How to Get Rid of PMI

How to Get Rid of PMI

If you secured your mortgage through a conventional loan, there is a chance you added private mortgage insurance, also known as PMI. PMI may protect your loan, but it can also cost you hundreds of dollars each month. Here is some information about PMI and ways you can save money by dropping it from your mortgage.

What Is PMI?

Private mortgage insurance protects your lender in case you default on your loan or go through foreclosure. PMI is usually required if you have a conventional loan and make a down payment of less than 20%, or if you refinance and your equity is less than 20% of your home’s value. The only benefit that you get from PMI is the ability to make a smaller down payment. 

How Much Does PMI Cost?

PMI depends on a variety of factors, just like your mortgage. The smaller your down payment is, the higher your PMI will be to cover your risk factor. A low credit score can also raise PMI since those with lower scores are more likely to default. However, fixed-rate loans will have lower PMI because they’re more predictable. Regardless of how high or low it is, your PMI can still be a few hundred dollars a month.

Ways to Get Rid of PMI

If you’re purchasing your home or refinancing, there’s a clear path to get rid of PMI. The first step is to build equity. You can’t cancel your PMI until your home equity reaches 20%. You can, however, raise your home equity by making loan payments. The second step is time. Most lenders require that you make 24 payments before being eligible to remove PMI, although some lenders allow removal after only 12 on-time payments. Once you’ve reached that 20% threshold and you have reached the required time threshold, contact your lender to get rid of PMI. 

For those refinancing their home, 20% home equity must still be reached to get rid of PMI. But after applying for your refinance and clearing all your paperwork, your new loan won’t include PMI.

Contact Your Florida and Georgia Mortgage Experts

Whether you’re a first-time or experienced buyer or looking to own a home or refinance, secure your home loan through Butler Mortgage. We’ve worked with potential homeowners throughout the states of Florida and Georgia for more than 25 years. We are ready to help find the best loan solution for you. Call us today at 407-931-3800 to schedule an appointment or fill out our free consultation form online. 

Should You Rent or Buy a Home?

Moving into a new home is a major life decision that requires much thought and research. When deciding whether to rent or buy a home, you should consider where you want to be in the next 5-10 years. If you just need temporary housing, perhaps renting is your best option. However, owning a home is an investment that can reward you in the long run. 

Here are some pros and cons of renting and buying a home.

The Benefits of Renting a Home

The biggest benefit of renting is your lower overall commitment to the property, both personally and financially. Since you are a tenant and not the owner, the responsibility of handling maintenance issues that often burden homeowners will fall on your landlord or property management company, unless specified otherwise in your rental agreement. 

There also aren’t any expensive closing costs to deal with. You simply agree to pay a set price for rent each month as well as an upfront deposit to cover any damages — usually in the form of first and last month’s rent. Renting also gives you the freedom to move around and “test-drive” a location or style of home before deciding to buy. 

The Drawbacks of Renting a Home

Regardless of the freedom that renting offers, there are several downsides to renting a home. The biggest drawback to renting is instability. While your rent shouldn’t change throughout the year, there’s a strong chance it will increase when it’s time to renew your lease. Such uncertainty and upheaval can be stressful as rental rates and cost-of-living go up. Furthermore, many view renting a home as throwing money away. As a tenant, you’ll live in the home but will be unable to build equity. Therefore, your monthly rent is passive income for the property owner. 

Before committing to a rental agreement, make sure you know what maintenance services are included, what you are allowed to do to the property, and what you’ll need to pay for out-of-pocket. Renters are often not able to make any home renovations; you get to live in the property as is. And if you paint or redecorate, you’ll likely have to change it back before you move out. 

While renting can be a good temporary solution, buying a home can help you settle down and create a permanent living space. 

The Benefits of Buying a Home

Buying a home does require a higher overall cost and more responsibilities than rentals; however, it is an investment in your future — and quite possibly the best investment you can make. You can receive tax deductions for the interest and property tax portions of your mortgage payments, and as you pay your mortgage and complete home improvement projects, your home’s equity and value will increase. You’ll also have unlimited freedom to decorate your house’s interior to make it feel more like home. 

