NEW AMERICAN FUNDING ANNOUNCES NEW “OTC” One -Time Close, Construction Loan

By Scott.Chapman@nafinc.com April 13, 2018

Have you ever thought, “I wish I could build my own home?”  If so, New American Funding, Inc., can help make that dream come true, with our brand new OTC (One Time Close), VA or FHA, only, home construction loan.

 

In a nutshell, you would qualify like you would for any VA, or FHA loan; all you need to do is get pre-approved, (call Scott Chapman @ 678-770-8743, or complete your on-line application at his web-page at www.newamericanagent.com/scottchapman), before you go out and find that magical land lot to build your dream home!  If you own your land lot already, the value of the lot can be used towards any monies you would need to bring to closing to cover either down-payment, or closing cost, or both.  If you don’t own your land lot yet, then we can finance the cost of the land lot, and the cost to build the home, together, with our (OTC) one time close, loan!

 

Once we close this loan upfront, YOU DO NOT HAVE TO BE RE-QUALIFIED when the construction of your home is completed, and the minimum credit score needed is only 620.  There are no payments by the borrower during the Construction of the loan as the builder will carry the cost of building the home, but we finance the build for him/her, and we approve your builder like we approve you by verifying his or her experience level, and financials from the company.   You even have a one-time float-down that allows you the ability to reduce your interest rate when the loan is finalized/modified, and the builder is paid once construction is complete, if interest rates are lower!  After the loan is modified, and your rate is locked in, the loan converts to you, and you start paying on the mortgage once the home has received the C/O, or “Certificate of Occupancy” from the county in which you are building. 

 

Call Scott Chapman today @ 678-770-8743, to take advantage of purchasing your own land, and building your own dream home, all in one loan called the OTC, or One Time Close, construction loan.

13 Ways To Save For A Down Payment

By lucy.martinez@nafinc.com April 11, 2018
When considering homeownership, one of the most important decisions you'll have to make is how to handle the down payment. Down payments can be challenging, but they can be doable if you set a goal for yourself. So how will you save? 

Down Payment

5 Ways to Help Adult Children Become Homeowners

By Dylan.Tortarolo@nafinc.com April 11, 2018
Many young adults dream of making the switch from renting to owning a home. When these aspiring homeowners are also your kids, it's only natural to want to help. After all, it's what parents do. Fortunately, there are many options available to help accommodate student debt obligations and to help improve their credit, if needed.

The Bank of Mom and Dad

Before offering to help, consider where the money would come from and have a conversation with your financial advisor about the long-term impact this type of assistance might have on your own financial well-being and retirement plans.

Also, consider the ramifications for the rest of your family. Offering to help one child may lead to similar expectations down the road from your other children. Determine how much you can afford to help in total before making promises to any one individual.

Ways to Lend a Financial Hand

Once you do decide that you can afford to help, there are several options available to you for doing so. However, each may have tax and legal consequences for both you and your child. These decisions require careful consideration before you determine which is the right choice for your situation.

Gifting. When cash is readily available and your child qualifies for a mortgage, but is struggling with saving for a down payment, you can simply give them money. Individuals can give up to $15,000 a year (as of 2018) to any other individual before the IRS requires the payment of gift taxes. This means each child can receive up to $30,000 in combined gifts from mom and dad without tax consequences to either the giver or the recipient. Since the child’s spouse can also receive a similar gift from you, that can boost the amount to $60,000 in a single year.

As part of the mortgage process, however, any gifts will require documentation in the form of a letter from you. The letter will simply state that the sum was, in fact, gifted and is not an interest-free loan.

Family loan. Lending money is another way to help. However, even family loans need to be documented, along with their terms. This would include the payback schedule and interest amount. The IRS requires a minimum amount of interest and sets the rate.

You will be required to file an extra form with the IRS each year that records the interest you received from this loan, which is generally treated as taxable income. Having this loan, however, will negatively impact your child’s debt-to-income ratio, which factors into the mortgage-approval process if they will still need to apply for a mortgage.

Partnering up. Another option is to become joint owners in the home and cosign the mortgage to purchase it. From your perspective, you are responsible for the entire loan should your child be unable to make the payments. As long as they do make the payments, your child would have access to any available mortgage interest deduction, which would help them build a strong credit history.

