Gen X is on the move in the real estate market and the industry is taking notice. Â While there is a lot of talk about Millennials entering the market, you, Gen X, are pulling the train.
YouÂ areÂ buying first houses, moving up, or upgrading yourÂ properties -- in droves.Click to see today's rates (Aug 19th, 2017)
Youâ€™re looking for home loans and mortgage lenders to help you achieve your real estate goals within your time frame and budget. While youâ€™re not â€śgeneration meâ€ť -- youâ€™ve got too many responsibilities for that -- you want to be taken seriously.
Your requirements differ from other generations, but arenâ€™t too hard to grasp.
Between ages 36 and 54, Gen X isÂ wedged between Millennials and Baby Boomers.Â By population, you'reÂ the countryâ€™s smallest generation. But youâ€™re also now its wealthiest -- and the one with the most responsibilities. Those come with more expenses, making you cost-conscious.
Youâ€™re often caring for children, parents or both. Your bigger family means more house, and probably a larger mortgage.
If, like many Gen Xers, you own your own business, you need flexible financing options and an easy-to-navigate approval process.
With all thatâ€™s on your plate, you have a lot of needs, but not a lot of time. Itâ€™s essential lenders create home loan packages that fit Gen X requirements and work with you to find the best option.
Today, there are multiple home loan options that help you get financed fast. Hereâ€™s a quick overview.
Most first-timers don't have 20 percent down, because they don't have profits from selling a previous home. According to Realtor.com, 81 percent of first-timers put less than 20 percent down.
As a first timer, you have severalÂ low down payment mortgage options. The most flexible for those who don't qualify easily areÂ FHA loans. These mortgagesÂ allow credit scores as low as 500 with ten percent down and 580 with 3.5 percent down.
However, FHA insurance is expensive -- a 1.75 percent upfront premium, which can be added into your mortgage, and annual premiums, which you pay each month with your home loan. Conventional (non-government) loans are often cheaper, especially for those with excellent credit.
Fannie Mae offers a three percent down payment program called HomeReadyTM. This product has income-eligibility requirements, and is cheaper than comparable standard mortgages. Mortgage insurance is discounted, fees are capped, and your down payment can be a gift or grant.
If your income exceeds the limits for HomeReady, you can choose a standard 97 percent loan. It's still cheaper for most borrowers than FHA financing.
Freddie Mac foreclosures in Alabama, Florida, Georgia, Illinois, Kentucky, North Carolina, South Carolina, Tennessee, Texas and Virginia can be financed with the HomeSteps program. It allows a five percent down payment with no mortgage insurance and no appraisal.
What if you have no down payment? The USDA home loanÂ offers 100 percent financing for modest homes in rural or low-population suburbs. You must meet income limits to be eligible for the program, and your credit score must be at least 640.
For military and veteran households, Â VA loans might be the best first time homebuyer option. Another no money down mortgage, it offers flexible underwriting (no minimum FICO) and some of the lowest available interest rates.
Established homeowners have different needs and priorities. You are more likely to have a 20 percent down payment, because you'll have the proceeds from the sale of your old house.
If you also have excellent credit, you're in position to shop for your loan very aggressively. you're the type of borrower most popular with mortgage lenders, and you deserve to pay less.
How long did you have your previous house? If it was less than ten years, consider hybrid ARMs when you look for financing. They have lower rates than fixed-rate mortgages, and those lower rates are fixed for three, five, seven or ten years.
One issue that affects you is the timing of your purchase. If you are trying to simultaneously close on the sale of your current house and the purchase of your new house, you'll want a lender capable of meeting deadlines and keeping you in contract.
An inept lender could cause your deal to fall through. Choose someone who is responsive and experienced. This person will return your calls promptly, explain his or her recommendations, and be upfront about what Â will take to close your loan on time.
If you decide to improve rather than move, you have different financing choices. You'll consider a fixed second mortgage, a HELOC or home equity loan, or cash-out refinancing.
The fixed second mortgage offers an unchanging interest rate and payment, which makes budgeting easier. Because it's riskier than a first mortgage, your interest rate will be higher. It's just as important to shop for your lowest rate on a second mortgage as it is a first.
This loan is best when you need a lump sum for your home improvements -- if you're paying a contractor for a large project, for example.
The HELOC can be the cheapest loan to originate. Some lenders even do it for free. However, its rate is variable, leaving you vulnerable to rising interest rates. The HELOC is ideal for ongoing projects with several steps, when you don't know the exact cost and will be withdrawing money over time.
The HELOC may be convertible to a fixed loan after you've completed your project. Ask if this feature is important to you.
Your final option is a cash-out refinance. This allows you to refinance the loan you have, while adding extra money for your project. Because it's a first mortgage, the rate is lower. However, the costs are likely to be higher.
The only reason to choose a cash-out refinance is if you can improve on the terms of the loan you already have, and if it's cheaper to do this than to refinance your first and add a second. A good lender should be able to map out your options and help you decide.
One special cash-out refinance is the FHA 203(k). It lets you refinance your mortgage and add funds for home improvements, without the extra fees of a cash-out refinance.
Current mortgage rates, whether HELOC, first or second mortgage, are still very attractive and will help you minimize costs. But you can go further -- ensure that you spend the minimum by getting several quotes from competing lenders, and choosing the best deal.Click to see today's rates (Aug 19th, 2017)
The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.
The Mortgage Reports is invaluable. It's our primary source for information on housing finance.
Thaddeus C. Systems Analyst
I am an aspiring homeowner and The Mortgage Reports helps me daily. Thank you for your excellent information.
Elizabeth C. Librarian
Thanks to The Mortgage Reports, I have a new, very low rate for my home. I owe you so much.
2017 Conforming, FHA, & VA Loan Limits
Mortgage loan limits for every U.S. county, as published by Fannie Mae & Freddie Mac, the Federal Housing Administration (FHA), and the Department of Veterans Affairs (VA)