Protect Yourself against Liability

Let’s say that your dog bites a guest at your annual summer party. If you don’t have homeowners insurance, you could pay for the damages that the victim incurs, and those damages could run as high as $100,000 or more. Homeowners insurance can also protect you financially if someone is hurt slipping on your icy driveway or tripping over a rug while inside.

You Get Protection for Everything inside of the Home

If your home was burglarized, your homeowners insurance policy will likely pay for anything that goes missing. The same is true if items are damaged in a home invasion. Your policy will likely cover the cost of repairing or replacing lost, stolen or damaged items inside of a shed or garage. Carports and similar structures on your property could also be included in your policy.

Homeowners Insurance Is Relatively Inexpensive

Homeowners insurance polices generally cost less than $1,000 per year. The payments can be rolled into your mortgage, so you don’t have to worry about making them on time. Before you purchase a policy, be sure to shop around to see what local insurance providers offer both in terms of cost and coverage levels. Independent brokers may be able to scour offerings made by all companies in your area to find the best policy.

What Happens If the Roof Is Damaged?

A powerful wind storm could result in shingles being blown off of your roof. It could also result in the entire structure being separated from the home. Regardless of the extent of the damage, it is important to fix it as soon as possible. With an insurance policy, you can get the money needed for repair work in a matter of hours or days. From there, you should look for a residential roofing professional.

Buying homeowners insurance provides you with a variety of benefits that are well worth the cost. While you hope that you never have to use it, it can save you thousands of dollars in repair or other costs if disaster strikes on your property.

image credit: Pixabay

You’ll Need a Lot of Information

You will need to present official tax returns from the last two years. Lenders will also likely ask for pay stubs or evidence of any other income that you have generated in the past two years. If you are self-employed, be ready to provide income and tax information about both yourself and the business.

Income Can Be Averaged

Let’s say that you made $100,000 this year and only $20,000 two years ago. It is likely that a lender will average those two numbers together when determining your qualifying income. This helps to smooth out fluctuations in your income and allow a lender to better assess your ability to repay the loan.

Your Finances Will Be Monitored until Closing

Lenders such as Home Mortgage of America will likely keep track of your credit report prior to closing. If you make a large purchase, are late on a credit card or other debt payment or otherwise alter your financial situation, it could reduce the odds of the purchase closing. Therefore, be sure to put off any major financial decisions until after the loan closes.

The Approval Process Can Take Several Days or Weeks

While you may see advertisements for mortgage companies that offer approval instantly, that isn’t necessarily common. You should allow for days or weeks for the loan approval process to play out as the lender or an underwriter could have questions or need more information to make a decision.

Don’t Forget to Prequalify

Ideally, you will get prequalified for a loan before you actually apply for it. The prequalification process takes only a few minutes and will provide valuable insight into how you should set your housing budget.

By applying for a mortgage, you are asking a lender to give you tens or hundreds of thousands of dollars. Therefore, the lender will want to make sure that you are able to repay that money in a timely fashion. This means getting ready to spend many days or weeks on your phone doing whatever it takes to get a mortgage request approved.

Not Everything Is Covered

Common sense dictates you need homeowner’s insurance when you buy a home, but you might not realize it’s not all comprehensive. Your policy might not cover things like flood damage, or it might cover certain types of flood damage but not others. Just because you’re protected from storm surge caused by a hurricane doesn’t mean your insurance company is paying out for a burst pipe and the water damage that occurred because of it. Companies such as Northeast Insurance Agency and other local agencies recommend you discuss the type of coverage you know you need and what you might need when you ask for insurance rate quotes to compare prices.

Your Belongings Aren’t Automatically Covered

You have a policy for your home, but did you know it might not cover everything you own? It only covers up to a certain amount for specific items, and most policies don’t insure any one item for more than a small amount. Let’s say you have your grandmother’s diamonds that are worth $100,000. They’re stolen from your home, but your insurance company might not pay you that amount of money. They might only pay you about $1,000 to $2,000 unless you have special coverage for exceptionally valuable items. Keep this in mind when you buy a policy.

Your Claims Can Be Denied

You have a large tree that’s been touching the side of your house for months due to overgrowth, and you know you need to cut it down. If it falls onto your home during a storm, your insurance company might deny the claim if they find out you knew it was a problem for months and failed to take the required precaution to remove the tree or the branches putting your home in danger. Be sure you’re always keeping up with your maintenance if you want your claims approved.

