If you’re evaluating mortgage options for a MA home purchase, you may be presented with a few different loan options. One common option is to pay points for a lower interest rate. Should you pay points on your mortgage? Before deciding, here are a few things that you should know.

What Are Mortgage Points?

Points are pre-paid interest. You are essentially paying interest up-front on a mortgage in order to receive a lower interest rate over the life of your loan. Why would lenders offer this? Well, on a 30-year loan, there’s no guarantee that you would actually keep the loan for the full term. Most people refinance or sell every 7-10 years.Plus, they receive interest in smaller increments over time. So, lenders welcome the opportunity to get paid a lump sum of interest up-front.

From a buyer’s perspective, you may reduce your mortgage payments each month by paying points. However, you’re not necessarily saving money yet. You’re paying some of that interest up-front rather than over time.

Should You Pay Points on Your Mortgage?

Whether paying points is a good idea depends on your plans. Do you intend to keep the loan for an extended period of time? Is it possible that you may sell or refinance before it actually saves you money? For example, you may pay $4,000 in points to reduce your monthly mortgage payment by $110. If you opted instead to pay that extra $110 per month in interest, it would take you over 3 years to spend the same $4,000. Therefore, paying points doesn’t save you any money until 3 years later. If you end up selling your home in 2 years, you’ve lost money in that deal. It would have been less expensive to pay higher interest each month ($110 x 24 = $2640) rather than paying points.

A lower interest rate is certainly appealing when you multiply the savings over the 30 year life of a loan. However, take a realistic look at how long you may keep your mortgage or stay in a certain home before deciding to pay points. In some cases, it can be a great decision that will save you significant money. In other cases, it may be an unnecessary added expense.

The HomeReady mortgage program in MA is a Fannie Mae program servicing low to moderate income families. Some recent changes to the program will allow more home buyers to qualify for this home loan. Here are a few highlights of the changes.

Homebuyer Education Requirements Relaxed

Taking homebuyer education courses is a requirement of this program. Previously, only in-person classes offered by a company called Framework satisfied the requirement. In some cases, class offerings were limited and made it difficult for buyers to attend. Now, homebuyers may receive one-on-one education directly from their loan officer. Buyers can therefore quickly start their home buying process.

Two additional education requirements have changed. First, landlords purchasing smaller unit building (up to 4 units) are no longer required to complete landlord education (although they must still satisfy the standard education requirements). Secondly, buyers refinancing into a HomeReady mortgage and not receiving a big cashout are not required to complete any courses.

Other Important Changes to the HomeReady Mortgage Program in MA

• Higher Income Requirements
  The income limits for HomeReady loans are now higher. Limits match the median income of the area. This higher limit allows more home buyers to use the program.
• Multi-property Ownership Limits Removed
  In the past, home buyers looking to use this program were not allowed to own any other residential properties. This condition has now been removed.

If you are interested in the HomeReady Mortgage Program in MA for your next purchase, contact us. We can refer you to a lender that is authorized to provide this type of financing.

Locking in your interest rate is an important step in the mortgage process. But, did you know that your rate lock expires? Knowing rate lock expiration dates is very important, and here’s why…

Closing Delays

During a real estate transaction, there may be causes for a delay in the closing date. For example, there may be issues with your loan paperwork, the lender may need more time to process your loan, or the seller may ask for an extension to accommodate their move. In some cases, such as the seller requesting an extension, you may have control over whether to allow the change. Knowing the extension date will give you a sense of how much cushion you have in the closing date. You will not want to delay it any further than the rate expiration.

Impact of Rate Lock Expirations

If your rate lock expires, it may cost you more money! Most lenders will charge a fee to extend your rate. The amount of that fee is typically calculated based on the interest rate at the time the extension is requested. It may cost you thousands of dollars to extend.

Why Can’t I Simply Get the Current Rate If My Rate Lock Expires?

Rate lock expirations don’t simply cause a new interest rate to apply to your loan. Your loan is evaluated by underwriting based on certain exact figures, such as your interest rate and monthly payment. If any of that information changes, the loan must go back through processing and underwriting, which could cause a lengthy delay. Some lenders don’t even allow you to change to the current rate, but rather mandate a rate extension.

