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Things to Consider When Buying an Investment Property

Taking a different route to the traditional payday isn’t easy, but it can be incredibly rewarding. If you’re ready to take on the role of landlord or want to start flipping the fixer-uppers in your city, here are the top things to consider when buying an investment property.

Steady Income

Investment property income isn’t the same as your usual bi-weekly paycheck. In fact, if you can’t manage to flip your property or sign tenants in a reasonable time frame, you could end up going weeks or even months without any cash flow. If you steadily rely on hourly or salaried wages, consider whether you can afford to take time away from those obligations and dedicate time to your investment.

Property Location

If you want to manage your own property, consider starting off with an investment property that isn’t too far from where you live. Also, if you have a particular type of tenant in mind, make sure that the area in which you intend to purchase has amenities or attributes from which the renters can benefit. For example, if you want to rent to a responsible, small family with stable income, search for properties with nearby schools in safe, clean neighborhoods.

Unexpected Expenses

Even if your property passed a pre-purchase inspection with flying colors, you may still run into some home hiccups once the keys are in your hands. For example, your fixer-upper can easily turn out to be a bigger project than you thought, or one of your larger appliances might give out on the newly signed tenants. Since these things can arise without warning, you need to have a savings cushion to help you weather such unexpected events.

Insurance Coverage

When shopping around for an insurance policy, consider whether you can afford to pay a little bit more each month for better coverage versus a low premium policy in which you will have to pay a larger sum in the event of an accident. Also, remember that when you’re purchasing a piece of property in an area prone to natural disaster damage, you might be facing higher insurance premiums for essential coverage. However, you should still shop around to find the best available rate for your financial situation and property plans.

Your Goals

Are you looking to turn an investment property into a full-time job? Are you looking for a stable source of additional long-term income? Whatever reason you decide to start investing in property, make sure to consider whether it is possible to satisfy your overall goals before making the purchase. For example, if you’re a risk-averse, first-time buyer, don’t start shopping for a home without understanding how it can fit into your one-, three-, or even five-year plan.

Mortgage Options

One of the most important things to consider when buying an investment property is how you plan to finance your purchase. Fortunately, you can find the right mortgage solution by teaming up with the professionals at Butler Mortgage who have been helping people finance primary homes, second homes, and investment properties for over 25 years. Our expert team will guide you through financing options to help you purchase your first investment property. Contact us online for a free consultation or call 407-931-3800.

FHA Revises Condo Requirements

FHA loans are one of the strongest financing options for first-time buyers, and condominiums are one of the most affordable and easily maintained property options—but FHA-backed condo loans have not always been an easily accessible mortgage solution. However, with new FHA updates from the Department of Housing and Urban Development (HUD), the condo approval process is about to change in a lot of ways.

Expanded Access

Under previous FHA guidelines, condo certifications only lasted for two years before developers or project owners required re-certification. Fortunately, the FHA will extend the condo certification window another year, giving project owners a three-year period before requiring re-certification. And when reapplying, developers will no longer have to resubmit a complete application; they’ll just need to upload the amended information.

Spot Approvals

According to the current FHA regulations, buyers are ineligible to obtain a single-unit FHA loan if the entire complex isn’t already FHA approved. With the new FHA amendments, spot approvals allow the FHA to approve single condo units within a community; however, the amount of units eligible for FHA insurance varies depending on the total units in the complex. For example, in unapproved projects with over 10 units, no more than 10% of units are eligible for an FHA loan. And in unapproved complexes with under 10 units, no more than two units are eligible for an FHA loan.

More Options

The new FHA guidelines are opening up a lot of incredible homeownership opportunities for first-time buyers, allowing them to easily finance in mixed-use developments and complexes with lower owner/occupant ratios. And now that more condo units will have the opportunity for approval, HUD projects that more condo projects will start appearing in development.

FHA Approval

Starting mid-October, condo financing may be more affordable and more available to countless buyers, which means now is the best time to get approved. If you want a head start on the condo market competition, partner with the mortgage professionals at Butler Mortgage. We can guide you through the approval process or help you find another financing option that best suits your situation. To learn more about the new FHA amendments or to find a different mortgage solution, complete our free consultation form or call 407-931-3800.

