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Month: December 2021

Conforming loan limits for 2022

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When applying for a mortgage, one of the most popular options is a conforming loan. These loans are called “conforming” because they conform to the guidelines set by Fannie Mae and Freddie Mac, federally-backed home mortgage companies created by the U.S. Congress to boost homeownership.

What do Fannie Mae and Freddie Mac have to do with your home loan?
These entities exist only to support the U.S. mortgage system. They don’t originate loans. Instead, after a loan has been issued, one of the entities will buy the loan from the lender if it meets their criteria. This is an important part of the mortgage market because it allows lenders to sell loans to Fannie Mae and Freddie Mac and use the cash raised to engage in further lending.

For a loan to be purchased by Fannie Mae or Freddie Mac, the borrower generally needs:

  • A good credit score
  • A debt-to-income ratio of 50% or less
  • At least 3% down payment
  • A loan amount that’s equal to or less than the conforming loan limit

2022 conforming loan limits
Each year, the Federal Housing Agency decides what the conforming loan limit is. As houses become more expensive, the limits increase. In 2022, the amount increased substantially for all units.

https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Announces-Conforming-Loan-Limits-for-2022.aspx

­­Base limit: This is the maximum loan amount for homes in most areas of the United States.

High-cost limit: This is the maximum loan amount for homes in high-cost markets such as parts of Alaska, Hawaii, California, and Washington, D.C.

Units: The number of housing units per building.

More >> Check what the conforming loan limit is where you live.

Because conforming loans can be re-sold, they’re not as risky for lenders and often have favorable terms for borrowers. Savvy home buyers will keep their loan amount within the conforming loan limits so they have an easier time securing their loan, they’ll have more relaxed requirements, and their rates will probably be better.

If you’re looking for a conventional 15 or 30-year loan (as most people are), you may want to consider keeping the loan amount under the loan limit in order for it to be a conforming loan.

When you need a bigger loan – consider a jumbo loan
If the limits won’t get you a home you’re interested in buying, you could look into a jumbo loan. Jumbo loans won’t be purchased by Fannie Mae or Freddie Mac, so they don’t need to conform to their loan limits – meaning you can get more money. If you have a strong credit score and low debt-to-income ratio, you may find a lender willing to extend one to you.

However, jumbo loans come with some disadvantages. They have stricter qualification rules, require a sizable down payment (sometimes 20% or more), and normally have a higher interest rate. For those reasons, a lot of homebuyers try to avoid them by finding a home that will keep them within the conforming loan limits.

To see whether you’ll be eligible for a conforming home loan, contact your local Mann Mortgage home lender. Together, they’ll help you crunch the numbers to see what type of loan would be best for you.

How to get ready to buy a house this year

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Buying a house is a big life event. To make sure you start your journey on the right foot, we’ve put together a few things you’ll want to do before you step into your first open house. If you follow our tips, you’ll set yourself up to get the right type of home and home loan.

Check and improve your credit score
Your credit score (sometimes called a FICO score) will be used by your mortgage company to decide if you’re eligible to receive a loan and, if you are, the interest rate you’ll get. Scores range between 300 and 850 – the higher the score, the better. If your score is under 500, you have what’s called “challenged credit”. It’s not impossible to buy a home, but you’re going to struggle. Learn about buying a home with challenged credit. In general, the lower your score, the higher down payment your mortgage company may require.

Check your score for free once a year at annualcreditreport.com. If it’s low, you’ll need time to raise it. You can start by doing the following:

  • If you don’t have a credit history, get one. Take out a credit card and make your payments on time to show you’re credit-worthy. Not having a credit history can give you a very low credit score.
  • If your credit cards are maxed (or almost maxed) you’ll need to start paying them off. Using too much of your available credit can lower your credit score.
  • Pay bills on time. If your payments become 30-days past due they will likely be reported to the credit bureau and lower your credit score.

Decide where you want to live
Do you want to stay in the city, county, or state you’re in? Take a little time to research your options and make sure you know where you want to be for the next few years.

Contact a local mortgage lender
Working with a home expert who has connections in your community is always a great idea. They’ll know the local and state first-time homeowner and down payment assistance programs that can save you a lot of money – and that’s in addition to all the national loan and assistance programs. Together, you will go over your credit, income, and financial goals to find the best home loan.

Save for your down payment
The amount you need to save for a down payment depends on the type of loan you select and your financial situation. It can range from 0% of the total purchase price for a VA loan to as much as 20% or more for conventional or jumbo loans. Many people mistakenly assume you always need 20% down to purchase a home, and that’s just not the case.

Some people may chose to put as much down as possible while others will put the minimum down. Which is right for you? You and your loan officer can go through the pros/cons of each scenario to help you decide.

>> Get the scoop on how much you’ll need for a down payment.

Get pre-approved
Being pre-approved means your lender has already looked at your income, assets, debt, and credit report to decide how much they might be willing to lend you. It’s never a guarantee of a loan, but it’s much better indication (for both you and the person you’re buying from) that you’ll be extended a loan if you make an offer on a house.

>> Don’t make these first-time home buyer mistakes

Find a real estate agent to represent you
Once you’re a client, agents have a fiduciary responsibility to you. That means they are legally obligated to put your best interests first. They will know what to look for with a property and neighborhood, they will help you negotiate the price, and they will help you navigate the paperwork and legal issues with making an offer and purchasing a home.

After those steps are done, you’re ready to be a serious buyer with competitive offers on your next home.

Wherever you are on your journey to purchase a home, reach out to us. We are happy to go over your finances and goals and help you navigate the home loan process.

