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What you Need to Know About MassHousing’s Zero Down-Payment Program

Joseph Coupal - Monday, July 02, 2018

Prime Lending at The McMullen Group, Boston, MATo give first-time homebuyers a leg up in the state’s expensive housing market, MassHousing has long offered low-interest mortgages with minimal down payments, based on certain income eligibility requirements — most borrowers qualify for 97 percent financing through the quasi-public agency. MassHousing went a step further by launching a new first time home buyers programs that makes it possible for borrowers to take out a second loan that covers their down payment.

Here’s how the new program works:

■ MassHousing will provide “down-payment assistance” covering as much as 3 percent of the cost of a house or condo priced up to $400,000. The maximum amount of down-payment help you can receive is $12,000, even if you buy a home that costs more than $400,000.

■ The down payment money is not a grant, however — it’s a loan you will be required to pay back through a 15-year second mortgage with a fixed interest rate of 1 percent and no additional fees.

■ To qualify for the down-payment assistance program, you must have a credit score of at least 660, a debt-to-income ratio of 41 percent, and an annual household income at or below the area’s median income. That’s up to $103,400 in the eastern part of the state, $85,700 in Worcester County, and $67,200 in Berkshire County. Also, you must attend a first-time homebuyers class.

■ Once you make an offer on a property, you can then formally apply for the MassHousing mortgage. Most MassHousing first time home mortgage loan borrowers qualify for a mortgage that covers up to 97 percent of the purchase price. As part of the application process, you will also do paperwork for a second mortgage — the one that covers the down payment up to 3 percent, or $12,000. MassHousing is itself not a lender, but it works with a network of 150 banks, credit unions, and mortgage companies.

■ After your offer is accepted, you’re locked in to the two separate MassHousing mortgage loans, which are delivered in tandem — one for the bulk of the borrowing, and the other for the down payment.

For more information, contact Prime Lending at the McMullen Group.

bostonglobe.com


MassHousing Mortgage Program Requires No Down Payment

Joseph Coupal - Monday, June 25, 2018
The McMullen Group, Prime Lending, Boston, Hanover, MA

For many, the prospects of being able to buy a home in the Boston area are slim.

The past few years have been trying times for would-be home buyers hoping to gain entry to Greater Boston’s red-hot housing market.

From a lack of homes for sale to overcrowded open houses to bidding wars, the chance for them to buy a house has become increasingly more remote. For many, even saving for a small down payment — never mind the recommended 20 percent — can be next to impossible.

It’s an issue that MassHousing is hoping to tackle through a new program that would cover the down payment on a property — up to 3 percent — for some first-time home buyers. The quasi-public state agency said Sunday that under the program, income-eligible people using a MassHousing mortgage to purchase their first home will be able to finance up to 100 percent of the cost. They’ll eventually have to pay back the down payment — through a low-cost secondary mortgage — but they won’t be required to have cash up front.

“You’ve got all kinds of competing interests that you didn’t have 15 years ago like Airbnb [and] foreign investors that are buying up units,” said Chrystal Kornegay, the agency’s new executive director. “And because of limited supply, inventory is really low and that’s driving prices. This is one of the ways we’re hoping to give people the opportunity to have a little bit of a leg up.”

The down payment would be covered by a 15-year second mortgage with a fixed interest rate of 1 percent and no additional fees. The loan amount would be capped at 3 percent of the purchase price — which can’t exceed $400,000 — for a single-family home or condominium unit.

In addition to meeting minimum credit standards to qualify, first-time home buyers must have annual household incomes at or below the area’s median income. In the eastern part of the state, that’s an annual household income of up to $103,400. It’s $85,700 in Worcester County, and $67,200 in Berkshire County.

The MassHousing down payment program also includes strict requirements for would-be buyers — including a minimum credit score, debt-to-income qualifications, and mandatory attendance at a homeownership education class.

With interest rates expected to rise this year, the program may be coming at an opportune time for people who have been unable to break into the housing market.

Younger folks can’t afford to buy in the city, and we need to address this broadly. We are not just talking about Boston, where we have these escalating home prices, but in other parts of the state people don’t have the resources to put down 20 percent, 10 percent, or even 3 percent, so they’re shut out of the market.

A 2017 study from the National Association of Realtors found that the median down payment for first-time home buyers has been 6 percent for three consecutive years. About half of MassHousing borrowers fall between the ages of 26 and 35, a demographic where heavy student loan debt is common, further limiting their ability to save for a home.

They’ve got so much student loan debt that they can’t really play in this marketplace well. They don’t have the savings because they’ve been spending this money in other ways.

East Boston Savings Bank’s chief executive, Richard Gavegnano, said that many younger buyers turn to their parents for assistance in making a down payment on a home. He said the idea of a zero-down-payment program is attractive, but borrowers should make sure they understand the terms before signing anything.

"A lot of people got into trouble because they didn’t know the repercussions of what they were getting into,” he said of the prerecession days, when predatory lending tactics were common.

The MassHousing program is intended to get people into a home without overwhelming their finances.

"We really are in the business of sustainable homeownership,” said Kornegay, the state’s former undersecretary for housing and urban development. “This is meaningful to us and we’re really excited about it and we hope to have hundreds of people be helped by this program get to that first house.”

Who’s eligible for the MassHousing program? I

n addition to meeting minimum credit standards, first-time home buyers must have annual household incomes at or below the area median income:

$103,400 in the eastern part of Mass.
$85,700 in Worcester County
$67,200 in Berkshire County

For more information, contact Prime Lending at the McMullen Group.

Source: bostonglobe.com


Even with mortgage rates up, buying instead of renting makes sense for many

Joseph Coupal - Monday, June 18, 2018

McMullen Group, Hanover, Boston, MATax changes don’t seem to have changed the calculus on home ownership very much

The spring home-buying season is in full swing, but the landscape has changed a lot from last year. Congress has curtailed tax incentives to purchase a home, mortgage rates are up and homes are more expensive. Yet, for many folks, buying a home is still better than renting.

The new tax law doubles the standard deduction to $24,000 for couples and caps deductions for state and local taxes at $10,000. Those greatly limit the tax incentive to purchase a home instead of renting. Zillow estimates homeowners who will take deductions and list mortgage interest and property taxes will fall from 44% to 14%.

Economists estimate this will reduce purchase offers enough to lower median housing prices by about 4% in more expensive cities, but that has yet to become apparent in the data.

Tax law changes were in focus by December and we have resale pricing data available through February. In the top 20 metro areas year-over-year price increases were about the same or greater than a year ago.

Most home buyers have more disposable income to pay mortgages. In their take-home pay, a higher standard deduction compensates them for not taking interest and property tax deductions, and lower rates overall actually boost most taxpayers’ buying power.

In hot markets, foreign buyers, who for a variety of reasons pay cash and are simply parking wealth in the United States, have played a big role in elevating prices. U.S. personal income tax laws have few consequences for that behavior.

The FreddieMac average for a 30-year fixed-rate mortgage is currently about 4.6% — up from about 4% a year ago. For a $300,000 mortgage, that adds about $150 to monthly payments but landlords are paying more to finance apartment buildings too and that gets factored into rents.

How long a purchaser plans to stay in a home remains a key factor, because closing costs, realtors’ fees, and the like significantly raise the initial cost of owning a home — even if you can roll these costs into the mortgage balance to stretch those out.

Employing a calculator on the Trulia website, we examined the buying vs. renting tradeoff with a 30-year mortgage, a 4.6% interest rate and 20% down payment. The formula also factors in higher utility costs associated with home ownership, and expected inflation and rent increases.

If the home is occupied for at least 4 or 5 years, owning beats renting even without a mortgage interest deduction.

Families could instead invest their down payments in stocks, which at first glance appear to be the better bet. From 2000 to 2017, equities as measured by the S&P 500 SPX, -0.80% were up an average of 5.3% annually, whereas homes appreciated 3.9%.

In recent years, appreciation as measured by the S&P Core-Logic Case-Shiller Indexes for top 20 markets and overall nationally indicate an accelerating pace of home appreciation — rising steadily from 4.4% in 2014 to about 6.5% in 2017.

Tougher zoning in and around cities where major employers are located, rising material costs and a slow pace of productivity growth in home building combine to make additions to the single-family housing stock slow. With millennials finally pushing into the house market, continued appreciation beating the historical trend and competitive with stocks can be expected.

Also, homeowners will have their full equity working for them, as opposed to just their down payments.

Homeowners enjoy more flexibility — they can modify and add to their homes to fit the circumstances of their families and personal preferences — and stability — they don’t have to fret about a landlord selling to a new owner who might want to repurpose the building.

Owning a home in a good neighborhood — not necessarily a rich area but one that is stable and has good employers within commuting distance — has proven one of the most reliable ways for ordinary folks to save and invest.

For more information on home mortgages, contact Prime Lending at The McMullen Group.

marketwatch.com


Should I Opt for a Conventional Home Loan or an FHA Loan?

Joseph Coupal - Monday, June 11, 2018

McMullen Group, Hanover, Boston, MAThose who opt for a conventional home mortgage loan versus those who choose FHA home loans have different buyer profiles. The buyer profile for someone seeking a conventional loan will have a different financial background from someone seeking an FHA loan. In order to determine which type of mortgage loan is right for you, keep reading to learn more about these two very distinct buyer profiles.

Conventional Loan Profile

Conventional loans are not backed by the government. As such, lenders require certain fiscal standards to ensure that you are financially stable enough to make monthly mortgage payments.

Debt-to-income ratio: The typical debt-to-income ratio for someone getting a conventional home loan is at most 43 percent. This helps lenders recognize whether you have a stable enough income to pay for monthly mortgage payments. Debts such as credit card bills, student loans and child support all go into your debt-to-income ratio.

Credit score: The higher your credit score is, the better. If you have a high credit score, then you have a shot at getting a low interest rate. However, the lowest credit score that a lender is looking for is around 620.

Down payment: This can vary a lot, but the typical down payment is 20 percent of the purchase price. There’s a chance you could put down less money if banks are offering special programs to buy a home in certain areas.

Private mortgage insurance (PMI): It’s easier to get away with not paying mortgage insurance when you opt for a conventional loan. However, if you put down less than 20 percent, the lender may require PMI.

Processing time: The time it takes to get approved for a conventional loan can be much quicker than that for an FHA loan. This is because the borrower works directly with the lender, not a government agency that acts as a middleman.

FHA Loan Profile

These loans are backed by the FHA, which offers an extra layer of security, ensuring lenders that monthly payments will be met. FHA loans often appeal to first-time homebuyers.

Debt-to-income ratio: Forty-three percent is standard. FHA loans tend to be for those for whom a down payment will require much of their income.

Credit score: 580 is typically the lowest possible credit score that a borrower can have to procure an FHA loan, far lower than what a conventional loan requires.

Down payment: Unlike conventional loans, those seeking an FHA loan can put as little as 3.5 percent down.

Mortgage insurance premium (MIP): MIPs are always tacked on to FHA loans. The borrower pays an initial 1.7 percent of the loan amount once they obtain the loan; however, this can be financed as part of the loan amount. Then, a monthly premium payment is required. The amount is determined by a certain percentage of the annual loan amount. That percentage varies, depending on the length of the loan and the amount of the down payment.

Processing time: The processing time for an FHA loan can take longer than that of conventional loans. This is because borrowers are going through a government agency to acquire a loan and not working directly with the lender. Underwriting tends to take the longest time.

Of course, these are just the basics. Keep in mind that laws and regulations change frequently. Contact us today for more information about conventional versus FHA loans. We’ll make sure that you’re selecting the right loan for you.

For more information on both types of home mortgages, Prime Lending at the McMullen Group is always available to answer your questions.

homeactions.net


Home Loans for First Responders

Joseph Coupal - Monday, June 04, 2018

McMullen Group, Hanover, Boston, MAEvery day, first responders do the unthinkable. They put themselves in harm’s way as they respond to emergencies and natural disasters, making rescues, providing medical care, securing crime scenes, extinguishing fires and much more.

At PrimeLending and the McMullen Group, we’re grateful for the first responders who face obstacles to protect our communities and help keep us safe. And we believe that buying a house shouldn’t feel like another challenge that they have to deal with. In fact, we think that every hometown hero deserves a house to go home to.

Affordable Options

We understand that being a first responder often comes with financial challenges, and we want to make sure that doesn’t stand in the way of being able to buying a house.

We offer a variety of custom mortgage options to help make homeownership affordable. Our loans fit different credit scores and challenging financial situations, and we offer options that require little to no money down.

Our Process is Simple

We make the entire mortgage process simple and hassle-free. From application through closing, borrowers can count on us to guide them through each step. We’ll always keep them in the loop and send them updates on their progress directly to their phones.

The best part? Borrowers can start the process for financing a home in the way that’s most convenient for them – online, by phone or in person.

We appreciate first responders’ hard work and service, and we’re looking forward to being able to serve them.

To learn more about your options, get in touch with one of PrimeLending’s home loan experts today at the McMullen Group.

primelending.com


Documents Needed for a Mortgage Preapproval

Joseph Coupal - Tuesday, May 29, 2018

McMullen Group, Hanover, MAGetting preapproved for a mortgage before you go home shopping isn’t required, but it is a good idea, especially in a seller’s market, where competition among buyers is intense. Unlike a prequalification, a preapproval letter lends weight to your bid on a home, proving to sellers that you have the financial clout to stand behind your offer.

To get preapproved, you’ll need to verify your income, employment, assets and debts.

It’s likely you already have many of the records you’ll need, or easy access to them. Gathering the documents shouldn’t take more than a week, depending on the lender’s requests and whether you need records from outside sources, like an attorney or county government.

Even for a preapproval, your lender may want more documents, especially if you’re self-employed or your income comes from several sources. Also be prepared to share information such as your Social Security number, which is used to check your credit reports and scores; your employer’s name and address; and your hire date.

Here’s a list of documents you’ll need.

Income and employment

The documents required to verify income depend on how you get paid. This step is easiest for workers with a paycheck from one source, which provides an annual W-2 form, and who have little or no overtime or shift differentials.

Tax returns: Copies of your two most-recent federal and state returns may be required.

Income:

W-2 wage earners: Copies of W-2 forms and your two most recent payroll stubs. If income includes overtime, bonuses or differential pay, you may need your most recent end-of-year payroll stub.

Self-employed, freelancers and independent contractors: Self-employed borrowers, including sole proprietors, partnerships and S-corporations, need a year-to-date profit and loss statement and two years of records, including the Form 1099s you used to report income and file taxes.

Real estate income. Document the rental income, address, lease and current market value of a rental property if you will use this income to qualify for a mortgage.

Assets

Bank statements: Copy 60 days’ worth of statements for every account whose assets you’re using to qualify for the mortgage. Include even blank pages of the statements.

Retirement and brokerage accounts: Two months of statements from IRAs, investment accounts (stocks and bonds), and CDs. The last quarterly statement from 401(k)s showing the vested balance. As with bank statements, include every page, even blank pages.

Debts

Monthly debt payments: Lenders examine your payment obligations to calculate your debt-to-income ratio. List all monthly debt payments, including student loans, auto loans, mortgage and credit cards. Include each creditor’s name and address and your account number, loan balance and minimum payment amount. If you have no credit history, utility bills may be used to help you qualify for a mortgage based on nontraditional sources of credit.

Real estate debt: If your current property is mortgaged, have your most recent statement — showing the loan number, monthly payment, loan balance and the lender’s name and address — and the declaration page of the insurance policy.

Other records

Rent: Renters need to show payments for the last 12 months and provide contact information for landlords for the last two years.

Divorce: Have your court divorce decree ready, if applicable, and any court orders for child support and alimony payments.

Bankruptcy and foreclosure: Ask your lender what documents they’ll need and how long you should wait after bankruptcy or foreclosure to re-enter the housing market.

Down payment gift letters: Lenders will want to talk about your down payment. You’ll need to show the sources of the money you plan to use. If your funds include gifts, you’ll need to get letters from your donors showing they don’t expect to be paid back. Gift letters aren’t required for preapproval but we do let borrowers know to be prepared.

Whew. You’re done for now. Keep those files handy, though. You’ll need these documents again when applying for the loan.

To get preapproved for a home mortgage, contact Prime Lending at the McMullen Group.


Thinking Of Buying A Home? Here's How To Prepare For Home Ownership

Joseph Coupal - Monday, May 21, 2018

Prime Lending, McMullen Group, Hanover, Boston, MAFirst-time home-buyers nationwide are deciding whether to rent or own. The perceived challenges to becoming a first-time homebuyer seem scary. Many avoid taking the step from renting to owning out of fear of the unknown. But buying a home is affordable in the right market, and with the right loan. First-timers can even explore rent-to-own homes (with the help of a real estate lawyer) or purchasing a small, "starter home" and later selling to upsize.

Renters' dilemmas, on the other hand, all boil down to one question: "Can I save money and achieve a better quality of life by owning a home instead of renting?"

To find the answer, we must first understand every relevant factor in the home-buying process. Gathering the facts is the first and foremost important step toward making an informed decision about home ownership, financial responsibility and real security.

The largest considerations in the rent or buy decision-making process are:

How To Calculate How Much Home You Can Afford

To understand if you can afford to buy, start by figuring out what you can pay per month. Financial professionals will tell you a home can safely cost between two and four times your annual salary.

This doesn’t consider your existing net worth, but over-investing in first-time home ownership isn’t recommended either. You can always buy more house later, but it’s impossible to undo a mortgage loan.

The idea here is to avoid overextending yourself and living “house poor.” Remember these seven essential factors when deciding how much home you can afford:

  1. Take-home pay after taxes
  2. All other debt and monthly payments (credit cards, auto and student loans, etc.)
  3. Foreseeable expenses you’ll incur in coming years (new computer, car repairs, etc.)
  4. Cushion funds for potential emergency (job loss, injury, death in family, etc.)
  5. Future uses for home and space requirements (retirement, children, home office, etc.)
  6. Down payment funds available (and whether you should buy or wait)
  7. Expected mortgage cost via a mortgage calculator

What Is My Down Payment?

A down payment is the amount of money you spend upfront when purchasing a home. Taxes and fees aside, the total purchase price of a home is the sum of the down payment and the mortgage. The amount of your down payment influences your mortgage interest rate and will determine how much interest you pay (or save) over the span of your home loan.

A rule of thumb is to buy only if you can afford a 20% down payment. Putting down 20% keeps your interest rate low and saves money on interest paid in the long run. It will also keep monthly payments smaller.

Be aware, however, down payments are expected to vary. Buyer finances differ and some feel comfortable putting more down than others. Figure out what number is comfortable for your budget. Then you’ll have a better idea of whether or not you're close to buying a home.

Six Factors To Remember When Calculating Your Mortgage

Once you’ve figured out what you can spend per month, now ask what amount you can get for that monthly payment. A mortgage is a home loan and the gradual repayment of the principal and interest monthly is called amortization. Monthly mortgage payments are influenced by six primary factors:

  1. Credit score
  2. Credit history
  3. Annual income
  4. Total debt
  5. Down payment
  6. Interest rates

Depending upon your timeline, these variables can be optimized to give you the best mortgage rate.

Most buyers pay off loans and save more for a down payment because lenders give the best rates to those who have low debt and can bring at least 10-20% to the table for a down payment. Many potential buyers wait until their credit improves because lenders will hand out the best rates to those with high credit scores.

Because interest rates are constantly fluctuating, it’s smart to lock in a low interest rate and save money. A lower interest rate means you save on your mortgage by decreasing the cost of the loan and reducing the total cost of interest over time.

What About Qualifying For A Loan?

To qualify for this mortgage amount, lenders require you to have a 28/36 debt-to-income ratio. This means that 28% or less of your total monthly income goes toward housing costs, and 36% or less of your monthly income goes toward monthly debt payments of any kind — your mortgage included.

For this reason, it’s smart to pay down debts before applying for a mortgage. Lenders use this ratio to see what you can afford, but this number doesn’t account for expenses and other costs.

Watch for those unavoidable fees in the home buying process, and look for opportunities to secure a commission refund.

Begin Your Journey Now

Start by calculating your home affordability budget based on income, savings and expenses. Remember that down payments can be between 3.5-20% of the home price, but you’ll need insurance for the lower sums. Make sure your debt/income ratio is solid before applying for a loan. Also, remember that you’ll want a good credit rating and interest rate to lock in the best mortgage rate.)

Forbes Real Estate Council is an invitation-only community for executives in the real estate industry. Do I qualify?

Start your home search today and use the information presented above to be an educated homebuyer.

For more information, contact Prime Lending at the McMullen Group.

Forbes


8 Tips To Help You Save For Your New Home

Joseph Coupal - Monday, May 14, 2018

Simple Ways To Save Cash Without Feeling The Pinch

Prime Lending at The McMullen Group, Boston, MABuying a home is a big and exciting purchase. For many people, it’s the biggest purchase they’ll make in their lifetime. Of course most people finance a home over a long period of time using a mortgage. But even if you get a home loan, you’ll have to come to the table with the money to cover the down payment and associated closing costs. Just how much money you’ll need at closing depends on the type of loan you are using to finance the purchase. For example, here’s a quick breakdown of the requirements and advantages of four common types of home loans. Remember, there is a wide range of options in each of these categories that a PrimeLending home loan expert can walk you through.

Conventional Home Loan — A conventional home loan is a mortgage that is not insured, or guaranteed, by the federal government. They’re popular with borrowers who have good credit, a stable job and income, who can afford a down payment and people who are financially stable overall. Conventional loans generally offer much more flexible terms and fewer restrictions than government-backed loans, and do not require mortgage insurance if you put at least 20 percent down on a purchase. Conventional loan rates are also often quite low, since the borrower is known to be financially stable with good credit.

FHA Home Loan — If you’re working with limited income or money for a down payment, a government-insured Federal Housing Administration (FHA) home loan could be the right solution for you. FHA home loans offer a low 3.5 percent down payment, flexible income and credit requirements and low closing costs. These are popular loans for first-time homebuyers.

USDA Home Loan — The USDA loan, or USDA Rural Development Guaranteed Housing Loan Program, is another type of government-backed loan. Originally designed to provide a mortgage alternative to rural property buyers who had limited financing options, the USDA home loan is becoming a viable mortgage option for people who want to live away from cities and enjoy country living. But even if you live in a suburb, you may find you can qualify for some USDA programs. The USDA loan requires no down payment, has low interest rates that aren’t tied to credit score or down payment, and offers flexible credit guidelines.

VA Home Loan — A VA home loan is a great benefit to military personnel during and after their service. VA home loans are partly guaranteed (typically a quarter of loan value) by the U.S. Department of Veterans Affairs and offer advantages such as no down payment, higher loan value, no private mortgage insurance, a limit on closing costs and other benefits.

Although you’ll want to start saving long before you ever apply for a loan, understanding the loan types can help you determine approximately how much you’ll need to save up. How can you save for your new home without living on rice and beans for the next several months (or even a few years)? Here are some strategies and tips to help you save for the purchase of a new home without feeling the pinch.

1. Start with a Monthly Budget — Let’s start with the obvious…the key to building savings is spending less than you earn. Your first step to saving for a new home (or any purchase) is to create a family budget. Creating a budget where you outline your monthly income and expenses will help you see exactly where your dollars are going, and make a plan to put any extra into savings. Be realistic, and stick to the plan as much as possible.

2. Build a Ladder — CD laddering is a savings strategy with both short and long term benefits. If you’re planning to buy a home in the next few years, investing your savings in the stock market can be risky, but a safer alternative is purchasing CDs, or certificates of deposit, which yield a higher return in exchange for that money being locked up for a set amount of time. Building a CD ladder means you’ll always have access to at least a portion of your money. Certificates of deposit are also a guaranteed investment, so you can’t lose when it’s time to take it out. Once you do pull it out, you can use that money toward a down payment, or reinvest it in a new CD for continued savings.

3. Save Less for Retirement — If your employer offers a 401(k) match, save enough to qualify for that employer-sponsored contribution, but cap your retirement contributions there and allocate any extra cash toward your down payment. First-time home buyers may also be able to use retirement savings to fund the down payment. Typically, $10,000 can be drawn without penalties. But before you scale back on your retirement savings, put these other strategies to work.

4. Go Traditional — If you just aren’t sure about investing your hard-earned money, a traditional savings account can still help you earn income on your savings. Shop around for a savings account that offers at least one percent in interest, and start stashing every extra penny into your savings. Better yet, create a dedicated bank account just for your new home fund, and quarantine it from any spending. Stick to your regular checking account to pay the bills and keep that savings account off limits. The biggest benefit to a traditional savings account is that you have zero risk of losing your money, and it’s always accessible, so the moment you find your dream home, you’ll be able to access the cash for your down payment.

5. Set Up Automatic Savings — Once you’ve established a dedicated savings account, arrange with the payroll department at your job to send a fixed amount to that savings account every payday via direct deposit and the remainder sent to your checking account as usual. You’ll never even notice the money going to savings because it was never in your checking account to begin with.

6. Save Your Windfalls — Any extra cash goes straight to savings. Whether that’s a tax refund or a year-end bonus, putting those one-time infusions of cash can help you reach your savings goal a little bit faster. Use the same strategy with pay increases – divert any additional pay to your savings account. If you’ve created a good budget and are sticking to the plan, you won’t need that extra cash anyway.

7. Cut Big Expenses — While you may really need that vacation, what if you put that money into your housing fund instead? Cutting big, non-necessity expenses allows you to add to your bank account and build savings quickly, rather than pinching pennies. If you can swing it, consider downsizing to drop a portion off your living expenses. If you’re living in a two or three-bedroom apartment and could do without one of those bedrooms for a year or two (especially if you don’t have kids), make the move to a smaller apartment and reallocate the unused rent in to your savings account. A smaller place may also save you money on utilities. Win-win!

8. Work More — If you’re eligible for overtime or additional work opportunities, seize those occurrences. Earning extra income can give a big boost to your savings. Taking on a second job on the side or a few new projects can help. If you’ve got a family, talk to your spouse and consider if you can live with the sacrifice for a few months to help bulk up your housing fund.

Saving for a new home requires dedication and grit. It means saying “no” to that splurge and spending less on frivolous expenses such as eating out and entertainment. Saving can be frustrating at times, but don’t be too hard on yourself. If you cut out going to the movies until you’re in your new home, consider a Netflix subscription instead. Rather than cutting out all dining out, budget to eat dinner out of the house once a month. The goal isn’t to be dissatisfied, but rather more intentional with how you spend your money.

