First-time Homebuyers Archives

Apache is functioning normally

May 28, 2023 by Brett Tams

How Bankrate scored Third Federal Savings and Loan

To determine Third Federal Savings and Loan’s Bankrate Score, Bankrate’s editorial team rated it and other lenders on a scale of one to five stars based on a variety of factors relating to the lender’s products and services. (Bankrate’s partners compensate us, but our opinions are our own, and partner relationships do not influence our reviews.) We derived its overall score by considering three basic factors:

Affordability: Third Federal’s mortgage rates are largely below Bankrate’s averages, and you can save on upfront closing costs with the bank’s low-cost options.
Availability: The bank serves borrowers in 25 states and Washington, D.C., and doesn’t offer government loans.
Borrower experience: Third Federal has a broad range of customer service hours and lots of online resources to help guide you through the mortgage process.

Affordability: 5/5

Affordability differs from lender to lender, so comparing costs is key. Third Federal Savings and Loan clearly displays mortgage rates on its website. These rates are generally competitive and updated regularly, and you can set up automatic rate alerts to get a notification when rates drop below a certain level. If you input some details about your desired loan, you can get even more information, such as the estimated payment and closing costs or how much you could save on the interest rate by paying for points.

The bank charges common closing costs that can include an origination fee, but also offers a lower-upfront cost option for virtually every type of loan that keeps these costs to just $295. These low-cost loans have a higher interest rate, however, so you’ll have a higher monthly payment and your borrowing costs could amount to much more over the life of your loan. Additionally, while there’s no fee to get a preapproval, you might be charged an application fee depending on the type of mortgage you’re seeking. Notably, the bank also offers a $750 closing cost credit to first-time homebuyers.

Availability: 4/5

This factor can make the overall mortgage application process smoother or more challenging. Third Federal Savings and Loan works with borrowers in 25 states, so you’ll need to confirm whether it services yours before you apply for a mortgage with the bank. Its loan offerings include conventional loans as well as construction loans and financing for investment properties. The bank doesn’t offer government-insured mortgages, however.

Borrower experience: 4.7/5

Know what to expect when you work with a specific lender. Third Federal Savings and Loan has 80 years of experience lending to borrowers in Ohio and elsewhere in the U.S. The bank has an A- rating from the Better Business Bureau. Its website makes it easy to check available rates, get preapproved, apply for a loan and sign the required paperwork. Before you apply, you can use the bank’s useful calculators to determine how much home you can afford and to estimate your monthly payment. Once you get your loan online, you can use the Third Federal app to manage it; however, you can’t apply for the loan itself directly through the app.

How to apply for a mortgage with Third Federal Savings and Loan

You can apply for a purchase loan or a refinance in person at one of the bank’s branches, on Third Federal’s website or by calling 1-800-THIRD-FED.

Here are some tips to prepare for the process:

Check your credit report. It’s important to check your credit report before your lender does, in case there are errors that could impact not only whether you get preapproved but also your ability to get the best mortgage rate. Knowing your credit score also helps you decide what type of loan to apply for. If your score is in the very low 600s, for instance, an FHA mortgage might be best for you, as its standards are more lenient than those for conventional loans.
Gather personal and financial documents. With any lender, you must supply documentation about your income, assets and debts. This includes pay stubs and W-2s and account and loan statements.
Provide details about the property. You’ll need to provide the address of the home and submit to an appraisal. (If you’re refinancing, you might or might not need an appraisal.)

Refinancing with Third Federal Savings and Loan

Third Federal Savings and Loan offers refinancing at competitive rates in line with Bankrate’s averages. You can apply to refinance your loan through the bank’s website, either to take equity out of your home, refinance your existing balance to a lower rate or shorter term (or both) or consolidate debt. The bank’s low-cost loans ($295 closing costs) are also available for refinances.

Methodology

Bankrate’s expert editorial team collects lender information through a variety of methods. We contact lenders directly, and we also turn to regulatory filings and to assessments by third parties. Our research takes into account three main factors – affordability, availability and borrower experience.

Bankrate’s reporters and editors have decades of experience covering the mortgage industry. They’re skilled at gathering information through interviews and by scouring regulatory filings. Bankrate evaluates more than 85 lenders for factors relating to affordability, availability and customer experience, assigning each a Bankrate Score out of five stars. Here’s how we assess each of the categories:

Affordability. Loan cost is a deciding factor for many borrowers. We look at two metrics: 1) a lender’s lowest advertised annual percentage rate (APR) based on Bankrate’s sample scenario, which assumes a 740 or higher credit score and a 20 percent down payment, among other factors and 2) established-customer discounts or incentive pricing, when applicable.
Availability. Another factor is how quickly your loan application will be approved, and how many loan programs the lender offers. So we evaluate approval and closing timelines and diversity of loan products.
Customer experience. Finally, we delve into what it’s like to deal with the lender as a consumer. We look at the lender’s application process and availability of customer service support. We also consider the results of J.D. Power’s 2022 Mortgage Origination Satisfaction Survey.

Bankrate’s editorial team confirms the accuracy of data at the time of publication. Our team is dedicated to maintaining the timeliness of information – the mortgage industry is changing constantly, so we regularly revisit these reviews to update them.

Bankrate’s methodology page spells out our rating process in greater detail.

Source: thesimpledollar.com

Apache is functioning normally

May 27, 2023 by Brett Tams

Alejandro Lazo | CalMatter

In this economy, who has enough money for a down payment on a house?

Despite a projected $25 billion budget deficit, the state of California does. At least for now.

The California Housing Finance Agency is poised to launch a scaled-down version of its new shared equity home loan program on March 27. With the Dream for All program, the state plans to provide $300 million worth of down payments for an estimated 2,300 first-time homebuyers.

The complicated program involves the state paying some or all of the upfront costs for buying a home — the down payment, for instance — in exchange for a share in the home’s value when it is sold, refinanced or transferred.

If the home appreciates in value, those gains to the state would then be used to fund the next borrowers — a little for the seller; a little for the next aspiring buyer.

Everybody wins — as long as prices go up.

The trouble is that home prices have been declining in the state for months, even as higher mortgage interest rates have made monthly mortgage payments more expensive.

A potential economic downturn looms as well, as the Federal Reserve weighs raising borrowing costs even further as soon as today.

And California’s tech industry is taking a beating and laying off workers, contributing to a decline in personal incomes. Income taxes are the state’s biggest revenue source.

Given the uncertainty, Gov. Gavin Newsom in January proposed a significantly smaller version of the 10-year, $10 billion program originally envisioned by Senate President Pro Tem Toni Atkins, a Democrat from San Diego. In his January budget, Newsom proposed spending an initial $300 million on the program, a cut from the $500 million compromise signed last year.

Optimism and expectations

The size and scope of the Dream for All program will likely be a subject of negotiations between Newsom and the overwhelmingly Democratic Legislature this year. The governor is expected to offer a revised state spending plan and a new financial forecast in May. Lawmakers must pass a balanced budget by June 15 in order to get paid.

The proposed cut “will not impact the Administration’s commitment or timeline for implementing the program,” Newsom’s Department of Finance said in January.

In a Feb. 13 email to CalMatters, Christopher Woods, budget director for Atkins, said her office will seek more funding for the program.

“The Governor ‘proposing’ to pull back some funds has very little to do with what will actually happen,” Woods wrote to CalMatters, in response to earlier coverage of the program. “No one should expect the program to be cut, and we should all fully expect additional funds – perhaps as much as $1 billion – to be allocated in the 2023-24 Budget Act.”

“With interest rates rising, the program is needed more than ever … and there are several innovative ways to fund the program,” Woods wrote.

Woods declined to answer follow-up questions for this story.

Atkins, who championed the equity sharing program last year, has said the Dream for All program is a priority. She said in a recent statement she isn’t giving up on getting more money for it.

“Our state is about to launch a program that will help change people’s lives for the better, and make the dream of homeownership a reality,” she said. “While existing funding for the California Dream for All is a great first step, we are working to allocate additional funding in the upcoming state budget — with the ultimate goal of providing $1 billion per year — to help even more families set the foundation for building generational wealth.”

Falling equity

The uncertainty in the economy and housing market has been a subject of discussion at CalHFA for months, as officials and political appointees seek to launch a program meant to take advantage of rising home prices at the very moment home equity is falling.

