What Factors Determine Home Loan Rates?

What Factors Determine Home Loan Rates?

Buying a home is an exciting milestone in anyone’s life. As a homeowner, you are free to decorate your home as you wish and are no longer tied to any rental obligations. However, when it comes to financing a home, there are many factors at play that can affect the interest rate you obtain on a loan. While there are many determinants, here are three factors that can impact home loan rates.

  1. Loan Program

There are numerous mortgage loan programs such as Conventional, FHA, VA, and USDA loans. Depending on investor’s appetites for specific loans, rates can rise or fall throughout the year. There are times when Conventional interest rates are more attractive than FHA rates, but that scenario is flipped at other times. Things like the stock market, consumer confidence, housing starts, and even unforeseen events like the pandemic all play an integral role in the interest rates affecting homebuyers and refinancers.

  1. Property Type and Occupancy

The type of property you intend to purchase can have an impact on interest rates. For example, the rates for mobile homes or condos may be higher than for single family, detached homes. Whether you plan to live in the home as your primary residence or not can also affect your rate. The rates for rental properties can be significantly higher than rates for primary residences since they are seen as a higher risk class. Second homes (or vacation homes) typically have the same rates as for primary residences, but require a higher down payment.

  1. Credit Scores

Credit scores can also affect the price you pay for loan rates. Lenders pay close attention to your credit history and your credit scores are a good indication of whether you will repay your loan or not. If they believe, based on your credit history, that you can pay your loans, they will be able to obtain lower loan rates for you. If you feel as if your credit score is low, there are several ways to improve this. Consult with your lender to find ways to boost your scores before locking in an interest rate.

Lock in at a Low Rate

Although these are just a few factors, there are other variables that can affect loan rates. One solution that will limit uncertainty is to lock your rates while they are low. Once you have a contract for a new home or decide to refinance your existing loan, speak with your lender about locking right away.

Right now, we are experiencing historically low rates. If you are looking to buy a home or refinance your existing one, rely on the experienced professionals at Butler Mortgage. With over 25 years helping buyers finance homes, we can help you find the right loan solution for your needs. To learn more, call us today at 407-931-3800 or fill out our free consultation form online.

4 Warning Signs to Look for at an Open House

4 Warning Signs to Look for at an Open House

Whether you’re looking to buy your first home, or you consider yourself a seasoned investor, finding the perfect property is always an exciting experience. Oftentimes, your first visit to a potential new property comes in the form of an open house. 

An incredibly valuable and insightful experience, open houses can provide you with an inside look into your prospective new home and give you some ideas as to the property’s potential and what your neighborhood might be like. However, your goal during an open house is to conduct a thorough inspection of the property in order to uncover any potential issues. Here are four warning signs to look out for when inspecting a home during an open house.

Faulty Lights

Testing the lights goes beyond simply flipping switches and seeing if they work. Of course, those are the basics of electrical work, but there are other factors to look out for. For example, make sure that turning on the lights doesn’t make another light fade or hurt the workings of an appliance. Quality electrical work will ensure that you and your family are safe, physically and financially.

Weak Roof

Although the roof may look healthy from the outside, ask the agent about its age and if there are any past roofing issues that you should be aware of. If there have been numerous repairs, that may be an indication that the roof needs replacing. Also ask if the current owner has gotten a wind mitigation report. This report will tell you the quality of the roofing materials, the quality of the installation, and could possibly give you a discount on your homeowner’s insurance.

Smelly Interior

It may seem like an odd thing to do but smelling the house can help you identify strange odors and determine whether something is right, or terribly wrong. Odors of mildew can mean that the house has mold, while a musty smell can indicate that the house is dirty or has not been properly maintained. Some of these smells can point toward water damage, mold, or other hazardous problems in the home. Taking note of these issues and the smells that go along with them can mean you are more well-prepared for what the home has in store.

Empty Neighborhood

When attending an open house, the home is not the only residence you should be examining. Be sure to check the neighborhood for warning signs. Does the neighborhood look clean and safe? Does it appear friendly and outgoing or is there no one around? Check how many homes in the neighborhood are for sale. Too many homes for sale may mean the area is not a desirable place to live. 

