Discover Why Conventional Home Loans May Be the Best Option

Have you been trying to figure out which home loan is right for you? Well, if you have good credit, and have taken the time to save for buying a home, then a conventional home loan may be the best option. The main benefit is a conventional home loan will save you money.

The main advantages of FHA home loans and other government-backed mortgages include (1) the qualifying credit criteria is lower, (2) the amount of your required down payment is less, and (3) refinancing is easier. However, these benefits have a cost. You can end up spending much more, both with your monthly payment and over the life of the loan.

Down Payment

FHA home loans require as little as 3.5 percent as the down payment. Of course, the lower down payment means more of the sale price is financed. Your monthly mortgage payment is higher, affecting your payment-to-income ratio and loan approval. The higher financed amount also means paying thousands more in interest over the life of the loan.

Private Mortgage Insurance

When you place 20 percent or more down on a home, you are not required to pay for mortgage insurance. This insurance reimburses a financial institution if the home goes into foreclosure. The premium is added to your monthly mortgage payment, also affecting your payment-to-income ratio.

Mortgage Rates

Since FHA and other government-backed mortgages have lower credit standards, there is a greater financial risk for banks and mortgage companies.  This translates into higher interest rates. Since conventional home loans have higher credit standards, they offer better rates.

More Options

Conventional home loans provide more flexibility with payment terms. FHA home loans have either 15-year or 30-year terms (some lenders can be more flexible). Conventional loans have options that can help you pay your mortgage off earlier and save thousands in interest.

If you would like to talk more about why a conventional home loan may be the best option, or need more information, please contact us.


Discover How to Save Money for a House

Saving money for a house can feel like an insurmountable goal. A down payment and closing costs will be in the thousands. For a traditional mortgage, the target number is 20 percent of the sale price for the down payment and another estimated 5 percent toward closing costs. If your dream home is $200,000, expect to need $50,000 saved.

It seems a bit daunting, doesn’t it? The Consumer Financial Protection Bureau reports, “People often put off saving for [important] goals because they feel like they don’t have enough money to save or they are busy struggling to make ends meet today. They feel like they can’t think or worry about saving for goals, large purchases, or even life events in the future. This can create financial challenges in the future.”

So, how do you start saving the tens of thousands of dollars needed for a home purchase? Here are our tips for saving money for a house.

Set a Goal: Decide how much money you need for the house you want, and set a date to achieve this goal. Moreover, ensure your goal is reasonable, It may take you five years to save $50,000.

Create a Plan: Convert your goal into yearly, monthly, and weekly financial targets. A $178.58 weekly goal is easier to achieve than the lump sum of $50,000.

Cut Spending: Reduce spending on as many items or services as you can. Cut back your cable television from the premium package to basic. Reduce your phone from unlimited calling to a fixed number of minutes. Limit the number of times you eat out.

Boost Savings: Take the money you have saved and invest it into a savings account, certificates of deposit, mutual funds, and savings bonds. Banks and credit unions offer financial products that are safe and boost the value of money saved.

Increase Income: Consider taking a part-time job. The added income will help you to save faster, and will help with other unexpected expenses like automobile repairs.

Revise Goals: If the amount you are saving for a home doesn’t make sense, or your life’s circumstances have changed, adjust your goals. Your goals are not etched in stone. Adjust them so they make sense for you and your family.

If you already saved money and plan on purchasing your first home, or just need more information, please contact us.


Making Room for Fitness

With your busy, constantly on the go schedule, you need fitness to be as easy as possible. If you can take care of your daily workout in the comfort of your own home, that’s greatly preferable to having to go to the gym every day. Unfortunately, making room for fitness equipment in your home can be a challenge. It’s clunky, takes up a great deal of space, and doesn’t fit with the existing decor of your room. Fitness equipment, however, doesn’t have to take over your home in order to be effective.

Find space in a closet. There’s plenty of fitness equipment that will help you stay active or get back in shape without taking up valuable floor space. Hand weights, bands, and pull-up bars will all fit in a box or crate in the closet when not in use, then come out for you to use them when you need them.

Choose fold-up pieces of equipment. There are plenty of treadmills, elliptical machines, and other workout equipment that are designed to fold up and slide out of the way when they’re not in use. They’ll fit behind the couch, beside a bookshelf, or anywhere else that you’d like to slide them when you aren’t actively using them.

Clear some floor space. The one thing that exercise does require is enough space to move around in. Shift your furniture around to provide plenty of open space in the center of the floor. While you can move the furniture in order to exercise, you’ll discover that you’re much more likely to actually make time for that workout when space is already there and all you have to do is take advantage of it.