State officials said buyers positioned to hold onto a property for the long-term are those best suited for the program when home prices are falling.

In a presentation to its board of directors in January, CalHFA officials also said the agency is planning for a program with a potentially “very short life cycle.”

“Having lived the dream of buying a house in Los Angeles in 1989, when the market peaked, and then selling it at a loss almost a decade later, I can appreciate that the market doesn’t always go up,” Jim Cervantes, CalHFA’s chair, said during that Jan. 19 meeting.

“Disclosures, whatever we can do to mitigate — or rather, have prospective buyers understand what they’re getting into — would be extremely valuable, because no one’s a good market timer.”

California home prices, already rising for years, saw big gains during the pandemic, as mortgage interest rates hit historic lows and families sought more space for their remote work set-ups to practice social distancing.

The median price of a previously-owned, single-family home in California, as tracked by the California Association of Realtors, increased 47% from March 2020 to May 2022, when it peaked at $900,170.

That same month the Federal Reserve, in order to tackle inflation, began its most aggressive interest rate hikes in years driving up mortgage costs for consumers.

Since May 2022, the state’s median home price has fallen 16.5% to hit $751,330 in January.

Market change

Despite the decline in home prices, monthly mortgage costs continue to make the state’s housing market more unaffordable than at nearly any point in the last 15 years, particularly for lower- and middle-class families. Only 17% of families in California could afford a median-priced single family home at the end of last year, according to the Realtors group.

Given the rapid market changes, Tiena Johnson Hall, CalHFA’s executive director, called the governor’s reductions in Dream for All funding prudent at CalHFA’s January meeting. “There’s still a lot of room for (home) values to continue to decrease, and that is what we expect to see,” she said.

In February, the state’s nonpartisan legislative analyst projected a revised $25 billion deficit in next year’s state budget. Since then, job growth nationally and in California has remained strong, except for layoffs in the tech sector.

The full details of the Dream for All program — for instance, which lenders will offer the shared equity loans to borrowers — are not yet available from CalHFA.

And loans will not be immediately available to consumers when the program launches this month. Lenders will need a month to six weeks to roll out the loans and begin marketing them to consumers, said Ellen Martin, a CalHFA official tasked with designing the program.

“We do know that there’s a lot of excitement out there,” Martin told CalMatters in a recent interview.

How it will work

Some details have been revealed in CalHFA board meetings, public hearings and a report to the state Legislature. Here are some of the program’s key components.

The loans will not be available for all Californians. Only those who earn 150% or less of the median income of others in their county qualify. Those income limits vary by county, with $300,000 being the cut-off in pricey Santa Clara and San Francisco counties, but $159,000 for many inland counties such as Fresno and Merced.

The loans will cover as much as 20% of a home purchase. Whenever a home is sold, transferred or refinanced, a borrower will owe the state the original amount the state invested, plus a percentage of the home’s increase in value. If the original loan was 20 percent of a home’s value, the seller would owe the state the original loan plus 20 percent of its increased value, though that amount would be capped at 250% of the original loan amount.

A social equity feature of the program will be included for those who earn as much as 80% of the area median income. They will get to keep more of their equity when they sell, refinance or transfer their properties than others with higher incomes. Also about 10% of the initial state funds, or $30 million, will be reserved for those lower-income borrowers.

The loans can be used to fund down payments and closing costs, including interest rate buydowns.

Given the complexity of the program, borrowers will be required to complete a homebuyer education course.

Advocates’ concerns

The complexity of the program has some consumer advocates worried.

Lisa Sitkin, a senior staff attorney with the National Housing Law Project, said it would be wise for the agency to ensure borrowers receive periodic notices about the loan’s atypical details.

“As time goes by, people tend to forget and treat it as a normal loan, and I think it is useful for people planning to be reminded,” said Sitkin, a member of a working group advising CalHFA on the program.

A proposal to sell the loans as mortgage-backed securities also has her worried. California officials are exploring the idea of pooling the shared equity loans into securities and selling them to investors, to help provide additional money for other borrowers.

Many Wall Street financial institutions bundled often poor-quality mortgage loans into securities during real estate’s boom years and sold them to major investors. But during the years of downturn, getting help to homeowners was complicated by the difficulties identifying who exactly owned these loans.

“If they are sold into private, securitized trusts there is a lack of transparency about who owns your debt, and a lack of information about options if there are problems,” Sitkins said. “I really want to be sure that there are guardrails and protections for the borrowers.”

Consumers are cautious

As CalHFA officials were designing the program last year, they held several listening sessions online, taking comments from the public. Jake Lawrence, a 41-year-old cannabis entrepreneur in Willits who also runs a nonprofit, said he liked what he heard.

“I’m very interested. The problem we face is that there’s such a flux in what’s going on,” Lawrence said. “We’re in the middle of a housing market bust, so we’re gonna watch prices tumble for a minute.”

What’s more, one of the county’s biggest industries, the marijuana trade, has been hit hard by declines in cannabis prices. “It’s beyond suffering,” Lawrence said.

Lawrence also wondered how the state will calculate equity if he makes improvements to a home.

Despite his questions, he is considering the idea.

“It doesn’t hurt my feelings to share equity with someone who invests in me,” he said of the state. “And anybody that understands any kind of financial literacy should understand an investor should be able to have their expected ROI (return on investment). For me, I have zero issue with the idea.”

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Source: capradio.org

Apache is functioning normally

May 27, 2023 by Brett Tams

Conventional loans are the most popular kind of mortgage, but a government-backed mortgage like an FHA loan is easier to qualify for and may have a lower interest rate. FHA home loans have attractive qualities, but borrowers should know that mortgage insurance usually tags along for the life of the loan.

As of March 2023, new FHA borrowers will pay less for insurance. The Biden-Harris Administration announced it was reducing premiums by .30 percentage points, lowering annual homeowner costs by $800 on average. The administration hopes the cuts will help offset rising interest rates.

What Is an FHA Loan?

The Federal Housing Administration has been insuring mortgages originated by approved private lenders for single-family and multifamily properties, as well as residential care facilities, since 1934.

The FHA backs a variety of loans that cater to the specific needs of a borrower, such as FHA reverse mortgages for people 62 and older and FHA Energy Efficient Mortgages for those looking to finance home improvements that will increase energy efficiency (and therefore lower housing costs).

But FHA loans are most popular among first-time homebuyers, in large part because of the relaxed credit requirements.

Recommended: Tips to Qualify for a Mortgage

FHA Loan Requirements

If you’re interested in an FHA home loan to buy a single-family home or an owner-occupied property with up to four units, here are the details on qualifying.

FHA Loan Credit Scores and Down Payments

Borrowers with FICO® credit scores of 580 or more may qualify for a down payment of 3.5% of the sales price or the appraised value, whichever is less.

Those with a poor credit score range of 500 to 579 are required to put 10% down.

The FHA allows your entire down payment to be a gift, from a family member, close friend, employer or labor union, charity, or government homebuyer program. The money will need to be documented with a mortgage gift letter.

FHA Loan DTI

Besides your credit score, lenders will look at your debt-to-income ratio, or monthly debt payments compared with your monthly gross income.

FHA loans allow a DTI ratio of up to 50% in some cases, vs. a typical 45% maximum for a conventional loan.

FHA Mortgage Insurance

FHA loans require an upfront mortgage insurance premium (MIP) of 1.75% of the base loan amount, which can be rolled into the loan. As of March 2023, monthly MIP for new homebuyers is 0.15% to .75% — most often 0.55%.

For a $300,000 mortgage balance, that’s upfront MIP of $5,250 and monthly MIP of $137.50 at the 0.55% rate.

That reality can be painful, but MIP becomes less expensive each year as the loan balance is paid off.

There’s no getting around mortgage insurance with an FHA home loan, no matter the down payment. And it’s usually only shed by refinancing to a conventional loan or selling the house.

FHA Loan Limits

In 2023, FHA loan limits in most of the country are as follows:

• Single unit: $472,030

• Duplex: $604,400

• Three-unit property: $730,525

• Four-unit property: $$907,900

The range in high-cost areas is $1,089,300 (for single unit) to $2,095,200 (four-unit property); for Alaska, Hawaii, Guam, and the U.S. Virgin Islands, the range is $1,633,950 (for single unit) to $3,142,800 (for four-unit property).

