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.

How to Avoid Paying PMI

How to Avoid Paying PMI

PMI, or Private Mortgage Insurance, allows buyers to put down less than 20% for a down payment. However, if home buyers do take advantage of this they’re required to pay monthly for PMI. As a result, many home buyers aim to avoid paying PMI altogether. There are a few different ways home buyers and owners can dodge PMI payments.

Military Loans

If you’ve served (or are currently serving) in the military, you are eligible for a VA Loan. These loans don’t charge PMI. There is an upfront Funding Fee that VA charges all borrowers (except those who are exempt), but there is no additional amount added to the monthly payment. This is rather remarkable considering VA requires 0% down when buying a home.

Pay 20% of The Down Payment

The most surefire way to avoid paying PMI is also the simplest, namely, paying at least 20% on the down payment of your new home. If you put down 20%, PMI won’t apply and you will avoid the cost of the payments.

Piggyback Loans

A piggyback loan (or combo loan) is when a second mortgage is used to cover part of the initial mortgage’s down payment. Going with this option will also lower the percentage required of the down payment. Instead of 20%, the home buyer will typically only need to put 5-10% down, with the rest coming from the second mortgage.

Lender Paid Mortgage Insurance (LPMI)

Opting for lender paid mortgage insurance in place of PMI will eliminate the cost of a monthly PMI payment. It can also allow home buyers to put as little as 3% down on their new home. Be aware, however, that these benefits come with the cost of a higher interest rate on your mortgage. Instead of paying for PMI, that money will instead be used to cover the higher interest rates. If you plan on staying in the home for a long period of time, you may prefer paying PMI since that may be removed once you hit the 20% equity threshold.  If you go with LPMI as an option, the higher interest rate stays for the life of the loan, causing you to pay more in the long run.

Finding the Right Mortgage Program

There are other loan programs that do not require PMI, but often come with higher rates or fees.  Discussing such programs with an experienced mortgage professional will help you determine the best path forward.

The ins and outs of mortgages and PMI can be tricky. If you’re trying to navigate your home purchase, we can help! With over 25 years of experience, Butler Mortgage can find the best fit for you in order to put you in your dream home. For a free consultation, call us at 407-931-3800.