Checking for these factors at an open house will help you make an informed decision when in the process of purchasing a new home. 

Find the Right Mortgage for You

When financing your new Central Florida home, it is important that you find a lender that offers affordable loan options. The professionals at Butler Mortgage will work to find a loan solution that meets your needs. Call us today at 407-931-3800 or fill out our free consultation form online.

Effect of Employment Gaps on Mortgage Approval

Effect of Employment Gaps on Mortgage Approval

A borrower’s employment history is an important aspect of the mortgage loan application process. Such loans are typically for large sums of money; therefore, lenders want to reduce the risk of default from the borrower by ensuring they have a stable two-year history of employment. Steady, continuous employment gives lenders a strong indication that a borrower will be consistent in making their mortgage payments in full and on time. A borrower who has a history of unemployment may have to explain such gaps in employment in order to reassure their mortgage lender enough to receive approval.

Employment Gap Exceptions

If you do have a gap in employment, there are some exceptions that may not hurt you. These include:

  • Maternity leave (about six months)
  • Completing your degree or returning back to school 
  • Company layoffs 
  • Filing temporary disability 

If any of these gaps should apply to you, you may not have a problem when applying for your mortgage loan. A major factor that may affect the approval of a mortgage loan is an unemployment period of more than six months. Having a previous gap of employment over two years prior to applying for a mortgage loan does not need to be disclosed as most lenders only require a two-year work history. 

Employment Gap Red Flags 

While there are acceptable employment gaps, there are also ones that send off a red flag to mortgage lenders. In turn, these instances can lead to you having a harder time of being approved. Some examples of this would be: 

  • Frequent job changes (more than three in a 12-month period)
  • Employment history of less than two years 
  • Recent large increases or decreases in your income 

How to Explain and Document Employment Gaps 

One way to increase your chance of having your mortgage application approved is to be honest with your lender. You can do this by adding explanations and documentation about any employment gaps that have lasted more than six months. For example:

  • If you went on maternity leave, you can provide work documents that give detail about your time off. 
  • If you went back to school, a transcript for each semester is good documented proof. 
  • If you took time to care for a family member, writing a letter surrounding your circumstances may suffice. 

In each case, a lender just wants to see how you will manage the situation in the future while working.

The most important thing a lender is looking for is work history stability. Proving that you can be reliable for bringing in a consistent income for your mortgage payments is what the lender cares about. Even if you do have employment gaps, this obstacle can be overcome. 

Butler Mortgage Will Work With You

Regardless of your past work or financial history, the professionals at Butler Mortgage will work with you to find the right loan solution. We have been working with seasoned homeowners and first-time buyers in the Central Florida area for over 25 years. You can fill out our free consultation form online or call us today at 407-931-3800 to take the first step in purchasing a new home.  

Can a Mortgage Be Refinanced With Bad Credit?

Can a Mortgage Be Refinanced With Bad Credit?

Refinancing a mortgage can be financially beneficial for homeowners, especially now as interest rates for mortgages have been declining to historically low rates. For homeowners who are interested in refinancing, an often asked question is whether or not refi is possible if a person’s credit score is low. While having bad credit definitely has an impact on the refinancing process, this impact does not necessarily have to be a negative one. Here are a few alternative refinancing options and ways to improve your bad credit score so that you may qualify for a desirable mortgage refinance rate.

Alternative Refinance Programs and Loans

If you are looking to refinance your home, but you are worried that having bad credit may limit your ability to do so, the first step is to talk with your lender about your situation. Being honest about your credit is important, as you are likely not the first person your lender has talked to that has been in this particular dilemma. Due to this, lenders often will provide alternative types of loans and programs that allow those with bad credit to still be able to refinance their homes. Some of these alternate loan programs include:

 

  1. VA Loans: With these types of loans, homeowners have access to a different type of refinancing where credit/appraisal checks are unnecessary and rolling “closing costs into the total of the new loan” is permitted. 
  2. FHA Streamline Refinance: This is a form of refinancing that can be available to those who are using FHA loans. Information related to a person’s credit score is not necessary. Income information may not need to be included either. Not much paperwork needs to be filled out and the process is highly streamlined.
  3. Other special refi programs could be offered by your lender, depending on your situation.