FHA Interest Rates

FHA loans usually have lower rates than comparable conventional loans.

The annual percentage rate (APR) — the annual cost of a loan to a borrower, including fees — may look higher on paper than the APR for a conventional loan because FHA rate estimates include MIP, whereas conventional rate estimates assume 20% down and no private mortgage insurance.

The APR will be similar, though, for an FHA loan with 3.5% down and a 3% down conventional loan.

First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.

FHA Income Requirements

There are none. High and low earners may apply for an FHA loan, but they must have at least two established credit accounts.

Recommended: How to Afford a Down Payment on Your First Home

Types of FHA Home Loans

Purchase

That’s the kind of loan that has been described.

FHA Simple Refinance

By refinancing, FHA loan borrowers can get out of an adjustable-rate mortgage or lower their interest rate.

They must qualify by credit score and income, and have an appraisal of the property. Closing costs and prepaids can usually be rolled into the new loan.

FHA Streamline Refinance

Homeowners who have an FHA loan also may lower their interest rate or opt for a fixed-rate FHA loan with an FHA Streamline Refinance. Living up to the name, this program does not require a home appraisal or verification of income or credit.

The new loan may carry an MIP discount, but you’ll pay the upfront MIP in addition to monthly premiums. An exception: The upfront MIP fee of 1.75% is refundable if you refinance into an FHA Streamline Refinance or FHA Cash-out Refinance within three years of closing on your FHA home loan.

Closing costs are involved with almost any refinance, and the FHA doesn’t allow lenders to roll them into a Streamline Refinance loan. If you see a no closing cost refinance for an FHA loan, that means that instead of closing costs, a lender will charge a higher interest rate on the new loan.

You’ll continue to pay MIP after refinancing unless you convert your FHA loan to a conventional mortgage.

FHA Cash-Out Refinance

You don’t need to have an FHA loan to apply for an FHA Cash-Out Refinance. Whatever kind of loan the current mortgage is, if the eligible borrower has 20% equity in the home, the refinanced loan, with cash back, becomes an FHA loan.

The good news: Homeowners with lower credit scores may be approved. The not-great news: They will have to pay mortgage insurance for 11 years.

Any cash-out refi can trigger mortgage insurance until a borrower is back below the 80% equity threshold.

FHA 203(k) Loan

In addition to its straightforward home loan program, the FHA offers FHA 203(k) loans, which help buyers of older residences finance both the home purchase and repairs with one mortgage.

An FHA 203(k) loan can be a 15- or 30-year fixed-rate or adjustable-rate mortgage.

Some homeowners take out an additional home improvement loan when the need arises.

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FHA vs Conventional Loans

Is an FHA loan right for you? If your credit score is between 500 and 620, an FHA home loan could be your only option. But if your credit score is 620 or above, you might look into a conventional loan with a low down payment.

You can also buy more house with a conventional conforming loan than with an FHA loan. Conforming loan limits in 2023 are $726,200 for a one-unit property and $1,089,300 in high-cost areas.

Borrowers who put less than 20% down on a conventional loan may have to pay private mortgage insurance (PMI) until they reach 20% loan-to-value. But borrowers with at least very good credit scores may be able to avoid PMI by using a piggyback mortgage; others, by opting for lender-paid mortgage insurance.

One perk of an FHA loan is that it’s an assumable mortgage. That can be a draw to a buyer in a market with rising rates.

The Takeaway

An FHA home loan can secure housing when it otherwise could be out of reach, and FHA loans are available for refinancing and special purposes. But mortgage insurance often endures for the life of an FHA loan. The Biden-Harris Administration recently reduced monthly MIP for new homebuyers to help offset higher interest rates.

Some mortgage hunters might be surprised to learn that they qualify for a conventional purchase loan with finite mortgage insurance instead. And some FHA loan holders who have gained equity may want to convert to a conventional loan through mortgage refinancing.

SoFi offers conventional fixed-rate mortgages with competitive interest rates and cancellable PMI, as well as refinancing. Check out SoFi’s low rate home mortgages.

Qualifying first-time homebuyers can put as little as 3% down, and others, 5%.

View your rate today.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.
SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
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Source: sofi.com

Apache is functioning normally

May 26, 2023 by Brett Tams

It’s tough out there for first-time homebuyers. They’re facing multiple challenges, including rising mortgage rates, high home prices and limited inventory. However, that doesn’t seem to scare off young Americans — in fact, 71.5% of Gen Zers plan to buy their first home in the next one to six years, according to a Rocket Mortgage survey from earlier this year.

At the same time, not every Gen Zer knows what mortgage lenders are looking at when evaluating a home loan application. On average, 33.9% of Gen-Z were wrong about the factors lenders consider when deciding whether to approve a mortgage, according to the survey.

What most mortgage lenders look at when considering your application

CNBC Select explains what factors influence mortgage approval and what young people can do to increase their chances of qualifying for a home loan.

Credit score

Most Gen Zers know that their credit score can impact their ability to secure a mortgage (73.2%). And while they’ve had less time to establish a credit history, Gen Zers have an average FICO score of 679 according to the latest data from Experian. That’s lower than that of older generations but still considered good.

The minimum credit score to qualify for a conventional mortgage is 620. Government-backed mortgages have more relaxed credit requirements. The minimum credit score for an FHA loan is 580 with a down payment of 3.5% or as low as 500 if you can put at least 10% down. USDA and VA loans don’t have set credit requirements, but lenders that offer them might.

Besides approval chances, a homebuyer’s credit affects the interest rate on the loan. A small difference in interest rates can add hundreds of dollars to a monthly mortgage payment.

It’s best to work on building credit before applying for a mortgage. Free credit monitoring services such as CreditWise® from Capital One and Experian free credit monitoring can be helpful in tracking progress and finding opportunities to improve.

CreditWise® from Capital One

Information about CreditWise has been collected independently by Select and has not been reviewed or provided by Capital One prior to publication.

Cost
Credit bureaus monitored

TransUnion and Experian
Credit scoring model used

VantageScore
Dark web scan
Identity insurance

Terms apply.

Experian Dark Web Scan + Credit Monitoring

On Experian’s secure site

Cost
Credit bureaus monitored
Credit scoring model used
Dark web scan

Yes, one-time only
Identity insurance

Terms apply.

Note that the scores credit monitoring services offer differ slightly from the scores mortgage lenders use when making their decisions. That said, they should be pretty close and provide a good idea of your overall credit health.

Debt-to-income ratio (DTI)

Almost one-third of Gen-Z didn’t name the debt-to-income ratio (DTI) as one of the factors affecting mortgage approval (32.8%). In reality, lenders evaluate this closely when determining whether to approve a mortgage and what the terms of the loan will be.

DTI is the amount of debt relative to income. To qualify for a conventional mortgage, you don’t want a DTI any higher than 43%. For USDA and VA loans, the DTI limit is typically 41%, while the FHA might allow you to go up to 50%. Remember, these are guidelines — it’s up to individual lenders to determine the cutoff for what’s an acceptable number.

Calculating your DTI

To calculate your DTI, divide your total monthly bills, such as rent and any debt payments, by your gross monthly income (how much you make before taxes).

For example, let’s say your monthly bills total $2,500 and your gross monthly earnings are $5,000.

$2,500 / $5,000 = 0.5

Multiply the result by 100 to get the percentage. In this case, your DTI would be 50%.

Down payment

When a homebuyer makes a sizeable down payment, the lender may consider them a less risky borrower. Having more money to put down increases the chance of mortgage approval and can lower the monthly mortgage payment.

According to the survey, 10.1% of Gen-Z plan to put down 20% of their home price. If they do, they’ll start off with a good amount of equity in their home and won’t have to worry about private mortgage insurance (PMI). PMI is a monthly fee rolled into the mortgage payment, designed to protect the lender if the borrower can’t pay their home loan.

That said, it’s possible to secure a mortgage without a 20% down payment. In fact, FHA loans require as little as 3.5% down with a credit score of at least 580. Qualified first-time homebuyers can also put 3% down with conventional mortgages, such as HomeReady and Home Possible. USDA and VA loans have no down payment requirement at all.

Saving up for a down payment can take some time — often, several years. Putting the funds in a high-yield savings account can help them grow a little faster. Some of CNBC Select’s favorite accounts include LendingClub High-Yield Savings and the Western Alliance Bank Savings Account for their high APYs and ease of use.

