Category: Blog

Going over your mortgage can sometimes feel like reading a foreign language. Indeed, the industry is full of acronyms and terms which may not be easy to understand the first time around. Below are some of the most common terminologies you’ll hear in relation to your mortgage.

Common Mortgage Terms

• Discount Points – Discount points are a one-time, tax-deductible fee that borrowers purchase to lower their interest on monthly payments. Paying discount points can be a smart move if you plan on keeping your home for more than four years, or so. Ask your Loan Officer to do a break-even analysis to determine if it is wise for you to pay this fee.
• Loan-to-Value (LTV) – This ratio is the amount of the mortgage loan divided by the home’s value.
• Private Mortgage Insurance (PMI) – Paying a monthly PMI payment guarantees that a lender will not lose their investment if a borrower stops making payments. PMI is typically only required when the LTV is more than 80%.
• Closing Costs – Closing costs include payments such as appraisal and survey fees, title insurance fees, recording fees, and other amounts related to closing a mortgage. All fees, except the appraisal fee, are paid at closing along with the necessary down payment.
• Conventional Loan – A conventional loan is any mortgage not guaranteed or insured by a government program. However, such loans utilize guidelines established by the quasi-governmental agencies Fannie Mae and Freddie Mac.
• Title Insurance – Title insurance protects the ownership of the property and is used when a lender uses the property as collateral for the mortgage to ensure the home is free of any liens.
• Escrow – An escrow account is maintained by lenders to collect additional money for taxes and hazard insurance on the home.
• Hazard Insurance – Hazard insurance is synonymous with homeowner’s insurance and describes all the coverages under those policies, including fire, theft and other damages.
• Annual Percentage Rate (APR) – APR is a way of calculating the cost of a loan when certain closing costs are taken into account. It was designed to simplify the process of comparing one lender’s interest rate to the next, but sadly it causes more confusion in most cases.
• Debt-to-Income Ratio – This ratio is when your monthly mortgage payments plus any other financeable debt are compared to monthly income to determine risk.
• Fixed-Rate Mortgage – This common type of mortgage has a set rate and term that does not change throughout its duration.
• VA Loan – This loan is guaranteed by the Department of Veterans Affairs, or VA.
• PITI – These are the four main elements of a mortgage payment: principal, interest, taxes and insurance, or PITI.

Turn to Butler Mortgage for Superior Service

Rely on the professionals at Butler Mortgage to help you through the closing process and navigate through all the jargon. For over 25 years, Butler Mortgage has worked with both first-time and seasoned buyers in Central Florida. Let us help you find the right loan solution for you by calling us at 407-931-3800, or filling out our free consultation form online.

Fannie Mae and Freddie Mac are operations sponsored by Congress that are crucial to the mortgage industry. These private-owned corporations buy mortgages from lenders and sell to investors. This helps provide stability, liquidity and affordability to the market. Essentially, they set the standard for home loans in the United States. Here is more information about Fannie Mae and Freddie Mac and how they can help you with your mortgage. 

What Are the Differences Between Fannie Mae and Freddie Mac?

Fannie Mae and Freddie Mac are nicknames for the Federal National Mortgage Association and Federal Home Loan Mortgage Corporation, respectively. 

While Fannie Mae and Freddie Mac provide similar services, there are a few differences between the two. For example, Fannie Mae typically purchases from commercial banks, and Freddie Mac typically purchases from smaller institutions. There are different borrower and loan program requirements as well. 

The two operations also serve different purposes. Fannie Mae is much older than Freddie Mac and was originally established to give more loan funds when mortgages ran out during the Great Depression. Freddie Mac was chartered in 1970 to expand secondary mortgages. 

What Are Some Fannie Mae and Freddie Mac Programs?

Both enterprises offer programs to buyers with low or moderate income. Some of the most popular Fannie Mae and Freddie Mac programs include:

1. HomeReady

This Fannie Mae program allows buyers to purchase or refinance their homes with just a 3% down payment. Buyers need a credit score of at least 620 to qualify, and private mortgage insurance is required until equity increases.

2. HomeStyle Renovation and HomeStyle Energy

Run by Fannie Mae, these two programs allow homeowners to borrow money to make renovations. HomeStyle Energy loans must be used to improve your home’s structure or energy efficiency, and it can be combined with renovation loans.

3. HomePossible

This Freddie Mac program helps buyers who earn less than 80% of the area’s median income. Similar to HomeReady, the down payment can be as small as 3% and can come from a variety of sources.

Your Central Florida Mortgage Experts

Whether you’re looking into one of these programs or want to buy your home another way, Butler Mortgage is here to help. We’ve worked with both seasoned and first-time homebuyers in Central Florida for more than 25 years. If you need help owning a home, fill out our free consultation form or call us at 407-931-3800 to start your mortgage journey.

There are several projects homeowners can take on to increase both their property’s value and enjoyment. Here are a few modifications you can make to improve your home’s resale value. 

Add New Appliances

Technology is constantly evolving. Many homeowners now use smart devices for both convenience and increased security. Some examples of smart devices for your home include smart locks, cameras, doorbells, garage door openers, thermostats, and smoke and carbon dioxide detectors. If you’re thinking about updating your entertainment system, there are also smart lighting and sound systems that can easily be installed to make your living space more attractive.

