Financing Guides

Financial Calculators

The calculators listed on this page can serve to give you preliminary answers to all your financial questions. For a full financial picture, ask to speak with a Century 21 Mortgage representative today. We are dedicated to giving you the financial options that make the most sense for you!

Down payment and Earnest Money

How Much Money Do I Need?

Of all the questions you may have about buying a new home, perhaps the biggest one is this: How much money do I need?

You know that buying a home means more than putting a roof over your head. Buying a home is not only one of the most personally rewarding investments, it's also a smart financial move, especially if you're currently renting.

To buy a home, you'll need a down payment, closing costs, pre-paid items and reserves. The amount of each of these will vary, depending on which type of loan you choose.

Your actual out-of-pocket costs may differ. Helping you find a way to finance your home is what your chosen home mortgage consultant will help you to do after speaking with you about your goals and resources in order to come up with a financing plan that makes sense for you

Learn more about sources for your down payment.

Figure your housing budget.

Century 21 JRS Realty is affiliated with Century 21 Mortgage, LLC.

Figuring Your Housing Budget

Figuring Your Housing Budget

Have you ever shopped for clothes, furniture or gifts without a budget and later found that you'd overspent? It's easy to do especially when looking at so many great houses with your agent. Obviously, staying on budget is very important when house hunting.

That's why you'd probably like to have a ballpark idea of how much house you can afford - before you start looking and even before meeting with your mortgage broker or lender.

To get a rough estimate of how much you'll qualify for, do what the lenders do – plug your budget numbers into a basic mortgage calculation formula.

Lender Formulas
Lenders typically use one of two formula guidelines; although most will require that you meet both sets of guidelines. Even if you don't meet the guidelines, talk with your chosen home mortgage consultant. S/he can provide additional details specific to your situation, and since there are other formulas that exist, you may qualify under another standard. For example, VA loans are calculated on a single ratio that's based upon mortgage payment and all debts. If you have very little debt, this formula may allow you to qualify more easily for a more expensive home.

Of the two usual formulas, the first compares income-to-housing costs (without including long-term debts), while the second includes all debts.

So, if you're a family with a monthly gross income (before taxes) of $3,500, you would multiply $3,500 by 28 and 36 percent. The result shows that you might qualify for a home mortgage with monthly payments between $980 and $1,260 a month.

Note that these percentages may be slightly less if you have long-term debts (more than eight months) or alimony/child support payments. The number and ages of your children as well as household budget items may also have an impact.

Now that you have a better idea of what your approximate housing budget may be, learn more about:

• Types of Loans
• Mortgage Strategies
• The Loan Application

Financing Your Home

How Much House Can I Afford?

It's kind of ironic, but house hunting usually begins in your own living room! That's because the best house-hunting strategies start with careful planning. So, long before you start pouring over online listings and hitting the neighborhoods with your Century 21 JRS Realty agent, first decide your price range.

Knowing your housing budget upfront will quickly bring your efforts into focus.

How much you can (and want) to spend depends upon two things:

1.        What you want or need your monthly payment to be.

2.        How much you're willing or able to put toward a down payment.

Remember that your monthly mortgage payment will include the principal and interest on the loan as well as property taxes and insurance (both fire and hazard). These four costs are abbreviated P.I.T.I. (for principal, interest, taxes and insurance). And, depending on which home you buy, your monthly cost could also include homeowner association dues, condominium fees and Private Mortgage Insurance (PMI).

Since your down payment can range from zero dollars to 25 percent of the total purchase price, talk to your Century 21 JRS Realty sales associate or Century 21 Mortgage consultant. S/he can be very helpful to you when it comes to understanding your options and determining just how much house you can afford. In the meantime, learn more about:

• How to estimate your out-of-pocket expenses at closing.
• How to find sources (outside of savings) for your down payment.

Qualifying
As part of the planning process, find out how much you can comfortably afford by getting pre-qualified. Keep in mind that although there are a number of loan types available, you still need to work toward finding a monthly payment that makes sense for you. As a general rule, expect your monthly mortgage to be no more than 25 to 33 percent of your gross monthly income. Use our quick and easy lending formula to figure your housing budget.

Credit Scoring
In deciding how much house you can afford, consider getting your credit score as early in the home-buying process as possible. Your credit score helps your lender determine the type and size of your mortgage loan; so knowing your score can save you loads of time and maybe even a little disappointment.

Your credit score is a numerical measurement of your credit report and reflects your overall management of credit. Using information compiled by credit bureaus, your credit score is based on several factors including:

• Your payment history
• The amount of credit you have
• Information reported monthly by your creditors
• Any serious problems in the past with debts, such as liens, bankruptcies, collections and judgments.

