Wed, Jul 30th 2014, 00:21
Many of us are unaware of how powerful the Hispanic market has become throughout the years. Especially, how powerful they are in the real estate field. After the economic hardship and the unprivileged services Latinos received when acquiring homes, Latinos are ready to be the leading market for home ownership.
Fri, Aug 8th 2014, 01:44
Fri, Nov 6th 2015, 16:13
Tue, Nov 10th 2015, 17:59
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Tue, Dec 15th 2015, 18:13
A mortgage – a loan to finance the purchase of your home – is likely the largest debt you’ll ever take on. A mortgage is actually made up of several parts – the collateral you used to secure the loan, your principal and interest payments, taxes and insurance.
Since most mortgages last 15 to 30 years of monthly payments, it helps to understand the working parts.
When you agree to a mortgage, you’re signing a legal contract promising to repay the loan plus interest and other costs. Your home is collateral for that loan.
If you don’t repay the debt, the lender has the right to take back the property and sell it to cover the debt, a process known as foreclosure. In a foreclosure, you will lose your home and you will likely damage your credit rating, affecting your ability to buy a new home in the future.
Principal and Interest
The principal is simply the sum of money you borrowed to buy your home. To lower your principal amount upfront, you can put down a percentage of the home’s purchase price as a down payment. Typically, lenders require you to make a down payment equal to 20 percent of the home’s purchase price to get a mortgage.
Interest is what the lender charges you to use the money you borrowed, usually expressed as a percentage called the interest rate. In addition to the interest rate, the lender could also charge you points and additional loan costs. Each point is one percent of the financed amount and is financed along with the principal.
Principal and interest comprise the bulk of your monthly payments in a process called amortization, which reduces your debt over a fixed period of time. With amortization, your monthly payments largely go toward paying off the interest in the early years, and gradually reduce the principal later on.
In addition to your principal and interest, your mortgage payment will likely include taxes. The taxes are property taxes your community levies based on a percentage of the value of your home. These taxes generally go towards financing the costs of running your community – for example, to build and maintain schools, roads and other infrastructure, and to provide certain public services.
Generally, if your down payment is less than 20 percent, your lender considers your loan riskier than those with larger down payments. To offset that risk, the lender sets up an escrow account to collect those additional expenses, which are rolled into your monthly mortgage payment.
Even if you don’t have an escrow account, you’ll likely have to pay property taxes as long as you live in your home.
Lenders won’t let you close the deal on your home purchase if you don’t have home insurance, which covers your home and your personal property against losses from fire, theft, bad weather and other causes.
If your home is in a federally designated high flood-risk zone within a flood plain and you are signing for a federally insured loan, federal law mandates that you must buy flood insurance.
If you choose a conventional loan and put down less than 20 percent of your home’s total value at closing, your lender will likely require you to pay private mortgage insurance. PMI protects the lender from you defaulting on the mortgage. You will have to make PMI payments for two years or until your mortgage balance shrinks to 78 percent of the home’s original purchase price.
If you choose a loan backed by the Federal Housing Administration, you will have to pay mortgage insurance. Mortgage insurance works the same as PMI, however, you will have to make these payments for 11 years or for the life of the loan, depending on your loan terms and down payment amount.
Mon, Dec 28th 2015, 19:11
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Tue, Jan 12th 2016, 16:55
Most of us work hard... very hard. We run our own businesses or work as contractors, and we get paid in cash, thus getting a 1099. When we look at our annual income, we generate enough to meet our family and entertainment needs. Many of us also keep some money for savings or retirement. We are going really well. However, each year we try to pay as little tax as possible through deductions. The more we earn, the more we want to keep. That's why we don't blame you but understand you. If the law gives you that option, you can use it, can't you?
But if you want to buy a home, there is a big problem when it comes to reporting too many deductions on your income. And which one is that? Reporting so many deductions when paying your taxes strongly reduces your personal income for that year. When buying a home, the lender pays more attention to your personal income rather than the business itself, and he will require your tax returns for the past two years. After examining them, he will realize that your income might not be high enough to pay off a mortgage. We've seen several examples in which our customers annually earn $100,000 or more, but after all the deductions reported (with the help of their accountants), they manage to prove an annual income of only $10,000 or even less. There is a big difference between what you actually earn and what you report.
If we put ourselves in the lenders' shoes, we would better understand it. They want to help you to buy a home and know that you generate enough to pay, for example, $1,200 per month for rent. They are required to consider taxes reported; then they'll realize that you "generate" (according to certain taxes) only $833 per month ($10,000 per year divided by 12 months). With such a low income, no lender will lend you money because you will also have to consider other personal expenses like food, transportation, water, electricity, among others.
If this is your case and you would like to buy a home, we want to give you some tips that will help you a lot. If you follow these simple steps, you will finally buy your house and give your family the home they deserve. Once you have the opportunity to pay taxes this year, let your accountant know yours plans for buying a home. They will understand that reporting too many deductions on your actual income is not convenient when qualifying for a loan. In this way, you will show a higher income, so the lender can determine your monthly installments to pay off the mortgage (home loan). You could ask your accountant to help you amend your last year's tax returns to show a higher income on the last taxes. If you decide to do this (amend last tax returns), you might have to pay taxes for the last year; the advantage is that this allows you to buy a home without waiting another year. Then, you can give your family what you've always longed for: a house that you'll finally get to call 'Your Home'.
Tue, Jan 12th 2016, 23:36
Mon, Jan 18th 2016, 19:40
Mon, Jan 18th 2016, 20:16