By Ralph Dibugnara By David McMillin March 24, 2025 Key takeaways Before you start looking for homes, take time to evaluate your finances and improve your credit score. There’s a big difference between meeting the minimum credit score requirement and showing your lender a credit score well above 750. Remember to account for the variable expenses of owning a home, which include insurance, property taxes, maintenance and repairs. While sellers still have the edge in most parts of the country due to limited inventory, buyers are gaining more bargaining power. Work with an expert real estate agent to develop a negotiation strategy and score a better deal on your first home. If you’re still renting your place, the thought of buying a home can feel pretty overwhelming. A recent TD Bank survey of first-time homebuyers found that 64 percent of people who have never owned a home are concerned about affordability due to high mortgage rates. Despite those worries, nearly half are working to save up for a down payment. If you’re one of them, read on for some money-smart moves that can put you on the path to successfully buying a home. House hunting tips for first-time homebuyers 1. Check your credit (and work on it) The higher your credit score, the better the interest rate on your mortgage. Pull your reports Thoroughly understand where your credit stands by pulling a free copy of your report at AnnualCreditReport.com. It’s not a one-and-done free ticket, either; the site lets you pull your report every week without paying anything. It’s important to note that your credit report may look different depending on the credit bureau. There are three main credit reporting bureaus in the U.S.: Experian Equifax TransUnion It’s wise to look at all of your reports because you never know which report a lender will analyze. “Look for any errors or past-due accounts that might have gone to collections,” says Ralph DiBugnara, president of New York City-based Home Qualified, an online resource for homebuyers. “These liabilities can create roadblocks when you apply for a home loan. If anything is amiss, contact the creditor to see if you can sort it out.” Fix and then monitor your credit In addition to contacting a bureau if you spot any mistakes, follow these steps to keep your credit in the best shape possible: Pay down your credit card balances: Most lenders like to see a credit utilization ratio of 30 percent or less, according to Lindsey Shores, business development manager with SchoolsFirst Federal Credit Union. “For many people, this number is something they have to plan for and work to pay down to achieve,” she says. If you’re over that number, try to pay down your balances. Pay your bills on time: Follow this step whether you’re trying to buy a house or not — you can make or break your credit by making your payments on time every month. Take advantage of free credit monitoring tools: Many banks have free credit monitoring tools built into their mobile apps, giving you the ability to check your credit score easily and more frequently. “You’ll get notified if your credit score changes, or if there’s suspicious activity on your report,” says DiBugnara. 2. Nail down your budget When you’re building a budget to narrow your search for properties, don’t just think about how much house you can afford, but how much in recurring costs you can handle once you’ve purchased your home. Consider these key items: Principal and interest: This will be the bulk of your monthly payment, and if you take out a fixed-rate mortgage, this chunk will never change over the course of the loan. Homeowners insurance: How much you’ll pay to protect the property can vary widely. If you’re buying in an area with higher risks for flood, wildfire or other severe weather, you’ll need to be prepared for higher, ever-increasing premiums. Property taxes: Your property taxes will look different depending on the location, and, in most cases, will increase as your home’s value increases and/or your local government needs to raise them for their budget. HOA fees: If you’re looking at condos or homes in a homeowners association, ask how much you’ll pay each month in HOA fees. If you’re looking at buildings with a gym, pool and other amenities, these can get very steep. In addition to these expected expenses, it’s a good idea to put aside some money regularly for maintenance and unexpected repairs. “As a rule of thumb, I tell clients to prepare to spend 1 percent to 3 percent of the value of their homes each year on house [expenses],” says Steve Sivak, a certified financial planner and managing partner of Innovate Wealth. You might need to set aside more if the home you end up buying is older, bigger or has maintenance-heavy amenities, such as a pool. 3. Consider your needs and wants Finding the ideal location and address can take more time than you expect, so begin scouting neighborhoods early in the process. “Drive and walk around that area at different times of the day and night,” says Bill Golden, a Realtor and associate broker with Keller Williams Realty Intown. “This will help you get a feel for what you like and don’t like.” Along with pinpointing the neighborhood, now is a good time to narrow down your preferences for the home itself by considering these essential questions: What type of house are you looking for? What can you compromise on? What are the dealbreakers? Are you willing to look at older properties that may require some updates, or do you want a move-in-ready property? Think about what you like and dislike about where you currently live — that can help inform your list of needs and wants. 