Will Adding a Co-Signer Help?

While adding a co-signer may help you qualify by adding additional income and improving debt to income ratios, adding an individual with good credit does NOT help from a credit standpoint because lenders are required to use the lowest credit score for determining the “soundness” of a loan request. It is possible, however, that one borrower (such as a spouse) has good credit and has sufficient income to qualify on their own. In such cases, you could refinance the loan in that person’s name alone but have both names on title to the property.

Ways to Enhance Your Credit Score

If you are struggling with a bad credit score, here are some tips on how to enhance your credit so as to increase your chances of being able to refinance your home:

  1. Analyze your credit reports carefully and speak with your lender about ways to improve your score. Most lenders have access to free programs that will help determine how much of a score increase you will get if you make modest changes to your accounts.
  2. Ensure all future payments are made before or by their due date. Having good credit is heavily based on being able to make full payments in a timely fashion.
  3. Spend within your means. Establish a budget and try not to reach the max out your credit cards. 
  4. Lower the amount of money that you can spend on a particular account.
  5. Refrain from opening up any more credit card accounts.

Refinance Through Butler Mortgage

For buyers in the Central Florida area looking to purchase a home or refinance their mortgages, Butler Mortgage is here to help. For over 25 years, we have been dedicated to providing valuable guidance and advice related to mortgage lending needs for all of our clients. For more information about personalized mortgage loan and refinancing solutions, call us at 407-931-3800, or visit our website to fill out our free consultation online form.

What Is the CARES Act?

What Is the CARES Act?

While many states are navigating various reopening phases to resume operations suspended during the novel coronavirus pandemic, the road to economic recovery in America is looking to be long and challenging. With the unemployment rate in the United States at its highest rate since the Great Depression, millions of people who have been left with no steady source of income are forced to choose between affording basic necessities such as food and rent.

To help those who have experienced financial setbacks due to the coronavirus pandemic, the government has enacted the CARES Act designed to provide financial relief options to those currently struggling to make rent and mortgage payments on time.

How the CARES Act Helps

The CARES Act, or the Coronavirus Aid, Relief, and Economic Security Act, is the latest effort by the federal government to mitigate the negative financial impacts that have resulted from the pandemic. This act in particular is designed to shield those who are making payments toward mortgages that are subsidized by the federal government.

The act includes two primary forms of defense for homeowners:

  1. For the first 60 days following March 18, 2020, lenders were unable to enact foreclosures or judgments pertaining to foreclosures.
  2. Forbearances can be requested by homeowners from lenders to provide an extension on deadlines for payments. These extensions can last from one to 180 days. Another extension can be requested that includes the same previously mentioned range of delay.

What Is Forbearance?

Often a common request made by those who currently do not have enough money to make payments, forbearance is an option that allows you to make lower payments (or no payments at all) if your lender agrees to the request.  Things to consider when discussing forbearance with your lender:

  1. The length of the forbearance period
  2. The amount of the payment required during the forbearance period
  3. Whether the lender will report the forbearance to the credit bureaus
  4. How you will repay the lender once the forbearance period ends

Federally-Subsidized Mortgages

The CARES Act applies to the following federally subsidized mortgage loans:

  1. Freddie Mac

  2. Fannie Mae

  3. VA

  4. FHA

  5. USDA

Even if you are not making payments toward federally subsidized loans, forbearance opportunities may still be available. The best way to learn about your options is to contact your mortgage lender directly.

A Mortgage Lender Who Cares

Since having a mortgage in forbearance can be an obstacle when refinancing a current mortgage or trying to purchase a new home, it is important to seek guidance from a mortgage professional who can help you avoid potential issues. For homeowners in the Central Florida area looking for mortgage management assistance as a result of the coronavirus pandemic, Butler Mortgage is here to help. For over 25 years, we have been dedicated to providing valuable guidance and advice related to mortgage lending needs for all of our clients. For more information about personalized mortgage loan solutions and forbearance information, call us at 407-931-3800 or fill out our free consultation form online.

