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.

Advantages of a Large Down Payment

Advantages of a Large Down Payment

There are numerous mortgage loan programs available in which you can make a minimal down payment (sometimes as low as zero), but making a larger down payment when purchasing a home has intrinsic benefits that can help a potential homeowner save money in the long run. While offering more money upfront will clearly reduce the overall amount owed, there are some additional advantages of making a large down payment when buying a home. 

  1. No Private Mortgage Insurance (PMI) Premiums

Lenders will require a homebuyer who borrows more than 80% of the total home’s value to pay PMI. PMI premiums are included in the monthly mortgage payment and protect the lender in case of mortgage default.  Depending on the down payment and credit scores, this extra amount (on an annualized basis) can typically range between 0.3% – 1.3% of the total mortgage loan. In the long term, these premiums can add up to thousands of dollars annually depending on the housing costs. The good news is that you can avoid these costs by making a down payment on your property that is at least 20%.

  1. Smaller Monthly Mortgage Payments 

It is obvious that the less you borrow, the less you will have to pay back. That’s why making a large down payment on your home can lead to reduced monthly mortgage payments. The payment is less due to borrowing less, but also because there will not be any PMI as discussed above. This double bonus scenario leaves you with less stress and potentially more cash flow for other projects and important needs.

  1. Less Overall Interest

Putting down a large down payment will have a significant impact on your long-term finances and help you save a lot in the long run. For instance, if you borrow $200,000 to buy a house without a down payment and take 30 years to repay it at a loan interest of 4%, then you will have to pay $143,735 in interest. On the other hand, if you borrow $160,000 with a down payment of $40,000 over the same duration and with the same interest rate, then you will end up paying only $114,989 in interest. The down payment option in this example saves you $28,746.

Realistic Home Lending

While the benefits of putting down 20% of a home’s total purchase value are no doubt appealing, it’s understandable that not everyone can afford to make such large a down payment toward the purchase of a home. If you are not in a position to make a large down payment because of your financial situation, then finding a mortgage lender that will work with you can make all the difference. 

Mortgage Lending That Works for You

At Butler Mortgage, more than 90% of our customers in the Central Florida market put 5% or less down when they buy a house. We provide loans that are tailored to each person’s unique financial situation. 

If you’re in need of financial assistance to buy a home, consider Butler Mortgage. To learn more about our mortgage lending services, contact us today at 407-931-3800 or fill out our free consultation form online.

The Benefits of Freddie Mac’s CHOICERenovation Loan

The Benefits of Freddie Mac’s CHOICERenovation Loan

The Freddie Mac’s CHOICERenovation Loan is a great solution for potential homeowners who are looking to buy a property that they must repair and renovate. Potential homeowners looking at “fixer-uppers” can really benefit from this loan that allows them to roll in the costs of renovations into their new mortgage. This saves time and money for a new homeowner and helps maintain and give selling potential to properties in need of repairs across the country.

The CHOICERenovation loan can also be used to repair properties that have been damaged from natural disasters when they include repairs that will prevent future damage. This loan is meant to help the aging housing supply across the country and expand buying opportunities for first-time homeowners.

Is This Loan Right for Me?

While the Freddie Mac CHOICERenovation loan is open to all eligible borrowers, there are certain people who can benefit from it more than others such as:

  • First time homebuyers looking to stretch their budget and expand their options to properties they would not normally consider because they could not afford to finance the repairs.
  • Buyers in rural communities where the home supply is less than its major city counterparts.
  • Aging homeowners who are looking to finance repairs while staying in their homes.
  • Homeowners who plan to keep their home for multiple generations and want to spend money customizing renovations tailored to their living style and preferences.

How CHOICERenovation Works

A borrower can finance repairs that cost up to 75% of their home’s value after renovation. A qualified lender can help borrowers narrow down these figures and customize estimates based on the properties the borrowers are interested in. The key is whatever figure you are aiming for, you must be credit worthy to qualify.

Freddie Mac’s CHOICERenovation loan uses the same debt-to-income ratios that most lender and mortgage programs are based upon. However, it expands your options as a homebuyer and should be considered when shopping around for your new property.

Your Choice for Superior Mortgage Lending

If you need assistance finding the right loan to help fund your home repairs, then contact Butler Mortgage. With over 25 years’ experience, the professionals at Butler Mortgage can help you find the best loan solution to satisfy your needs. To get started, call us today at 407-931-3800 or fill out our free consultation form online.

Factoring Property Taxes Into Your Mortgage

Factoring Property Taxes Into Your Mortgage

Like insurance, property taxes are often a forgotten part of a mortgage payment. Property taxes can go up as time goes on as the value of your home rises. Therefore, considering this aspect of your mortgage payment before you buy can help save you money and frustration when choosing your new dream home.