Equitable ownership. With this option, you would make the purchase and arrange any necessary financing in your name. However, your child would occupy the home, maintain it, and pay all related expenses, including the mortgage, which they would pay directly to the lender. This would allow them to build equity and credit in their own name.

Get Professional Advice Before Acting

Again, before determining how you want to help, discuss the tax ramifications of each option with your financial advisors. Recent changes in the tax laws, especially those regarding the deductibility of mortgage interest and property taxes, could influence your decision.

13 Ways to Save for a Down Payment

By Ryan.Whitmore@nafinc.com April 11, 2018
When considering homeownership, one of the most important decisions you'll have to make is how to handle the down payment. Down payments can be challenging, but they can be doable if you set a goal for yourself. So how will you save? 

Down Payment

New to Homeownership? There's a Tool for That!

By Jonny.Moore@nafinc.com April 11, 2018

As you head toward your closing date, one of the most helpful things you can do to prepare for homeownership is to make sure you are properly equipped. With the right tools, you can literally nail this home owning thing on the first try!

Tape Measure and Level

A tape measure and level will come in handy for centering and leveling shelves, hanging pictures, and installing curtain rods. There are also apps you can download to your phone, so that these tools are virtually always with you. For example, EasyMeasure and iHandy Level are two apps that let you measure distances and pinpoint a horizontal plane using your phone’s camera.

Power Drill

A power drill makes drilling neat, precise holes in drywall, wood trim, or masonry fast and easy. Having a good selection of drill bits in various sizes and styles, including ones that let you use your drill like a powered screwdriver, is even better. Cordless models let you handle projects anywhere on your property, are easy to use in tight spots, and can make you feel invincible.

Screwdrivers

Whether manual or battery powered, your screwdriver collection should include slotted, Phillips, and square-drive heads in an assortment of blade lengths. Also, consider picking up a set of hex keys (Allen wrenches). These are especially useful if ready-to-assemble furniture is in your future.

Hammers

Your choice of hammer depends on the job you're doing. While any hammer can drive a nail into an object, only a claw hammer has what you need to remove nails.

Stud Finder

These convenient, handheld devices help locate the framing studs inside your walls when you are hanging things. Simply run the stud finder across the wall surface to determine where to drive a nail or sink a screw so that it will be securely anchored in solid wood (not just drywall).

Pliers

Having a variety of this tool—slip-joint, needle-nose, and locking pliers—will enable you to handle a range of jobs that require gripping small parts or securing a firm hold in tight spaces.

Utility Knife and Blades

A handheld utility knife (with a sharp, new blade) is great for trimming work materials, removing old caulk, cutting vinyl tile, and very useful on move-in day when you are breaking down your unpacked boxes.

Extension Cords and Work Lights

Keep your workspace safe and more efficient with easy-to-access electrical power and adequate lighting. A portable, hanging utility light with a built-in electrical outlet gives you both. For convenience, a heavy-duty flashlight with a beam that can be aimed directly at your work surface is hard to beat. Also, a head-strap-mounted "miner's light" will let you keep both hands on your project.

Ladder or Step Stool

It's always a good idea to avoid overreaching—and often necessary as you unpack and store items in your new home.

Seasonal Tools

When moving in during warm weather, having a garden hose and lawnmower on hand can help maintain your curb appeal. If moving in during wintry conditions, a bag of salt and a shovel are must-haves.

Duct Tape

Yes, it's true: you can fix anything with duct tape!

Having the right tool on hand will get the job done faster and make moving in that much easier, and cut down on the trips to the hardware store.

Mortgage Interest Rates: What You Need to Know

By matt.moore@nafinc.com April 11, 2018

With the economy strengthening throughout 2017 and general expectations for it to continue to be healthy, it’s believed that the Federal Reserve Bank (Fed) will increase interest rates during 2018. The increases are expected to be small and are being done to bring the overall level of short-term rates back to what is considered by economists as a "neutral position."

While that can sound like it will have a big impact on the mortgage rates you would pay as a new borrower, it may not.

How the Interest Rate on Your Mortgage Is Determined

Only short-term or adjustable-rate mortgages react to moves by the Fed. The Fed does not determine mortgage rates on conventional 15- and 30-year loans.

Instead, they are determined by the bond market. Depending on how bond investors view the Fed's actions, the interest rate on long-term bonds may go up or down. The reality is that even without the Fed shifting short-term rates, mortgage rates for longer-term loans can fluctuate depending on what is going on in the bond market.

