Author: Jack Leachman

When we had historically low interest rates, people didn't ask about ARM loans as much but today we hearing more questions, so a good explainer always helps even if you're a mortgage pro - here's a refresher. Adjustable-rate mortgages (ARMs) offer upsides and downsides, providing homeowners with an opportunity to capitalize on initially lower interest rates. Among the various ARMs available, the 5/1 ARM has emerged as a popular choice. This post delves into the mechanics of a 5/1 ARM, its advantages, disadvantages, and how it compares to other mortgage options. What is a 5/1 ARM? A 5/1 ARM is a specific type of adjustable-rate mortgage. The "5/1" denomination signifies two critical components of the loan: the first number (5) represents the duration in years of the initial fixed-rate period,…

Understanding Mortgage Proof of Funds (POF) Letter: A Key Document for Homebuyers When you're stepping into the world of homebuying, especially with a mortgage, a critical piece of paperwork you'll encounter is the Proof of Funds (POF) letter. This document is not just a formality; it's an essential part of the buying process, assuring lenders and sellers of your financial readiness. Let's dive into what a POF letter is, why it's needed, and how to obtain one. What is a Proof of Funds Letter? A Proof of Funds letter is your financial passport when buying a home. It demonstrates that you have the necessary liquid assets – be it cash, checks, or money in accounts – to cover the purchase costs, including the down payment and closing fees. For cash…

For many homeowners who opt for a conventional mortgage with less than a 20 percent down payment, Private Mortgage Insurance (PMI) becomes a necessary part of their monthly expenses. PMI is an additional charge on your mortgage payment, primarily designed to protect the lender in case of default. However, there are several ways to eliminate this extra cost, which can save you a significant amount over the life of your mortgage. When Does PMI Go Away? The Homeowners Protection Act of 1998 set forth guidelines for the automatic termination of PMI. According to the Act, PMI must be removed by the lender once the borrower attains a 78 percent loan-to-value (LTV) ratio. This means that when you have paid down your mortgage to 78 percent of the original purchase price…

Homeowners often overlook the financial potential of their home equity, a valuable asset that can be used to purchase a second home. This equity, calculated as your home's value minus any outstanding mortgage, can be accessed through two primary methods: a home equity loan or a Home Equity Line of Credit (HELOC). A home equity loan offers a lump sum with a fixed interest rate, ideal for significant one-time expenses. In contrast, a HELOC provides a flexible, revolving line of credit with variable interest rates, akin to a credit card. Using home equity to buy another home offers several advantages. It enables you to access substantial funds without depleting personal savings and allows you to retain ownership of your current home. Additionally, it can position you as a more competitive…

In 2024, new homeowners are seeing mortgage interest rates have more than doubled since 2021, making the dream of home ownership with the traditional down payment of 20% seem like a bridge that is very far. However, there are many options and programs that don’t require 20% down. Some loan programs now allow for a much lower down payment, requiring as little as 3 percent in cash. This development significantly eases the burden for homebuyers, especially first-timers. Understanding 3 Percent Down Mortgage Options These low down payment mortgages are often part of special programs, typically targeting first-time homebuyers or those who haven't owned a home in the recent past. Here’s a closer look at these options: 1. Conventional 97 • Backed By: Fannie Mae • Key Features: Only 3% down…

As we enter 2024, inflation is improving while home prices remain high, if you are planning on buying a home in 2024 here are 5 key steps to take to get ready. 1. Put Savings In A High-Yield Account If you are planning on buying you will need your money to be “liquid” or relatively easy to access for a down payment. 2. Check Your Credit You may have heard this before but it’s important, so we’ll say it again. Review your credit report to make sure there are not any errors or attempts at identity theft that can erroneously lower your credit score. 3. Down Payment or Closing Costs Assistance It’s a good idea to check to see if you qualify for down payment or closing cost assistance or…

As we usher in the new year, we want to extend our warmest wishes to you and your family. May this year bring new happiness, new goals, new achievements, and a lot of new inspirations to your life. Remember, a new year means new beginnings, new adventures, and thankfully, new homes! We're excited to be a part of your journey, whether you're buying your first home, refinancing, or simply exploring your options. Happy New Year from all of us! Here's to a prosperous and joyful 2024! 🎉

As 2023 comes to end its a good idea to do a year end financial checkup. 1. Review your budget and savings plan Analyze your spending and saving for the year. Your savings might not have gone to plan this year and that’s ok – focus on replenishing your emergency fund first if needed and recalibrate plan for 2023 if needed. 2. Maximize Retirement Plan Contributions If you participate in a 401k make sure you maximize contributions before the December 31 deadline, you have until April for Roth contributions 3. Review Your Insurance Coverage Check your insurance coverage in many parts of the country housing prices went up, make sure you home is covered under current market prices. Also check your liability coverage and consider getting an umbrella liability policy…

As 2023 comes to end its a good idea to do a year end financial checkup. 1. Review your budget and savings plan Analyze your spending and saving for the year. Your savings might not have gone to plan this year and that’s ok – focus on replenishing your emergency fund first if needed and recalibrate plan for 2023 if needed. 2. Maximize Retirement Plan Contributions If you participate in a 401k make sure you maximize contributions before the December 31 deadline, you have until April for Roth contributions 3. Review Your Insurance Coverage Check your insurance coverage in many parts of the country housing prices went up, make sure you home is covered under current market prices. Also check your liability coverage and consider getting an umbrella liability policy…

A lot of homeowners that are thinking about moving have an option with their home: rent it out or sell it? What to do hinges on various factors, including one's financial situation and local market conditions. Let's explore the key aspects to consider, including the financial implications of both options. Deciding Between Selling and Renting Out Your Home: A home is often the largest financial asset for many people, making the decision of what to do with it a significant one. Selling your home offers a substantial cash windfall, while renting it provides a steady monthly income. Renting also allows you to continue building equity if property values rise. Consider your personal circumstances to determine the best choice. When Selling is the Best Option: Need Cash for Next Home Purchase:…