Understanding the Updated 2020 VA Loan Limits

Updated 2020 VA Loan Limits

There are multiple benefits available for veterans securing a VA loan and recent updates make VA mortgage loans an even better choice for some. To better prepare veteran borrowers for their next big purchase, let’s take a look at what the 2020 VA loan limit changes mean for upcoming applicants.

The 2020 VA Bill

Earlier this year, the Senate and the President approved the Blue Water Navy Vietnam Veterans Act to award veterans with higher benefits in healthcare and homeownership for 2020. The bill removed the previous loan limit of $484,350, allowing the Department of Veteran Affairs (VA) to support veteran borrowers seeking larger home loans.

VA loan limits represent the maximum zero-down amount that the VA can guarantee regarding good credit risk, but this does not represent the amount that a lender is guaranteed to approve. The final approval decision is still in the hands of mortgage lenders.

VA Loan Fees

As of January 1, 2020, veterans in nearly every county in the United States will be able to borrow at higher amounts—without making a down payment. However, removal of the loan limit comes at a small price to borrowers in the form of additional loan fees. Per the 2020 changes, the funding fee without a down payment is set at 2.30% for first-time users and 3.60% for subsequent users.

Spouses of veterans who died in active duty or suffered fatal disabilities from their service may be eligible to have these fees waived. Similarly, active-duty Purple Heart recipients will also be exempt from these fees, but there are other loan requirements that all veteran applicants must keep in mind. Regardless of the loan limits or applicable funding fees, borrowers must meet standard lender requirements regarding credit and income to qualify for VA mortgage loans.

VA Loans in Central Florida

Finding the right mortgage product to purchase or refinance a home can be difficult when the options and limitations are constantly changing. Fortunately, the loan experts at Butler Mortgage are here to help Central Florida citizens make the best borrowing decisions. Whether you’re looking for a VA loan or any other mortgage solution, our team of loan professionals will guide you through the optimal mortgage options for your finances. Call us today for a free consultation at 407-931-3800.

How to Qualify for a Mortgage When You’re Self-Employed

Anyone gearing up for a mortgage application is going to take some time to prepare their information, gather necessary documents, and comb through their credit reports. However, for those who write their own paychecks, the process can be a little trickier. With a few more hoops to jump through regarding income, credit, and borrowing in general, the lending process can easily deter any self-employed mortgage applicant. So, here’s our guide to qualifying for a mortgage when you’re your own boss.

Adequate Income

Although writing off expenses decreases your taxable income, it also decreases your provable income. Lenders don’t care about your gross earnings; they care about the number that you take home, which means you’ll have to prioritize whether you want to save more on taxes now or qualify for a home later. If you want your mortgage application to look its best, you’ll need to show that you have as much net income as possible, even if you’re going to pay a little more in taxes.

Necessary Documents

When applying for a mortgage, salaried workers must provide W-2’s and their personal tax returns for the past two years to show that they have both adequate and constant income. Self-employed borrowers must provide the same items as well as their business tax returns (all schedules) for the past two years. If they are a sole proprietor, the schedule C in their personal returns would be sufficient.

Lenders don’t deny applications for having too much proof of income, so save any business documents that you feel may be beneficial to your mortgage application.

Borrowing History

Credit plays a big part in mortgage qualifications whether you’re self-employed or not. Therefore, it’s essential that you work to lower your debts and improve your score as much as possible before you begin the home buying process. Since your financial history will be under a microscope when applying for a mortgage, you must examine each of your credit reports, avoid closing or opening any new accounts, and continue making timely payments on each of your existing ones.

Down Payment

As a self-employed borrower, you don’t have to put more money down to walk away with the same deal as a salaried applicant. However, most lenders are much more likely to approve loan requests when the applicant is willing to put down more money because it minimizes the likeliness of a mortgage default. Therefore, while you’re planning to purchase a home, consider saving up for a larger down payment to strengthen your application.

