May 17, 2013 by admin
Building a home is a huge commitment, both financially and time-wise. There are many things that are involved in the process. Therefore, it is important to understand what the whole endeavor entails, before venturing into it. The cost of building a home is calculated per square foot. However, this does not include land price. To figure out the homeowner needs how much to build a house, he or she must include all costs of special amenities and construction. The overall cost should then be divided by the number of square feet in the home, which is normally 2000 square feet for average sized houses.
Established property owners who desire a few amenities may be able to build a house without spending much. This is because they already own land and the number of amenities required is less. Normally, they can build the house for as little as $80 for every square foot. That would translate to $160000 for an average home. In some cases, materials can be obtained from already existing property. This mainly depends on the financier’s willingness to use recycled materials recovered from another home.
Normally, the cost of building an average home is $200000. This excludes the price of land. In some areas, especially those that are in active seismic zones or those that experience cold climates, special structural adjustments are made to the homes. This can involve the addition of safety structures or heating systems, which drive up the price of building a house.
Brick exteriors also increase the cost substantially. Shrewd homeowners build their homes with high-quality structuring materials and add cosmetic features over time. For instance, instead of building a tiled or wooden kitchen floor, one can use linoleum and make adjustments in the future.
Building a home
Just like any other huge project, building a home requires planning, scheduling and coordinating deliveries and contractors. House construction is a step-by-step process. The execution of each consecutive step depends on the success of the previous one. Here are the steps of setting the foundation of a house.
The building area is cleared of all vegetation and debris. A surveyor then locates the corners of the house. Using these corners as reference points, a chalk outline of the house perimeter is drawn.
After that, the footing is dug according to the foundation type and house plan. The plumbing drain lines are laid down and rebar and concrete forms are set. Perimeter and pier footings for crawl space are dug and a temporary power pole put in place.
Concrete, which is meant for the foundation, is then poured and anchor straps and bolts inserted into it while wet. The concrete is allowed to cure overnight. A concrete block should be built if one is building on a crawl space. Every wall section that is below grade is then waterproofed. With that, the foundation is ready and one can start framing.
It is easy to know a homeowner needs how much to build a house. With the correct estimate, he or she is able to plan the construction properly. This way, the house can be built faster.
Category: How Much to Build a HouseComments Off
May 10, 2013 by admin
Buying a home can sometimes be a bit confusing, especially if you are not familiar with the financial or home buying business. One portion of the process that often many homebuyers do not know much about is mortgage insurance. Recent changes to requirements and standards for mortgage insurance have many more potential homebuyers perplexed.
Mortgage insurance is required on home purchases in which the buyer puts down less than 20 percent of the sale price or appraised value of the property. The lender is protected by this type of insurance in the event that you should default on your monthly mortgage payments. The mortgage insurance premiums are paid through your mortgage payments and your lender is the beneficiary if the insurance needs to be used. Mortgage insurance makes it possible for individuals and families who may not have the traditional 20 percent down to be able to purchase a home. In some instances they can put down as little as 3 to 5 percent.
Mortgage insurance can be obtained through the government and also through private insurers. The Federal Housing Administration is the primary mortgage insurance provider through the government. Private mortgage insurance, also known as PMI, or Lenders mortgage insurance, can be purchased through many different companies.
Fees for PMI can vary. Factors that cause variances are how much is put down on the home, the total amount of the loan, and frequency of premium payments. Generally premiums are around 0.3 to 1.15 percent of the original loan per year. PMI can be paid up front or it can be capitalized onto the loan. Through the end of 2013, mortgage insurance premiums are tax deductible, and it is quite possible that Congress could extend this timeframe.
It is important to keep track of the payments you make which are applied to the principle of your mortgage. When the loan-to-value ratio becomes 80 percent, you can notify your mortgage lender to stop paying PMI premiums. When you close on a home loan, Federal law mandates that your lender tell you the time period it will take for this value to reach 80 percent so that you can cancel your PMI. Once the loan-to-value ratio gets to be 78 percent the lender is required to cancel the PMI. However, it is important to note that some types of FHA loans are required to have PMI payments throughout the entire life of the loan.