4. Get finances in place Regardless of income level, you should be able to document to potential lenders that you have a stable source of earnings. “Your income and how much you earn monthly will be scrutinized by lenders, who will look for a two-year employment history and want to see consistent income — whether you’re receiving a salary, hourly pay or are self-employed,” says Tom Hecker, a loan officer with Cherry Creek Mortgage. If you’re self-employed, be ready for closer scrutiny than someone getting a salary or hourly wage. In terms of your liquid funds and overall financial health, in addition to reviewing your credit report, mortgage lenders typically look at your bank statements from the last two months when assessing your application. If you plan to make any deposits into your checking or savings accounts from other assets — such as a down payment gift — do it before that 60-day window. This gives the funds time to “season.” And it’s best to avoid opening new credit accounts or loans, or racking up more debt, at this stage, DiBugnara adds. All those activities could possibly ding your credit report. Learn more: How to save for a down payment Tips for finding the right mortgage 5. Comparison shop mortgage lenders At this point, you should know what monthly payment you’re comfortable with, what areas you can afford and how much you can put down. Now it’s time to shop for a mortgage. Consider these factors: Comparison shop: Compare mortgage rates from at least three different types of lenders, as well as different types of mortgages. What others have to say: Read customer reviews for lenders online to get a sense of what the experience is like with individual lenders. Interactions with the lender: Even “in this market, you can find competitive rates and service, but you want to pay close attention to lenders’ responsiveness and communication,” says DiBugnara. The mortgage terms: It’s also a good idea to focus on not just the rates lenders quote you but also all the mortgage terms. What are the late fees? What are the estimated closing costs? Is there a prepayment penalty? If you’re able to get a mortgage with the bank where you already have accounts, will you get a better deal? Sometimes, it makes sense to choose a loan with a slightly higher rate if the other terms are more favorable overall. Learn more: Different types of mortgage lenders 6. Get preapproved Once you settle on a lender, get preapproved for a mortgage. This will require documentation of your income and finances, and organizing your paperwork in advance can help the process run smoothly. It will also prepare you for mortgage underwriting, which will require similar documentation. Unlike prequalification, which is a projected loan size you’ll be able to get, a preapproval is an official letter from a lender stating exactly how much it will loan to you. A preapproval will put you in a much stronger position when you’re making an offer on a house, and it will ease the process once your offer has been accepted and you’re actually applying for your loan. Preapprovals usually expire after 90 days, says DiBugnara, so ask your lender how long yours will be good for. If you’re a first-time homebuyer with significant debt or so-so credit, you might want to apply for a preapproval as soon as possible to identify issues to fix. “Once you have a preapproval in place, keep sticking to your budget and savings plan and continue to pay all debts on time,” says Hecker. “Try not to make any extraordinary purchases or take on extra debt, either.” 7. Look for down payment assistance There are many first-time homebuyer and down payment assistance programs, including at the local, regional and national level, that can help cover your down payment or closing costs. These aren’t for everyone, though. To score some down payment assistance, be prepared for these eligibility requirements: Earn less than a specific amount per year, which typically varies by location and household size Purchase a home that does not exceed a maximum amount, which can vary based on targeted and non-targeted areas Take out a loan offered in conjunction with the state housing authority These programs are typically limited to borrowers with an income below a certain level (based on location), and can impose a cap on the home’s price, too. Keep in