 

The Downside of Paying off Your Mortgage Early

The Downside of Paying off Your Mortgage Early

For many homeowners, being able to pay off your mortgage early sounds like a great idea. It’s likely one of the costliest payments you have to make each month and the idea of being able to save on interest payments can surely be attractive. In some cases, it can have profoundly positive financial and psychological effects for the homeowner. However, there are some disadvantages when it comes to paying off your mortgage prematurely, so it is important to do your homework before making such an important decision.

Less Available Resources

Most homeowners have other financial goals, like paying for house remodels, a new car, college tuition, a daughter’s wedding, or a vacation or two. If your extra money goes to paying off your mortgage, it’ll make it a lot harder to save for such things. Even without these extra financial goals, there’s always an unfortunate chance that you will experience an unexpected emergency that could take a good chunk of change from your pockets and may even go beyond your savings. It’s much easier to pay off these emergency expenses if you’ve created a cash reserve to fall back on, so you may want to consider putting aside an extra cushion if you do decide to pay off your mortgage early.

Fewer Tax Breaks

Another disadvantage of paying off your mortgage early is a reduction in the tax breaks you’re able to receive. Although the mortgage interest tax deduction was reduced back in 2017, you can still deduct interest on up to $750,000 of mortgage debt if you itemize your taxes. If you began your mortgage prior to 2018, your limit is even higher, at $1 million. If you are a homeowner that does not currently itemize, your income is still likely to grow over time — offering you a chance for deduction in the future.

Fewer Investment Potentials

If you put part of your income into investments, you may not want to pay off your mortgage early. Depending on how you invest and how the market is doing, there’s a chance that you could make additional money that would surpass the amount you would have saved on interest payments from paying off your mortgage early.

Make the Right Call Regarding Your Mortgage

Butler Mortgage wants to be your Mortgage Advisor for life. We would be happy to discuss the merits of paying off your mortgage early. With over 25 years of experience, we’ve worked with buyers of all kinds and experience levels to help make the right financial decisions regarding homeownership. To discuss your financial options or find the mortgage that’s right for you, call 407-931-3800 today or fill out our free consultation form online.

Which Renovations Have The Highest Impact On Home Value?

Which Renovations Have The Highest Impact On Home Value?

When looking to increase home value, homeowners are often inundated by gimmicks and trends that ultimately do not produce a definitive effect on value. However, good old-fashioned home remodeling and renovation has remained the best solution to increase a home’s value. Whether you choose to replace your garage door or redo your kitchen, these changes can not only make your home look nicer but can also boost its value. Furthermore, there are loans you can apply for to help you cover the costs.

The Benefits of Remodeling

Remodeling your home may seem like a daunting task, but in fact, it can provide a host of benefits for your finances. For one, a home renovation will grant you more home value and, with that, more home equity. If you were to sell your home, you would be guaranteed a higher return on investment and if you choose instead to refinance your loan, you will have more options available to you, which may include the removal of mortgage insurance from your payment amount.

Other benefits to remodeling include designing your home as you wish. There are plenty of options to make your home your own, with beautiful decorations and durable structures, like updated doors and windows. When choosing these features, you may also have the option to use energy-efficient building materials that will help you save on utility bills.

Top 5 Renovations to Increase Home Value

These common home renovations average the best return on investment:

  • Garage door replacement
  • Manufactured stone veneer or anything that improves the curb appeal of your home
  • Kitchen remodel
  • Bathroom remodel
  • Wooden deck addition
  • Siding replacement

Analyzing how these renovations affect your home value will allow you to make educated decisions on what remodels you should be spending your time and money on. If you need assistance paying for such renovations, you can reach out to a local mortgage lender to find a loan that can help shoulder the cost.

Home Remodeling Loans

Here are a few loans that can assist you with your home value-boosting remodeling work.

    • CHOICERenovation® Loans – Freddie Mac’s CHOICERenovation® Loans allow funding for homeowners looking to make home value boosting upgrades and improvements that will help their home withstand natural disasters
    • FHA 203(k) –This loan can be a single, long-term adjustable-rate mortgage or a 15-, 20-, 25-, or 30-year fixed-rate term.
    • HomeStyle® Renovation Loans Available in adjustable-rate as well as 15- and 30-year fixed-rate, these mortgages from Fannie Mae may be used for a variety of home improvements such as swimming pool installations. 