Top field-tested cleaning tricks for 2022

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We’ve gone through endless online cleaning tips to find ones we’re certain you can easily incorporate into your routine to get your home extra clean. Our only requirements were that the cleaning tip was quick to do, didn’t require any special equipment, and made an impact on how clean our house feels. Only the best-of-the-best and most useful tricks have made it into our field-tested tips.

Remove mold and stains from your toilet water tank

Citric acid occurs naturally in fruits like lemons and limes. It’s often used as an active ingredient in kitchen and bathroom cleaning solutions. You can find it wherever home canning supplies are sold.

To clean your water tank, make sure the water is turned off and flush the toilet to drain as much water as possible. Pour a bucket of warm water into the tank and add about ¼ cup of citric acid. Let it sit for an hour, then turn on the water and flush.

Freshen your garbage disposal
“Something I learned is to make sure to clean the rubber cover over your disposal. The bottom part gets dirty with food,” says Alexandra. Run baking soda, vinegar, and hot water through the disposal to neutralize the odor and clean out the remaining food.

Keep your mattress clean
Dan found keeping his mattress fresh and moisture-free was easy using common household baking soda. “Shake baking soda on your mattress and let it sit for a while. Then, just vacuum it up!”

Baking soda works wonders as a cleaner and deodorizer. It’s gentle, non-toxic, and an alternative to expensive store-bought solutions. Sprinkle a little on your cutting board, scrub, and rinse to freshen it. Add ½ cup of it to your load of laundry to boost colors and help remove stains. There are endless ideas for ways to clean with it.

De-stink your frontload washing machine
Ever notice the little hatch on the bottom of your machine? It’s how you access the machine’s filter. Pry open the hatch, drain the water from the tube, then pull the filter out to clean it. If you haven’t done it before you’ll probably find all sorts of gunk that’s causing your laundry (and frontload machine) to smell musty.

Stephanie learned to keep her machine fresh by wiping the door, soap drawer, and rubber gaskets with a little water and vinegar. She recommends this video for a quick tutorial on how to get your frontload machine stink-free.

Dust fan blades
Spray the inside of an old pillowcase with a cleaner, then place the whole blade into the case. Now, wipe the top of the blade with the case and the excess dust will fall into the case, not onto you or your floors. “I always do this when I’m cleaning my bedroom fan now. It hangs over my bed, so this trick keep my fan and my bed clean!” says Jessie.

Don’t forget about baseboards
A lot of dirt and pet hair builds up on and alongside your baseboards. Dedrean found that going over his with the vacuum every time he cleaned his floors helped keep his home clean. Another easy trick is to run a dryer sheet along your baseboards to repel dust for a few months.

Clean the outside of your fridge
We all know to clean our shelving and drawers, but Pete says cleaning the outside of your fridge is just as important. “The old ones get especially dusty, so pull it out and vacuum the coils on back as well as the area under the fridge.” Newer models have coils under the fridge. Pete recommends cleaning them once in a blue moon, but experts recommend doing it every six months.

The benefit to getting rid of all that dust and pet hair? It helps the coils push out heat and keep your foods colder.

Still want more tips?
For those of us who can’t get enough tips, Amber recommends almost everything on Go Clean Co’s Instagram page where they go over ways to clean almost everything using basic household cleaning products like powdered Tide, Windex, Dawn dish soap, white vinegar, and scrub brushes.

Getting a loan to buy a rental property

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Rental properties are one way of making money in real estate. Rentals may bring you income, but managing them can be an expensive and time-consuming task. For those who find the income from a rental worth the work they’ll put into it, how can they afford to purchase the property? One solution is through a lesser-known loan product.

>> Decide whether becoming a landlord is worth it.

The DSCR mortgage

It stands for debt service coverage ratio. Basically, it’s a formula designed for property investment loans that uses the property’s income potential rather than your financials to determine whether you’re eligible to receive a loan.

DSCR = annual net operating income / annual mortgage debt

Say the property you would like to purchase will make a net income (after taxes and other expenses) of $150,000 a year. And your loan payment totals $130,000 a year. Divide the net income by the loan payment. The answer you get is your DSCR ratio. In our example, it would be 1.15.

If you’re unsure how much income your property will make, it’s ok. Your loan officer will do their own supplemental report called a market rental analysis to find out.

There isn’t a DSCR ratio that guarantees you’ll get a loan, but the higher the number the better your chances. Anything above 1.0 shows the property, at least, won’t lose income. Your lender will use their calculation of your DSCR, documentation showing you have adequate assets, and your credit score to decide whether to extend credit to you.

Benefits of a DSCR loan

  • Unlike a traditional mortgage, you don’t need to provide your income, employment verification, or paystubs to qualify.
  • If you have employment gaps or are self-employed it won’t impact your eligibility to receive the loan.
  • The loan can close in an LLC’s name instead of yours – keeping your personal finances out of the transaction.
  • The closing time may be faster since the underwriting team won’t have to verify your employment or job history. This speed may help during a bidding war to ensure your property purchase goes smoothly.

Features of a DSCR loan

  • It requires a minimum of 15% down payment.
  • They come in loan terms of either 15 or 30 years.
  • You can get a loan of $100,000 to $4,000,000 to purchase your property.
  • You can use the loan to purchase residential investments and some light mixed-use investments. That means you can purchase an apartment building and possibly even an apartment with either a commercial or industrial rental space.

We are here to help you with your DSCR loan

Investing in residential property has a lot of benefits, but it’s best to work directly with a local loan officer to help you decide whether it’s the right financial move for you. Meeting with a Mann Mortgage loan officer to discuss your loan options is always free. We’re happy to calculate your DSCR, go over the loan program, and answer any questions you may have. Buying an investment property is a big move, and we want to make sure you make the best choice for your financial goals.

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