Category: PMIComments Off
April 25, 2013 by admin
A homeowner may have equity in his home. Basically, this means that he owes less on his mortgage/s than the value of his home. If your present outstanding mortgage balance is 80 percent or less of your home’s value, you can borrow some of that equity. You could use the money to remodel your home, pay medical bills, pay down high-interest debt, etc.
When it comes to converting some of your home equity to money, you basically have two options: either a home equity line of credit or a standard home equity loan. Each of these can be desirable options, but each is suitable for different situations. By knowing which type of loan is suitable in which type of situation, you can easily decide which type of loan is appropriate for you.
If you’re interested in obtaining a loan against your home equity, you need to know your options. Here are the three differences between a home equity line of credit vs home equity loan.
1) Get cash as you go vs. get a lump-sum payment
A home equity line of credit (HELOC) is appropriate when you’re not sure how much money you’ll need to borrow. It works more like a checking account that you can borrow when you need it- up to a particular amount. For instance, if you’re planning to do some home remodeling over a period of time, you may want to consider borrowing a bit at a time.
Conversely, a home equity loan is appropriate when you know ahead how much money you’ll want to borrow. You need to apply for a loan and have it funded as a single lump sum.
2) Have a variable interest rate vs. a fixed interest rate
In case of most HELOC loans, the interest rate of your loan will be variable. The rate is usually calculated as the Prime Rate (PR) plus a margin, depending on the loan to value (LTV). There’s usually a maximum rate or cap, put in place to protect you when the PR increases considerably during your repayment period.
On the contrary, with a standard equity loan, you’ll need to pay a fixed rate which is determined at the time when your loan is closed. In both cases, the interest rate is higher as compared to the rate you pay on your first mortgage. But, it will be lower as compared to the rate you need to pay if you were to get an unsecured loan, such as borrowing against your credit card.
3) Make variable payments vs. Fixed payments
Likewise, with a home equity line of credit your outstanding balance, which is the amount of money you owe to the lender at any given time, will vary over a period of time. Thus, your repayment amounts will also vary. On the contrary, your loan payments on your equity loan are typically fixed from month to month.
Always keep these three differences in mind as you decide which kind of loan is appropriate for you.
Category: HELOC, Home Equity LoanComments Off
April 10, 2013 by admin
If you are looking for a home mortgage, you will very quickly come across the acronym APR. Those wondering what is APR should know that it stands for annual percentage rate and it will tell you how much interest you will have to pay on your mortgage annually. It allows you to compare the rates that you will pay for different loan providers in order to determine which one is best for you. Since these loans will be for the same amount of money but will have a different APR, you can make an apples to apples comparison about which is best for your budget.
What’s In A Name
APR is, in effect, the amount of risk that a bank will take on when they provide you with the money to purchase a house. Since banks are constantly loaning out their money to investors and homeowners, they have to have an amount of surety on each loan in order to determine whether or not they can make a profit. If you choose to pay a large down payment on a house, it significantly reduces the risk of the bank, resulting in a lower APR. Likewise, if you have a stellar credit history, the bank is less likely to take on risk and will reward you with lower interest rates.
Now And Then
Usually, the deciding factor that determines APR is the amount of money a homeowner is willing to pay upfront. The more you provide, the lower the interest rate will be. Over the long term, it can save you money, though it represents a significant amount of your savings in the here and now. Getting the lowest APR you can get is not necessarily the best solution if you only have a limited amount of money on hand today that you can use for a purchase.
Category: What is APRComments Off
March 20, 2013 by admin
Reverse Mortgages Explained
There is perhaps no greater asset that an individual or a couple can own than a home. Once the initial mortgage has been paid off, homeowners may look to a reverse mortgage in order to borrow money. Ownership is still maintained by the homeowners and they are able to borrow against the equity when needed.
In order to qualify for a reverse mortgage, a homeowner must be at least 62 years old. There are no payments going from the borrower to the lender each month. The lender will make payments to the borrower on a monthly basis, or in one lump sum. A line of credit is also an option.
A reverse mortgage is paid back if the property is sold, if the borrower passes away, or if the borrower moves. The equity, or the value of the home, will shrink as money is borrowed on the reverse mortgage. When making traditional mortgage payments, the equity in a home increases, unlike with the reverse mortgage.