Think about what you’ll need. Do you prefer exercise videos to a regular cardio workout? Do you like to have music playing while you exercise? If you need a television, stereo, or other devices handy throughout your workout, make sure the room you intend to use contains all those critical items.

Fitness equipment doesn’t have to take over your home when you start making exercise a priority. In fact, it can blend in so well that most people won’t even know it’s there unless you tell them! Looking for more ways to help make your home perfect for you and your family? Contact us today for more information.


FHA Loans

The trick with Federal Housing Administration (FHA) financing is that it’s a mortgage insured by the federal government. The way the FHA manages to ensure the loan is that they require the borrower to pay for mortgage insurance. The mortgage insurance protects the lender in case if the borrower defaults on the loan.

FHA mortgages must be obtained from FHA-approved lenders. The FHA has standards that have to be met before the FHA is willing to insure the mortgages.

Because the FHA is behind the loan and the risk to the lender is less, interest rates can be very favorable and less down payment may be required. Because the lender is protected by the insurance, the lender is less cautious about making loans to riskier customers and those with lower credit ratings. For many people, the FHA loan offers the only way they can obtain a mortgage in today’s market. Many first-time home buyers take advantage of FHA loans.

To get a mortgage with a down payment as low as 3.5%, the borrower needs a FICO credit score of at least 580. Those with credit scores of 500 to 579 must make down payments of at least 10%. People with credit scores below 500 are generally ineligible for FHA loans except for special circumstances. The low 3.5% down payment floor is a major attraction for many home buyers. Some special minimum down payments of as low as 3% are also sometimes available.

FHA borrowers pay for their down payments out of their own savings. However, gifts from family members can also be used. Grants from state or local governments down-payment assistance programs are also sometimes available. Closing costs can also be covered by lenders, builders or lenders as an inducement to purchase.

The borrower can use a relative as a non-resident co-borrower to help support qualification for the loan using blended debt-to-income ratios that equally blend the borrower’s and non-occupant co-borrower’s income and monthly payments to qualify for the loan.

Because the government is involved, lenders do find some additional paperwork involved. The appraiser has the additional duty to evaluate and report any health or safety hazards that could affect the insurance. They can require that concerns be repaired before the loan is closed.

The FHA mortgage insurance consists of two payments. The “upfront premium” is paid as part of the down payment. It is 1.75% of the loan amount (a $100,000 loan would cost $1,750 upfront). The annual premium (paid monthly) vary by the size of the down payment and the length of the mortgage.

  • If you take a 15-year mortgage with a down payment of less than 10%, the insurance would cost .7% annually. On a $100,000 mortgage, this would mean $7,000 per year or $583 monthly added to your mortgage payment.
  • On a 15 year mortgage with a down payment larger than 10%, the insurance may cost only .45% or $375 monthly.

On longer mortgages, risks are greater and the insurance premiums are slightly higher.

  • On a 30 year $100,000 mortgage with very low down payments (less than 5%) the annual insurance premium would be $8,500 or $708 per month.
  • If the 30 year $100,000 mortgage were started with a down payment of 5% or more, the annual premium would be at $667 per month.

In addition, for those with credit scores above 639, the FHA supports a Housing and Urban Development (HUD) lending program called a 203k. This program guarantees loans to renovate or repair homes.

  • The loan must be made by an FHA lender.
  • You have to have at least a 3.5% down payment on the home.
  • You can have no other FHA-approved loans outstanding.
  • The loans can range from $5,000 for minor repairs to sufficient coverage to virtually reconstruct the home.
  • The loan is based on the value of the home after the repair or improvement is made.
  • The loans are subject to certain basic energy efficiency and structural standards.

Pacific Mortgage Group can help you lock in the most competitive rates. If you are ready to start looking for a home loan or home quotes give us a call and we can help you every step of the way. Please contact us to learn more.


What is a reverse mortgage? What are some of the pros and cons?

You’ve probably seen one of the many commercials on TV for a reverse mortgage, and you’re probably wondering if you should get one for yourself or, for your older loved one. In this short article, we’re going to talk about what exactly a reverse mortgage is, and what are some of the pros and cons of getting a reverse mortgage so you or your loved one can make an informed decision about getting one.

A reverse mortgage is sometimes called a home equity conversion mortgage (HECM). This type of loan doesn’t require the homeowner to make monthly mortgage payments (though they are still responsible for the property taxes, homeowner’s insurance, and HOA fees if any),  but it allows the homeowner to access the equity they’ve built up in their home.