Quality Advice

When it comes to financial assistance to renovate your home, rely on the quality advice from the professionals at Butler Mortgage. With over 25 years lending experience in the Central Florida area, we can help you with financing renovations that will positively impact the value your home. Contact us today at 407-931-3800 or fill out our free consultation form online.

The Pros and Cons of Buying a Fixer-Upper Home

The Pros and Cons of Buying a Fixer-Upper Home

Buying a fixer-upper has become a trend in recent years for investors and first-time homebuyers who cannot find or perhaps cannot afford turnkey homes. However, for those deciding on buying a fixer-upper, the question often becomes, “Is investing in a fixer-upper more of a hassle than it’s worth?” Here are some pros and cons of buying a fixer-upper and a few ways you can get financial support to cover the repair costs.

Advantages of a Fixer-Upper

  • More affordable – One of the main benefits of a fixer-upper property is that it can be a cheaper option. Saving up for a down payment for a new home can be difficult for most first-time buyers. A lower sales price equals a lower down payment.
  • Wider choice of location – The area where you purchase your house is as essential as the house itself. A fixer-upper property can help you acquire a home in an otherwise unaffordable locale.
  • Chance to add value – A home renovation can add value to your property. Once you buy a fixer-upper and finish the upgrades, you are automatically adding value to the house. You can even sell it for a higher price when you decide to move again.
  • Opportunity for personalization – Renovations for your home give you a chance to customize specific areas to your own liking. This is often difficult for move-in ready homes.

Disadvantages of a Fixer-Upper

  • Renovations can be pricey – As a buyer, you should remember that, although you’re buying the home for a low amount, the labor and renovation costs can rack up. Always have some money saved as a contingency in case your renovations go over budget.
  • Renovations can be unpredictable – It can be risky to buy a home that needs renovations. For instance, you may discover underlying damage or find that the house needs more work than you originally anticipated. Such additional work can prolong renovations and skyrocket costs.
  • You can end up paying for two homes – Home renovations have a reputation for taking longer than initially estimated. Oftentimes, timetables are pushed back, which forces many homeowners to obtain a rental home while repairs are being completed.
  • It can be time consuming – A fixer-upper is a long-term commitment that often involves a long list of improvements, which can take a lot of your time and patience.

Fixer-Upper Loan Options

A fixer-upper can indeed become costly. Depending on the type of renovations you intend to make — either by yourself or through a third-party contractor — you may not only see your free time being eaten up, but your money as well. Fortunately, there are several loan options to help you finance your purchase of a fixer-upper. Here are some loan programs that are designed to help out those in your exact situation.

Get Fixed up With a Loan at Butler Mortgage

Whether you’re buying a new home or a fixer-upper, Butler Mortgage can provide you with a loan that works for your budget or see if you qualify for a renovation loan to help you cover the costs of your repairs. Call us today at 407-931-3800 or fill out our free consultation form online and let us find the best loan solution for you.

Should You Make Bi-Weekly Mortgage Payments?

Should You Make Bi-Weekly Mortgage Payments in Florida?Paying off your mortgage early can come with a host of benefits. You can free up money for travel or retirement, tackle other debts, or even financially protect yourself from losing your home. However, achieving these can be difficult without the proper planning or budgeting.

Alternative options to quickly paying off your mortgage can be a step in the right direction. Rather than paying monthly, you might consider making bi-weekly mortgage payments.

What are Bi-Weekly Mortgage Payments?

Bi-weekly mortgage payments allow you to submit a payment twice per month. For example, if you usually make a $1,000 monthly mortgage payment, you will instead make a $500 mortgage payment every two weeks. Essentially, you are paying half your monthly amount every two weeks.

Because there isn’t a standard amount of days per month, this equates to 26 biweekly half payments or 13 full monthly payments. Although you will be making one extra full payment per year, you can budget to alleviate any financial strain this payment could cause.