If you’re in the market for a new home, start your journey to homeownership with PrimeLending and the McMullen Group. Contact one of our home loan professionals today to get details on your loan options and start the application process.

primelending.com


Factors to Consider When Pricing Your Home to Sell

Joseph Coupal - Tuesday, May 08, 2018

Do your research, choose your listing price, and watch the buyers line up.

McMullen Group, Hanover, Boston, MAUnlike the cost of a gallon of milk or a flat-screen television, a home’s price can be hard to pin down. It’s complicated because each home is unique, and has its own story to tell.

When it comes to setting the price of a house, the only thing to do is to look at the recent sales and active listings of similar homes in your area. Combine this research with the inside market knowledge of a local real estate agent, and you can confidently choose your list price.

Here are some guidelines to keep in mind when determining how much to ask for your house.

Make sure to look at recent comps

Markets change fast, so it’s best to find comparable sales within the past three months. If you go back too far, you will see homes where a deal might have been made many months before it closed.

Real estate markets can turn on a dime, so a deal put together more than six months ago isn’t applicable. Pending sales are your best indicator of the current market’s conditions.

Understand that fixtures and finishes matter

Let’s face it, buyers prefer a tastefully renovated home with neutral finishes and fixtures over an unrenovated home, one stuck in the ’80s, or one with outlandish decorations.

When looking at comparable houses online, you must be objective. If your home isn’t updated, it’s not going to sell for as much.

Here’s the good news: The amount of money it would cost to upgrade your house is probably a lot less than the difference in value. Be open to making some small changes before listing.

No two homes are alike

The 2,000-square-foot, 3-bedroom, 2-bath home with two-car parking on a quarter acre down the street just closed for $500,000. That means your home — also a 2,000-square-foot, 3-bedroom, 2-bath house with two-car parking on a quarter acre — is also worth $500,000, right?

Not so fast. What you don’t realize is that the other home’s three bedrooms are not all on the top floor, and that the home lacks an en-suite master bathroom, its kitchen is closed off from the living areas, and the layout is choppy.

Buyers pay more for better floor plans and flow. Your home, with an open concept kitchen/living area and three bedrooms all near each other, is much more valuable.

Small nuances in the market will affect price

Understand that each comparable home requires some serious research before calling it a “comp.” A house down the block may seem like it’s the same location as yours, but it could be in a different school or tax district, which will affect its value.

A smaller home may have sold for 20 percent more than yours, but maybe it was on a double lot that could be split, which makes it more valuable to a builder or developer.

If you see a nearby home with a price that seems off the mark, there must be a reason. Dig deeper to uncover what it is, and realize that the home may not, in fact, be a comparable one.

Go see homes for sale

Rarely does anyone decide to sell overnight. Once you realize a sale is in your future, get out and see what’s in your market. Check out open houses nearby to see the interiors for yourself.

Homes you see in January will likely be pending or closed by the time you list in April. Or they may still be on the market, which is an indication of poor pricing.

Check out the different floor plans, finishes and fixtures of nearby homes for sale, and consider whether each is more or less valuable than yours.

The best seller is the informed one. So don’t rely solely on your agent’s word about a particular house, or the market in general.

Use your agent as a resource

The earlier you bring a local real estate agent into the fold, the better. Top agents tour properties regularly, and know their market inside and out. They can likely explain the seemingly inexplicable, and offer tips to help make your home more valuable.

A good agent has the inside knowledge on pending homes sales and their finger on the pulse of the market 24/7. But remember to research independently, and never rely solely on the advice of your agent.

For information on home mortgages, contact Prime Lending at the McMullen Group.

zillow.com


Spring 2018 Housing Market Outlook

Joseph Coupal - Monday, April 30, 2018

5 Things Prospective Homeowners Need To Know About Buying A Home This Spring

McMullen Group, Hanover, Boston, MASpring is traditionally the busiest season for real estate sales, but this year, buying season began in January. Inventory is selling fast — at record rates, according to the February 2018 RE/MAX National Housing Report — which also means a shortage in housing, especially for first-time buyers. The economy is stable and employment rates are low, which means spring 2018 will be an active one in the housing market.

Javier Vivas, director of economic research at realtor.com, spoke to Forbes about the 2018 real estate outlook and said we’re facing the lowest level in housing industry in at least 20 years. It’s a seller’s market for homes in the $100,000 to $350,000 range — what realtor.com defines as entry-level to mid-tier homes. And the numbers comparing January 2018 to January 2017 tell the same story. The median listing price is up eight percent, from last year, while inventory is down eight percent.

If you’re looking for a new home this spring, here’s what you need to know about the state of the housing market and how you can increase your opportunities to find a home during this hot market.

Historically low inventory. At least for home is the low-to-mid range. If you’re looking for a luxury home, there are more available, which means the time is right to find a good deal on a trade-up home. According to the fall 2017 RE/MAX National Housing Report, housing inventory was down 13.4 percent in October 2017 compared to the same time the previous year. The same report also found only three of the 53 metropolitan areas in the country reported a buyer’s market, or had a balance. What does this mean for you? Be prepared to look longer and harder to find a home, particularly if you’re a first-time buyer looking for a starter home.

Fast sales. According to Forbes, the average home is on the market 89 days, down seven percent from last year. The RE/MAX National Housing Report shows homes sold in an average of just 60 days in January, the fewest days on the market in at least nine years. If you find a home you like that fits within your price range, act quickly. Don’t wait around hoping for the price to come down, or you’ll likely miss out. Want to be sure your offer is accepted over others? Be willing to offer above asking price and be flexible with seller’s requests.

Prices are up. Be prepared to spend a little more this year. Nearly every market in the country has recovered from the 2008 housing market crash, the economy has stabilized and unemployment rates are low. As a result, we’re seeing higher home prices. The median sales price of homes in January hit $224,000, another record, and 51 of 53 metropolitan markets posted gains for the 22nd consecutive month of year-over-year price increases, according to the RE/MAX report.

Interest rates are on the rise. Mortgage rates tend to follow the 10-year Treasury and has been on the rise in the last several weeks. According to bankrate.com, the average interest rate was 4.57 percent at the beginning of March, up from 4.15 percent in December. Interest on a 30-year-fixed-rate mortgage has been on the rise over the past several months, and is expected to continue rising. To secure the best rate on your mortgage, contact a home loan expert from PrimeLending to find out all your options and lock in a great rate.

Prequalification1 is essential. Due to low inventory, many sellers are receiving multiple offers on their homes. Do not consider making an offer on a home if you haven’t been prequalified, or you’re more likely to be passed over for another buyer. Get prequalified for a home mortgage loan to help you know how much you can afford, but be sure you don’t stretch yourself financially. Just because you are approved for a $350,000 home, take a serious look at your income and determine your max dollar from there. Plan to dedicate at least one-third of your monthly income to mortgage payments.

If you’re looking to buy this spring, this outlook may seem grim, but don’t give up. Knowing what you’re up against can help reduce frustration in your search for a new home. Have a plan. Be prepared. Set your budget. Prep your finances. Get prequalified. And go!

To get prequalified for a home mortgage, contact PrimeLending at the McMullen Group today to connect with a home loan expert in your area.

PrimeLending


Is It Time To Remodel Your Kitchen?

Joseph Coupal - Tuesday, April 24, 2018

8 Things To Consider Before Committing To A Kitchen Renovation

Prime Lending, Hanover, Boston, MAThe kitchen is the heart of your home. It’s where you prepare meals and gather with loved ones. It’s the entertainment hub. It may be the spot where you sit to sip your morning coffee or where you kiss your kids goodbye before sending them off to the bus for school.

The kitchen is often the number one selling point of a home and if your kitchen is a little outdated, a kitchen makeover could boost your home’s resale value. Kitchen remodels are also often more complicated than remodels on other parts of a home — and more costly. According to HomeAdvisor, the average kitchen remodel costs homeowners more than $22,000. For a smaller project, such as painting walls, refacing cabinets and upgrading the sink, you may spend between $5,000 and $10,000. But a renovation that involves installing custom cabinets, new countertops, new floors, and high-end appliances, the cost will settle out upwards of $30,000.

Before you dive into the time and expense of a kitchen remodel, here are some important things to consider.

How to Know It’s Time for a Kitchen Remodel

Are you considering selling in the near future? As the most valuable room in your home, remodeling your kitchen is generally a worthwhile investment if you’re considering selling. A newly updated kitchen is sure to catch a buyer’s eye, even if you aren’t able to update other parts of the home, such as bathrooms.

How much storage do you have? Lack of storage in a kitchen can be a problem, especially for potential buyers. But whether or not you’re planning to sell in the future, be sure your kitchen remodel design makes room for your dishes, food storage containers, spices, pantry items and small appliances and kitchen gadgets. If storage space is an issue now, it’s time to consider a remodel that provides more space for storage so you can clear your counters of clutter.

Are your appliances outdated? One outdated appliance doesn’t necessarily warrant a kitchen overhaul. But, if your large appliances, such as fridge, stove, oven and dishwasher are out of date or not functioning properly, at the very least, updating appliances is a wise investment.

Questions to Ask Before Getting Started

What is the central purpose of your kitchen? Are you a big entertainer, often hosting parties and gatherings? If so, consider a kitchen design with plenty of counter space, a large refrigerator and double ovens. Other kitchen features such as custom cabinets and granite countertops are also important for entertainers. If you consider yourself a chef, you may lean toward a remodel that provides plenty of space for kitchen gadgets.

How much can you afford to spend on a kitchen makeover? Your budget will largely determine the scope of your kitchen reno. If you’re hoping to spend the low end of the national average ($4,000 according to HomeAdvisor), consider your bottom line and must haves. What absolutely needs to be fixed or replaced? If you are going for an updated look without the budget for a total overhaul, painting your kitchen cabinets (light colors like white and gray are in), changing out the hardware and replacing your sink — or even just the faucet — can go a long way in changing the look of your kitchen. If you have more to spend, there’s more room in the budget for needs and wants.

Should you hire a remodeling or renovation contractor? When you’re ready to start your project, there are some important steps to take to ensure you hire a contractor who will meet your standards and complete the work correctly. Be sure to check every contractor’s credentials. Research online to find contractors in your area with positive ratings. Ask friends, family and trustworthy neighbors for recommendations. We suggest you take such measures as asking if they’re licensed and to see their work and referrals to ensure the quality of work they will do in your home.

When is the best time for a remodel? Your kitchen renovation project will likely take anywhere between six and 12 weeks to complete. Consider this when deciding when to take on the project. If you’re a regular host for holiday parties and entertainment, opt for a remodel during the first part of the year, after the holiday season ends, or early summer at the latest. Depending on the scope of your project, you may not be able to use your kitchen during the renovation, so be sure you have a backup plan for cooking meals — a microwave, hot plate, slow cooker and toaster oven that you can set up in another part of your home, such as your dining room table, will come in handy.

Whether you’re opting for a simple, cost-effective kitchen update, or going for a total overhaul, be prepared for the project to take some time. But living with dust, disorganization and chaos will all be worth it in the end when you are able to move back into your beautiful, updated kitchen.

Are you planning a kitchen renovation soon? Prime Lending and the McMullen Group can give you a hand with a home renovation loan that fits your needs. Give us a call today to speak with a Loan Officer in your area to learn about your options.

blog.primelending.com


Is It Smart To Buy A Home With Less Than 20% Down Payment?

Joseph Coupal - Tuesday, April 17, 2018

Here are some items to consider before taking on one of the new, low-down-payment loans on the market.

McMullen Group, Hanover, Boston, MAThere’s a reason most people don’t purchase a home on a whim. From appraisals and inspections to closing costs and down payments, the upfront cash required can take years to save. However, thanks to low-down-payment loans now on the market, homeowners can have keys in hand to that home for sale Massachusetts, with significantly less cash out the door. But is purchasing a house with little to no money down a good financial move?

If you’re weighing your down payment options before diving into a home purchase, here are a few things to consider.

What are the types of no- or low-down-payment loans?

There are several no- or low-down-payment loan options available for a wide array of financial situations. We’ll highlight just a handful.

VA loans: Reserved for active-duty and honorably discharged service members, reserves, National Guard members with at least six years of service, and spouses of service members killed in the line of duty, VA loans require 0% down and no private mortgage insurance.

USDA loans: Also known as the “rural housing loan,” this 0%-down loan is meant to help low- to moderate-income households in eligible areas that are in need of housing but may be unable to qualify for other loans.

FHA loans: With more lenient approval requirements than conventional loans, FHA loans also require as little as 3.5% down. However, mortgage insurance premiums will have to be paid for the life of the loan.

Conventional loans: It’s possible to get a conventional loan with as little as 3% down, but just as with FHA loans, there’s an additional requirement of private mortgage insurance (PMI). However, once you reach 20% equity in the home, this additional cost can be dropped.

What are some of the reasons to put less than 20% down on a home?

You don’t have the cash upfront

Many people struggle to come up with a 20% down payment, but that doesn’t mean they can’t handle the monthly mortgage costs. For example, you may have recently paid off your student loans, leaving you free of debt but also leaving you without enough savings to afford a lump-sum payment at the beginning of your home-buying journey.

You aren’t planning on staying in the home for the long run

It’s a gamble to purchase a home you plan to sell within a shorter time frame (say, three to five years), but if that’s the plan, the cost of a 20% down payment could wash out the savings of a lower monthly payment. Plus, this practice puts your potential profit from the sale of the home at risk, since you’ll need time to build equity (and hope real estate prices rise).

You need the liquid funds

Whether you prefer a larger emergency fund, plan to invest liquid assets elsewhere, or need cash to put toward a home remodel, you may want to protect your liquidity by minimizing the amount of your down payment. It’s all about your personal comfort level when it comes to your finances.

What are the upsides to making a smaller down payment?

Your money might be more useful elsewhere

There’s a chance the money could offer a bigger savings or return if used elsewhere. For instance, if you have $20,000 in credit card debt at an interest rate of 16% and a minimum monthly payment of 2% of the balance, you would be paying $400 per month (plus interest). Now let’s say you want to buy a $200,000 house at 3.92%. A down payment of $40,000 would put your mortgage payment at $756.50 (plus the additional $400+ per month for the credit card). However, if you cut the down payment in half (to redirect the funds to pay down the credit card) and increase your home-loan interest rate to 4.02%, your total monthly mortgage payment would be $861.42. In this case, the greater monthly savings comes from paying off the card.

You can keep your cash liquid

Unless you plan to move out, pulling equity out as cash requires refinancing — a potentially costly endeavor. A lower down payment can keep more of your cash liquid in case life circumstances require a cash expenditure in the near future. Without this cushion, you could potentially put your home (and living situation) in jeopardy.

What are some downsides to a smaller down payment?

You may have to pay PMI or mortgage insurance premiums (MIP)

To mitigate the additional risk of lending to a borrower with a small down payment, lenders usually require private mortgage insurance for conventional loans until the homeowner has at least 20% equity in the home. All FHA loans require homeowners to pay mortgage insurance premiums for the life of the loan.

You’re likely to have a higher interest rate and closing costs

The best interest rates don’t automatically go to the borrowers with the best credit score — the size of the down payment makes a difference as well. This higher rate translates into higher monthly payments and more money spent over the life of the loan. In addition, since closing costs are a percentage of the total loan amount, borrowing more means higher costs.

You will have less equity upfront

The less money you put down, the less equity you will have once the home officially becomes yours. This could mean you can’t take advantage of home equity loans or lines of credit if your home needs repairs for which you can’t afford to pay cash. It could also increase your chances of being underwater in your home (owing more than what the home is worth) should the market crash.

So, what’s the bottom line?

Conventional wisdom might say 20% is always the way to go, but more options and different financial circumstances put this to the test. Make sure to fully explore the loan options available to you before deciding on the down payment amount that suits you and your situation best.

For more information on mortgages, contact Prime Lending at the McMullen Group.

trulia.com


Refinancing And Renovation Loans: What To Know As A Homeowner

Joseph Coupal - Monday, April 09, 2018

Discover A Loan That Will Help Create The Home You’ve Always Wanted

McMullen Group, Hanover, Boston, MAWhether you want to consolidate your debt, lower your interest rates or create your dream home, if you’re a homeowner, you have plenty of home loan options.

But you may be wondering, “Which loan should I choose?”

The simple answer is: It depends.

You have a variety of loans to choose from, and the “right” one is highly dependent on your situation and what your homeownership needs are. With that in mind, let’s go over the difference between refinancing and renovation loans, and which will help you reach your homeownership goals.

Refinancing

Are you interested in paying off your mortgage as soon as possible? Want to lower your interest rates? Need money for unplanned expenses? If the answer is YES to any of these, then refinancing could be the solution you’re looking for. Refinancing may sound like a scary word, but it’s essentially the process of replacing your old loan with a newer one.

By doing this, you’re able to reap benefits such as:

  • Lower monthly payments so you can save toward other expenses
  • A shorter home loan term to help you pay off your mortgage even sooner
  • Converting your home’s equity into much-needed cash to use however you like (including home repairs or renovations)

How do you know if refinancing is the best option for you?

To find out if you’re ready to take the next steps toward refinancing your home, check to see if your home meets any of the following conditions:

  • You’ve got a newer mortgage
  • Your home’s value has increased
  • You qualify for lower interest rates

If your home does meet one of these conditions, you’re in a great position to take advantage of your refinancing options. Overall, refinancing has some major benefits, but it’s important to understand the realities of refinancing. Keep in mind that whether you are refinancing to pay lower interest rates or to make lower monthly payments, you are still hitting the reset button and starting a brand-new loan.

Want to see how much you could save by refinancing your current home loan? Check out our handy Refinance Calculator to get a quick savings estimate and find out if it’s a good idea to refinance.

Renovation Loans

As you’ve probably noticed, home renovations have become quite popular in the past few years. In fact, there are countless reality TV shows completely devoted to showing you how to transform a home into an elegant dwelling fit for royalty. But even if you’re not trying to turn your house into a country-chic masterpiece, a home renovation can still help you create your ideal living space.

Here are a few key reasons you should consider a home renovation:

  1. You have some minor/major damage that needs to be repaired. Has your area recently experienced some inclement weather that has caused damage to your home? Need to replace old plumbing or electrical systems within your home? A home renovation loan can help you with both small and large repair projects.
  2. You want to redesign your kitchen/bathroom (etc.). Are you eager to install that timeless and functional farmhouse sink in your kitchen? Dreaming about taking a relaxing soak in your very own luxurious tub? You can design the kitchen or bathroom you’ve always wanted with the help of a home renovation loan.
  3. You’d like to add additional rooms/floors to your home. Are you planning on starting (or growing) your family? Need some extra space to build your very own home office? With a home renovation loan, remodeling and expanding your home has never been easier.

As you can see, a home renovation loan can help you achieve a great deal of your homeownership goals. If you happen to love the home you’re in, or you’re firmly planted in the perfect neighborhood, remodeling your home can give you the opportunity to stay in your current home while being a far less expensive alternative to purchasing a new home.

Final Thoughts

Whether you’re interested in lowering your monthly payments, or you’re looking to create the home of your dreams, you’ve got options. PrimeLending’s remodeling loans are a type of refinancing loan that can be rolled into the cost of a new mortgage. This type of loan is a great option because you can make necessary home repairs and upgrades while still only paying on a single mortgage payment.

On the other hand, a home renovation loan can help you repair, remodel and enhance your home just the way you’ve always envisioned it. The option you should choose depends on what your specific goals are and PrimeLending is here to help you sort out which solution will benefit you the most. Ready to take the next step toward achieving your homeownership goals? Contact a McMullen Group loan expert today to discover which option is right for you.

primelending.com


What to Expect From the Housing Market This Spring

Joseph Coupal - Monday, April 02, 2018

Prime Lending, The McMullen Group, Boston, MAThe economics of home buying are getting interesting, thanks to higher mortgage rates, tax changes and a supply-demand imbalance.

This spring’s home sales season is shaping up to be the most interesting one in years.

The housing market will depend on which opposing force proves more powerful: long-term fundamentals of supply and demand, or near-term ripples emanating from Washington and Wall Street.

Most evidence suggests that fundamentals will prevail over time and push sales and prices higher, especially at the lower and middle tiers of the market. But the opposing forces could mean a period of uncertain deal-making. Higher mortgage rates and a new tax law will affect several elements of home buying.

Mortgage Rates Are Higher

This is the simplest to calculate. In mid-September, according to Freddie Mac, the average rate on a 30-year, fixed-rate mortgage was 3.78 percent; in the most recent reading it hit 4.45 percent. It rose because global bond markets, which ultimately determine the rates on longer-term loans, judged that larger budget deficits and a faster-growing economy would result in higher inflation and more interest rate increases from the Federal Reserve.

For a family resolving to pay $2,000 a month for a home mortgage and not a penny more, the math works out that they can afford to borrow $397,000 today, down from $430,000 in September.

The math around affordability is a little more complicated than that — you must also consider the potential tax deductibility of mortgage interest and how much cash a buyer has available for a down payment.

The psychology around a rise in rates isn’t necessarily straightforward either. A survey for the online brokerage Redfin — involving 4,000 people who bought or sold a home last year or tried to do so — found that 25 percent of respondents said a mortgage rate rise to 5 percent would have “no impact” on their home-buying plans.

Twenty-one percent said they would search with more urgency, fearing that prices would rise faster, while 27 percent said they would slow their search and wait to see if rates came back down. Only 21 percent said they would seek to buy a less expensive house.

“If shortage of inventory is a headwind for housing, mortgage rates are a gentle breeze by comparison,” said Nela Richardson, chief economist at Redfin.

The Tax Law Is Messy

The United States tax code subsidizes homeownership in ways large and small. (Whether those subsidies encourage greater homeownership or just drive up prices is a different matter.) But the tax law enacted in December reins in several of those advantages.

Most directly, the law reduces how much mortgage debt will benefit from tax-deductible interest payments; that number was previously $1 million and is now $750,000. Also, property taxes previously had no limits in being deductible against federal income tax, but now the deduction of property and other state and local taxes is capped at $10,000.

Both provisions will most affect upper- and upper-middle-income families in states with relatively high housing prices and high state and local taxes: Think Massachusetts, Connecticut, New York, New Jersey, Maryland and California.

For example, a married couple in Connecticut with a $300,000 annual income aiming to borrow $1 million toward a $1.2 million house would be able to deduct about $33,000 in mortgage interest in the first year of their loan, compared with about $44,000 under the previous law. Because they would be in the 24 percent federal marginal tax bracket, buying that house would cost them about $2,650 more in the first year of the mortgage after taxes than under previous law.

Moreover, that family’s state income tax obligations would push them over the $10,000 deductibility limit on their own, meaning the family would effectively lose the ability to deduct property taxes of around $22,000 a year, depending on the jurisdiction. That represents another reduction of this family’s tax advantage from homeownership by about $5,000 a year.

(Our hypothetical family may not be losing out as much as those numbers suggest because they would have faced the alternative minimum tax under the old tax system — evidence of just how complex these calculations can be.)

Even people whose mortgages are well below $750,000, or who are in lower-tax states, may find the tax law could shift the incentives for buying compared with renting. The new law roughly doubles the standard deduction that all households can take, to $24,000 for a married couple, which means that more households will find that they get no net tax savings from taking on a mortgage. They are better off just taking the larger standard deduction whether they buy or rent.

Over all, Moody’s Analytics estimates that the tax law will reduce home transaction prices by 4 percent, a number that reflects both the direct impact of tax changes and higher interest rates caused by larger deficits.

But Mark Zandi, the company’s chief economist, emphasizes that this reduction should play out over a couple of years, and that it is more likely to slow the rate of price gains rather than cut prices outright. For example, if prices were on track to rise 5 percent a year in 2018 and 2019, they might instead rise 3 percent a year.

“The tax law change and higher mortgage rates should moderate the prices buyers are able to pay,” Mr. Zandi said. “I think the rate of house price growth will soften.”

Supply and Demand Are Mismatched

Those developments on interest rates and tax policy seem likely to be drags on home buying. But they come amid a housing boom rooted in a major imbalance between the number of people looking to buy, especially in cities with strong job growth, and the inventory available.

On the demand side, the peak year for births in the millennial generation was 1990, meaning they are turning 28 this year. Many members of that large generation are now in their 30s, marrying and having children.

In their 20s, this group was forming new households at lower rates than earlier generations because of a scarcity of jobs in the aftermath of the financial crisis, large student debts and perhaps a cultural shift in attitudes toward homeownership. That appears to be changing as they get older.

But the rising demand has not been accompanied by increase in supply.

Builders started work on 1.3 million new housing units in 2017, which is up a lot from the depressed levels of the 2008 recession but still below the 1.5 million average between 1959 and 2007.

There was overbuilding relative to demographic trends in the mid-2000s housing boom, but the opposite has been true for a while.

The home-building industry attributes this to the constraints it faces.

Many of the metropolitan areas with the strongest rates of job creation — and hence housing demand — have restrictive zoning laws that make finding suitable land a challenge. The housing bust drove some construction firms out of business and their workers out of the industry, meaning a shortage of building capacity years later. Tighter immigration enforcement has limited labor supply in some markets, and prices of many building materials have risen faster than overall inflation.

“Longer-term demographics are telling us that every year there are going to be more people entering the stage of life where they want to get married, have kids and buy a home, and they’re going to be looking for housing to accommodate that stage of life,” said Skylar Olsen, a senior economist at Zillow. “The fundamentals are pushing up against the reality of so much pent-up demand.”

In other words, as long as there are more families looking for a place to live than new homes in place to accommodate them, the pressure on prices and sales will be upward, no matter what happens as the market adjusts to higher mortgage rates and tax changes.

For more information on home mortgages, contact Prime Lending at the McMullen Group.

nytimes.com


Did You Think You Need 20% for a Down Payment? Think Again

Joseph Coupal - Monday, March 26, 2018

Prime Lending at the McMullen GroupSaving for a down payment often represents the biggest hurdle for first-time home buyers. In December, 25% of buyers on realtor.com® who were looking to purchase their first home said a key factor holding them back was lacking funds for a down payment. No matter how you cut it, it represents a big chunk of cash. But here's the thing: It doesn't always need to be quite so big as most think.

Many first-time buyers don't realize that it doesn’t necessarily take 20% down to purchase a home.

Indeed, the average down payment in the U.S. on mortgages used to purchase a home was 11%, according to our analysis of loan records from Optimal Blue, an enterprise lending software company.

As with many stats, that 11% average hides lots of variation across loan types and locations. And for some buyers, it may even take more than 20% to buy a home.

