Author: kollin.yelensky

Home mortgage refinancing is a great idea for many homeowners, but there are situations in which it is not possible or desirable.

In some situations, refinancing may not make financial sense, especially if you plan to sell your home in the next few years.

Before committing to refinancing your home, you should ask the following questions:

Do I have equity in my home?

To qualify for a home loan that is free of private mortgage insurance (PMI), you will need at least 20 percent equity in your home.  While you can refinance a loan with less than 20 percent equity, the PMI costs may negate the benefits of refinancing.

However, having little or no equity in your home does not necessarily rule out a refinance.  There are programs like FHA and VA that require little to no equity and may be a viable option.

How is my credit?

Credit scores are one of the most important factors in securing a good interest rate. The lowest interest rates typically go to applicants with credit scores over 720. Speak to your mortgage professional about ways to improve your credit score before applying for the refinance loan.

How long do I plan to stay in this home?

Since there are closing costs associated with refinancing, doing a simple calculation shows the amount of time it will take to reach the point where the savings outweigh the initial costs. If you plan on only staying in your current home for a short time, it may not make sense to refinance. Additionally, if you are close to paying off your mortgage, the costs may be higher than the amount you will save before the mortgage is paid off.  However, there are numerous other considerations when determining whether a refinance is right for you.  For example, you may need cash to consolidate other debt, make improvements to your home, or pay for a daughter’s wedding.  There are also tax considerations as well since interest on a home equity line of credit (HELOC) may not be deductible with the newly signed tax law. Interest on a refinance loan, by comparison, IS tax deductible in most cases.

Let Us Help

We understand that refinancing your home can seem like a daunting task, but the experts here at Butler Mortgage are here to help. Our Loan Officers will do everything possible to make your refinancing 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.

Purchasing a home requires having enough money on hand for a down payment, a history of on-time payments over the past couple of years, and a steady income; but do you necessarily need a perfect credit history? While a high credit score will often bring more favorable loan terms, you can still buy a home with less than stellar credit.

Take Steps to Improve your Credit

Regardless of your credit history, it is important to reduce debtand improve your credit score as much as possible in order to get the best possible loan terms. To find out where you stand regarding your credit rating, you should look at your credit score. There are a number of resources available to check your credit scores for free that do not impact your overall score.

Mortgages for Less-Than-Perfect Credit

When looking for a loan with blemished credit, an FHA loan is often a smart choice. The Federal Housing Administration (FHA), part of the Department of Housing and Urban Development, guarantees loans administered by authorized lenders and is typically more flexible when looking at someone’s past credit history.

In addition to FHA loans, there are other programs available that offer the ability to make lower down payments and are also more flexible on credit than conventional mortgage financing. Two such options are the Rural Development loan, available through the US Department of Agriculture, and VA loans, offered through the Department of Veterans Affairs.

Bottom Line

Buying a home with bad credit can be a challenge, but it is far from impossible. With more than 20 years of experience in the Central Florida area, you can trust Butler Mortgage to find a mortgage product that perfectly suits your needs. You can also rest assured that we’ll be here to help you every step of the way, including on closing day. Contact us today at 407-931-3800 or online to request a complimentary consultation.

After you’ve found a home you like, made your offer, and have been pre-approved for a mortgage, you might think the job is almost done. However, there is  still one important hurdle to clear, and that is getting a final approval from an underwriter. So what exactly can you expect?

Think of an underwriter as a sort of detective. It’s their job to ensure that you and your finances are accurately represented and that there are no false figures on your loan application. Although this information is checked during a loan pre-qualification process, underwriters have much more stringent requirements.

Some of the criteria they look at includes:

Credit History

An underwriter will first look at your credit score from the three major bureaus which are Experian, Equifax, and TransUnion. Red flags from things like bankruptcy or accounts going to collections will require a letter of explanation and steps of what you have done to correct the past credit issue. Credit report issues can sometimes be overcome with a solid employment history or larger down payment.

