Author: kollin.yelensky

When thinking about buying a home, you should take the time to examine your finances closer than you ever have – because the mortgage underwriter will be looking at them even more closely. It’s their job to evaluate your income, credit score, and assets to make sure you’re a good candidate for a loan.

For this reason, it is imperative that you do nothing to make the mortgage company question your ability to repay them. To demonstrate that you’re the ideal loan candidate, here are some things you should avoid doing during the mortgage process.

Making Large Purchases or Lifestyle Changes

Qualifying for a mortgage means that the lender has to be completely sure that you’ll pay them back. Because of this, they will keep an eye on your spending habits. Refrain from making sizable purchases or serious financial decisions until you’ve closed on your home. Even if your budgeting is perfect and you’re able to afford a new car, that purchase can make your underwriter question your ability to afford your monthly mortgage payments.

Avoid major lifestyle changes as well, such as quitting your job. A career change or anything that may put a strain on your financial health would be a red flag to  your underwriter.

Forgetting Important Paperwork

It is common for family members to want to help out with the down payment or closing costs. However, it is important that you speak to your Loan Officer to make sure that such financial assistance qualifies in the eyes of the underwriter. Most importantly,  money from a family member must be considered a gift rather than a personal loan.  Additionally, your donor will need to complete a gift letter (ask your Loan Officer for this form), explaining their relationship to you, their address, the amount of money gifted, and a statement saying the donor is not expecting the money to be repaid.

Changing Your Credit

This almost goes without saying, but don’t make any drastic changes to your credit. During this time, don’t open up any new credit cards or lines of credit, and don’t close any out, either. Both actions can negatively affect your credit score, and you want it to be as high as possible when applying for a home loan.

Opening a new line of credit creates an inquiry on your credit report, which can lower your score. Any charges on your new credit card can negatively affect your debt-to-income ratio, which is a figure that underwriters look at closely.

Instead of closing out credit accounts, simply continue to pay them off monthly like you normally would. This allows you to keep your credit open and your credit score high. Closing credit accounts can be dangerous as it lowers your amount of available credit, making any remaining debt take up a larger percentage of the remaining limit, which can seriously hurt your credit score.

Let Us Help

No matter how you choose to find and buy your dream home, Butler Mortgage is here to help. We have been helping Central Florida families like yours get the financing they need for more than 20 years. We can help you find the perfect mortgage for your needs and qualifications. For questions, or to speak with one of our representatives, call us today at 407-931-3800.

 

With your house-hunting efforts finally behind you and your preferred lender found, you can start making your way down the final stretch to home-ownership – settlement day, also referred to as the ”Closing.” At least 3 business days prior to your closing, the title company (or your lender) will have sent you a copy of your closing documents. Read through them carefully, as they will include details on the closing costs that are due the day of closing.

Closing costs will cover both recurring and nonrecurring fees that are a part of your transaction. Recurring costs are ongoing expenses that you will continue to pay as a homeowner, with a portion of them due upon closing. Nonrecurring fees are one-time costs associated with borrowing money and the services required to purchase the property. Recurring costs are placed in your escrow account, which serves as a savings account for those upcoming costs.

Common recurring costs include:

• Property taxes
• Homeowners insurance
• Prepaid loan interest
• Mortgage insurance (if applicable)

Nonrecurring costs may include:

• Home inspection fees
• Discount points paid up front to lower your interest rate
• Origination/Processing fees
• Document preparation fees
• Appraisal fees
• Survey fees for verifying the home’s property lines
• Underwriting or administrative fees for the cost of evaluating and verifying your loan application
• Credit report fees
• Title Insurance, search, and recording fees
• State taxes – In Florida, these are called Documentary Stamps (Note and Deed) and the Intangible Tax

Let Us Help

We understand that financing a home can be a daunting task, but the experts here at Butler Mortgage are here to help. Our Loan Officers will do everything possible to make your mortgage experience as painless as possible, so you can spend less time worrying, and more time enjoying your home. Call us today at 407-931-3800 with any questions.

