McClintick Real Estate, Inc.



Posted by McClintick Real Estate, Inc. on 3/12/2020

Image by Peggy und Marco Lachmann-Anke from Pixabay

You’ve decided it’s time to build the dream house you’ve always wanted. An exciting time!

Prior to hiring builders to construct your home, it’s critical to understand the financials involved before you start the planning process. Securing funding for land is different than obtaining a traditional home mortgage. For starters, there are typically fewer loan options. If you’re looking to buy land to build your new home, here is a rundown of several common funding options.

Cash

If you have the cash to cover the full purchase price of the land, this might be your best bet because you’ll be debt-free. Many mortgage lenders often waive large down payments to build houses because the borrower establishes equity in their new home by buying the land outright.

A word of warning—be careful about wiping out your savings because you’ll need money as unexpected circumstances arise during the build process—always have a financial contingency plan.

Land or Lot Loans

Land loans are available for raw, undeveloped land, and is a great alternative to avoid cleaning out your bank account. The big drawback is interest rates will be higher. Lot loans are very similar to land loans, with the primary difference being the land has building permits, surveys, and/or utilities already in place. Like a land loan, a lot loan typically comes with higher rates.

Seller Financing

Land is often difficult to sell and, to get the ball moving, some sellers are willing to lend buyers the money needed to get their build started. These loans are usually short-term and come with high-interest rates.

Construction Loans

These short-term, high-interest loans are designed to help you get your project started. To be approved, you’ll need to have a budget and construction plan in place. Once your project is completed, you can often convert a construction loan to a traditional mortgage.

Home Equity Loans

If you already own property, you can explore taking out a home equity loan to cover the cost of your new land. These loans are easier to acquire, along with longer terms, better interest rates and no down payments. The big drawback is if you default on payments, you risk losing your existing home.

Borrow from Local Financial Institutions

Local lending agencies are more likely to approve a land loan than other financial institutions that aren’t vested in the community. You might do well by identifying community banks and credit unions who are familiar with the land, along with its worth and potential.

In general, lenders command higher interest rates and bigger down payments with land-related loans because they deem land purchases to be far riskier than lending money to people to buy an existing home. The reason being they perceive owners as not yet fully invested in the property until a house is on it.

Choosing the right property and finding a way to fund the purchase is the first step. Once you’ve got these two boxes ticked off your to-do list, you’ll have taken one big step towards the day you’ll be able to move into your dream home.




Tags: Land   Financing   buying land   Building  
Categories: Uncategorized  


Posted by McClintick Real Estate, Inc. on 12/26/2019

Image by Burst from Pexels

Buying a home is an exciting time. As you start to comb through listings and decide you’re ready to take the plunge to purchase, you’ll want to pursue getting pre-approved for a mortgage. This way, you'll know how much you're approved for and can shop for homes within your price range. Additionally, having a pre-approval boosts your chances of having your offer accepted once you’ve found a house you want to buy. If you aren't already pre-approved, this delays your ability to put in a bid, which means someone else may be the one moving into your dream home.

To get yourself qualified for a mortgage, it’s a good idea to shop around for rates. Many people find they do best with a credit union, however, there are some drawbacks you might want to consider before making your decision of the type of lender you want to work with.

Credit Unions Require a Membership

Unlike traditional banks, credit unions aren’t open to everyone to use. To apply for a mortgage through a credit union, you’ll have to join as a member. The drawback is not just anyone can join. To qualify for membership, you’ll have to be affiliated with a specified organization or meet other designated criteria set by the credit union’s guidelines.

Many people find they are successfully able to locate a credit union they are eligible to join, but it’s not a given. To check to see if you meet the criteria for membership to a credit union near you, check MyCreditunion.gov.

Fewer Branch Networks

Credit unions are community-based non-credit entities. As a result, most of them are geographically concentrated and operate with fewer branches than traditional banks. This means your options may be extremely limited if you want in-person service.

Having a physical branch to visit when you want to resolve problems is a convenience many people often want when working with a financial institution. Consider how important this access to your lender would be to you. If you’re comfortable with strictly phone contact or online options (which might also be limited, depending on the size of the credit union), in-person access may not be an issue for you.

Limited Financing Options

Larger commercial banks typically have a broad range of financing options. While you might find a good rate at a credit union, you’ll typically find far fewer product offerings than you would at a larger bank.