You Want the Insurance

Even with potential that your claims can be denied, you still want the insurance. It is better to have it and not need it than need it and not have it at all. You want to make sure that your home is taken care of at all times. If something were to happen, it could cost you a lot of money. In some cases, it can cost more than what you are able to afford on your own. Therefore it is better to have the insurance just in case the worst were to happen.

Homeowner’s insurance is no fun to deal with, but you’ll be so glad you have it if anything should happen to your home. Now is the time for you to review the policy you’re thinking of buying and be sure it has everything. Talk to your agent about adding additional coverage as needed.

Tips to follow for getting a quick approval for your home mortgage loan

• Make sure your credit report is good-
  In order to get approved for a home mortgage loan, you must have a good credit report; typically, above 750. A good credit report will increase your chances of getting approved by money lenders. A lender will always check your credit score history to figure out if you are trustworthy and can repay the loan on time.
  Applying for a home mortgage loan with a low credit score will prove to be a blunder on your part as you will not get approved with that score. You must check your credit score history, pay off any debts, check for write offs, and fix all these issues before applying. After all, every bank has their norms and they cannot offer a loan overlooking company’s regulation.
• Try different money lenders-
  Often, one money lender might reject your home loan mortgage, while another one will quickly approve it. Always check with a number of good sources before applying for a loan. It is important to avoid loan sharks, and be extremely cautious to find the right lender to meet your needs. Many lenders might even ask for higher fees or interest rates. Checking up with different banks will give you a fair idea and help you choose the right one for your needs.
• Pay off all your previous loans-
  If you have a previous loan that has not been paid yet, it will give the wrong impression to your lender. You have a high risk of having your loan rejected, as your lender will assume you will not be able to pay back the additional loan with your current income. Before applying for any home mortgages loan, make sure all your current loans are paid off. This will give you a better chance of getting your loan approved.
• Have some savings in reserve-
  Borrow only what you will be able to pay off. By taking on more than you can handle, you are at a high risk of not being able to pay off your loan within the agreed period. Always keep some savings in reserve, as this ensures that you will be able to pay back your loan periodically even if you are set back slightly due to income issues. These reserves can be in cash or assets which you can sell off easily to repay your home loan. If not, you will end up paying higher amounts for your home loan than what was agreed on.
• Have a stable employment-
  Before approving your home loan; a lender would like to make sure that you have a steady income, so that you are able to pay back the EMI’s. These EMI’s may stretch over months, years or even decades. In order to ensure periodic payments, you must be able to have a stable job and income. Frequent job changes will add a negative point to your card. Make sure you have stayed in your job for over a year before applying for a home mortgage loan.

Applying and getting approved for a home mortgages loan is not an easy process. These tips will allow you to get approved easily without facing any risks or rejection.

5 essential things for approval of the loan

The several things that you have to look into before the loan gets approved are explained below.

• The banks and other lending organizations prefer people with clear financial history. They initially calculate the credit score of the customers. It gives a clear picture of whether the individual has paid his past EMIs on time. Usually a score of 800 is considered the best, while if the score is below 300 it is likely that the loan application would get rejected.

  The shorter the repayment time the more likely that the loan would get approved in minimum possible time. The organizations mostly prefer individuals who agree to pay back the entire amount along with the interest within five years. The maximum time period that the organizations offer is 15-20 years but here the sanctioning of the loan becomes a difficult job.

• The relationship of the individual with the bank is also an important aspect the lender looks into. The longer the relationship the more easy would be the job of getting approval. An individual who has been the account holder in the bank for more than 10 years would most likely get the loan easily.
• The occupation of the borrower also plays an essential role in this matter. The banks prefer applicants with government and PSU jobs the most, since their job is considered the most stable. Next the doctors followed by engineers, lawyers and chartered accountants are considered. Individuals associated with private companies or self-employed are considered lowest in the ladder.

  This is one of the essential factors since the repayment capacity of the individuals is completely dependent on their income.
  For example if an individual is associated with a company where the employees do not get proper salary or if he switches job too frequently the loan application becomes weakened.

  The loan gets sanctioned easily if they are applied as joint loan. It occurs in cases where the income of the partner is also considered. Sometimes the interest rate is a little low if the loan is taken in the name of the spouse. However, in these cases both of their income would be taken into account while calculating the repayment capacity.

• The age of the borrower is also a determining factor for approval of the loan. Usually the applications of individuals within the age group of 30-50 is considered most stable, since they have decent years of service left.

  The application from retired personals is considered the weakest for obvious reasons. The number of working years is also an essential factor that is checked before sanctioning of the loan. The personals with longer work experience are preferred over those with less experience.