Why Take Out a Reverse Mortgage?
The retirement years can be difficult for many people to manage, financially speaking. Borrowing against the value of a home is an ideal way to help pad the finances during tough times and maintain a comfortable way of life. Monthly income for a person over the age of 62 will increase when the bank pays monthly.
Older homeowners may experience difficulty in keeping up with the costs of running and maintaining a home. Having money available to cover such expenses can give peace of mind and help keep a property in good shape. The equity of the home becomes cash that is readily available to be spent on whatever the homeowner needs or wants.
There are several important factors that will determine the amount that a homeowner will receive with a reverse mortgage. Age, current interest rates, and the current market value of the home will all be considered by the bank. The older a homeowner is, the more money that they are likely to qualify for.
Reverse mortgages explained may sound the perfect solution, but there are some important aspects to keep in mind. First, the fees can add up. There are loan origination fees, interest rates, closing costs, and several others. The amount can total in the thousands. Even if a homeowner does not plan on moving from their property, circumstances may arise that force them to do so. The loan is then required to be paid back. Since the equity decreases, if the homeowner passes away, the inheritors of the property will receive less money than the value of the home.
Reverse mortgages can be complex to understand, but the fact is that it is a great option for some homeowners. Homeowners will always retain the title for their home and have ownership. There is no risk of being forced out of the property as long as the homeowner is alive and residing there. Reverse mortgages are a good option for retirees to consider.
Category: Reverse MortgagesComments Off
March 13, 2013 by admin
The dream of purchasing and owning a home can be achieved through a mortgage loan. Basically, a mortgage loan is a loan issued to customers of a financial institution for purposes of purchasing a home, property or other real estate. The reason most buyers need a mortgage loan is that homes are quite expensive and it may take a lifetime to save enough money to buy one. This is the reason why most individuals choose to get a mortgage loan in order to invest in a home of their choice.
Not every person qualifies for a loan and lenders are very specific in regards to who gets to borrow such a loan. It is essential that potential home buyers understand exactly what lenders want. To qualify for a loan, borrowers need to have a certain threshold in terms of annual income. The income is very important as the banks need to lend to individuals who can manage their monthly repayments and not default on the loan. This is a major factor and hence a reasonable monthly or annual income will matter. Another important factor is the credit worthiness of the borrower. Only borrowers with a good credit rating will be considered. Credit ratings are measured on a score referred to as the Fico score. The higher the score the better a person is. Low fico scores usually discourage lenders and other organizations that provide credit facilities.
There are other factors that need to be considered as well. For example, a borrower will need to be in possession of at least 15 to 20 percent of the entire loan amount which will be used as a down payment for the property. All this is information that any serious home buyer will need so as to prepare themselves to buy a home of their choice. Once a person buys a home on a loan from a financial institution, they have the option to refinance. Some investors may ask the question what is refinancing your house? To answer this question, it is important to understand what refinancing is. Basically, the term refinancing a home mortgage refers to the process of taking out an entirely new mortgage to replace the current mortgage loan. The process can be undertaken through the same financial institution or with a different lender.
Others may ask, what is refinancing your house? Are there reasons for this? Well, there are reasons why people choose to refinance a mortgage loan. One of the reasons is to try and reduce the time period for the loan. Loan terms are the number of years borrowers have in order to repay the mortgage received from the lender. By refinancing the mortgage loan, the term could become shorter due to the new terms introduced by the new loan. Another reason is to reduce the monthly payment amounts. Rather than pay some large monthly amounts, it is always better to reduce these amounts. In many cases, home buyers achieve both purposes and go on to repay their mortgage in smaller amounts and for a shorter period of time.
Category: RefinanceComments Off
February 25, 2013 by admin
Many home owners who purchased their homes using home mortgage loans are seeking options available to them. One such option may be the prospect to refinance upside down mortgage. The reasons for this are many and the options available are few. Ideally, a home buyer will get a home mortgage loan from a local lender such as a bank or a mortgage company. There are certain conditions that need to be fulfilled for these loans to be issued. For instance, a borrower will need to have a good credit rating, a regular and reliable income such as a salary from employment and a certain amount in cash, usually about 15 — 20 percent of the value of the home.
