Pamela K. Johnson
Nicholas L. Johnson Sr.
1.jpg) "The Nick Johnson Group"
TOLL FREE
877-642-9025
Nick (C) 717-226-4905
Pam (C) 717-226-4907
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"THE NICK JOHNSON GROUP"
Nicholas L. Johnson Sr, Pamela K. Johnson
Licensed Maryland & Pennsylvania Realtors Associated with
long&foster realtors
Gettysburg, Pennsylvania and Frederick, Maryland
Serving Clients in a 2 state 15 county area
| Adams County, Franklin County, & York County, Pennsylvania |
Carroll County, Frederick County & Washington County, Maryland |
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Providing Multi-state Real Estate Services For Sellers and Buyers Utilizing
Todays Technology
Home Selling, Listing/Marketing, Seller Agency - Buyer Agency, Searches/Showings,
Home Buying
Single Family, Townhomes & Condominiums, Estates, New Construction, Luxury Homes, Historic & Investment Properties, Weekend
and Vacation Homes, Luxury Home Sites, Building Lots, Land, Farms, Farmettes,
Retirement, Golf and Lake Communities.
What you would expect from your agent, plus more....
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First Time Home Buyers Guide To Lending
Owning your own home is the American Dream. And that dream is more alive
today than ever before.
Experience has taught us that the buying process involves common stages
for all home buyers. To help you understand that process, and make the
most of every day and dollar you spend, Long & FosterŪ, RealtorsŪ has
prepared this Home Buyers Guide to provide an overview from the planning
table to the closing. After all, helping you fulfill your home ownership
dream is our business.
In today's market an "affordable" home is not so much determined
by sales price as it is by the financing which translates that price into
a monthly payment. A house hunter's first step is to set a housing budget,
then go shopping for the house (price) and payments (PI.T I.) that fit
that budget.
Even though there are many ways to qualify to buy a home, make sure the
monthly payment makes sense for you. A current rule of thumb is that the
monthly payment should not be more than 25-33% of gross monthly income.
Restrictions will apply for smaller down payments.
How Much Can I Afford?
The key items are the size of the down payment, interest rate, APR and
the amount of the mortgage. The down payment might be zero in the case
of VA-backed mortgages. Or a buyer may invest 20 to 25 percent of the purchase
with a conventional loan and not be required to buy mortgage insurance.
It can be very helpful to you in determining just how much house you can
afford.
The obvious source of money for your down payment is either your savings
or the proceeds from the sale of a home you already own. But there are
some other not so obvious sources. In recent years, for example, "parent
power" has taken some new twists for first-time buyers.
Home Equity Loan
Parents often have considerable equity built up in their own homes-and
many are tapping that asset through home equity loans to make a gift to
the youngsters. Ask your tax advisor for current information. Often lenders
will require a "gift letter" to verify that parents don't expect
repayment.
Shared Equity/Profit-Sharing
In return for providing a part of the down payment, the parents (or another
investor) share in the "profit" or net equity of the house when
the home owners eventually sell it.
Life Insurance
If you have built up a cash value on your life insurance policy over the
years, you may be able to borrow from your insurance company up to the
amount of this accumulated cash value. Often they will even ask a more
favorable interest rate than would be asked for other types of loans.
Stocks and Bonds
If you feel the market doesn't favor selling your stocks or bonds now,
you may be able to secure a bank loan using your portfolio as security.
Company Profit Sharing or Savings Plan
Look into the possibility of withdrawing what you have in your profit sharing
or savings plan account or borrowing against it, if your company has these
programs.
How To Reduce Down Payment
Mortgage Insurance Can Reduce Down Payment If you need a conventional loan,
there is a way to put down only 5 or 10 percent. Through the lender, you
will be required to buy private mortgage insurance (PMI). This insurance
provides protection for the lender in case of default, and allows the lender
to approve a larger mortgage amount.
In a common approach, you'd pay an initial amount at closing (often one
percent of the mortgage if your down payment is 5 percent, 1/2 of 1 percent
if you put down 10 percent). Then, included in your monthly payments for
your mortgage, you would pay an additional one-twelfth of 1/4 percent of
the mortgage balance. This payment will usually continue until dropped
at the discretion of the lender, unless a stop point is specifically written
into the deed of trust, such as accumulating a 20% equity. Ask your lender
for specific figures for any loan program you are considering, as the amount
of mortgage insurance varies by the type of loan.
One Caution
The larger the down payment, the less money you need to borrow, which means
a lower monthly payment. However, remember that in addition to your down
payment and monthly payments, you will need money to pay for closing costs,
moving, appliances, household setup, a reserve for family emergencies and
other miscellaneous items. So don't plan to put your last penny down on
the closing table
Figuring Your Housing Budget
Generally, lenders figure that the home buyer shouldn't pay more than 28-38
percent of gross income for PI.TI. payments, or 36-38 percent for both
P.I.T I. and monthly debts combined. This might be a little more or a little
less depending on other outstanding long term debts (more than 10 months),
alimony/child support payments, number of children and their ages, and
other household budget items.
The easiest way to make a quick estimate of the mortgage amount you may
qualify for requires applying the two basic formulas for loan application
that lenders use. Keep in mind the loan balance will vary over the term
of the loan, although the monthly payment remains the same.
Two Lender Formulas
Two Lender Formulas Most lenders will require that loan applicants meet
both guidelines before approving a mortgage loan. The first formula compares
income to housing costs without including long term debts, the second includes
all debts.
28% Formula
Total Monthly Housing Costs
(P I. T I.)
__________________ = 28% (or less)
Gross Monthly Income
36% Formula
P.I.Tl. + All Monthly Debts
__________________ = 36% (or less)
Gross Monthly Income
A variety of other formulas exist. VA and some lenders use a single ratio
based on mortgage payment and all debts, which allows easier qualifying
for a more expensive home for a borrower with little debt.
To figure your housing budget, simply multiply your gross monthly income
(before taxes) by 28% and 36%. For example, a family with a monthly income
of $3,500 might qualify for a mortgage with payments up to $980. For specific
figures, ask me
Mortgage Help
More Mortgage Help New types of mortgages, such as graduated payment mortgages,
flexible payment mortgages and deferred interest loans, feature monthly
payments that start lower than usual in the early years--and thus help
home buyers "afford" more house and buy sooner by qualifying
on a lower mortgage payment.
ARE YOU WORKING WITH A REALTOR?
Call The Long & Foster Realtor offices today and please ask for Nick or Pam Johnson directly!
Reach Us Toll Free At 1-877-642-9025
Nicholas Johnson - Cellular (717) 226-4905 - Pamela Johnson - Cellular
(717) 226-4907
LATE AT NIGHT? SEND US AN EMAIL!
NickJohnson@NickandPam.com - PamJohnson@NickandPam.com
Member In Good Standing,Pen Mar Realtors Association, National Association
of Realtors,Maryland Associations of Realtors, Pennsylvania Association
of Realtors,
Realtors Association of York and Adams County, Frederick County Association
of Realtors - MLS MRIS - Metropolitan Regional Information Systems
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Long & Foster Real Estate Incorporated
Nicholas L. Johnson Sr. & Pamela K. Johnson - Nick Johnson Group
Frederick Office 1700 Kingfisher Drive Suite 6 Frederick, Maryland 21701 MD Broker 240-626-3700
Our MD Direct Line 240-626-3700
Gettysburg Office 430 Baltimore Street Gettysburg, Pennsylvania 17325 PA Broker 717-338-3406
Our PA Direct Line 717-338-3406
Pamela Johnson - Cellular (717)226-4907 Nicholas Johnson - Cellular (717)226-4905 |
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