Category Archives: For Buyers

How Much Does PMI Cost and How Do I Pay It?

Paying Private Mortgage Insurance

If you’re thinking of taking out a conventional mortgage, but don’t have a 20% down payment, there’s good news for you: you can get a mortgage with less than 20% down.

It’s important to know, though, that private mortgage insurance (PMI) is often a requirement for homebuyers who are paying less than 20% down on a conventional loan.

For many people, the cost of PMI is worth the benefits of owning a home. Understanding the costs associated with PMI will help homebuyers be prepared for their upcoming mortgage expenses.

So, how much does PMI cost? Fees vary, depending on the down payment amount and the homebuyer’s credit score. If you have a 15% down payment and an excellent credit score, for instance, your PMI costs will most likely be less than a homebuyer who has only a 5% down payment and an average credit score.

Typically, PMI fees range from 0.3 to 1.5% of the original loan amount, per year. So, for example, if you take out a $300,000 mortgage, your PMI costs may range from $900 to $4,500 per year (or roughly $75 to $375 per month). Most PMI is paid monthly by the borrower, but there are other options.

You may be thinking, “Why would I want to pay that?”

Because interest rates are low, historically speaking, it may be financially beneficial to obtain a mortgage now, while you can lock in a lower rate. Even with the additional cost of PMI each month, this could still be more affordable than waiting several years to save for a 20% down payment and ending up with a higher mortgage interest rate.

As far as the actual act of paying for your PMI, you won’t have to worry about doing any of the work. In most cases, you will pay for PMI as part of your total loan payment, which also includes the mortgage principal, interest, and taxes. Your lender will take care of getting the money to the private mortgage insurer.

At the end of the day, it’s all about weighing the pros and cons of PMI. Speaking with an experienced loan professional will help you learn more about your options. Regardless of your decision, it’s never too early to begin planning for homeownership.

Millionaire to Millennials: Don’t Rent a Home… Buy!

Millionaire to Millennials: Don’t Rent a Home… Buy! | Simplifying The Market

In a CNBC article, self-made millionaire David Bach explained that: The biggest mistake millennials are making is not buying their first home.” He goes on to say that, “If you want to build real financial security, real wealth for your lifetime, then you need to buy a home.

Bach went on to explain:

“Homeowners are worth 40 times more than renters. Now, that first home doesn’t need to be a dream home, it can be a very small home. You might literally have to buy a small studio apartment, but that’s how you get started.” 

Then he explains the secret in order to buy that home!

Don’t do a 30-year mortgage. You want to take that 30-year mortgage and instead pay it off early, do a 15-year mortgage. What happens if you do a 15-year mortgage? Well, one, you pay the mortgage off 15-years sooner, that means you’ll be able to retire in your fifties. Number two, you’ll save a fortune (on potentially hundreds of thousands of dollars in interest payments).”

What will it cost to pay your mortgage in fifteen years? He explains further:

“For fifteen years, you got to brownbag your lunch. Think about that! Brownbag your lunch literally for fifteen years. You can retire ten years sooner than your friends. You’ll have real wealth, because you bought a home – you’re not a renter. And you’ll be financially secure for life.”

Bottom Line

Whenever a well-respected millionaire gives investment advice, people usually clamor to hear it. This millionaire gave simple advice – if you don’t yet live in your own home, go buy one.

Who is David Bach?

Bach is a self-made millionaire who has written nine consecutive New York Times bestsellers. His book, “The Automatic Millionaire,” spent 31 weeks on the New York Times bestseller list. He is one of the only business authors in history to have four books simultaneously on the New York Times, Wall Street Journal, BusinessWeek and USA Today bestseller lists.

He has been a contributor to NBC’s Today Show, appearing more than 100 times, as well as a regular on ABC, CBS, Fox, CNBC, CNN, Yahoo, The View, and PBS. He has also been profiled in many major publications, including the New York Times, BusinessWeek, USA Today, People, Reader’s Digest, Time, Financial Times, Washington Post, the Wall Street Journal, Working Woman, Glamour, Family Circle, Redbook, Huffington Post, Business Insider, Investors’ Business Daily, and Forbes.

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Why A Platinum Credit Approval Makes Sense

Waterstone Mortgage Platinum Credit Pre-Approval

When it comes to making an offer on your dream home, you want to be as confident as possible.

Imagine this… you are house-hunting when you find an absolutely perfect home. With no time to waste, you move ahead with making a full-price offer. You get the disappointing phone call from your Realtor the next day; the seller has decided to accept another full-price offer from a buyer who was pre-approved for a mortgage. In your excitement to buy a home, you neglected to take that step.

The real estate market is a competitive place – not to mention, buying a home is an impactful, meaningful, and often emotional decision. If you could rest assured that you’re presenting your best offer on a property, wouldn’t you want to seize that opportunity? Well, opportunity is officially knocking!

A Platinum Credit Approval (PCA) from Waterstone Mortgage is the strongest home loan pre-approval you can receive, and will help you present a compelling offer on a home.

