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It’s all about service at Academy Mortgage, and our company has been meeting the needs of homebuyers across the United States since 1988. I joined Academy because of its strong reputation for integrity—based mortgage lending, its unwavering commitment to responsible lending practices, and for its broad portfolio of mortgage solutions and tools.
Since 1985, I have helped many individuals and families attain the dream of homeownership. Whether you want to buy a new home or refinance an existing mortgage, I will provide a customized solution for you at competitive rates. No brokering, no middleman, no hassle, no surprises. In addition to homeowners, I have also helped hundreds of business and commercial property owners finance or refinance their properties.
Academy is a direct lender, which means that my Branch and Regional Offices are equipped to complete the entire loan process in—house—all loan processing, underwriting, closings, and funding are handled locally. As a result, we have a proven track record of closing loans as quickly and efficiently as possible
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Read these articles to educate yourself on the mortgage process and industry.
We are proud to be one of the top independent purchase lenders in the country. We achieved this distinction by continually providing exceptional customer service and by following responsible lending practices, especially in today’s rapidly changing economy.Adam Kessler, CEO, Academy Mortgage
Figure: 7 TAC §81.200(c) CONSUMERS WISHING TO FILE A COMPLAINT AGAINST A MORTGAGE BANKER OR A LICENSED MORTGAGE BANKER RESIDENTIAL MORTGAGE LOAN ORIGINATOR SHOULD COMPLETE AND SEND A COMPLAINT FORM TO THE TEXAS DEPARTMENT OF SAVINGS AND MORTGAGE LENDING, 2601 NORTH LAMAR, SUITE 201, AUSTIN, TEXAS 78705. COMPLAINT FORMS AND INSTRUCTIONS MAY BE OBTAINED FROM THE DEPARTMENT'S WEBSITE AT WWW.SML.TEXAS.GOV. A TOLL-FREE CONSUMER HOTLINE IS AVAILABLE AT 1-877-276-5550. THE DEPARTMENT MAINTAINS A RECOVERY FUND TO MAKE PAYMENTS OF CERTAIN ACTUAL OUT OF POCKET DAMAGES SUSTAINED BY BORROWERS CAUSED BY ACTS OF LICENSED MORTGAGE BANKER RESIDENTIAL MORTGAGE LOAN ORIGINATORS. A WRITTEN APPLICATION FOR REIMBURSEMENT FROM THE RECOVERY FUND MUST BE FILED WITH AND INVESTIGATED BY THE DEPARTMENT PRIOR TO THE PAYMENT OF A CLAIM. FOR MORE INFORMATION ABOUT THE RECOVERY FUND, PLEASE CONSULT THE DEPARTMENT'S WEBSITE AT WWW.SML.TEXAS.GOV.; Licensed by the Department of Business Oversight Under the California Residential Mortgage Lending Act;
No, you don't need a 20% down payment to buy a house
Lack of inventory has made for a highly competitive housing market this year, which in turn has pushed home prices up.
According to the U.S. Census Bureau, the average home price in February 2017 was $390,400. This compares to $355,300 in January 2017 and $349,400 in February 2016. Rising home prices makes it difficult for homebuyers to make a sizeable down payment and encourages bidding wars that increase the price tag even more.
It's generally said that a 20% down payment is typical or at least wanted by most sellers and real estate agents. According to a recent Redfin survey, 35.7% of real estate agent respondents said a 20% down payment is generally associated with a successful bid on a home.
With the average price at $390,400, a 20% down payment would be $78,080 - more than many homebuyers have saved up. As such, many are forced to make smaller down payments.
However, Redfin's study found that this might not be as big a detriment as one might think. Nearly one-fourth of respondents said down payments of between 3% and 5% seem to have a good chance at success. In fact, there are many ways to seal the deal on a home without putting up your entire life savings.
Make a connection
Many successful bids come from people who have established a connection with the seller. This doesn't mean they're best friends or even that they know each other. One Chicago area agent, Rano Khudayberdieva, told Redfin that writing a cover letter can greatly improve a prospective buyer's chances of getting a bid accepted.
"Writing a cover letter can improve a buyer's chances of getting a bid accepted."
"You'd rather have a committed buyer who put a little less down than a buyer with 20% down who may back out," Khudayberdieva explained.
Another Chicago area agent, Tim Zielonka, said a buyer who bonded with a seller over a common interest was able to beat out his competitors who made larger down-payment offers.