Looking for a way to make purchasing your first home a little bit easier? The Florida Bond Program allows first time homebuyers to acquire a variety of different loans (FHA, USDA, VA, or Conventional) ranging from 95% to 100% loan-to-value ratio. This means that many homebuyers will be able to secure low interest financing through the Florida Bond Program, while putting little to no money down beforehand. Down payment percentages for the various eligible loans are as follows:

• USDA – 0% down
• VA – 0% down
• FHA – 3.5% down
• Conventional – 3% or 5% down

Down Payment Assistance

The Florida Bond Program provides down payment assistance for first time buyers in a couple different ways. The Florida Assist down payment assistance loan is a $7,500 loan with a 30-year term, 0% interest, and $0 payments as long as you occupy and do not refinance the property.

Buyers that opt for the Conventional Bond program are able to receive a grant equal to 3% of the home’s sale price, and are not required to pay the grant back after occupying the home for 5 years.

Who Qualifies as a First-Time Home Buyer?

Contrary to what many think, this doesn’t have to be your first home purchase to be considered a first-time home buyer. As long as you have not owned and occupied a primary residence in the past three years, you qualify for the Florida Bond Program as a first-time buyer.

How Does the Program Work?

The Florida Bond program is offered through the Florida Housing Finance Corporation and is available to buyers through specific local and approved lenders. Loan originators must be certified to participate in the program, and all loans in the program are sold to the Florida Housing Finance Corporation after origination. Loans are then serviced by US Bank.

Are you a first-time homebuyer in search of a way to make that down payment process easier? The Florida Bond Program might be the perfect solution. For more information regarding the program, or to schedule a consultation, contact Butler Mortgage today at 407-931-3800.

A healthy credit score is a prized possession to many, but if your score needs some help, it likely won’t happen overnight. This is largely because your credit score takes into account information from the past several years, not just your present actions.

That doesn’t mean that your credit score is a lost cause though. You can turn around a less-than-stellar score faster than you might think with these simple steps:

Keep Your Balances under Control

A major factor that goes into creating your credit score is how much credit you have compared to how much of it you’re using. The smaller the percentage is, the better it is for your credit score. 30% or less is the optimal range to be in, as it shows that you are able to use credit responsibly.

If you’re one of the many who has multiple credit cards, consolidating those balances with a personal loan can also help your score.

Even if you pay your balances in full each month, you might have a higher credit usage percentage than you’d expect. Some credit issuers report your statement balance to the credit bureau, so even if you’re paying it in full every month, there is still an existing balance

Eliminate Nuisance Balances

Another way your score is determined is by how many of your cards have outstanding balances on them. Charging small amounts to multiple cards is worse for your credit score than using the same card (though hopefully one with a good interest rate).

Pay off those cards with small balances, and use one or two go-to cards instead.

Use a Calendar

When shopping for a car, home, or loan, it’s best to do your shopping in as short a period of time as possible. Every time you apply for credit, it can cause your score to dip down slightly for up to a year. The thought is that if a person is making multiple applications for credit, they want to use more credit than they have already.

Fortunately though, the credit bureaus do not penalize you when trying to shop around for the best rate for a home loan. For scoring purposes, even if you had your credit pulled at a dozen (or more) mortgage companies within a 45 day period, it would only count as one inquiry.  If you had your credit pulled at two different mortgage companies 46 days apart, it would count as two distinct inquiries.

Pay Bills on Time

Making a big purchase like buying a home or a car often requires putting together a sizeable amount of cash at once. This, on top of the usual monthly bills and expenses can cause you to fall behind over time. Making late payments is one of the fastest ways to tank your score, even if you end up with a substantial amount in savings as a result.

Making your monthly payments on time, every time is one of the best ways to let creditors know you are consistent and serious about your debt.

Don’t Portray Yourself as a Risk

Sometimes the best way to improve your score is to do nothing at all. Don’t do anything that the credit agencies frown upon that could drop your score.

Two of the biggest things to avoid doing are missing payments and drastically changing how much you pay or charge on your credit cards. Taking cash advances or even using your card at places that could indicate financial trouble like a pawnshop should be avoided if possible, as well.

The key here is to not do something that makes you look like a risk to a potential creditor.

