Lisa Westerman's Blog
You can ask any homeowner-buying and owning a home is expensive. Mortgage payments, property taxes, utilities, and other bills quickly add up.
If you want to buy a home but don’t have a large down payment saved, odds are you’ve discovered something called private mortgage insurance (PMI).
PMI is an extra monthly payment that you make (on top of your mortgage payment) when you don’t have enough to make a large (20%) down payment on your home.
However, if you want to buy a home and don’t want to tack on an extra monthly payment for PMI, you have options. In today’s post, I’m going to talk about some ways to avoid paying PMI on your mortgage so you can save more money in the long run.
Before we talk about getting rid of PMI, let’s spend a minute on what to expect when you do have to pay it.
PMI typically costs 0.30% to %1.15% of your total loan balance annually. That means that your PMI payments will decrease a moderate amount as you pay off your loan.
Furthermore, once you have paid off 22% of your loan, your PMI will be cancelled and you’ll only be responsible for your regular monthly mortgage payments.
Getting PMI waived early
With conventional loans, you can request to have your PMI cancelled once you’ve paid off 20% of the mortgage. However, many buyers with PMI are using some form of first-time buyer loan, such as an FHA loan.
With an FHA loan, you’ll be stuck with PMI for the lifetime of the loan if you don’t make a down payment of 10% or more. That’s a lot of PMI payments, especially if you take out a 30 year loan, and it can quickly add up.
If you have an FHA loan with FHA insurance, the only way to cancel the insurance is to refinance into a non-FHA insured loan. And remember--refinancing has its own costs and complications.
Making it to the 20% repayment mark
On conventional loans, the best way to get rid of PMI is to reach your 20% repayment mark as soon as possible. That could mean aggressively paying off your mortgage until you reach that point.
This can be achieved by making extra payments, or just paying more each month. However, you don’t want to neglect other debt that could be accruing costly interest in favor of paying off your loans. Make sure you do the math and find out which debt will be more expensive before neglecting other debt.
Once you do reach the 20% repayment mark, you’ll have to remember to apply to have your PMI canceled with your lender. Otherwise, it will be canceled automatically at 22%.
A home inspection is a valuable opportunity for a property buyer. If a homebuyer knows how to plan for an inspection, he or she should have no trouble getting the most out of this opportunity.
Now, let's take a look at three tips to help you get ready for a home inspection.
1. Hire an Expert Home Inspector
Not all home inspectors are created equal. And if you make a poor home inspector selection, you risk missing out on potential problems that may result in costly, time-intensive home repairs down the line.
When it comes to finding the right home inspector, it pays to be diligent. As such, it is crucial to allocate time and resources to conduct an extensive search for an expert house inspector. Because if you have a qualified home inspector at your side, you can get the support you need to perform an in-depth property evaluation.
Ask a home inspector for client referrals before you make your final decision. That way, you can find out what past clients have to say about a home inspector and determine if this professional is the right choice for you.
2. Attend Your Home Inspection
Although you are not required to attend your home inspection, it generally is a good idea to walk through a property with a professional inspector. By doing so, you may be able to gain insights that won't necessarily appear in your house inspection report.
You may want to take notes during your home inspection as well. If you remain diligent throughout your home inspection, you can understand a house's strengths and weaknesses. And as a result, you'll be better equipped than ever before to decide whether to move forward with a home purchase.
3. Ask Questions
There is no need to leave anything to chance, especially when you buy a house. Thus, if you have concerns or questions during a home inspection, address them immediately.
Remember, a home inspector is happy to respond to any of your property concerns or questions. He or she can provide honest, unbiased responses to your queries and help you make an informed decision about a house purchase.
As you prepare for a home inspection, you may want to consult with a real estate agent too. This housing market professional can offer recommendations and suggestions to help you get ready for a home inspection and put you in touch with the top home inspectors in your area. Plus, a real estate agent will help you review a house inspection report so you can determine whether to proceed with a home purchase.
For those who want to get the most out of a house inspection, you may want to prepare as much as possible. Thanks to the aforementioned tips, you can streamline the home inspection preparation process. Then, you can enter a home inspection with a plan in hand and use this evaluation to decide if a house will be able to serve you well both now and in the future.
Ready to discover your dream home? With help from your loved ones, you may be able to accelerate your journey from homebuyer to homeowner.
Ultimately, there are many reasons to include family members and friends in your search for the perfect home, including:
1. Loved ones are happy to help you in any way they can.
Loved ones have your best interests in mind and will do whatever they can to assist you. That way, you can get extra help as you embark on the homebuying journey.
Before you begin your home search, it may prove to be helpful to meet with loved ones so that you can explain your homebuying goals to them. This will allow you to describe what you'd like to find in your dream home. Plus, meeting with loved ones gives family members and friends an opportunity to ask you questions about your home search.
If you and your loved ones are all on the same page, you'll be able to get ample support as you prepare to kick off your home search. Then, you and your loved ones can check out a broad array of houses and find one that matches or exceeds your expectations.
2. Loved ones can share their homebuying experiences with you.
For those who are entering the real estate market for the first time or have not purchased a house in several years, it may be beneficial to involve loved ones in the property buying process.
