home buyers, is how much money you need to save before you can buy a home. What I want people to understand is that not only can you get an FHA loan, which only requires 3.5% down, but you may also qualify for a buyers assistance program. The program in particular that I am talking about, that every lender should be mentioning to first time home buyers, is the Home Is Possible grant. This down payment assistance program is available through the Nevada Housing Division. The Home Is Possible grant will give first time home buyers a 4% down payment assistance grant on an FHA loan. Let’s take a look at home important this is.

As I mentioned, the FHA loan only requires a down payment of 3.5%. This means that with a 4% grant, your entire down payment is taken care of and still leaves you a half of a percent towards your closing costs! Now let’s take a look at what this means in dollar amounts so you can really grasp how important this can be for you. On a $170,000 home, you are looking at an FHA down payment amount of $5,950. With title fees and closing costs added in as well you are looking at an out of pocket amount, roughly around $12,000. On a purchase price of $170,000, the 4% grant will provide you $6800 towards this cost. That means, after the grant, you will be able to purchase your first home for only $5200 out of pocket, upfront costs. Take into consideration these are only rough estimates and round numbers to give you an idea of what you are looking at. That big, scary down payment doesn’t look so terrifying now! The best part is, this puts you in a home you now own, and most likely your mortgage payments will be cheaper than renting a similar property. The even better news is, in the end, you now own a solid investment for years to come!

My goal here is to help you begin to understand that there are options out there and programs that can help you accomplish your dream of home ownership. I want to provide you with this information so you are well informed when it comes time to make that decision of your first home purchase. Please do not hesitate to reach out to me if you ever have any questions about this topic, or any other ways I can clarify certain aspects of the home buying experience for you.

Please follow the link below to find out even more about the Home is Possible grant:
http://housing.nv.gov/programs/FTH/Home_is_Possible/

Are Student Loans Hurting Young Homebuyers?

Home ownership, in my opinion, is still part of the American dream, despite the numbers showing it is the lowest it has been in almost 40 years. Nothing offers the sense of pride and value quite as much as purchasing and owning your first home. I bought my first house a little over a year ago, just before I turned 27. That feeling of closing escrow and realizing you have just made not only a huge investment in your future, but one of the biggest investments you can make in yourself, is a hard feeling to beat. With so much talk these
days about the impact student loans are having on young adults, what effect are we seeing in their ability to buy?

Home ownership, in my opinion, is still part of the American dream

Are young home buyers losing the ability to experience this pride, this investment in their
future?

Student loans are at an all-time high, with around 71% of bachelor degree recipients graduating with a student loan. The national average for these loans is just over $35,000, and can vary depending on the region. Total education debt in the US in 2015 hit a new high at $68 billion. This is a large loan for any young adult to overcome just trying to get by day to day, let alone trying to save up for, and purchase, their first home.

I want people to understand the importance of higher education, but more so, I want them to understand the importance of why they need the education first. I feel too many kids go off to college without a clue of what they want to do in life, and spend years, and thousands of dollars, in school only to never use it in their career path. We have been told to just go to college after high school, because that’s just what you do, but why? What are you going to do with that specific area of education? I feel you should take the time to find your passion in life, and decide what you want to do, before investing in the proper education needed to pursue that career, regardless of what it may be.

What I also want young adults to realize is that even with a student loan, home ownership is still within their reach. We have amazing programs here in Nevada that will grant you money to assist with your down payment. These grants cover up to 4% towards down payment and closing costs when obtaining a government loan. An FHA loan requires a down payment of 3.5%. That means with this grant, it can cover your entire down payment and help pay a portion of your closing costs. That means you may purchase your own home with an initial investment of only a few thousand dollars! Think of the investment you can make in your future, owning your home instead of spending the same amount to rent every month. Not to mention, real estate is a vital part in maintaining a healthy and balanced portfolio. With the help of this grant, you can be well on your way to building future wealth.

If you have any questions about this topic or questions about how I can help you with your real estate goals, feel free to reach out to me at any time.

To download my interview about this topic follow the link here:

http://bit.ly/22UqbbY

For more information about grants click here:

http://housing.nv.gov/programs/FTH/Home_is_Possible/

For more information about this topic click here:

http://www.realtytoday.com/articles/57018/20151130/difficulties-first-time-homebuyers-student-loan-biggest-obstacle.htm

http://economistsoutlook.blogs.realtor.org/2016/01/05/student-loan-debt-hampering-home-

What does the Fed’s rate hike mean for you?

On December 16th 2015, the Federal Reserve announced they would raise the key interest rate by 0.25%. This is the first rate hike in nearly ten years and had many people wondering what kind of impact this would have on the economy, especially the real estate market and mortgage loans. So what impact has the rate hike had on the real estate market? Well, the short answer, none. According to Bankrate, the 30 year fixed mortgage rate here in Nevada is still at an extremely low 3.88%. All research has pointed to the fact that fixed rate mortgages will receive little to no impact from the Federal Reserve’s raise of the key interest rate. This should help with some of the skepticism and uncertainty hovering around the future of mortgage rates.

For more information check out the following links:

Nevada Mortgage Rates: http://www.bankrate.com/nevada/mortgage-rates.aspx

The Fed Rate Hike: http://money.cnn.com/2015/12/15/news/economy/fed-rate-hike-2-minutes/