While you cannot control what happens in the economy, the Fed or the bond market, the other factors that determine your mortgage rate—your credit score, the amount of your down payment, and your loan amount—are all factors you can, and should, control.

Moves You Should Make Regardless of What Interest Rates Do

To ensure you get the lowest rate possible when you apply for your mortgage, you will want to have the highest credit score you can. With this in mind, review your credit score well before you expect to apply for a mortgage.

Specifically, clear up any errors on your reports. Make sure that you don’t have any late items within the last 12 months and, if you do, be consistent and timely with future payments, so those late payments will fall off your record before you apply.

Also, pay down any outstanding balances as quickly as your resources allow. Most importantly, postpone taking on new debt until after your mortgage closes. Lenders look at the amount of debt you have outstanding versus your income. The lower that ratio is, the better.

Other factors impacting the mortgage rate you are offered include the amount of money you’ll need to borrow to purchase and close on your home. To keep your monthly mortgage payment affordable, consider increasing the amount of your down payment. That will reduce the amount you borrow and can lower your mortgage rate.

Get Advice

The Consumer Financial Protection Bureau offers a tool that allows you to enter your information and receive a preview of the interest rate you might expect to see and the factors that influence it. However, talking to a Loan Officer will give you a clearer idea of the mortgage programs available to you, what you can do to get the best rate possible for your circumstances before you apply, so you can plan and budget accordingly.

The reality is that mortgages make home purchases affordable. That is true regardless of the current level of interest rates. While it’s a good idea to be aware of predicted moves in interest rates, taking actions on the mortgage pricing factors you can control will have the bigger impact. Doing so may also leave you in a stronger financial position.

13 Ways To Save For A Down Payment

By jeff.moore@nafinc.com April 11, 2018
When considering homeownership, one of the most important decisions you'll have to make is how to handle the down payment. Down payments can be challenging, but they can be doable if you set a goal for yourself. So how will you save? 
Down Payment

Down Payment Download: How Much Do You Really Need?

By Cinthia.Lugo@nafinc.com March 22, 2018

image: https://assets.newamericanfunding.com/media/3031/down-payment-download-how-much-do-you-really-need-blog.jpg

down payment writing on glass

There is a well-rooted perception that to buy a home, especially your first one, you should keep saving and renting until you can make a 20 percent down payment. Reality is far different and knowing your options may get you through the door to homeownership that much sooner.

Doing More with Less

Black Knight Financial Services reports that 1.5 million borrowers became homeowners in the 12 months ended June 2017 with down payments of less than 10 percent. Most of these loans were conventional, fixed-rate offerings made through the Fannie Mae, Freddie Mac, and FHA loan programs. Because these agencies are now able to accommodate this type of loan, close to 40 percent of all new mortgages are being made with low down payments.

MORTGAGE PROGRAMSMINIMUM DOWN PAYMENT
Conventional Loans 3–5 percent
Conventional Jumbo 10 percent
FHA Loans 3.5 percent
VA Loans 0 percent
USDA Loans 0 percent

Down payment requirements may differ for condo purchases or new construction.

Weighing the Trade-Off

While it’s possible to get into a home sooner with less money up front, mortgages made with low down payments do come with the added expense of mortgage insurance premiums until that 20 percent equity level is achieved. They also typically result in the borrower paying more interest over the life of the loan, which could make the ultimate cost of the home higher.

However, proceeding with a low down payment might still save you money over the long run. You will no longer be paying rent and may realize tax savings after deductions for your higher interest expense and property taxes. Potential gains in the home’s value can also make the earlier purchase and expenses worthwhile over time. So, it is important to consider how these varying factors may affect your near-term budget as well as the potential for a long-term gain in your net worth. In many cases, your Loan Officer or financial advisor can help you weigh the alternatives.

Next Steps

Going through the preapproval process with a Loan Officer is an effective way to gauge how much home you can buy—and afford—given different down payment scenarios. It will also help you engage the attention of a Real Estate Agent. Having a preapproval letter will ensure they view you as a serious buyer instead of an aspirational browser still building your savings.

When it comes to down payments, in today’s market it isn’t as much about the amount you put down as it is how much you can comfortably afford to owe. Once you know that, homeownership is in reach.