Borrowers with jumbo mortgages had to put the highest percentage down, with an average of 23%. Conforming mortgages averaged 18% in 2016. On the other hand, government-backed FHA, VA, and USDA mortgages featured average down payments of 4.8%, 2.2%, and 0.4%, respectively. These government programs are meant to open up more pathways to homeownership for first-time buyers, veterans, and heads of households in rural areas.

Where you live or are thinking of living can also dramatically affect what it takes to get a mortgage. Higher-cost markets don’t just have higher-priced homes; they also have buyers with higher down payments. Lower-cost markets are just the opposite.

Higher-cost markets tend to have higher down-payment percentages because those more expensive homes are less likely to be covered by low down-payment loans.

Cutting to the chase: Without a higher down payment, the monthly payment simply ends up being too high to afford in an expensive market. Got that? This is why borrowers in high-cost areas have little choice but to put a higher percentage down on top of paying a much higher price.

That’s why, regardless of income levels, it's so much harder for first-time buyers in high-cost areas. And homeownership rates, especially for younger households, take a hit.

Deciphering the financial differences

Let’s dive into some specifics so that it is easier to understand the financial differences.

The average purchase price of homes financed with a mortgage was just over $290,000 in 2016 across the U.S. The average down payment amount was $32,680, or 11%.

But in the District of Columbia, where the average purchase price was just over $630,000, the average down payment was almost $110,000, or more than 17%.

That $110,000 could fund more than two-thirds of the average purchase price of $165,000 in Mississippi. And in that low-cost state, the average down payment was under $9,000, or a little more than 5%.

The variances get more extreme as we get more local.

Buyers in San Francisco County put down an average of more than $326,000 on homes purchased in 2016, which represented an average down payment of 29.9%.

In Manhattan, buyers shelled out an average down payment of (gulp) 30.2%, but because the average purchase price was slightly less than San Francisco, the dollar amount of the down payment was a more modest $219,000.

In more rural counties in the South and Midwest, average down payments can be closer to 3% and often amount to $5,000 or less. For example, in Tennessee's Tipton County, an outer suburban county of Memphis, the average down payment was just over $3,500. The average price of a home purchased with a mortgage in 2016 was just under $138,000.

So the whole etched-in-stone notion of 20% down payment or bust? Well, it all depends on how you look at it. And where.

For more information, contact Prime Lending at the McMullen Group.

realtor.com


First-Time Buyers: Here's the Stuff You Don't Know About Mortgages

Joseph Coupal - Monday, March 19, 2018

McMullen Group, Hanover, Boston, MAWhen it comes to home mortgages, there's a big gap between what people think they need in order to get one and the reality of what buyers are successfully doing—especially young people.

It has been previously highlighted that putting 20% down isn't the norm.

But you know what? When it comes to what might be the biggest purchase of your life—one that can be incredibly intimidating for first-time buyers—it’s nice to know real facts. And in the mortgage market, reality is very often different from perception. Or, for that matter, myth.

Recently, the National Association of Realtors issued its 2017 Aspiring Home Buyers Profile report. The report cites data from surveys taken in the third quarter of 2016 about down payments.

The report summarized that 39% of non-owners believe they need more than 20% for a down payment on a home, 26% believe they need to put down 15% to 20%, and 22% believe a down payment of 10% to 14% would work.

So on average, those non-owners thought a down payment would need to be about 16%. The reality? The average down payment on purchase mortgages in 2016 was 11%.

In fact, when we drill into the purchase mortgages taken out by people under 35, who represent the majority of first-time buyers, we see the average down payment was even lower, at just under 8%. In other words, aspiring first-time buyers think it takes twice as much to buy a home than it really does.

Perception, meet reality

But averages can be misleading, right? Especially when there is a wide distribution, like we observe with down payments. When we dig into what actually happened in 2016 we find that most young people buy homes with ... less than 5% down. That's less than one-third of what the average nonowner had assumed!

As with many things in life, the most correct answer to the question of how much you need to put down is “it depends.” There are a slew of important factors like who you are, your financial circumstances, the home's location, and the price of the home.

It is possible to buy a home with a mortgage with no money down. VA and USDA loans are the most popular loans that offer the ability to put no money down. In 2016, 16% of buyers under 35 put no money down.

The largest share (36%) of loans for buyers under 35 in 2016 was for people putting down something less than 5%. The options there include loans offered through the U.S. Department of Veterans Affairs and the U.S. Department of Agriculture, but also 3% down payment programs backed by Fannie Mae and Freddie Mac (aka conforming loans). And, of course, this includes the traditional 3.5% FHA mortgage that is primarily targeted to first-time buyers.

More than half of young people who successfully bought a home with a mortgage in 2016 put at most 5% down. The average dollar amount for these buyers was $3,500. That's right, if you have #FOMO from your friends buying homes, the majority of them are putting down just a few thousand dollars.

How are they doing it? The aforementioned mortgage products (conforming, FHA home loans, VA home loans, and USDA home loans) represent almost 99% of the mortgages to people under 35 in 2016. There is nothing exotic about this.

And it doesn't require perfect credit, just fair credit. The average FICO was 713, and the floor we observed in FICOs (below which very few mortgages were made) was 639.

Put that all together and you can see that for the millennial dreaming of buying a home this year, you need a FICO score of at least 639 and enough money that you could put down at most 5%. If you live in a typical American town, what you need could be as little as $3,500.

That sounds a lot more attainable than most people think. The truth is out there! Take advantage of it.

For more information on home mortgage loans, contact The McMullen Group at Prime Lending.

Realtor.com


Should You Invest in Real Estate?

Joseph Coupal - Monday, March 12, 2018

McMullen Group, Hanover, Boston, MABrick and mortar, there’s no better way to save your money. And for decades, the most solid investment you could make was in real estate. But is this still the case? If not, when will it be a good time to invest in real estate once again?

In fact, 5.1% of the world’s wealth is held in real estate. To be honest, we’re quite surprised at this figure; we thought it would be a lot higher than that. Could this low figure be somehow related to the most recent global recession? We’re not quite sure. But one thing is for certain, if investors have any sense, that figure should change in the next year or so.

Traditionally, there was this belief that if you bought property at a reasonable enough price, then you simply couldn’t lose money on it. But then came the slump in the economy and people who had invested their hard-earned cash in property found themselves stuck in a home that they couldn’t sell. Or worse, with an investment property they were losing money on each month.

So, if that’s the risk we run, why would we want to invest in real estate at all? Well, the benefits while simple to explain are quite significant.

First off though, we just have to say that you should never invest all your money into a property. Try to keep some of your savings in a separate and secure investment. Remember that advice about eggs in one basket? Heed it.

Investing in real estate is almost like making a double investment, and this is particularly true if you need to borrow very little or nothing at all to purchase your property. With a small mortgage repayment, you can charge rent that will cover the costs and then some. This extra cash can go back into the upkeep of the house or another investment. Add to that the fact that your property should increase in value over time and you have your self the perfect investment.

But what about the current climate? Is it wise to jump into the property market right now?

The answer to these questions depends on your location. The high prices in Seattle, New York, San Diego, Los Angeles, Denver, San Francisco and Boston mean that you need to have either a high income to secure the loan required or a lot of money in the bank to minimize the risks. Yet while property prices are sky high in those areas, this also means that rent prices are too and there are plenty of people willing to pay. However, if you already own a property in one of those areas, you might want to sell it and invest in several smaller properties in other affordable areas. Eggs in many baskets!

Areas such as Baltimore, Nashville, Minneapolis, Atlanta, Buffalo and Dallas offer buyers the perfect opportunity to invest in rental properties. In these areas, you buy property cheap (low mortgage payments) and charge higher rents. For some, the median rent for the area is double the average mortgage payment. If that’s not reason enough to invest, then we’re not sure what is.

Another reason to invest would be to take advantage of the low-interest rates. Although we’re not seeing the 125% mortgages we saw back in the early 2000s, the current rates make borrowing money (even when a 20% deposit is required) something you should probably do sooner rather than later.

While some realtors have a reputation for aggressively pushing people to buy regardless of the current climate, we’re happy to say that at this moment in time, they’d be correct. With low-interest rates and many affordable areas with high-rent income potential, buying realty as an investment opportunity is a great idea right now. Just be sure that you don’t put all those eggs in one basket.

Contact a mortgage professional from the McMullen Group today to find out more.

mpamag.com


From Fixer-Upper To Dream Home: How To Start Your Renovation Project

Joseph Coupal - Monday, March 05, 2018

Save Money And Personalize Your Home

McMullen Group, Hanover, MAIf you’re planning on creating and customizing your dream home, there are several benefits of purchasing a fixer-upper house. But before you make this major investment in time and money, it’s important to consider the reality of fixing up an existing home — it’s not always a simple process.

If you approach the project with preparation and strategy, however, you can convert an older house into a beautiful home for your family to grow in, or you can even turn a profit on the housing market. With that in mind, let’s go over some things you should know before you buy a fixer-upper home.

First, why should you consider purchasing a fixer-upper?

When it comes to buying any home, there are pros and cons. As such, you need to think about WHY you really want to buy your very own fixer-upper.

Here are a few reasons why buying a fixer-upper home is a good idea:

You want to create your dream home. Purchasing a new home can be costly. Not only that, but there’s little room for customization if you buy a pre-built home. With a fixer-upper, you have the freedom to incorporate your own style and add any features you want, allowing you to turn an older house into your ideal living space.

You’ve found a great deal. Whether it’s because of an eager seller, or structural and/or cosmetic defects, fixer-upper houses can sometimes be found well below market value. If you find an older home for an outstanding price, it may be worth the investment to purchase it and renovate it to your liking.

Some helpful tips before you purchase your fixer-upper:

Check for zoning restrictions. Ready to turn that run-down property into gold? Better hold your horses. Many properties have zoning requirements, which could limit how you can renovate your fixer-upper. To find out a home’s zoning requirements, you’ll need to do a little research by visiting the area’s municipality website, or you can contact an official who will help you navigate the zoning specifics.

Hire a home inspector. A home inspector is a must-have if you’re purchasing a fixer-upper home. They will walk through your property, help you detect structural damage, and root out common issues found in older homes, such as asbestos and termite infestations. A home inspector can even provide you with suggestions on things that should be replaced or renovated, like electrical wiring, plumbing and roofing.

Recruit an architect or contractor. If you can afford to do so, you should consider bringing on an architect or contractor to assess your fixer-upper. They will be able to detect load-bearing walls and find out if and how you are able to properly restructure and renovate your property.

Research tax incentives*. In addition to the standard property tax deductions homeowners are eligible for, you could be eligible for other home-related tax benefits, such as:

  • Home office tax deduction. Building a home office that is used regularly and exclusively for business could allow you to make rent and utilities partially deductible.
  • Solar power tax credits. Installing solar energy panels can not only boost your property’s value, it can also provide you with a significant tax credit. 
Get a building permit. To ensure compliance with building codes, you will need to acquire a permit before you begin renovating your property. Without a permit, you could face serious delays and fines for violating city regulations. States and cities have varying requirements for issuing permits, so you will need to contact your local permit service center, or hire a permit service to manage the building permit application process on your behalf.

Key Takeaways

Overall, renovating a fixer-upper is not for the faint of heart (or wallet). But if you’ve found a property that’s in a great location and simply needs a little TLC, it could be a worthwhile investment for you and your family. Ready to start your fixer-upper project? PrimeLending and the McMullen Group offers a wide range of renovation home loans that can assist you in creating your perfect home. Contact a mortgage professional from the McMullen Group today to find out more.

blog.primelending.com


How To Save For Your Down Payment In 1, 3 Or 5 Years

Joseph Coupal - Monday, February 26, 2018

McMullen Group, Hanover, Boston, MABuying a home is likely the biggest purchase you’ll make in your lifetime, and one that can seem overwhelming. If you’re considering purchasing a home in the not-too-distant future, now’s the time to start saving.

Whether you’re working with a timeline of 1, 3 or 5 years, here’s everything you need to know about saving for a down payment.

Set a Clear Savings Goal — Before you start saving, know your goal. While some mortgages do allow a smaller down payment – such as three or five percent – as a general rule of thumb, plan to make a down payment of at least 10 percent on your home loan, if not 20 percent. A down payment of 20 percent would reduce your overall costs by eliminating private mortgage insurance (PMI) that is required on anything less than 20 percent.

Not sure how much you can spend on a home? Getting prequalified for a home mortgage can give you an idea how much you can afford. From that number, you can determine how much you need to save for a down payment. Keep in mind that in addition to your down payment you’ll have additional expenses, including closing costs, which typically amount to about three percent of the price of the home. (Your mortgage lender can provide you a better estimate on closing costs and exactly how much cash you’ll need to bring at closing.)

For the purposes of this guide, let’s assume you are a first-time buyer looking to buy a home that costs $300,000. To put 20 percent down, you’ll need to save $60,000. While that number may seem insurmountable, with a clear goal in mind, it is possible to save what you’ll need for a down payment in one, three or five years. Here’s how.

Save for Down Payment in One Year

If you’re starting at zero and your goal is $60,000, that amounts to $5,000 per month for 12 months. This is not a challenge to take lightly. You’ll have to make some serious cuts in expenses if you want to achieve your goal in one year, but it is possible.

Move In With Friends or Family — Slash your rent payment by moving in with family or friends while you save for a down payment. Offer to do work around the house to further reduce costs. Mowing the lawn, cooking and cleaning, child care, pet sitting — any mutually beneficial arrangement you can work out to reduce or eliminate rent payments can help you put away a sizable chunk of change each month.

Sell Non-Essential Assets — If you want to save for a down payment and you’re currently paying a car payment, consider selling your vehicle and purchasing a basic ride to get around until you’ve purchased your dream home and can afford to pick up another car payment. Sort through other belongings such as clothing, housewares, books and electronics. Sell your stuff at a consignment sale, in a garage sale or online yard sale.

Cut the Nice-to-Haves — Cable, Internet, Netflix, etc. – while these little luxuries are nice to have, they’re just that. Not a necessity. Reduce your monthly expenses by cutting ties with your TV service, Internet provider and any other utilities you can live without. Doing so could net you anywhere from $50 to $300 a month, or more, depending on what you’re currently paying. Now’s also the time to talk to your cell phone provider about downgrading, to a basic, more affordable mobile plan.

For the next 12 months, ask yourself, “Do I need this?” If the answer is “no,” don’t buy it.

Pick Up a Side Gig — It’s time to add a new word to your vocabulary: Hustle! Look for ways boost your income with a second job or side gig. Start by thinking about the things you already enjoy doing. Pick up a job tutoring students, walk neighborhood dogs, referee youth sports leagues, substitute teach – these are just a few ways you can start earning extra income to help you reach your savings goal in a year.

Say “No” — During this year of hard core savings, you’ll need to learn how to say “no” to most social invitations. While you might miss that annual weekend getaway with the girls, or playing a round of golf with the guys after work, skipping out on these splurges can easily help you save several hundred, if not a few thousand bucks over the course of a year.

Save for a Down Payment in Three Years

Now you’re looking at pocketing about $1,700 a month in savings to reach your $60,000 goal in three years. It’s certainly still an ambitious goal, but with three years, the lifestyle changes necessary may not be quite so extreme, though the basic principles of saving stay the same.

Lower Your Bills — Cut your cable and switch to a streaming service, like Netflix, which costs anywhere from $10 to $14 per month. You’ll still be able to watch many of your favorite shows, without a monthly cable bill of $100 (or more!).

Pack Your Lunch — If you buy lunch out every day, you’re probably spending anywhere from $40 to $80 a month on lunch alone. Slash your meal costs in half by making your meals to go from home.

Cut Back on Entertainment — Remember that streaming service you signed up for? Plan date nights in, rather than forking over $35 to go on a date to the movies. Sell your season tickets and cancel your golf course membership.

Negotiate Your Bills — Contact your service providers, such as your home and auto insurance company and cell phone provider to discuss your options to lower your bills and trim your expenses. Ask about basic services and request discounts that can help you save on your monthly bills.

Save Your Windfalls — Your annual work bonus, commission checks, tax refund, gifts and any extra income should be put directly toward your down payment savings. These one-time infusions of cash can help you reach your savings goal and if you’re living on a budget, you won’t need it anyway.

Save for a Down Payment in Five Years

You’ll certainly have the most flexibility with this time frame, but you’ll still need to save $1,000 a month if you want to reach your savings goal in five years. Use the tips above to help put more away in savings. With the extra time, you also have a few other options to help build your savings.

Put Your Money in the Market — You won’t need the money for five years, so consider investing your savings, enabling your money to work for you. If this sounds too risky, consider building a CD ladder by purchasing CDs, or certificates of deposit, which yield a higher return in exchange for that money being locked up for a set amount of time. Building a CD ladder means you’ll always have access to at least a portion of your money. CDs are also a guaranteed investment, so you can’t lose when it’s time to take it out. Once you do pull it out, you can use that money toward a down payment, or re-invest it in a new CD for continued savings.

Set Up a Traditional Savings Account — If you aren’t sure about investing in the market, or tying your money up in a CD, a traditional savings account can still help you earn income on your savings. Shop around for a savings account that offers at least one percent in interest, and start stashing every extra penny into your savings. The biggest benefit to a traditional savings account is that you have zero risk of losing your money, and it’s always accessible, so the moment you find your dream home, you’ll be able to access the cash for your down payment.

Set Up Automatic Savings — Once you’ve established a dedicated savings account, arrange with the payroll department at your job to send a fixed amount to that savings account every payday via direct deposit and the remainder sent to your checking account as usual. You’ll never even notice the money going to savings because it was never in your checking account to begin with.

No doubt, saving for a down payment requires discipline and dedication. Spending less and saving more can be frustrating at times, but making temporary sacrifices and being intentional with how you spend your money can result in a big payoff.

If you’re in the market for a new home, get the ball rolling now. Contact a mortgage expert today to get details on your loan options and start the application process.

primelending.com


4 Ways The 2018 Tax Reform Could Affect Homeowners

Joseph Coupal - Monday, February 19, 2018

McMullen Group, Hanover, Boston, MA2018 is in full swing, along with a newly enacted tax policy referred to as The Tax Cuts and Jobs Act.

While many of the tax reform changes don’t have any immediate impact, the new act is predicted to affect countless businesses and tax payers down the line — it could even bring a whole new set of challenges for current and aspiring homeowners.

If you own a home, or plan to, how will this affect you, you may be wondering.

To help you out, we’ll go over a few of the notable 2018 tax reform changes and how they could potentially impact homeowners and homebuyers.

1. A Lower Cap on Deductible Mortgage Interest

The Tax Cuts and Jobs Act lowers the limit for the mortgage interest rate deduction for new loans (loans started after December 15, 2017) to $750,000. Any loans taken out prior to that date have been grandfathered into the previous tax policy, which offered homeowners a $1 million deduction limit.

Will this lower cap affect you as a homeowner/homebuyer?

The median home price across the country is sitting at around $250,000, so there’s a good chance you won’t be affected. While this new change makes it more challenging for buyers looking to purchase more expensive homes, only about 1.3% of all U.S mortgages will actually be impacted by this new deduction cap.

2. Increased Standard Deduction

Taxpayers are able to lower their taxable income with the help of larger standard deductions. Prior to the new tax reform bill, a single person could claim a $6,350 standard exemption and an additional $4,050 personal exemption.

How will this change affect you?

Under the new tax laws, the standard deduction has nearly doubled to $12,000 ($24,000 if filing jointly with a spouse), while the personal exemption deduction was completely removed. However, because tax payers choose between taking a standard deduction (now nearly doubled) or itemizing their deductions using a Schedule A Tax Form, taxpayers have more incentive to choose the standard deduction.

3. Eliminated Home Equity Interest Deduction

Home equity lines of credit (HELOC) have been a great way for homeowners to borrow money using their home’s equity. In addition, prior to the new tax reform changes, homeowners could deduct interest paid on home equity loans from their taxes. With the new tax act, homeowners may no longer be able to deduct the interest paid on home equity loans. The exception, however, is if the loans are used to improve your home or purchase another one.

How does this tax change affect you?

As a homeowner, this new tax change will give you one less deduction to itemize if the loan is used for personal expenses instead of re-investing it back into your home’s value. However, with the nearly doubled standard deduction, many homeowners will be less incentivized to itemize this deduction anyway.

Note: While the ability to deduct interest on home equity loans (not used for home improvement/purchase) has been eliminated, home equity is still an affordable and effective way to borrow money.

4. New Limit on State and Local Property Taxes

Prior to the signing of the Tax Cuts and Jobs Act, tax payers could deduct their state income, sales and property taxes without any limit. Under the new tax laws, state and local property tax deductions are capped at $10,000.

How will this new deduction limit affect you?

With this new cap limit, you will no longer be able to fully deduct state and local property taxes, as well as income or sales taxes. So, if you itemize deductions and reside in a state where local tax liability exceeds $10,000, you may end up receiving a smaller tax break.

The Bottom Line

Whether you’re a homeowner or potential homebuyer, we understand you probably have questions about how the new tax reform laws will affect you. While we aren’t tax advisors, as a mortgage lending company with over 30 years of experience, we do understand how the new tax system will affect our business partners and customers.

In the end, buying and owning a home has its own set of advantages and rewards that are unaffected by the recent tax reform changes. Each homeowner and homebuyer has their own unique situation, but we’re here to help evaluate your options so you can find a mortgage that fits your needs. If you have any questions regarding your personal situation, feel free to connect with a PrimeLending mortgage professional at the McMullen Group.

PrimeLending is not authorized to give tax advice. Please consult your tax adviser for tax advice for your specific situation.


What First-Time Home Buyers Don't Know About Mortgages

Joseph Coupal - Monday, February 12, 2018

Prime Lending at The McMullen GroupWhen it comes to mortgages, there's a big gap between what people think they need in order to get one and the reality of what buyers are successfully doing—especially young people.

But you know what? When it comes to what might be the biggest purchase of your life—one that can be incredibly intimidating for first-time buyers—it’s nice to know real facts. And in the mortgage market, reality is very often different from perception. Or, for that matter, myth.

Last week, the National Association of Realtors issued its 2017 Aspiring Home Buyers Profile report. The report cites data from surveys taken in the third quarter of 2016 about down payments.

The report summarized that 39% of nonowners believe they need more than 20% for a down payment on a home, 26% believe they need to put down 15% to 20%, and 22% believe a down payment of 10% to 14% would work.

So on average, those non-owners thought a down payment would need to be about 16%. The reality? The average down payment on purchase mortgages in 2016 was 11%.

In fact, when we drill into the purchase mortgages taken out by people under 35, who represent the majority of first-time buyers, we see the average down payment was even lower, at just under 8%. In other words, aspiring first-time buyers think it takes twice as much to buy a home than it really does.

Perception, meet reality

But averages can be misleading, right? Especially when there is a wide distribution, like we observe with down payments. When we dig into what actually happened in 2016 we find that most young people buy homes with ... less than 5% down. That's less than one-third of what the average nonowner had assumed!

As with many things in life, the most correct answer to the question of how much you need to put down is “it depends.” There are a slew of important factors like who you are, your financial circumstances, the home's location, and the price of the home.

It is possible to buy a home with a mortgage with no money down. VA and USDA loans are the most popular loans that offer the ability to put no money down. In 2016, 16% of buyers under 35 put no money down.

The largest share (36%) of loans for buyers under 35 in 2016 was for people putting down something less than 5%. The options there include loans offered through the U.S. Department of Veterans Affairs and the U.S. Department of Agriculture, but also 3% down payment programs backed by Fannie Mae and Freddie Mac (aka conforming loans). And, of course, this includes the traditional 3.5% FHA mortgage that is primarily targeted to first-time buyers.

More than half of young people who successfully bought a home with a mortgage in 2016 put at most 5% down. The average dollar amount for these buyers was $3,500. That's right, if you have #FOMO from your friends buying homes, the majority of them are putting down just a few thousand dollars.

How are they doing it? The aforementioned mortgage products (conforming, FHA, VA, and USDA) represent almost 99% of the mortgages to people under 35 in 2016. There is nothing exotic about this.

And it doesn't require perfect credit, just fair credit. The average FICO was 713, and the floor we observed in FICOs (below which very few mortgages were made) was 639.

Put that all together and you can see that for the millennial dreaming of buying a home this year, you need a FICO score of at least 639 and enough money that you could put down at most 5%. If you live in a typical American town, what you need could be as little as $3,500.

That sounds a lot more attainable than most people think. The truth is out there! Take advantage of it.

For more information on home mortgages, contact Prime Lending at The McMullen Group.

realtor.com


Documents Needed for a Mortgage Preapproval: A Checklist

Joseph Coupal - Tuesday, February 06, 2018

Prime Lending at The McMullen GroupTo get preapproved, you’ll need documents that verify your income, employment, assets and debts.

Getting preapproved for a mortgage before you go home shopping isn’t required, but it is a good idea, especially in a seller’s market, where competition among buyers is intense. Unlike a prequalification, a preapproval letter lends weight to your bid on a home, proving to sellers that you have the financial clout to stand behind your offer.

To get preapproved, you’ll need to verify your income, employment, assets and debts, says Bob McLaughlin, senior vice president and director of residential mortgage at Bryn Mawr Trust, in Bryn Mawr, Pennsylvania.

It’s likely you already have many of the records you’ll need, or easy access to them. Gathering the documents shouldn’t take more than a week, depending on the lender’s requests and whether you need records from outside sources, like an attorney or county government.

Even for a preapproval, your lender may want more documents, especially if you’re self-employed or your income comes from several sources. Also be prepared to share information such as your Social Security number, which is used to check your credit reports and scores; your employer’s name and address; and your hire date.

Here’s a list of documents you’ll need.

Documents needed for mortgage preapproval

INCOME AND EMPLOYMENT

The documents required to verify income depend on how you get paid. This step is easiest for workers with a paycheck from one source, which provides an annual W-2 form, and who have little or no overtime or shift differentials.

Tax returns: Copies of your two most-recent federal and state returns may be required.

Income:

  • W-2 wage earners: Copies of W-2 forms and your two most recent payroll stubs. If income includes overtime, bonuses or differential pay, you may need your most recent end-of-year payroll stub.
  • Self-employed, freelancers and independent contractors: Self-employed borrowers, including sole proprietors, partnerships and S-corporations, need a year-to-date profit and loss statement and two years of records, including the Form 1099s you used to report income and file taxes.
  • Real estate income. Document the rental income, address, lease and current market value of a rental property if you will use this income to qualify for a mortgage.

