Mortgage Tips

8 Budgeting Tips That Let You Buy a Home Sooner

Buying a home is one of the largest investments you’ll likely ever make, so it requires preparation and forethought to get it right. When you’ve decided you’re ready to be a homeowner, the most important thing you can do is to ensure your personal finances are in order. If this is something you struggle with, follow our simple tips to set yourself up for success and be able to buy your Florida home sooner rather than later. 

Tips to Know 

  • Establish Your Household Income

The first thing to do is figure out your household income after tax, called your net income. To figure out your net income, you have first to know your gross income. To do this, look at your pay stubs and the amount shown before deductions are taken out is your gross. If you’re paid monthly, multiply this number by 12 to arrive at your annual income. If you’re paid weekly, multiply by 52, and if bi-weekly, multiply by 26. If you work irregular jobs or hours, you’ll have to add up your entire year’s income to get this amount. 

Next, subtract any relevant expenses, including retirement contributions, and medical and dental deductions, from your gross income amount to end up with your taxable income. Then, deduct what you owe in taxes, and the remaining number is your annual net income. 

Once you’ve established your household income, 

  • Identify Your Expenses

A mortgage will be only part of your monthly bills, so writing out all your expenses is crucial. This includes needs such as the following. 

  • Credit card bills
  • Utilities
  • Insurance
  • Groceries
  • Tuition
  • Cable/internet 
  • Medical needs
  • Recreation
  • Clothing

What you have after you’ve deducted these amounts is what is known as your expendable income. One common rule is that only 28% of your gross monthly income should go to house-related expenses and 36% on total debts. Of course, everyone’s situation is different, and there is no one-size-fits-all approach to determining an ideal expenditure amount. 

  • Calculate Monthly House Payment

Now that you’ve compiled your household income and gotten a grip on your overall expenses, it’s important to start planning how much home you can afford with a monthly house payment. It’s important to be realistic but also optimistic about this number. By following more of these steps, you may even be able to see your maximum monthly house payment grow!

  • Lower Your Spending 

Once you have a clear understanding of your monthly expenses, you can decide where to cut back on your spending. Maybe you’re spending too much money on eating out at restaurants or subscribing to services you don’t really need or even use. The more you can save in these areas, the more money you will have to put toward a down payment on your home. 

  • Handle Your Debt

Having outstanding debt isn’t an automatic rejection from being able to obtain a mortgage. But it is far easier to be approved with a higher, better score and at a better rate when you aren’t carrying excess debt. So, take the time leading up to your home purchase to pay down your debt as much as you can. For credit cards, it’s recommended you carry 30% or less of the limit. 

  • Review Your Credit Report and History

Reviewing your credit report is a free and easy proactive step to take every year. Not only does this help protect your identity from fraud, but it also helps you ensure you stay on track with your financial goals of buying a home. Did you know that you get access to a free copy of your credit report every year? You can pull your credit report annually to review information. The report itself can feel overwhelming so a few helpful areas to look out for to ensure accuracy include

  • Personal Information: Name, residential addresses (current and past), and employers (current and past)
  • Accounts: Financial accounts, no duplications, proper balances, payment schedules, accounts in collections
  • Inquiries: Recognizable companies that have pulled a credit check on you

Checking your credit report can give you a great starting point to know where you stand on your credit history and areas to improve your score. By improving your credit score, you’re showing that you are a responsible borrower who repays debts and helps back you for approval in financing.

  • Actively Save

This step may seem obvious, but one of the best things you can do when you want to buy a house is to save as much money as possible to contribute to your down payment. Generally speaking, a down payment can range from 3-20% of the home’s total price. Your mortgage lender can tell you what your down payment amount should be, or you can use our handy mortgage calculator, but no matter the amount, it will require putting money aside to be ready. 

In addition to your down payment, you’ll also have to pay closing costs. So when you’re planning on how much money your new home will cost, this amount must be considered too. The money you pay at closing may range from 2-5% of your home’s purchase price and include fees such as the following. 

  • Appraisal
  • Credit report
  • Tax services
  • Government recording
  • Lender’s origination  
  • Plan Ahead

Buying your home and moving in is only the beginning. It’s also wise to set aside some money for unexpected repairs or maintenance needs that can be shocking if you’re not ready. 41% of homebuyers in the last year are most worried about affording home repairs or maintenance in the coming 2 years. A good rule of thumb is saving 1% of your home’s value. But the more you put into this emergency savings, the better off you’ll be should something unforeseen happen — and any seasoned homeowner will tell you that needed repairs inevitably happen. 