Loved ones who have recently purchased homes can provide real estate insights that you may struggle to obtain elsewhere. They can respond to your homebuying concerns and queries and help you prepare to enter the housing market.
Also, loved ones may be able to help you avoid potential pitfalls as you search for the ideal residence. Although some family members and friends may have made mistakes when they bought homes in the past, your loved ones can help you learn from their errors and ensure you can avoid various homebuying pitfalls.
3. Loved ones can help you make tough homebuying decisions.
Let's face it – the decision to buy a home is one of the biggest that an individual may make in his or her lifetime. As such, the decision to purchase a home is not one that should be taken lightly.
Loved ones are happy to listen to your homebuying concerns time and time again. They can offer suggestions and recommendations as you explore homes and help you remain calm, cool and collected at each stage of the homebuying journey.
Of course, if you want additional assistance during the homebuying journey, it never hurts to hire an expert real estate agent. This housing market professional can set up home showings, negotiate with home sellers on your behalf and provide comprehensive homebuying support at any time.
Reach out to loved ones for support as you get ready to search for your dream home. By doing so, you may be able to speed up the homebuying process.
Tired of renting an apartment? Buy a house, and you can reap the benefits of homeownership for years to come.
Ultimately, there are many wonderful reasons to start a search for your dream home today, including:
1. You can enjoy the freedom of owning your own residence.
Let's face it – nothing beats the freedom of owning your own residence, and perhaps it is easy to understand why.
If you launch a search for your own house, you can find a residence that matches your personality and budget. Plus, you can always decorate and customize your house however you choose. And if you complete myriad home upgrades or maintenance, you may be able to boost your house's value – something that may prove to be important if you eventually decide to sell your residence.
2. You can capitalize on various tax benefits.
Believe it or not, buying a house may enable you to reap myriad tax benefits.
The U.S. Tax Code allows homeowners to deduct the interest paid on a mortgage and property taxes. Also, if you study the U.S. Tax Code closely, you may find that you can deduct some of the costs involved in a home purchase.
3. You can pay predictable housing costs for a set period of time.
With a fixed-rate mortgage in hand, you can pay the same amount each month for the duration of your mortgage. This means you won't have to worry about fluctuating housing costs; instead, you'll pay the same total each month – without exception.
Of course, homebuyers who choose an adjustable-rate mortgage can enjoy fixed housing costs for a set amount of time too. On the other hand, those who select an adjustable-rate mortgage likely will need to plan ahead for a potential increase in mortgage costs after three, five, seven or 10 years.
Clearly, there's a lot to like about buying a house. For those who want to enter the housing market today, it certainly helps to work with an experienced real estate agent as well.
A real estate agent allows you to take the guesswork out of pursuing a residence in any housing market, at any time. In fact, this housing market professional will ensure you can streamline the process of going from homebuyer to homeowner.
In most instances, a real estate agent will keep you up to date about new houses as they become available, teach you about the ins and outs of shopping for a residence and set up home showings. Furthermore, a real estate agent will negotiate with home sellers on your behalf, guaranteeing that you can get the best price on any house.
Perhaps best of all, a real estate agent is available to respond to any homebuying concerns or queries. This means you can get the expert insights that you need to make informed decisions at each stage of the homebuying journey.
Take the next step to pursue your dream residence – employ an experienced real estate agent, and you should have no trouble transforming your homeownership dream into a reality.
Are you planning on buying a home by a certain date? It’s unfortunate that life can’t go as we plan it all the time! With a bit of planning finding the right home at the right time is possible. Many times, families are looking to buy a home before the end of the summer. This allows them to get settled in and get the kids started in a new school before the start of the year in September. Just because there are more popular times throughout the year to move doesn’t mean that the inventory of homes changes much as to what’s on the market. Whatever the reason for the short supply of homes, you’ll need to be informed and creative in order to land a house in a high demand market when it’s crunch time. Below, you’ll find some tips to help you on your search.
Research Your Location Ahead Of Time
Every housing market has a bit of a down time. You want to pinpoint that period. Does your location have a time of year where people flee the area for vacations? The holiday season can also be a great time to look. There may still be low supply, but there also will be less competition. Do a bit of research in order to find pricing trends. When the prices dip, you’ll know that’s a time where competition for homes is lower.
Always Have Your Finances In Order
When you’re buying a home, no matter what time of year it is, you need to have your lender on call. Make sure that you have been preapproved and that your downpayment money is at your disposal. Sellers like serious buyers who are ready to pass paperwork.
Know What You’re Willing To Compromise On
When you’re buying a home on a timeline, you may not have the luxury of searching around endlessly to meet your wishlist. You should have a few musts, but there may be many things that you’ll need to work with or compromise on in finding the right property. You may be able to find a home in the right neighborhood, but it might not have the granite countertops that you’re looking for. When time is of the essence, your home search priorities need to be set straight.
Don’t Look For Bargains
When you’re in a time crunch to land a home, you don’t want to fool around with price. In order to land a home that you love, you might have to offer a bit more than the asking price. There’s no space for a bidding war, a low offer, or an extended search when you need to buy a home fast.