ASSETS

  • Bank statements: Copy 60 days’ worth of statements for every account whose assets you’re using to qualify for the mortgage. Include even blank pages of the statements.
  • Retirement and brokerage accounts: Two months of statements from IRAs, investment accounts (stocks and bonds), and CDs. The last quarterly statement from 401(k)s showing the vested balance. As with bank statements, include every page, even blank pages.

DEBTS

Monthly debt payments: Lenders examine your payment obligations to calculate your debt-to-income ratio. List all monthly debt payments, including student loans, auto loans, mortgage and credit cards. Include each creditor’s name and address and your account number, loan balance and minimum payment amount. If you have no credit history, utility bills may be used to help you qualify for a mortgage based on nontraditional sources of credit.

Real estate debt: If your current property is mortgaged, have your most recent statement — showing the loan number, monthly payment, loan balance and the lender’s name and address — and the declaration page of the insurance policy.

OTHER RECORDS

Rent: Renters need to show payments for the last 12 months and provide contact information for landlords for the last two years.

Divorce: Have your court divorce decree ready, if applicable, and any court orders for child support and alimony payments.

Bankruptcy and foreclosure: Ask your lender what documents they’ll need and how long you should wait after bankruptcy or foreclosure to re-enter the housing market.

Down payment gift letters: Lenders will want to talk about your down payment. You’ll need to show the sources of the money you plan to use. If your funds include gifts, you’ll need to get letters from your donors showing they don’t expect to be paid back. Gift letters aren’t required for preapproval but borrowers need to know to be prepared.

Whew. You’re done for now. Keep those files handy, though. You’ll need these documents again when applying for the loan.

For more information on home mortgages, contact Prime Lending at The McMullen Group.

nerdwallet.com


How to Choose the Best Home Mortgage

Joseph Coupal - Monday, January 29, 2018

Prime Lending, The McMullen Group, Boston, MAInventory debts, credit score, income and other bills to help you choose between a government or conventional, fixed- or adjustable-rate and conforming or non-conforming mortgage.

Buying a home is probably the largest purchase you’ll make in your lifetime. And choosing the right type of mortgage loan is one of the most important decisions you’ll make in the homebuying process. With so many different options out there, it can be hard to find an affordable home loan that meets your financial goals.

Start by asking yourself “How much house can I afford?” After taking inventory of your debts, credit score, income and other monthly bills, you can make an informed decision about the terms of your mortgage.

Here are three key loan decisions you’ll need to make.

  • Mortgage type: Government-backed or conventional
  • Interest rate: Fixed or adjustable
  • Loan size: Conforming or non-conforming

Mortgage type: Government-backed or conventional

There are two main types of mortgages: a conventional loan guaranteed by a private lender or banking institution, or a government-backed loan.

Most government-backed mortgages come in one of three forms:

FHA loans, insured by the Federal Housing Administration, were established to make homebuying more affordable, especially for first-time buyers, by allowing down payments as low as 3.5% of the purchase price.

VA loans are insured by the Department of Veterans Affairs and offer buyers low- or no down payment options and competitive mortgage rates. They’re available to current military service members and veterans only.

USDA loans are backed by the U.S. Department of Agriculture and are geared toward rural property buyers who meet income requirements. All three programs follow the limits for conforming loans and have low down payment requirements. More on that later.

Conventional home loans, on the other hand, are offered and backed by private entities such as banks, credit unions, private lenders or savings institutions. Borrowers need good credit to qualify. This is because the loans aren’t guaranteed by an outside source — so the possibility of borrower default poses a greater risk for lenders.

Conventional loans have terms of 10, 15, 20 or 30 years. They also require much larger down payments than government-backed loans. Borrowers are expected to put down at least 5%, but that amount can vary based on the lender and the borrower’s credit history.

If you don’t have a lot of cash saved up for a down payment but have solid credit and a stable income, a government-backed loan is likely the way to go.

If you don’t have a lot of cash saved up for a down payment but have solid credit and a stable income, a government-backed loan is likely the way to go. Keep in mind that if you choose a conventional or government-backed loan and you’re making less than a 20% down payment, you’ll have to pay for private mortgage insurance.

If you can afford to save up a large down payment and build your credit score while lowering your debt-to-income ratio, a conventional loan is a great choice that can eliminate some of the extra fees and higher interest rates that may come with a government-backed loan.

Interest rate: Fixed or adjustable

Once you’ve chosen your loan, you’ll decide whether you want a fixed or an adjustable rate. Your choice determines the interest you’ll be charged.

The interest rate on a fixed-rate loan never changes. If you’re settled in your career, have a growing family and are ready to set down some roots, a 15- or 30-year fixed-rate loan might be your best bet, because you’ll always know what your monthly mortgage payment will be. It’s worth noting, though, that if other fees are rolled into your monthly mortgage payment, such as annual property taxes or homeowner’s association dues, there may be some fluctuation over time.

Adjustable-rate mortgages, or ARMs, have interest rates that reset at specific intervals. They typically begin with lower interest rates than fixed-rate loans, sometimes called teaser rates. After the initial term ends, the interest rate — and your monthly payment — increases or decreases annually based on an index, plus a margin. They most often appeal to younger, more mobile buyers who plan to stay in their homes for just a few years or refinance when the teaser rate is about to end. Paying a lower interest rate in those initial years could save hundreds of dollars each month that could fund other investments.

Loan size: Conforming or non-conforming

The amount of money you borrow tells your lender a lot about your level of risk — and it has a big impact on your interest rate. For this reason, home loans fall into two main size categories: conforming and non-conforming.

Conforming loans meet the loan limit guidelines set by government-sponsored mortgage associations Fannie Mae and Freddie Mac. In 2018, conforming home loans for single-family homes in most of the continental U.S. are limited to $453,100. In designated high-cost areas, such as Hawaii and Alaska, the conforming loan limit for single-family homes goes up to $679,650.

Loans can be non-conforming for a few different reasons. Some, called jumbo loans, are for borrowers whose loan amounts are higher than the conforming loan limits in their areas. Jumbo loans are considered riskier and come with higher interest rates to protect lenders. You’ll need to make a larger down payment (at least 20%) and have pristine credit to qualify for one. Other types of non-conforming loans include those made to borrowers with poor credit, high debt or recent bankruptcies.

If you want to stay within conforming loan limits so you get a lower interest rate, you’ll need to tailor your home search to properties priced below the loan limit for your area. If you want a house that’s priced above your local limit, you can still qualify for a conforming loan if you have a big enough down payment to bring the loan amount down below the limit.

The bottom line

All of these options might seem overwhelming at first glance. But bear in mind that the type of loan you wind up getting will depend largely on your credit profile, income and overall financial goals. Before you start shopping for a home loan, take complete stock of your finances and try to boost your credit score as much as possible.

For more information on home mortgages, contact Prime Lending at The McMullen Group.

nerdwallet.com


What Determines the Total Cost of Your Mortgage

Joseph Coupal - Monday, January 22, 2018

Prime Lending, The McMullen Group, Boston, MCosts to secure financing are a big factor when it comes to getting a mortgage. And knowing why your loan costs a certain amount is critical to being able to understand how lenders price loans in the marketplace. People tend to think of interest rates when it comes to mortgages, but that’s not the only cost to consider.

Here’s what you need to know about the things that determine your mortgage fees.

Do I Really Have to Pay Mortgage Fees?

Remember, all loans come with fees and all fees are paid for by someone. You can have what seems like the perfect loan and there will still be fees, like closing costs. There are two situations where you might not have to pay all of the closing costs. The first way is for a seller to credit the closings cost when you purchase your home. The second is to select an interest rate that generates an overage, or credit, which is applied to your loan fees.

For the purpose of this discussion, we’ll focus on the factors that determine your interest rate and any points associated with that rate.

Two factors that determine your loan fees above anything else are your loan-to-value (LTV) and your credit score. Your loan-to-value (LTV) is the difference between the loan amount you are seeking and the value of your home. Your credit score is particularly important to how your loan is priced because it determines the risk associated with your loan.

The following things play out in terms of how your loan is priced:

High Loan-to-Value (LTV) Loans

Loan adjustments start at 65% LTV, in increments of 5%, all the way up to 95% LTV on conventional loans. For example, if you’re looking for a conventional mortgage and you have 20% equity in the home — 80% LTV — your loan will be priced worse than someone who has 30% equity and 70% LTV.

Your Credit Score

Your credit score is the barometer the lender uses to gauge your potential for default. The higher your credit score, the less likely you are to default, and the less risk the lender assumes by granting you that mortgage. When it comes to mortgages, credit scores generally break down like this:

  • 740+ — Excellent
  • 720-739 — Great
  • 700-719 — Good
  • 680-699 — Fair
  • 620-679 — Poor

Occupancy

If the property you are looking to purchase is a second home or a rental property, you might end up paying an additional pricing adjustment in the origination of your mortgage loan. Rental properties are especially known for this pricing adjustment. This change can influence an interest rate by as much as .375 compared to a primary home loan.

Property Type

If your property is a condominium and/or a multi-family property, you can generally expect to pay more. Specifically, this is because both types of properties contain more risk to both Fannie Mae and Freddie Mac than a single-family home.

Condominiums also have rules and regulations that single-family homes do not. A multi-family property, such as a duplex, is more risky because there is another unit involved and more potential liability compared to a single-family home.

Some General Guidelines

If you are looking for a mortgage with a high loan-to-value and a great credit score such as a 95% financing … then you can expect to be paying interest rate of .375 to .5 more than what you might see advertised online or in print.

If you are financing a triplex as either an owner or a non-owner-occupied transaction … then, if the property is a primary home, you can expect to pay about .5% in the form of a discount point based on the rate chosen.

If you will be renting your property out for investment purposes … then you can expect to pay as much as .5% more in the interest rate, with up to one discount point based on the rate chosen.

Final Thoughts

The moral of the story is that not all mortgage rates and pricing are created equal. If you are pricing out a loan with a lender and your scenario falls into any one or more of the intricacies outlined in this post, you can expect to pay more for the type of financing you are seeking.

For more information on home mortgages, contact Prime Lending at The McMullen Group.

credit.com


Four Ways to Buy a House, Even if You Have Bad Credit

Joseph Coupal - Tuesday, January 16, 2018

McMullen Group, Hanover, Boston, MAThings are looking better for our economy, but if you are like millions of Americans who suffered devastating losses in the Great Recession, you may still have rotten credit that's preventing you from buying the home you want. However, all is not lost!

Below is a guide through the actual problem you are facing, and a look at the top four ways to beat the system and buy your next house NOW.

It’s all about your credit score. That is a three digit number that a computer says represents the sum total of your life and determines whether you win or lost at the game of loan applications.

There are several significant ways around your credit score. But first, what IS your credit score?

Answer: It’s a three digit number that is produced by a company named FICO. It supposedly is a predictor of the likelihood that you will pay back money that you borrow today, and it is supposedly based only on five key factors of your credit history:

  1. Payment history
  2. Amounts Owed
  3. Length of Credit History
  4. New Credit
  5. Types of Credit Used

You can view your credit score on a daily basis for free on a daily basis at CreditKarma.com. They don’t even ask for a credit card, so you know they aren’t trying to scam you.

So, how do we still buy a house, even with a bad credit score?

FOUR WAYS TO BUY WITH ROTTEN CREDIT:

Owner Finance. Under this scenario, you are looking for a seller who is willing to allow you to buy their house with some amount of cash as a down payment, but instead of you obtaining a traditional loan and making payments to the bank, the seller “carries back” a mortgage on the house and you make monthly payments to the seller for principal plus interest. All the details are open to negotiation. You will need an attorney.

Rent To Own. Sometimes called a lease-purchase, the buyer is not quite ready to purchase, so he rents the house for a period of time and has the option of buying the house under certain terms and conditions at some point in the future. This has the advantage of allowing the buyer to “try out” the house for a year or two or three before making a final decision of whether or not to buy. Once again, you will need an attorney.

FHA Loan. The FHA loan program is widely used by first time home buyers. IT has various plusses and minuses, all of which you need to understand in advance, but the most important feature is that applicants are now required to have a minimum FICO score of only 580 to qualify for the low down payment advantage, which is currently at around 3.5 percent. If your credit score is below 580, however, you aren't necessarily excluded from FHA loan eligibility.

Increase Down Payment. If your credit score is below 580, you can still be considered for approval under the FHA loan program, but you must increase your down payment to at least 10 percent of the purchase price. That may seem like a lot, but the solution is to start saving today, and at the same time start working on improving your credit score. The sooner you start, the closer you will be to your goal of your next new home!

THE BOTTOM LINE: There are real and viable alternatives to needing perfect credit when you want to buy a home to live in. You need to understand the rules of credit scoring and the down payment requirements, but you still have options.

The good news is this: for most Americans, owning their own home is still likely to be the best investment they ever make.

For more information on home mortgages, contact Prime Lending at The McMullen Group.

fox5atlanta.com


Signs You’re Ready To Buy Your First Home

Joseph Coupal - Monday, January 08, 2018

Prime Lending, The McMullen Group, Boston, MARenting an apartment has its perks. You’re not responsible for maintenance and upkeep and you may have access to amenities like a swimming pool and/or fitness center. And while the apartment life is right for some people, it’s not necessarily the best long-term solution for everyone.

If you are an apartment dweller, but wondering if it might be time to move on to homeownership, here are 9 signs you’re ready to take the leap.

You’re Too Close for Comfort — If you’re tired of hearing your neighbors through the wall, or feel like they’re encroaching on your personal space, it may be time for a single-family home with a little space between you and the neighbors. When you buy a home, you get to choose just how close it is to the next-door neighbors — whether that’s 50 feet or 500 (or more)!

You’re Running Out of Room — Apartments are nice for singles, and even married couples with no kids, but by the time you start adding little ones to the family, the walls of your apartment may feel like they’re beginning to close in on you. If you’re planning on adding to the family, or even if you’d like to have space for out-of-town guests to stay (other than on the couch), purchasing a home can give you the space you need.

Things Are Breaking and Not Getting Fixed — If your kitchen sink backs up, or you’ve got an infestation of insects, the best you can do is contact your landlord and ask for help. But if you’re not getting a response, and things are beginning to fall apart in your apartment, with no help from your landlord, it’s time to get out from under that lease. While the responsibility falls on your shoulders when you own a home, that’s not necessarily a bad thing. You call the shots. So if you need to call in pest control, the plumber or repairman, you can, and you can schedule those repair at a time that works best for you.

You’re Tired of Building Equity For Your Landlord Every Month — Sure, renting may be easier and even cheaper in some aspects, as you’re not responsible for routine home maintenance and when something expensive goes out, like the AC, you’re not on the hook for the repairs. But when you rent, all that money you pay month after month, year after year, doesn’t get you anything except a place to stay for another month, and you’ll never see that cash again. When you buy a house, with each house payment, you’ll gradually build equity — money you could see again if you choose to sell down the road. By making a monthly home mortgage payment, you’re actually building your wealth, little by little.

Rent is On the Rise — You may have secured a great deal at the time you first signed your lease, but as every renter knows, when it comes to rent charges, nothing ever stays the same. Apartment complexes and even private landlords have the option to raise the rent based on market rates, or even their own whim, if they so desire. If you’re tired of the uncertainty, it’s time to buy a home and lock in an interest rate so you’ll know just how much you need to budget for housing from one month to the next.

You Could Use a Tax Break — Did you know homeowners qualify for certain tax perks? If you’re a first-time homebuyer, there may be a tax credit available, but every homeowner with a mortgage loan under $1 million is able to deduct any interest paid from their taxes. In the first few years, the majority of your monthly mortgage payment goes toward interest, so you’ll see a higher tax break in the beginning, when you’re trying to get your feet under you as a homeowner. If you purchase mortgage discount points when you close on your home, that money is also tax deductible.

You’re Ready to Invest in Personalizing Your Space — Feeling inspired from all the Fixer Upper you’ve been watching and ready to take on a decoration or renovation project of your own? Put the brakes on it if you’re living in a rental; your landlord will probably want to approve any changes first, even down to paint color. If you own your home, you have the freedom to make it what you want and let your personality shine through.

You Dream of Green Space — Just think how nice it would be to open the back door and tell the kids — or dogs — to go play outside. When you live in apartment, any outdoor space you’ve got access too is community property. But if you live in a home, you’ll likely have a yard and own your own little piece of earth. Put in a pool, build a garden, create an outdoor living space — however you want to use it, the choice is all yours.

You’re Planning for the Future — Buying a home is like making an investment in your future. Sure, you still have to make your monthly payments, but the more equity you build, the more financial freedom you have to purchase another home, buy investment properties, or put away for retirement. Owning a home gives you a measure of security for your future, something you can’t put a price tag on.

If you’re looking for a place to call your own and you’re ready to claim your part of the American Dream, contact PrimeLending at the McMullen Group today to speak with a mortgage expert in your area. Our experienced mortgage lenders will help you secure a mortgage loan to buy your dream home.

primelending.com


Renovation Financing for New Year's Resolutions for Your Home

Joseph Coupal - Tuesday, January 02, 2018

Prime Lending, The McMullen Group, Boston, MAWith renovation financing, homes that need a little TLC can get the attention they deserve.

PrimeLending and the McMullen Group can show you how renovation programs may be good options to finance a first, second or investment home, plus any needed improvements, all with one loan. Improvements can range from basic repairs to:

  • Update the kitchen or bathrooms
  • Install new carpet or flooring
  • Replace the roof, siding or windows
  • Upgrade the electrical, plumbing and/or heating systems

To bring out the best in the property of your choice, contact The McMullen Group today!


How to Choose the Best Mortgage

Joseph Coupal - Monday, December 18, 2017

McMullen Group, Hanover, MAInventory debts, credit score, income and other bills to help you choose between a government or conventional, fixed- or adjustable-rate and conforming or non-conforming mortgage.

Buying a home is probably the largest purchase you’ll make in your lifetime. And choosing the right type of mortgage loan is one of the most important decisions you’ll make in the homebuying process. With so many different options out there, it can be hard to find an affordable home loan that meets your financial goals.

Start by asking yourself “How much house can I afford?” After taking inventory of your debts, credit score, income and other monthly bills, you can make an informed decision about the terms of your mortgage.

Here are three key loan decisions you’ll need to make. Read more below.

  • Mortgage type: Government-backed or conventional
  • Interest rate: Fixed or adjustable
  • Loan size: Conforming or non-conforming

Mortgage type: Government-backed or conventional

There are two main types of mortgages: a conventional loan guaranteed by a private lender or banking institution, or a government-backed loan.

Most government-backed mortgages come in one of three forms:

  • FHA loans, insured by the Federal Housing Administration, were established to make homebuying more affordable, especially for first-time buyers, by allowing down payments as low as 3.5% of the purchase price.
  • VA loans are insured by the Department of Veterans Affairs and offer buyers low- or no down payment options and competitive mortgage rates. They’re available to current military service members and veterans only.
  • USDA loans are backed by the U.S. Department of Agriculture and are geared toward rural property buyers who meet income requirements.

All three programs follow the limits for conforming loans and have low down payment requirements. More on that later.

Conventional loans, on the other hand, are offered and backed by private entities such as banks, credit unions, private lenders or savings institutions. Borrowers need good credit to qualify. This is because the loans aren’t guaranteed by an outside source — so the possibility of borrower default poses a greater risk for lenders.

Conventional loans have terms of 10, 15, 20 or 30 years. They also require much larger down payments than government-backed loans. Borrowers are expected to put down at least 5%, but that amount can vary based on the lender and the borrower’s credit history.

If you don’t have a lot of cash saved up for a down payment but have solid credit and a stable income, a government-backed loan is likely the way to go.

If you don’t have a lot of cash saved up for a down payment but have solid credit and a stable income, a government-backed loan is likely the way to go. Keep in mind that if you choose a conventional or government-backed loan and you’re making less than a 20% down payment, you’ll have to pay for private mortgage insurance.

If you can afford to save up a large down payment and build your credit score while lowering your debt-to-income ratio, a conventional loan is a great choice that can eliminate some of the extra fees and higher interest rates that may come with a government-backed loan.

Interest rate: Fixed or adjustable

Once you’ve chosen your loan, you’ll decide whether you want a fixed or an adjustable rate. Your choice determines the interest you’ll be charged.

The interest rate on a fixed-rate loan never changes. If you’re settled in your career, have a growing family and are ready to set down some roots, a 15- or 30-year fixed-rate loan might be your best bet, because you’ll always know what your monthly mortgage payment will be. It’s worth noting, though, that if other fees are rolled into your monthly mortgage payment, such as annual property taxes or homeowner’s association dues, there may be some fluctuation over time.

Adjustable-rate mortgages, or ARMs, have interest rates that reset at specific intervals. They typically begin with lower interest rates than fixed-rate loans, sometimes called teaser rates. After the initial term ends, the interest rate — and your monthly payment — increases or decreases annually based on an index, plus a margin. They most often appeal to younger, more mobile buyers who plan to stay in their homes for just a few years or refinance when the teaser rate is about to end. Paying a lower interest rate in those initial years could save hundreds of dollars each month that could fund other investments.

Loan size: Conforming or non-conforming

The amount of money you borrow tells your lender a lot about your level of risk — and it has a big impact on your interest rate. For this reason, home loans fall into two main size categories: conforming and non-conforming.

Conforming loans meet the loan limit guidelines set by government-sponsored mortgage associations Fannie Mae and Freddie Mac. In 2016, conforming home loans for single-family homes in most of the continental U.S. are limited to $417,000. In designated high-cost areas, such as Hawaii and Alaska, the conforming loan limit for single-family homes goes up to $625,500.

Loans can be non-conforming for a few different reasons. Some, called jumbo loans, are for borrowers whose loan amounts are higher than the conforming loan limits in their areas. Jumbo loans are considered riskier and come with higher interest rates to protect lenders. You’ll need to make a larger down payment (at least 20%) and have pristine credit to qualify for one. Other types of non-conforming loans include those made to borrowers with poor credit, high debt or recent bankruptcies.

If you want to stay within conforming loan limits so you get a lower interest rate, you’ll need to tailor your home search to properties priced below the loan limit for your area. If you want a house that’s priced above your local limit, you can still qualify for a conforming loan if you have a big enough down payment to bring the loan amount down below the limit.

The bottom line

All of these options might seem overwhelming at first glance. But bear in mind that the type of loan you wind up getting will depend largely on your credit profile, income and overall financial goals. Before you start shopping for a home loan, take complete stock of your finances and try to boost your credit score as much as possible.

For more information on home mortgages, contact Prime Lending at The McMullen Group.

Nerdwallet


5 Ways To Pay Your Mortgage Every Month

Joseph Coupal - Monday, December 11, 2017

McMullen Group, Hanover, Boston, MAMortgage payment taking a bite out of your budget? Use these hacks to make it easier to pay each month, and speed up your loan repayment in the process.

Your mortgage is likely your largest monthly bill. But if you use the following five hacks, you can make that slice of the pie easier to fit into your budget. You can even save money on your loan and pay it off faster if you use your savings right! Here’s how.

1. Share your space

It’s the ultimate mortgage payoff hack: get someone else to pay the bill for you! It may sound crazy, but it’s possible if you’re willing to share your living space with others in exchange for rent. Roommates can help share other expenses too. Just be sure you’re prepared to be a live-in landlord. Make the process even easier: You can list an extra bedroom using Trulia’s free Room For Rent service!

Renting out space in your house not an option? Look to other “idling assets” you may be able to monetize. You can share (and charge for access to) things like bikes and cars.

2. Use a mortgage accelerator

Mortgage equity accelerators are a newer product on the U.S. market, although homeowners in Australia and the U.K. have used them for years. These products work by opening an account with a line of credit that you automatically deposit your paycheck in each month. You can pay all your bills and living expenses out of the account. At the end of the month, whatever is left in the account is applied to your mortgage payment. The idea is that you’ll spend less than you earn — and much less than the cost of your mortgage — so the “extra” cash is automatically applied straight to your loan. That helps you pay it off faster.

The downside is that you may need to pay a service or company to set up a mortgage accelerator for you. The additional cost of having a third party manage the account could outweigh the potential benefit. With smart budgeting and good spending discipline, you could reduce costs and apply the extra savings to your mortgage on your own.

3. Cut your living expenses

If you can hack some of the costs that come with owning a home, you can reduce your overall expenses and make it easier to pay your mortgage. This isn’t about depriving yourself or becoming a penny pincher. It’s about dropping or replacing expensive products and services with their less-expensive competitors.

You could say goodbye to your cable company and switch to streaming services. Netflix, Hulu, and Amazon Prime offer excellent programming and are a fraction of the cost of traditional cable. Even better, there are more savings to be had if you go in with friends or a sibling on a family plan — you might be able to trim the costs for your cell phone, streaming, and other services in half.

If you can’t cut the cord entirely, call your cable company and ask about different packages or service tiers that can help you save a few bucks each month. Another savings opportunity? Skip the expensive gym membership and use free alternatives such as streaming workouts online or lacing up your sneakers for a run.

Making swaps such as biking to work rather than driving or cooking at home instead of dining out can benefit your wallet and your waistline. Signing up for a grocery pick-up or delivery service can help you cut back on impulse buys — if you don’t set foot in the story, you won’t be tempted. Digital coupons, cash-back sites, and apps can make it easy to save on your necessities. It is possible to enjoy life more by spending less money!

4. Use your tax refund and other “bonus” money

Do you normally get a tax refund? Apply that money to your mortgage instead of spending it this year. Or look at your withholdings. You can adjust those to pay less in taxes throughout the year and keep more money in your paycheck. With this small salary boost, you’ll have more cash to pay on your mortgage every month.

You can use the same hack with cash from gifts, work bonuses, or any kind of windfall. Dedicate a portion of bonus money to your mortgage payment. And if the thought of using all this “extra” cash on something boring like a mortgage pains you, set aside a small amount — even just a dollar a day — for splurges and fun spending. Then use the rest to knock down the balance of your loan.

5. Put extra funds toward your loan’s principal

When you start using these hacks to pay your mortgage every month, you want to make the most of your savings. You can do that by using the money you save to pay down your home loan faster (as long as there’s no penalty for prepayment). Apply your extra funds in one of two ways. You can make an extra payment on your mortgage each month, or you can add the extra money onto your regular payment and pay more than what you owe each month.

Either strategy will help you pay your mortgage faster, which can save you tens of thousands of dollars in interest over the life of the loan. Just make sure any extra payment is applied to the loan’s principal and not just interest payments. To do so, you’ll need to be current on all your payments. Then call your loan servicer and ask if they have a process for putting extra payments toward the principal balance of your mortgage. Follow the steps they provide to make sure your money goes to the right part of your loan.

