Thoughts From Dave Zitting, Chairman

Many American consumers believe that you need a 20 percent downpayment to purchase a home. That’s a myth, according to an analysis of home buying activity by the National Association of Realtors. Among those who take out a mortgage to purchase a home, the median downpayment is about 10 percent.

The National Association of Realtors’ Profile of Home Buyers and Sellers provides a glimpse into how Americans finance the purchase of their homes. Consider:

• Eighty-eight percent of home buyers finance their home purchase.
• First-time home buyers (comprising more than one third of all home buyers) typically finance 95 percent of the purchase price of a home (5 percent downpayment), compared with 86 percent for repeat buyers (14 percent downpayment).
• For 59 percent of home buyers, the source of their downpayment was wholly or partially their personal savings. Thirty-eight percent of home buyers used all or part of the proceeds from the sale of a primary residence, contributing to the larger downpayment for repeat buyers.
• For 13 percent of buyers, the most difficult step in the home buying process was saving for a downpayment. Of those buyers, nearly half said that student loans made saving for a downpayment more challenging. Forty-two percent cited credit card debt as being their primary challenge; 37 percent cited car loans.
• Of all home buyers surveyed, 65 percent were married couples, 18 percent were single females, 7 percent were single males, and 8 percent were unmarried couples.

Find more interesting statistics about buying or selling a home by reading the full report.

At PRMI, we believe in offering our customers choices in how they can apply for and manage their home loans. That’s why we offer a streamlined application process called ClickApproval. It’s a simple and secure way to apply for a mortgage via your computer or mobile device.

You can apply for a home loan quickly and easily knowing the information you provide is safe and protected. And if you have questions, you can easily get answers and chat with a PRMI loan specialist.

Would you rather apply for a home loan in person? Primary Residential Mortgage is one of the leading and most established residential mortgage lenders in the country, with more than 280 local branches across the United States. Our exemplary customer service, innovative products, and unwavering commitment to excellence allow us to provide our clients with a positive, personal home loan experience.

Get started with ClickApproval today by visiting our website. We also can help you find a branch at this link or by calling 1-800-255-2792. Whichever option you choose, you’ll be amazed at how simple and convenient it is to get a residential home loan.

Whether you’re buying or refinancing, you have a number of choices. One of those is your loan term. While the overwhelming majority of home buyers and home owners elect to go with the 30-year mortgage, you may be wondering if a 15-year home loan might be a better choice for you.

There are some definite advantages to going with a 15-year mortgage. The biggest benefit, of course, is that it provides homeowners the opportunity to pay off their loan in half the time of a 30-year mortgage. If you have the financial cushion, a 15-year mortgage can get you thinking about the day you won’t have a mortgage anymore! Not only that, but over the life of your loan, you’ll pay significantly less interest than with a 30-year loan.

The big downside to a 15-year loan — or any other shorter term home loan? The monthly payments are significantly higher and you’re locked into that payment for the life of the loan or until you sell your home or refinance. Use PRMI’s handy home loan calculator to run a comparison of the monthly payments of a 15-year and 30-year home loan with the same loan balance. You’ll also see the difference in the amount of interest you’ll pay over the life of the loan. Then stop by one of our convenient offices to discuss loan options with a PRMI loan officer. The 15-year home loan isn’t for everyone. But it could be for you.

No one likes to read mounds of paperwork when buying a home. But there’s one form you definitely don’t want to gloss over. The closing disclosure form is one of the most important documents you’ll review when buying a home. It explains the terms and costs of your mortgage.

Lenders must provide the closing disclosure form — CD for short — at least three business days before closing. The CD is the final report of the fees you will pay on your home loan. It’s a follow up to the good-faith estimate or loan estimate — LE for short — that was provided as an estimate when you first applied for your mortgage.

