Great news, the Federal Housing Finance Agency (FHFA) increased the maximum 2019 conforming loan limits for Fannie Mae and Freddie Mac mortgages for one-unit properties to $484,350, an increase from $453,100 in 2018.
You may be wondering if there is a right order to buying and selling a home when you’re already a homeowner. For example, would it be better to sell first and then shop for a new home?
Or maybe it’s best to buy first then sell your current home?
This article will help you to understand the advantages of each scenario as well as a creative alternative.
A lot has changed since the last time you applied for a home loan. Your income, your FICO score, and even how you apply for a home loan is different!
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One of the main perks of buying first is that you can take your time to shop around, similar to the way it was when you first bought your home. You can visit as many open houses as it takes to find just the right one without any pressure to rush your decision.
You can also take your time to plan the move, make any repairs or upgrades, and even move your stuff little by little instead of packing it all in one moving day. Changing your address, turning on utilities, and making changes to childcare and school can also be coordinated with ease when you buy first.
On the other hand, there may some overlap in mortgage payments if you don’t sell your current home within a month of buying your new home. If the possibility of carrying both mortgages sounds like too much of a burden then buying before selling may not be for you.
You’ll also want to consider that your income and debts affect how much you qualify for. In other words, it will be difficult to get approved for a new home loan if your income can’t support two mortgages.
Selling your home first means that you’ll have your equity free and on hand, ready to make an offer on the next house. In a competitive market, having cash on hand is a significant advantage.
You’ll also save money by not having to pay two mortgages and utilities at the same time. It can even seem pretty wasteful to be paying double when in reality you are living in one home and not the other.
While avoiding paying double would be ideal, you should know that there may be some overlap. For example, you will likely have temporary housing in an apartment while you shop for your new home. In this case, you’ll probably pay a month or so of rent plus your mortgage.
But this is still a better scenario than paying for two mortgages for an indefinite amount of time. Remember that when you buy first, you are at the mercy of other homebuyers to sell your home. If instead, you’re renting, the worst that can happen is that you pay a fine for breaking the lease early.
Plus there’s also the feeling of being rushed to find a home. When you sell first, there’s a sense of urgency to find a new home fast. Buying a home should be a joyful and thoughtful experience, never rushed.
We’ve given you the pros and cons of both selling-first and buying-first scenarios.
Now we want to share an alternative to both: make an offer that is dependent on selling your current home.
This is called a “contingent offer.”
The main benefit is that it bridges your current home to your future home so that you avoid double mortgage payments and the need to rent an apartment.
You may be wondering what to use as a down payment if it’s tied up in the equity of your current home. A possible solution is to take a home equity line of credit (HELOC) –a home loan product that you can apply for right now using our online application –and use it to cover the down payment while still paying the mortgage on your current home.
Whether you buy or sell first, it requires quite a bit of coordination, especially when it comes to qualifying for a new home loan. Find out the expert advice you need and learn more about your options by contacting us today! Apply online HERE.
This article will answer the most common questions about buyers closing costs, including some ideas for minimizing paying closing costs upfront.
Yes, there are always closing costs. Whether you’re the buyer or the seller or even refinancing, you’re going to have closing costs. If you’re the buyer, your mortgage closing costs account for about 2%-5% of the purchase price. If you’re the seller, about 6% of the sales price will go toward paying realtor fees.
Typically, the only loan that allows you to include the closing costs into the mortgage is a USDA loan.
Home loans have a loan-to-value ratio (LTV ratios) that puts a cap on how much you can include in the loan. This is calculated by taking your loan amount plus the closing costs and then subtracting the down payment. The number you’re left with must not exceed the LTV limit for that specific loan.
The only exception to the LTV ratio rule are USDA loans. You can include your closing costs into a USDA loan just as long as your property appraises for more than the sales price.
You can negotiate with the seller to see if and how much of your closing costs, including realtor fees, they are willing to pay. One way to entice them to pay your fees is to offer to buy the home for a higher purchase price if they agree to pay for some of your costs.
You may be wondering if this is actually worth, but consider this: increasing your offer by $6000 in exchange for them paying $6000 in your closing fees amounts to only a few extra dollars a month in your mortgage payment. If you’re looking for a way to save on your fees upfront, this is how you want to do it.
Note that each type of loan has a max as to how much the seller can contribute to your closing costs. Call our office for more information.
The following is not an exhaustive list, and the amounts will vary. However, you will have a precise breakdown of your closing costs when funding your home purchase with us.
Closing costs may not be the most attractive part of buying a home or refinancing your current mortgage, but it’s a small price to pay for the benefits that a home loan provides. Find out how much you qualify for by applying for home loan with us today. It only takes a few minutes! Apply HERE.
It’s true –you can buy a home with no money down!
If you’ve been toying with the idea of buying a house but the lack of down-payment funds is holding you back, you’re in luck! We’re going to show you how you can buy a home this summer even if you don’t have a penny saved for a down payment.
A rural development mortgage from the USDA is a zero-down loan for low-to-moderate income families. Besides the no money down, you’ll enjoy other perks like a mortgage insurance premium (mip) that is lower than most other home loans. There are a few limitations to this loan, mainly the location of the home and your income.
Contact us to find out if the area you’re considering is approved for USDA home loan purchasing and to see if you qualify for a USDA mortgage.
VA loans are for those who are currently serving in the armed forces, previously served and is now a veteran as well as for spouses of veterans.
In other words, if you currently receive or qualify for any benefits from the military, then you’re likely eligible for a VA home loan. In addition to the zero down-payment, you’ll also save money on mortgage insurance because VA loans don’t require it! VA loans are also flexible with credit score requirements. You’ll need a VA certificate so be sure to contact the Department of Veteran Affairs to get yours and contact us to get started with your loan application.
FHA loans are government-backed with have flexible qualifying requirements similar to VA loans. While you’ll still need a down payment with an FHA loan, the minimum is much lower –sometimes as little as 3.5% of the purchase price!
Here’s a hint for using an FHA loan AND still pay zero down: use gifted funds!
While other loans have limitations as to how much of your down-payment can be gifted, and FHA mortgage allows you to use gifted funds for 100% of your down-payment. When you combine that perk with that of only 3.5% down, you can see how easy it is to buy a home with an FHA loan!
Have more questions? We’re here to help! Call or email us, and we’ll get back to you with personalized mortgage answers.
Congratulations Colleen, Brandon, and Madeline as you start your adventures in your new home. If a picture paints a thousands words, I know you guys are going to have years of happiness in your new home!!!
On this Memorial Day weekend, we remember all the men and women who bravely fought for our freedom. Thank you to all who serve or who have served.
How would you like to reduce or remove your MI from your current mortgage? Call us today at: 207-899-5354 or visit us at www.BlueStripeMortgage.com to learn how.
We are delighted for Kirsten and Isaac. Congratulations on the purchase of your beautiful home. We hope you have a wonderful summer in your new neighborhood.
Listen to our radio debut this Sunday on Rewind 100.9. Here’s a sneak peek: