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The Pros and Cons of Borrowing the Down Payment for Your Next Home

August 31, 2016 by Kay Monigold

The Pros and Cons of Borrowing the Down Payment for Your Next HomeWith the rising cost of real estate, many people feel that now is a good time to buy a home to ensure a good financial future. However, if you haven’t saved up enough money to make a down payment, it’s possible you may be considering whether or not you should borrow the funds. If you’re considering a loan from friends or family, here are some points you may want to think about before asking for a loan.

Getting Out Of The Rental Market

With even the rental market seeing huge increases in its rental rates, buying a home can be an even more beneficial purchase then ever. While your rental check is gone once you’ve paid it each month, payments on your mortgage will become a part of the wealth you’re building and the equity in your home. It’s just important to consider the property taxes and maintenance that go along with purchasing a home beforehand, as these added costs might end up making for a poor investment if they’re too costly.

Saving Money On Insurance

You may have heard many different things about the percentage your down payment should be, but because you will have to pay mortgage default insurance if you put less than 20% down, it can be an added boon to borrow the additional funds needed. While borrowing the money can be great in terms of lowering your monthly payment and making your home less costly in the end, it can also cause financial strain for you since you’ll have to pay back the funds over time.

Testing Your Relationships

It goes without saying that money can often times get between people, and when it comes to borrowing a significant sum of money from family or friends, this can improve your relationship or even cause a rift. While you may be willing to take this risk if you have no concerns about paying those who have lent you money back, if something arises and you’re unable to give back the funds, this can create issues that may be more problematic than renting a little longer.

Many people consider borrowing the money for their down payment in order to come up with the 20%, but it’s important to consider what borrowing this money can mean for your financial future and your personal relationships. If you’re currently looking into a new home, you may want to contact one of our mortgage professionals for more information.

Filed Under: Home Mortgage Tips Tagged With: Down Payments, Home Mortgage Tips, Mortgage

Can You Get a Mortgage after a Chapter 7 Bankruptcy Discharge? Yes – But You’ll Have to Wait

August 10, 2016 by Kay Monigold

Can You Get a Mortgage after a Chapter 7 Bankruptcy Discharge? Yes - But You'll Have to Wait There was a time when it was possible to acquire a mortgage shortly after filing for Chapter 7 bankruptcy, but with the shifts in the financial sector, the timeline on such a mortgage approval has changed in recent years. If you’re currently undergoing a Chapter 7 bankruptcy and are wondering how this will impact home ownership, here are the basics on this type of bankruptcy and what it may mean for you.

What Is Chapter 7?

While a Chapter 13 bankruptcy is the kind of financial situation that requires debt repayment, Chapter 7 is different in that it involves the liquidation of an individual’s personal assets to pay back the debt that is owed. A trustee will be designated to take care of the bankruptcy process, but a Chapter 7 bankruptcy will remain on your credit report for 10 years and have a negative impact on your credit score, which can mean increased interest rates on a mortgage down the road.

Re-Building Your Credit Score

The most important step to obtaining a mortgage following a Chapter 7 bankruptcy is keeping on top of your credit. Because your credit score will be lowered and bankruptcy will remain on your report for a long time, paying all of your bills on time in full and ensuring every aspect of your financial health is in check is of primary importance. Since most lenders will not even consider your application if you’re delinquent with payments, impeccable form is necessary in this case.

The Timeline On A Mortgage

According to the Federal Housing Administration (FHA), anyone applying for a mortgage must wait a minimum of two years after the discharge date of their Chapter 7 bankruptcy, which is the date they are cleared of obligation to their debt. While this is good news for those who want to apply for a mortgage in the near future, it’s important that a good credit history is developed and all FHA requirements are met to ensure approval.

Filing for Chapter 7 bankruptcy can be a hard financial pill to swallow, but by keeping your credit history in check for the duration of the 2-year period, you can be well on your way to a mortgage approval. If you’re planning on being on the market for a home in the near future, contact your trusted mortgage professional for more information about opportunities in your community.

Filed Under: Home Mortgage Tips Tagged With: Home Mortgage Tips, Mortgage, Mortgage Debt

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Our Team

Kay MonigoldKay Monigold
Owner/Mortgage Broker/Residential Mortgage Loan Originator
NMLS#1086176

Steven LoweSteven P Lowe, Sr
Residential Mortgage Loan Originator
NMLS #1085638

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