Sunrise Homes & Renovations, Inc.

First-Time Homebuyer’s: Understanding Mortgage Terminology

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Obtaining a mortgage can seem to be filled with perplexing terms and concepts. Don’t worry, though – we’re here to decode the complexities and make it easy for you to navigate the mortgage landscape with confidence. Let’s break down some of the most common and confusing terms in simple, easy-to-understand language.

1. Down Payment:

Complex Term: The initial payment you make when purchasing a home.

Simple Explanation: It’s like a security deposit when you rent an apartment but for your house. The more you can put down upfront, the less you’ll need to borrow.

2. Principal:

Complex Term: The amount of money you borrow to buy a home.

Simple Explanation: Think of it as the actual cost of your house. The principal is the amount you’ll pay back, excluding interest.

3. Interest Rate:

Complex Term: The cost of borrowing money, expressed as a percentage.

Simple Explanation: This is the fee you pay the bank for letting you borrow their money. A lower percentage is better because it means you’re paying less extra for the loan.

4. Amortization:

Complex Term: The process of paying off a loan over time through regular payments.

Simple Explanation: Imagine your mortgage as a big pizza. Amortization is slicing it into monthly pieces until you’ve eaten the whole thing.

5. Fixed-Rate Mortgage vs. Adjustable-Rate Mortgage (ARM):

Complex Term: The interest rate stays the same for the life of the loan the rate changes periodically.

Simple Explanation: Fixed-rate is like a stable friend; they don’t change. The adjustable rate is more like the weather – it might be sunny today but stormy tomorrow.

6. Closing Costs:

Complex Term: Fees and expenses you pay when you close on your home.

Simple Explanation: It’s the bill for all the services that helped you get your home, like the real estate agent, appraiser, and others. Be prepared for this additional cost.

7. Escrow:

Complex Term: A third party holds and manages funds for the buyer and seller.

Simple Explanation: It’s like a referee in a game. They make sure everyone follows the rules, holds onto important documents, and ensures the money gets to the right place.

8. Pre-approval vs. Pre-qualification:

Complex Term: The process of determining how much you can borrow vs. a preliminary assessment of your creditworthiness.

Simple Explanation: Pre-approval is like getting the green light to go shopping with a set budget, while pre-qualification is more of a ballpark estimate.

9. Private Mortgage Insurance (PMI):

Complex Term: Insurance that protects the lender if the borrower can’t make their mortgage payments.

Simple Explanation: It’s a safety net for the bank. If you can’t pay your mortgage, PMI helps them recover their losses.

10. Appraisal:

Complex Term: An evaluation of a property’s value by a licensed appraiser.

Simple Explanation: Like a report card for your house – it tells you and the bank how much it’s worth.

Understanding these terms can empower you as a first-time homebuyer. While the mortgage journey may seem daunting, a little knowledge goes a long way in making the process smoother and more enjoyable. Happy house hunting!

Why You Need to Be Truthful on Your Mortgage Application

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There are few things better than finding your dream home and being able to afford it, but simply because you’ve found the perfect place doesn’t mean you should stretch the truth. It might seem tempting to polish your mortgage application a little in the hopes of making a better impression, but here are a few reasons why you should stick to the truth when signing off on your home.

Your Credit History Tells All

It can be tempting to bump up your salary or make some hefty deposits into your savings account. However, lenders will be taking a look at your financial history by way of your bank statements, credit report, and paystubs so they’re likely to discover any erroneous details. If you’re not honest about your financial situation, the lender may suspect that you’re not a reliable buyer. Not only that, making false statements about your finances may give you more home than you can really afford, which can cause setbacks down the road.

Mortgage Fraud Is Still Fraud

A little white lie on your mortgage application might not seem like such a big deal, but because you are painting a picture of yourself that is not true, this can actually be considered mortgage fraud. While there are mistakes that can be made on any mortgage application given all the details required, it’s very important not to mislead the lender or home seller on purpose. It may not be common, but mortgage fraud can be punished with hefty fines or even prison time.

A Bad Way To Begin

There’s nothing like the feeling of moving into your newly purchased home and feeling enthusiasm for all the things it entails, but being dishonest about your financial situation can sully that. A lie may just be a small detail, but mortgage lenders look at a variety of factors to ensure you’re a good fit for a loan that will stay manageable month after month. While a minor mistruth may seem insignificant, it disables lenders from being able to assess if your financial situation is right for the home you want to purchase.

It may be enticing to fudge a few details on your mortgage application, but there can be serious implications involved in not being honest about the information on your application. If you’re currently in the market for a home, contact one of our mortgage professionals for more information.

Are You Ready for Home Ownership? Find Out by Answering These 4 Questions

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Do you ever dream about a larger, roomier, or more luxurious living space? Or perhaps just want to experience the joy of owning your own home and building your net worth instead of renting? Let’s explore a few questions that can help to answer whether or not you’re ready for a new lifestyle as a homeowner.

Can You Realistically Afford To Buy A Home?

The first consideration to make is a financial one: can you afford it? Buying a home is a significant financial investment. In most cases, you’ll need to manage monthly mortgage payments for many years. The good news: owning a home is more affordable than you might think. If you’re already a stable renter then you’re most of the way there.

Do You Have Your Down Payment Saved Up?

If you’re confident that monthly payments are no problem, then the next step is saving up enough to cover your down payment. This is a lump-sum investment that you make when you buy the home. Typically your down payment is around 20 percent of the home’s cost, but there are assistance programs that can reduce this further.

Do You Know What Type Of Home You Need?

Once you’ve cleared all of the financial hurdles, you will need to decide exactly what kind of home you need. If you’re a single young professional, a condo or apartment might be the perfect starter home from which you can upgrade later. Or you might prefer something more rural which comes with more yard space, perfect for pets.

Are You Ready To Set Down Some Roots?

Finally, it’s worth taking some time to decide whether or not you’re ready to emotionally and physically invest in your local community. Is your career stable enough that you won’t be moving for at least a few years? What about that of your partner or spouse? If you don’t already, do you envision having children in the future? All of these are considerations that will help you choose the right neighborhood.

When you are ready, our professional mortgage team is here to help you finance the home of your dreams.

First Things First, What To Do Upon Moving Into Your New Home

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If you have purchased a new home and are going to move in soon, what are the first few things that you will need to do upon moving into your new home?

Moving can be very stressful, but having a checklist can make your move to a new home effortless.

Here are 6 easy steps that can eliminate any frustration and help you feel safe and secure: 

Change Your Address
You will need to change your address for all magazine subscriptions, bills, and other services. You can update your mailing address online or visit your local post office to find out what needs to be done.

Set Up The Utilities
When you move into a new home, you may get all of the contact information from the previous homeowner or real estate agent for the utility companies. Be sure to change the services into your name before you move in, such as gas, cable, electricity, internet, telephone, sewer, and water.

Change The Locks
You have no way of knowing who the old homeowners gave a copy of the key to, so having the locks changed is something that you should do right away when you move into your new property.

Have The Carpets Cleaned
Get your life in the new house off to a fresh start by having the carpets steam-cleaned before you move your furniture in. You could either rent a steam cleaner or pay for a carpet cleaning service, but either way, this will make the house feel really clean and new.

Figure Out Your Breaker Box
Another important first step to owning your new home is to figure out which breakers control each part of your home.

Knowing how the breaker box works will ensure that you can flip the right switch when you need to. You might need to ask someone to help you by standing in another part of the house and letting you know which lights come on or off when you flick the switches.

Check Your Smoke Alarms
The smoke alarms and CO monitors in your home might not have been checked recently, so make sure that they are functioning properly. Depending on how old they are, you might need to change the batteries. This is an important maintenance task for your own safety.

These are just a few of the important first steps that you should take when you first move into your brand-new home.

For more information about buying a new home, feel free to contact your trusted real estate professional today.  

Buying Your First Home? Learn These 5 Essential Home Maintenance Skills as Soon as Possible

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New homes can be scary. But when you take the time to think about it and plan ahead, maintaining a home is easier than you think a manageable mix of experience and common sense. Here are five skills that will help maintain your new home for years to come.

Fixing A Toilet

It’s not as daunting as it sounds. Just remember that toilets work with gravity the water wants to flow freely. Don’t be afraid to open that tank up and adjust the floater and valves as needed. Occasionally run the water (flush the toilet, turn on the sink) in unused rooms, like the guest bathroom, to keep the pipes clear and functioning.

Dealing With Animals

Sometimes your animal neighbors invite themselves in. While it’s always better to use professionals if you have a large-scale or persistent pest problem, there are steps you can take to minimize animal visitors before it comes to that. Check for termites by looking for raised, hollow tubes along the wood (tubes filled with bugs). If you have mice, and know how they’re getting in, block their holes with steel wool and set friendly traps ones that capture instead of kill. But make sure to release the captives far from your home.

Electricity and Water Awareness

Know how to shut off your electricity and water, just in case. Find the shut-offs when you first move in. And take the time then to test the breakers and label them, clearly, directly, with a permanent marker. That way there is no confusion if one gets tripped.

A Regular Deep Clean

On a regular basis, give your house a deep clean. Scrub the bathrooms, and clean the kitchen appliances and floors/walls. Doing this will not only prevent the accumulation of dirt and grime, which could lead to bigger problems later on but will also give you a chance to do a run-down of your house and see what needs fixing/updating/replacing.

Be Prepared

Gather your home maintenance kit (Home Maintenance for Dummies has examples) before you need it, and keep it up if you use all the nails, replace them. It’s also a good idea to make a maintenance calendar with notes on what needs to be done when this makes it easy for the homeowner, and anyone they need to step in. Finally, in being prepared, don’t forget to maintain your fire and carbon monoxide detectors with regular checks and battery changes (suggested every six months, regardless of battery life).

Your first step in preparation is to contact your local real estate agent, who can help you get started on your road to home maintenance.

Understanding How Home Equity Works and Why Buying a Home Can Be Your Best Investment

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Understanding How Home Equity Works and Why Buying a Home Can Be Your Best InvestmentWhen delving into the world of real estate and investment property, there are many terms that will come up that require further explanation. Whether you’ve never heard the phrase ‘home equity’ before or you have a little familiarity, here are the ins and out of what it means and how this asset can help your financial outlook.

All About Home Equity

Essentially, home equity refers to your portion of the value of your home, and the amount of this figure is important because it is included among your assets when determining your net worth. If this sounds confusing, think of it this way: if you have completely paid off the cost of your home, the value of your home equity is this total amount. Of course, because most people seek a lender to borrow money from when they purchase a home, their home equity would consist of their down payment and whatever amount they’ve paid down on the mortgage since purchase.

An Example Of Home Equity

To provide further clarification, let’s use the example of a house that has been purchased for $300,000. In the case that a down payment of 20% has been provided at the time of purchase, the equity in the home would be $60,000. Since this amount is the percentage and cost of the house that’s been paid down, this is the amount of the house that is actually owned and this will be figured among an individual’s assets.

How Home Equity Works

As you pay the amount that you owe on your home each month, you are paying off your total debt and thereby increasing your equity. Since this amount of money is considered an asset that belongs to you, it can be used down the road to buy another home or invest in other important things like education or retirement. While paying off the amount owed on a home is a considerable investment, if the value of your home increases, this means that you’ll still owe the same on it but your home equity will have automatically increased.

As an asset that is part of your financial net worth and can be used down the road to fund other investments, home equity is a very useful term to know when it comes to purchasing a home. If you’re on the market for a home and are considering your options, you may want to contact one of our local real estate professionals for more information.