Home Appraisal

Part of the underwriter’s job is to make sure the appraisal of the home you wish to buy matches the size of the loan you’re seeking. This process is important as an appraiser’s valuation is the first line of defense in protecting a lender’s collateral. If an appraised value comes in artificially high, the lender is at risk if the borrower eventually defaults on making payments. A quality underwriter will know how to evaluate the appraiser’s work and take into account the home’s location, age, condition, and other significant factors.

Perceived Risk

Another part of the process is to determine how big of a risk it is to give you a loan. Your debt-to-income ratio, which is your monthly financed debts divided by your monthly gross income, is an extremely important aspect of underwriting. A high debt-to-income ratio, which can be due to a lack of sufficient income, a high level of debt, or both, can increase your perceived risk, hurting your chances of securing financing.

The best thing you can do to improve your overall underwriting experience is always to provide complete and accurate information on your loan application, and respond promptly to additional requests.

The professionals at Butler Mortgage have been helping Central Florida families like yours get the financing they need for more than 20 years. Not only can we assist you with your pre-approval process, but 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.

Adjustable vs. Fixed-Rate Mortgages

Whether you’re a first-time or experienced homeowner, it’s important to review mortgage options. To make you a more informed homebuyer, here is an explanation of fixed-rate and adjustable rate mortgages (ARM).

Fixed-Rate Mortgage Pros and Cons

A fixed-rate mortgage is the most common type of loan. With a fixed-rate mortgage, there won’t be any variability which is attractive to buyers on a fixed income or with rigid budgets. However, this may not be the best option if interest rates are high at the time of purchase. Here are some of the benefits and drawbacks of a fixed-rate mortgage.

Pros:

• With a fixed-rate mortgage, the interest rate stays the same throughout the duration of the mortgage.
• Fixed-rate mortgage payments are always consistent regardless of what happens in the economy, making financial planning a simpler task.
• Fixed-rate mortgages are easy to understand, which is good for a first-time homebuyer who may not feel comfortable with an ARM.

Cons:

• Often has a higher initial cost than an ARM.
• If interest rates fall, a fixed-rate mortgage holder has to refinance to take advantage. This process typically involves thousands of dollars in closing costs, and time spent organizing documentation.

Adjustable-Rate Mortgage (ARM) Pros and Cons

An ARM is the opposite of a fixed-rate mortgage in that the interest rate fluctuates depending on the market. While their lower interest rate and payment makes them attractive to first-time homeowners, ARMs are typically more complex loans. Here are some of the advantages and disadvantages of an adjustable rate mortgage.

Pros:

• ARMs offer a lower initial interest rate and, thus, a lower payment amount.
• With an ARM, a borrower may qualify to buy more house than they otherwise would.
• A borrower can take advantage of falling interest rates without having to pay closing costs and fees all over again..
• An ARM provides 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, an ARM offers a more cost-effective mortgage solution that is more flexible than a fixed-rate mortgage.

Cons:

• Because of fluctuation, interest rates can increase significantly over the life of an adjusted-rate mortgage. If rates rise sharply, so will your mortgage payment.
• ARMs can be far more complex than fixed-rate mortgages as they rely on margins, caps, and adjustment indexes which can quickly get confusing.

Choosing the Right Mortgage for You

Buying a home is a big deal and one of the most important financial decisions you’re likely to make. If you’re unsure about what type of mortgage to choose, consider talking with an expert at Butler Mortgage.

For more than 25 years, Butler Mortgage has worked with all types of homeowners 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.

When you’re in the market for your home, you undoubtedly have questions, concerns, and no shortage of emotions. It’s no secret that purchasing a home is one of the largest financial decisions you’ll make, and of course, you don’t want to make a mistake. It is natural to have questions regarding buying your first home, and the concerns you feel are completely natural.

Here are some of the most common questions we receive in regards to purchasing a first home, along with answers that should help ease your mind during the process.

Am I ready for homeownership?

Though there are no concrete signs that you are ready to take the plunge into homeownership, there are clues you can look out for to give you an idea. A home is a long-term investment, so being in an area that you enjoy and plan to stay in for a while is important. Being financially secure enough to take on the extra burden of home ownership is something that cannot be ignored.