mind that many of these programs have terms that stipulate you must live in the home for a certain period of time to qualify for forgiving the loan and/or avoiding a recapture tax penalty that can come into play if you sell the property earlier than expected and earn a profit. Often, your loan officer can provide info on the available programs and what you might be able to pair with your mortgage. Tips for buying your first home 8. Work with a real estate agent After you have your financing squared away and a preapproval letter in hand, your next step as a first-time homebuyer is to hire a real estate agent or Realtor. An experienced real estate agent who knows the area you’re looking to buy in especially well can advise you on market conditions and whether homes you want to make offers on are priced properly. Your agent can also identify potential issues with a home or neighborhood you’re unaware of, and go to bat for you to negotiate pricing and terms. You can start by asking friends, relatives or co-workers for referrals. Interview several prospective agents to get a feel for who may be a solid match in terms of personality and expertise. “Don’t just pick [an agent] blindly — make sure it’s someone who works in the general area you’re looking in and whom you feel comfortable with,” says Golden. Offerings “come up every day, and a good Realtor will be on top of that and get you to see new listings as soon as they become available.” 9. Negotiate with the seller Even when you see the home of your dreams, don’t be afraid to negotiate the price with sellers. While it’s difficult in red-hot real estate markets, some areas of the country are beginning to see more homes sell for less than the asking price. As you work to get a good deal, consider these bargaining tactics: Use comps to justify a lower offer. A low offer can offend a seller, so work with your agent to look at comps that justify why a seller should consider your terms. Did a nearby property with an additional parking spot recently sell for the same amount? Are there other similar homes with nicer amenities listed for less? Back up your bargaining with evidence from the rest of the market. Ask for concessions based on the home inspection report. Is some of the electrical wiring incorrect? Does the furnace seem like it’s nearing the end of its lifespan? Are the windows going to need to be replaced soon? If your home inspector uncovers some minor issues with the home, don’t be afraid to ask for concessions that will require the seller to cover a chunk of your closing costs. And if the inspector uncovers some major issues, be aggressive in your negotiations — and don’t be afraid to walk away from the deal altogether. Request a different closing timeline. Negotiating your home purchase isn’t just about money; it’s also about time. Depending on your needs, you can ask the seller for a closing date that gives you more or less time to get the deal done. For example, if you really want to avoid paying another month of rent, don’t be afraid to request that the seller be prepared to move out earlier. 10. Draw up a contract When you find a home and prepare to make an offer, work with a real estate attorney to spell out any conditions or situations that will allow you to walk away from the deal. These are known as contingencies, and they often include: Major issues with a home inspection Mortgage application denial A lower appraisal than the offer price If these terms are spelled out in writing with deadlines, you’ll have an out if the transaction doesn’t go as planned — and get your earnest money deposit back, too. Bottom line For a first-timer, buying a home can feel overwhelming and endless. But breaking down the process into steps and tackling them one at a time can help you stay focused and get the job done. Doing your research in advance and working with a trusted real estate agent can help you stay on track throughout the process. Keeping your finances steady and limiting other big-ticket purchases can also help you qualify for a loan and get into your first home.

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By Ralph Dibugnara March 6, 2025 By: Paul Centopani February 26, 2025 https://themortgagereports.com/32667/mortgage-rates-forecast-fha-va-usda-conventional Mortgage rate forecast for next week (Feb. 24-28) Mortgage rates came down for the fifth straight week. The average 30-year fixed rate mortgage (FRM) declined to 6.85% on Feb. 20 from 6.87% on Feb. 13, according to Freddie Mac. “The 30-year fixed-rate mortgage has stayed just under 7% for five consecutive weeks and in that time has fluctuated less than 20 basis points. This stability continues to bode well for potential buyers and sellers as we approach the spring homebuying season,” said Sam Khater, chief economist at Freddie Mac. Will mortgage rates go down in March? “With consumer confidence plummeting and a great deal of uncertainty and volatility in the market as the Trump Administration continues to promise high tariffs and mass deportations, there’s been a flight to safety in the bonds market.” -Rick Sharga, CEO at CJ Patrick Company Mortgage rates fluctuated significantly in 2023, with the average 30-year fixed rate going as low as 6.09% and as high as 7.79%, according to Freddie Mac. That range narrowed in 2024, with a spread of 6.08% to 7.22%. Find your lowest mortgage rate. Start here (Feb 27th, 2025) With the economy possibly heading into a recession, we may have already seen the peak of this rate cycle. But if inflation rises, mortgage rates could uptrend. Of course, interest rates are driven by many factors and notoriously volatile, so they could change direction any given week. Experts from Realtor.com, First American, Home Qualified and CJ Patrick weigh in on whether 30-year mortgage rates will climb, fall, or level off in March. Expert mortgage rate predictions for March Ralph DiBugnara, president at Home Qualified Prediction: Rates will moderate “The market is starting to slowly but steadily see some small movement of mortgage rates coming down. I believe March will be around the same averages we have seen through February. Historically, we would see the greatest drop in mortgage rates come during the spring buying season. If inflation ticks down and consumer spending slows along with increased seasonal home buying, we should see a significant reduction in interest rates.” Hannah Jones, senior economic research analyst at Realtor.com Prediction: Rates will moderate “Mortgage rates are likely to remain high through March. We may see some volatility as markets weigh the implications of the Trump administration’s various economic proposals and policy actions. PCE inflation data could influence rates, especially if it comes in higher-than-expected. Overall, we expect both inflation and mortgage rates to be higher for longer than initially expected, but the path is not yet clear due to considerable policy uncertainty.” Rick Sharga, CEO at CJ Patrick Company Prediction: Rates will moderate “With consumer confidence plummeting and a great deal of uncertainty and volatility in the market as the Trump Administration continues to promise high tariffs and mass deportations, there’s been a flight to safety in the bonds market, driving down bond yields. Because of those lower yields, we’re seeing what is probably a temporary dip in mortgage rates, which could reverse course suddenly if the next inflation report comes in higher than expected. But for now, it looks like rates for a 30-year fixed-rate loan will rest somewhere between 6.75-7.0% for at least the next few weeks, while the market settles into its new reality.” Sam Williamson, senior economist at First American Prediction: Rates will moderate “With a strong U.S. labor market and inflation running hotter than anticipated, the Federal Reserve is likely to hold off on cutting interest rates at its upcoming March meeting. This limits downward pressure on 10-year Treasury notes, which mortgage rates tend to follow. Consequently, we expect mortgage rates to remain stable in March, fluctuating in the upper 6% range.”

By Ralph Dibugnara February 27, 2025 By Erik Martin February 4, 2025 Best Ways to Tap Home Equity for Home Improvements | Mortgages | U.S. News Using your home equity financing products may allow you to borrow more at a lower interest rate compared to credit cards or personal loans. Key Takeaways Tapping into home equity can provide substantial funds for home improvements at lower interest rates than personal loans or credit cards. Home equity loans, HELOCs, cash-out refinances and FHA 203(k) rehab loans have distinct advantages and drawbacks. While using home equity for renovations can enhance property value, it's crucial to consider closing costs, foreclosure risk and the impact of fluctuating property values. Thanks to strong home appreciation, Americans have accumulated $35 trillion in home equity, which can fund renovations and improvements that boost their home's appeal and resale value. There are several popular ways to liquidate home equity, including a home equity loan, home equity line of credit, cash-out refinance and FHA 203(k) rehab loan. Homeowners should consider each home improvement loan's pros and cons and determine which option will best meet their needs. You don't necessarily have to pull from your home equity to fund a major remodel or other home improvement goal. Other options include taking out a personal loan, using credit cards, or applying for a personal line of credit from a bank or lender. However, a home equity loan or line of credit is often a smarter move. Loans backed by home equity are less risky for lenders, so their interest rates are lower and terms are more favorable. Take a closer look at the advantages and disadvantages of using home equity to improve your property. SEE: Best Home Equity Loans Pros of Using Home Equity for Remodel You Can Borrow More If you have a lot of unused home