With monthly rental costs increasing, it makes more sense to invest your money in a home. By working with a mortgage professional to find an affordable rate, you can possibly become a homeowner for around the same amount that you would be paying for rent each month.

Find Out Your Home Buying Options at Butler Mortgage

For over 25 years, Butler Mortgage has worked with both first-time and seasoned buyers wanting to own a home in Florida or Georgia. 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.

4 Practical Reasons to Use Home Equity

4 Reasons to Use Home Equity

Home equity is technically the amount of your mortgage that you’ve paid off. Your home’s worth is weighed against what you still owe, so as your home’s value increases and your mortgage sum decreases over time, your home equity will grow. 

If your financial situation needs assistance, your home equity can be tapped into to provide a low-cost and convenient way to pay for major life milestones. 

Ways to Use Home Equity

With few limitations, home equity loans are an easy and safe way to receive a large cash sum to help pay for various expenses. 

Here are a few common reasons why homeowners tap into their home equity.

  1. College Loans Using your home equity may be a better option than taking out traditional student loans. In some cases, mortgage interest rates are lower than student loan rates. Student loans may also have a shorter term, making it harder to pay back. A home equity loan is a great way to receive a low-cost loan with plenty of time to repay.
  1. Debt Consolidation While it isn’t always advisable to turn short term debt into long term debt, there are times when simplifying credit card bills, student loans, car loans, and other debt into one payment makes sense. Credit cards can carry extremely high interest rates, making repayment of large balances rather difficult. Consolidation creates breathing room for the borrower, but is only successful if the borrower changes their spending habits to avoid getting into serious debt all over again. 
  1. Emergencies Nothing adds a financial strain more than a medical or family emergency. Sudden unemployment or injury can cost you a significant amount of money in a short amount of time. Home equity loans are a good short-term solution to temporary financial distress.
  1. Home Improvements One of the most common reasons to use home equity, home improvements are a wise way to invest your equity as it can feed back into your home’s equity by increasing your property value. 

There are a myriad of other reasons to obtain a home equity loan, such as buying a car, paying for a daughter’s wedding, or financing another home. However, it would be advisable to discuss your reasons for using your home’s equity with a qualified mortgage loan professional before starting that process.

Secure a Home and Build Equity with Butler Mortgage

For over 25 years, Butler Mortgage has worked with both first-time and seasoned buyers wanting to own a home in Florida or Georgia. 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.

How to Get a Mortgage with Student Loans

Once out of college and starting a career, adults often start looking for a place to settle down. However, they may encounter difficulty qualifying for a home loan if they have excessive student loan debt. If you are in a similar situation, here is what you can do to increase your chances for approval and get a mortgage with student loans. 

What Do Lenders Look For?

Mortgage lenders start by looking at your credit score, which may not even be affected by student loans. To boost your credit score, make sure you pay your bills on time and don’t over-spend. Manage your credit wisely, and use more than one type. Having a credit card and student loans shows you’re capable of handling finances. During the mortgage process, keep old credit accounts open, especially ones in good standing. 

The Effects of Your Debt-to-Income Ratio

After your credit score and income have been assessed, lenders will calculate your debt-to-income ratio, or DTI. This is where student loans can impact your standing. Your DTI shows the percentage of your monthly income that goes toward paying debts. Your monthly recurring payments, such as credit cards, rent, and student loans, are divided by your pre-taxed monthly income to get your percentage. 

The higher your DTI, the harder it’ll be to get a mortgage. Most lenders will work with clients who have a DTI of 50% or lower, depending on what type of loan you take out. Paying off your student loans or other debts can help lower a high DTI ratio and qualify you for more loan programs.

Qualifying for a Mortgage with Student Loans

If you have solid, reliable income and make consistent payments, it’s possible to qualify for a mortgage before paying off your student loans — even if your DTI is over 50%. Loans backed by the Federal Housing Administration will take a DTI of up to 57%, in some cases. Veterans and active duty personnel can also qualify for a VA loan that can be even more flexible with your DTI ratio. 

Get a Mortgage with Butler Mortgage

No matter your budgetary means, Butler Mortgage is here to help you navigate the mortgage process. For more than 25 years, we’ve worked with potential homeowners throughout the states of Florida and Georgia to find their perfect loan solution. Get started today by calling 407-931-3800 or filling out our free online consultation form.

