Donna Hennessey is a Mortgage Planner with extensive experience in Conventional, FHA, VA, USDA and New Hampshire Housing mortgage financing. She has been in the mortgage industry since the mid 80’s. With more than 25 years of experience she has help many first time homebuyers, move up buyers and Investment buyers find the right mortgage program to fit their needs. She is licensed in the state of NH.
Donna has been on the board of trustees for the Lakes Region Scholarship foundation for the past 6 years and is currently serving as the Vice President. She is active in the local Board of Realtor and Chambers of Commerce. She is currently enrolled in the Leadership Lakes Region Program. She has resided in Canterbury NH for the last 19 years with her husband Jack and son TJ.
I would appreciate the opportunity to work together to develop client relationships that last a lifetime. .
Which is smarter: renting a home or buying a home?
Withbelow 4 percent and rents rising in many U.S. cities, there's a good case to be made for buying a home -- purchasing power is high and mortgage payments are low.
Despite the cliché, though, renting a home isn't always "throwing your money away"; and, buying a home isn’t always "a good investment."
Some renters are better off renting for another year, and some renters should be looking to purchase immediately.
As you're trying to decide for yourself -- should I rent or should I buy -- ask yourself a few questions. The answers will point you forward.
"SHOULD I RENT OR SHOULD I BUY?"
When mortgage rates are low, it can be cheaper to make monthly mortgage payments than to make monthly rent.
However, the decision between whether to rent a home or to buy one is about more than just the monthly payment. There are benefits to homeownership, just as their are benefits with renting.
In order to determine which path is best foryou, consider your answers to the questions below and addto your bucket of research tools.
You may find that homeownership is your best way forward; or, that you're better off waiting to buy.
Is your income stable?
Mortgages are available with part-time income and but having a steady, somewhat-predictable income can make the month-in, month-out regularity of paying a mortgage less stressful.
Before buying a home, you should also have cash reserves to tap in case of an emergency. Your reserve fund should be able to cover no less than six months of your total monthly debt obligations.
Renters who lack emergency savings, or who rely on overtime checks and tips to make ends meet should consider another year of renting, at least.
Is your family status changing?
For home buyers who plan to get married within the next few years, or who plan to have children, buying a home can be premature. It's too soon to know what your housing needs will be, exactly.
You don’t want to be live in home that’s too small for your family’s needs, for example, and you wouldn't want to buy a home that's bigger than what you need, either. What if you have twins? Or, triplets?
Life rarely pans out as expected, so when you're anticipating changes in family status, it can make sense to remain a renter for, at least, the short-term.
How long do you want to stay?
When you buy a home, it's customary for the home seller to pay the commissions due to the real estate agent(s). Therefore, if you're already planning your next change of scenery, it's smart to consider the cost of selling of your home.
According to the Federal Housing Finance Agency (FHFA), homes are appreciating at a rate of roughly 5% per year. This is also close to the average commission paid to sell a home.
Therefore, selling your home within 1-2 years of purchase may result in your "profit" getting used on your agent. You may also lose tax benefits associated with owning a home for such a short period of time.
Consider renting if you plan to move or sell within 24 months of purchase.
Do you have a down payment?
Unless youqualify for a VA loan or 100% USDA Loan, expect to have at least 3.5 percent of the home's sale price available for a down payment. There are three percent down payment programs available to you, too, but unless your credit score is over 740, you may be assigned a high mortgage rate in order to use it.
Making low downpayments, though, means that you're borrowing more money. And, although today's mortgage rates are below 4%, payments can be high.
There is a trade-off that every home buyer makes betweendownpayment andmonthly payment. If you don't have much to put down and don't have much to make payments, consider renting for another year.
Will buying make you "house-poor"?
There are more costs to owning a home than just your monthly mortgage payment. Different from renters, homeowners are responsible for making repairs to the home when damage occurs or appliance break.
For example, a leaky dishwasher or broken HVAC can costs hundreds or thousands of dollars to repair. Fixing a roof can cost even more.
If you've spent everything you have on buying the home, and tied up your paycheck in your mortgage, you're what's known as "house poor" -- all of your wealth is locked up in your home.
Don't be house-poor. If you can't set aside two percent of your home's value per year for home repairs and maintenance, consider renting another year.
RENT OR BUY? DECIDE WHAT'S RIGHT FOR YOU.
For all renters considering whether to buy a home or rent for another year, the answer will be a personal one. Mortgage calculators can assist with the decision, but your lifestyle and your tolerance for risk is what's most important.
Take a look at today's real mortgage rates now. Your social security number is not required to get started, and all quotes come with instant access to your live credit scores.
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.
Mortgages Made Easy
Your home is likely the most expensive purchase you will ever make - and the largest amount you will ever borrow. Yet, the mortgage loan documents have always been shrouded in mysterious legal language and complicated financial percentages. Now, that's a thing of the past.
Starting October 3rd, lenders must present borrowers with two streamlined, easy-to-read documents that allow them to understand costs and compare mortgage products. Fora quick tour of those documents go to Bankrate.com.Here's what homebuyers (and realtors) need to know about the two new consumer friendly mortgage documents:
1.The Loan Estimate. The new Loan Estimate form allows you to easily see the facts of your loan - including the amount of the total loan borrowing, the monthly payment, all of the closing costs, individually broken out. It also clearly shows any unusual features of the loan --such as if it has an adjustable interest rate (with disclosure of how much the payment can rise over the life of the loan) or any prepayment penalty. And, it clearly displays the total amount of interest you will pay as a percent of the loan amount over the life of the loan.
2.Five Year Comparison. One of the most interesting new features of the Loan Estimate is the simple comparison of costs and payments over the next five years, and how much those payments have reduced the principal of the loan. That is the easiest way to compare loans side by side. Your goal is to pay out the least total amount over those five years - and reduce the loan principal by the greatest amount.
3.Interest Rate Lock. One of the least understood aspects of a mortgage deal is the "lock" on interest rates. The new loan estimate form clearly shows whether you are "locked in" to the rate (and points, and any lender credits) being offered - and exactly when, down to the hour and minute, that lock expires.
4.The Closing Disclosure. This is the second new document, and it replaces several confusing older forms. For starters, it lets the borrowers know exactly what cash they will have to bring to the table at closing, including all costs for appraisals, title search, etc. The form clearly shows what your monthly payment will be - and the component parts that go into escrow each month, including payments for homeowner's insurance, mortgage insurance, property taxes, and interest.
5.Three Day RuleIn addition to the simple disclosures both of these forms provide, there is one other aspect of the new mortgage forms that benefits consumers.These documents must be delivered in writing to the consumer three days before the closing!Any last-minute changes in rates or terms trigger another three day delay. So the borrower gets time to read and understand all the terms and costs.
Some mortgage companies will be scrambling to make the new 3-day deadlines, so maybe you should request a longer "lock-in" period. But online firms such asGuaranteedRate.comsay they are so streamlined that the three day advance notification will not be a problem.
The CFPB deserves credit for getting this new consumer-friendly mortgage process put into place relatively quickly. The documents tell consumers exactly what they are paying, and what they are getting. But the one thing it cannot tell them is whether they can really afford those payments. For that, home buyers should do some soul-searching and perhaps some credit counseling. And that's The Savage Truth.