"I recently had an FHA-backed offer with 3.5% down beat out four other offers, each of which had conventional 20% down loans," Zielonka said. "The sellers were at the showing. I introduced them to the buyers and pointed out that both were huge enthusiasts of both vintage bicycles and classic cars, which put them at ease with one another and enabled them to form a natural connection. Had they not discovered this shared interest, my clients may not have gotten the property."
Explore other loan options
A conventional mortgage requires the buyer either make a 20% down payment or purchase private mortgage insurance, which could potentially add thousands to a home loan. There are, however, other loan products that allow for a smaller down payment without a PMI obligation - as long as you qualify.
If you or your spouse has served in the armed forces, you may qualify for a VA loan. These loans offer very low rates, plus don't require a down payment at all, as long as the sales price of the home is less than the appraised value, according to the U.S. Department of Veteran Affairs.
The Federal Housing Authority has a loan program to encourage first-time homebuyers find a house they can afford while also reducing risks for lenders. Under the FHA program, a buyer can put as little as 3.5% down - as long as their credit score is 580 or higher. But if you've got a not-so-impressive score, don't worry. You can still put as low as 10% down on a home under the FHA program.
In an effort to aid low- and moderate-income families living outside major metropolises obtain adequate housing, the U.S. Department of Agriculture offers a loan program in rural areas. Though it's often called a "rural home loan," it's actually available in the majority of the U.S., though not in very large cities. Like the VA loan, a down payment isn't required for USDA loans.
Seek out down payment assistance
Down payment assistance programs are available to many homebuyers, regardless of whether they've purchased a home before or not. According to research conducted by Urban Institute, these programs have aided in the purchase of many homes across the U.S., largely without risk to the lender or increased fees to the borrower. Every program is different, but many offer to pay a portion of your down payment or closing costs for you.
Though paying PMI can add to the cost of the mortgage, there are situations where purchasing this insurance product is actually your most cost-effective option. For example, if you have an excellent credit score, your lender may give you a generously low PMI rate. Additionally, you'll be able to cancel your PMI once you've paid off 22% of the home price or more. If you know you can reach this goal fairly quickly, it might be worth paying the PMI for a few months and cancelling it as soon as you can.
Coming up with the funds for a down payment is often one of the most difficult hurdles of making a home purchase. Luckily, consumers have myriad options for clearing this obstacle and carrying on with their homebuying journey.
Is an FHA loan or a conventional loan with PMI a better option?
Among the many decisions you'll have to make on your journey to homeownership will be the choice of how much to pay upfront, also known as the down payment.
The traditional amount to put toward your down payment is 20% of the home's value. But, as many prospective homebuyers know, this isn't always feasible. Many lenders will accept lower down payments, while requiring the buyer to also purchase Private Mortgage Insurance.
Another way to put less than 20% down is to look into other loan products, like an FHA loan. These are government-sponsored products that allow down payments of as low as 3.5%.
For the buyer who wants to put less than 20% of the price of the home down, both PMI and an FHA loan are good options. But for some, one might be more beneficial than the other. Before making this decision, it's important to know which is the more financially responsible choice.
History of FHA loans and PMI
The Federal Housing Administration was first created in 1934. At that time, the housing industry was struggling immensely, according to the U.S. Department of Housing and Urban Development. The FHA helped many Americans become homeowners, and largely improved the market as a whole.
Years later, in the late 2000s, another housing downturn came in the form of the Great Recession.
"Between 2007 and 2009, FHA loan originations increased 355%."
During this time, many homebuyers didn't qualify for PMI, so people who wanted to buy a home with less than a 20% down payment needed to find another option. This caused FHA loan popularity to soar. Between 2007 and 2009, FHA loan originations increased 355%, according to WalletHub. In 2009, a record 1.8 million FHA loans were issued, compared to the 402,000 just two years prior.
Meanwhile, conventional loans with PMI plummeted. In 2007, 1.5 million conventional loans with PMI were originated. By 2010, that number dropped to 260,000.
In the years that followed, FHA loans began to increase in price. Additionally, as the housing market continued to recover, PMI became affordable again. This gave rise to conventional loans with PMI once more.
In 2015, FHA loans were still more popular than those with PMI attached. However, FHA loans are trending downward overall, while PMI is gradually growing more popular. And while they both have their merits, it's important for homeowners to understand why one might be a better option than the other.
When does PMI make sense?
If you can pay 22% of the home's value quickly or plan on staying in the home for a long time.