What Rising Interest Rates Mean for You

What Rising Interest Rates Mean for You

Inflation affects everyone, and first-time homeowners are feeling the effects of rising costs and interest rates — especially when it comes to financing a home. Here’s why the interest rate is rising and what it means for new homebuyers like you.

Why Are Interest Rates Rising?

The Federal Reserve, or “Fed” as they are known, indirectly determines interest rates by managing the nation’s money supply. This “tinkering” is their main tool in fighting inflation. When inflation rates are high, the Fed typically decides to increase interest rates, which, as the theory goes, will slow down spending and bring the economy back to normal. The opposite happens when inflation is low — interest rates are lowered to increase spending. The interest rate has increased four times in 2022, and it’s predicted that it may happen again at the Fed’s next meeting. While rising interest helps fight inflation, it certainly doesn’t help mortgage rates.

How Do Rising Interest Rates Affect My Mortgage?

Your mortgage may not be directly tied to the national key interest rate, but it’s certainly influenced by it. Mortgage rates have been rising, with monthly payments skyrocketing over the Spring and Summer of 2022. Since rates are increasing, home ownership is decreasing. Many people can’t afford such a drastic change in their mortgage rate; therefore, mortgage applications have decreased in the past year.

What Can I Do?

The best plan for first-time homeowners looking to secure a steady mortgage is to meet with a mortgage provider and determine the most suitable loan program for your situation as quickly as possible. You may find that the higher interest rate is not as prohibitive as you thought, especially when comparing a mortgage payment to the skyrocketing rents that are also plaguing most of the country. There are still numerous benefits to buying a home now and you can always refinance the high rate into a lower one when the economy improves. Plus, you will be locking in a payment as well as the value of a home since home prices, while levelling off in recent months, are surely to keep rising each year.

Secure the Best Rate with Butler Mortgage

Whether you’re a first-time buyer looking for a solid mortgage rate or a homeowner wanting to refinance, consider financing your home through Butler Mortgage. For more than 25 years, we’ve worked with all types of buyers looking to own a home in the Central Florida area. 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.

What Is Escrow and Escrow Analysis?

What Is Escrow and Escrow Analysis?

When working to secure a mortgage, you’ll likely hear the terms “escrow” and “escrow analysis.” Depending on your mortgage, you may have to create an escrow account and fund it with your monthly payment to ensure your property taxes are paid and insurance is maintained. Each year, your escrow will need to be monitored through an escrow analysis to determine its accuracy. 

Here is what you need to know about your escrow and escrow analysis.

What Is an Escrow Account?

An escrow account is essentially a savings account for insurance and taxes. It’s a financial account held by a third party, usually your mortgage provider. The purpose of an escrow account is to pay for obligations of a purchase agreement. Your account balance is determined by property taxes and various insurance policies which are divided into a monthly amount that will go directly to your escrow. 

What Is an Escrow Analysis?

Insurance and tax rates never stay the same. To ensure your escrow amount is correct, a mortgage lender conducts an annual escrow analysis. This analysis looks at payments made to the account and determines if there is a surplus or a shortage. 

If you have a surplus in your account, the money will be returned to you. If there’s a shortage, however, you’ll have to make up the difference either in a one-time payment or via higher payments over time. 

Your lender will also look to see if your monthly escrow payment needs to be adjusted. 

How an Escrow Account Benefits You

An escrow account and analysis equally divide your property taxes and insurance, so you aren’t paying a huge bill each year. Escrow ensures your payments are on time, and a yearly analysis makes sure you’re only paying exactly what you owe. 

Ultimately, an escrow account takes the pressure of paying insurance fees and property taxes off your mind, so you can enjoy being a homeowner. 

Work with the Professionals at Butler Mortgage

If you’re looking to secure a mortgage in Central Florida, consider financing with Butler Mortgage. We’ve worked with both first-time and seasoned buyers looking for their dream home for more than 25 years. 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.