Benefits of Bi-Weekly Mortgage Payments

There are several key benefits to bi-weekly mortgage payments. For one, you can build equity faster. Home equity is the amount of your home that you own versus how much you owe your lender. The extra payment made goes toward reducing your loan balance. This will give you a boost in building equity and can allow you to take out a home equity loan if you find yourself needing to finance home repairs, consolidate other debt, or pay for a child’s college education.

Another benefit is that you will pay less interest over time. During the first few years after taking out a mortgage, most of the money will be going toward interest, while little will be going to reducing the balance of your loan. This process is known as amortization. Since you will be making an extra payment each year, you can pay down your principal amount even faster. This means that each interest payment afterwards will be smaller.

Bi-weekly mortgage payments allow you to pay off your mortgage faster. This is because you will slowly be paying off your principal balance faster than normal. Lastly, these payments will make it easier for some people to budget and can help you save on stress.

Understanding Your Options

Whether you choose to follow a standard monthly mortgage payment or conduct bi-weekly payments, there are plenty of options to choose from. For over 25 years, Butler Mortgage has worked with both first-time and seasoned buyers wanting to own a home in Central Florida. Let us help you find the right loan solution for you by calling 407-931-3800 or by filling out our free consultation form online.

Your Loan Options When Buying a Fixer-Upper

Your Loan Options When Buying a Fixer-Upper

As opposed to a move-in ready, entry-level home, a fixer-upper may be a lower-priced, established house that requires some repairs. While fixer-upper homes can be a home-buying solution to those with a limited budget, there are also renovation expenses to consider. Fortunately, certain loan options can help cover the cost of common home improvements such as:

  • Home modernization and functionality improvements
  • Health and safety hazard elimination
  • Disabled accessibility enhancements
  • Energy conservation upgrades
  • Exterior aesthetic improvement changes
  • Landscape overhaul
  • Roofing, flooring, plumbing, gutter, and downspout addition or replacement
  • Structural reconstruction and alterations 
  • Well and/or septic system installation

Fixer-Upper Loan Options

The following renovation loans help you finance a house and its improvements at the same time. 

  1. FHA 203(k) – Offered through the U.S. Department of Housing and Urban Development’s Federal Housing Administration, the FHA 203(k) loan is a single, long-term mortgage that is applicable toward both the purchase and improvement of a lower-value home. Comparable to conventional mortgages, this loan can be used with 15-, 20-, 25-, and 30-year fixed-rate, as well as adjustable-rate mortgages. The FHA 203(k) is eligible to homeowners who have a minimum credit score of 580 and requires a minimum down payment of 3.5%.
  2. HomeStyle® Renovation Loans – Fannie Mae Homestyle® mortgages may be used for many home improvements, including luxuries like swimming pools. A great option for single-family homes, HomeStyle® loans are available in adjustable-rate as well as 15- and 30-year fixed-rate mortgage terms. Qualifying manufacture homes are also eligible under the HomeStyle® Renovation Loan.
  3. CHOICERenovation® Loans – These Freddie Mac loans allow improvements that help your home withstand natural disasters along with other upgrades. CHOICERenovation® Loans follow standard credit score guidelines as opposed to FHA 203(k) loans. Therefore, they require a higher credit score from borrowers who put down less than a 25% down payment. However, borrowers can also make repairs themselves to earn a down payment credit.
  4. VA Renovation Loans – A VA-approved contractor is required for this loan available to eligible veterans. However, projects are limited, and your lender might charge a construction fee.

There is no doubt that a fixer-upper is more work compared to a move-in ready house. However, the reward might match the effort you put into it. When everything is done and dusted, your first home will be full of personal touches that will make you an extremely proud homeowner. In addition to the above programs, there are other renovation loans available as well. Quite possibly, one of them will fit your individual needs.

Your Best Option for Quality Loan Services

For help making your dream of homeownership a reality, turn to Butler Mortgage. For over 25 years, we’ve worked with both first-time and seasoned buyers wanting to own a home in Central Florida. By filling out our free consultation form online, we’ll see what type of loan you qualify for and help you get the financial support you need. For the right loan solution for you, call Butler Mortgage today at 407-931-3800.