Your final score is used by lenders to help determine the likelihood that you'll repay your loan on a timely basis. Credit scores typically fall in a numerical range, from 300 to 900. Generally, the higher the score, the lower the risk you are for the lender.

Keep in mind that credit scoring is only one factor considered by a lender. You can expect a careful analysis of all the information collected from you during the loan process.

By the way, even if you're already pre-qualified, you can benefit from knowing your credit score. While pre-qualification measures your debt and income ratios to predict your qualifying loan amount, your credit score provides a clear indication of your credit standing — a major factor during the final loan approval process.

Read more about credit and buying.

Century 21 JRS Realty is affiliated with Century 21 Mortgage, LLC.

Questions For Your Lender

Questions for Your Lender

Ever make a list of questions for your doctor? It's a great way to remember to ask things that are important to you. And so it is with your mortgage-related questions.

That's why Century 21 JRS Realty created this comprehensive list of questions for your lender. Before choosing your lender and making application for your mortgage loan, make sure all these questions are asked — and answered — to your satisfaction.

1.        Do you offer a fixed-rate loan?

2.        Do you offer an adjustable rate loan and if so:

o        How often will the interest rate be adjusted?

o        Is there a maximum limit on each rate change?

o        How often will the monthly payment be adjusted?

o        Is there a ceiling on payment adjustments?

o        Can the term of the loan be extended?

o        Can I convert the adjustable loan to a fixed loan at a later date?

3.        Can I lock in my interest rate? For how long?

4.        What points can I expect to pay at closing? (Remember, one point is one percent of the loan.)

5.        What other fees can I expect to pay?

6.        Are funds available for a second mortgage?

7.        Is there a prepayment penalty clause?

8.        Would my loan be open-ended?

9.        What is the grace period of the loan?

o        How late can a monthly payment be made before a late charge is assessed?

o        What will happen if I miss a payment?

10.     Is this an assumable mortgage?

11.     Do you require me to carry mortgage insurance?

Buying a home is generally a long-term commitment. And getting the loan for it takes both time and energy. You home mortgage consultant can help you fully understand the financial implications of your decision and start you on the way to new home ownership.

Century 21 JRS Realty is affiliated with Century 21 Mortgage, LLC.

Questions From Your Lender

What Your Lender Needs From You

It's the million dollar question: How much do you need to borrow?

Regardless of the amount of your mortgage, expect to be asked that very question – plus a whole lot more.

So, it's best to be prepared. Know what your lender will ask and bring necessary documents with you to your appointment. Use our mortgage loan checklist as a reference for compiling the information and documents your lender will undoubtedly ask for.

Mortgage Loan Checklist

Once you've begun the application process, you can expect your lender to:

1.        Verify the facts of your application.

2.        Obtain a credit report.

3.        Make a property appraisal.

4.        Review all the details of your loan application.

5.        Make a determination on your loan.

Shopping For a Loan

Shopping for a Loan

Securing a loan to buy the house of your dreams is a big step, but it doesn't have to be intimidating. Understand the different types of loans and lenders, and you can take control of the process to get the loan that's right for you.

With thousands of loan options available, it's important to work with a trusted partner who understands the array of loans and can match them to your needs, wants and desires.

Mortgage Loan Brokers
Mortgage loan brokers specialize in pairing you with a lender who offers what you need – that's a lower interest rate or a loan with no down payment. Loan brokers can directly make loans, too. The primary advantage of using a loan broker is the number of financing alternatives available to you. Only a mortgage broker represents multiple investors and lending institutions so you can "shop around" for the best fit. And, a mortgage broker's services are available oftentimes at the same cost as a mortgage banker.

Mortgage Bankers
Mortgage bankers offer home loans and then process and sell the mortgage to a larger investor or to a secondary mortgage market.

Financial Institutions
Traditional financial lenders, like mutual savings banks, savings and loan associations, insurance companies and certain commercial banks, usually offer mortgage loans in addition to their other services.

Private Lenders
Private lenders, both individuals and groups, are another mortgage source, and are often considered for second mortgages. For example, a seller or employer might provide a mortgage loan, however, private lenders often loan money as a means of real estate investing. You can also expect to be charged a higher interest rate from a private lender.

Credit Unions
Cooperative institutions also provide financial services to their members. If you're already a member, your credit union may offer a 30-year conventional or government-insured mortgage with competitive interest rates.

Find a home mortgage consultant today and get more details about how you can find the right product for you!