• The loan gets approved more easily if the individual is moving to a completely ready house rather than the one that is still under construction. Sometimes sanctioning of home loans for under construction houses become risky since there is a slight chance that the construction may get stopped midway leading to major chaos.

Nowadays when the banks are lowering their interest rates to attract customers it seems that getting home loans approved is not a big deal, but actually it involves several aspects and it is quite a headache to get the whole process completed without any hassle.

It’s Best to Get Preapproved

If the idea of trying to obtain a mortgage and then failing part way through the process makes you nervous, then you should certainly get preapproved for a mortgage with a bank before you even begin looking at houses. However, it’s a good idea to get preapproved in general. In fact, many real estate agents don’t want to deal with buyers who weren’t already approved by a bank. Going through the preapproval process will also give you important information regarding just how expensive a home you can actually afford. Also be aware that a preapproval and a prequalification sometimes mean different things.

Making a 20 Percent Down Payment Is a Good Idea

It is true that you don’t actually need a 20 percent down payment to obtain a mortgage. While that may make a mortgage sound more attractive to you, paying the 20 percent is still very much worth it. Making that large of a down payment will make the process a lot smoother for you then if you try to pay less. It will also start you off on the right foot with you owning more equity in your home. If you pay considerably less, you’ll have to pay more fees, higher interest rates and larger monthly mortgage payments.

An Online Mortgage Calculator Can Answer Some of Your Questions

There are a lot of choices when it comes to a mortgage. Should you obtain a 15 year mortgage or a 30 year mortgage? Should you get an adjustable rate mortgage or a fixed rate mortgage? You may also be wondering what your monthly mortgage payment is likely to be. Thankfully, you can answer many of these questions by using online mortgage calculators. Different mortgage companies such as Premium Mortgage Corp make these calculators available to potential customers to help them sort out some of the questions they have about what kind of mortgage they should choose and how a certain mortgage type will impact their finances.

Overall, don’t be intimidated by the process. It isn’t as scary once you gain some knowledge. Owning property is a wise investment for nearly any family. If you can afford to do so, certainly begin the process of eventually owning a home.

Most People Don’t Have the Resources to Buy a Property With Cash

The average person doesn’t have $100,000 or more on hand to buy a home or other property outright. Therefore, it is easier and more convenient to contact different lenders about borrowing the money now and paying for the house over time. There are tons of resources out there to help you be able to finance your new home. All you have to do is put forth the research to find them.

Mortgages May Provide Multiple Financial Advantages

There may be good reasons to take out a mortgage even if you could afford to pay for a home in cash. First, the interest on the loan can be deducted from your taxable income. Second, interest rates are at historic lows, which means it may not cost that much more to borrow than it would to pay for it upfront. In the meantime, you can invest your cash in stocks and bonds and earn a return that is higher than the interest you will ultimately pay on the loan.

Use a Mortgage to Gain Access to Your Equity

When your property is worth more than what you owe on your loan, you are said to have positive equity. However, that equity exists only on paper unless you liquidate. As selling a home or any other piece of real estate can be a long and complex process, a home equity loan may be preferable. These are often referred to as second mortgages, and lenders will put a second lien on your home or other property as collateral. Once you have the money in your bank account, you can use it for any reason including to pay bills at a low interest rate or put an addition on the house that could further increase its value.

When it comes to seeking a mortgage you make want to talk to a realtor, such as those at EXIT Lakes Realty Premier, so that you can get as much help as possible. When you are looking to buy or refinance a home or any other property, it may be a good idea to get a mortgage to do so. You can borrow hundreds of thousands of dollars at reasonable and often flexible repayment terms. Additionally, you can usually prepay the loan at any time or refinance when it makes sense, so you are never locked into a loan you don’t want or need.

Interest Rate Expectations

One of the biggest mistakes many first-time homebuyers make is failing to have a good idea of what types of interest rates they should expect. According to the experts at Republic State Mortgage Co, most homeowners refinance to get a lower interest rate. Save yourself that money upfront and find a good rate to start with. In many cases, first time buyers find out they will have higher interest rates than anticipated, since they didn’t do any research, which can greatly impact the type of home they may be able to purchase.

To keep this from happening, buyers should check their credit reports for any errors, as well as be wary of applying for more credit while waiting for their mortgage to be approved. In some cases, applications can be rejected and deals can fall through. However, if all goes well for buyers, interest rates may be as low as three percent for those with excellent credit, making all the financial work well worth the effort.