LendingClub High-Yield Savings

LendingClub Bank, N.A., Member FDIC

Annual Percentage Yield (APY)
Minimum balance

No minimum balance requirement after $100.00 to open the account
Monthly fee
Maximum transactions
Excessive transactions fee
Overdraft fees
Offer checking account?
Offer ATM card?

Western Alliance Bank Savings Account

Western Alliance Bank is a Member FDIC.

Annual Percentage Yield (APY)
Minimum balance

$1 minimum deposit
Monthly fee
Maximum transactions

Up to 6 transactions each month
Excessive transactions fee

The bank may charge fees for non-sufficient funds
Overdraft fee

The bank may charge fees for overdrafts
Offer checking account?
Offer ATM card?

Terms apply.

Employment

Current employment, as well as work history, are also factors in mortgage lending decisions. It’s not uncommon for a lender to require two years of consistent employment history. Note that it doesn’t necessarily mean working for the same company. More likely, the lender will be looking to see whether the borrower has been employed in the same line of work or career field and if there are any lengthy gaps without a job.

Showing this kind of consistency can be tricky for Gen Zers who have only just started building their careers. However, as long as the homebuyer can prove they have a stable income and are a responsible borrower, the lack of two years of work history might be something a lender can live with.

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How Gen-Z can prepare for a mortgage application

While mortgage lenders generally examine the same things when evaluating an application, they might not always agree on what’s an acceptable risk. Individual lenders also may offer different types of home loans, work with different down payment assistance programs or even have their own unique offers for first-time homebuyers.

For that reason, it’s wise to speak to several lenders before choosing one. Plus, this will also allow for interest rate shopping, which is essential to securing the best possible mortgage terms.

CNBC Select picked PNC Bank as one of the best lenders for first-time homebuyers, thanks to the variety of home loan options they can offer. Rocket Mortgage can be a good choice for borrowers with lower credit scores, and Ally Bank Mortgage can help new homebuyers save on lender fees.

PNC Bank

Annual Percentage Rate (APR)

Apply online for personalized rates; fixed-rate and adjustable-rate mortgages included
Types of loans

Conventional loans, FHA loans, VA loans, USDA loans, jumbo loans, HELOCs, Community Loan and Medical Professional Loan
Terms

10 – 30 years
Credit needed
Minimum down payment

0% if moving forward with a USDA loan

Terms apply.

Ally Bank Mortgage

Annual Percentage Rate (APR)

Apply online for personalized rates; fixed-rate and adjustable-rate mortgages included
Types of loans

Conventional loans, HomeReady loan and Jumbo loans
Terms

15 – 30 years
Credit needed
Minimum down payment

3% if moving forward with a HomeReady loan

Terms apply.

Bottom line

Gen-Z are entering a challenging housing market, but many feel up for the task and plan to buy a home in the next few years. Homeownership can be an excellent way to build wealth, but before springing into action, it’s a good idea to educate yourself on what impacts mortgage lending decisions and get your financial ducks in order based on what you’ve learned.

Catch up on CNBC Select’s in-depth coverage of credit cards, banking and money, and follow us on TikTok, Facebook, Instagram and Twitter to stay up to date

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.

Source: cnbc.com

Apache is functioning normally

May 26, 2023 by Brett Tams

National Mortgage News Editor-in-Chief Heidi Patalano joins Yahoo Finance Live to discuss the state of the housing market, including mortgage rates, pricing, and challenges for first-time homebuyers.

Video Transcript

– Keeping a close eye on the housing market, buyers are flowing into the new home market. Sales of new single family houses hitting in 683,000 during the month of April. This comes as mortgage rates continues to gradually trend higher again after a few weeks of declines. Rates on a 30-year fixed rate mortgage, they topped 5% for the first time in over a decade last year climbing as high as 7%.

For more on the housing market, we’re joined by Heidi Delano, who is the National Mortgage News editor-in-chief. Thanks so much for joining us on set.

HEIDI PATALANO: Thanks for having me. Great to be here.

– Certainly. So we were just diving into some of the numbers that broke this morning, particularly on the new home sales front. And one of the kind of figures that caught my eye here was the median sales price, that’s sitting at about $420,000 right now– so just shy of $500,000 there. And particularly, how that correlates to where people are finding mortgage rates.

You say in your notes to us they’re expected to remain volatile in the near term. But what about as we get towards the end of this year where there’s not as much buying that typically takes place towards that kind of latter half, or at least the third and fourth quarter of this year.

– Right. Well, there’s some reason for optimism for first-time homebuyers, those looking to get into their homes now or in the near future. As we’re noting, a lot of Fannie Mae is predicting that there may be a recession, of course, coming at the second half of the year. We’ve heard from the Mortgage Bankers Association, they expect rates to go down to about 5.6 by the end of the year, which should bring some people back to the table in terms of being interested in getting back in there and finally making an offer on a home.

So, you know, prices aren’t going to come down drastically from where they are now. They may come down a smidge– just a smidge. But really, there’s so much more demand than there are homes to be bought, so that’s really going to keep the prices pretty much where they are for the moment.

– Well, that and if we’re seeing mortgage rates come down, doesn’t that give a little room for prices to go up? In other words, when mortgage rates go up a lot, isn’t that a little bit of a curb to some extent on pricing because if you’re buying a house, you need a little bit more of an incentive on the pricing side?

– Right. Right. Absolutely. And you know, it’s interesting that across the country, every market is different. And we’re seeing more and more of that that every market has its own unique dynamics and there’s different things at play. For example, in Boise, Idaho, over the pandemic, the prices went up 70%. And now they’re coming back down. They came back down by about 8% from last year. So where there were huge increases, there is a little bit of a correction right now. And so yes, with rates coming down a little bit, they want to close that deal. It’s possible to maybe come down a little bit more on price.

– That might be a little bit of a correction, but like that’s not– I mean, if it went up 70% and it’s just coming down by 8%, that is still incredibly elevated. I mean, in other words, are you seeing as you look across the country, it doesn’t sound like that there is a, quote unquote, “normalization” to pre-pandemic levels certainly.

– Right. Certainly not. No. From the start of the pandemic, prices went up about 30%. And they’re only coming down just a little bit from that. They’re still way above historic norms. And so that’s actually really good for people who bought in the last few years. Of course, we don’t want to see people who have purchased over the past two to three years have their homes now drop in value drastically.

So this is actually good for the health of the overall housing market the fact that these prices aren’t coming down too much. But it’s also tough for the first-time homebuyers who are really having a hard time getting into those homes that are affordable to them.

– Something that we heard about within the earnings reports of Home Depot and Lowe’s was lumber deflation– that being one of the kind of common threads or denominators there. But how does that also play into potential new homebuyers as well who are looking for a home in the price that they may potentially pay?

– Right. There’s hope there. There’s some hope there. One thing that’s interesting about this market, you know, people in homes that exist today are not– they are not incentivized to move. So they’re staying put. And the things that are– the homes that are available to first-time homebuyers are those new ones, those brand new ones. Making them affordable at this time is, of course, still challenging because labor and materials are still quite high, but that’s where the real optimism is in the housing market for those new homes.

– I don’t know what kind of consumer surveys you guys do or you draw from. When people are making those decisions right now, is it rates? Is it price? Is it still location, location, location? Like, what are kind of what are people prioritizing, I guess?

– Right. I think it’s rates in some ways. Certainly for the people that do own a home now, they are not going to move right now. They’re going to wait to see what’s going to happen over the next couple of months. We’re really just in a holding pattern until the next Federal Reserve meeting and we see what they do in terms of raising the federal funds rate.

And for others, it’s a matter of relocating to a place that’s more affordable for them. Like, maybe the existing homeowner will move if they’re moving to a place where, you know, they can make up the difference in the higher cost of the new home because their overall cost of living will be lower. For first-time homebuyers, they want to get into this market no matter what. And so they’re just looking. And you know, certainly a lot of lenders are trying to come up with products that will help them to get into these homes.

You might have seen yesterday, Rocket launched a new product where they will help cover the 3% down that a homebuyer will need in order to get those people into those homes and make it more of a realistic proposition for them.

– Hopefully that doesn’t come back to bite on the other side. I don’t know.

– Yeah. Mortgage News Editor-in-Chief, Heidi Patalano, thank you so much for joining us here on set today. Thank you so much for having me.