How to Pre-qualify for a Mortgage

How to Pre-qualify for a Mortgage

The best thing someone can do for their future is to prepare for it now. This is especially true for the aspiring homeowner who needs to lay the foundation for buying the home of their dreams. If you’re thinking of buying a home, getting pre-qualified for your mortgage can help speed up the process and prepare you for the future.

Getting Pre-qualified

Pre-qualification is the first step on the road to acquiring a mortgage. It is typically a very straightforward, complimentary, and quick process that can be done online or over the phone. To start the process, you will need to supply your potential lender with information that gives them an idea of your overall financial picture. 

Your credit score, debt-to-income ratio, total monthly bill amount, and available down payment are all aspects that a mortgage provider will need to take into consideration in order to calculate which mortgage options are best suited for you and give you an estimate of what you can afford.  

While a pre-qualification is beneficial, it only takes a little extra work to obtain a pre-approval letter which shows Realtors and Sellers that you’re serious about buying a home. 

The Difference Between Pre-qualification and Pre-approval

Something that many first-time home buyers fail to realize is that pre-qualification and pre-approval are two different things, and many buyers are lulled into the belief that if you are pre-qualified for a mortgage, then you are pre-approved as well. That simply isn’t the case. 

After you’ve been pre-qualified, you’ll need to provide your lender with documentation proving your income (paystubs, W2’s, tax returns) and assets (bank statements, investment holdings) in order to get pre-approved for your mortgage. Your lender will verify all the information you provided and give you a pre-approval letter with a more accurate idea of the amount for which you qualify. Your pre-approval letter will get you one step closer to obtaining your mortgage.

Navigating the Mortgage Process

While pre-qualification and pre-approval are beneficial, neither guarantee your mortgage will be approved. You’ll want a mortgage lender on your side who knows the ins and outs of the process and ensures you’re getting what you need to own your home. Fortunately, Butler Mortgage is here to help. 

Experienced Mortgage Professionals in Central Florida

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.

5 Things to Know About Mortgages When You Buy a Home

5 Things to Know About Mortgages When You Buy a Home

Financing your home through a mortgage can often seem like a stressful and intimidating process. However, you can make the mortgage process seem a bit easier by educating yourself on the following five aspects of mortgage loans. 

1. Your Credit Score

One of the most important qualifications for your mortgage is your credit score; however, you don’t need perfect credit to get a decent mortgage. Programs such as those provided by the Federal Housing Administration (FHA) and the Department of Veterans Affairs (VA) provide mortgages to borrowers with lower than average scores. Conventional programs, including Fannie Mae and Freddie Mac, as well as the U.S. Department of Agriculture (USDA) typically require higher scores for their loans. Regardless of which program fits your needs best, a mortgage professional can analyze your credit and help put you on a path to a higher score.

2. Your Down Payment

While 20% used to be the standard down payment, you probably won’t need to put that much down. VA and USDA mortgages do not require any down payment, FHA allows for 3.5% down, and Conventional loans typically have a 5% down requirement—although in some cases, only 3% is needed. 

3. Your Employment History

Most people know that two years of employment is typically necessary for a mortgage. However, if you were in school or were out of work due to circumstances beyond your control (such as Covid), this requirement can be waived. Make sure to have a timeline of all recent work history ready to share with your Loan Officer 

4. Closing Costs

Closing costs are paid when homeowners purchase a home, and these fees can quickly add up; though there are some ways to cover them without paying out-of-pocket. Sometimes the seller will pay the closing costs depending on the negotiated sale price. Mortgage lenders may also pay a portion of costs for a small increase on your mortgage rate. If you are a first-time home buyer, some government programs will cover closing costs. There are also gifts from family members that can be used for most mortgage transactions. It is important that you provide bank statements for any accounts you plan to use to cover your portion at closing.

5. Pre-Approvals Are Lifesavers

Getting pre-approved for a mortgage only takes a few minutes and helps you know how much you qualify for before you go shopping for a home. It also gives you leverage with a Seller since they will know that a professional has already reviewed your information.

Contact Your Central Florida Mortgage Experts

For over 25 years, the mortgage professionals at Butler Mortgage have worked with both first-time and seasoned buyers wanting to own a home in Central Florida. To begin finding the right loan solution for you, call 407-931-3800 or fill out our free online consultation form today.

