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Tag Archives: Buyer

Information you may want to know about when buying real estate.

Mortgage Insurance – What is it and When is it Required

Mortgage Insurance insures the lender from loss, if the borrower is unable to pay back their mortgage. It is required on loans that are more than 80% of the property’s purchase price and vary significantly between conventional loans and government insured loans. Buyers obtaining conventional loans with less than 20% down will be required to obtain a Private Mortgage Insurance (PMI). PMI is added to the monthly payment. The annual cost can range from .3% to 1.20% of the loan amount depending upon the amount of down payment.

Federal Housing and Urban Development (HUD) insures Federal Housing Association (FHA) loans through a required upfront mortgage insurance premium (UFMIP) and a monthly mortgage insurance premium (MIP). The UFMIP is normally financed into the loan and equal to 1.75% of the loan amount. MIP varies depending upon the amount of down payment and ranges from .45% annually on the 90% 15 year term mortgage to 1.35% annually on a 95% 30 year term loan.

You may wonder why someone would obtain an FHA insured loan versus a conventional loan since the cost on government insured loans is more expensive. The answer is FHA loan qualification ratios are more lenient allowing a buyer to qualify for a loan that they would not otherwise qualify. See our post on Determining Your Maximum Purchasing Power which discusses the different ratios used in conventional and FHA insured loans.

Home Inspections

Home inspections are part of real estate transactions almost always these days. To help understand the home inspection process better I asked Lance Marquardt with Pillar to Post Home Inspections some basic home inspection questions. Here are the questions I asked and his response to them: What kind of things do you see most often…Continue Reading

What Buyers Want

Most homebuyers prefer newer homes with extra space, according to the NATIONAL ASSOCIATION OF REALTORS’® (NAR) 2013 Profile of Buyers’ Home Feature Preferences. The survey, which examined buyers who purchased a home between 2010 and 2012, finds that the typical recently-purchased home was built in 1996 and had 1,860 square feet. The typical buyer purchased…Continue Reading

Basics of Loan Qualificaton

There are three parts to qualifying for a loan. One, your down payment. Two, your debt to income ratios. And, three your Credit Score. The amount of down payment reduces risk to lenders. Because of this they reward borrowers that put more money towards the purchase of the property. These rewards are lower interest rates,…Continue Reading

Using Other Peoples Money to Fund Your Retirement

As you know interest rates are at an all time low. This is one of the best times to buy residential rental property (2 to 4 units). Anything above 4 units has to qualify for a commercial loan. You may not know this but commercial financing is not as favorable as residential financing. Commercial financing…Continue Reading