How Are Property Taxes Calculated?

There are two factors that determine how much you will pay in property taxes on your new home:

  • Your local county tax rate
  • Your property’s total assessed value

Multiplying your property’s assessed value rate by the county tax rate will provide you with your yearly tax payment.

How Do I Pay My Property Taxes?

Homeowners who take out a typical 30-year fixed rate mortgage will not usually pay the property taxes directly to the government, but rather will have an escrow account setup with their mortgage provider who will pay the taxes on their behalf. The reason for this is because the lender has a vested interest in your home and does not want the government placing a lien on their collateral.

Therefore, when you take out a mortgage, expect to have one consolidated bill from your mortgage provider that includes: 

  • Mortgage (principal and interest)
  • Mortgage insurance (if applicable)
  • Property tax
  • Home insurance (flood insurance if applicable) 

Since the total mortgage payment is made up of all of these amounts, potential homeowners must factor these bottom-line figures into how much house they can comfortably afford.

Tax Rates in Florida Vary

Hillsborough County, which includes Tampa is reported to have the highest median property tax for any county in Florida. However, Orlando, located in Orange County, has the highest medium median property taxes for a city in all of Florida. On average, the property tax rate in Florida is 1.1 percent of the assessed value, although that can fluctuate depending on where you live. Even more reason to not overlook the impact that taxes have on your property purchase.

Homestead Exemptions

If you are planning to make the home your primary residence, Florida allows you to obtain a $25,000 exemption, called a Homestead Exemption.  This lowers the assessed valuation causing your property taxes to be reduced. You can apply for this exemption with your county after January 1st following the year in which you purchased the property.

Get the Best Rates at Butler Mortgage

Don’t let property taxes deter you from owning a home. Contact the mortgage professionals at Butler Mortgage. We have over 25 years’ experience working with buyers who want to own a home in the Central Florida area. Let us help find you the best loan solution for your needs by calling 407-931-3800 or by filling out our free consultation form online.

The Difference of Being Preapproved vs. Prequalified for a Mortgage

Preapproved vs. Prequalified for a Mortgage

If you’re a first-time homebuyer, applying for a mortgage may seem overwhelming, or at the very least, foreign to you—especially when there are so many terms and conditions. For instance, many borrowers are confused about what it means to be preapproved for a mortgage as opposed to being prequalified. If you can relate, rest assured that you’re not alone. Here is some insight to help you understand the difference between each term and how they apply to you. 

What Is a Preapproved Mortgage?

Mortgage preapproval means a lender has agreed to take a close look at your financial condition to determine whether you would meet all underwriting guidelines for a particular loan. You will be informed about interest rates and monthly payments when speaking to the lender, but first you must agree to having your credit report run, and provide proof of income (paystubs, W2’s, tax returns) and document assets (bank statements, retirement account statements, etc.).

If you are preapproved for a mortgage loan, you will receive a letter indicating the lender is interested in working with you. The letter contains the terms they are willing to provide, such as the loan amount, interest rate, and the length and specific type of mortgage loan. However, you are not obligated to work with this lender just because they sent a letter of preapproval.

The great thing about being preapproved is you can take the letter to your Realtor, who will share it with potential sellers. This makes your offer on a given property more valuable than one from a buyer who hasn’t been preapproved.

What Is a Prequalified Mortgage Loan?

Getting prequalified is a less formal way of seeing how much of a loan you can afford. A lender will ask specific questions such as how long you have worked at your current job, how much do you make, and how much of a down payment you would like to put on a house. They may or may not run your credit at this time. As you can see, a prequalification is simply based on the verbal information you provide to the lender. Since the information has not been verified for accuracy, the letter you receive upon being prequalified does not carry the same weight as a preapproval.

Regardless, prequalifications are important in the early stages of the home buying process as borrowers can find out if they are in the right ballpark for a specific home and can easily shop for the best loan terms without spending too much time with one lender.

The Major Difference Between Being Approved vs Prequalified

Preapproved home buyers can feel extremely confident that they will obtain a mortgage loan in order to purchase real estate. Prequalified buyers are not guaranteed to get approved for a loan, but if they provide accurate information and work with a reputable lender, their chances are very good. Also, having a credit score that is less than perfect should never deter someone from trying to get prequalified or preapproved for a loan. There are different loan types for customers with all types of credit.

Reliable Mortgage Professionals

For over 25 years, the professionals at Butler Mortgage have been making the process of securing a home loan an easy one for Central Florida borrowers. Whether you are a first-time or repeat homebuyer, we can sit down and work with you to find the best mortgage that suits your every need. Contact Butler Mortgage today at 407-931-3800 or fill out our free consultation form online to see if you can be preapproved or prequalified for a mortgage loan.