The millennial generation is entering a job market and economy that comes with its own set of challenges. The Wall Street Journal reports that, “The financial crisis exacted a heavy toll on the generation of Americans now entering their 30s. Facing difficult job prospects, little-to-no income growth and a historically unprecedented level of student loans, their finances are in a more precarious state…” At the same time, this younger generation is empowered by technology and motivated by a strong desire for more freedom in their daily life.
Faced with both unique opportunities and challenges, how can millennials get on the fast track to financial independence?
- What bills do you have and how will you ensure each is paid on time?
- Where is your money going and what expenses can you reduce? Separate the needs from the wants. Consider luxury items like cable, cell phone plans, transportation, dining out, entertainment, gym membership and that daily $5 latte habit. To get started, there are lots of free budget worksheets out there, like this one.
- Get a free copy of your credit report, check for errors and signs of identity theft. Keep the report in shape by committing to pay bills on time.
- Set goals. What is really important to you? What are you saving for?
Tackle Student Loan Debt
- Review the terms of your loan so you know when the first payment is due.
- What are your options for repayment? This Consumer Finance website provides a breakdown of student loan repayment options.
- Pursue options for savings. You are allowed a limited federal tax deduction for interest paid on federal and private student loans. Some lenders may offer a rate reduction for things like having your payment automatically deducted from your bank account.
As you evaluate the housing portion of your budget, you will be faced with the decision to rent or buy. How much down payment will you need? What loan amount will you qualify for? What type of loan will work best? What can you afford to spend? Thankfully there are a variety of options to make saving for a down payment an achievable goal. Contact a Mortgage Planner who will guide you through the process of applying for a loan that is right for you.
By Amy Malloy, RPM Mortgage
Showing houses is the easy part. Financing them is a bit harder. You can start with the basics, and we can help with the rest!
What is a Conforming Mortgage?
Sometimes called Conventional, Conforming loans are for 1-4 unit condos, or any primary residence or second home. Each loan is set to specific bank lending criteria, like the limit to loan amounts set by Fannie Mae and Freddie Mac.
- 1-unit: $25,000- $417,000
- 2-unit: $25,000- $533,850
- 3-unit: $25,000- $645,300
- 4-unit: $25,000- $801,950
There are two types of loans:
Fixed Rate Mortgage
If your home owners plan to stay in their home for 10 years without refinancing, a Fixed Rate Mortgage may be best for them. The interest rate on this type of mortgage never changes during the duration of the loan. They’ll pay the same principal and interest payment until the loan is fully paid off. Commonly, the loan is based on 30 years, but terms can also be 10, 15, 20 or 25 years as well.
Adjustable Rate Mortgage (ARM)
An ARM loan allows for an interest rate and payment to remain the same for a fixed period of time, at which point can become adjustable. After the first 1, 3, 4, 7 or 10 years of your loan, the rates can be
Learn more about our mortgages and how we can help make your homeowner dream home become a reality!
Beginning on October 3, the CFPB’s new “Know Before You Owe” rule, also known as TRID, went into effect. The new regulations will result in some changes to the way real
estate transactions are processed. The updates include new forms and timelines that are intended to make the process more transparent and easier to understand. Recently, the Mortgage Bankers Association released a set of guidelines to help educate everyone involved.
As a borrower, what can you do to prepare for a new home purchase? What can you expect? What are your responsibilities? How do you avoid delays? The tips listed below offer some insight:
- Get financial details sorted out first by obtaining a pre-approval from your lender! It’s helpful to secure financing early – even before you officially begin the search for your dream home.
- Read your Loan Estimate (LE) carefully early on in the process so any questions can be addressed in a timely manner. You have at least seven days to review paperwork between the time you receive the LE and the time you close.
- Do not make any major financial decisions or purchases that might impact your loan or closing. Inform your mortgage planner immediately of any changes that do occur, including a change in employment status.
- Order reports and home inspections as soon as you know they are required so that any contingencies can be removed quickly.
- Schedule a final walk through of the property before the Closing Disclosure (CD) is issued – at least 3 days before closing.
- Avoid last minute changes to the loan. Certain changes to the APR or loan product after you receive the CD will trigger an additional three business day waiting period.
Although the new disclosure rules could potentially add additional time to the process, delays are avoidable if you have a clear understanding of the process and what is expected of you. Your Mortgage Planner will guide you through each step.
Contact a Mortgage Planner today to start a conversation about your home ownership goals.
- Amy Malloy, RPM Mortgage
Smartphones can do it all, and who doesn’t have one these days? We’re willing to bet you have one!
There’s an app for everything! We’ve compiled a list of the most useful real estate apps, because trust us, you’ll want to use them!
- All of these apps do the same thing. You can check out any listings for houses on there and add your own if you make an account! They’ll provide you with any quick information you need.
- This app would be great to share with your clients! It allows anyone to take a picture of a house they like, and see details regarding how much the house would cost, estimated mortgage payments, neighborhood information, etc. This would help homeowners figure out what they are looking for in a house!
- Lovely is the perfect app for people to find rentals. Again, as an agent, you can share the app with any home owners that discover that renting may be a more viable option for them, or if you have any clients that are looking to rent out their beach house to vacationers!
- This app, along with many others like it, works to give the best estimates on mortgage payments a client would make on a house they are interested in. (Of course, Regency is here to help!)
- Sitegiest is perfect for anyone looking to learn about neighborhoods. Scroll through hundreds of infographics made from information and statistics pulled from any location. You’ll likely be able to tell interested buyers how busy the local movie theater is on a Friday night.
- All of these apps could be essential to your work load! They’re convenient and easy since they all allow you and your clients to sign documents over the app!
All of these apps are great to add to your business, but we’re here to help too!
The reason for this is simple…
The industry is now holding the lenders feet to the fire on pre-approvals. Meaning, if a lender issues a pre-approval too early in the process and later, information is obtained that renders that approval invalid, the lender may still have to close that loan. A pre-approval is now regarded as a commitment to extend credit and assumes the credit has been evaluated for worthiness. A loan is never truly approved until all pertinent docs are received & has gone through underwriting. No lender wants to make a loan that is unsalable, hence most are now issuing pre-qualifications upfront, unless they have a full picture of the borrowers’ assets, liabilities, income, employment history and any other pertinent information that might influence a credit approval.
Pre-Qualified vs. Pre-Approved
Pre-qualification is a lender’s estimate of how much you could be eligible to borrow based on information you supply. Pre-qualification does not mean you will get the loan. Pre-qualifications are usually free.
Pre-approved usually means that the lender is ready to make you a mortgage loan based on the information and documentation you provided at the time you requested a pre-approval. The pre-approval will say how long it is valid for and may contain some other conditions for you to get the loan. Your lender may not require that you pay any fees except the cost of a credit report at this time.
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