Chris Doering Mortgage Is Your Homebuying Partner 

Buying a home in Gainesville, Florida, can be overwhelming, but with the winning team on your side, it’s easier and more enjoyable than you may think. At Chris Doering Mortgage, we’re passionate about knowledgeably guiding you every step of the way and getting you into a home you’ll cheer for and love for years to come. Contact our experienced team today to learn more about budgeting for your home and how we can help make it a breeze.

Homeownership: The Benefits May Surprise You

Your home is more than just where you lay your head and where your heart is — it’s also one of the most significant financial investments you will ever make. While some of the advantages of homeownership are immediately apparent, there are some you may not think about as you consider purchasing a home. 

Aside from being a place to create treasured memories with your family, owning a house offers many financial benefits, and these advantages aren’t limited to tax season. June is National Homeownership Month, so it’s the perfect time to learn about why owning a home is a smart investment you can make for your future. 

Homeownership Financial Benefits

Build Wealth

Owning a home allows you to build your wealth over time as you strengthen your financial future. In a strong economy, home values increase, so owning a home is like putting your money into an investment account that continues to grow. However, it is important to note that this is only true if you buy a home you can afford and continue to afford for the life of your mortgage.  

Grow Equity

When you purchase a home, you are also amassing equity that you wouldn’t if you were renting. In a rental scenario, you pay your rent each month, and that money doesn’t accumulate. When you buy a home, you build equity as your home’s value increases and as you pay off more of what you owe on it. 

You are also able to use the equity you’ve built for home improvements or paying off other debt, to name just a few uses. At 78.6%, homeownership rates are highest among Americans aged 65 and older, indicating that equity also contributes to retirement savings for many. 

Predict Costs

When you rent, you aren’t guaranteed the same rate year over year. Rather, the amount you pay to live in your home is at your landlord’s discretion and subject to change. On the other hand, with homeownership, you most likely have a fixed rate and can better budget predictably for the life of your mortgage loan. Further, when you own your home, you can set goals such as installing more energy-efficient appliances that continue saving you money in the long run. 

Strengthen Credit 

Another benefit of homeownership is that a mortgage is sometimes referred to as “good debt” and increases your credit score provided you pay it on time. It may also help your creditworthiness when you apply for other forms of credit. 

Pay It Off 

A benefit that may be hard to fathom, especially if you have just started mortgage payments, is that you will eventually pay off your home loan. Once the terms of your mortgage have ended and your house debt is satisfied, you will be able to use the money you previously spent on your mortgage each month to invest elsewhere. 

Homeownership Tax Benefits 

At tax time, you can file for deductions for the mortgage interest and property taxes you have paid out in the previous year. As most of your mortgage goes toward owed interest rather than principal in the first few years of the loan, these deductions help put money back into your pocket. 

If you have private mortgage insurance (PMI), you may also be able to deduct these payments. And, if you’re in the first year of repaying your mortgage, you can also write off any mortgage points you have paid as well as the origination fees as part of your closing cost deduction. 

Chris Doering Mortgage Is Your Homeownership Dream Team

Are you tired of renting and ready to experience the many benefits of owning your own home? Finding trusted advisors to walk you through the mortgage process and be there for you long after closing is easier than you may think. Let the experienced team at Chris Doering Mortgage offer you our expert guidance on the mortgage that will best suit your family’s needs. Contact us today to find out more about how owning a home is a wise investment for your current and future financial health.

How to Build Your Home Buying Dream Team

If you are a potential home buyer who is unfamiliar with the industry, it can be overwhelming to know the processes’ inner workings and how it all fits together to take you from the mortgage pre-approval to move-in day at your new house. But, just as with football games, it takes a passionate, competent group of people working together behind the scenes toward a favorable outcome. These people make all the difference because without them, buying a home would be stressful, intimidating, and downright frustrating. Read on to learn who should be on your home buying dream team and how these important players make your home buying experience a positive one. 

The 6 People You Need in Your Home Buying Line-Up 

The Real Estate Agent 

As the person who may hold the key to showing you your dream home, your real estate agent plays a vital role in the process. A knowledgeable buyer’s agent can help you find exactly what you are looking for regarding your new home’s location, features, and price. They can also negotiate on your behalf to ensure you do not overpay for your home and may have the resources to notify you of pocket listings, homes that have not yet been released to the public. 

The Accountant 

Accountants on your home buying team provide valuable advice on the tax breaks that come from homeownership as well as any associated annual benefits. They can also help you ensure your finances are in optimal health for your monthly and long-term budgeting needs. 

The Home Inspector

A home inspection protects buyers by disclosing any existing defects that can cost the buyer in repairs later if not addressed before closing. These discoveries include the home’s structural and mechanical systems. Further, they are a snapshot of the future of your home and what may need to be fixed down the line. 