Why should I buy instead of renting?

Real estate markets are ever-changing, and if you can afford it, buying a home is a much more effective investment than renting. When you buy a home, you have equity in what you’re paying your mortgage towards each month, and you’re left with an investment that will increase in value over time.

How much do I need for a down payment?

Down payment amounts vary depending on the purchase price of the home, along with interest rates and the terms of the mortgage you’re applying for. FHA loans and others allow you to put as little as 3-5% down, though you may encounter private mortgage insurance, or PMI until you pay a certain amount of your mortgage off.

What is PMI?

PMI, or private mortgage insurance, is a means for lenders to protect themselves if a buyer defaults on their loan. PMI is paid each month in addition to their principal to help reimburse a lender if they default. This fee is typically rolled into your monthly mortgage payment until about 80% of the loan is paid off, at which point the PMI is canceled.

Let Us Help

We understand that buying your first home can seem like a daunting task, but the experts here at Butler Mortgage are here to help. Our lenders will do everything possible to make your home buying 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.

An LTV, or loan-to-value ratio is a way of comparing the size of a home loan to the value of the property securing that loan. Many lenders use an LTV ratio to determine how risky a loan is, and it is often used in the loan approval process or to determine if mortgage insurance is required. Higher LTVs may indicate a higher risk loan since the borrower has less “skin in the game” and the lender is less protected if the borrower defaults on the loan.

Put simply; an LTV ratio indicates how much of a property you truly own versus how much you owe on it.

Why LTV Matters

 LTV ratios help lenders evaluate risks associated with their loans; the more they lend, the higher their risk. A high-risk loan means:

• It may be more difficult to be approved for a loan
• You may pay more per month due to a higher interest rate
• You may incur other costs such as PMI (Private Mortgage Insurance), which protects the lender if you put less than 20% down.

What is a Good LTV Ratio? 

While the best LTV ratio is largely dependent on the type of loan you’re seeking, the more equity you have invested going into the loan process, the better.

80 percent is seen as a magic number for home loans, as if you borrow over 80 percent, you will likely have to pay private mortgage insurance (PMI) to protect the lender. Though it is an extra expense, it can often be canceled once your LTV ratio drops below 80 percent. Some lenders will loan with as little as 3 percent down, and FHA loans only require a 3.5 percent down payment, but you will pay mortgage insurance (FHA calls it MIP, or the Mortgage Insurance Premium), possibly for the entire life of the loan.

Let Us Help

We understand how daunting it may feel to try and learn the ins and outs of home loans, and the team here at Butler Mortgage is here to help. We have your best interests at heart and will see you safely through your borrowing process. For any questions about LTV ratios or our lending options, call us today at 407-931-3800.

Millions of people in the US are eligible for home financing with a VA home loan, and even though many veterans may have already used their VA loan benefits, it is possible to purchase a home again with VA financing by either using the loan entitlement that is remaining from the first purchase, or by having their loan entitlement restored.

Before arranging for a new mortgage to finance a home purchase, veterans should consider some of the advantages of VA home loans:

Advantages of VA Home Loans:

• VA home loans typically require no down payment, whereas a conventional home loan requires a 5% down payment, and an FHA loan requires 3.5% respectively.
• There are no monthly insurance premiums associated with a VA loan. FHA loans include upfront and annual mortgage interest charges and conventional loans typically requiring the purchase of private mortgage insurance – unless there is a 20% down payment being made.
• Seller-paid closing costs. Sellers can pay buyer’s loan-related closing costs up to 4 percent of the sales price.
• VA loans often carry lower interest rates than other loan types, averaging among the lowest of any type of mortgage loan.
• No prepayment penalties with a VA loan; you are free to pay your loan off early with no financial penalties
• Foreclosure avoidance advocacy from the VA loan program. The VA has staff members who advocate on behalf of homeowners to find alternatives to foreclosure.

VA Loan Limitations

A VA loan cannot guarantee that the home you buy, whether it be new construction or previously occupied, will be defect-free. A VA appraisal is not intended to act as an inspection of the property, and if you have any doubts as to the condition of the home, it is advisable to seek out a professional inspection before committing.