Don’t let a less-than-perfect credit score keep you from the home of your dreams. These simple tips can have your credit score on the fast track to recovery in as little as 60 days. When the time comes to buy that dream home, know that Butler Mortgage is here to assist. We understand that every situation is different, and we pride ourselves on finding mortgage solutions to suit your specific needs. Contact us today at 407-931-3800 with any questions.

A simple way to explain an escrow account is to think of it like a holding tank for your money. During a real estate transaction, an escrow officer who is typically a lawyer or representative from the title company, holds all important documents and deposits in an account while final details of the transaction are worked out.

The escrow officer’s job is to make sure the closing on your house goes smoothly and to ensure everyone gets paid what they’re owed. Escrow officers typically charge a fee of 1% to 2% of the cost of the home for their services. After closing, the officer makes record of the deed and title transfer that makes the home officially yours.

In addition to the escrow account used for holding deposits and documents during closing, there is typically also a second type of escrow account used during the transaction. This second account is between you and your lender, and is used as a holding area for money used to pay property taxes and insurance. When you make your monthly mortgage payment, a percentage goes into escrow to help cover the estimated annual tax costs, while the rest goes to paying principal and interest.

At the end of each year, your lender may adjust your monthly escrow account to compensate for any under or over-payment of your tax and insurance bills. If you are short one year, you are generally able to spread the difference owed out over the next year. If you pay in too much, your lender will refund the difference to you.

We understand that financing a home can be a daunting task, but the experts here at Butler Mortgage are here to help. Our Loan Officers will do everything possible to make your mortgage experience as painless as possible, so you can spend less time worrying, and more time enjoying your home. Call us today at 407-931-3800 with any questions.

Put simply, home equity is the part of your home’s value that you own outright. When you have a mortgage, you don’t own the entire home until the mortgage is completely satisfied. Until then, your mortgage lender has an interest in your home as well. As you pay off your mortgage, your equity grows and the lender’s interest decreases until you own the house outright.

Your current home equity represents the property’s value minus the outstanding amount owed to your lender. For example, a home that sells for $600,000 but has a $400,000 mortgage, would have an equity of $200,000 as that is what would be remaining after the mortgage is satisfied.

How to Build Equity as a Homeowner

You can build home equity through making a larger down payment when you purchase the house or by paying down your mortgage balance through regular monthly (or extra principal) payments. Your equity will also increase if your home appreciates in value thanks to a favorable housing market.

Benefitting from Appreciation

Appreciation occurs when market demand rises, the supply of available homes decreases, or a combination of both. Most markets throughout the country are currently seeing historically low levels of home inventory, which has helped bring about big price increases. If you bought your home for $200,000 a few years ago, it may sell for significantly higher than that if prices in your area or neighborhood have increased. You can also help your property appreciate by maintaining, repairing, and making home improvements.

The natural trend for home prices over time is to appreciate, but this is not always the case. When property values depreciate, your equity decreases as well. If it depreciates far enough, you may end up ‘upside-down’ in your home, which means you owe more on it than it’s worth.

At Butler Mortgage, we strive to help you utilize the value you own in your property. Contact us today for guidance and advice so we can sit down with you to create a mortgage plan that suits your needs. Call us today at 407-931-3800.

Many first time homebuyers have a difficult time coming up with the large down payment necessary for a conventional mortgage, or lack the strong credit history required to secure financing. Luckily, a mortgage insured by the Federal Housing Authority (FHA) is a great alternative, as they do not have the same strict requirements.

The basic premise is: loans are sourced through private lenders, and the government then insures those loans so there is less risk to the lender, allowing them to approve financing for those with less-than-perfect credit or smaller down payments.

Though there are minimum requirements for an FHA mortgage, they offer some significant advantages for many people.

Lower Credit Score and Down Payment

Because an FHA loan is backed by the government, credit score and down payment requirements are lower than those of conventional loans. Buyers require a minimum of a 580 credit score and a down payment of 3.5% to qualify.

Closing Costs

For buyers who may be able to put together a down payment but struggle to put enough away to cover closing costs, an FHA loan is especially beneficial, as they allow sellers to pay up to 6% of the loan amount to cover the buyer’s closing costs – whereas a conventional loan only allows up to 3% when going with a minimum down payment (Conventional loans also allow a 6% seller contribution when putting at least 10% down).