equity, you may qualify to borrow a lot more than the limits imposed by non-home-equity financing options, like personal loans or credit cards. Consider that the average home renovation project budget in 2025 is more than $52,000, with typical expenses ranging from around $19,000 to more than $88,000 for most homeowners, according to digital marketplace HomeAdvisor. "You are borrowing against your home when you tap home equity, and right now people are sitting on a ton of equity," says John Horton, senior vice president of mortgage lending with A and N Mortgage Services Inc. "Over the last seven to eight years, the average increase in home equity has been between 9% and 10% per year." Interest Rates Are Lower Home equity financing products typically offer lower interest rates than credit cards or loans not backed by real estate. Paying a lower rate means potentially saving thousands over the life of your loan. A Flourish chart Enjoy Longer Repayment Terms Home equity repayment terms generally run between five and 30 years. Extending repayment reduces your payment and can make the loan more affordable. Most personal loan providers set their maximum term at five to seven years. Reap Tax Savings "You could be eligible for a tax deduction on the interest you pay for a home equity loan or HELOC if you use it for a home improvement project, although you'll need to consult with your tax advisor to see if you qualify," says Aaron Craig, vice president of mortgage and indirect sales for Georgia's Own Credit Union. Cons of Using Home Equity for Remodel You'll Pay Closing Costs Expect to pay 2% to 5% of the loan amount or credit limit at closing. Fees and interest rates can vary widely among lenders and products, so it's important to compare. Your Home Is at Risk Home equity financing is secured by your home. Missing home equity loan payments could lead to default and foreclosure, even if your first mortgage is in good standing. You May Pay More Interest Than You Think The longer repayment terms available with home equity financing are a double-edged sword. That's because extending the repayment period to lower what you pay each month increases your interest cost over the life of the loan. You can calculate the total interest expense by multiplying the monthly payment by the number of scheduled payments and then subtracting the loan amount. Interest Rates and Payments Can Increase Many HELOCs come with variable interest rates that can change your payment and costs significantly over the life of the loan. In addition, HELOC terms are divided into a drawing phase, typically five to 10 years, during which the borrower can make a minimum or interest-only payment. Once the drawing period ends, the entire balance must be repaid over the remaining loan term, and payments can rise sharply. Many borrowers are unprepared for this. Getting Approved Could Take Longer The lender must appraise the property in addition to evaluating your credit history, income and debts. "Since it is a loan secured on your home, home equity financing usually takes a little longer to fund than a consumer loan alternative, like an unsecured personal loan. But this isn't a big deal unless you are under a tight deadline and need the money quickly," Craig says. It Could Lead to Negative Equity Tapping a substantial portion of your home's equity can be risky if property values decline, leading to negative equity. This occurs when your outstanding loan balance surpasses your home's current market value, thereby limiting your ability to refinance or sell the property. Calculate: Use Our Free Mortgage Calculator to Estimate Your Monthly Payments. Best Home Improvement Loans Now that you have a better idea of the pluses and minuses of going the home equity financing route, which borrowing vehicle is best for you? HELOC A HELOC is a flexible line of credit that works similarly to a credit card. You can borrow as needed up to a preset limit and only pay interest on the amount you use. HELOC lenders generally allow total borrowing against 80% to 90% of the home's value. If your home is worth $100,000 and you owe $70,000 on your existing mortgage, you may be able to borrow an additional $10,000 to $20,000 with a HELOC. The interest rate on a HELOC is typically variable, meaning it can fluctuate depending on market conditions. Some lenders offer fixed-rate HELOCs or convertible HELOCs, which give the borrower more control over their interest rate and payment. A HELOC operates in two main stages: the draw period and the repayment period. During the draw period, you can borrow against the line of credit and are only required to make minimum or interest-only payments on your balance. The draw period typically lasts five to 10 years. Once the loan moves into the repayment phase, you can no longer access the credit line. The required payment will be adjusted to cover your interest and pay off your balance during the remaining loan term. "HELOCs are a great way to access