Here’s a sample of the closing disclosure form. Before August 1, 2015, the CD was known as the HUD-1 settlement form. The CD is designed to be a new and improved version of the HUD-1. It was created to be less confusing and easier to understand. It’s also required that it be provided to home buyers three days before closing, compared with the day of closing for the HUD-1.

It’s extremely important that you read your closing disclosure form and compare it to what you saw on the loan estimate. In most cases, the fees and terms of your loan should be close or the same as when you first applied for your loan. In other cases, there will be some significant differences, which can be explained by your loan officer. Here are some other items the Consumer Financial Protection Bureau recommends you should review:

Loan amount: This is the total amount you’re borrowing.

Interest rate: Make sure the rate is the same as the rate you locked in.

Monthly Principal & Interest. This is the amount you’ll pay each month in principal and interest only. This amount does not include homeowners insurance, mortgage insurance, homeowners association dues (if applicable) and property taxes. Those are included in Estimated Taxes, Insurance & Assessments.

Estimated Total Monthly Payment: Your total monthly mortgage payment, with principal, interest, insurance and taxes.

Loan term: The term of your loan in years. The most common loan term is 30 years.

Loan type: Check to see that your loan type (fixed rate or adjustable) is correct.

Cash to close amount: This is how much money you need to bring on closing day in down payment and closing cost funds.

Closing costs: Generally, home buyers pay an estimated 3 percent to 4 percent of the home’s sale price in closing costs.

Estimated total monthly payment: Your monthly payment may change over time as your property taxes and homeowners insurance costs increase. If your loan has an adjustable rate, your monthly payment also can change when the loan rate adjusts.

Once you’ve received your closing disclosure, it’s important to take the time to review it and ask any questions. Don’t hesitate to ask questions! At Primary Residential Mortgage, we believe home buyer education is extremely important. Asking questions is the key to becoming an educated home buyer and feeling comfortable with your purchase.

When buying a home, you have the option of selecting a fixed-rate home loan or one with an adjustable rate. ARMs are attractive to some home buyers today because the introductory rates — and monthly payments — often are lower than for fixed-rate loans.

With a fixed-rate mortgage, your rate remains the same over the entire term of the loan. With an ARM, you get a fixed rate for 3, 5, 7 or 10 years — depending on the type of ARM you choose — before the mortgage becomes adjustable. ARM rates can go up or down each year after the introductory period based on a particular index value. Most ARM rates are based on the Cost of Funds Index (COFI), the one-year Treasury yield or the London Inter-bank Offered Rate (LIBOR).

With an ARM, you could save money each month in the early years of the loan because the introductory rate on ARMs is lower than with fixed-rate loans. But you run the risk of having your mortgage rate increase after the introductory period ends. Most people who take out adjustable-rate mortgages are betting that they will have sold their home before the rate adjusts.

Still, there’s a chance you may still be in the home at that point. According to the National Association of Realtors, the average homeowner remains in his or her home for 10 years. That’s why you want to know before taking out an adjustable rate mortgage how soon and how frequently your mortgage rate and monthly payment could go up, how high your mortgage rate and monthly payments can go with each adjustment and if there is a limit on how low your interest rate could go.

Questions? We’re here to help you evaluate all of your financing options.

Mortgage rates are on the move. When is the best time to “lock” your mortgage rate? And for how long should your lock be effective? If you’re buying or building a home, you’ll have to answer both of these questions.

Unfortunately, there’s not a one-size-fits-all answer to either one. You’ll want to work closely with your loan officer to determine the timing of your rate lock. With an existing home, many buyers wait until the seller has accepted their offer to lock in their rate. With a new home that could take several months to build, deciding when to lock in your rate gets a bit trickier. You’ll want to discuss the matter with your builder and lender before making the decision.

Part of the decision of when to lock in a rate depends on how long your lock will be effective. Typically, borrowers are given the option of locking in for 30, 45, 60 or in some cases, even 90 days or more. Locking in a rate for longer periods of time, however, can come at a cost.

