Dino Rossi
RE/MAX Preferred Properties | 617-312-3910 | [email protected]


Posted by Dino Rossi on 12/13/2020

Photo by Vlada Karpovich from Pexels

Buying a second home is an exceptional opportunity. You can expand your real estate portfolio, creating an investment strategy for building wealth over the long term. It’s also nice to have a home, one you can use on the weekends to get away. Whether you want to buy a home on the beach, on a lake in a densely wooded area or a home across the country, your first step is securing financing.

Know the Costs of Buying a Second Home

Purchasing a second home does mean more responsibility. It may mean a second mortgage, insurance costs and property maintenance. You’ll be paying utilities, upkeep and taxes on a multiple properties. Using this information, calculate how much you want to spend each month in these areas. Then, you can start looking for the home that fits.

Work to Build Your Down Payment

Buying a second home affordably is easier to do when you can apply a sizable down payment. Most often, home buyers need between 3 and 20 percent of the purchase price available as a down payment. The more you have, the less you finance or the larger of a home you can safely purchase.

With second homes, you may have additional avenues for securing that down payment. This includes savings, of course, but it may also include borrowing against the equity in an existing home to use as a down payment.

Choosing a Loan Program for Your Needs

One of the challenges of buying a second home is proving to lenders you can afford the mortgage payment and other costs. There are loan programs available to help you, but the options are somewhat limited in terms of federally sponsored programs. You may have used a VA or FHA loan, for example, to purchase your first home. These are generally just for the primary residence, not second homes.

However, there are other loans available to you. Conventional loans, which are still some of the most commonly sought-after loans available, are available to most people. Lenders will look at things such as:

  • Credit scores
  • Repayment history on existing loans
  • Debt-to-income ratios
  • Income reliability
  • Property value
  • Like any other home loan, it will be backed by the value of the home you purchase. In that way, the home must be worth at least as much as you plan to borrow.

    Debt-to-income ratios tend to be a big factor for most lenders. Fannie Mae-based loans often require a ratio that is up to 45 percent if you have at least 25 percent down and a moderate credit score. That means your monthly payments need to be under 45 percent of your gross income.

    It’s also important to consider how you plan to use the property. Lenders need to know if the home will be vacant (getting insurance for it can be difficult). They also want to know if you plan to produce a second income from it. If so, you need to ensure your loan covers this type of use.

    The good news is that most conventional lenders off second home loans. Find the dream home you’ve been looking for, and then work with a lender to secure the purchase.




    Categories: Uncategorized  


    Posted by Dino Rossi on 11/29/2020

    Image by Credit Commerce from Pixabay

    Finding financing for a home could be as simple as applying for a conforming FHA loan or it could be as difficult as having to locate a portfolio loan or even a combo loan. What you need depends on the real estate you are buying. Most people buying a primary residence get a conforming loan, whether it is conventional or government-backed.

    Conforming vs. Non-Conforming

    The first thing to determine is whether your loan is going to be conforming or not. A conforming loan for a single-family unit must be under $510,400 in most areas and $765,600 in other areas. The Federal Housing Finance Agency sets the rates. If you have to borrow more, you will need a jumbo loan or a piggyback loan. A common piggyback loan is where you pay 15 percent of the price, then take out two mortgages: one for 80 percent of the purchase price, then a second mortgage for 5 percent of the purchase price. You can work the percentages however you need them based on the purchase price. The piggyback loan keeps you from going into jumbo loan territory and possibly paying higher interest rates.

    Conforming Loans

    Conforming loans are conventional or government-backed loans. A conventional loan usually has a higher interest rate because it’s riskier to the lender. A government-backed loan, such as a VA or FHA loan is guaranteed by the federal government, thus it is less risky to lenders. Because of the lower risk, you get a better interest rate as long as your credit is good.

    Adjustable vs. Fixed-Rate Loans

    If interest rates are low and are projected to stay low, you can get an adjustable-rate loan to save a bit on the interest rate. As interest rates change, so does your mortgage payment. Adjustable rates are based on a certain index. For example, if your base interest rate is 4 percent, which means your interest rate will never go lower than that, and the Libor London rate is 1 percent, your rate is 5 percent. If the Libor London increases by a half percentage point, so will your loan. However, if it decreases by a point, your interest rate also lowers by a point.