Sources For Down payment

Sources for Your Down payment

Not wanting to dip into (or not even having) a nest egg can keep you from pursuing your dream of owning a new home. While the obvious source of money for your down payment is either your savings or the proceeds from the sale of your existing home, there are alternatives.

Here's a look at some not-so-obvious sources for funding your new home:

Plus, you won't want to forget to plan for these other out-of-pocket expenses:

• Closing costs,
• Moving expenses,
• Appliances and household setup,
• Reserve for emergencies and miscellaneous items.

In other words, don't put your last penny down at the closing table. Talk to your home mortgage consultant for more information or for help in planning the financing for your new home.

Century 21 JRS Realty is an affiliate of Century 21 Mortgage, LLC.

Types of Loans

Types of Home Loans

When it comes to paying for your new home, you have a veritable smorgasbord of financing options from which to choose. Your home mortgage may come through the seller or from a financial institution such as a mortgage company, bank, credit union, or savings and loan.

Here's our run-down on the primary types of home loans available today. Interest rates are intended for illustration only. Ask a Century 21 JRS Realty sales associate or your lender for current market rates and more detailed information on loan products to suit your needs.

Type: ARM
Characteristics: Low initial interest rate with payments that may decrease or increase over time. Popular with first-time buyers and buyers who plan to move or refinance in three to five years.
Term: Varies by lender.
Interest Rate: Subject to change on a periodic basis.

Type: Balloon
Characteristics: Lower interest rates and monthly payments than fixed-rate loans. Best for borrowers who plan to move or refinance within the loan term. May allow conversion to a fixed-rate loan at term's end.
Term: 5-7 year loans, amortized over 30 years. Repaid in equal monthly payments plus a "balloon" payment for the remaining balance.
Interest Rate: Varies by lender.

Type: Buy-down
Characteristics: Home owner, builder or third-party puts additional cash up-front in exchange for a lower interest rate.
Term: Varies.
Interest Rate: Varies.

Type: Conventional
Characteristics: Can be obtained with as little as 5 percent down payment. If the down payment is less than 20 percent, it may be necessary for the loan to have Private Mortgage Insurance (PMI) to protect the lender.
Term: Paid off in equal monthly payments over 15, 25 or 30 years.
Interest Rate: Stays the same for the life of the loan.

Type: FHA
Characteristics: Insures loans, making lenders willing to finance home purchases on favorable terms. Down payments as low as 3 percent. Discount points may be paid by either seller or buyer.
Term: Varies by lender; however, the FHA charges an up-front Mortgage Insurance Premium, similar to Private Mortgage Insurance that can be financed in the mortgage amount or paid in cash at settlement. The borrower must also pay an annual Mortgage Insurance Premium of 0.50 percent, which is collected monthly.
Interest Rate: Varies by lender.

Type: Nehemiah
Characteristics: Loan-to-value up to a maximum of $289,175. Requires approval by a participating lender, contribution of 1 percent toward the home purchase, and completion of a home buyer education course.
Term: Varies by lender.
Interest Rate: Varies by lender.

Type: Non-conforming
Characteristics: Provides home buyers with products that do not conform to the normal FHA/VA and conventional lending guidelines. These unique loan products are tailored to fit specific financial situations, including:

• bankruptcies less than 2 years from discharge;
• no income/no asset verification loans;
• late payments on previous or current mortgage;
• bank statement programs for the self-employed; or
• excessive credit problems, but sufficient liquid assets to work with.

Term: Varies.
Interest Rate: Varies.

Type: Owner-assisted
Characteristics: Owners may finance first, second, third or fourth loans. They may loan their equity back as a first mortgage (often called a "take back").
Term: As determined by the owner.
Interest Rate: As determined by the owner.

Type: Second mortgage
Characteristics: Made by the seller or by a commercial lender.
Term: 5- to 15-year loan, sometimes interest-only payments are made until the term date, when the balance is due.
Interest Rate: Based upon lender or buyer/seller agreement.

Type: VA
Characteristics: Available to qualified veterans of the Armed Services, Reserves and National Guard. Loans can exceed $200,000 with no down payment. Flexible underwriting guidelines. Closing costs may be a gift. Can be combined with second mortgages and are assumable (upon qualifying) by future buyer.
Term: Payment fixed for the full term.
Interest Rate: Varies by lender.

Type: Renovation Financing
Characteristics: Provides buyers money to fix up, renovate, repair, replace or remodel a home with the purchase. We loan on the "after improved value" and can do a loan on a home in ANY condition. We can combine this type of financing with FHA or Conventional financing. Available for singles, doubles, triples or quads.

When you're ready to think about buying your new home, make sure you explore these primary loan options and the dozens of others available. The best lending partners will be able to find the right one for your needs.