Proper Planning

Buying a home isn’t a spur of the moment decision, which is why you should start planning now. By teaming up with the professionals at Butler Mortgage, you can prepare for your purchase to be way ahead of the application game. Whether you’re self-employed or in a salaried position, our team of loan experts can guide you to the best decisions for your long-term purchase and financial future. Contact our team for a free consultation by calling 407-931-3800.

Do My Tax Returns Affect My Mortgage?

If you apply for a mortgage here at Butler Mortgage (or any other lender in the U.S.), we will likely request your tax returns before offering any financial assistance. While you would think that normal financial documents cover everything needed to get a mortgage, the last two years of your tax returns are required for most mortgage loan products and paint a more detailed picture than typical income documentation like paystubs. Let us explain why your tax returns are crucial for your mortgage application.

What Part of My Tax Returns Are Needed?

We need to see all pages of your tax returns so that we can determine how much you can afford for your monthly mortgage. Generally, you will have to provide the last 1–2 years of personal tax returns, business tax returns (if you own more than 25% of one), and W-2s or 1099s. These documents let us see if you have a steady income that can sustain future mortgage payments. They also alert us of any write-offs and deductions, which may not be useable when calculating your income for qualification purposes.

How Do My Tax Returns Help Me Qualify?

When we look at your tax returns, we are looking to pull out key pieces in order to construct your total monthly income as it is defined in federal mortgage lending guidelines. Once we have that number, we are able to determine your debt-to-income ratio, or DTI. This is calculated by dividing your monthly debts (including your future mortgage) by your average income in a month. While we can work with a range of different DTI percentages, a lower ratio will allow for a higher mortgage and is more appealing to an underwriter, especially when other areas of your application, such as credit or assets, are not as strong as they could be.

Central Florida Mortgage Lenders

Getting a mortgage can seem like a daunting process, especially when lenders want to dig through your financial information and history. However, our goal at Butler Mortgage is to help you achieve your dreams and get a mortgage loan. Your financial records are crucial to making that happen. We are experts at analyzing even the most complex tax returns and will work with your situation to figure out the best plan for your future. Contact us today and request a free consultation at 407-931-3800.

3 Big Tips for First Time Home Buyers

3 Big Tips for First Time Home Buyers Orlando Florida

Buying a house for the first time can be a daunting task. The initial down payment, closing costs, and mortgage rates all have large price tags attached and are full of minute details that can be missed by the average customer. The last thing you want is for your first home to put you into excessive debt and set back your financial future. With the help of an experienced mortgage professional, a real estate agent, and these important tips, you can feel confident as you search for the home of your dreams.

Start Saving ASAP

Long before you plan on buying your first house, you need to build up some savings to make your initial purchase. While there are many different options in the market allowing for a lower down payment, many first time homebuyers forget that there are closing costs as well. Figure on adding an extra 3 to 3½% of the purchase price for closing costs. Dedicated saving can help prepare you for the down payment and other fees.

Choose a Smart Mortgage Plan

When looking at mortgage options, the temptation will be to spread your payments over a long period of time. Even though the monthly payments will be lower, you will end up paying far more money in the long run with a 30-year mortgage than a 15-year one. Discuss with your mortgage professional the various term options such as 20 or 25 year mortgages if the payment on a 15 year loan is too steep. Another option is an adjustable rate loan, which can save a borrower thousands of dollars over the life of the loan. However, if you are risk-averse and would rather have a steady payment, aim for a fixed-cost conventional loan mortgage. This will ensure that your mortgage rate will not inflate over the course of your payment schedule.

Find Your Dream Home

Buying a house is a long-term commitment, so it is imperative to find a place that checks off as many of your important desires as possible. Be cognizant of the location, neighborhood, local schools, and other factors that are major components of your life, not just the home itself. As the famous real estate saying goes, the three most important parts of a property are its location, location, and location.