Depending on your individual credit and financial standing, a credit union may not be able to offer you the best interest rates on a mortgage. Additionally, since they are smaller entities, they don’t always have nearly as much cash on hand as traditional banks, which means they might be limited in the number of mortgages they can approve at a given time.

When shopping for lenders to pre-approve you for a mortgage, you have many options between traditional banks, credit unions, mortgage banks and mortgage brokers. If you diligently do your homework, it’ll empower you to find a lender that can meet your financing needs.




Categories: Uncategorized  


Posted by McClintick Real Estate, Inc. on 11/8/2018

If you’re hoping to buy a home in the near future, there are a number of financial factors you’ll need to consider.

One of the factors that all lenders will consider when determining whether or not to approve you for a mortgage is credit score.

In this article, we’ll lay out the minimum and ideal credit scores that are needed for getting approved for a home loan.

Determining Your Score

As you may guess, credit reporting is a complicated business. There are three main reporting companies that lenders use to determine your credit: Experian, TransUnion, and Equifax. These companies largely collect the same data about your finances, but can have minor variations. Lenders will take these scores and use the median or middle score to determine your credit rating.

Thanks to the Fair Credit Reporting Act, Americans have the ability to confirm the accuracy of their reports.

If you want to find your credit score, there are a number of online reporting agencies that will show you your report for free on an annual or monthly basis.

Minimum credit scores

Depending on the type of loan you’re applying for and which lender you are pursuing, minimum credit scores vary.

For those seeking first-time homeowner (FHA) loans, you’ll need a credit score of at least 580 to qualify for a 3.5% down payment. A score lower than this amount and you will need to put at least 10% down.

Since FHA loans are insured by the government, you are more likely to be approved if you have a low or “poor” or “bad” credit score (usually anywhere from 300 to 650).

Another type of loan that could help people with low credit is offered by the Department of Veteran’s Affairs. These loans, known as VA loans, are guaranteed, in part, by the government. However, the loans are still approved and distributed by lenders who all have varying minimum credit requirements. A good benchmark is that you’ll need a score of at least 620 to be approved.

Minimum isn’t ideal

While you may get approved for a loan with a low credit, this isn’t always a reason to celebrate.

Lenders use your credit score, among other things, to help determine the interest rate of your loan. A lower score often means a higher interest rate.

While 1 or 2 percent can seem like a small number, it can mean paying tens of thousands of dollars more in interest over the span of a thirty-year loan.

To illustrate the importance of one percent, consider the following. If you owe $200,000 on a home and intend to pay it over 30 years, you will pay $103,000 in interest at 3% and $143,000 at 4% - that’s a difference of $40,000.

Rather than shooting for the minimum credit score, a better approach would be to build credit while saving for a down payment. Someone with a credit score of 740 or higher will be seen by most mortgage lenders as an ideal person to lend to.

Of course, life doesn’t always allow for the ideal situation. So, do your best to save and build credit, and be sure to shop around for the best rates when you’re ready.





Posted by McClintick Real Estate, Inc. on 12/12/2013

Having a baby can be a very expensive venture. A 2012 report from the U.S. Department of Agriculture says raising a child from birth through age 17 will cost a typical middle-income family a whopping $235,000. That is a lot of money so it is important to plan for your financial future, prepare for your new baby and protect your growing family. Here are some tips to get you and your family on the right track: 1. Purchase life insurance. You will need life insurance to protect your family. It is not as expensive as you think and you will get better rates when you're young. Talk to your life insurance company about what amount of insurance you will need to protect your family. 2. Start planning for college. It may seems years away but you need to start college planning right away. According to the College Board, the average cost of tuition and fees for the 2011-12 school year was $8,244 for a public college and $28,500 for a private one, 3. Update your will. If you have a will you will need to update it and appoint a guardian for your child. If you do not gave a will now is the time to get one. 4. Prepare your baby budget. Babies are expensive, from diapers to child care you will need to look at how your baby will affect everyday expenses. Go to the store and price out diapers and other baby items, consider if you will be living on one income or paying for child care, this will help you figure out if you need to cut spending to afford your new baby. 5. Use a flexible spending account. If your employer offers a flexible spending account, you may be able to use it to pay up to $5,000 in child-care expenses a year. You can also use flexible spending account for health care costs. Money in a flexible spending account is exempt from income taxes. While having a baby is expensive it is also exciting. It may also be a time when you are considering a housing change.