Obtaining a home loan may be a difficult process because of the different loan options, the paperwork involved, and the qualification process. Getting help from local MA loan specialists will minimize some of the difficulty. In this blog is advice on the benefits of utilizing MA loan specialists.

Benefits of MA Loan Specialists

MA Financing Programs

MA loan specialists stay up to date on community financing programs and grants. They can offer guidance on unique programs and qualification criteria. This is most important for first time home buyers as many of these programs are geared specifically toward them. Some of these programs provide more flexible lending criteria or can save money on closing expenses or interest.

Involvement In The MA Market

Every local market routinely changes and includes unique characteristics. MA loan specialists process loans in the area monthly and may know about some of the patterns and challenges. That knowledge can minimize the possibility of closing delays. Not all issues can be avoided, but local loan specialists will definitely be a benefit.

Level of Service

Even though many business transactions are completed via telephone and email, in some cases a face-to-face meeting is helpful. Utilizing local loan specialists gives you the opportunity to meet and address vital issues. Time zones are also less of a headache. Lastly, local professionals have an image and reputation to maintain and will, as a result, work hard to ensure the satisfaction of local customers

MA Loan Specialists

Purchasing real estate is a huge investment. Local real estate brokers and loan specialists will play a role your home buying experience. MA loan specialists are also a informational resource that you should tap in to. For a list of local MA loan specialists, contact Peter DaMore with Law Offices of Peter T. DaMore Jr., at 781-229-7900 or pdamore@ptdlaw.com.

It is a surprise to many that the USDA (US Department of Agriculture) provides mortgages. The loans may be used for homes in specific non-metropolitan towns and have great terms and options. This blog includes MA USDA home financing information.

MA USDA Home Financing Information

USDA Loan Benefits

• Local mortgage companies are approved to provide this type of mortgage.
• 102% financing is possible.
• Both new purchases and refinances qualify.
• Contrary to common perception, USDA is not restricted to farm land.
• It applies to single family homes and multi-unit homes.
• It can be possible to include the cost of specific improvements.

Approved Zip Codes

USDA provides a list of areas in which USDA financing can be used. Home buyers might be pleased to see some areas on the list as many are not as rural as imagined. To check eligibility for MA and and other locations, visit the USDA Loan website at http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do and click on either single family or multi-family in the Property Eligibility menu in the left hand side. You will be required to enter a state and zip code to see a map of approved neighborhoods.

Qualification Criteria

USDA criteria are similar to FHA loan criteria. Buyers need sufficient credit scores, acceptable earnings, and the ability to repay the financed amount. Income limits (found at http://eligibility.sc.egov.usda.gov/eligibility/incomeEligibilityAction.do?pageAction=state&NavKey=income@11) differ by state, county and size of your household. USDA loans will take more time to process than other mortgages. Ask a USDA mortgage professional about applicable time lines to ensure that you allow sufficient time before closing.

Where to Find USDA Assistance

Select a reputable local bank that is approved to provide USDA mortgages. Your real estate broker should be able to refer a lender. Obtain a pre-approval early and know the requirements and options in advance of making an offer on real estate. Contact Peter DaMore at 781-229-7900 or pdamore@ptdlaw.com for up to date MA USDA home financing information.

FHA adjusts their loan limits on an annual basis. Home buyers must keep in mind these limits and when they may fluctuate. For this year, in many areas, the limits have improved to accommodate the improving market. Below are a few important details on new FHA loan limits for MA.

Definition of FHA Loan Limits

Loan limits reflect maximum loan values complying with an FHA loan. The loan value is lower than the sales price. For instance, if you find a house for $ 200,000.00 and are making a 3.5% down payment, then your loan value comes out to $ 193,000.00.

FHA Loan Limits Range

FHA loan limits vary by market. Median property prices are analyzed against the national conforming loan limits. Conforming loans are those that comply with the Fannie Mae and Freddie Mac rules and may be sold in secondary mortgage markets. FHA calculates 65 percent of the limit for conforming loans to set their bottom limit for low cost markets. Low cost markets are cities where 115% of the median real estate value is less than 65% of the conforming loan limit. For higher priced markets, the limit can reach 150% of the national conforming loan limit. These areas are those where 115 percent of the median real estate values exceed 150% of the national conforming loan limit.