Reverse Mortgage: What It Is and How It Works?

A reverse mortgage can be a great option for older homeowners looking to stay in their home, get rid of monthly mortgage payments, obtain an extra source of income, or a combination of the above. Here is a guide explaining how reverse mortgages work and their benefits.

What Is a Reverse Mortgage?

Reverse mortgages are loans available to homeowners who either own their home or have a low mortgage balance. The home’s equity is turned into an amount that homeowners can borrow against.  For those in good standing who want to pay for cost-of-living expenses, reverse mortgages are a great option.

Reverse Mortgage Eligibility

There are certain requirements you must meet if you’re trying to secure a reverse mortgage, including:

  • High Home Equity: In most cases, your home equity must be at least 50%.
  • Certain Types of Properties: Only certain types of properties qualify, including single-family homes, homes built after June 1976, and some multi-unit properties.
  • Not Planning on Moving: If you’re thinking about a reverse mortgage, it’s best to stay put. Moves can complicate the loan and add undue stress.
  • Age: You must be at least 62 years old to take out a reverse mortgage. However, if your spouse is older than 62, you can still qualify for the loan even if they pass away.  Also, the older you are, the more you are able to take out in the form of the reverse mortgage loan.

Benefits of a Reverse Mortgage

Homeowners can enjoy many benefits from a reverse mortgage, whether it comes in a lump sum or a monthly deposit. Here are some of the top reasons to secure this loan.

  • No Mortgage Payments: If you’re still paying a mortgage, those monthly payments will stop.
  • Tax-Free: Since it’s a loan, there are no taxes on this payment.
  • Federally Insured: Reverse mortgages are federally insured which means you’ll receive benefits even if your lender defaults.
  • Flexible and Restriction-Free: There are several ways to receive your reverse mortgage payment, and you can use the funds however you like.

Secure Your Finances with Butler Mortgage

If you’re looking into a reverse mortgage, contact the mortgage professionals at Butler Mortgage. For over 25 years, we’ve worked with both first-time and seasoned buyers wanting to own a home in Central Florida. To begin finding your right loan solution, call 407-931-3800 or fill out our free online consultation form today.

Know Your Options to Avoid Foreclosure

Know Your Options to Avoid Foreclosure

If you’re facing financial hardships and are worried about the bank foreclosing on your home, there are several mortgage relief options that you can consider to help you avoid foreclosure.

Ways to Stay In Your Home

Potential options to stay in your home and avoid foreclosure include:

  • Modification: You may be able to negotiate with your mortgage company to adjust the original terms of your agreement—including the payment amount and length of your loan—to make your payment more affordable.
  • Repayment Plan: If you’re past due, you could agree to split your balance and add it on to additional future payments. This resolves delinquency and helps you catch up over a longer period.
  • Refinancing: It’s possible to create an entirely new loan that replaces your current mortgage. Refinancing in this situation would only be helpful if it lowers your interest rate and, therefore, the payment enough to bring it in line with your budget.

Leave Your Home Without Foreclosing

Options for when you cannot stay on your property but want to avoid foreclosure include:

  • Sale With Equity: If your home is worth more than your mortgage balance, you can convert that value into cash to use when you sell. It pays off your remaining debt, and you have flexibility and control leaving your home.
  • Short Sale: The opposite of a sale with equity is a short sale. If your mortgage company agrees, you can sell your home and pay a portion of the balance with the revenue. You may have to make your own financial contributions, but you’ll be relieved of any remaining balances through a deficiency waiver.
  • Mortgage Release: Your property’s ownership is transferred to your mortgage owner in exchange for a release from your loan and payments. While it’s a loss of control, it eliminates your debt, and you may qualify for relocation assistance.

Reverse Mortgage Option

If you’re over 62 years of age, you can apply for a reverse mortgage by borrowing against the value of your home. As long as it is your primary residence and you pay all the maintenance fees, the loan does not have to be repaid.

Explore Your Options with Butler Mortgage

Regardless of what option you choose, Butler Mortgage is here to guide you and help you avoid foreclosure. For over 25 years, Butler Mortgage has worked with 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.