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Would-Be Buyers with Student Debt

by The Mike Parker Team

59% of non-owners are not comfortable taking on a mortgage with their student debt according to the Aspiring Home Buyers 2017 survey. It is estimated that the college graduates have an average of $37,172 in student debt.16522219-250.jpg

Fannie Mae, who has loan programs with as little as three to five percent down payments, has announced changes to how student loan debt is treated that could make the difference in qualifying for a mortgage.

For the 5 million borrowers who participate in the reduced payment plans, actual payments are considered for calculating debt-to-income ratio rather than maximum payment amount.

Non-mortgage debts paid by another party for at least 12 months won’t be included in calculating debt-to-income ratio.  For example, payments being made on a student loan by the parents would not be counted against the DTI ratio for the student.

These changes can make it possible for would-be buyers with student debt to get a home now instead of waiting for years. Being pre-approved by a trusted mortgage professional is the best way to confirm that these changes apply to your situation. Call today for a recommendation of a trusted mortgage professional.

Going UP

by The Mike Parker Team

Reasons to Refinance

by The Mike Parker Team

Regardless of the reason to refinance a home, the basic question to ask is: “Do you plan to live in the home long enough to recapture the cost of refinancing?” There are always expenses involved in refinancing which can be paid in cash or rolled into the new mortgage.

From a strictly financial standpoint, the break-even point is achieved when the cost of refinancing has been recaptured by the monthly savings. It would take approximately 23 months to recapture $4,000 of refinance costs with a lower payment of $175 a month.22683914-250.jpg

  1. Lower the rate
  2. Shorten the term so that the loan will build equity faster and be paid off sooner.
  3. Lower your payment to reduce your monthly cost of housing.
  4. Convert an ARM to a FRM to stabilize your payment due to concern of rising interest rates.
  5. Cash out equity to be able to use the money for another purpose.
  6. Combine a first and second mortgage.
  7. Consolidate personal debt so the interest is tax deductible.
  8. Payoff higher cost debt such as credit cards, student debt, etc.
  9. Remove a person from a loan as in the case of a divorce.

Points paid to purchase a principal residence are tax deductible completely in the year paid. However, the points must be spread over the life of the mortgage on a refinance. For that reason, consider getting a “par” value loan with no points. It may have a slightly higher rate but the interest will be fully deductible and it will lower the cost of refinancing.

Determine the break-even point on your situation by using the Refinance Analysis . Call for a recommendation of a trusted mortgage professional.

The Mike Parker Team Shred Event 2017

by The Mike Parker Team

Indecision May Cost More

by The Mike Parker Team

“More has been lost due to indecision than was ever lost to making the wrong decision.” Interest rates have as much effect on housing costs as price and when they are both trending upward, it can be very expensive to wait. 25787590cropped.jpg

There can be some legitimate reasons for postponing a purchase such as needing to save the down payment, improve your credit or waiting to find out about a possible transfer. The problem is that prices and interest rates could, and very likely will, go up in the future.

If the price of $250,000 home went up 5% and the interest rate went from 4.5% to 5.25%, the payments would increase by $176.42. The additional cost over a seven-year period would be close to $15,000.

The questions that indecisive buyers need to ask themselves is “how am I going to feel knowing that if I had not waited, I could have been living in the home for less money?” and “What would I have spent the money on if I didn’t have to make the larger payment?”

Use the Cost of Waiting to Buy calculator to find out how much indecision may be costing you.

Displaying blog entries 1-5 of 5

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Mike Parker - CRS
HUFF Realty
60 Cavalier Blvd.
Florence KY 41042
859-647-0700