 Assumability

FHA loans are assumable, which means that if you sell your home in the future, the new buyer can take advantage of your low rate as long as they qualify for the loan.  In a rising interest rate environment like we currently have, this is a valuable selling point.  Imagine a situation where prevailing rates are 9% or 10% (or higher) years from now, but you can offer a potential buyer an attractive rate less than half of that.  This could save them hundreds of dollars every month on their payment!

If you’re in the process of saving to purchase your first home, an FHA mortgage may be a great option if you’re looking for a smaller down payment, flexible seller contributions, assumability, and  competitive interest rates.

For more information about FHA loans, or to explore your other mortgage options, give the experts at Butler Mortgage a call today at 407-931-3800.

You’re in the process of saving to purchase a home, but when is the best time to buy?

According to Trulia, homes in the “starter” price range see a 7% boost in inventory numbers between October and December each year. Starter homes are defined as any listing in the $230,000 range or under, with listings between $230,000 and $360,000 being categorized as “trade-up” homes, and anything above being classified as a “premium home.”

Of the 100 largest metropolitan areas in the US, the number of starter houses on the market reaches its peak in 70 of them during this time of year, so those looking to purchase their first home have more options at the year’s end.

Numbers of homes available to first-time buyers tends to shrink between July and September, but this is also when trade-up and premium home inventories are at their peak.

Ultimately, local factors and personal needs shape the decision to purchase a home.  Nationwide studies may strategically point out the best time to buy, but that doesn’t take into account numerous factors, such as career changes, a seller’s motivation, interest rates, and the need for a larger home.   Some people may want to move when their schedules permit devoting enough time for the mortgage process and moving their family to a new home while others think about certain times of year like when they receive their tax refunds or during the holidays.

One thing is certain – no matter when you would prefer to buy a home, the time to talk to a mortgage professional about your options is NOW. If you’re in the market for a house, whether it be a starter or a premium home, the loan experts here at Butler Mortgage are ready to assist you. Call us today at 407-931-3800 to schedule a consultation with one of our Loan Officers who can walk you through each step of the mortgage process.

If you’ve been in the market to purchase a home, you’ve undoubtedly heard terms like “fixed-rate” and “adjustable-rate,” but which is best for you?

The low initial cost of an adjustable-rate mortgage, or ARM, is tempting to many homebuyers, but they do carry more uncertainty than the alternative. However, the current economic climate has home interest rates on the rise, and an adjustable-rate mortgage allows you to lock in the lowest possible interest rate for a practical amount of time, before it begins to increase.

Adjustable-Rate Mortgages – What You Need to Know

Pros

• Lower interest rates and initial payments make ARMs especially appealing to those who plan on selling their home before their mortgage matures.
• Lenders are able to use that lower payment amount when qualifying a buyer, allowing them to buy more house than they otherwise would be able to.
• The opportunity to invest and save more effectively. With a lower interest rate, a borrower could invest the money left over each month into a higher-yielding investment.
• For borrowers who do not plan on living in one house for very long, it offers a more cost-effective option than a traditional fixed-rate mortgage.

Cons

• Interest rates can increase significantly over the life of the mortgage. If rates rise sharply, so will your mortgage payment.
• ARMs can be more complicated to understand than fixed-rate mortgages since they rely on margins and indexes to establish the current rate and how the future rate will be capped.

Fortunately, for those prospective homebuyers who do not plan on staying in one place for more than 5, 7, or 10 years, most of the drawbacks of an ARM can be avoided. Savvy buyers can lock in the lower initial interest rates that an ARM offers for several years, and then sell before the rate begins to adjust for the rest of the term. Most homeowners tend to move within 7 to 10 years of buying a house anyway, making this a great way to save for many people.

Let Us Help

If you’re unsure whether an adjustable-rate mortgage is right for you, the loan experts at Butler Mortgage are here to help. Call us today at 407-931-3800 to schedule a consultation with one of our loan originators who will be happy to walk you through each step of the mortgage process.