If these conditions and a few others are met, then the lender will usually process the loan and provide a mortgage to a customer to buy a home of their choice. This is all very well. However, in recent years, some homes have lost value such that the value of the mortgage is much higher than the value of the home. In many instances, home buyers may have homes whose value is less than what they owe the bank. This means that even if the home is sold, the proceeds would not be sufficient to cover the cost of the mortgage. This presents a problem and a challenge to players in the mortgage industry.
It is important to understand an upside down mortgage. Basically an upside down mortgage is a mortgage used to purchase a home whose value declines sharply in the duration of the mortgage. Such a loan can be very costly to a borrower and hence the need to ensure there are options necessary to mitigate against this. One such option is the option to refinance upside down mortgage. Many people may consider this as impossible because no lender may wish to finance a mortgage whose principle asset loses value over time. However, there are options available for customers seeking to refinance upside down mortgage loans.
Some of the largest lenders in the USA such as Fannie Mae and Freddie Mac offer mortgage loans and refinancing options to customers. These options also include those necessary to refinance upside down mortgage. Many banks fashion their products according to the trends and standards set by these federal mortgage providers. There are usually quotes offered by banks and other lenders to their customers. It is important to discuss these details with the mortgage section of the bank or with a finance specialist.
The process of refinancing an upside down mortgage loan is usually a long and tedious one. It does take quite some time. It is important therefore that an applicant is patient. It is also necessary to submit all the documents required by the lender in order to process the application and provide a solution to refinance upside down mortgage loans. During such times, it is important to avoid making other major financial commitments such as buying a new car or taking out additional debt.
Category: Refinance, Refinance Underwater Mortgage, Refinance Upside Down MortgageComments Off
February 20, 2013 by admin
Being able to prequalify for a home loan is an essential step when one is considering entering into home ownership. One can prequalify for the home loan by determining how much of a mortgage one can afford. This step is prior to preapproval which means that your preliminary application has been approved and is favorable for final approval of the home loan. There are several steps that you can take to ensure that you prequalify for a home loan.
You have to understand the process that the lending institution goes through when considering a borrower for a home loan. Sit with a representative and gather as much information as possible and be sure to ask about all the relevant documents that will be needed to complete the final application. This allows the borrower to be ahead and ready when the lending institution calls during the various processes.
The borrower should have an understanding of what his or her debt ratio is. The debt ratio is the proportion of one’s liabilities to one’s income and can range from 30% to 40% depending on the lender. The borrower has to take into account all sources of income including child support, alimony and court settlements; and the liabilities should include all debts. This ratio is used to determine what mortgage payment one can afford and in turn, the maximum amount one can use to purchase or build a home.
The lending institution should give the borrower an idea of what deposit will have to be paid and one should definitely have money set aside for a deposit before seeking prequalification. Most lenders would want to see evidence that there is enough money in a bank account before prequalification. The deposit can also be paid directly to the selling homeowner or his agent and evidenced with an original receipt. It can also be reflected through work completed in an appraisal.
Knowing what it takes to prequalify for a home loan in advance helps with shopping for the right home or looking for the best estimate to build one’s home. The mortgage payment in addition to other liabilities should not exceed the lender’s stipulated debt ratio. If it does, it becomes harder to be prequalified. Therefore, by using some online tools, one can have a rough estimate of the house he or she can afford. This saves time and money for all parties involved.
Once a borrower speaks with the lender in advance of applying for a home loan, the process can move more smoothly. Talk to a representative at the lending institution to determine the type of information required, the supporting documents and the size of the deposit so that one can prequalify for the home loan. It is also good to conduct research on the internet and to speak with relatives and friends about the process they went through before they were prequalified. Once you are prequalified, you just have to be patient and diligent so that you are approved for your home loan.
Category: Prequalifying for a Home LoanComments Off
January 26, 2013 by admin
Buying a home is one of the biggest investments most people will ever make in their lifetimes. It is therefore important for you to ensure that you tread very carefully when it comes to this issue. Failure to do so will possibly leave you with a home, which has little or no value at all which just ends up being a liability. This is where a mortgage rate tracker can be a lifesaver.