For more information on refinancing your home or paying off your mortgage, contact Prime Lending at The McMullen Group.

trulia.com


Guide To Refinancing Your Home

Joseph Coupal - Monday, December 04, 2017

McMullen Group, Hanover, Boston, MAAre you considering a home mortgage refinance? There are a number of reasons you may want to consider refinancing your home mortgage loan: from getting a lower rate to lowering your monthly payments to switching from an adjustable-rate mortgage to a fixed-rate mortgage. Perhaps you want to secure a shorter term or cash out equity from your home.

Whatever your reason for refinancing your mortgage, we know it can be an overwhelming process. That’s why we’ve put together this guide to refinancing your home mortgage. Follow these steps to reduce your stress and ensure a successful refinance.

Determine if Refinancing is Right for You — There can be many benefits to refinancing, but no two home mortgages, personal or financial situations are ever the same. Before you start the process, determine if refinancing is right for you. If your home has increased in value, you have a relatively new mortgage or interest rates are low, it’s probably a good time to consider refinancing your mortgage. Our online refinance calculator can be a helpful tool in assessing your options.

Gather Your Documentation — Refinancing requires the same paperwork you needed for your original mortgage. Update your files and obtain the latest copies of your pay stubs, tax returns from the past two to three years, credit report, statement of outstanding debts and statements of your assets. Review your credit report carefully and take steps to correct any errors. If you’re planning to refinance your mortgage, now is not the time to apply for new credit cards or make any major purchases as your lender may check your credit days before closing on the refinance.

Talk to a Lender — Start by talking to a mortgage lender you can trust, like PrimeLending, to determine your refinancing options. A professional will run several scenarios and help you weigh the pros and cons of refinancing. You can find one of our home loan experts in your community to get started.

Submit Your Application — If you have decided to proceed and submit your application, your lender will then review your credit, verify your income and schedule an appraisal of your home. The appraisal report is an important factor, but know you’ll be responsible for picking up the bill (usually $300 to $500). After your application and all necessary paperwork has been submitted, it’s normal to receive additional questions from the lender. PrimeLending uses instant notifications to keep borrowers in the loop throughout the process.

Close on Your New Loan — Once your application for refinance has been given the green light, you’re ready to set a closing. If you run into any potential problems, you’ll have three business days after signing the closing documents to cancel the refinance if necessary.

With rates remaining low, refinancing continues to be a smart option for many homeowners. Contact one of our home loan experts to see how we can help you make a smart refinancing decision.

For more information on how to refinance your home, contact Prime Lending at The McMullen Group.

primelending.com


7 Ways to Improve Your Credit for a Mortgage Application

Joseph Coupal - Monday, November 27, 2017

Prime Lending, The McMullen Group, Boston, MAIt’s more important than ever to prepare your credit for a mortgage application. Cleaning up your credit report and increasing your credit score will improve your chances of getting approved. If your credit’s already good, maintaining it will be key in locking in a low interest rate.

1. Check Your Credit Reports

When you make your application, the mortgage lender look for three main things: a steady income, a down payment, and a solid credit history.

Checking your credit report will let you see if there’s anything that’s hurting your credit. You never know which credit report the bank will pull, so check all three of them. You can get a free copy of all three credit reports at AnnualCreditReport.com.

2. Dispute Inaccurate Information

Misinformation can hurt your credit score and get your application denied . Get rid of any inaccurate information by disputing it with the credit bureau. If you have proof of the mistake, providing it will help ensure the mistake is removed from your report.

3. Pay Off Delinquent Accounts

Delinquent accounts include any late accounts, charge-offs, bills in collection, and judgments. Mortgage lenders need to be convinced that you’ll make your payments on time.

Outstanding delinquencies will kill your chances of getting a mortgage. Pay off all accounts that are currently delinquent before putting in a mortgage application.

4. Bury Delinquencies with Timely Payments

You need to establish a pattern of timely payments to get approved for a mortgage and get a competitive interest rate.

If you have a recent late payment - or you've just paid off some delinquencies - wait at least six months before applying for a mortgage. The older the delinquency, the better your credit looks.

5. Reduce Your Debt-to-Income Ratio

Your mortgage underwriter will question your ability to make your mortgage payments if you have a high level of debt relative to your income. Bring your monthly debt payments to at most 12% of your income – the lower, the better. (After you get a mortgage, your debt-to-income ratio will skyrocket, but shouldn't be higher than 43% of your income.)

6. Check Your FICO Score

Order your Equifax and TransUnion FICO Scores from myFICO.com to get an idea of where your credit stands. Your FICO score should be at least 720 to get good interest rate on a loan. If your score is lower than that, read through the included analysis to find out what’s bringing your score down. Note: Although lenders still use it, Experian no longer allows consumers to purchase a FICO score based Experian credit report data. If you want to get an idea of your Experian credit score, you can purchase a VantageScore or buy a three-in-one credit score from Equifax or TransUnion.

7. Don't Incur Any New Debt

Taking on new debt can make a mortgage lender suspicious of your financial stability – even if your debt level stays below 12% of your income. It’s best to stay away from any new credit-based transactions until after you’ve gotten your mortgage. That includes applying for credit cards, especially since credit inquiries affect your credit score.

For more information on home mortgages, contact Prime Lending at The McMullen Group.

thebalance.com


Signs It’s Time to Move To A New Home

Joseph Coupal - Monday, November 20, 2017

Prime Lending, The McMullen Group, Boston, MAMoving is a lot of work – there’s no doubt about it. But it can also give you a wide range of rewards, from lowering costs, to gaining space, to giving you the features you value most. If you’re considering a move into a new space, there are many factors to consider including budget and location. But how do you know if relocation is the best option for you? If you’ve been thinking about moving and just haven’t taken the first step, here are 12 signs it’s time for you to start a new house search.

Growing Family

If your home isn’t big enough to accommodate your growing brood, upgrading to a home with more bedrooms or square feet is logical. In addition to enough bedrooms, consider a new home with multiple living spaces that will allow you to spread out. If you feel like the walls are closing in on you, look for a home with an open floor plan — a smaller house that is open can feel as big as a home with more square footage.

Empty Nest

Much like a growing family, if your kids have moved out, why pay for all that extra space if you don’t need it? Take advantage of the market and trade in your family-sized home for something a bit smaller, perhaps with the upgraded features you always wanted but couldn’t afford during your child-rearing years.

Hot Market

It’s a seller’s market (for now), so if you’re looking to get more out of your house, particularly if you’ve made improvements to increase the value of your home, now’s the time to sell. Buyers can still win big, even in a seller’s market. According to U.S. News & World Report, buyers can get the right home for the right price if they are smart and ready to move quickly. That means getting prequalified, doing your research and finding a good agent.

No More Storage Space

If you’ve reorganized, cleaned out clutter, sold or donated clothes and household items you no longer use and still don’t have enough storage space, it may be a sign it’s time to look for a home with more storage options. But before you decide the storage options in your current home aren’t enough, be sure to check out these clever storage and organization tips from RealSimple.com. (Pinterest is also a great source for creative storage solutions!)

Return on Investment

Does your home need upgrades and improvements to turn into your dream home? Financial guru Dave Ramsey suggests that some of the best home improvements for return on investment include: a family room or bedroom addition, kitchen remodel and bathroom remodel. Smaller projects such as painting your front door, replacing hardware and light fixtures and updating dingy carpet can also help. But not all home renovations will add value to your home, so consider the finances before you start construction. It may be a better deal for you to sell your home without dropping the cash on major improvements and put the money toward a down payment on your dream home.

Cost Savings

If the struggle to pay your utility bills, home repair bills and a hefty mortgage keep you up at night, moving to a less expensive home in a more affordable community may be the answer to your sleepless nights. In every growing metropolis, there are outlying towns and cities rapidly building new homes with a budget-friendly price tag. If you’re truly looking to save money, be sure to take a look at property taxes in your potential new neighborhood as these can vary from city to city, and even a tiny difference can add a significant amount to your monthly mortgage.

Money Pit

Is it costing you more to maintain your home than it’s worth? It may be more affordable for you to make a move than to continue pouring your hard-earned cash into a money pit. If that’s the case, market your home as a great “investment property” and list to sell as-is.

Declining Neighborhood

A spike in crime or more police activity in your current neighborhood can be a clear indicator it’s time to pack the moving truck and head out. If you sense your neighborhood moving in the wrong direction, don’t wait to make a move, or you may also see the value of your home take a dive.

Out of Place

Over time, neighborhoods grow and change. If you’re feeling out of place where you live now, maybe it’s time for a move. Living in the city can have its perks, but perhaps you’re ready for a slower pace in a quieter neighborhood. On the flip side, if you live in the ‘burbs but are making the drive into the city frequently, there may not be much in the way of cost savings for you to continue living in suburbia.

Crazy Commute

Are you driving an hour or more to and from work each day? Take some time to weigh your options. Cutting your commute could save you big bucks in the way of gas and tolls and it could also mean more family time. There’s a point when it just doesn’t make sense to continue driving so far to work if living closer is a possibility.

Life Changes

Marriage, kids, aging parents — changes in the stages of life may require a move to a new home that’s more suitable for the season you’re in. If you’re getting serious in a relationship or are the primary caretaker for aging loved ones, combining households can save you time, stress and money.

A Fresh Start

Sometimes the best thing is simply a fresh start. If you’re coming out of a difficult period in your life, starting over may be just what your heart needs. If it makes sense financially, there’s no better time than the present to hit the reset button and start anew.

If it’s time for you to make a move, take the first step and contact a PrimeLending home loan expert at The McMullen Group to get prequalified for a home loan.

primelending.com


Homes For Heroes: Home Mortgage Program FAQs

Joseph Coupal - Monday, November 13, 2017

Prime Lending, The McMullen Group, Boston, MAWho qualifies as a hero?

Current and former firefighters, law enforcement, military (active, reserves and veterans), healthcare workers, emergency medical services and teachers.

What if I am already working with an agent or lender?

If you are currently represented by a real estate agent or mortgage lender, it is not our intent for you to break that agreement. If they are interested in learning more about our program, please feel free to have them contact us for more information on Homes for Heroes and the Hero Rewards we offer.

Do I need to use all Homes for Heroes affiliates to enjoy the savings?

No, you do not need to use all of the HOH affiliates, but it is required that you use a Homes for Heroes affiliated real estate agent in order to receive a Hero Reward check after closing. Most heroes do not want to miss out on any savings, so they choose to use as many of our local affiliates as possible to maximize their Hero Rewards.

What if I’m not ready to buy, sell or refinance?

Don’t worry. If you’re not ready, that’s OK. It’s still a good idea to speak to a real estate specialist if you’re simply thinking about it. They can provide some good insight on preparation and steps to take before you even begin the buying, selling or refinancing process.

For more information on the Homes for Heroes Rewards Programs, contact Prime Lending at the McMullen Group.

homesforheroes.com


All Heroes Deserve a Life After Service

Joseph Coupal - Monday, November 06, 2017

McMullen Group, Hanover, MAServing others is the most humble and noble career any of us can decide to take on. Many of us work in some form of service – but a select few serve with a level of sacrifice attached to it. These are our heroes. If you are reading this, you are likely one of these heroes or are closely related to one. For this, we cannot possibly thank you enough.

HEROES DEFINED

For us, heroes are those who sacrifice so much to give back through their chosen career, most notably a bigger and well-earned paycheck, in order to serve our families, communities and country every day. We recognize teachers, EMS, firefighters, law-enforcement, military, and healthcare professionals for all they have done to make our country better and keep us safe. Your service is appreciated so much more than what you are compensated for.

This is the idea behind Homes for Heroes. The least we can do for our heroes is provide the resources and services to help our heroes stretch their dollars. Also, considering that many in these professions are not physically able to work as long as others in less demanding fields, heroes deserve a life after service. This is why I work closely with many heroes- to make sure they are prepared financially when they need to be physically.

ENOUGH SACRIFICE

Even as our heroes love what they do to serve their fellow citizens and communities, even those with the biggest hearts know the time will come when they just can’t give any more. Our best and brightest who serve, know that they want to give 100 percent of themselves to their communities every day. But there is a chance that one day, you’ll realize that you just can’t give it all they have anymore. You will know it’s time to retire and move into a new chapter.

It is important to know ahead of time what that next chapter looks like. Those who fight for our freedom, our safety and our education are true heroes, and it is our job to help them make the most of your modest salaries and make a promising future for you and/or your families. While many in public service are given great workplace benefits, increasingly governments have come strained and are shifting responsibility to the individual. Now more than ever, working with a Financial Advisor to create a strategy to the next chapter is critical.

THE FINANCIAL HOMES FOR HEROES

After watching many of my own family members sacrifice so much, including a quality retirement, I consider it a true privilege to help our heroes prepare for success in the next chapter. From life insurance, retirement accounts and college-savings plans to overall financial strategizing, serving those of you who serve us is a great honor.

I am also here to present advice on managing money, sticking to a budget and being able to save and invest so you and your family can achieve your goals. Whether it’s carrying on an estate to loved ones left behind, or to enabling you to live the life you want when you retire from service, we on the Homes for Heroes team have the resources and expertise to serve you by providing the tools you need to live the life you need now and have the life you want later.

For more information on the Homes for Heroes Program, contact Prime Lending at The McMullen Group.

homesforheroes.com


Renovate Your House Into Your Ideal Home

Joseph Coupal - Monday, October 30, 2017

Is there a project in your house that you have always wanted to undertake? With the help of a professional contractor, and PrimeLending at the McMullen Group, now you can. Our renovation loan programs can help you renovate your home OR help you purchase a house that may need some work, but has great potential.

If you own a house but have always wanted an “open floor plan” or if you’d just like to make a few small improvements, PrimeLending can help make that a reality. By refinancing with PrimeLending, homeowners can get the funds they need to truly make a house, your home.

Or if you are looking for a new house, PrimeLending allows you roll the cost of the house, plus the cost of the improvements you would like to make, into a single loan, streamlining the process.

Imagine the possibilities for you and Imagine the possibilities and contact Brian McMullen today to learn what a renovation loan might look like for you.


How to Buy your First Home

Joseph Coupal - Monday, October 23, 2017

Millennials make up largest group of home buyers

Prime Lending, The McMullen Group, Boston, MAThe real estate market is soaring.

But Millennials shouldn't feel pressure to get in on the action, according to financial experts. They're the largest group of homebuyers in the market today.

Buying a home is one of the most -- if not the most -- significant purchases of your adult life. So, you'll want to make sure you're really ready.

Here are three steps that'll help you do that:

Sort your money out

First and foremost, get your finances in order before skipping off to find your dream home. This means understanding your total income and what it can buy.

While there are lots of online calculators out there to give you some quick numbers, approach with caution.

Calculators online can be deceiving in that they don't consider all expenses.

The general rule according to experts is to spend no more than 30 to 38% of your monthly (pre-tax) income on housing costs. This includes all costs involved in homeownership -- from monthly loan payments to insurance. But you may need to err on the conservative side if your expenses are high.

Next you'll need to figure out exactly how much you should have saved.

Sure, you'll need enough to afford a down payment on the house -- typically about 20% of the purchase price. In some cases you might be able to put down significantly less, though you'll probably be required to pay mortgage insurance as well.

But having a down payment isn't enough. You may also need savings to cover a couple months' worth of mortgage payments that the bank will expect to see, plus enough to cover home insurance and possibly mortgage insurance, and also closing costs -- between 2 to 5% of the purchase price -- before you get to the closing table. Plus, you want to make sure you have enough to buy furniture, still pay your monthly expenses, and cover emergencies, too.

While that sounds daunting, a little careful planning can get you there over time. Budgeting is a big part of the process, so allocate what money you'll need by setting up a savings account toward getting your future house.

So where do you find the savings?

If you're living paycheck to paycheck, it's time to get comfortable and take a close look at your budget to figure out where you can cut back. Financial planners recommend sitting down with a professional to look through your finances and form a game plan.

Save any extra income -- put aside bonuses or incentive payments you earn.

Shop around for your mortgage

Since a home is a pretty big purchase, you're probably going to need a loan. But there are a wide variety of mortgage options to choose from. Work with a professional mortgage provider before house shopping to go over the options and figure out what you qualify for.

It's probably a good idea to stick to the basics. The most common mortgage is a fixed interest rate mortgage over a number of years -- usually either 15 or 30. The main benefit of a fixed rate is consistency, meaning steady payments over the life of the loan. While 15 years of payments will save you money on interest and allow you to pay off your loan sooner, spreading the loan out over 30 years might make the monthly payments more affordable for you.

The mortgage qualification process is called pre-approval. If you get pre-approved for a mortgage of a certain amount, the lender will give you a letter that you can present to sellers to show you have access to the money for the home you're bidding on.

To move forward with the pre-approval process you're going to need good credit, at least some money to spare, and a steady job.

Keep in mind, mortgage lenders will require protection in case you default on paying your mortgage.

As a first-time buyer, you usually add insurance to your mortgage.

But a higher down payment could spare you the added expense of insurance. Most lenders will want a down payment of at least 20% to avoid paying for mortgage insurance.

Find a home

It's finally time to shop for your dream home. When looking at a house, put the time in to get familiar with the place. And know that while you're shopping around, just because you make an offer does not mean you're committed to buying that home.

Pay attention to the layout and structure of the house. Hire a good home inspector, and ask lots of questions about the property. These are your first line defenses against a bad buy, according to experts. Spending a little more money on help in finding the cracks can save you a lot down the road. Knowing the facts before signing a contract can also help you negotiate a lower price on the property or walk away from thousands of dollars in repairs.

If you find problems with your future house, let the seller know and ask for a discount. The last thing you want is a property with a lot of problems that you didn't anticipate.

Educate yourself on the real estate market and read and understand the terms of the contract. Use your head, not your heart.

For more information or to speak to a mortgage lender, contact Prime Lending at The McMullen Group.

ksat.com


Credit Scores: A Closer Look

Joseph Coupal - Monday, October 16, 2017

McMullen Group, Boston, MAAsk any given loan officer about big factors that go into getting a great interest rate on your mortgage, and you’ll hear that having good credit can help you out tremendously. That’s because borrowers with higher credit scores tend to have lower delinquency rates than borrowers with low credit scores. In other words, lenders consider it less risky to give loans to borrowers with good credit, which is why those borrowers are often eligible for lower interest rates and terms.

But what exactly does a credit score reflect? Here’s a breakdown.

What Goes Into Your Credit Score

Your credit score is also commonly called a FICO® score. It’s an analysis of all your credit files that together represent how credit-worthy you are. Your score is added up based on the following:

  • Payment history (do you pay your bills on time?) – 35% of your score
  • How much you owe (on each line of credit, and in total) – 30% of your score
  • Length of credit history – 15% of your score
  • New credit and inquiries (how often you apply for new credit) – 10% of your score
  • Types of lines of credit you have (credit cards, car loans, etc.) – 10% of your score

Most scores range from 300 to 850 or higher. The higher, the better, and having good credit habits and spending behaviors will help build and keep your score high.

Getting a Copy of Your Credit Report

It’s always a good idea to know what your credit score is, especially if you’re thinking about buying a house soon. You can get a free copy of your credit report once a year from a leading reporting agency like Experian, Equifax or TransUnion.

Once you receive a copy of your report, look it over for any errors. If you find anything incorrect or questionable, contact the credit bureau you received your report copy from. You’re allowed to add a 100-word written statement to your credit report if you want to dispute an error.

Ways to Improve Your Credit Score

Raising your credit score takes time and effort, but it’s worth it. To start, you can:

  • Pay all your bills on time
  • Reduce debt
  • Use credit cards wisely
  • Avoid spending more than you earn

You can also seek assistance from credit counselors, who are available through credit bureaus and local government agencies.

Keep in mind that while having good credit can be beneficial, you shouldn’t worry if you want to buy a house but have less-than-perfect credit – PrimeLending and The McMullen Group offers a wide variety of home loans for an array of financial situations. Get in touch with one of our home loan experts to learn about your options.

primelending.com


Refinance Your Mortgage To Reduce Debt

Joseph Coupal - Tuesday, October 10, 2017

The McMullen Group, Hanover, Boston, MAYou may have large outstanding debt on one or more credit cards. You may also be struggling to make any significant dent in paying the debt down; especially if you’re only making minimum payments. With interest rates making up a significant portion of each payment, it might take years to pay off the balance.

When you factor in that most credit cards have variable interest rates, your minimum payment amount increases as the rates climb. And with multiple credit cards – each with different due dates and their own minimum payment amounts – you may feel as if you’re drowning in debt. But there is a potential lifesaver; if you already have a mortgage, you can apply for a cash-out refinance loan and use the funds to consolidate and pay off high interest credit card debt, medical expenses or college tuition.

What is a cash-out refinance loan?

It’s when a homeowner secures a new loan to replace the current mortgage for more than the amount currently owed and keeps the difference between the old and new loans. The homeowner is then able to use the additional cash refinanced to help pay off any debt.

Why should I get one?

One of the many advantages to using a cash-out refinance loan to pay off your high interest debt is the lower interest rate this secured loan typically offers; it’s usually much lower than any of the high rates on your credit cards.

The average credit card rate is substantially higher than the average 30-year mortgage rate. In fact, the interest on credit card debt and even car loans could easily be double that of your mortgage rate. The reason? Credit card debt is considered riskier than mortgage debt so the credit card companies charge interest accordingly. As such, using a cash-out refinance loan can help you pay off your credit card debt much sooner, since less of your money is going toward interest payments.

By transferring debt from a financial vehicle that charges more to less, you can save a considerable amount of money. And if you consolidate the debt, you will see immediate monthly savings in your payments. You’ll also eliminate multiple bills; it can be very confusing paying several credit card and car loans which have different due dates during the month. If you consolidate, you will only need to pay one bill per month, your mortgage.

The other important advantages to using a cash-out refinance loan to pay off debt, include:

  • Access to money you already have to pay off big bills including college tuition, medical expenses, new business funding or home improvements
  • It’s usually available at a more attractive interest rate than found on unsecured personal loans, student loans or credit cards
  • The interest rate is more stable than the adjustable rate that comes with the other debt reduction instrument, a home equity line of credit (HELOC)
  • Increase your credit score because when you use the funds to pay off high-interest credit card debt, it not only eliminates the higher-interest monthly payments, but can have a positive impact on your credit score
  • The mortgage interest is tax deductible and the debt may be tax deductible as well

Cash-out refinancing and a home equity loan – what’s the difference?

Some people aren’t sure of the difference between cash-out refinancing and a home equity loan. Here are some of the major distinctions to look for:

  • A cash-out refinance is a replacement of your first mortgage, while a home equity loan is a separate loan on top of your first mortgage
  • The interest rate on a cash-out refinancing loan is usually, but not always, lower than the interest rate on a home equity loan
  • You may pay closing costs when you refinance your mortgage, while you don’t typically pay closing costs with a home equity loan

The Bottom Line

It’s important to note that while a cash-out refinance loan can reduce your high interest debt, it’s not a panacea. It is a great solution to provide immediate debt relief, but the best practice is to take steps, such as save more or reduce discretionary expenses so that you don’t end up with an unmanageable amount of high interest debt. If this sounds like a solution you might be interested in, start by talking with an experienced mortgage professional or loan officer to find out what your best loan options are for reducing high interest debt.

primelending.com


Ready for a Kitchen Remodel?

Joseph Coupal - Monday, October 02, 2017

Start your fall off with a renovation loan from PrimeLending.

With a renovation loan, you can purchase or refinance a home and roll the cost of a kitchen remodel into your mortgage.

  • Add an island, upgrade your cabinetry or countertops and more
  • The loan covers the mortgage plus the kitchen remodel costs in one monthly mortgage payment
  • Improvement costs are spread throughout the term of the loan
  • Refinancing now could enable you to take advantage of lower interest rates

Why not enjoy the holidays in a beautiful new kitchen? Contact Brian McMullen today to learn how you can turn a property into your perfect home.

Prime Lending


Refinancing to End PMI

Joseph Coupal - Monday, September 25, 2017

McMullen Group, Prime Lending, Hanover, Boston, MAFor many home buyers, private mortgage insurance is a necessary evil. If you don’t have 20% in cash to put down on a home, you’ll often be left with little choice other than PMI.

But that doesn’t mean you’re stuck with the payments.

If you’ve built up some equity in your home, you may be able to refinance your loan and end those PMI payments. But is it a good idea?

Are you already eligible for a PMI cancellation?

Before you consider refinancing, determine if you’re eligible—or nearly eligible—for an automatic PMI cancellation.

PMI drops off automatically once the loan-to-value ratio reaches 78% based on the value of the property at the time the policy was instituted.

If your equity is nearing the cutoff, it may make more sense to wait until your lender automatically cancels your PMI payments rather than pay closing costs to refinance your loan. However, if you have a government-backed loan, things may be different. Many Federal Housing Administration loans now carry mortgage insurance for the life of the loan.

The only way to get rid of FHA insurance is to refinance into a conventional loan.

The equity and appreciation combo

If you haven’t made enough payments to reach the automatic cancellation point, you may still be able to get out of PMI without refinancing.

If the value of your home has increased since you took out your loan, your lender may be willing to factor that in and cancel your PMI automatically. Many lenders will allow borrowers to drop PMI once the value has reached the 80% level through a combination of appreciation and amortization.

If you know the value of your home has increased, or you’re close to reaching the equity point through payments, you’ll need to order an appraisal to give to your lender, which will cost $300 to $450.

If you aren’t sure if the value of your home has increased and don’t want to spend the cost of a full appraisal upfront, start with an automated valuation model.

This is a computerized estimate of the home’s value. It is not a substitute for an appraisal, but it can give some advance notice of what the property may appraise for.

But, really—should you refinance?

If you’re not eligible for an automatic cancellation, refinancing will get you out of PMI, but you still need to make sure the cost is worth it.

There will always be charges for title and escrow, appraisal, underwriting, document preparation, and other third-party costs and fees.

To determine if refinancing is the better option, you’ll have to determine if the amount you’d save by ending PMI payments earlier is greater than the costs associated with refinancing.

A quick way of getting an approximate idea of those numbers is to divide the cost of the loan (title, escrow, etc.) by the monthly reduction in payment.

Finding a good deal

If you do want to refinance, make sure you get the best deal by finding the lender with the best fees, rather than the lender with the best interest rate that day.

There is very little difference in rates from one lender to the next. The consumer should get an itemized listing of costs and fees before making a decision on what lender to use. They should also be aware that rates change from one day to the next.