Here are some of the pros of a reverse home mortgage:

  • It allows people on a fixed income to remain in their homes until their death, without worrying about the financial burden of a mortgage.
  • The homeowner keeps their home, regardless of their financial straits.
  • The money can be disbursed in a variety of ways (such as a lump sum cash payment, or a monthly payment of funds).

Here are some of the cons of a reverse home mortgage:

  • The interest rate on a HECM is higher than on a traditional home equity loan.
  • When you die, your heirs are responsible for either paying off the balance of the reverse mortgage or selling the home in order to cover the balance.
  • If you haven’t lived in the home for a year or more, you may not qualify to get the reverse mortgage.

Contact us today to see if a reverse mortgage is right for you or your loved one.


How Do VA Loans Work?

How Do VA Loans Work

Purchasing a home is probably the biggest financial decision you’ll ever have to make. If you’re a veteran, you can  apply for a VA loan to buy an existing home, construct your own house or purchase a condominium or townhouse.

What’s more, VA loans can also be used for making home improvements such as installing storm windows, insulation and other features that promote energy efficiency. Here’s how VA loans work, along with some of their benefits.

Who Qualifies for a VA Loan?

Besides veterans, VA loans are also for people who are currently serving in the United States military, along with their spouses. However, there are some qualifications need to be fulfilled.

For example, anyone interested in buying a home must have served for at least 181 days during peacetime or must have completed 90 days of active service during times of war. Another requirement is having a record of six years of service in the National Guard or the Reserves.

Advantages of VA Loans

VA loans offer several benefits. One of the main perks is that you don’t need to put down any money as you would have to do when getting a conventional loan. This makes buying a home easier for people who’ve served their country.

Also, you don’t have to pay a monthly fee for PMI or private mortgage insurance, which saves you a considerable amount of money. Consider that with a conventional loan, you could have monthly payments that are as high as $65 for the first three to five years.

Another advantage is that you have less closing costs. VA loans have interest rates that are very competitive. In fact, the rates for VA loans are almost always lower than those of conventional loans. Also, if you pay off your loan early, you don’t have to pay a penalty.

What’s Involved in the Loan Process

  • First, obtain a copy of your credit report through Experian, TransUnion or Equifax, which are the three main credit bureaus.
  • Next, find a lender, comparing the various closing costs. Apply at approved financial institutions and banks that offer home financing through VA loans.
  • The next step is to pre-qualify for your loan as this helps in determining how much you can borrow, as well as gives a lender details, regarding your assets and income. Although pre-qualifying for a loan isn’t required, it’s a good idea because you’ll need to know what you can afford when searching a home.
  • Search for your home. This can be done by using a realtor or other means such as real estate ads in newspapers or online sources.
  • Draw up a purchasing contract, which outlines the specific conditions and terms regarding a real estate transfer. A purchasing contract will also include important data on easements, restricts, property liens, and other items.
  • Ask the Veterans Administration for an appraisal; the amount of your loan should not be more than what the VA estimate of a property’s value. This is needed for a loan to be finalized.
  • Finally, go to the loan closing where you’ll need to sign the loan note, mortgage, and other papers.

Considerations and Warnings

  • You’ll need to pay a fee for VA funding if this is your first VA loan. However, it’s not that much as it’s just 1.5 percent of the amount of your loan. This can be paid at the time of your closing, provided you pay a somewhat higher rate.
  • Your loan may not cover lender closing expenses. These costs, which are paid by either the seller or the buyer, usually include those such as recording fees, title insurance, a credit report, discount points and a loan origination fee.

Let the mortgage professionals at Pacific Mortgage Group answer any questions you may have. For more information about obtaining a VA loan, please contact us.


Thinking Long-Term When Looking at Home Loans

Buying a home is still a dream for many people. For the vast majority of home buyers, they will use home loans in order to buy their home. Many people believe it is a good idea to borrow as much money as possible when taking out a home loan. However, there are many things to keep in mind when it comes to borrowing money over the long term. A mortgage is a huge commitment for anyone to make. It is vital that everyone involved understands how financially important a mortgage is.

Types of Mortgages

A home loan is simply a way to borrow money when purchasing a home. For many home buyers, getting a 30-year mortgage is the way to go. This type of mortgage spreads the monthly payments out over a longer period of time. If the home buyers can afford the higher monthly payments, getting a 15-year mortgage is a way to pay in a lower amount over the life of the mortgage. Buyers should weigh the pros and cons of each mortgage before making a final decision. If you have questions about mortgages in general, contact us today so that we can answer your questions.