Before you embark on getting a mortgage there are a few things you need to think about. One of these things is the value of the house and its potential value in the future. It is important for you to research and make sure that the land on which your home is built on is valuable and not prone to too many problems. Some infrastructures like a railway station nearby may end up lowering the value of your home. You should ensure that you get a mortgage on a home that has a very high likelihood of increasing in value. This way, you end up making a good investment which will come in handy should you decide to sell in the future.
Once you select your possible home, you also need to check out if there are any social amenities within the area. Depending on whether you want solitude or a family home, the lack or presence of social amenities nearby can be a good or bad thing. The value of your mortgage may be determined by the amenities nearby.
Money is always an issue when it comes to getting a mortgage. It is important for you to get a lending institution that will help you with the financing or refinancing of your home at rates that are fair to both parties. This is where the mortgage rate tracker comes in.
The mortgage rate tracker is usually an online calculator that enables you calculate the rate of a mortgage in terms of your estimated monthly payments as well as the period of payment in relation to its location. It can also enable you decide on what lending institution to select to provide you with the best financing deal possible for your budget.
With the help of a mortgage tracker, you will also be able to decide on the kind of mortgage loan you should take. This is usually a significant decision that will affect you financially in the long term. Loans like those of FHA, for example, usually have insurance cover to protect FHA-affiliated lending institutions from defaults. This in turn enables them refinance your mortgage and better rates to those of private lending institutions.
You should therefore ensure you make use of a mortgage tracker to determine the best property to buy, the location, the payment period, the interest rates, the closing costs among other things. While these issues may look insignificant if considered individually, the truth is that they are correlated and capable of causing havoc if miscalculated. Using the right calculators for your mortgage calculations will therefore, prevent you from making a colossal mistake in an investment vehicle that will possibly be the biggest you will ever make in your lifetime.
Category: Mortgage Rate TrackerComments Off
January 6, 2013 by admin
Home buyers are often confused about the home loan process. A home buyer might even consider hiring a lawyer who can thoroughly explain the approval process and legal procedures. However, the process for home loan approval is not that complicated at all.
Here are the instructions:
First, you should not start the home loan process unless you are certain that you meet the qualifications of your lenders. Otherwise, all your efforts will be wasted since your application for home loan will be immediately rejected. Understand that banks and mortgage lenders only approve applicants with a steady employment. This means that your salary for the last 6 months will be verified with your employer. Your income is going to determine if you are capable to pay your debts.
All necessary documents and legal papers must be prepared prior to submission. As explained above, copies of your recent paychecks and bank statements are required. These are your primary proof of your ability to settle your loan on time. Taxes, divorce decrees and other information about your financial status are also necessary.
The banker/lender will perform a background check on your credit history. Make sure that all your previous debts are settled before the home loan process begins. The lender will interview you via telephone or will invite you to visit their office to personally answer their questions. Since home loans usually involve huge amount of money, it is advisable that you do not have any pending loans that you are still paying out. This will encourage the bank or financial institution to quickly approve your home loan.
Expect that the home loan application may not be approved immediately. It may take days or weeks for the lenders to process the loan approval. Initial response from them is usually received within one week. Once you received their call, it means that the home loan process is now ongoing and they are already evaluating your documents. However, receiving calls from your lender does not automatically mean that your loan is already approved. It could be that they just want to clarify some information in your files. They might also want you to submit additional supporting documents to establish your credibility. Submit whatever they are asking for to avoid further delay. The entire home loan process may take 2 weeks up to one month and possibly longer than that depending on the situation.
Once the home loan process is finished, the lender will then decide if your application will be granted. Do not worry because it will be approved as long as you met all requirements. They will set an appointment with you to sign the papers. Read carefully the terms of agreement. The home loan process is easy to understand but contracts are often complicated so you might need an attorney to explain the terms. After everything is agreed and signed, you still need to wait another three days to receive the check. Once the home loan has been funded, the lender will record the transaction as completed. Now all you have to do is to pay your installments regularly to avoid legal problems.
Category: Home Loan ProcessComments Off