Loan lock provisions can vary, so make sure you understand your own. What is the effective date and expiration date of your lock? Read the fine print and ask for clarification if there’s something you don’t understand. Do you know what happens if there’s a delay and you aren’t able to close on your home before your lock expires? More questions? Just ask!

A home equity loan or line of credit from Primary Residential Mortgage can be a great way to fund your next home renovation project. But which projects offer the greatest return on your investment when it comes time to sell your home? You can get a pretty good idea of which upgrades offer a better ROI than others by taking a look at Remodeling Magazine’s Cost Vs. Value Report.

The report shows, on average, how much of the cost of 21 popular remodeling projects you may be able to recoup when a property is sold. Data is available on a national and regional basis, as well as for cities. The report can help you home in on individual projects that provide the biggest bang for your buck.

According to the report, homeowners on average stand to recoup 98.3% of the cost of replacing a garage door, while the installation of a steel entry door returns on average 91.3%. The addition of a wood deck has an average return on investment of nearly 82.8%, followed by minor kitchen remodel (81.1%); siding replacement (76.7%); new vinyl windows (74.3%) and bathroom remodel (70.1%). Some of the most costly projects offer the lowest return on investment, such as the installation of a backyard patio (47.6%) and major kitchen remodel (59%).

The report doesn’t take into account, of course, the enjoyment you and members of your family get from the remodeling project while you still live in the home. If you’re planning to stay put in your home for a long time, remodeling might be less about return on investment and more about how much pleasure it brings to your daily life. For more information on the Cost Vs. Value report, go to this link.

Are you ready to purchase a home, but you’re not sure if you qualify for a mortgage? In the latest Housing Opportunities and Market Experience survey by the National Association of Realtors, non-homeowners were asked about what they believe would prevent them from purchasing a home. Limited income was No. 1 (47 percent of respondents), followed by student loan debt (30 percent), rising rent (28 percent) and health and medical costs (14 percent).

Non-homeowners were also asked the potential reasons why qualifying for a mortgage would be difficult. Again, income was the top factor (45 percent), followed by less-than-perfect credit (34 percent) and too much debt (26 percent). Another 29 percent said they lacked the financial knowledge or did not know the first step needed to qualify.

If you want to purchase a home, but you’re not sure if you are in the right financial situation to do so now, it’s never too early to visit Primary Residential Mortgage and discuss your financial situation. Visiting us early can provide you with the information you need to be a better home loan candidate and can provide an outline of what you need to do to be in a position to buy a home. You can learn about the wide variety of home loan programs available. To qualify for a mortgage, you might need to work on increasing your credit score, pay down some student debt or do a better job of keeping your expenses under control over a period of time leading up to applying for a home loan. Put yourself on the path to homeownership, Visit us today.

When making an offer on a home, you’ll need to decide how much you’re going to offer for the property and how much to offer in earnest money. The earnest money deposit is an important part of the home buying process. It’s an amount of money that is used to show sellers that a buyer is serious — or ‘earnest’ — about buying their home. Sellers rarely accept offers that don’t include an earnest money deposit.

Your real estate agent will help you decide how much earnest money to offer. In some cases, you’ll offer a set amount, such as $1,000. In other cases, a percentage of the amount offered on the home — such as 1% to 2% — is more appropriate. In the many competitive housing markets, an earnest money deposit of as much as 3% to 4% or more might be warranted. If you end up purchasing a home, your earnest money is typically held by a title company or the seller’s broker — depending on the state in which the transaction is taking place — and will be applied toward your down payment and closing costs.

Larger earnest money deposits — especially in competitive housing markets and in multiple offer situations — can signal to a seller that you’re serious. What happens to that money if the home sale doesn’t go through? A purchase contract should spell out instances in which an earnest money deposit would be refunded, such as if the buyer’s financing falls through, a home inspection finds a costly hidden defect or the home in deemed uninsurable.