home equity, acting almost like a credit card on your home," says Ralph DiBugnara, president of Home Qualified. "This is a line of credit that traditionally follows the prime borrowing rate, which historically is somewhere between 0.35% and 0.5% above the average 30-year mortgage interest rate. Right now, however, that is a disadvantage because it's providing a rate in the mid- to high-7% range." Even a HELOC with a variable interest rate won't necessarily cost you more than a fixed-rate home equity loan. "Your payments could actually decrease if interest rates fall. Interest rates are usually lower on a HELOC than on a home equity loan," Craig says. Home Equity Loan As with a HELOC, you can likely borrow against 80% to 90% of your property value with a home equity loan. You receive a lump sum when you close your loan, and you repay it with fixed monthly payments. Home equity loan terms typically run between usually five and 20 years, with some lenders offering up to 30 years. "It's a solid choice if you have a well-planned project and can comfortably manage the repayments," says Carl Holman, director of communication and content for A&D Mortgage. However, you could underestimate the project and end up needing more money than you agreed to borrow, "or you could overspend by borrowing more money up front than what the project ends up costing," cautions Craig. "You also have limited flexibility to borrow any more funds using your home equity if additional dollars are needed for the project. That means you'd have to secure an additional loan." Cash-Out Refinance A cash-out refinance involves replacing your existing mortgage with a new, larger loan, allowing you to take the difference in cash. Lenders typically approve cash-out refinances up to 80% of your home's appraised value. "A cash-out refi provides a large lump sum at closing and may come with a lower rate than a home equity loan or HELOC. Plus, the interest could be tax deductible," Holman says. "However, it reset your primary mortgage loan term, which could mean paying more interest over time." Also, closing costs – usually 2% to 5% of your loan amount – could be significant. Cash-out refinancing can be a good option if you're looking to tap into your equity and can secure a better rate for your primary mortgage. Craig adds that a cash-out refinance can be more budget-friendly because you only have one payment to make instead of a monthly bill for your mortgage and a separate bill for your HELOC or home equity loan. However, a cash-out refi can be quite costly if your refinance amount is large and the equity cash-out portion is relatively small. That's because the closing costs apply to the entire mortgage, not just the cashed-out equity. Read: Best Home Improvement Loans. FHA 203(k) Rehab Refi The FHA's 203(k) Rehabilitation Mortgage Insurance program enables homebuyers to finance both the purchase and renovation costs of a property with one loan. If you already own a home, you can also refinance your existing mortgage while incorporating the costs of necessary repairs or improvements into the refinance. This approach is particularly advantageous if you have little equity, as the refinance loan-to-value is based on the improved value of the property, not its current value. The limited 203(k) loan allows financing up to $75,000 for non-structural repairs and improvements, such as kitchen remodels or new carpeting. There is no minimum borrowing amount, and it's suitable for minor renovations. The rehabilitation period for this loan is nine months. The standard 203(k) loan covers more extensive renovations, including structural repairs, and has a minimum borrowing amount of $5,000. It mandates the involvement of a 203(k) consultant to oversee the project and has a rehabilitation period of 12 months. "These loans are accessible to borrowers with lower credit scores and smaller down payments and offer a streamlined option for smaller projects," Holman says. "However, it requires more paperwork, FHA inspections, and mortgage insurance premiums, and it's limited to primary residences. But it's a solid choice for buyers tackling major renovations." Which Is the Best Option for You? The right home equity financing choice for you depends on your needs, budget, timeline and other factors. A home equity loan is best for a borrower who currently has a very low interest rate on their first mortgage, can afford additional loan payments, has a pretty good idea of how much the home improvements are going to cost, and likes the stability of a fixed rate and fixed term. A HELOC is better for someone who isn't quite sure how much home improvements are going to cost and wants some flexibility but is OK with a variable interest rate. If you have a high interest rate on your first mortgage and can benefit from refinancing to a lower rate, a cash-out refinance could be a good option. A homeowner with low equity and limited funds available should consider an FHA 203(k) loan.