February 2022

Do I need mortgage insurance for a VA loan?

Do I Need Mortgage Insurance For a VA Loan?
 

The VA verifies your eligibility for the program by filling out the necessary paperwork. A VA loan also provides you with what is known as your entitlement, which is a dollar amount guaranteed. A lender might be willing to lend you four times the amount you are entitled to.

It’s possible to qualify for a VA loan without putting any money down if all of these things are in place. In addition, VA loans do not require mortgage insurance, but you will have to pay a VA funding fee when you close, which is a percentage of the total loan amount. The VA funding fee keeps the program running for future borrowers.

 
Do you need PMI with a VA loan?
With VA loans, private mortgage insurance (PMI) is not required. PMI is a rare benefit since most home loan options have some form of mortgage insurance without a significant down payment. By eliminating any kind of mortgage insurance, VA buyers can avoid paying thousands of dollars in mortgage insurance during the first few years of their mortgage – or the entire term, as is the case with FHA loans.

In the event that a borrower defaults, private mortgage insurance protects the lender. The conventional loan typically ends when the borrower has 20 percent equity in their home – the same 20 percent that the lender was looking for when they started the process.

 
When can mortgage insurance be removed on a VA loan?
Simply put, once the borrower has acquired enough equity, the PMI is removed. In a broader sense, there are four different ways to remove mortgage insurance on a VA loan.

Pay down your mortgage for the automatic or final termination of PMI
Upon reaching 80 percent of the mortgage balance, request cancellation of PMI
PMI will be eliminated through refinancing
Reappraise your home if it has gained value

Note: In addition to adding amenities or renovating your home, you might have increased its value as well, which will also increase your equity. Upgrades like a renovated kitchen, replacement windows, or an extra room can add value to your home. As long as you reach 20 percent equity, you can kick PMI out.

 
Do veterans pay homeowners insurance?
The importance of homeowners insurance goes beyond just protecting your home. In order to close a VA loan, you must have sufficient homeowners insurance.

Usually, veteran borrowers will need to pay their first year’s insurance premiums when they close. Sellers may have to cover the cost when negotiating closing costs in Maryland and concessions for VA loans. It is considered a seller concession if the seller pays for or reimburses you for this upfront premium payment.

As part of their regular mortgage payment after this first year, homeowners typically pay a portion of their homeowner’s insurance premium each month. Generally, mortgage lenders in Columbia MD or servicers will escrow these portions and pay the annual bill on your behalf.

 
What are the insurance requirements for a VA loan?
Generally, title to the estate ought to be acceptable to informed buyers, title companies, and attorneys in the area where the property is located.

The Department of Veterans Affairs does not require a lender making a VA loan or the veteran-borrower to obtain title insurance.  However, lenders are free to apply their own title insurance requirements to VA loans.  As outlined in “Estate of the Veteran in the Property,” the VA only requires that the title to the property meet certain standards.

 

Contact us today to get you the best rates on VA loans in Maryland with Ability Mortgage Team.

 

 

Image: Pexels.com

 

How do you find a lien on your property?

How do you find a lien on your property?

As you know a lien is a legal right or claim against a property by a creditor, so it is important to know how to find it. Generally, liens are in the public realm. The website of the county recorder, clerk, or assessor typically allows free searches by address. Alternatively, you can appear directly at the county’s office, or you can hire a title company to conduct the search for you.

Property Liens Types: 
Divorce lien: 
Couples who use a divorce lien sign a deed transferring title to the house from the spouse who will not be living in it. Former spouses will sign a payable note and a deed of trust for the house. The note is known as a divorce lien. 
Construction liens: 
The purpose of construction liens is to protect professionals from their services going unpaid. Construction liens make it difficult or impossible to sell a property or refinance it since they encumber the title. It can be forced to sell the house to provide compensation in the worst-case scenario. 
Judgmental liens: 
As a result of a court ruling, a creditor has the option of seizing a debtor’s property when he or she does not honor a contract. In contrast to equitable liens, judgment liens are not consensual, since they are attached without the owner’s consent. 
Tax liens: 
When you neglect or fail to pay a tax debt, the government may file a tax lien against your property. The lien safeguards the government’s interest in all your assets, including real estate, personal property, and financial assets. 
 Voluntary liens: 
Voluntary liens exist when a person takes possession of another’s property as security for the repayment of a debt. The lien attaches to the property, rather than the owner. 
Involuntary liens: 
Liens imposed by an outside authority against the will of the owner are known as involuntary liens. An involuntary lien is usually placed on a property due to unpaid debt obligations instead of a mortgage lender placing a lien on the property.

 
Ways to know about the lien property: 
Checking for liens is crucial before investing in a property. There are three ways to do this: 
Check County records checking: 
If you are interested in getting a lien record for a property, you should contact the county’s recorder, assessor, or clerk. Depending on the county, you can often simply search property records on the assessor’s website. 
Consult a Title Agent to resolve mortgages liens: 
Title Agents have expertise in identifying liens, pulling property records, and documenting the full history of a property’s title. If your Maryland Mortgage Lenders require title insurance, you can purchase it through this agent. Title issues will be protected if they arise in the future. 
Online lien tool searching: 
Companies offer online tools for searching property titles and liens. Be aware that these tools aren’t free. 