Landscape Your Yard

A well-landscaped exterior can increase your property’s curb appeal and resale value by anywhere from 5-15%. Minor changes, such as planting trees and gardens or adding outdoor lighting, will impress buyers who like to spend time outside. Larger changes like firepits, patios, and decks are also appealing and provide a big return at a minimal cost. While pools may be a major investment, they can also boost your home’s resale value. 

Increase Your Square Footage

Adding extra rooms to your house is a big investment that could take lots of time and construction. However, it can also provide major value to your home. Creating a garage or adding an extra living space will boost your home’s value significantly. More rooms will be beneficial to buyers looking for plenty of space. 

Renovate Your Home

Updating your home’s interior design is often the easiest way to improve your home’s resale value. To add value, there are several minor renovations that can be done in your home’s kitchen and bathroom, including repainting, replacing light fixtures, or updating appliances like faucets and sinks. While these changes are mostly cosmetic, it’s a great way to modernize an old home and make it feel like new to potential buyers. 

Fund Your Home Improvements with Renovation Loans

Regardless of which project you choose, there are several financial assistance options available to homeowners looking to remodel. Butler Mortgage offers several loans to help you fund your renovations, including:

• CHOICERenovation loans
• HomeStyle Renovation loans
• Cash out refinance loans

Butler Mortgage has worked with buyers in the Central Florida area for more than 25 years. Let us help you find the right loan solution by filling out our free online consultation form or calling 407-931-3800.

Tax deductions can help by lowering the amount of taxable income you have to pay on. If you’re a homeowner with a mortgage, a mortgage interest deduction could similarly benefit you. Here are some ways to navigate mortgage tax deductions when filing your tax return. The information contained below should not be construed as tax advice. It is general guidance only and should always be confirmed with your tax professional.

What Is a Mortgage Interest Deduction?

A mortgage interest deduction is an itemized tax incentive to help homeowners reduce their tax burden or increase their refund. This deducts interest paid on any loan used to build, purchase, or improve your home from income taxes. You can also sometimes claim this deduction on mortgages for second homes or vacation homes, as long as it’s within limits. This amount is reported each year by your mortgage company on the Form 1098.

How Do Mortgage Interest Deductions Work?

Mortgage interest deductions depend on when the mortgage began, how much it is, and how the mortgage is used. The deduction can only be taken if it’s a secured debt, meaning you’ve pledged your home as collateral.

Once you’ve met qualifications, you’ll know how much mortgage interest is paid by reviewing Form 1098 and reporting it on line eight of the Schedule A form, which is a list of various deductions, including medical bills, taxes, and charitable donations. If you have a rental property, you can deduct that interest as well by reporting it on the Schedule E with supplemental income. Usually, homeowners can deduct the entire mortgage interest paid amount.

What’s Included in a Mortgage Tax Deduction?

Mortgage tax deductions can cover a variety of mortgages. All of the following qualify as a mortgage tax deduction:

? Interest on primary or secondary mortgages

? Mortgages on home equity loans

? Mortgage insurance premiums

? Prepaid or discount points

What’s Not Included in a Mortgage Tax Deduction?

While mortgage income taxes are a deductible expense, there are several aspects of home ownership that are not. Here is what you can’t include as a mortgage tax deduction.

? Homeowners insurance and premiums

? Principal payments

? Deposits or down payments

? Utilities and domestic services

? Title insurance

Your Central Florida Mortgage Experts

If you’re looking into buying a Central Florida home, consider financing through Butler Mortgage. We’ve worked with both first-time and seasoned buyers for more than 25 years to help them own their dream property. To find the right loan solution for you, call us at 407-931-3800 or fill out our free consultation form online.

Closing on your home is an exciting time that is the culmination and celebration of months of hard work. However, home ownership doesn’t end at the closing table. Here are a few things for homeowners to expect in their first year post-closing.

What to Expect on Closing Day

On the day of closing, your loan officer will be working around the clock to make sure everything is in order. They’ll ensure all your financial statements are accurate and the necessary paperwork is ready. Once you sign, the paperwork is double-checked. Your title company then transfers the money and you officially own a new home.

What to Expect in the First Month After Closing

Once you move in, your insurance and mortgage companies will begin to reach out. Your title company prepares an insurance policy and sends it to you within 30 days of closing. This policy protects you in case there is something wrong in your title. Additionally, you should receive the details of your mortgage within the first month. This information will be in a first payment letter, which is typically due one month after you close.

Other Post-Closing Events to Expect

There is still a long list of to-dos to complete once you make your first mortgage payment, especially in the first months of the year. If your new home is your primary residence, file a homestead exemption to receive a tax break.

Tax season runs February through April, and it’s a busy time of year. There are several mortgage tax breaks you can take advantage of, including a mortgage interest deduction. Your escrow account, which holds funds related to property taxes, will send you its yearly analysis around February.

Finally, your county will send its yearly property assessment (in Florida it is called a TRIM notice) in August. If you feel like it’s too high, you may want to consider contesting it.