Some people confuse the home inspection with the property appraisal. The inspection reveals the home’s condition, while the appraisal tells you how much the home is worth. 

The Lender

Unless you are a cash buyer, your mortgage lender is an integral part of your home buying team, without whom purchasing a home may not be possible. Your mortgage lender underwrites your home’s purchase and fronts the funds you can pay back over time through your mortgage.  The lender should be the first party that you contact when beginning the home buying process.  It is imperative to know if you are qualified to buy and, if so, what price range you should be looking in.  A qualified, experienced loan originator will also help you customize your financing options to meet your immediate needs as well as your long-term goals.

The Attorney

Once you choose a home to buy, one of the first things you do is submit a purchase and sale contract. As this is a legally binding document, having an attorney on your side who can walk you through it and protect your interests is invaluable. Home purchasing requires understanding complex procedures and documents, including deeds, mortgages, court orders, and wills, and other legal rigmaroles not easily understood by the layperson. 

The Title Company 

A title company is responsible for verifying that a home’s seller legitimately owns the property they are selling and subsequently guaranteeing that information through title insurance. This insurance protects the lender and owner against financial losses and court defense costs if another party tries to lay a claim on the property later on. In some instances, the title company may also provide the home closing location, as that is where escrow accounts and closing costs are held. 

Chris Doering Mortgage Is Your All-Star Team

At Chris Doering Mortgage, our experienced loan originators and processing team are on your side as you allow us to knowledgeably walk you through the home-buying process with passion, competence, and excellence. Buying a home for yourself and your loved ones is a significant milestone, and you should not feel alone or uninformed. Contact us today and let Chris Doering Mortgage be the Most Valuable Player on your home buying dream team!

The What, Why, and How to Refinance Your Home Loan

A few months ago, we had a blog Should I Be Refinancing My Home Mortgage? Today, the answer is clear: yes. The current market is prime for refinancing on home mortgage loans. The mortgage refinancing market hinges on further economic data in the global market. However, a major market mover comes biologically.

In the midst of growing coronavirus (COVID-19) fears all over the globe, it has investors retreating to safer investments. As average mortgage rates continue to unwind (parallel to the 10-year treasury yield) to recent history record lows, it shapes up to be an opportunity for those with a current mortgage through refinancing. So far, according to the Mortgage Bankers Association, refinancing applications are up 165% on the year.

What Is Refinancing?

Refinancing is a refresh that gives you a new mortgage with lower monthly payments, a lower interest rate, a shorter term, or even a different lender. The rates that you locked in on your mortgage — whether last year or ten years ago — are not the same that they are today.

In looking at Freddie Mac’s monthly 30-year-fixed-rate mortgage data over the years, there is a widespread in annual averages just in the past two decades ranging from 7.44% in 1999 to 3.66% in 2012. If you locked in at a market rate in 1999 or other high times, you could be paying more per month than you need to be with the current available rates. Cutting the interest rate of your mortgage is a common reason for refinancing.

Why Should I Refinance?

Individuals refinance for two key reasons: to reduce monthly payments or to reduce the term of the loan. By refinancing a home loan, you use current market rates to your advantage for increased monthly cash flows. A reduced monthly payment or loan term allows for individuals to focus their hard-earned money elsewhere and also bolster their credit score. By slashing your monthly payments on your current home, you can better position yourself for purchases down the road with a reduced payment. Other homeowners also refinance in an effort to consolidate their debt or to utilize their current home equity for other large purchases.

Terms of every mortgage vary and it’s important to closely analyze if it is beneficial to refinance your current mortgage and if it’s for the right reasons. The refinance process doesn’t happen overnight and should be thoroughly evaluated prior to locking in.

How Do I Refinance?

Refinancing is not for everyone. There are still lending standards in place that make refinancing only suitable in certain situations.

Here at Chris Doering Mortgage, our team of mortgage loan experts can help you determine if a refinancing of your current home mortgage is right for you. We’ll walk through your current mortgage with you as well as your longterm goals. Once we learn more about your motivations, we can provide the right curated deal just for you. Get in touch with our outstanding team of mortgage experts to find out how you can cut costs with refinancing.

Be a Better Home Buyer

Buying a home is a great step for you and your family but also a large financial commitment. When purchasing a home, how do you know you’re getting the best deal? How do you know that agent isn’t taking advantage of you and your money? How do you know that this house is a good investment?