    Adjustable-rate loans are risky for the buyer because you don’t know if the rate will significantly increase over the life of the loan. If you plan on refinancing or selling the home after a few years, an adjustable-rate might be beneficial.

    A fixed-rate loan means that your interest rate does not change over the life of the loan.

    Portfolio Loans

    You might have a hard time finding a loan because you are self-employed, your credit isn’t the best, or you are buying a property that doesn’t conform to most lenders’ standards. A lender doesn’t sell the loan on the secondary market, but instead holds it in the bank’s portfolio. These loans are riskier for the lender and will often have a higher interest rate.




    Tags: Financing   home loan   loan  
    Categories: Uncategorized  


    Posted by Dino Rossi on 11/10/2019

    For those who want to acquire a house, it helps to get your finances in order. That way, you can quickly and effortlessly navigate the homebuying journey without having to worry about how you'll afford your dream house.

    There are many quick, easy ways to straighten out your finances before you embark on the homebuying journey, such as:

    1. Assess Your Credit Score

    Your credit score ultimately can play a major role in your ability to secure a great mortgage. If you understand your credit score, you may be able to find ways to improve it prior to conducting a home search.

    It is important to remember that you are entitled to a free copy of your credit report annually from each of the credit reporting agencies (Equifax, Experian and TransUnion). Request a free copy of your credit report today, and you can take the first step to evaluate your credit score.

    If you find that your credit score is low, there is no need to worry. You can always pay off outstanding debt to improve your credit score over time.

    Also, if you identify any errors on your credit report, you'll want to address these mistakes immediately. In this scenario, you should contact the agency that provided the report to ensure any necessary corrections can be made.

    2. Look Closely at Your Monthly Expenses

    When it comes to buying a house, it generally helps to have sufficient funds for a down payment. The down payment on a house may fall between 5 and 20 percent of a home's sale price, so you'll want to have enough money available to cover this total for your dream residence.

    If you evaluate your monthly expenses, you may be able to find ways to save money for a down payment on a house.

    For example, it may be beneficial to cut out cable TV for the time being and use the money that you save toward a home down payment. Or, if your dine out frequently, cooking at home may prove to be a substantial money-saver that could help you speed up the process of saving for a down payment.

    3. Get Pre-Approved for a Mortgage

    With pre-approval for a mortgage, you can enter the housing market with a budget in hand. Then, you'll be better equipped than ever before to narrow your search to houses that fall within your price range.

    To get pre-approved for a mortgage, you'll want to meet with banks and credit unions. These financial institutions can teach you about different mortgage options and help you assess all of the options at your disposal.

    Furthermore, don't hesitate to ask banks and credit unions about how different types of mortgages work. This will enable you to gain the insights that you need to make an informed decision about a mortgage based on your financial situation.

    If you need extra help as you prepare to pursue a house, you may want to hire a real estate agent as well. In fact, a real estate agent can help you find a high-quality house at a budget-friendly price in no time at all.




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    Posted by Dino Rossi on 3/9/2014

    Having a baby can be a very expensive venture. A 2012 report from the U.S. Department of Agriculture says raising a child from birth through age 17 will cost a typical middle-income family a whopping $235,000. That is a lot of money so it is important to plan for your financial future, prepare for your new baby and protect your growing family. Here are some tips to get you and your family on the right track: 1. Purchase life insurance. You will need life insurance to protect your family. It is not as expensive as you think and you will get better rates when you're young. Talk to your life insurance company about what amount of insurance you will need to protect your family. 2. Start planning for college. It may seems years away but you need to start college planning right away. According to the College Board, the average cost of tuition and fees for the 2011-12 school year was $8,244 for a public college and $28,500 for a private one, 3. Update your will. If you have a will you will need to update it and appoint a guardian for your child. If you do not gave a will now is the time to get one. 4. Prepare your baby budget. Babies are expensive, from diapers to child care you will need to look at how your baby will affect everyday expenses. Go to the store and price out diapers and other baby items, consider if you will be living on one income or paying for child care, this will help you figure out if you need to cut spending to afford your new baby. 5. Use a flexible spending account. If your employer offers a flexible spending account, you may be able to use it to pay up to $5,000 in child-care expenses a year. You can also use flexible spending account for health care costs. Money in a flexible spending account is exempt from income taxes. While having a baby is expensive it is also exciting. It may also be a time when you are considering a housing change.