You also want to find a lender who is willing to go the extra mile for you.

Just as the selection of a Realtor is important in a buyer’s success, the same can be said about mortgage lender. Any borrower should look for a mortgage officer who returns calls, emails and texts promptly, answers questions fully and in plain language, and is highly knowledgeable about different loan programs to meet their client’s needs.

For more information on how cash-out refinancing can help you, contact PrimeLending home loan expert at the McMullen Group today.

realtor.com


Cash-out Refinance: How it Can Help

Joseph Coupal - Monday, September 18, 2017

McMullen Group, Prime Lending, Hanover, Boston, MAHas your home gone up in value? You may want to take advantage of cash-out home refinancing–a program that lets you turn a portion of your home’s equity into money that you can use however you want.

It doesn’t take a sonnet to show you that your possibilities are endless with a cash-out refinance. You could use your home equity to:

  1. Pay off high-interest credit card debt
  2. Make home improvements
  3. Take that dream vacation
  4. Pay for education instead of student loans
  5. Start a business
  6. Invest in high interest savings
  7. Start an emergency fund/save for a rainy day

For more information on how cash-out refinancing can help you, contact PrimeLending home loan expert at the McMullen Group today.


Thinking Of Buying A Home?

Joseph Coupal - Tuesday, September 12, 2017

Prime Lending, The McMullen Group, Hanover, Boston, MAFirst-time home-buyers nationwide are deciding whether to rent or own. The perceived challenges to becoming a first-time homebuyer seem scary. Many avoid taking the step from renting to owning out of fear of the unknown. But buying a home is affordable in the right market, and with the right loan. First-timers can even explore rent-to-own homes (with the help of a real estate lawyer) or purchasing a small, "starter home" and later selling to upsize.

Renters' dilemmas, on the other hand, all boil down to one question: "Can I save money and achieve a better quality of life by owning a home instead of renting?"

To find the answer, we must first understand every relevant factor in the home-buying process. Gathering the facts is the first and foremost important step toward making an informed decision about home ownership, financial responsibility and real security.

The largest considerations in the rent or buy decision-making process are:

• Home affordability

• Down payments

• Mortgage rates and details

• Loans

How To Calculate How Much Home You Can Afford

To understand if you can afford to buy, start by figuring out what you can pay per month. Financial professionals will tell you a home can safely cost between two and four times your annual salary.

This doesn’t consider your existing net worth, but over-investing in first-time home ownership isn’t recommended either. You can always buy more house later, but it’s impossible to undo a mortgage loan.

The idea here is to avoid overextending yourself and living “house poor.” Remember these seven essential factors when deciding how much home you can afford:

1. Take-home pay after taxes

2. All other debt and monthly payments (credit cards, auto and student loans, etc.)

3. Foreseeable expenses you’ll incur in coming years (new computer, car repairs, etc.)

4. Cushion funds for potential emergency (job loss, injury, death in family, etc.)

5. Future uses for home and space requirements (retirement, children, home office, etc.)

6. Down payment funds available (and whether you should buy or wait)

7. Expected mortgage cost via a mortgage calculator

For more information on how to purchase mortgage loans, contact Prime Lending at The McMullen Group.

Forbes


What You Should Do Before You Apply for a Mortgage

Joseph Coupal - Tuesday, September 05, 2017

McMullen Group, Hanover, Boston, MAIt’s more important than ever to prepare your credit for a mortgage application. Cleaning up your credit report and increasing your credit score will improve your chances of getting approved. If your credit’s already good, maintaining it will be key in locking in a low interest rate.

1. Check Your Credit Reports

When you make your application, the mortgage lender look for three main things: a steady income, a down payment, and a solid credit history.

Checking your credit report will let you see if there’s anything that’s hurting your credit. You never know which credit report the bank will pull, so check all three of them. You can get a free copy of all three credit reports at AnnualCreditReport.com.

2. Dispute Inaccurate Information

Misinformation can hurt your credit score and get your application denied . Get rid of any inaccurate information by disputing it with the credit bureau. If you have proof of the mistake, providing it will help ensure the mistake is removed from your report.

3. Pay Off Delinquent Accounts

Delinquent accounts include any late accounts, charge-offs, bills in collection, and judgments. Mortgage lenders need to be convinced that you’ll make your payments on time.

Outstanding delinquencies will kill your chances of getting a mortgage. Pay off all accounts that are currently delinquent before putting in a mortgage application.

4. Bury Delinquencies with Timely Payments

You need to establish a pattern of timely payments to get approved for a mortgage and get a competitive interest rate.

If you have a recent late payment - or you've just paid off some delinquencies - wait at least six months before applying for a mortgage. The older the delinquency, the better your credit looks.

5. Reduce Your Debt-to-Income Ratio

Your mortgage underwriter will question your ability to make your mortgage payments if you have a high level of debt relative to your income. Bring your monthly debt payments to at most 12% of your income – the lower, the better. (After you get a mortgage, your debt-to-income ratio will skyrocket, but shouldn't be higher than 43% of your income.)

6. Check Your FICO Score

Order your Equifax and TransUnion FICO Scores from myFICO.com to get an idea of where your credit stands. Your FICO score should be at least 720 to get good interest rate on a loan. If your score is lower than that, read through the included analysis to find out what’s bringing your score down. Note: Although lenders still use it, Experian no longer allows consumers to purchase a FICO score based Experian credit report data. If you want to get an idea of your Experian credit score, you can purchase a VantageScore or buy a three-in-one credit score from Equifax or TransUnion.

7. Don't Incur Any New Debt

Taking on new debt can make a mortgage lender suspicious of your financial stability – even if your debt level stays below 12% of your income. It’s best to stay away from any new credit-based transactions until after you’ve gotten your mortgage. That includes applying for credit cards, especially since credit inquiries affect your credit score.

Start the process by contacting a PrimeLending/ home loan expert at the McMullen Group today.

thebalance.com


The VA Home Renovation Loan Can Turn A Fixer-Upper Into A Dream Home

Joseph Coupal - Monday, August 28, 2017

Prime Lending, McMullen Group, Hanover, Boston, MAYou’re ready for more space, better appliances or an open-concept living area. But with the high prices of today’s housing market, buying a move-in ready home may not be an affordable option. In a limited inventory housing market, your best solution may be renovation, whether buying a home with potential and fixing it up right away, or upgrading a home you already own. Sound like an overwhelming project? Don’t worry, our VA Renovation Loan will help make the process easier.

If you are an eligible veteran, the VA Renovation Loan provides you all the benefits included with a traditional VA loan, such as zero down payment and lower closing costs, plus the ability to roll your renovation costs into the very same loan. It is one loan with one application and one monthly payment – and that could save you money when compared to taking a second loan to pay for the renovations.

Here’s what you need to know to apply for the VA Renovation loan:

  • For Veterans Only – while it may seem like stating the obvious, only homes owned, occupied or purchased by veterans are eligible for this type of loan. Pay Off Your Loan in 30 Years – a VA Renovation loan can be financed over 30 years, which translates into a lower monthly payment.
  • You Can Get a VA Renovation Loan at the Same Time as Your Original Mortgage Loan – the two loans are bundled together so if you’re buying a fixer-upper home that needs immediate repairs or upgrades you have the funds to do so at the time of purchase.
  • A VA Renovation Loan is a Better Deal than a Supplemental Loan – Because the loan is rolled into your mortgage, it is one loan with one rate and one payment, instead of paying for a second loan which could be charged at a higher rate; therefore a VA Renovation loan can save you money.
  • Immediately Take Care Of Pressing Problems with your Property – This loan can also help you make repairs and upgrades to a home you already own. It’s used to address electrical, plumbing, structural issues, updating kitchens and bathrooms, changing flooring, painting and making your home more energy efficient. It cannot be used for things like putting in a pool, building a patio or adding more rooms.
  • You Can Use Up to 25% of your VA Renovation Loan to Improve/Replace Non-Fixtures – one of the benefits of the loan is you can purchase things like appliances, furnaces or hot water tanks as long as they relate to the original purpose of the loan; that means that you can use the loan to buy a stove if you’re remodeling your kitchen but not if you’re only remodeling your bathroom.
  • Allowable Repairs – the repairs you can make include:
  • Roof (repair or replacement)
  • Paint (interior, exterior and lead paint removal)
  • Kitchen (appliances, cabinets and total overhaul)
  • Electrical (repair, replace, recondition and total system)
  • Plumbing (repair, replace, recondition and total system)
  • HVAC (repair or replace)
  • Flooring, subflooring (tile, carpet and wood)
  • Foundation repair
  • Energy-efficiency upgrades

A VA Renovation Loan is a great home loan option if you’re an eligible veteran and have repairs you need or want to make when you’re buying a house. Because you can roll the repair cost into the original loan, you have a lot more options in terms of the type of home you can consider buying. It’s also a great refinance option, if you want to take advantage of lower interest rates and need funds for repairs. With all these options to consider, start the process by contacting a PrimeLending/ home loan expert at the McMullen Group today.

blog.primelending.com


Cash-Out Refinance And Other Ways To Manage The Costs Of Home Renovations

Joseph Coupal - Monday, August 21, 2017

5 Tips To Help You Afford To Remodel Your House

Remodeling a house can truly transform its entire look and feel for the better, but upgrades aren’t always cheap. If you’ve been considering a home renovation, here are some things to consider and tips to help you save.

McMullen Group, Prime Lending, Boston, Hanover, MAResearch

Planning before you start the remodeling process can help save you a lot of time and money. No matter what kind of renovations you have in mind, do plenty of research on the estimated costs, time frame and supplies that your upgrades will require.

You should also determine whether or not you’ll want to hire a contractor. While a contractor may seem pricier than a do-it-yourself project, consider your experience and skill level – if you make a mistake, it could end up costing more to fix than if you’d originally hired a contractor.

Keep in mind that not all home improvement projects are equal, profitability-wise. Certain upgrades, like revamping the kitchen or adding a deck, are likely to pay off more than others in the long run. If you are planning to sell your home in the near future, you may want to avoid projects that don’t add to your home’s resale value.

Budget

Create a budget for your remodeling goals and stick to it. This should begin with you reviewing your current financial situation in order to see where you stand and what you can truly afford.

Once you have your budget figured out, don’t plan to spend every cent on upgrades — at least 20 percent of your budget should be set aside for unexpected expenses. Once remodeling begins, surprises can arise, and you’ll want to have money put away to help cover any unexpected expenses. If you find your home needs more work than your current budget allows, consider a cash-out refinancing as an option. Cash-out refinancing lets you turn a portion of your home’s equity into money you can use however you want, including to remodel your home. A PrimeLending home loan expert explain the process and help you determine whether refinancing makes sense for you.

Shop Around

You don’t have to limit yourself to just one or two home improvement stores when you’re remodeling – there are plenty of places where you can find good deals on supplies. Browse online at sites like Freecycle.org for materials, or visit a Habitat for Humanity ReStore, which resells home improvement and home décor products at prices much lower than retail stores. You can also go to building supply auctions.

To find bargains on appliances, keep an eye out for holiday sales (Realtor.com has some great tips on when the best times are to buy appliances). Sites like Groupon often have coupons and promo codes for appliances that can be used both in-store and online. If you’re OK with buying gently-used appliances, see if there are any used appliance stores near you or check out sites like Craigslist. Some big-name retailers, like Best Buy, also offer open-box, pre-owned and refurbished appliances at discounted prices.

Buy Ready-to-Assemble Cabinets

Cabinets aren’t cheap to install, especially if they’re custom. On average, the cost to install kitchen and bathroom cabinets is about $4,561, according to HomeAdvisor.com. However, ready-to-assemble cabinets are often much less expensive, and come in many different design styles to choose from. You can find these at most home improvement store. Alternatively, you can buy unfinished oak cabinets and paint them on your own.

Consider Making Smaller Changes Instead

If the time isn’t right for big changes, why not tackle smaller projects. Sometimes a room just needs a fresh coat of paint or updated lighting to look new again. Rather than a floor-to-ceiling renovation, decide if some superficial décor changes could make your home more livable and loveable. For example, if you’re planning on remodeling your bathroom, consider how it would look with some added shelving, a different paint color or new cabinet knobs. In the kitchen, updated appliances, new barstools and new ceiling lighting can help provide a modern-looking transformation.

What are you waiting for? Whether you have a lot to spend, or just a little, with careful planning and smart spending, you can make changes to your home that won’t break the bank.

For more information contact Prime Lending, The McMullen Group.

blog.primelending.com


House Hunting, What To Watch Out For

Joseph Coupal - Monday, August 14, 2017

McMullen Group, Prime Lending, Hanover, Boston, MAYou found a home. You’re ready to make an offer. But what’s that strange gnawing feeling that you can’t shake? Pay attention! It could be that your own five senses are warning you that this house just doesn’t make sense.

Most homeowners listing their home for sale are eager for quick offers and speedy closings. Their rush to find a buyer can sometimes lead them to cut corners on home repairs, or worse, attempt to disguise any issues that could hinder the sale of their home. While a professional home inspection of the property that you’re seriously considering will help identify any unforeseen issues, you can also do some subtle inspections yourself during the house hunting phase that can help you narrow down your choices.

How can you spot major red flags when considering the purchase of a home? Just let your five senses lead the way.

LOOK — Your eyes do not deceive you! Nothing is clearer than what is visible to the naked eye. Sure, a professional exterminator can spot evidence of termite damage and depressed structural issues that might not be easily visible to you, but there are some red flags that simply can’t be hidden out of plain sight. So look for:

  • Cracks: Cracks in walls and ceilings can be indicative of foundation and structural issues. Some homeowners attempt to cover cracks with caulk and fresh paint, but if you look close enough, you can usually spot a difference in wall texture and/or paint tint.
  • Water Damage: Water damage is also hard to cover up. If you notice areas of discoloration or mismatched paint color on a ceiling, chances are it’s evidence of water damage, which can lead to major structural issues. Check baseboards too, especially around bathroom, shower and sink areas, for any discoloration, rotting or molding of wood due to too much moisture.
  • Fence with Large Gaps: A fence is meant to provide privacy. So if you can see through it — beyond the typical ¼ inch gap between wood planks — you might be dealing with termite or rodent damage.
  • Too Many For Sale Signs: Is there a mass exodus occurring in your future neighborhood? If you notice tons of for sale signs, investigate the cause for mass turnover by talking with existing neighbors and/or representatives from the homeowners’ association. Check city-zoning permits to see if any major area changes are in the works, like building a new industrial park or transit system.

SMELL — One smart sellers’ trick is to entice buyers with a welcoming scent, like freshly baked cookies or fragrant floral arrangements. But what else do you smell?

  • Musty Air: If you notice the air thickens with a musty or mildew type smell, there may be mold or rotting wood nearby. Pay special attention to musty smells around kitchens, bathrooms, laundry rooms and any other areas with plumbing.
  • Wet Dog: If the house is home to any pets, you might be greeted with a wet-dog or litter-box smell. Be diligent as you explore the property and try to pinpoint the source of the stench. Is it just from a recent hose down of man’s best friend that left behind an added aroma in the bathroom? Or is there evidence of potty training marked deep into an area of the carpet? If the odor is deeply rooted into carpets or hardwoods, you could have an expensive treatment and/or re-flooring project in your near future.
  • Harsh Chemicals or Gas: Let’s face it … there aren’t many good reasons to ever experience strong odors of bleach, natural gas or harsh chemicals. So if your sense of smell is heightened by odors you might describe as “sterile,” “rotten eggs” or “unusual,’’ ask your realtor for an explanation and report any concerns to the city as appropriate.

TASTE — Taste the home? What? This may sound strange, but your sense of taste goes hand-in-hand with your sense of smell to send pleasant and unpleasant signals to your brain. So while you’re taking in the smells mentioned above, you may also notice a sour, bad or unusual taste when coming into contact with mildew, harsh chemicals, gas and moisture:

  • Mildew — Along with a musty smell, unseen mold and mildew can incite a sour taste in your mouth.
  • Harsh Chemicals or Gas — Harsh chemicals can breathe a heaviness on your tongue.
  • Moisture — Humidity changes might awaken your salivary glands.

FEEL — Of course, you want to end up in a home that makes you feel great! But have you taken notice of how a home and property literally feel underfoot and even on your skin? Take note of:

  • Uneven Surfaces: If you sense a tilt to the house as you walk or notice uneven surfaces underfoot, make sure you ask about any previous water damage, flooding or foundation issues in the home. Those are expensive problems to inherit, so do your homework and ensure repairs and upkeep have been maintained.
  • Temperature Changes: During a home tour, do you notice any significant shifts in temperature or humidity as you travel from room-to-room? Sometimes a previous renovation or addition to a home can be “felt” by a change in temperature due to inadequate air circulation that doesn’t account for the new living space. Also, humidity can be a sign of plumbing and/or mold issues.
  • Air Pressure: While noting the efficiency of vents and fans scattered throughout the house is a good idea, you should also take notice of the atmosphere adding any extra pressure to your head. For example, hidden mold within walls and flooring can induce a headache or significant sinus pressure.
HEAR — Noises heard inside and outside of the home can be deal breakers for homebuyers. For example, a beautifully, well-crafted home can become immediately off-putting when it backs up to a noisy thoroughfare of city traffic. And an annoyingly noticeable and consistent water drip can send a buyer running, as plumbing fixes are not cheap. Listen for:
  • Leaky faucets: It’s okay for you to test out each faucet and water fixture, and it’s encouraged! Make sure the water pressure is good and that each faucet easily turns on, as well as securely turns off.
  • Running toilets: While you’re testing the water faucets, also test the bathroom facilities. Flush each toilet in the house to ensure there is a strong suction of drainage. Also, make sure that the toilets don’t continue running for a long period of time.
  • House Pests: As we mentioned in our “Did You Hear That?” blog, different house pests make different noises. If you think you hear a horse trotting in the attic, it’s likely that raccoons have taken up residency. If you notice any rolling, thumping, trotting or scurrying either up above or within the walls, you can expect to acquire some critters with your home purchase.
  • Moaning: Older homes sometimes come with original appliances and furnaces. If you hear moaning as the heat kicks on, make sure to ask about the age of HVAC systems. You’ll also want to check that all systems (HVAC, plumbing, electrical, etc.) are up to code.
  • Whistling: If you hear whistling and feel a bit of a draft, chances are the window seals and/or doorframes need repairing or replacing. Make sure you check the condition and energy efficiency of all windows and doorways.

Buying a home is exciting! It can be made better even by tapping into your five senses to figure out if a home is right for you.

When your five senses do let you know that a home makes perfect sense, be sure to call a PrimeLending loan expert at The McMullen Group to find out which mortgage home loans make sense for your financial future.

Prime Lending


4 Common Types of Mortgage Loans

Joseph Coupal - Tuesday, August 08, 2017

McMullen Group, Prime Lending, Hanover, Boston, MABuying a home is a big and exciting purchase. For many people, it’s the biggest purchase they’ll make in their lifetime. Of course most people finance a home over a long period of time using a mortgage. But even if you get a home loan, you’ll have to come to the table with the money to cover the down payment and associated closing costs. Just how much money you’ll need at closing depends on the type of loan you are using to finance the purchase. For example, here’s a quick breakdown of the requirements and advantages of four common types of mortgage loans. Remember, there is a wide range of options in each of these categories that a PrimeLending home loan expert can walk you through.

Conventional Home Loan

A conventional home loan is a mortgage that is not insured, or guaranteed, by the federal government. They’re popular with borrowers who have good credit, a stable job and income, who can afford a down payment and people who are financially stable overall. Conventional loans generally offer much more flexible terms and fewer restrictions than government-backed loans, and do not require mortgage insurance if you put at least 20 percent down on a purchase, which makes them more affordable home loans. Conventional loan rates are also often quite low, since the borrower is known to be financially stable with good credit.

FHA Home Loan

If you’re working with limited income or money for a down payment, a government-insured Federal Housing Administration (FHA) home loan could be the right solution for you. FHA home mortgage loans offer a low 3.5 percent down payment, flexible income and credit requirements and low closing costs. These are popular loans for first-time homebuyers.

USDA Home Loan

The USDA loan, or USDA Rural Development Guaranteed Housing Loan Program, is another type of government-backed loan. Originally designed to provide a mortgage alternative to rural property buyers who had limited financing options, the USDA home loan is becoming a viable mortgage option for people who want to live away from cities and enjoy country living. But even if you live in a suburb, you may find you can qualify for some USDA programs. The USDA loan requires no down payment, has low interest rates that aren’t tied to credit score or down payment, and offers flexible credit guidelines.

VA Home Loan

A VA home loan is a great benefit to military personnel during and after their service. VA home loans are partly guaranteed (typically a quarter of loan value) by the U.S. Department of Veterans Affairs and offer advantages such as no down payment, higher loan value, no private mortgage insurance, a limit on closing costs and other benefits.

Although you’ll want to start saving long before you ever apply for a loan, understanding the types of mortgage loans can help you determine approximately how much you’ll need to save up.

If you’re in the market for a new home, start your journey to homeownership with The McMullen Group. Contact one of our mortgage lenders today to get details on your loan options and start the application process.

blog.primelending.com


Is It Smart To Buy A Home With Less Than 20% Down Payment?

Joseph Coupal - Monday, July 31, 2017

McMullen Group, Prime Lending, Hanover, Boston, MAHere are some items to consider before taking on one of the new, low-down-payment loans on the market.

There’s a reason most people don’t purchase a home on a whim. From appraisals and inspections to closing costs and down payments, the upfront cash required can take years to save. However, thanks to low-down-payment loans now on the market, homeowners can have keys in hand to that home for sale with significantly less cash out the door. But is purchasing a house with little to no money down a good financial move?

If you’re weighing your down payment options before diving into a home purchase, here are a few things to consider.

What are the types of no- or low-down-payment loans?

There are several no- or low-down-payment loan options available for a wide array of financial situations. We’ll highlight just a handful.

VA loans: Reserved for active-duty and honorably discharged service members, reserves, National Guard members with at least six years of service, and spouses of service members killed in the line of duty, VA loans require 0% down and no private mortgage insurance.

USDA loans: Also known as the “rural housing loan,” this 0%-down loan is meant to help low- to moderate-income households in eligible areas that are in need of housing but may be unable to qualify for other loans.

FHA loans: With more lenient approval requirements than conventional loans, FHA loans also require as little as 3.5% down. However, mortgage insurance premiums will have to be paid for the life of the loan.

Conventional loans: It’s possible to get a conventional loan with as little as 3% down, but just as with FHA loans, there’s an additional requirement of private mortgage insurance (PMI). However, once you reach 20% equity in the home, this additional cost can be dropped.

What are some of the reasons to put less than 20% down on a home?

You don’t have the cash upfront

Many people struggle to come up with a 20% down payment, but that doesn’t mean they can’t handle the monthly mortgage costs. For example, you may have recently paid off your student loans, leaving you free of debt but also leaving you without enough savings to afford a lump-sum payment at the beginning of your home-buying journey.

You aren’t planning on staying in the home for the long run

It’s a gamble to purchase a home you plan to sell within a shorter time frame (say, three to five years), but if that’s the plan, the cost of a 20% down payment could wash out the savings of a lower monthly payment. Plus, this practice puts your potential profit from the sale of the home at risk, since you’ll need time to build equity (and hope real estate prices rise).

You need the liquid funds

Whether you prefer a larger emergency fund, plan to invest liquid assets elsewhere, or need cash to put toward a home remodel, you may want to protect your liquidity by minimizing the amount of your down payment. It’s all about your personal comfort level when it comes to your finances.

What are the upsides to making a smaller down payment?

1. Your money might be more useful elsewhere

There’s a chance the money could offer a bigger savings or return if used elsewhere. For instance, if you have $20,000 in credit card debt at an interest rate of 16% and a minimum monthly payment of 2% of the balance, you would be paying $400 per month (plus interest). Now let’s say you want to buy a $200,000 house at 3.92%. A down payment of $40,000 would put your mortgage payment at $756.50 (plus the additional $400+ per month for the credit card). However, if you cut the down payment in half (to redirect the funds to pay down the credit card) and increase your home-loan interest rate to 4.02%, your total monthly mortgage payment would be $861.42. In this case, the greater monthly savings comes from paying off the card.

2. You can keep your cash liquid

Unless you plan to move out, pulling equity out as cash requires refinancing — a potentially costly endeavor. A lower down payment can keep more of your cash liquid in case life circumstances require a cash expenditure in the near future. Without this cushion, you could potentially put your home (and living situation) in jeopardy.

What are some downsides to a smaller down payment?

1. You may have to pay PMI or mortgage insurance premiums (MIP)

To mitigate the additional risk of lending to a borrower with a small down payment, lenders usually require private mortgage insurance for conventional loans until the homeowner has at least 20% equity in the home. All FHA loans require homeowners to pay mortgage insurance premiums for the life of the loan.

2. You’re likely to have a higher interest rate and closing costs

The best interest rates don’t automatically go to the borrowers with the best credit score — the size of the down payment makes a difference as well. This higher rate translates into higher monthly payments and more money spent over the life of the loan. In addition, since closing costs are a percentage of the total loan amount, borrowing more means higher costs.

3. You will have less equity upfront

The less money you put down, the less equity you will have once the home officially becomes yours. This could mean you can’t take advantage of home equity loans or lines of credit if your home needs repairs for which you can’t afford to pay cash. It could also increase your chances of being underwater in your home (owing more than what the home is worth) should the market crash.

So, what’s the bottom line?

Conventional wisdom might say 20% is always the way to go, but more options and different financial circumstances put this to the test. Make sure to fully explore the loan options available to you before deciding on the down payment amount that suits you and your situation best.

For more information on low down payment mortgages, contact Prime Lending and The McMullen Group.

trulia.com


A Renovation Loan Might Be the Key to Affording Your Dream Home

Joseph Coupal - Tuesday, July 25, 2017

Prime Lending, McMullen Group, Boston, Hanover, MAConsidering the current high prices of the housing market, buying a move-in ready home may not be the affordable option. Renovating a fixer-upper may be your best solution.

Whether it’s changes to a current home or updating a newly bought fixer-upper, more people are finding their dream homes through renovation.

Going with renovation lets you buy a larger or better located fixer-upper than you could afford as a move-in ready home; it boosts resale value for a smarter long-term investment; you can invest in upgrades that will pay -off over time, such as energy-efficiency. But the most important benefit is it helps you better enjoy the space you’re in because it suits you better.