Source: finance.yahoo.com

Apache is functioning normally

May 26, 2023 by Brett Tams

The home-buying process can seem daunting for first-time homebuyers. The good news is there are some mortgage lenders that offer home loan products designed to provide more ease with the process, which can be very appealing to many first-time future homeowners.

To help you get started, CNBC Select rounded up a list of the best mortgage lenders first-time homebuyers should consider. We evaluated home loan lenders based on the types of loans offered, customer support, credit score requirements and minimum down payment amount, among others (see our methodology below.)

Beyond just the lowest rates, it’s important to go with the lender that offers the best loan terms to suit your needs. There’s a learning curve when it comes to homeownership, but we’ve included an FAQs section below to help you get a better understanding of some aspects of the process.

The best mortgage lenders for first-time homebuyers

Best for loan variety

PNC Bank

Annual Percentage Rate (APR)

Apply online for personalized rates; fixed-rate and adjustable-rate mortgages included
Types of loans

Conventional loans, FHA loans, VA loans, USDA loans, jumbo loans, HELOCs, Community Loan and Medical Professional Loan
Terms

10 – 30 years
Credit needed
Minimum down payment

0% if moving forward with a USDA loan

Pros

Offers a wide variety of loans to suit an array of customer needs
Available in all 50 states
Online and in-person service available

Cons

Doesn’t offer home renovation loans

Who’s this for? PNC Bank has a wide variety of home loan options, making it easy for first-time homebuyers to find a loan that suits their circumstances. This lender offers conventional loans, FHA loans, VA loans, jumbo loans and HELOCs. On top of that, PNC Bank offers USDA loans, which can be tougher to find among some lenders. PNC Bank also has some specialized loan options, like the Community Loan, which is meant for individuals with lower cash reserves and allows for a down payment as low as 3% and no PMI (private mortgage insurance).

It also offers a Medical Professional Loan for interns, residents, fellows or doctors who have completed their residency in the last five years. Eligible borrowers for this loan can borrow up to $1 million and won’t have to pay PMI, regardless of their down payment amount.

In addition to all these offerings, PNC Bank gives eligible borrowers the chance to qualify for a $5,000 grant to be used toward closing costs. Eligible borrowers must have an income at or below 80% of the median household income for the metropolitan statistical area (MSA), or their desired property must be located in a low- or moderate-income census tract as designated by the FFIEC, according to PNC’s website.

Best for educational offerings

Bank of America Mortgage

Annual Percentage Rate (APR)

Apply online for personalized rates; fixed-rate and adjustable-rate mortgages included
Types of loans

Conventional loans, FHA loans, VA loans, jumbo loans, doctor loans and the Affordable Loan Solution mortgage
Terms

15 – 30 years
Credit needed

Not disclosed
Minimum down payment

0% if moving forward with a VA loan; 3% if moving forward with the Affordable Loan Solution mortgage

Pros

Offers a wide variety of loans to suit an array of customer needs
Offers an Edu-Series for educating first-time homebuyers as well as other learning resources and materials
Online and in-person service available
Fixed-rate and adjustable-rate mortgages offered
Reduced cost of mortgage insurance

Cons

Doesn’t offer USDA loans

Who’s this for? Bank of America stands out for its first-time homebuyer educational resources. Aside from home loan calculators, which are typical for mortgage lenders to provide on their websites, Bank of America has an online “Edu-Series” for first-time home buyers. There are also guides on its website that break down key terms and a list of FAQs geared toward first-time home buyers.

Bank of America also offers a variety of loan options, including a home loan for medical professionals. With this loan, doctors, dentists, residents and fellows can make down payment minimums that are tiered based on the size of the loan they’re applying for. They’ll put down at least 3% on mortgages up to $850,000, at least 5% on mortgages up to $1 million, at least 10% down on mortgages up to $1.5 million and at least 15% down on mortgages to $2 million. If you’re a medical professional, Bank of America will also exclude your student loan debt from your total debt when you’re applying for the loan. This could bring down your debt-to-income ratio for the purposes of applying for the loan and make it easier for you to qualify.

Even if you aren’t a qualifying medical professional, you can still potentially take advantage of tiered down payment terms through the Affordable Loan Solution mortgage option. With this loan, eligible borrowers can make a down payment as low as 3% on loan amounts up to $726,200, and as low as 5% on mortgages up to $1,089,300. Mortgage insurance would be required if making down payments lower than 20%, but according to Bank of America’s website, the mortgage insurance would come at a reduced cost compared to that of other conventional loans.

Best for lower credit scores

Rocket Mortgage

Annual Percentage Rate (APR)

Apply online for personalized rates
Types of loans

Conventional loans, FHA loans, VA loans and Jumbo loans
Terms

8 – 29 years, including 15-year and 30-year terms
Credit needed

Typically requires a 620 credit score but will consider applicants with a 580 credit score as long as other eligibility criteria are met
Minimum down payment

3.5% if moving forward with an FHA loan

Pros

Can use the loan to buy or refinance a single-family home, second home or investment property, or condo
Can get pre-qualified in minutes
Rocket Mortgage app for easy access to your account

Cons

Runs a hard inquiry in order to provide a personalized interest rate, which means your credit score may take a small hit
Doesn’t offer USDA loans, HELOCs, construction loans, or mortgages for mobile homes
Doesn’t manage accounts for jumbo loans after closing

Who’s this for? First-time homebuyers tend to be younger and may not have a long credit history, which can make it harder to qualify for a good mortgage rate. Rocket Mortgage stands here because it accepts applicants with credit scores as low as 580. The lender also has a program called the Fresh Start program that’s aimed at helping potential applicants boost their credit score before applying.

Rocket Mortgage offers conventional loans, FHA loans, VA loans and jumbo loans but not USDA loans, which means this lender may not be the most appealing for potential homebuyers who want to make a purchase with a 0% down payment. Rocket Mortgage doesn’t offer construction loans (if you want to build a brand new custom home) or HELOCs, but if you’re a homebuyer who only plans to purchase a single-family home, a second home, or a condo that’s already on the market, this shouldn’t be a drawback for you.

This lender offers flexible loan repayment terms that range from 8 – 29 years in addition to standard 15-year and 30-year terms.

Best for no lender fees

Ally Bank Mortgage

Annual Percentage Rate (APR)

Apply online for personalized rates; fixed-rate and adjustable-rate mortgages included
Types of loans

Conventional loans, HomeReady loan and Jumbo loans
Terms

15 – 30 years
Credit needed
Minimum down payment

3% if moving forward with a HomeReady loan

Pros

Ally HomeReady loan allows for a slightly smaller downpayment at 3%
Pre-approval in just three minutes
Available in all 50 U.S. states
Online support available
Doesn’t charge lender fees

Cons

Doesn’t offer FHA loans, USDA loans, VA loans or HELOCs

Who’s this for? Ally Bank doesn’t charge any application fee, origination fee, processing fee or underwriting fees. These are what’s collectively known as “lender fees” and they can cost you anywhere from a few hundred to a few thousand dollars, and eat into the money you put aside for buying your home. When you’re a first-time home buyer, going through the process as affordably as possible is often top-of-mind, so saving on these fees will let you keep more of your money for other things, like renovations or moving costs.

Keep in mind, though, that Ally Bank may still charge appraisal fees and recording fees and may charge for the title search and insurance. As long as you have all the necessary documents handy and submit complete and accurate information, you can get pre-approved for a loan in as little as three minutes online and submit your application in just 15 minutes.

Best for no PMI

CitiMortgage®

Annual Percentage Rate (APR)

Apply online for personalized rates
Types of loans

Conventional loans, FHA loans, VA loans and Jumbo loans
Terms

15 – 30 years
Credit needed
Minimum down payment

Terms apply.

Pros

Citi’s HomeRun Mortgage program allows for a downpayment as low as 3%
Citi’s Lender Assistance program gives eligible homebuyers a credit of up to $5,000 to use toward closing costs
Ability to choose between fixed-rate and adjustable-rate mortgages
New and existing Citi bank customers can qualify for closing cost discounts based on their account balance
HomeRun mortgage program allows for a downpayment of less than 20% without PMI
Provides homeownership education and counseling

Cons

No options for a 0% downpayment
Existing customers need high account balances to receive some of the highest interest rate discounts

Who’s this for? CitiMortgage gives homebuyers a chance to save big-time by waiving the PMI (private mortgage insurance) requirement on loans with down payments below 20%. This can be done by applying for a mortgage through Citi’s HomeRun program, which also allows for down payments as low as 3%.