Do you want to buy a property with a lien? 
Well, it is always said that buying a property with a lien is bad. But as there are two different types of liens I will consider choosing Consensual liens as they do not impact the credits.

 

Image attribution: Chapay – Pixabay

 

How much do I need to make to afford a 450k house?

How much do I need to make to afford a 450k house?

To finance a 450k mortgage, you’ll need to earn roughly $135,000 – $140,000 each year. We calculated the amount of money you’ll need for a 450k mortgage based on a payment of 24% of your monthly income. Your monthly income should be around $11,500 in your instance. A 450k mortgage has a monthly payment of $2,769.
450k House Mortgage Calculator
The first step in buying a house is determining your budget. This mortgage calculator can help you figure out how much you can spend.

 
Down payment on a 450k house?
Assuming you have good credit, you’ll probably be able to secure a low interest rate for a $450,000 mortgage, and you might not need to come up with a full 20% down payment. Although you might want to, because the more money you put down, the lower your mortgage payments will be.

If you follow the recommended 28/36% rule, spending no more than 28% of your gross monthly income on home-related costs and no more than 36% on total debts, including your mortgage, you’ll have an idea of how much house you can afford to buy.

Assuming the best-case scenario — you have no debt, a good credit score, $90,000 to put down and you’re able to secure a low 3.12% interest rate — your monthly payment for a $450,000 home would be $1,903. That means your annual salary would need to be $70,000 before taxes.

 
What is the monthly mortgage payment on a 450K house?
With a $450,000 mortgage and an APR of 3%, you’d pay $3,107.62 per month for a 15-year loan and $1,897.22 for a 30-year loan. Keep in mind, these amounts only include principal and interest. In many cases, your monthly payment will also include other expenses, too.

Here is a list of what is included in a typical mortgage payment:

Principal: This will be applied to the outstanding balance on your loan. At the start of your loan, you only pay a modest amount toward the principal, but as time goes on, you pay more.

Interest: This is the cost of borrowing the money, and it is usually the largest portion of your initial payment.

Escrow: Many lenders will also want you to pay money into escrow on a monthly basis. This is a savings account designed to save aside money for future property tax and insurance expenses.

 
Income Needed To Qualify for a $450K Mortgage
Unfortunately, there is no magic formula for calculating the exact amount of income required to qualify for a $450,000 mortgage. We can, however, make an estimate using some simple calculations.

Most mortgage lenders in Maryland adhere to the 43 percent rule, which states that your monthly costs, including your mortgage, taxes, insurance premiums, credit card payments, and utilities, should not exceed 43 percent of your total annual income. In other words, banks will not consider borrowers who have a debt-to-income ratio (DTI) of more than 43 percent.

To figure out how much you can afford to pay each month, you’ll need to know the following:

The total amount of your down payment. Your mortgage only needs to cover the total cost of your new home minus the amount of your down payment.
The base rate of interest. The amount you’ll have to pay each month will be influenced by the interest rate.
The duration or length of the mortgage. Whether you’d like a 20- or 30-year mortgage — or a different timescale entirely — will depend on whether you want to make fewer, more expensive payments or, less expensive payments. You should keep in mind that the second option will cost you more money in the long run.
Mortgage insurance, property taxes, and homeowners insurance are all things to consider. These charges may be added to your mortgage payment, however they vary. Although these three items can be combined into a single monthly mortgage payment, your bank will create an escrow account to receive payments for each.
Closing costs and other fees. These might be included as a separate payment or integrated into the mortgage payments. The first will limit your ability to make additional monthly mortgage payments.

Closing charges and other fees are not included in the price. These could be paid separately or as part of the monthly mortgage payment. The first will limit your ability to make extra mortgage payments on a monthly basis.

 
Income Needed To Qualify for A $450k Mortgage
It can be difficult to establish what income is required for a $450K mortgage, similar to the explanation offered above. However, we can apply a calculation that is even easier than the one offered above.

The maximum cost of your home should not exceed 2.5 to 3 times your entire annual income, according to a solid rule of thumb. This suggests that your minimum wage should be between $165K and $200K if you want to buy a $450K home or qualify for a $450K mortgage.

If your monthly income is $8,000, your monthly mortgage payment is limited to $8,000 x 28 = 224,000. Divide the sum by 100 to get 2,240 (224,000 x 100).

These mortgage income criteria are, once again, quite flexible and dependent on a variety of conditions. If you want a general idea of the type of mortgage you can afford, multiply your total annual salary by 2.5 or 3. The resulting number should give you a good sense of how much mortgage you’ll be able to get.

The 28/36 percent rule can also be used. This means that housing expenses should account for no more than 28% of your total monthly income, and loans should account for no more than 36%. Multiply your monthly income by 28 and divide by 100 to get 28 percent of your monthly income.

 

For more information about getting a $450,000 mortgage contact Ability Mortgage Group today and get started on the right path.

 

Image source: Max Vakhtbovych – Pexels