Listen to yourself

“What’s important to you in your ideal home?”. Are you talking about improving your living situation, or are we talking about making more money when you sell?

What’s “cool” in housing trends changes so frequently that “if you’re going to live in the house for at least five years after the remodel, don’t worry about the [resale] value you’re adding. In cases like this, think about cost rather than value.

Stick with professionals

Unfortunately, a successful renovation isn’t as easy as it looks on home improvement shows. There are few things in life as complicated and traumatic as home remodeling. There’s plastic over everything. You can’t find anything in its normal place.

Seeking professionals to handle your work — as opposed to doing it yourself — can save your sanity. Before hiring your team, consider the following:

  • Calculate the cost of your dream changes ahead of time
  • Pick what you can afford (with some cushion money set aside for the unforeseeable)
  • Select professionals with a proven history (more than a year is ideal).

Looking at reports of “cost versus value” will be invaluable in calculating the cost of each additions and upgrades depending on your location, as well as the resale value it could add.

Renovating a kitchen, updating bathrooms or adding additional square footage are the kind of projects that offer the biggest impact in both adding value and improving quality of life.” says Brad McMullen, vice president of renovation lending at PrimeLending.

Weigh your financial options

Having so much to plan and pay for can be daunting, but it doesn’t have to be. Connecting with a professional renovation lender can help you set a budget and start your renovation project off on the right foot.

Know your financial options — how much can you borrow and what will your renovated home appraise for? — and speak to a pro as soon as possible. There are many options for renovation loans available. We base your loan amount on the cost of planned repairs. If you’re knocking down the wall between the dining room and kitchen, that’s one loan. But if it’s a load-bearing wall, that’s another.

Spanning from $500 for a broken water heater to a $2 million home addition, PrimeLending offers a rainbow of renovation loan options in Boston, MA and in all 50 states. Options for if your credit isn’t great, if you’re a military veteran or if you want to roll your renovation costs into your mortgage for a single payment. These options simplify your finances and save you money — along with the invaluable expertise that will guide you through remodeling’s many “surprises” and across the finish line.

For more information on renovation loans, contact Prime Lending and The McMullen Group.

modernwellnessguide.com


Renovating Your Home: How Much Will it Cost?

Joseph Coupal - Monday, July 17, 2017

Prime Lending, McMullen Group, Boston, Hanover, MAThe market is tight. Many homeowners who would be in the market are staying put and considering renovating instead of buying a new home. Start your project off on the right financial foot — with a little planning and the right team, you'll keep your budget in the black.

So you want to calculate the price tag on a house rehab, but you have no construction background. How do you go about it?

Understandably, this is a common scenario that holds many people back from flipping houses. It’s also one of the most common questions people ask.

Home renovation costs involve more than just what you pay your contractor, so ensure you consider them all by dividing them into five categories:

  • Costs of a rehab team
  • Costs of purchase
  • Costs of rehab
  • Costs of ownership
  • Costs of selling
  • Costs of a rehab team

Build your rehab team before you start a project. This gives you time to thoroughly screen each of your team members. The last thing you need is to hire the wrong home inspector or contractor because you were closing on a deal and crunched for time.

You want qualified people who understand your needs and investing as a business. If you’re wondering what your team should look like, here are the main players:

  • Attorney
  • Lenders
  • Real estate agent
  • Insurance agent
  • Contractor(s)
  • Home inspector

Ask others. It’s a good way to find solid, trustworthy team members, and most investors will be glad to recommend who they use.

The only possible exception to this is contractors. Good contractors can be hard to come by, and a real estate investor may not be willing to compete with you for their contractor’s time. So, you may be on your own.

If you find yourself in that situation, ask employees at your local lumberyard or hardware store for recommendations. You can also search sites like Craigslist or Angie’s List, but you’ll want to personally vet whomever you choose.

Once you assemble your team members, use their help to get more accurate rehab numbers. It could also be beneficial to enroll in a program for learning the ins and outs of real estate investment, like Success Path.

Costs of purchase

The biggest chunk of this category is probably the money you’ll pay to close on the property. But also included here is any expense you might have incurred while hiring your team members.

There are some other hidden costs here that you might not have thought of, such as flood certificates or various government fees. But in general, your main expenses will likely include the following:

  • Purchase price
  • Home inspection
  • Home appraisal
  • Surveys
  • Lender fees (your bank’s closing costs, appraisal fees, origination costs, etc.)
  • Attorney fees
  • Costs of rehab

This includes contractor fees, permits, and any work done on the house. It can be difficult to get an accurate number for this category, but there are a few things you can do to get close.

First, pay your contractor to do the walkthrough with you. Get their advice on things that need to be fixed or changed, and get a quote from them.

Or, find a home inspector with construction experience, then ask questions and listen to their input as they inspect the house.

Costs of ownership

These expenses happen while you are in possession of the home:

  • Mortgage payments
  • Property taxes
  • Property insurance, including flood insurance, if necessary
  • Utilities
  • Yard upkeep
  • Costs of selling

It might seem like this category should be all profit. That may be true if you do the job right, but it’s still important to budget for the costs that come with selling a house, like the following:

  • Selling price
  • Real estate commission
  • Home warranty
  • Radon and lead tests, termite inspection, and other tests buyers sometimes request
  • Staging
  • Attorney fees

For more information on home renovation loans, contact Prime Lending and the McMullen Group.

zillow.com


Confusing Mortgage Terms Explained - Boston, Hanover, MA

Joseph Coupal - Monday, July 10, 2017

McMullen Group, Prime Lending, Boston, Hanover, MAYou’ve found your dream home, which means it’s time to start the mortgage process. If you find yourself overwhelmed and confused from the start, don’t worry because you’re not alone. Getting a mortgage can be a complicated process, made worse by all the unfamiliar terminology your mortgage lender might use. For many it can seem like a foreign language, creating many different questions. Here, we’ll help you understand some of the mortgage terms that you’ll encounter.

Private Mortgage Insurance (PMI)

If you use a down payment of less than 20%, it is likely that you will be required to pay private mortgage insurance. This is used as a way to offer protection to your lender if you fail to make your monthly mortgage payments and default on the loan. If your mortgage comes with private mortgage insurance, then you should be able to have it removed once the loan-to-value ratio (see below) reaches a certain level.

Loan-to-Value (LTV)

This is a ratio that divides the amount of money you are borrowing for the home by the total value of the property. The larger your down payment, the lower your loan-to-value ratio will be. When originating a mortgage or refinancing, lower loan-to-value ratios usually mean more favorable interest rates.

Adjustable-Rate Mortgage (ARM)

An adjustable-rate mortgage is a mortgage product that will have a fixed rate for a certain period of time, typically three, five, seven, or 10 years. This rate is usually lower than the rate you can receive on a fixed-rate mortgage. However, once the fixed period is over, the rate can be adjusted up or down, depending on current interest rates.

Fixed-Rate Mortgage

A fixed-rate mortgage of one of the more popular products for home buyers. This product will take any uncertainty out of your loan. The rate will stay the same until you either pay off the loan or refinance. The downside of fixed-rate mortgages is that they tend to come with higher interest rates than adjustable-rate mortgages. Plus, you will not be able to take advantage of interest-rate declines. It will, however, offer you protection against rising interest rates.

Jumbo Loan

A jumbo loan is a mortgage that is for an amount greater than the conforming loan limits laid out by Fannie Mae and Freddie Mac. In most areas of the U.S., this is anything above $417,000. In some higher-cost areas of the country, it’s $625,000. Many lenders will require a larger down payment with a jumbo loan. Plus, they tend to want borrowers with a credit score above 700. (You can view your own credit score for free on Credit.com.)

FHA Loan

FHA loans allow borrowers to purchase a home with a lower down payment than a conventional loan. These loans are insured by the Federal Housing Administration, which is part of the Department of Housing and Urban Development. With an FHA loan, there is more flexibility with credit score requirements, however, they typically always require mortgage insurance to be paid.

Annual Percentage Rate (APR)

The annual percentage rate is the cost of your mortgage over the year. This is something that the federal Truth in Lending Act requires all lenders to provide potential borrowers. This percentage includes different costs that you will have when taking out the loan, so it will be higher than what is stated for the interest rate.

Discount Points

The purpose of discount points is to help reduce the interest rate on your mortgage. The more points you purchase, the lower your interest rate will be. Points typically cost 1% of the loan amount. That means if you are purchasing a $300,000 home, one point would cost $3,000.

Good Faith Estimate (GFE)

Within three days after you submit a home loan application to the lender, they are required to provide you with a good faith estimate. This will detail exactly what the closing costs would be on your loan.

Servicer

The servicer is the one that sends mortgage statements, collects loan payments and distributes payment for things like insurance and property taxes. While you might receive your loan from one company, they might not be the ones servicing the loan.

Principal, Interest, Taxes and Insurance (PITI)

When you hear the term PITI, this refers to your total monthly payment which includes principal, interest, real estate taxes and hazard insurance.

Underwriting

After you submit your application for a home loan, it will go to the underwriting department. This is who is going to assess your application and make the decision on whether or not to approve your loan. They will consider your credit score, assets, employment and other factors.

Origination Fees

These are fees charged by the lender to cover their processing costs, loan document preparation, as well as administration costs. Most lenders will charge an origination fee as a percent of the total loan value.

Rate Lock

As you consider different lenders and negotiate terms, the rates can fluctuate based on market conditions. Once you choose a lender and agree with their terms, you will want to lock in your rate. This will keep it set at a certain amount until your loan closes, usually 60 days.

Escrow

Part of your monthly mortgage payment is used to pay for real estate taxes and insurance. This money is typically placed into an escrow account and then distributed on a set schedule.

HUD-1 Settlement Statement

This statement will be provided to borrowers at closing and will detail the different costs involved with purchasing your home.

For more information on home mortgages in Boston, MA, contact mortgage loan officers in Boston, MA at Prime Lending and The McMullen Group.

credit.com


Buying A Second Home: 5 Things To Know

Joseph Coupal - Monday, July 03, 2017

McMullen Group, Prime Lending, Hanover, Boston, MAMany people dream of having a second home. Wouldn’t it be great to have a place to escape to on the weekends or for vacations – your own private oasis?

But there are certain things you need to be aware of before you take the plunge and take out a mortgage on a second home. Since a lender is taking on more risk when providing financing for a second home, they may be a little less flexible in providing a second home loan than they were with your first one. In addition, there are a number of potential speedbumps that you should avoid along with opportunities that you might not have considered.

Here are 5 things you should take into account when buying a second home:

Buy Property that’s Geographically Desirable

First, you should know that a lender will need to determine if your second home is a “reasonable distance” from your primary residence. What’s a reasonable distance, you might ask? Essentially they’re confirming that you are in fact buying a second home and not an investment property.

It’s also important that the home you choose as your second home be one that you’ll definitely use, in an area that you enjoy visiting but not so far away so that you’ll never use it. A vacation home isn’t much of a bargain if it’s in the boondocks, no matter how great a deal it is.

You also need to consider how easy it is to get to the property and the availability of amenities, including quality health care and services. Hiking into the wilderness or having to fly in by bush plane may make a great adventure, but doesn’t make for easy access.

And take into consideration the type of lifestyle you’re looking for. A condo at a resort can offer access to many activities but it may not be your cup of tea. While a cabin in the woods or on a lake may offer solitude but, could also require too much of your time spent on maintenance.

Consider Buying a Fixer-Upper

Everyone has their own vision of a dream vacation home. Buying an existing one may be someone else’s dream home but a far cry from your own. But there is a solution. Consider buying a less-than-perfect property and fixing it up to make it your version of Better Homes and Gardens. If you use a home improvement/renovation loan which can be rolled into the mortgage, you can update the home to your satisfaction and have the pride in knowing it’s upgraded to suit your specific tastes and needs.

The one thing to remember – as with any home purchase – is to have it professionally inspected so you’ll know exactly what you’re getting into in terms of cost and how much time it will take to have it fixed. You should also check out local zoning and homeowner’s association rules as they may limit what you can and cannot do to alter the appearance of a home.

Have Your Second Home and Rent It Too

Some people combine their use of a second home as a vacation getaway with an occasional lease or rental. This way you can make money while you’re not there and save money by not spending on lodging during vacation time. But be aware that the IRS considers a vacation or second home an investment property if you use it for less than 14 days a year or 10% of the time it is occupied, whichever is less. What that means to you is you can deduct many of the overhead costs, including mortgage interest and maintenance. If you only rent it out part of the year, you can still deduct some costs but on a pro-rated basis.

Make a List of Possible Expenses

Calculate all the expenses you’re likely to incur in owning a home. Can you fit them into your budget without breaking the bank or leaving you without much leeway? While it’s great to build equity in a second home, if you’re really tight on cash every month, it’s probably not worth it. You’re likely better holding off on the second home until you’ve paid off the first one.

Some of the expenses you need to factor in are:

  • Property taxes – these vary state to state
  • Utilities – sure they’ll be lower because you’re not there all the time, but it’s still an expense
  • Upkeep – your house like your car will eventually need repairs and regular maintenance such as landscaping and painting. You need to periodically check the roof and if you live in a cold climate area – the pipes which can freeze

Know Your Financing Options

Most people are unaware that there is a difference between financing a second home and getting a loan for an investment property. Lenders tend to charge a higher interest rate and require a larger down payment for an investment property than they do for a second home.

Here’s a closer look at what you can expect in terms of a down payment for a second home vs. an investment property:

  • The down payment on a second home can be as low as 10% with a conventional loan
  • An investment property can require a down payment that varies between 15 and 25% depending on the number of units
  • Lenders view second homes as vacation homes and expect borrowers to live there at least some time during the year. If the property is rented out continually or offered as a timeshare, it is considered and investment property.

PrimeLending and The McMullen Group has a number of second home loan options that open up more possibilities to a number of financial situations. Our flexible options cover borrowers:

  • With less than perfect credit
  • Previous home ownership events
  • Looking for lakefront or luxury second homes
  • Seeking a loan with less restrictions
  • Living in the U.S. or foreign nationals

By factoring in the 5 tips we’ve listed, you’re much more aware of what to look out for and what kinds of questions to ask when you’re seeking a loan for your second home. It will make the process run smoother, help you avoid any less than pleasant surprises and let you concentrate on finding the perfect second home to enjoy. Learn more about second home loan options by contacting a McMullen Group loan officer today.

By Jack Honig - Prime Lending


Mistakes to Avoid When Buying a Home

Joseph Coupal - Monday, June 26, 2017

The McMullen Group, Prime Lending, Boston, Hanover, MAPurchasing a new home is one of the biggest life milestones you’ll encounter. It could be a wise investment. But there are also costly mistakes that can be made in the process. Following are some common pitfalls people experience when obtaining mortgages. It’s important to understand each before taking the plunge into home ownership.

Contributing Little to No Down Payment

It may seem appealing at first. But making a down payment of less than 20% of the home’s value will require you to take out a private mortgage insurance (PMI) loan in addition to your mortgage. That means higher monthly payments and possibly higher interest rates. In the unfortunate situation where your home value decreases while you still own it, you could end up owing more than your home is actually worth. These “underwater” mortgage situations can result in extreme difficulty to resell your home.

Not Thinking Through Mortgage Type

Many people assume the standard 30-year fixed-rate home mortgage is the only way to go. This could be a huge mistake. While longer terms may result in lower payments, you’ll pay considerably more in interest over the lifetime of the loan.

Do some research on the exact financial implications behind a 15-year and 30-year loan for your particular mortgage. Also, analyze the difference between a fixed-rate mortgage or adjustable-rate mortgage (ARM).

If you can’t afford the monthly payments of a 15-year mortgage, consider getting a 30-year loan that allows prepayments. That way, you can pay more than you need to each month. You could even make an extra payment at the end of the year. Trust me—it will make a huge difference in interest and in the lifetime of your loan.

If you don’t plan on being in your home for long, an ARM could be the best choice in order to lock in low interest rates for a few years. If you foresee yourself in your home for the long term, it’s probably best to obtain a fixed-rate mortgage. That way, it won’t change with our country’s fluctuating interest rates.

Not Getting Pre-approved Before You Start House Shopping

It’s important to have all your ducks in a row before you get your heart set on a particular home. The pre-approval process may seem time and labor intensive, but you’ll thank yourself later when your credit score, employment, financial health and tax returns are already deemed credit worthy by a lender. The major advantage to getting pre-approved for a loan is that you’ll know exactly how much home you can afford. It will also make you look more appealing as a buyer if you’re bidding against others for a home. The seller will know you can put your money where your mouth is.

Buying More House Than You Can Afford

Sure, it’s tempting to look at homes beyond your price range. It’s fun to dream, right? The more you look, however, the more you may be feel compelled to actually get a mortgage that’s outside your budget. Ask yourself whether it’s worth feeling financially strapped in order to buy a home you can’t afford. Some financial experts recommend spending no more than 25% to 30% of your gross monthly income on housing. Remember, that includes both property taxes and insurance. (For more, see: Mortgage Basics: The Amortization Schedule.)

Instead of just taking that broad guideline into account, however, analyze your own financial situation. What other monthly bills do you have? Once you add them all up, including the cost of prepping your old home for sale and setting up your new one, 25% to 30% of your income may still be too much to spend. Buying less home than you can afford instead of overspending will give you a layer of protection in case of emergencies and also allow you to build up savings.

Not Shopping Around for a Mortgage

You may be surprised that there is a wide range of options out there when it comes to mortgages in Boston. Different lenders use different assessments when analyzing your financial situation. Depending on where you go, you may be offered significantly different interest rates. That’s why it’s important not to settle for the first one you come across.

You should definitely check with your own bank, as they may give you a discount on the interest rate since you’re a customer. But it’s important to also shop around at other banks, as well as credit unions and independent mortgage brokers. The latter option will offer you a wide range of different loans and can be helpful if you have less than stellar credit record. Mortgage brokers can also give you more individualized attention than a bank may provide.

Not Researching Your Credit Score

You may not realize what kind of an impact your credit score has on the interest rate lenders will offer you. If you fail to find yours out, you may be in for an unpleasant surprise why trying to obtain a mortgage for a reasonable rate.

On the other hand, if you find out your score is low you can spend time raising it back up before going through the time-consuming home buying process. Credit scores can be boosted by fixing errors in your credit record, paying bills on time and reducing your overall debt-to-income ratio.

Check out the following example:

If you were borrowing $200,000 via a 30-year fixed-rate mortgage, and you had a top credit score in the 760 to 850 range, you might get an interest rate of 3.3%, with a monthly payment of $880 and total interest paid over the 30 years of $116,717. If your score was 630, your rate would be 4.9%, with a monthly payment of $1,064, and total interest of $183,174. That’s $184 more per month — $2,208 per year — and a whopping $66,457 more in interest.

The Bottom Line

The home buying process isn’t something that should be taken lightly. Obtaining a mortgage is a big deal that requires a lot of patience, research and diligence on your part in order to secure the best fit for your particular situation. By avoiding the above pitfalls, you’ll be in a much better position to make an educated choice on your home purchase.

For more information on home mortgages in Boston, MA, contact a Prime Lending loan officer at The McMullen Group.

Investopedia


Down Payments and Closing Costs: Having A Hard Time Finding the Money?

Joseph Coupal - Monday, June 19, 2017

McMullen Group, Prime Lending, Boston, Hanover, MAHome Ownership Programs Can Help

Coming up with the cash for a down payment and/or closing costs on a house may seem challenging, or even impossible, to some homebuyers, but it doesn’t have to be. There are a number of home loan programs to help reduce the amount of cash you pay at closing. But for many buyers and even real-estate agents, the programs are off-the-radar, and they don’t know how simple applying can be.

That was the finding of RealtyTrac, an Irvine, California-based real-estate research firm and Down Payment Resource, an Atlanta-based company that aggregates programs for real-estate agents and buyers. Interestingly, the 2016 report also revealed that buyers using available down-payment assistance programs could save an average of $5,965 on the down payment of a medium-sized home.

Down Payment Averages Falling

And while the traditional rule of thumb and benchmark for a down payment is 20% of the home’s price according to MortgageCalculator.org, estimates from the Home Buying Institute suggest that the average down payment is actually around 10%. Last summer’s Ellie Mae Origination Insight Report agrees, finding average home purchase down payments are shrinking as more first-time homebuyers enter the market and as mortgage guidelines ease nationwide. Ellie Mae also notes that down payments for government-backed loan programs are even lower: FHA, for example averages 4%, while VA loans averages 2%.

There are a number of programs that can help you make your down payment affordable, many with low- and no-down payment options; and some connected to government-backed loan programs.

  • NeighborhoodEdge® Closing Cost Assistance – Exclusively offered by PrimeLending, this program offers up to $1,500 in closing cost assistance for qualified homebuyers in all 50 states; the property must be located in a low-to-moderate census tract area.
  • Conventional 97 – available through Fannie Mae, this program requires a 3% down payment and is available for the purchase of single unit primary residence properties. It’s best suited for buyers with excellent credit or average credit. At least one borrower must be a first-time homebuyer.
  • HomeReady™ – this Fannie Mae-backed program allows for a 3% down payment and offers discounts on mortgage rates and private mortgage insurance; it’s targeted at multi-generation households where multiple people contribute to the family income and can be anyone with an income below the average for the area.
  • Home Possible® – a Freddie Mac mortgage option; it allows a down payment of only 3%.
  • FHA Loan Program – allows for down payments of just 3.5% and can be used for primary residences with 1-4 units; a big advantage is that FHA mortgage rates tend to beat conventional rates.
  • VA Loan Guaranty – this program is available to veteran or active duty military borrowers; there is no down payment requirement and no mortgage insurance charge, regardless how little you choose to put down.
  • USDA Home Loan – is available to buyers in less dense parts of the country, including rural areas and many U.S. suburbs as well; it allows for 100% financing and offers reduced mortgage insurance costs as compared to other low- and no-down payment loans.
  • 203K Renovation Loan – a great solution if your first home is a fixer-upper; if your purchase requires repairs, there’s a low minimum down payment requirement of only 3.5% and the loan covers the value of the property plus the repair costs.

We’ve only listed some of the many options available here. Before you give up on your dream of owning a home because you think the cash required at closing is insurmountable, speak to a PrimeLending McMullen Group loan officer. They can assess your individual case and determine which of the many programs available is suitable for your specific needs.

Contact us to today to get a better sense of what is possible and find an advocate that can help guide you every step of the way through the option chosen.

Prime Lending - By Jack Honig


Home Mortgage Offers: Read The Small Print

Joseph Coupal - Monday, June 12, 2017

McMullen Group, Prime Lending, Hanover, Boston, MAYou’ve seen many examples online, on TV, in print or in your mailbox of offers that seem to be too good to be true because they are so alluring – and they usually are too good to be true. They come from all kinds of companies, including those pushing credit cards, mobile phone service, TV cable and satellite companies – and mortgage companies in Boston, MA.

The one thing they all tend to have in common is fine print at the bottom of the page or screen listing all kinds of details, terms and conditions. They’re the little footnotes that “explain or clarify the deal”. The purpose of the fine print is to give you the unvarnished truth behind the boastful marketing claims made about a product or service. But as most people know, these disclaimers can run for pages, with wording so obscure and ambiguous as to be almost incomprehensible. And you’ll probably need a magnifying glass to read them.

Do You Really Read the Fine Print?

While the law requires these disclosures to be “clear and conspicuous” – which means that the important terms of the deal can’t be hidden in a tiny font, the reality is most people simply do not read the fine print. 

Finding the Fine Print in the Mortgage Industry

In the mortgage industry, where you are dealing with potentially the largest investment you’ll ever make, it’s especially important to do your due diligence and read the fine print and conditions.

Here are some of the mortgage offers that aren’t really as good as they might appear:

No Closing Costs

One of the offers some lenders push are no closing costs. Well, you’ve probably heard there’s no such thing as a free lunch. While closing costs can differ depending on how and where you borrow your money, there are always costs associated with it, and someone – a nice euphemism for you – is going to pay those costs.

It’s important to understand exactly what the lender is referring to when they say no closing costs. If you scratch the surface of the this offer, you’ll likely see that while you may not have to pay some of the elements of the closing costs such as title search, title insurance or attorney fees but you are responsible for paying the borrower fees, for instance.

Ask your lender what you’re responsible for paying along with a good faith estimate of what you’ll have to pay at closing time.

Closing Cost Guarantee

Then there are the lender offers that propose a set time closing cost guarantee. Of course, if you examine the offer closer, you’ll see a disclaimer with verbiage to the effect of “10 days from the time the loan goes to title” or “10 days after appraisal and credit package are approved.”

Low-Fixed Rates

When you see this in print, your natural knee jerk response is that the interest rate will remain low over the life the loan. Surprise! Some lenders advertise “low-fixed rate” mortgages that are really adjustable-rate mortgages (ARMs); the low fixed rate actually applies to just the initial term (5 or 7 years) before the rate adjusts – upward.

Government-Backed Mortgages

Many people think the product is safe because the government has given its stamp of approval. The truth is nearly all mortgages are government-backed because they are held by Freddie Mac or Fannie Mae. Be wary of any lender that boasts about the government’s involvement with too much gusto.

Read The Fine Print

You might think that a lender that invites you to read the extra-fine print must be upstanding and that it couldn’t contain something bad. Wrong again. While the fine print is there for everyone to see, it’s often so fine that you can’t read it without a magnifying glass. In fact, the Consumer Financial Protection Bureau, a government agency responsible for consumer protection in the financial sector, including mortgage servicing, found that very few focus group participants could read the fine print in magazine or newspaper ads, and none could read the fine print used in TV commercials. And as for the contents of the fine print – it often contains scary stuff.

What About Robo-Quoter Offers?

There are also quotes from robo-quoters online that may have questionable practices. If you select an experienced loan officer on the other hand that is honest, efficient and accurate, you can be sure they will help you lock at the best rate and term available for your situation when the time is right. Some loan officers might be able to provide you a better rate but if you can’t trust them to get your loan funded on time with little hassles, it probably isn’t worth it.

Your Best Consumer Watchdog Is You

When you’re spending the amount of money you are on a home, you want an open an honest process with as few surprises as possible. Take the time to ask the right questions and read the fine print. But you shouldn’t have to crank up an electron microscope to see what’s written there. If there are so many conditions and permutations, that should be a red flag.

While consumer watchdogs and government agencies, including the Federal Trade Commission (FTC) and some states have gone after lenders who intentionally use vague and misleading language in their advertising – that still hasn’t prevented many lenders and brokers from taking linguistic liberties.