PMI is typically a required monthly charge with other home loans if you make a down payment of 20% or less. But PMI can cost you tens of thousands of dollars extra over the entire life of the loan. The money you save from not paying PMI could potentially go towards saving for a second property, a home renovation, or any other financial goal you have. HomeRun mortgages also allow borrowers to lock in a fixed rate on their mortgage so they won’t have to worry about their rate increasing down the line.

FAQs

How do mortgages work?

A mortgage is a type of loan you can use to purchase a home. This agreement essentially says you can purchase a home without paying for it in full, upfront — you’ll just need to put some of the money down — usually between 3% and 20% of the home price — and pay smaller, fixed monthly payments over a certain number of years, plus interest and potentially other charges. Having a mortgage allows you to own the property even if you don’t have the hundreds of thousands of dollars in cash needed to purchase it outright.

What is a conventional loan?

A conventional loan is a home loan that’s funded by private lenders and sold to government enterprises such as Fannie Mae and Freddie Mac. It’s a very common loan type and some lenders may require a down payment as low as 3% or 5%.

What is an FHA loan?

A Federal Housing Administration loan, or FHA loan, is a loan program that has some slightly looser requirements. For example, this loan program may allow some borrowers to be approved for a loan with a lower credit score or be able to get away with having a higher debt-to-income ratio. You’ll typically only need to make a 3.5% down payment with this type of loan.

What is a USDA loan?

A USDA loan is offered through the United States Department of Agriculture and is aimed at borrowers who want to purchase a home in a qualifying rural area. USDA loans don’t require a minimum down payment, so borrowers can use this loan to purchase a home for almost no money upfront (you’ll still likely pay fees, though).

What is a VA loan?

VA mortgage loans are provided through the U.S. Department of Veterans Affairs and are meant for service members, veterans and their spouses. They typically require a 0% down payment and borrowers don’t have to pay private mortgage insurance.

What is a jumbo loan?

A jumbo loan is meant for home buyers who need to borrow more than $647,200 to purchase a home. Jumbo loans usually have stricter credit score and debt-to-income ratio requirements, and they also typically require a larger minimum down payment.

How is my mortgage rate decided?

Mortgage rates change almost daily and can depend on market forces such as inflation and the overall economy. However, your specific mortgage rate will depend on your location, credit report and credit score. The higher your credit score, the more likely you are to be qualified for a lower mortgage interest rate.

Be sure to submit the necessary information for more personalized rate estimates from your desired lender.

What is the difference between a 15- and 30-year term?

A 15-year mortgage gives homeowners 15 years to pay it off in fixed, equal amounts plus interest, while a 30-year mortgage gives homeowners 30 years to pay it off. Monthly payments are generally lower with a 30-year mortgage since you’ll have a longer period of time to pay off the loan. However, you’ll wind up paying more in interest over the life of the loan since it is charged on a monthly basis. A 15-year mortgage, on the other hand, lets you save on interest but you’ll likely have to make a higher monthly payment.

How does private mortgage insurance (PMI) work?

Lenders charge private mortgage insurance (PMI) to protect themselves in the event that a borrower defaults on their loan. PMI is assessed to your account if you choose to make a down payment of less than 20%. You’ll be responsible for paying this in addition to your monthly mortgage payments.

However, you can usually have the PMI waived after you’ve made enough payments to build 20% equity in your home.

Bottom line

If you need to take out a mortgage to purchase your first home, you have options. Certain mortgage lenders stand out for first-time homebuyers by considering applicants with lower credit scores, offering lower down payments and providing useful educational resources.

Keep in mind that mortgage interest rates fluctuate often and the rate you receive will vary depending on your location, credit score and credit report. While lenders may post general interest rate ranges on their websites, the best way to get a more accurate estimate of your rate is to provide the necessary information to check your rate.

Our methodology

To determine which mortgage lenders are the best for first-time homebuyers, CNBC Select analyzed dozens of U.S. mortgages offered by both online and brick-and-mortar banks, including large credit unions, that come with fixed-rate APRs and flexible loan amounts and terms to suit an array of financing needs.

When narrowing down and ranking the best mortgages, we focused on the following features:

Fixed-rate APR: Variable rates can go up and down over the lifetime of your loan. With a fixed rate APR, you lock in an interest rate for the duration of the loan’s term, which means your monthly payment won’t vary, making your budget easier to plan.
Types of loans offered: The most common kinds of mortgage loans include conventional loans, FHA loans and VA loans. In addition to these loans, lenders may also offer USDA loans and jumbo loans. Having more options available means the lender is able to cater to a wider range of applicant needs. We have also considered loans that would suit the needs of borrowers who plan to purchase their second home or a rental property.
Closing timeline: The lenders on our list are able to offer closing timelines that vary from as promptly as two weeks after the home purchase agreement has been signed to as many as 45 days after the agreement has been signed. Specific closing timelines have been noted for each lender.
Fees: Common fees associated with mortgage applications include origination fees, application fees, underwriting fees, processing fees and administrative fees. We evaluate these fees in addition to other features when determining the overall offer from each lender. Though some lenders on this list do not charge these fees, we have noted any instances in which a particular lender does.
Flexible minimum and maximum loan amounts/terms: Each mortgage lender provides a variety of financing options that you can customize based on your monthly budget and how long you need to pay back your loan.
No early payoff penalties: The mortgage lenders on our list do not charge borrowers for paying off the loan early.
Streamlined application process: We considered whether lenders offered a convenient, fast online application process and/or an in-person procedure at local branches.
Customer support: Every mortgage lender on our list provides customer service via telephone, email or secure online messaging. We also opted for lenders with an online resource hub or advice center to help you educate yourself about the personal loan process and your finances.
Minimum down payment: Although minimum down payment amounts depend on the type of loan a borrower applies for, we noted lenders that offer additional specialty loans that come with a lower minimum down payment amount.

After reviewing the above features, we sorted our recommendations by best for loan variety, educational offerings, lower redit scores, no lender fees and no PMI.

Note that the rates and fee structures advertised for mortgages are subject to fluctuate in accordance with the Fed rate. However, once you accept your mortgage agreement, a fixed-rate APR will guarantee the interest rate and monthly payment remain consistent throughout the entire term of the loan, unless you choose to refinance your mortgage at a later date for a potentially lower APR. Your APR, monthly payment and loan amount depend on your credit history, creditworthiness, debt-to-income ratio and the desired loan term. To take out a mortgage, lenders will conduct a hard credit inquiry and request a full application, which could require proof of income, identity verification, proof of address and more.

Catch up on Select’s in-depth coverage of personal finance, tech and tools, wellness and more, and follow us on Facebook, Instagram and Twitter to stay up to date.

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Source: cnbc.com

Apache is functioning normally

May 25, 2023 by Brett Tams

“Over the last year, we’ve consistently rolled out innovations to ensure our digital tools are improving speed and efficiency, reducing risk and, ultimately, helping us serve our mission by reaching more qualified borrowers,” said Kevin Kauffman, single-family vice president of seller engagement at Freddie Mac, in the company’s official announcement. “Today’s innovation further automates income … [Read more…]

Apache is functioning normally

May 25, 2023 by Brett Tams

Florida Gov. Ron DeSantis might be best known these days for his “war on woke.” He’s generated daily headlines for his “Don’t Say Gay” bill in schools, his battles against Disney, and the travel advisories issued against the state by the NAACP and LGBTQ organizations.

However, his housing policies haven’t generated nearly as much attention.

After months of fueling rumors, DeSantis formally announced his bid for the U.S. presidency on Wednesday. What would that mean for the housing market if he wrests the Republican nomination from real estate mogul and former President Donald Trump and wins the general election in 2024? (Currently, Trump has a sizable advantage in the polls among likely GOP voters.) Realtor.com® looked at the No. 2 Republican contender’s housing-related priorities during his four-plus years as governor of the Sunshine State for clues.

“His experience as the governor of Florida has certainly exposed him to the housing market and its issues,” says Sean Snaith, director of the Institute for Economic Forecasting at the University of Central Florida in Orlando. “He’s intimately familiar with the shortage of housing that has plagued our state.”