Consider the Costs of Home Ownership

To ensure you get a home you can afford over the long run, make sure you consider the entire cost of owning a home. For example, make sure you include the costs of insurance and property taxes, as well as repair costs and utility bills. If you don’t, you might take on more debt than you can handle, which could lead to additional financial problems in the future.

Don’t Quit Your Day Job

If you or your partner has considered quitting a job or changing jobs, don’t do it while you’re in the process of getting a mortgage. If you do, the lender may think you won’t be able to make the payments and deny the mortgage application. Rather than let this happen, show your lender you have a stable history of employment and wait until you’ve been approved before deciding to make a career move.

By making sure you don’t let what appears to be a minor incident keep you from getting the money needed for your dream home, put some serious thought into these and other matters. If you do, chances are you’ll not only get a great deal from your lender, but you’ll also get the home you’ve always wanted.

Learn about the costs, financial and otherwise. Any extra time you spend in preparation pays for itself later, when you’re able to avoid common pitfalls and unpleasant surprises. Below you’ll find three basic things to expect when you purchase your first home. 

1. There’s No “One Size Fits All” Mortgage

Mortgages vary based on several factors: your down payment amount, credit score and resulting interest rate, assets, and the amount you plan to borrow (Source: Sente Mortgage, a mortgage lender in Austin). Your entire financial history and current net worth are just two of many parts to the final cost equation.

But before you become nearly overwhelmed with all of the complexities, stop and take a breath. If you find a reliable mortgage lender, they’ll help you through each step of the process.

2. The Process Takes Time

From beginning to end, you participate in three basic parts to create and close on your first home’s mortgage. These parts consist of:

Pre-Qualification or Pre-Approval
Before you even think of listings and open houses, fill out a standard loan application. Your mortgage lender or provider will request initial documents regarding your income, assets, and employment situation. With this combined information, your lender then notifies you of an approximate amount you’re approved to borrow.

Home Search
As you create a pool of homes that interest you, stay in touch with your mortgage banker to ensure price approvals. Once you have a loose idea of 2-3 homes that present a viable option, you’ll begin to consider a chosen loan program, or mortgage type.

Contract-to-Close
In which you create a sales contract and review and sign the various legal disclosures. Upon receipt of these documents, your mortgage provider may need updated information on your original asset, income, and employment documents. Review, clarification, and the choice of an insurance provider all occur before you sign the final closing documents.

3. Costs Add Up

Expenses include more than just the principal (home price) and taxes. Closing costs alone include a list of itemized charges, so review all documents you receive to understand the basic costs. If you expect these costs in addition to insurance, utilities, and possible upgrades, the bottom line costs won’t come as a surprise to you or your wallet. Remember to also keep in mind potential repairs, and leave room in your budget for such expenses.

Mortgages are probably the most complex thing for anyone to understand when they go to buy a home. Always sit down with a professional. They will explain how the process works and what you can expect during the time it takes to get your loan approved. They will also tell you what will work best for you and for your current financial situation.

Build Your Equity Faster

When homeowners get a raise or have an increase in their family’s income they may want to consider refinancing in order to build their equity faster. An example of this would be a homeowner that originally went with a 30-year mortgage due to a lower paying job or position in the company. When they are promoted, they can then refinance with a 15 or 20 year mortgage in order to build equity and save on financing fees.

Negotiate Lower Rates

Negotiating lower rates is one of the most common reasons that homeowners will refinance their home. Over the years, a long list of variables may have improved your credit or brought another income into the home. By refinancing, you can negotiate for lower monthly rates or better interest rates. This could free up thousands of dollars over the lifetime of your mortgage.

Potential New Discounts

Many homeowners are simply unaware of all the discounts that they could be missing out on by not refinancing. Families have the option to contact companies such as Low VA Rates to see if they qualify for new refinancing programs due to their past or current service. Loan officers may also give a variety of discounts to homeowners that have transitioned into new fields such as teaching or working for the government.

Re-Invest Current Equity

If your home does have a good deal of equity but you are struggling with other high interest payments such as student loans or credit card debt, then you may want to consider refinancing. Refinancing and pulling out a small amount of the home’s equity could help you immediately pay off other debts that are at a much higher rate than your mortgage. Families with shaky finances may not benefit from this, but those with a solid financial history could benefit from a lump cash payment.

Before refinancing, it is important for homeowners to have a clear understanding of their current financial situation and their future goals. Taking a look at long-term goals will help you make the most out of your refinancing and provide a highly lucrative option.

Image credit: Refinance by GotCredit, on Flickr