All of these thoughts and fears are normal, but the best thing to know is that you’re not alone in this. You have a team of individuals involved in the buying process. Often, deals will include a closing agent, a real estate attorney, a real estate agent, and us, a mortgage loan officer. While it’s a team effort with everyone to make the deal happen, there are key things that you as a home buyer can keep in mind to give you an edge in the deal process as well.

Be Open to Negotiation

You won’t find out if you don’t ask. This rule in life also applies to negotiating on your home price. If you accept the first price that the real estate agent listing the house offers, you probably are taking the high end. Keep in mind that they are motivated to get the house sold, maybe even desperate to get it off the market. Make sure they aren’t too desperate, as that could be a red flag for the house as a whole. However, the housing market has so many homes available at any given moment, you could find another one.

Follow Your Budget

While negotiation is recommended, it’s far more important to stick to the house that fits your budget at every step of the process. The price tag on the home paints a good picture, but not quite the full extent of costs. As you close on a home, there will be additional closing costs that must be factored. When moving in, there will be plenty of costs associated such as hiring movers, new furniture, appliances, and updating cosmetic aspects. Plus, even after moving in, there could be unexpected costs that arise such as a broken washing machine or oven. 

Know Your Programs & Resources

There are plenty of programs and resources available to assist home buyers. Some of the most popular mortgage options include:

There are plenty of other loan types, like jumbo loans, USDA loans, and more to help you land in your dream home. Chris Doering Mortgage can help you locate the right loan from these many options.

Secure Pre-Approval

Before you tour your dream house, you need to show that you have what it takes to purchase said house. This means coming to a mortgage lender, like our team at Chris Doering Mortgage, to work out the details. Our pre-approval process requires a formal credit check, review of financial documents and income, and underwriting the potential loan. With all of this information, you’ll walk away with a good sense of what’s the low, high, and comfortable zone of your house budget.

Coming to an open house prequalified lets the real estate agent know that you’re serious about your shopping and that you are a real option for the house.

We’re Here to Help

It’s important that you feel well-equipped to take on the home buying process, but our team is here to help you every step of the way. Whether you need to be pre-qualified or want to discuss the best loan type for you, get in touch with us to learn more.

Should I Be Refinancing My Home Mortgage?

Whether it was just last year or ten years ago, you agreed to a specific market rate and terms to pay off your home mortgage. Since then, a lot may have changed in your life; your job/position, your car, your cell phone, and more. If these items aren’t stagnant, why should your mortgage be? Refinancing your mortgage loan depends on a variety of factors and has to be done based on current market conditions, but it’s safe to say that right now is a great time to explore refinancing your home loan.

Factors that Affect Your Decision to Refinance

With the Federal Reserve’s two rate cuts this year in July and again in September, interest rates are hard to beat right now. The federal funds rate, which controls costs like mortgages, is now sitting under 2%. According to Freddie Mac, if you got a 30-year fixed-rate mortgage a year ago (November 2018), the average interest rate has dropped by about 1.5% since then. By sticking with such long and pricey terms, the costs will add up significantly over the years and you’ll end up spending more for the same home.

There are other factors beyond interest rates to consider when exploring refinancing on your home loan:

Home’s Value

The equity in your home is important to assess prior to refinancing your loan. In most parts of the United States, the value of homes has risen in recent years. You should be aware of your home’s new value, whether it has risen or dropped. If the value has dropped, do you really want to be re-investing in the property? If you’re refinancing, you want to be absolutely sure that your home is the place you want to live for an extended period of time.

Your Income and Debts

Also commonly known as your debt-to-income ratio, mortgage lenders will want to know that you have a stable job history with a source of good income, a safety net of savings, and minimal debts to cover, like student loans. Before refinancing, make sure that you have great job security with a steady stream of income that allows for optimal payments, no matter the term length.

Your Credit Score

Refinancing means more favorable rates, but in order to get these favorable rates, you have to have an equally favorable credit score to your name. While you may be able to secure a new loan, the interest rates might only be marginally better with a lower credit score.

Refinancing Closing Costs

Before you jump to refinance your loan, it’s important to note that there are numerous additional costs associated along the way during the refinancing process. Often, there are refinancing fees like an application fee, an origination fee, and more associated with the total loan amount. While those may be changed, these additional costs are important to weigh as you explore refinancing options.

We’re Here to Help

With favorable conditions for home buyers right now, you have to assess if refinancing is right for you. Before locking down your refinancing terms, make sure you run a breakeven analysis that accounts for all of these factors mentioned, especially the closing costs, to assure that the new refinancing is to your benefit.

Are you still unsure if a home mortgage refinancing is right for you? Our team of loan originators is here to help you navigate your options and decide what is best for you. Get in touch with our team to find the right refinancing match.