Florida experienced tremendous growth during the COVID-19 pandemic as companies expanded and legions of folks moved to the Sunshine State. It was the nation’s fastest-growing state last year, according to the U.S. Census Bureau. The median home list price in Florida shot up 42%, to about $468,000, from April 2020 to April 2023, according to Realtor.com data. Rental prices also surged throughout the state during the pandemic.

This year, DeSantis has passed bills geared toward creating more housing, providing assistance to first-time buyers, as well as restricting international buyers from certain countries from purchasing real estate in Florida. The government has also responded to the devastation wrought by hurricanes and flooding by making changes to Florida’s property insurance industry.

The legislature has also been forced to confront the state’s affordability challenges. For years, the state had typically been reallocating the money from its affordable housing trust fund to other projects. In 2021, the legislature agreed that a third of that money will be spent on housing, while the rest can go to other priorities.

Democrats have blasted diverting the money away from housing during such a severe real estate shortage.

DeSantis and Trump will have plenty of competition from other Republicans vying for the nation’s highest office. Former South Carolina Gov. Nikki Haley announced her candidacy in February. South Carolina Sen. Tim Scott threw his hat in the ring this week, and former New Jersey Gov. Chris Christie is expected to enter the fray. New Hampshire Gov. Chris Sununu and former Vice President Mike Pence are also likely to run.

Whoever wins the 46th presidency—from either side of the aisle—will have a major challenge in tackling the housing crisis.

“It would have to be concerted efforts from all levels of government,” says Snaith. “We need to help expedite the process for developers from going from paper to getting these housing units off the ground.”

DeSantis tries to create more affordable housing

In March, DeSantis signed an affordable housing plan that invested more than $700 million to provide low-interest loans to developers building workforce housing in Florida, down payment and closing costs assistance for first-time homebuyers, and the redevelopment of underused properties near military installations.

The Live Local Act is also expected to make it easier to convert commercial buildings into housing by bypassing local zoning boards, building height requirements, and local density regulations.

While superseding local authorities and zoning regulations can lead to a strain on local infrastructure—such as more traffic, crowding in schools, and other growing pains—the housing shortage “trumps” these concerns, says Ken Johnson, a real estate economist at Florida Atlantic University in Boca Raton.

“This will start to increase the supply of housing rather rapidly. We just need units built right now,” says Johnson. “We are still in a rental crisis here.”

He was less enthusiastic about the $100 million provided for down payment and closing costs assistance. The money will fund the Florida Hometown Heroes Housing Program, which the governor announced the creation of last year. It’s geared toward eligible first-time buyers who work in critical professions such as law enforcement, firefighting, education, health care, and child care, and active military or veterans, among others.

“There’s not enough money behind them to make a dent,” says Johnson.

The Live Local Act also prohibits towns and cities from enacting rent controls.

The state of Florida is short about 444,000 affordable and available rental homes for extremely low-income renters, according to the National Low Income Housing Coalition.

“It has been more pocket change than real substantial solutions to the problem,” says Jack McCabe, who runs an eponymous housing consultancy in Southern Florida. “Seven hundred eleven million dollars looks like a lot of money, but the truth is it could take billions and billions of dollars to correct the problem.”

Restrictions on who can buy homes in Florida

Last week, DeSantis signed a bill to prohibit many Chinese citizens who aren’t legal U.S. residents from purchasing real estate in the state of Florida. The bill also bans citizens from six other countries—Russia, Iran, North Korea, Cuba, Venezuela, and Syria—from buying farmland that is located within 10 miles of military sites and critical infrastructure.

In addition, as of July 1, the new law will require some Chinese nationals to register the real estate they already own and whatever they buy with Florida’s state government.

The law has been criticized by Democrats, Asian American leaders, and some real estate professionals.

“The law is very restrictive,” says Dan Lionetta, president of the Asian American Real Estate Association of America, Greater Jacksonville Chapter. He is also a mortgage lender at Movement Mortgage. “We are certainly not in favor of the law and anyone, from any country, being limited regarding purchasing real estate.”

Real estate economist Johnson believes a bill like this “distorts” the market by dictating who can and who cannot buy.

“It will negatively impact price, although I think it will be marginal,” says Johnson. “We’re simply cutting the demand for real estate.

Tackling Florida’s hurricane and flooding issues

Last year, DeSantis signed a Republican bill to prop up Florida’s property insurance system as many companies have gone out of business and others are struggling due to the extensive damage wrought by storms and flooding. The bill raises costs for some homeowners while providing tax rebates for residents affected by Hurricanes Ian and Nicole. It will also force some homeowners out of receiving coverage from the state-created insurer.

As a result, many Floridians expect their already high flood insurance premiums to double this year.

“Many people are being forced to sell their homes and move,” says housing consultant McCabe.

However, the governor has also signed bills into law to give homeowners a break. One prevents insurers from refusing to cover homeowners if their roof is less than 15 years old. And in the wake of the Surfside condo collapse, buildings that are three stories and higher must be inspected after 30 years and then receive additional inspections every 10 years. Buildings that are within 3 miles of the coast must start undergoing inspections after 25 years.

The governor also approved setting $150 million aside last year to be used for grants for homeowners who want to retrofit their homes to be more resistant to hurricanes.

“The overall impact [of a DeSantis presidency] is hard to say right now,” says Johnson. “It’s a toss-up.”

Source: realtor.com

Apache is functioning normally

May 25, 2023 by Brett Tams

When you buy a home, you’re likely paying more than just the down payment and closing costs. You’ill probably also need to purchase homeowner’s insurance. While this coverage is not mandated by law, many mortgage lenders require it before they agree to finance the purchase of your home.

Here’s what first-time homebuyers need to know before shopping for homeowners insurance.

What Does Homeowners Insurance Cover?

Homeowners insurance coverage provides protection for both a home and its contents against damage, theft, and up to 16 named perils, including fire, hail, windstorms, smoke, vandalism, and theft. It also typically includes personal liability coverage for accidents that may happen on the property (think of people slipping and falling down your stairs, or your dog biting a neighbor on the property).

On the flip side, basic homeowners insurance likely won’t cover damage from disasters such as floods and earthquakes, and even war (seriously). Homebuyers who live in an area prone to certain events or natural disasters may want to consider supplemental coverage. In some cases, their lender may even require it.

It’s a good idea to learn what’s generally covered by each homeowners insurance policy type — and what isn’t — to ensure you have the right protection in place.

When You Need to Buy Homeowners Insurance

If buyers plan to get a mortgage to purchase their home, their lender will likely require they obtain homeowners insurance coverage before signing off at closing.

In reality, this is a sound business tactic, as the lender will want to protect its investment, which is the property, not the person it’s lending to (harsh, we know). Let’s say the home is damaged in a windstorm or burns to the ground. Insurance will cover the cost, after a deductible, without burdening the homeowner. The homeowner can then continue to pay their mortgage on time, much to the delight of the lender.

Again, if you live in an area prone to certain disasters like floods or earthquakes, your lender may require additional coverage. Check with your lender on what’s necessary before signing.

If a person’s first home happens to be a condo or co-op, the board may also require specific coverage, thanks to a shared responsibility for the entire complex.

Recommended: House or Condo: Which Is Right For You? Take the Quiz

Can You Forgo Homeowners Insurance?

Technically, there are no laws requiring a person to obtain homeowners insurance, but it’s a rule put in place by many lenders.

If you’re paying cash for a new home, you can forgo purchasing homeowners insurance, though that may be a risky proposition.

Think you can somehow snake the system? Think again. If a lender doesn’t feel that the homebuyer is working hard or fast enough to find homeowners insurance before closing, the lender may go ahead and purchase insurance in that person’s name with what’s called “lender-placed insurance.”

This isn’t as cool as it sounds. Not only will it increase the mortgage payment, lender-placed insurance is typically more expensive than traditional homeowners insurance. And it may not even provide all the protection a homeowner needs or wants.

To give yourself enough time to find the right policy for you, aim to start shopping around a good 30 days before closing.

How Much Coverage a Person Needs

How much homeowners insurance a new homeowner needs will depend on the value of their home and the possessions in it. As a first step, would-be homeowners can ask their agent for a recommended amount of coverage.