Refinancing

Keep an eye on the economy and make sure to contact your Loan Officer if you notice that interest rates have improved. You may be able to save on your monthly payments by refinancing your loan. Even if rates are the same or higher, you may still benefit by taking cash out for home repairs, a daughter’s wedding, college expenses, or other debt consolidation.

Enjoy Homeownership with Butler Mortgage

Buying a home can be an exciting and intimidating process. If you’re a first-time homeowner in Central Florida, consider financing through Butler Mortgage. Our mortgage experts have worked with both first-time and seasoned homeowners in Central Florida for more than 25 years. Let us help you find the right loan solution for you by calling 407-931-3800 or by filling out our free consultation form online.

The home buying process can certainly be a long and involved journey. There are many moving parts and boxes to check. In a sense, it’s almost like buying a car. There is shopping around to do, loan rates to secure, and value to assess.

If you’re in the market to buy or refinance a home, you’re probably aware that some form of inspection will need to take place to determine your home’s value. This is known as a home appraisal, and it’s a very important step in the overall home purchasing process. Therefore, it’s important for you to understand just what a home appraisal is, and how it plays into your home buying/refinancing journey.

Defining a Home Appraisal

To put it simply, a home appraisal is the estimated value of a home typically determined by two factors:

• A complete inspection of the property
• Comparison to recently sold homes in the area

It’s also important to distinguish between a home appraisal and a general inspection. Both occur before a home purchase, but only a home appraisal is required while an inspection is just highly recommended. Furthermore, an appraisal assesses a home’s value while an inspection verifies its condition.

How Long is a Home Appraisal Valid?

Typically, a home appraisal’s results are valid for about 4 months. Market conditions change often, so an appraisal’s lifetime is generally short. If you do not close on your home within that window of time, you will be required to order another appraisal.

After your home is appraised, the appraising party will assign a value to the property and send their assessment to the mortgage lender. If the home is appraised at or above your asking price, you can begin the process of closing on your home once your loan is finalized.

Get Desirable Home Mortgage Rates at Butler Mortgage

To get the best mortgage rates to fit your budgetary needs, contact the professionals at Butler Mortgage. For over 25 years, the team at 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.

Currently, it’s a seller’s market, so many houses are selling at prices that are significantly above market value. This can be quite advantageous for current homeowners looking to sell or refinance their home. Refinancing, in particular, is a great option to take as it can result in lowered monthly mortgage payments, shortened home loan durations, and access to built equity.

Whether you bought your home recently or many years ago, you might be wondering how soon you can refinance after purchasing your home.

Home Refinance Options and Timeframe Considerations

Generally speaking, you can refinance almost immediately after purchasing a home; however, depending on your servicer and loan officer, you may only qualify for some of the following refinance options:

• Cash-Out Refinance – In this refinance option, you borrow extra funds against your existing home equity (of which you might not have much if you recently purchased). This usually involves a six-month waiting period.
  
• FHA Streamline Refinance – If your original mortgage used an FHA loan, you must wait 210 days from the original closing date to refinance.
  
• Rate and Term Refinance – One of the easiest refinance options to qualify for, rate and term refinances usually don’t have a waiting period.
  
• After a Mortgage Forbearance – If you underwent mortgage forbearance, you typically must either bring your mortgage current or make three on-time payments to be eligible for a refinance.

If you are considering a home refinance but not sure where to start or if you would qualify, then consult with the professionals at Butler Mortgage. 

Explore Your Home Refinance Options with Butler Mortgage

For over 25 years, Butler Mortgage has worked with both first-time and seasoned buyers wanting to own a home in Central Florida. We can help walk you through your mortgage refinance options and secure you desirable rates that fit your budgetary needs.

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.

Buying a home is as exciting as it is stressful, especially for first-time home buyers. However, getting your ducks in a row credit-wise can be tough and could delay the mortgage approval process. Fortunately, if you’re making the switch from renting a home to buying one, recent updates to Fannie Mae’s underwriting guidelines could work in your favor.

Typically mortgage lenders consider an applicant’s credit score during the application process. If your lender works with Fannie Mae, the company that backs most mortgages in the U.S., your rental payment history could also help you secure the loan.

How Does Rent Payment Consideration Work?

With this new feature, Fannie Mae will automatically recommend that your lender factor in your rental payment history if they believe your case would benefit from it. That means, if you’ve been making rental payments of over $300 per month and the lender is able to obtain a 12-month Verification of Asset (VOA) report, then your likelihood of qualifying for a mortgage may improve.

Rent Payment Consideration Qualifications

To be eligible for rent payment consideration, a borrower must:

• Be a first-time home buyer
• Have been renting for at least 12 months with a rent payment of $300 or more per month
• Have a credit score

Other qualifications that must be met for rental payment consideration:

• The mortgage loan must be a purchase transaction
• The property must be secured by a principal residence

Before this update, first-time home buyers were at a disadvantage if their rental history was not on their credit report. Now, a record of consistent rental payments can help give homebuyers the boost they need to secure a mortgage.

Mortgages That Work for You

If you’re a first-time home buyer applying for a mortgage, reach out 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 and throughout the state. 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.