Central Florida Home Mortgage

Getting your first home can be intimidating, but with the right team of professionals at your side, you can have an enjoyable experience and find the home of your dreams. Here at Butler Mortgage, we can help you through this process and determine the best financial plan for your situation so that you can begin your new life in your first home with financial security. Call us today for a free consultation at 407-931-3800.

What Is a Freddie Mac Home Possible Mortgage?

Getting a first mortgage can be a difficult task. Raising the necessary funds to make the first down payment can be stressful for some people, and if you do not have a great credit score or are relatively unestablished, this can become an even more frustrating process. However, there are ways to finance a home purchase other than a traditional mortgage. Here are some details about one of these programs: the Freddie Mac Home Possible mortgage.

Home Possible Specifics

A Freddie Mac Home Possible mortgage is a way for lower-to-moderate income clients to get their first mortgage when other paths are out of reach. The main advantage of this loan is the low down payment: it only needs to be 3% of the cost of the home. Freddie Mac loans also have more flexible credit requirements than traditional loans, which can especially help young people who are relatively unestablished have their mortgage application approved.

Qualifications for Freddie Mac

In order to get a Freddie Mac Home Possible mortgage, you must meet certain criteria. To begin, the annual income of the buyer must not be greater than 100% of the median income limits of the surrounding area. However, this restriction might not apply in underserved areas. In addition, you cannot have over 43% to 45% of your income going towards debts, but you might be able to qualify anyway if you consult loan professionals. Also, you must also be a first-time homebuyer and take a homebuyer course online or in-person.

Apply for a Home Possible Mortgage

If you deeply desire to be a homeowner and think that you could qualify for a Home Possible mortgage, the most important step is to contact a knowledgeable mortgage professional and apply. A Freddie Mac Home Possible Loan can help you buy your first home when you didn’t think it would be possible financially. Here at Butler Mortgage, we can help you determine if you are eligible for a Freddie Mac mortgage and then guide you along the process towards owning your first home. Call us today at 407-931-3800 for a free consultation!

How to Get a Home Seller to Pay Closing Costs

When buying a home, many people worry about being able to pay the initial out-of-pocket costs. With the burden of having a large down payment, the extra closing costs can cause people to have to wait on buying their home. However, it can work out in the best interests of both the buyer and seller for the seller to pay the closing costs of the property, helping you complete the sale. Keep these scenarios in mind so that you can get help paying your closing costs.

Give Them What They Ask For

Sometimes, making an offer at (or near) the seller’s asking price can benefit you more than offering a lower price point. If the seller is looking for a minimum amount of profit from the property, meeting their asking price could make the seller more likely to help out with closing costs. This way, you can incorporate the extra cost into your mortgage and spread it out rather than paying it all upfront.

Help Their Timeline

Another time that the seller would be open to helping with closing costs is if they are looking to move out and get the deal done quickly. If they have already begun a mortgage on a new home, speeding up the sale process is in their best interest, and they would be far more likely to help you out with any closing costs. A seller would also be open to helping pay closing costs if you are willing to accept the home as it stands without causing trouble during the inspection period. A little give-and-take in this area can go a long way in your negotiations.

Work With a Real Estate Professional

While getting a seller to pay closing costs is very common to mortgage transactions, in most cases, you would benefit greatly from having a real estate professional go to bat for you. We recommend working with a Realtor for many reasons. Among those reasons is that they are trained to negotiate and know how to take the emotion out of the process. Their goal is to get the best deal for their customer and studies have shown that buyers and sellers alike benefit from working with such professionals.

Mortgage Experts in Central Florida

Buying a home is an exciting event, but it can come with a lot of stress when figuring out how to finance it all. Here at Butler Mortgage, we have been helping families for over 25 years! Let us help you navigate the loan process and make sure you end up with the home of your dreams. Contact us today at 407-931-3800 and get a free consultation.

Understanding Fannie Mae HomeReady Mortgage Loans

Finding your dream home can be tough, but acquiring a practical mortgage loan can seem even more difficult. If you are new to the home buying market, it is important to understand the different types loans available to you so that you can make the best decision. In particular, you need to know more about the Fannie Mae HomeReady loan, since it was designed particularly for first-time home buyers. To help you out, here are some of the most frequently asked questions regarding Fannie Mae HomeReady mortgage loans.