It’s important to read and understand the fine print. If you don’t understand what it means, ask your loan officer to explain it to you. You can always ask your lender what the fine print means, but it’s what’s in writing that matters — not what someone tells you. The bottom line. If a lender makes you an offer that sounds too good to be true, beware!

Let’s Be Clear

At PrimeLending and the McMullen Group, we are committed to transparency and educating our borrowers to be savvy. We make it a point to provide as much as information as possible so the choices you make have context and details. Our loan officers provide step-by-step guidance so we eliminate surprises and take the complexity out of the loan process. For questions about loans and their terms and conditions, ask a PrimeLending loan officer for more information today.

Prime Lending - By Jack Honig


New Mortgage Options For Borrowers Still Paying Student Loans

Joseph Coupal - Monday, June 05, 2017

Prime Lending, McMullen Group, Boston, Hanover, MANow You Can Graduate To Own A Home Even With A Student Loan

The statistics are pretty frightening. Americans owe over $1.4 trillion in student loan debt and that’s spread out among approximately 44 million borrowers. And last year, the average Class of 2016 graduate had over $37,000 in student loan debt, up 6% over the previous year. To a lot of people with outstanding student loans, it seems like home ownership is something they have to put on the back burner or dismiss altogether as unrealistic.

But there are options that may make homeownership possible now. For instance, the Federal National Mortgage Association (FNMA), commonly known as Fannie Mae, one of the largest funder/backer of 30-year fixed rate mortgages, recently announced a number of significant changes that can positively impact those who have student loans.

You’ll Owe a Debt of Gratitude: New Guidelines for Borrowers with Student Loans

The Fannie Mae program changes help borrowers with student loans in two key ways:

  1. It’s now easier to qualify for a mortgage with student loans
  2. If you already have a mortgage, you can refinance and roll student debt into a new loan with a lower rate

More Accurate Reporting Gives You Credit for Actual Payments

Fannie Mae has introduced new student debt reporting that may positively impact your home loan qualification. Before the new guidelines were introduced, your credit report probably didn’t include how much your monthly student loan payment actually was. As a result, the amount estimated was a larger percentage of the total amount owed which usually meant it was significantly more than what you actually paid and thereby potentially affecting your ability to get a loan.

Now, even if your monthly payment amount is not included on the credit report, a lender can use either 1% of the outstanding student loan balance, or a calculated payment that amortizes the loan based on the documented loan repayment terms. The bottom line is that a borrower with student debt is in a much better position than previously to get a home loan.

Receive a Benefit if Student Loans Paid as Gift

Another significant change introduced by Fannie Mae has to do with other people paying your student loan debt. Previously, even if another party such as a relative, friend or an employer was paying your student loan debt, the debt still impacted your credit report. Now, if a lender receives documents that show the debt has been paid by another party for the past 12 months, the student loan debt is no longer included in the debt-to-income ratio used to calculate eligibility for a loan.

Use Home Equity to Pay Off Your Student Debt

Fannie Mae has also introduced a student loan cash-out refinance feature. This cost-effective alternative allows you use your existing home equity to pay off student loan debt. This new update gives borrowers with student debt the opportunity to pay off one of more of their student loans by refinancing their mortgage and that their equity qualifies them for to reduce their monthly debt payments.

Considering that according to Federal Reserve statistics, the average monthly student loan payment for borrowers aged 20 to 30 years is $351, any avenue that reduces their monthly obligation is welcome.

You’re Not Alone with Your Student Loan

PrimeLending and the McMullen Group will work with you to find solutions that fit. We have options for borrowers with student loans that can help them lower their monthly payments and make it possible to get a loan even with student debt. Our loan officers will analyze your individual financial situation and factor that in to find you the best avenue to address your specific home ownership goals.

Student debt doesn’t have to be an obstacle to home ownership. There are ways to move past the debt so your aspirations are possible now. If you have student loan debt, contact a PrimeLending loan officer to learn what your options are.

Prime Lending - By Jack Honig


Home Renovations: What’s The Best Way To Pay For Them - Boston, Havover, MA?

Joseph Coupal - Tuesday, May 30, 2017

Is it too much to ask for your home to take care of itself once in a while? To cover the costs of home repairs or remodeling on its own? Not really! There are loans available that let you use your home’s equity as collateral. Or, you can choose cash-out refinancing to get the money you need. In either case, you’re using an investment you’ve already made to finance the home improvements you dream of.

Making repairs or remodeling can help maintain your home’s value, increase its resale value, or just make it a more enjoyable place to live. The longer you plan to stay in your home, the more financial sense it makes, and the more likely you’ll be able to recover the costs. Below are descriptions of the financing options available to you.

Home Equity Loans

If you’re interested in getting a loan to pay for home repairs or remodeling, you have a choice between a home equity loan and a home equity line of credit, or HELOC. Both of these are like getting a second mortgage, with your home being used as the collateral for the loan. This creates a lien against the house – if you don’t pay the loan back, the lender could foreclose on your home. Equity loans are generally a little harder to qualify for, requiring borrowers to have good or excellent credit, but they’re also faster and easier to obtain than a mortgage. They provide a specific amount of money based on the value of your property, which will be determined by an appraiser. They come with interest rates that are generally higher than a mortgage, but with no or lower costs and fees. The interest payments are usually tax deductible as well.*

If you choose a home equity loan you’ll receive a single lump sum of money at a fixed interest rate at a term usually shorter than a mortgage, 5-15 years. You’ll then make monthly payments for the life of the loan until you pay it back.

If you choose a HELOC you will not receive a single lump sum. You’ll qualify for a specific amount that is then available to you as a line of credit. So you use, or borrow, the money as you need it. You only pay interest and make payments on the money you use. HELOC interest rates tend to be slightly lower than an equity loan.

Keep in mind, if you choose either type of equity loan, you’ll have two monthly payments, for the loan and your mortgage, each with different interest rates.

Cash-Out Refinancing

Much like traditional refinancing, cash-out refinancing will likely give you a lower interest rate, lower monthly payments, perhaps even a shorter term. Each of which offers you different ways to save money. However, it also allows you to turn a portion of your home’s equity into cash. Getting the money to pay for home repairs or remodeling is one of the top reasons people use cash-out refinancing. It lets you avoid taking out a new, separate loan so you only have one affordable monthly payment at an interest rate probably lower than your current mortgage, and lower than you’d get with an equity loan.

With cash-out refinancing it’s important to remember your new mortgage will be higher than what you currently owe to make up for the amount of equity you turn into cash. Also, because it is a new mortgage, the loan process is longer, with more paperwork, and you can expect fees and closing costs. These expenses can often be rolled into the loan, allowing you to avoid paying this money up front. They could also be offset and recovered over the life of the loan, and by the savings that come with getting a lower interest rate. Like equity loans, the interest payments are usually tax deductible.*

A Quick Comparison



What’s the right choice for you? That’s going to depend on your personal goals and financial needs. Equity loans require less effort to get, if you qualify. Cash-out refinancing is a longer, more complicated process, but may be more affordable over time, and refinancing can give you a better mortgage.

Talk to a PrimeLending mortgage expert at the McMullen Group who will help you compare your options to find the best solution that will enable you to renovate or repair your home.

*You should consult a tax advisor for more information about the deductibility of interest.

Prime Lending - By Michael Nevin


Four Common Mistakes That First-Time Homebuyers Make - Boston, Hanover, MA

Joseph Coupal - Monday, May 22, 2017

McMullen Group, Boston, MAAvoid Small Missteps That Can Cause Big Problems

Buying your first house is an exciting time and a big milestone! Once you’ve made the decision that you’re ready to buy, it can be tempting to immediately start making a to-do list: start looking at homes for sale, buy new furniture, etc.

But it’s important to keep in mind that there are also some steps to avoid that will help make your buying experience as simple and rewarding as possible. Here are some common but avoidable mistakes that first-time homebuyers sometimes make.

1. Skip Getting Prequalified

Before doing anything else, the first thing step you should take is to get prequalified.* That means you’ll speak with a lender and provide information on your credit, income, assets and debts. In return, you’ll get an estimate of how much you can afford to spend on a mortgage. Plus, you can identify any potential obstacles, such as credit rating, and have time to resolve issues before you buy.

When you’re prequalified, you’ll save time by only looking at houses within your price range, and sellers are likely to prefer your offer over a buyer who is not prequalified, giving you negotiating power. Additionally, a lot of real estate agents won’t work with buyers who aren’t prequalified. It makes sense, too – they don’t want you to get your heart set on a certain house and then find out that it’s not in your price range.

2. Bypass Budgeting

Buying a house is a great investment that’s arguably much more rewarding than renting, but the cost of homeownership is more than just the price tag on a house. Homebuyers sometimes forget the true costs that go into owning, like private mortgage insurance, closing costs, property taxes and repair and maintenance costs.

Be sure to factor in these costs while house hunting so that you end up with house that you not only like, but can truly afford – being “house poor” doesn’t exactly sound like much fun! The loan officer you work with can help you answer more questions about homeownership costs.

3. Forgo Working with a Real Estate Agent

There are apps for everything these days, including house hunting. But nothing compares to working with a qualified real estate agent or Realtor. They have access to all kinds of listings, and sometimes that includes homes that haven’t even gone on the market yet.

Plus, they may know of some homes that don’t meet every single item on your wish list, but are pretty darn close and are within your budget. Look for an experienced agent who has lived in the area you’re shopping in for a while.

4. Waive the Home Inspection

A house is one of the biggest purchases you’ll ever make. Even though a home may look perfect on the surface, it could secretly have problems that are hard for the average eye to spot. And if you fall in love with what you think is the perfect home, you may unintentionally start seeing it through rose-colored glasses.

But the last thing you want is to buy your dream home, only to have to deal with the nightmare of hidden, costly problems down the road, like termites, structural issues or mold. That’s why it’s so important to hire a professional, reputable home inspector before closing on a house – they’re trained to find problems that many people tend to overlook.

The average cost of hiring a home inspector can range from $200 to $600, depending on the size and location of the house. Some buyers skip this step in an effort to save some money, but trust us: it’s so worth the time and money.

PrimeLending is a name that’s stood for strength and commitment to customer care for more than 30 years. If you’re thinking about buying a new house, we have a wide variety of mortgage loan products to help you reach your goal. Get in touch with us today to learn more about your options.

*A prequalification is not an approval of credit, and does not signify that underwriting requirements have been met.

For more information, contact The McMullen Group.

Prime Lending - By Sarah Crandall


5 Tips So You Can Afford To Remodel Your House - Boston, MA

Joseph Coupal - Monday, May 15, 2017

Cash-Out Refinance And Other Ways To Manage The Costs Of Home Renovations

Remodeling a house can truly transform its entire look and feel for the better, but upgrades aren’t always cheap. If you’ve been considering a home renovation, here are some things to consider and tips to help you save.

Research Planning before you start the remodeling process can help save you a lot of time and money. No matter what kind of renovations you have in mind, do plenty of research on the estimated costs, time frame and supplies that your upgrades will require.

You should also determine whether or not you’ll want to hire a contractor. While a contractor may seem pricier than a do-it-yourself project, consider your experience and skill level – if you make a mistake, it could end up costing more to fix than if you’d originally hired a contractor. Check out Porch.com to find renovation professionals near you.

Keep in mind that not all home improvement projects are equal, profitability-wise. Certain upgrades, like revamping the kitchen or adding a deck, are likely to pay off more than others in the long run. If you are planning to sell your home in the near future, you may want to avoid projects that don’t add to your home’s resale value.

Budget

Create a budget for your remodeling goals and stick to it. This should begin with you reviewing your current financial situation in order to see where you stand and what you can truly afford.

Once you have your budget figured out, don’t plan to spend every cent on upgrades — at least 20 percent of your budget should be set aside for unexpected expenses. Once remodeling begins, surprises can arise, and you’ll want to have money put away to help cover any unexpected expenses. If you find your home needs more work than your current budget allows, consider a cash-out refinancing as an option. Cash-out refinancing lets you turn a portion of your home’s equity into money you can use however you want, including to remodel your home. A PrimeLending home loan expert explain the process and help you determine whether refinancing makes sense for you.

Shop Around

You don’t have to limit yourself to just one or two home improvement stores when you’re remodeling – there are plenty of places where you can find good deals on supplies. Browse online at sites like Freecycle.org for materials, or visit a Habitat for Humanity ReStore, which resells home improvement and home décor products at prices much lower than retail stores. You can also go to building supply auctions.

To find bargains on appliances, keep an eye out for holiday sales (Realtor.com has some great tips on when the best times are to buy appliances). Sites like Groupon often have coupons and promo codes for appliances that can be used both in-store and online. If you’re OK with buying gently-used appliances, see if there are any used appliance stores near you or check out sites like Craigslist. Some big-name retailers, like Best Buy, also offer open-box, pre-owned and refurbished appliances at discounted prices.

Buy Ready-to-Assemble Cabinets

Cabinets aren’t cheap to install, especially if they’re custom. On average, the cost to install kitchen and bathroom cabinets is about $4,561, according to HomeAdvisor.com. However, ready-to-assemble cabinets are often much less expensive, and come in many different design styles to choose from. You can find these at most home improvement store. Alternatively, you can buy unfinished oak cabinets and paint them on your own.

Consider Making Smaller Changes Instead

If the time isn’t right for big changes, why not tackle smaller projects. Sometimes a room just needs a fresh coat of paint or updated lighting to look new again. Rather than a floor-to-ceiling renovation, decide if some superficial décor changes could make your home more livable and loveable. For example, if you’re planning on remodeling your bathroom, consider how it would look with some added shelving, a different paint color or new cabinet knobs. In the kitchen, updated appliances, new barstools and new ceiling lighting can help provide a modern-looking transformation.

What are you waiting for? Whether you have a lot to spend, or just a little, with careful planning and smart spending, you can make changes to your home that won’t break the bank. For more information on loans for remodeling your home, contact The McMullen Group.

Prime Lending, By Sarah Crandall


Refinance Your Mortgage To Reduce Debt - Boston, Hanover, MA

Joseph Coupal - Tuesday, May 09, 2017

McMullen Group, Hanover, MAYou may have large outstanding debt on one or more credit cards. You may also be struggling to make any significant dent in paying the debt down; especially if you’re only making minimum payments. With interest rates making up a significant portion of each payment, it might take years to pay off the balance.

When you factor in that most credit cards have variable interest rates, your minimum payment amount increases as the rates climb. And with multiple credit cards – each with different due dates and their own minimum payment amounts – you may feel as if you’re drowning in debt. But there is a potential lifesaver; if you already have a mortgage, you can apply for a cash-out refinance loan and use the funds to consolidate and pay off high interest credit card debt, medical expenses or college tuition.

What is a cash-out refinance loan?

It’s when a homeowner secures a new loan to replace the current mortgage for more than the amount currently owed and keeps the difference between the old and new loans. The homeowner is then able to use the additional cash refinanced to help pay off any debt.

Why should I get one?

One of the many advantages to using a cash-out refinance to pay off your high interest debt is the lower interest rate this secured loan typically offers; it’s usually much lower than any of the high rates on your credit cards.

The average credit card rate is substantially higher than the average 30-year mortgage rate. In fact, the interest on credit card debt and even car loans could easily be double that of your mortgage rate. The reason? Credit card debt is considered riskier than mortgage debt so the credit card companies charge interest accordingly. As such, using a cash-out refinance loan can help you pay off your credit card debt much sooner, since less of your money is going toward interest payments.

By transferring debt from a financial vehicle that charges more to less, you can save a considerable amount of money. And if you consolidate the debt, you will see immediate monthly savings in your payments. You’ll also eliminate multiple bills; it can be very confusing paying several credit card and car loans which have different due dates during the month. If you consolidate, you will only need to pay one bill per month, your mortgage.

The other important advantages to using a cash-out refinance loan to pay off debt, include:

  • Access to money you already have to pay off big bills including college tuition, medical expenses, new business funding or home improvements
  • It’s usually available at a more attractive interest rate than found on unsecured personal loans, student loans or credit cards
  • The interest rate is more stable than the adjustable rate that comes with the other debt reduction instrument, a home equity line of credit (HELOC)
  • Increase your credit score because when you use the funds to pay off high-interest credit card debt, it not only eliminates the higher-interest monthlypayments, but can have a positive impact on your credit score
  • The mortgage interest is tax deductible and the debt may be tax deductible as well

Cash-out refinancing and a home equity loan – what’s the difference?

Some people aren’t sure of the difference between cash-out refinancing and a home equity loan. Here are some of the major distinctions to look for:

  • A cash-out refinance is a replacement of your first mortgage, while a home equity loan is a separate loan on top of your first mortgage
  • The interest rate on a cash-out refinancing loan is usually, but not always, lower than the interest rate on a home equity loan
  • You may pay closing costs when you refinance your mortgage, while you don’t typically pay closing costs with a home equity loan

The Bottom Line

It’s important to note that while a cash-out refinance loan can reduce your high interest debt, it’s not a panacea. It is a great solution to provide immediate debt relief, but the best practice is to take steps, such as save more or reduce discretionary expenses so that you don’t end up with an unmanageable amount of high interest debt. If this sounds like a solution you might be interested in, start by talking with an experienced mortgage professional or loan officer to find out what your best loan options are for reducing high interest debt.

For more information, contact The McMullen Group.

Prime Lending


Home Improvement Projects That Add Value To Your Home - Boston, MA

Joseph Coupal - Monday, May 01, 2017

McMullen Group, Hanover, MAThat home renovation project you’ve been considering might look great on Houzz, but is it worth the investment? When it comes to home improvement, “Will this help my house’s resale value?” may be the most critical question you need to ask yourself before heading to the hardware store or hiring a contractor. If you anticipate selling your home in the near future, here’s a list of renovation projects that can boost home value to potential buyers:

Replace the Front Door with Steel

The front door is one of the first things people notice about your home. In addition to adding instant curb appeal, a steel front door can help you save money. Thanks to foam insulation, steel doors are more energy efficient than wooden or fiberglass doors, meaning lower energy bills. They’re sturdy and weather-resistant, and they offer better security against break-ins than other types of doors. Think about it: it’s much tougher for a burglar to quickly and discreetly break down a steel door. In addition to blocking air from getting in and out, seals on steel doors can also help stop outside noise.

Revamp the Kitchen

Whether you decide to selectively upgrade the kitchen or completely renovate it, it’s likely to pay off. As they say, “The kitchen is the heart of the home,” making it one of the most important rooms that homebuyers take into consideration when house hunting. A complete renovation might be a good idea if the kitchen’s layout is awkward and if adding an island can provide some extra space to prepare food. New appliances and upgraded countertops can also go a long way in freshening up your kitchen’s look and they’re high on many buyers’ wish lists.

Finish the Attic or Basement

If you have an attic or basement in your home, you’re likely to add value if they’re finished. No matter if you plan to use attic or basement space for an extra bedroom, an office or something else, they add extra room and square footage, which is attractive to homebuyers. Over the past few years, homes with attic bedrooms have been a hot commodity on the market. The typical cost recouped for insulated attics is about 116 percent, according to Remodeling Magazine’s 2016 Cost. Vs. Value report.

Update Your Lighting

Good lighting is everything when it comes to making a home feel inviting and cozy. Exterior lighting can give a home extra curbside appeal and make it elegantly stand out. The right ceiling and wall lighting can help brighten up dark rooms and is a great way to help transform the interior of older houses. A quick way to give your home a more modern feel is to replace older light fixtures. Certain lighting styles, like recessed lighting, remains a popular way to accentuate some rooms. For other lighting effects, you can add lighting to bookshelves or under cabinets to create a custom feel with a punch of drama.

Add a Deck

There’s no better place to relax on a warm day than from the comfort of your own deck. Decks make perfect spots for summer grilling and entertaining, which are just some of the reasons that many house hunters seek homes that have already them. Adding either a wooden or composite one to your home will help add some extra living space while boosting your home’s value and making your yard look more appealing. Depending on the size of the deck you want and whether you plan on building it yourself or hiring a builder, some decks can be built in as little as three or four weeks. Deck additions, depending on what type of deck, can recoup a cost between 64 and 75 percent.

If you need help financing home renovations, contact the McMullen Group. We can walk you through our range of loan options. blog.primelending.com


Loans for Spring Home Improvements - Hanover, Boston, MA & Save Money

Joseph Coupal - Tuesday, April 25, 2017

You’ve made it through winter and spring has officially sprung! Now’s the time to do some heavy lifting around your house and time to take care of some essential home repairs and renovations that can help keep you leaping forward through 2016.

Springtime repairs and renovations are great for improving the overall look and functionality of your home. But some critical maintenance can also help erase yearly wear-and-tear and prevent serious, weather-related damage. From interior and exterior upkeep and repair basics, to roofing renovations and storm drainage overhauls, we’ve put together a checklist of important action items that can help you prepare your home for the impending warmer-weather months.

Outside Action Items: Water Woes And Roofing Red Flags

Household damage from water is the second most frequently filed insurance claim in the United States; however, 93 percent of this destruction is preventable. Below are some tips, tasks and information to help you defeat some of the common culprits that cause water woes for your home.

  • Keep It Out of the Gutter — A clogged gutter or downspout can be one of your home’s greatest and costliest foes. According to Moneypit.com, an overflow of rainwater can cause mold, rotten wood, bugs, chipped paint, slippery sidewalks, cracked foundations, landscape damage and more. With spring showers arriving, not to mention seasonal hail and thunderstorms, it’s important to inspect drains and downspouts to make sure they are clear of leaves and debris, intact, and ready for rain.
  • Move Up the Ladder — If you plan to tackle the gutters yourself, Cleaning & Maintenance Management suggests using a sturdy four-legged ladder and reviewing important ladder-safety protocol. In addition, gloves and goggles can go a long way in protecting your hands and eyes. For fast and efficient cleaning, try using a garden hose, nozzle spray or gutter scoop.
  • On Guard! — Jazzing up your gutter with a leaf guard or cover is one way to speed up gutter maintenance. If you’re going to tackle this renovation DIY-style, do your research. Home Depot and Lowe’s both have a variety of products, and a quick search on YouTube can yield a few detailed how-to videos. HGTV.com recommends a roll screen gutter guard as a quick and easy DIY installation.
  • Generate Curb Appeal — Inspecting the storm drains just beyond your yard is also a good practice, according to the City of Portland — a place that knows a thing or two about rain. Portland city officials recommend clearing a path for water with a rake if any blockage is visible around street drains.
  • Don’t Be a Drip — Standing water in your yard could indicate an issue with your sprinkler system. Run a brief test on the zones where you see water, and repair or replace busted or malfunctioning sprinkler heads.
  • Do As the French Do — If your drains and sprinkler systems are in tact, but you still have a huge water puddle problem, it might be time to check the elevation or slope of your yard. Before you plant spring foliage and flowers, take time for some “yard-scaping” to alleviate any water-runoff issues. Consider installing a French drain to help redirect the flow of water.
  • Shingle Out the Problem — Roof repairs can be among the most costly fixes for a home. Keeping ladder-safety in mind, perform a quick visual inspection of your roof for issues. Owens Corning suggests checking for worn, curled, bent, loose, cracked or damaged shingles, as well as bald areas, dark streaks and excessive algae or moss growth.
  • Phone a [Professional] Friend — Keeping an eye on your roof and fixing small problems with sheathing, underlay, flashing or tiles can help you avoid major water catastrophes. Just remember, some renovations may prove harder than they appear. So keep the number of a professional handy, just in case.

Additionally, many insurance companies have resources available to guide your decisions. Be sure to find out what services your company provides.

Inside Action Items: Weatherproofing And Keeping Cool

Making springtime home repairs and renovations inside your home is every bit as important as tackling outdoor challenges. Some fixes can have a major impact on your financial bottom line, by reducing energy costs and preventing the need for future repairs or complete replacements. Where should you start? We recommend starting at the top — in the attic.

  • Evict Unwanted Pests — Make sure your attic space is free and clear of pesky vermin, like squirrels, raccoons and other unwanted furry friends, before tackling any big projects. As we reported in “Did You Hear That?,” pests in your attic and walls are often the result of roof or siding damage. And once they’ve nestled into your space, these critters can make a tasty meal out of your electrical wires and cables, all while leaving unsanitary droppings in their wake.
  • Pamper Your Water Heater — If your water heater is located in the attic, the United States Environmental Protection Agency (EPA) suggests wrapping an insulating blanket around the unit to reduce heat loss by 25-to-40 percent. These specialized materials can be found at most large hardware stores for between $25 and $50 dollars.
  • Filter Out the Nonsense — HVAC (heating, ventilation and air conditioning) manufacturers typically recommend changing air filters once a month to preserve good air quality. In addition, it’s good practice to also visually inspect each of your HVAC units about every 30 days.
  • Go Pink! — One of the most important renovations you can tackle is pink and fuzzy — insulation! In truth, there are many grades and varieties of insulation that are not all pink. And while some products are suitable for the DIY weekend warrior, some products, like a high-grade blown-in insulation, are best left to the professionals. Do your research and be diligent about taking appropriate safety precautions as outlined by This Old House.
  • Light A Candle — Sealing windows is another great energy saver. One DIY trick to check for air leaking through windows is to light a candle and slowly move it around each window. Wherever you see a flicker, you probably need to apply caulking.
  • Peel and Stick — Weather-stripping your exterior doors can not only help keep you cooler in the summer and warmer in the winter, but it can also save you potentially 10-to-15 percent on your utility bill. Weather-stripped doors also help keep out moisture and bugs. Win-win … and win!

We hope you have a safe and fun time tackling your springtime home repairs and renovations. Let us know what’s at the top of your to-do list in the comments section below.

If you love home repair projects, but are in need of the actual home in which to channel your DIY energy, contact McMullen Group to learn what mortgage plan is best for you.


Welcome to The McMullen Group at PrimeLending - Hanover, MA

Joseph Coupal - Monday, April 24, 2017

The McMullen Group has a combined experience of over 30 years in the mortgage industry. We offer a wide range of home financing options designed to take advantage of today’s real estate market. Our team takes the time to ask all the necessary questions up front to determine the best available loan program to fit your specific needs. We’re invested in our client’s success and it is important to work with true professionals to help guide you through the loan process. Whether you are purchasing a home or refinancing an existing home, we are with you every step of the way.

Brian McMullen has been recognized by Mortgage Executive Magazine as being in the top 1% of mortgage originators nationwide and has also been a consistent President’s Club member.

The McMullen Group will be with you step by step and through the entire loan process. We ensure you understand every aspect of the process and we are available to you whenever you need us.

We look forward to working FOR you.


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