WalletHub pointed out that the economic value of an FHA loan depends on several factors, including how long you plan to live in the home and what your credit score is. FHA options include mortgage insurance, but it's wrapped up in the price of the loan as a whole. PMI, on the other hand, is a completely separate product from the loan itself. PMI can be taken off after a few years, once the loan amount reaches 78% of the home's value. In the case of an FHA loan, however, the mortgage insurance will be included for the entire life of the loan.
If you have good credit.
There is no set amount that a lender can charge for PMI, but it's usually between 0.5% and 1% of the cost of the loan per year. One factor that contributes to how much it will cost is your credit score.
"The cost of PMI dropped 47% for people who had a credit score of 760 or more."
Generally speaking, the higher your score, the lower your PMI will be. WalletHub noted that between 2014 and 2016, the cost of PMI dropped 47% for people who had a credit score of 760 or more. But for people who had a credit score of 660 or lower, the cost increased 28%. For people with a good credit score, choosing PMI over an FHA loan could save them as much as $8,000.
When does an FHA loan make sense?
If you plan on refinancing soon.
PMI makes sense if you plan on staying in the home long enough to pay down 22% of the home's value, at which point you can get rid of the insurance and just pay off the loan. Likewise, if you don't plan on staying in the home for long, an FHA loan might be the way to go, since it's generally a bit less expensive right off the bat.
Additionally, Zillow pointed out that FHA loans are typically easier and cheaper to refinance than conventional mortgages through a process called "streamline refinance."
They also are assumable loans, which means they can be transferred to another party. This means that when it's time to sell a home, the buyer can take on the responsibility of the loan at the same time that he or she purchases the house. Since FHA loans typically have lower interest rates, this might end up be a good selling point.
If you have low credit.
If your credit score is 660 or lower, opting for an FHA loan instead of a conventional loan with PMI can save you as much as $11,000.
If you recently experienced a credit problem.
FHA loans also have looser restrictions for time elapsed between certain problems you might have encountered, like a bankruptcy or foreclosure. If you are pursuing a conventional loan, you'd have to wait four years after a bankruptcy or seven years after a foreclosure to qualify. But if you're looking for an FHA loan, you can qualify just two or three years, respectively, after the event.
Academy Mortgage is one of the top independent purchase lenders in the country as ranked in the 2015 CoreLogic Marketrac Report. Visit www.academymortgage.com to find a loan, get a rate, or calculate your payment today.
There are a few numbers everyone should know to help them understand their own financial health, such as their income and how much they have in savings. One important piece of information for homeowners is their mortgage rate.
"Your mortgage rate is one of the most important numbers in your financial life, and there's a good chance that one of your neighbors has no idea regarding how much he or she is paying," Holden Lewis, a senior mortgage analyst at Bankrate.com, explained.
"In some cases, refinancing can earn you a lower interest rate."
Though your rate is a crucial piece of information, many mortgage lenders aren't shocked by the results of the survey, according to CNBC. Buying a home is an emotional purchase, and after looking at homes, speaking to lenders, real estate agents and the many other people involved with the homebuying process, many consumers are just focused on getting everything squared away so they can move in.
Your mortgage rate determines how expensive your home loan is. It's important to know what the rate is so that you can make smart decisions about whether to refinance. In some cases, getting a second mortgage can earn you a lower interest rate, which would save you money over time.
"The issue is not so much that they don't know their mortgage rate," Lewis commented. "It's that they don't know that rates are a whole lot lower now."
Refinance rates now
According to Bankrate, refinance rates fell Jan. 10, providing many homeowners the opportunity to lower their monthly mortgage payments.
The 30-year fixed-rate refinance rate landed at 4.04%, down from 4.09% the week before.
The 15-year fixed-rate refinance rate ended at 3.16%, down from 3.25% the week before.
The 10-year fixed-rate refinance rate came to 3.04%, down from 3.16% the week before.
While these rates trended down compared to the week prior, the overall direction of rates seems to be going up. Bankrate reported that a month ago, the 30-year fixed-rate refinance rate was 4%.
It's unknown where rates will go in the coming months. The economy has been in a good place, with the number of jobs increasing and consumer spending going up in the fourth quarter of 2016. As expected, the Fed also voted to increase the federal funds rate at the end of the year. Some economists think the Fed will make a similar move during one of the first four Federal Open Market Committee meetings of 2017, GOBankingRates reported.
Even though 2017 began with a dip in mortgage and refinance rates, there's always the possibility that they'll reverse direction in the future. Homeowners who don't know their mortgage interest rates would be doing themselves a favor by looking it up and comparing it to refinance rates available to them. Refinancing soon could save them some money in the long run.