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Buying a Home for less per Month than your Rent by the Numbers

Buying a Home for less per Month than your Rent by the Numbers

This statement always raises an eyebrow…or 10, when I say in this market, with just a moderate down payment, you can buy a home for less than what you pay in rent.
 

Buy a home for less than rent

This is how it comes out by the numbers:

Let’s take a $175,000 house in this market, assuming a 5% down payment.

Principal and Interest  @4.25 817.88
Taxes @1.25% 182.29
Insurance  100.00
Mortgage Insurance    81.74
Total     $1,181.88

 

Lets compare that to a reasonable rent payment in this market of $1,250. This is how we come to prove the statement that you can buy a home for less than your rent.

Even further, after the tax benefits of mortgage interest, and the doors which this immensely valuable deduction opens, the net effect means an amazing savings to the home buyer over renting.

For more information, check out HomesteadU

The Fed Raised Rates….Why Did Mortgage Rates Drop?

Homestead Financial | Mortgage Rates Drop

The U.S. Federal Reserve raised its key, Federal Reserve Funds Rate (Fed Funds) .25% on Monday, March 13th, 2017 for the second time this year, citing economic growth, job gains and confidence.

Then the mortgage market did something odd. Mortgage rates dropped. The yield on the 10 year US treasury peaked at 2.60% the day the FOMC chair, Janet Yellen announced the Federal Reserve would raise its key Fed Funds rate to 1.00%, from .75%.

The reason? Consumer debt gets pricing from DC and mortgages get their pricing from Wall Street. Fed Funds is the interest rate the Federal Reserve changes its member banks for short term loans. There is no direct correlation between the Federal Reserve raising rates and mortgage rates.

So in other words, Fed Funds going up has an effect on your credit card rates and consumer loan rates, rates tied to the prime lending rate, but not mortgage rates.

So what do I do if I’m in the mortgage market? The best indicator of mortgage rates is the yield on the 10 year US Treasury which can be found here https://finance.yahoo.com/quote/%5ETNX?p=^TNX

4 Tips for Using Child Support to Qualify for a Mortgage

Quite often we see mortgage applicants, generally single mothers applying for financing that have income from a job and child support.  Sometimes, the child support is the make or break item that is the difference in qualifying the applicant for a home loan.

However, due to the inconsistent nature inherent in some child support relationships, there are a number of rules that apply to getting the child support payments to qualify as income for a mortgage applicant.

Below are 4 tips to use in advance of your mortgage application to make sure child support income can be included by your mortgage lender.

1. 6 Months Backwards

In order for child support income to be considered, we must ba able to document a 6 month history of receipt. This is due to so many parents not making the required child support payments. Proving receipt for 6 months can be problematic though. In some cases where child support is administered by the state government, for example, state of MO Child Support Enforcement has a link to document payment history of their cases, which is available at https://dssapp.dss.mo.gov/payments/WbMdi3OrdersByCaseListSvr.ASP Each recipient is required t to obtain an 8 digit key code to access their account.

2. 3 Years Forwards

Also, like most income that is not directly derived from work, the rule of thumb to qualify for a mortgage is to show that the income stream will continue for at least 3 more years. Effectively, this means the children for which the borrower receives financial support can’t be any older than 15 at the time of application.

3. Check Please! 

If not paying via some online vehicle, try to be paid by check. It helps if there is a copy of the check which can be verified with the deposit receipt on the bank statements.

 

4. Deposit the check quickly, by itself and wholeSingle Dad Mortgage

The child support check should be deposited as quickly as you receive it, and should be deposited by itself and do not take any cash out of the deposit. So in other words, don’t hold on to the check to deposit with a payroll check and don’t take cash from the deposit.

So, for example, Sally, who lives in Warrenton, collects child support of $1,100 per month is paid by check for 2 children ages 12 and 10. She regularly copies the front of the check and deposits the check by itself and whole. A mortgage company will be able to use this as income towards qualifying for her mortgage by producing 6 months of bank statements and copies of the checks showing a check for $1,100 and deposits for $1,100.

To conclude, it is possible to include child support as income toward qualifying for a mortgage application. It does take some planning and documentation.

 

If you have anymore questions or want to discuss this further, please feel free to reach out to Jayson Hardie at 636-256-5712, it costs ZERO to find out!

Buying a House in a Buyer’s Market Part Two

In “Buying a House in a Buyer’s Market – Part I,” we explored the importance of timing when it comes to buying a house in a buyer’s market. Finding the right house at the right price should be a buyer’s first and final goal with a long term plan of living there as a means of riding out bad market conditions that can occur. This time we’ll take a look at how technology and an experienced buyer’s agent, negotiating effectively and avoiding gimmicks are also essential when it comes to buying a house in a buyer’s market. Continue reading “Buying a House in a Buyer’s Market Part Two”

Buying a Home After Foreclosure

If you’ve experienced foreclosure you might think you’ll never be in a position to buy another home again. Foreclosure certainly impacts your credit score but it’s only a matter of time before you can once again apply for a mortgage. The question many people have is how long they have to wait before buying a home after foreclosure. How long depends on the circumstances of your foreclosure, your ability to increase your credit score, the type of loan you’re prepared to apply for and the foreclosure waiting period. Continue reading “Buying a Home After Foreclosure”

How Collateral Impacts Mortgage Loan Qualification

Collateral

When you obtain a mortgage loan to purchase a home, the collateral used to secure the loan is the house. If you fail to make payments and default on your loan, your lender has the option to claim ownership of the house due to its security interest.

Collateral = your home  –  this is the what secures the mortgage loan in case you don’t make your payments
Continue reading “How Collateral Impacts Mortgage Loan Qualification”