After determining that number, it’s also a good idea to take stock of belongings and see if any items may require additional coverage (think expensive antiques, paintings, or other irreplaceable items). It could also be smart to photograph and digitally catalog major items in a home for proof needed on any claims.

Replacement Cost vs. Actual Cash Value

When shopping for homeowners insurance, there’s replacement cost coverage and actual cash value coverage.

Replacement cost coverage pays the amount needed to replace items with the same or similar item, while actual cash value coverage only covers the current, depreciated value of a home or possessions.

This means that if you have actual cash value coverage and disaster hits, you’ll only be able to get enough cash for the depreciated value of the home and items, not the cost of what it may take to replace them.

Most standard homeowners insurance policies cover the replacement cost of a physical home and the actual cash value of the insured’s personal property, but some policies and endorsements also cover the replacement cost of personal property.

The upshot: It’s best to go for replacement cost coverage whenever possible.

Recommended: How Much Is Homeowners Insurance?

The Takeaway

Is homeowners insurance required to buy a home? If you’re taking out a mortgage, that’s almost always a “yes.” It’s worth looking at your options — and understanding what will and will not be covered — so you can feel at ease in your new home for years to come.

Of course, shopping for homeowners insurance often requires considering several options, from the amount of coverage to the kind of policy to the cost of the premium. To help simplify the process, SoFi has partnered with Lemonade to bring customizable and affordable homeowners insurance to our members.

Lemonade is a name you can trust. It has exceptional ratings, is fully licensed, and reinsured by some of the most trusted names on the planet. Plus, it donates any leftover money to nonprofit partners chosen by customers.

Check out homeowners insurance options offered through SoFi Protect.

SoFi offers customers the opportunity to reach the following Insurance Agents:

Home & Renters: Lemonade Insurance Agency (LIA) is acting as the agent of Lemonade Insurance Company in selling this insurance policy, in which it receives compensation based on the premiums for the insurance policies it sells.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Source: sofi.com

Apache is functioning normally

May 24, 2023 by Brett Tams

The lack of housing inventory – a major pain point for real estate agents and loan officers – is an issue that Mark Cohen, principal owner of Cohen Financial Group, also sees in the upper end of the Southern California market.

The $1 million to $4 million homes market is very competitive, and qualified borrowers are having a hard time finding homes. However, there’s an oversupply of Inventory for homes priced $5 million plus, Cohen said in an interview with HousingWire.

“It’s a two-story housing market in Southern California,” Cohen said.

Cohen funded $751.4 million in loan volume in 2022, which led to him being the second-ranked loan originator of the year, Scotsman Guide’s rankings showed. Cohen trailed behind Guaranteed Rate‘s Shant Banosian, who originated $925 million during the same period. He was the number one mortgage broker and the loan officer with the most non-QM origination volume, according to Scotsman Guide.

Among mortgage brokers, Cohen ranked first.

While there are fewer move-up buyers now compared to the pandemic years, Cohen noted the uniqueness of the Southern California housing market, in that people tend to move more frequently compared to other states as they accumulate wealth.

“Here in LA, if you make money, you have your starter home, and if you make more money in the next few years, three, four or five years, you go to a bigger house. It’s not like in the Midwest or in other areas where you are in the house for the next 30 years. (…) There’s a lot of upward movement in LA. That’s why the market is so brisk,” Cohen said.

Read on to learn more about the two sides of the Southern California housing market and how Cohen stays competitive.

This interview has been condensed and lightly edited for clarity.

Connie Kim: California – as well as the rest of the country – is experiencing issues from a serious lack of inventory. I’m curious what the situation has been for the high-end markets you target.

Mark Cohen: I think inventories are improving a little bit just from what I’ve seen the last four, five, six days. But there are many clients, who are well qualified, trying to buy houses. For the most part, it’s the $3 million and under category. Anywhere from about $1 million to $4 million, the market is very, very competitive.

It’s a two-sided market here. Once you get over the $5 million threshold, there’s this oversupply, and the psychology of property tax is having a real negative effect on the market. I think there were only two or three sales last month in LA County over $5 million.

However, you’ll see isolated sales too. Beyonce and Jay Z bought a $200 million house in Malibu recently, so you’re going to see things like that. But as a general rule, the $5 million to $10 million market is off.

Kim: You also do a lot of non-QM loans. Who are your main borrowers?

Cohen: Executives, it’s probably a mix of 50/50. There’s a whole bevy of people here in Los Angeles that are self employed, who have good jobs, good businesses, but they don’t show everything they make on their tax returns. That’s where non-QM comes into play. The rates for those loans are pretty aggressively priced in comparison to the bank rates like JP Morgan Chase and Bank of America.

The rates – depending on the loan-to-value and credit score – are only about half to three-quarter points higher, which is really tangible. So it opens up a whole new avenue for people who fall within that category.

Half the clients go to the traditional banks where we can show tax returns.

Kim: If you have a lot of so-called wealthy borrowers, I would assume a lot would be interested in investment properties. How much of your sales is investment properties versus first-time homebuyers?

Cohen: I also do heavy work in the entertainment business in Southern California. I have several dozen business managers, money managers that I do work with. I would say maybe 10 to 15% of the deals are investment property deals.

A lot of first time buyers [actually], which is good because they’re not used to having 3% mortgages. They’re not going to be sensitive to the rate differentials.

Here in LA, if you make money, you have your starter home, and if you make more money in the next few years — three, four or five years — you go to a bigger house.

It’s not like in the Midwest or in other areas where you are in the house for the next 30 years. It doesn’t really work that way. In most situations, especially with young couples, they get married, have a kid and they need more rooms, assuming they’re doing well. So there’s a lot of upward movement in LA. That’s why the market is so brisk.

Kim: That’s really interesting. It’s quite the opposite from other areas, where people in different states are not moving, thus creating an inventory lock-down.

Cohen: It’s held back to a degree. I’m not saying it’s overly buoyant, but a lot of people really need more rooms when you have a kid. A lot of people I work with make money and there’s a lot of money in upward mobility.

Kim: So are they less impacted by the higher rates compared to about three years ago?

Cohen: Everybody is impacted. But we get the best deliverable rates – rates are in the 5s. So yeah, they’re less impacted. They’d rather pay more with the idea that at some point in time, which will occur in the next six to 12 months, rates will be lower. We’ll have the window to refinance the house.

Kim: What does your product mix look like?

Cohen: With the yield curve where it is, if you’re going to do a bank loan, it’s pretty much all 30-year fixed rate loans or 10-year adjustable-rate mortgages (ARMs). I’m doing a lot of HELOCs. Refinances are maybe 10% of business here from where it used to be at around 40, 50%.

I do have one brokerage house that if you have a million dollars net worth with them, rates are in the high 4s or low 5s. Lower loan-to-value, so I do have some good rates, but that’s going to be for more affluent people.

Kim: What helped you become the top producing broker in 2022? Does Cohen Financial Group have proprietary tech or are sales mostly coming from referrals?

Cohen: I’ve been in the business for 36 years, and it helps obviously knowing people and constantly following through. It’s the same thing in any business: doing the right things.

I’ve got very strong resources in banks and private banks, and on the non-QMs. I’m very picky with who I work with in terms of banks, because the worst thing to do is to get in situations where you don’t have control over the deals.

Kim: There’s a forecast that the 30-year fixed rates will drop lower in the second half of the year. Do you think it will be a better year for you compared to 2022?

Cohen: To maintain this to the best I can and hopefully achieve the same numbers. Obviously the more the better, but I’ve got no control. Just to do the right thing, get good execution and keep my relationships going with people, which I always work on.

Source: housingwire.com

How Bankrate scored Third Federal Savings and Loan

Affordability: 5/5

Availability: 4/5

Borrower experience: 4.7/5

How to apply for a mortgage with Third Federal Savings and Loan

Refinancing with Third Federal Savings and Loan

Methodology

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Advocates’ concerns

Consumers are cautious

What Is an FHA Loan?

FHA Loan Requirements

FHA Loan Credit Scores and Down Payments

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First-time homebuyers canprequalify for a SoFi mortgage loan,with as little as 3% down.

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Purchase

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The Takeaway

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CreditWise® from Capital One

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Credit bureaus monitored

Credit scoring model used

Dark web scan

Identity insurance

Experian Dark Web Scan + Credit Monitoring

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Credit scoring model used

Dark web scan

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Bottom line

Video Transcript

First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.