New FHA Loan Limits For MA

The loan range is $271,050 and $625,500. Thus, in no community will it fall less than $271,500 or be greater than $625,500. Both the low and high end figures are unchanged from 2014, but many communities are not at this min or max and will have a change for this year. There are also adjustments for single family and multi-family units. In a majority of prospering markets, the FHA loan limits increased significantly for 2016. Home buyers in markets where home prices have skyrocketed might be able to increase their price range and therefore have additional options to choose from.

Essex County, Single Family $523,250
Essex County, Two Family $669,850
Middlesex County, Single Family $523,250
Middlesex County, Two Family $669,850

Specific details are available at https://entp.hud.gov/idapp/html/hicostlook.cfm.

Importance of New FHA Loan Limits For MA

If you are pre-approved for the FHA program, you must remain cognizant of the new FHA loan limits for MA. Buying a home above the max may require a larger down payment or require you to find another type of loan. For example, if the loan limit is $ 300,000.00 and you hope to submit a 3.5 percent down payment, then your price limit is $ 310,880.83. Selecting a property for $ 317,098.45 results in a $ 6,217.62 gap. The home buyer would need to come up with that difference. If you do not have it, this may be a huge problem. Do not forget that the max purchase limit might be different for each city that you are looking in. It is a good idea to know what they are ahead of time.

Many folks guess that you must have a huge down payment to use a conventional mortgage, but this is in factnot true.. Although FHA loans are popular for first time home buyers with low down payments, there are other conventional loan alternatives with comparable terms. This blog explains 97 percent conventional mortgages in MA.

Important Facts on Conventional Mortgage

Income and Debts

For any type of financing, lenders will consider monthly earnings and all applicable debts. Normally, total debt-to-income (including the predicted monthly payment on the new mortgage) must not surpass a particular amount. For conventional financing, that percentage is actually less than FHA loans. This can make it harder for some home buyers to qualify or might lead to a lower amount for which a buyer is approved.

Other Loan Requirements

For borrowers with satisfactory debt-to-income percentages and who meet other applicable requirements, conventional mortgages provide an easier process for qualification overall. Up-front and recurring mortgage insurance rates may also be less expensive and may lead to useful savings. Be aware that not all lenders have the exact same criteria or fees.

More On 97 Percent Conventional Mortgages In MA

Every mortgage alternative is different. It is important that you are aware of what they are in order to make an educated decision on which option is the best option for you. It is important to speak with a local loan professional for accurate details. Most offer complimentary pre-approvals and advice. For assistance with selecting a local home loan broker, contact Peter DaMore at Law Offices of Peter T. DaMore Jr. at 781-229-7900 or pdamore@ptdlaw.com.

Home purchasing assistance programs are abundant, yet not often utilized by buyers. Most buyers mistakenly assume that those programs are available only to first time home buyers, but that is certainly not true for all of the programs. If you are in the market to buy a home, the following is what you need to know about assistance programs for MA home purchases.

Types of Programs Available

Assistance programs for MA home purchases are offered on a national and community level. Approval is program-specific, so there may be more than one for which you may qualify. Criteria may include income level, household size, property type, house location, or property repairs required. Programs may also be provided based on veteran status, disabilities, race, post-foreclosure, or membership in certain organizations.

Types of Assistance

Because all assistance programs for MA home purchases are unique, they also administer different forms of help for qualified buyers. Some programs will hand out gifts for down payments and closing fees. Under certain scenarios, the funds do not need to be paid back if specific criteria is met. Some provide discounted rates or more lenient approval standards. For houses requiring work, rehab financing are also available.

Why These Programs Have an Effect on Home Buying

Some potential buyers can get approved for a mortgage based on credit and earnings, but do not have adequate savings for down payment and/or closing fees. These buyers then hold off on a home purchase in order to gather sufficient money. Meanwhile, mortgage rates and home prices could surge, making it less affordable to own. Programs that offer down payment grants empower people to act now and benefit from exceptionally low interest rates.