Do I Qualify for a Fannie Mae HomeReady Loan?

Fannie Mae HomeReady was designed with first-time homebuyers in mind. Since you only have to make a down payment of at least 3%, you don’t have to have a high income or large savings to qualify. And candidates with low to moderate income can even acquire a HomeReady loan with a credit score as low as 620, although having a 680 or higher will give you more favorable terms, such as a better interest rate.

What Are the Advantages of a Fannie Mae HomeReady Loan?

The minimum down payment of 3% for Fannie Mae HomeReady loan is an attractive feature to many people with limited savings. This payment can even be made with monetary gifts, grants, and Community Seconds, making it even more affordable. With a HomeReady loan, you also receive reduced private mortgage insurance coverage that can be cancelled once your home equity reaches 20%. Another advantage of HomeReady is that boarder or rental income can be factored into the application income to help improve the borrower’s debt-to-income ratios.

Is the Fannie Mae HomeReady Loan Program Right for Me?

The needs and wants of homebuyers are diverse, which is why HomeReady loans were created to help increase eligibility and simplify the process. HomeReady has some of the benefits of government-insured mortgages, without some of the negative strings attached. If you want to find an affordable way to get the home of your dreams, HomeReady may be the right fit for you.

Where Can I Get a Fannie Mae HomeReady Loan?

Butler Mortgage has over 25 years of experience working with both first-time and experienced buyers looking to acquire a mortgage loan in Central Florida. If you want to learn more about whether you qualify for Fannie Mae HomeReady or any other first-time homebuyer loan program, contact our mortgage experts. Call us today at 407-931-3800 for more information.

Qualifying for a Home Loan with Bad Credit

Everyone knows that having good credit is important for securing a home loan. But not everyone has a sparkling borrowing history. Does this mean you can’t qualify for a home loan with bad credit? Not necessarily. There are many different options available to you. A seasoned mortgage professional will be able to help you identify the areas in your credit profile that can be improved, thus boosting your credit score. In other words, while you can certainly do things on your own to repair your credit, developing a game plan with an experienced loan officer will help you to avoid some pitfalls that could prove detrimental to your score.

Check Your Reports

It’s important to know your credit score before you apply for a loan. Once a year, you can receive your credit score from the three national credit reporting agencies for free. It is also important to note that the score given by Equifax, Experian, and TransUnion may differ slightly from bureau to bureau. Knowing your score across every bureau is essential, because your median score will be used when evaluating your application.

Dispute Any Errors

Your credit score may be lower than it should be because of reporting errors or issues on your reports. When searching your credit reports, make sure that all of the information is accurate and correctly reflects your credit history. If you find any errors, such as payments that were incorrectly reported as late, you can dispute the error to return your score to its correct number.

Work on Building Your Score

Before you apply for a mortgage loan, you may want to spend some time on building your score as much as you possibly can. Once you’ve thoroughly scanned your credit reports and disputed errors, you can start building habits that will benefit your score. The most helpful actions you can take to improve your score include:

Paying your bills, loans, and other debts on time
Holding off on applying for new credit accounts that could bring negative inquiries
Keeping your credit balances as low as possible

Search for the Right Loans

If you have credit that isn’t where you would like it to be, you aren’t alone. There are countless homebuyers who have successfully qualified for mortgage loans without having the best credit in the application pool. In fact, some loan programs were designed to make low range credit applicants more eligible. Some of the most common credit-friendly loans include HARP 2.0, FHA, and USDA Rural Development.

Find an Experienced Mortgage Firm

If you want to learn more about building your credit score before applying for a loan or are ready to start applying today, you can count on the trusted experts at Butler Mortgage. With over 25 years of experience in helping homebuyers of all credit ranges, we can find the right loan for your wants and needs. Contact us online or by calling 407-931-3800 for a complimentary consultation.