How Much To Borrow

One of the best ways to examine how much you can afford to borrow for a home is by looking at the income to payment ratio. The higher your income relative to your monthly payment, the better off you will be financially. Always think long term when borrowing money to buy a home.


FHA Mortgage

The Federal Housing Administration provides mortgage insurance on loans granted by FHA-approved lenders. A FHA mortgage insurance policy gives lenders protection against losses that result from homeowner default. The benefits of this type of loan are:

Lower Down Payment: FHA loans require a low down payment. You can deposit as little as 3.5 percent. A bonus is this allows you to start building equity sooner.

Lower Mortgage Insurance: The insurance fee is lower than the fee you would pay on a conventional mortgage. The overall monthly payment is also lower.

Better Interest Rate: FHA offers the same low-interest rate to all borrowers. If you qualify for a loan, you get the current rate and the guidelines do not require a minimum credit score.

Higher Seller Contribution: This type of loan has a higher allowable seller contribution and you can negotiate to have the seller pay most of the closing costs.

The FHA approval process involves the following 5 steps:

  • Pre-approval during which the lender reviews your financial circumstances.
  • A standard Loan Application also known as a Uniform Residential Loan Application. You must give them information about the type of loan you want and the property address.
  • A property Appraisal which involves having a licensed home appraiser determine the true market value of the property based on sales prices and the condition and unique features of the property.
  • An underwriting and documentation review that involves an analysis of your income, paperwork, and credit score.
  • FHA loan approval if the underwriter is satisfied you meet all of the lender’s guides and FHA guidelines.

A mortgage group can help you find the best possible home loan at the lowest interest rate available. For more information please contact us.


Three Reasons Not to Ignore The Holiday Season

There’s no doubt that mortgage refinancing is very stressful. After all, who has fun crunching numbers and dealing with lenders? However, the upcoming season is something to look forward to. It’s not something to ignore, and will give you a break from the hassles of your finances. Here are a few reasons why you shouldn’t ignore the Holiday season.

#1. Your Family is Essential

Though mortgages and finances are very important, family is just as essential. Not only do the Holidays come around only once a year, but it’s also a time where many people put aside their usual tasks, to spend time with those they care about. Of course that’s not to say the Holidays are the only time we see our family members, but between debts, jobs, and loans, the interactions we have with our loved ones are sometimes very limited.

#2. It Will Be Over Before You Know It

The Holidays are a time to relax, enjoy yourself, and spend time with the family. However, the bright lights and Christmas trees come and go as quickly as they’re put up. If you spend all your time and energy focusing on financial tasks (instead of focusing on your family and the true meaning of the season), you’ll realize what a missed opportunity you had. That’s not to say you should neglect what you need to do, but it’s the best moments in life that tend to pass us by in the blink of an eye. Make every moment during the season last.

#3. You Will Have A Fresh Start 

Once the Holidays are over and you’ve had your break, you’ll be rejuvenated and ready to accomplish your tasks. It’s not just for your direct benefit, but for our benefit as well. Generally speaking, if sufficient breaks aren’t taken, it may affect one’s determination to complete what’s required of them. After all, mortgage refinancing isn’t easy to deal with when experiencing a burnout.

After you’ve enjoyed the Holidays, contact us regarding home loans and mortgages. Thanks, and have a happy new year.


The benefits of using mortgage brokers!

You may be wondering if there are any benefits that are inherent in working with mortgage brokers, and we’re here to assure you that there are, indeed, benefits of working with brokers. Here, then, is the list of benefits you will receive when you work with a mortgage broker:

  • It will save you time and effort. You don’t have the time in the day to go searching for the best deal on your mortgage — and it definitely takes a long time to find the perfect deal. But that’s all the mortgage broker does, and will ever do: find the perfect deal on your mortgage. By hiring a mortgage broker to handle this important part of the home-buying process, you will be saving time and effort.
  • Mortgage brokers already have contacts and relationships in the banking industry that put them at a distinct advantage over non-professionals. These relationships will be suited to your needs — for instance, if you have poor credit, you will need one kind of mortgage broker; if this is your first time buying a home, you will need another kind of mortgage broker.
  • Finally, your mortgage broker will be able to streamline your application materials into one package. If you were to fill out a new application for each mortgage you were looking to apply for, you would waste time and energy and money in the process.

We are a committed team, here to help you find the right mortgage rate for your needs. We understand that every borrower is different, and we offer a variety of services to meet your individual requirements. For more information about us and our services, contact us today to see what we can do for you.

What does a mortgage broker do?