Read more at https://www.newamericanfunding.com/blog/down-payment-download-how-much-do-you-really-need/#iF41tsxi94ouJaXq.99

Market Update - March 15, 2018

By charity.bohuslavizki@nafinc.com March 20, 2018

Market Update - March 15, 2018

 

Hello everyone and welcome back to the Mortgage Rundown. Today we are going to talk once again about what’s happening with interest rates. Recall from mid-December to mid-February, the 10yr Treasury rose from 2.35% all the way up to 2.95%. Now in the last month it’s down somewhat to around 2.85% while the market takes a little bit of a breather.

Next week on March 21st is the next FOMC meeting and the first chaired by Jerome Powell. The odds are by and large that the Fed will raise interest rates 25bps, but what’s interesting is that the market has priced in a 16% chance that the Fed raises interest rates 50bps. That is an overly optimistic view of the economy or overly pessimistic view of interest rates. A 50bps move could spook the already fragile Treasury market.

With that in mind there might be what’s called a relief rally on Treasury rates, and by extension, mortgage rates. A relief rally is when the market has priced in excessive fear and with a new Fed chair there definitely is a lot of uncertainty. If the FOMC raises rates 25bps and makes no major changes to guidance for the remainder of 2018 then we could see rates drop some on the relief that it wasn’t 50bps or no major changes to the forward guidance on rates.

If you need further evidence then take a look at the following graph. This shows the implied odds of a 50bps FOMC move at the March 21st meeting. Jerome Powell took over the Fed Chair role on February 5th and the odds were pegged at zero. As you can see since that day the odds of a 50bps move have gone up and up.

 

image: http://www.newamericanagent.com/uploads/images/MU3-15.png

Graph 1

 

With the Fed’s inflation measurement still running well below 2%, I think there is more fear than economic reality priced into rates.

How the New Tax Law Affects You and Your HELOC

By charity.bohuslavizki@nafinc.com March 20, 2018
HELOC Money

 

Whether you are already a homeowner or thinking about buying your first home, the new tax laws—officially known as the Tax Cuts and Jobs Act (TCJA)—will challenge how you think about your home loans, especially your Home Equity Line of Credit (HELOC).

What Changed

In addition to flatter tax brackets, TCJA eliminates many popular deductions for individual taxpayers, and puts new limits on those that remain. Whether you benefit from these changes. and to what degree, will be a function of where you live, how much debt you currently owe, who makes up your household, the type of debt you have, and how much you make.

To understand exactly how you will be impacted, you will need to work through a projection with a tax professional. Until you do, here is a summary of some of the key home-related changes.

  • Mortgage interest remains deductible for most homeowners. The deduction is available on acquisition indebtedness – debt incurred in acquiring, constructing, or substantially improving a qualified residence –  that does not exceed a total of $750,000. The previous cap on total mortgage debt of $1 million remains in effect for existing mortgage holders.

  • Property, state income, and local taxes, which had been deductible on your federal return, are now limited to $10,000. This is especially significant for individuals living in states with high income taxes and those in areas with high property taxes.

  • Interest on home equity lines of credit, may no longer be tax deductible. This takes effect for tax years beginning after December 31, 2017, and the suspension remains in effect until 2025.

Offsetting the elimination of these deductions is a jump in the standard deduction. For 2018, the standard deduction will rise to $12,000 for individual filers and $24,000 for those who are married and filing jointly. For many households, this boost could more than offset the loss in their itemized deductions and lower their overall federal tax bill, even after their home-related deductions disappear.

But What About Those HELOCs?

Homeowners with home equity-based debt may want to meet with their Loan Officers, as soon as possible. With the Federal Reserve expected to raise the level of interest rates three times this coming year and most HELOCs priced to move up with them, the attractiveness of this type of loan would have diminished even without TCJA. Now without the deduction, HELOCs are likely to be even more expensive to use versus other alternatives.

Chief among the alternatives is a cash out refinance. With long-term mortgage rates still low, this type of borrowing enables HELOC users to retire their home equity loan product and combine the outstanding balance into a larger mortgage. Assuming the new mortgage does not exceed the $750,000 threshold, the interest paid would then qualify for the deduction for those still planning to itemize.

Given the degree to which the standard deduction rose, after meeting with your Loan Officer you should also discuss your circumstances with your tax professional to determine what course of action will lead to the best after-tax outcome for you.