This program is perfect for individuals who are actively searching for a home, want to present a strong offer (the next best thing to a cash offer), and who would like to ensure a speedy closing process.

So, what does a PCA involve? A Waterstone Mortgage underwriter will review your credit, income, and other documentation to determine the mortgage loan amount you are financially capable of repaying. Then, your loan will be fully credit underwritten before you begin making offers on homes. Finally, all that’s needed from here is proof of property value (e.g. appraisal) and adequate insurance (e.g. insurance binder).

It’s true that a PCA takes a little bit of time and effort up front. But, for many homebuyers, the benefits are entirely worth it.

With a PCA, you can:

  • Shop confidently. Knowing “how much” house you can afford before making offers will make your home search process easier.
  • Stand out from other buyers. In a competitive market, a PCA makes your offer more impactful than other buyers who haven’t been preapproved for a mortgage yet; in fact, it’s nearly as strong as an all-cash offer.
  • Close faster. Because your loan will be fully credit underwritten prior to your accepted offer, the loan process will proceed quickly, and you can get into your new home sooner.

Don’t lose a perfect home to another buyer. Begin the Platinum Credit Approval process, so you can shop confidently.

Disclosure: A Platinum Credit Approval is a pre-approval program offered by Waterstone Mortgage. In accordance with federal regulations, consumers are not required to provide verifying documents until they have submitted an application, received a Loan Estimate Disclosure, and stated their intent to proceed with the loan transaction. A pre-approval is not an offer to enter into an agreement, which must be made separately and in writing, and should not be construed as a commitment to lend. Waterstone Mortgage is not obligated to close and fund this loan unless all terms and conditions of the pre-approval have been met. Once a property is selected, Waterstone Mortgage must order and receive a satisfactory flood zone determination, property appraisal, and a satisfactory private mortgage insurance certification, if required. Waterstone Mortgage reserves the right to cancel this pre-approval in the event of any material misrepresentation in the customer’s application, in the event of an adverse change in the customer’s credit history, employment, income, assets, debt, or other factors affecting their financial status, or if the above requirements are not satisfied. 

Whether You Rent or Buy, Either Way You’re Paying a Mortgage!

Whether You Rent or Buy, Either Way You're Paying a Mortgage! | Simplifying The Market

There are some people who have not purchased homes because they are uncomfortable taking on the obligation of a mortgage. Everyone should realize, however, that unless you are living with your parents rent-free, you are paying a mortgage – either yours or your landlord’s.

As Entrepreneur Magazine, a premier source for small business, explained in their article, “12 Practical Steps to Getting Rich”:

“While renting on a temporary basis isn’t terrible, you should most certainly own the roof over your head if you’re serious about your finances. It won’t make you rich overnight, but by renting, you’re paying someone else’s mortgage. In effect, you’re making someone else rich.”

Christina Boyle, Senior Vice President and head of the Single-Family Sales & Relationship Management organization at Freddie Mac, explains another benefit of securing a mortgage as opposed to paying rent:

“With a 30-year fixed rate mortgage, you’ll have the certainty & stability of knowing what your mortgage payment will be for the next 30 years – unlike rents which will continue to rise over the next three decades.”

As an owner, your mortgage payment is a form of ‘forced savings’ which allows you to build equity in your home that you can tap into later in life. As a renter, you guarantee the landlord is the person building that equity.

Interest rates are still at historic lows, making it one of the best times to secure a mortgage and make a move into your dream home. Freddie Mac’s latest report shows that rates across the country were at 4.22% last week.

Bottom Line

Whether you are looking for a primary residence for the first time or are considering a vacation home on the shore, now may be the time to buy.

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The FYI on PMI

FYI on PMI

So you’re wondering what private mortgage insurance (PMI) entails? We’ve got you covered.

PMI is often given a bad rap, but the positive side of PMI is that it allows more buyers to purchase a home with less than 20% down.

Before considering a mortgage with PMI, it may be helpful to learn a little bit more about it.

PMI is a typical requirement for conventional mortgage loans when the homebuyer has a down payment that is less than 20% of the home’s value. Essentially, the homebuyer pays an additional fee each month, which is used by the lender to obtain PMI for that specific mortgage.

As a buyer, you won’t need to worry about making arrangements for PMI; your lender will do that work for you. PMI protects your lender from losing money if you stop making your monthly mortgage payments.

PMI is usually paid monthly, but in some situations it can be purchased up front. Fortunately, for many homebuyers, PMI is an affordable and feasible option that makes homeownership possible.

If you are ready to buy a home – but don’t have a 20% down payment for a conventional mortgage loan — PMI might be a helpful solution for your situation. With interest rates low, especially when compared with previous decades, now may still be a smart time to buy.

Of course, everyone’s situation is unique. If you still have questions about conventional loans, PMI, or other mortgage-related inquiries, be sure to contact your loan professional for additional information.