Whether you’re purchasing your first home through a VA home loan, or you’re using your loan entitlement to purchase another home, Butler Mortgage can help. Call our team of experts today at 407-931-3800 with any questions regarding VA home loans.

Mortgage loan giant Fannie Mae has announced that it intends to raise the acceptable debt-to-income ratio for acquiring a home loan. This comes as huge news for aspiring homeowners, as debt-to-income ratio is the number one reason for mortgage application rejection, according to Kenneth Harney of The Washington Post.

As of now, millennials make up the largest portion of the population to be rejected due to high debt-to-income (DTI) ratios, thanks in large part to high rent-to-income ratios early on in their careers. Fannie Mae’s revision to their DTI aims to help more millennials enter the home buying market without being a detriment to their ability to satisfy their mortgage payments.

According to an article by The Washington Post, Fannie Mae will raise its DTI ceiling from 45% to 50% in hopes of attracting large numbers of new home buyers, as Fannie Mae’s researchers found that individuals with DTIs between 45% and 50% were not prone to defaulting on loans, and many have very good credit ratings.

What is DTI?

Debt-to-income is a calculation of a person’s total amount of debt from credit cards, student loans, auto loans, and mortgages compared to their total annual income. Some in the industry have reservations about lending to borrowers with higher DTIs, but time will tell whether Fannie Mae’s research on this topic was accurate.

We have been working with folks throughout the Central Florida area for over 20 years, and we can help you get the financing you need. For any questions, or to speak with a representative, call us today at 407-931-3800.

The best thing someone can do for their future is to prepare for it now, and this holds especially true for the aspiring homeowner who needs to lay the foundation for buying the home of their dreams.

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. There is a huge difference between the two terms, and you should know exactly what it means to be pre-qualified before beginning your home buying process.

Getting Pre-Qualified

Pre-qualification is the first step on the road to acquiring a mortgage and is typically very straightforward. To start the process, you will need to supply a bank or lender with information that gives them an idea of your overall financial picture. Things like your debt, income, and assets are all taken into consideration. After looking over your information, your lender will be able to give you an idea of the amount for which you qualify. Pre-qualification can be done via phone call or online typically, and it is usually free.

Pre-qualification is a great tool that allows you to analyze the goals or needs you have with regards to purchasing a home with your lender. With that information, your lender is better able to explain the various mortgage options that are best suited to you.

Because being pre-qualified is only a rough estimate based on information that you provide, that amount and the amount you are pre-approved for can be very different as the criteria for being pre-approved is much more thorough.  In order to be pre-approved, you would need to provide your lender with supporting documentation to back up the numbers you originally gave them.  For example, to verify your income, you would typically provide recent paystubs along with W2’s and tax returns from the past two years.  To verify assets, you would provide bank statements from all accounts for the past two months.

If you’re buying a home for the first time, don’t underestimate the importance of a pre-qualification. When the time comes to purchase the home of your dreams, look no further than Butler Mortgage to help. With decades of experience under our belts, 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 the housing market steadily on the rise, millennials are beginning to get their hands on more and more houses. A report by Zillow shows that 50% of home buyers are under the age of 36 which is great for the real estate industry, as the average age of first-time homebuyers has been on the increase for years.

A Millennial’s Preferred Method

A survey by CentSai indicates that 75% of millennials would prefer to have a local real estate agent help with their home buying process rather than an online equivalent, with 71% saying they would prefer working with a local mortgage lender. This comes as a surprise to many, who chalk millennials up to being technology obsessed, but it turns out that they prefer the local knowledge and personal touch that mortgage professionals have to offer.This doesn’t mean that using technology isn’t an integral part of the real estate process. Both millennials and Gen X home shoppers were most likely to use online services while browsing homes, but they were also the most likely to use a real estate agent for the purchasing process, at 92% and 88% respectively.

Such a high percentage of buyers opting to work with real estate agents when buying or selling, especially among millennials, has led to the lowest number of for-sale-by-owner transactions ever, at just 8% of the total.

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.