Finding Assistance Programs For MA Home Purchases

All assistance programs for MA home purchases are intended to allow more people to buy homes. These programs are often part of economic improvement initiatives because home sale activity usually affect the economy. Surprisingly, it may be hard to learn about these programs. To look up programs, try visiting DownPaymentResource.com. This website creates a list of potential programs using some basic data from you. You can subsequently contact your lender for further information. Note that many require that you use designated companies.

Many homeowners decide to expand as opposed to upgrading to a bigger house. The great thing about renovating is your option to customize and make sure it meets your specific preferences. Knowing methods to pay for home additions in MA can be useful. The following are some well known ones.

Home Equity Loan

If your property value is much higher than your home loan balance, ask about a home equity loan. Usually, you may get a loan for up to around 80 percent of the current value of your home. A Home equity loan has desirable rates and low closing costs. There could be tax advantages to this type of loan (consult with your accountant to find out). The loan length may be shorter and interest rates can change.

Unsecured Loans

Unsecured loans are not a perfect alternative but of course they may be a way to pay for home additions. Interest rates are usually higher on unsecured loans than other financing alternatives. Additionally, interest paid may not have any tax advantages. Some people use unsecured loans as interim funding. Once additions are completed, your home value will increase. This may enable you to then get a home equity loan or complete mortgage refinancing. Those funds may be used to pay off unsecured loans.

Mortgage Refinancing

Mortgage refinancing to a higher amount enables you to pull out some equity while managing just one loan. It is a great way to distribute your home addition costs over a longer timeframe and secure a fixed interest rate. The amount of money accessible is based on the particular loan that you apply for and the current value of your property. One down side of this solution is the closing costs.

Methods To Pay For Home Additions In MA

Speak with an experienced loan consultant for information on these alternatives. Additionally, there may be special home addition mortgages for which you may qualify. No matter which financing solution you select, remember that your future recurring home expense will be greater as a result. Prior to moving forward with any work, understand what you can afford and what work can be achieved with your funding. The details on methods to pay for home additions in MA in this blog are intended only as a basic guideline.

President Obama recently shared that the PMI premiums for FHA loans is changing by half a percent. This will truly help buyers currently in the market to purchase. In this article is helpful information on decreased FHA PMI premiums for MA loans.

Starting January 26, 2015

Decreased FHA PMI premiums for MA loans are effective on January 26, 2015. Any FHA case numbers requested on or after that date will benefit from the reduced rates. Case numbers are usually created when an application is submitted. For active case numbers, you might be able to cancel and generate a new one. There is a set procedure that must be followed by your lender to accomplish this. Regrettably, this is not an option for closed loans. Refinancing would be needed.

Decreased FHA PMI Premiums For MA Loans

Decreased FHA PMI premiums for MA loans are half a percent lower than previous PMI premiums. There are actually various PMI premiums based on the down payment amount. For loans with five percent down or more, the PMI charge was 1.3% and is now changed to 0.8%. For loans with less than 5% down, the previous PMI was 1.35%, compared to the new 0.85% rate.

Impact of the Decreased PMI Premiums

Recurring PMI is calculated by multiplying the loan value (not sales price) by the PMI, and then dividing by 12 (months). For a borrower putting 3.5% down, the PMI on a $200,000 mortgage changes from $225/month to $141.67/month, saving $83.33. On a larger mortgage of $400,000, the difference is $166.67 per month. With the decreased PMI premiums, that same home buyer pre-approved for $400,000 may be able to increase their loan amount to $420,000 instead. So, this PMI drop not only makes home ownership more affordable but will also help buyers to get into a more expensive property (if desired).

Help with FHA Loans in MA

Decreased FHA PMI premiums for MA loans is simply one of many changes that constantly take place in the mortgage industry. Your loan consultant ally to keep you up-to-date with important changes and assist you through the whole process. Contact Peter DaMore at Law Offices of Peter T. DaMore Jr. (781-229-7900, pdamore@ptdlaw.com) to be referred to a local loan officer.