19 Resources That Will Make You Better at Home Buying

Home buying is at the top of your list. It may sound easy. After all, what do you have to do? Look online, schedule some viewings, and then cross your fingers that your bid will be the winning one.

OK. That is one strategy. But have you factored in all of the other parts of home buying? Choosing a real estate agent, applying for a mortgage, accounting for closing costs, moving…Yes, there’s much more involved in home buying than you may think.

However, that doesn’t mean that home buying has to be difficult and don’t let the tasks involved deter you. To take the challenge out of your home buying experience and make it a successful one, take a look at these 19 resources:

  1. If you are dipping your toe into the home buying pool for the first time, where do you start? With the Massachusetts First Time Home Buyer’s Guide. (Plus, Fairway Independent Mortgage is a MassHousing Top 10 Partner Lender)
  2. Home buying isn’t one-size-fits-all. Whether you are a veteran or want to purchase a home in a rural area, you can find specific mortgage products for specific situations. It’s all there.
  3. It’s one thing to want to buy a home; it’s another to be able to afford one. To get a sense of your financial readiness, use this mortgage calculator to help you with your home buying budget. Even better – it includes taxes and interest in its calculations.
  4. Once you know what you may qualify for, you should know what you can afford. These two aspects are different. This link can help you make the right financial decisions that are comfortable for your situation.
  5. Who doesn’t like a deal? And guess what – you can find some, even when it comes to home buying. Of course, you need to qualify, but these home buying assistance programs can go a long way. It even lists available programs by city/town.
  6. Do you know what can influence how much you pay for a home? Where you live! Here is an overview of some of the places to live in the wonderful state of Massachusetts.
  7. You also need someone to help you handle that purchase – a trusted REALTOR®! Narrow down your search by state and city, among other filters. Or ask the Murphy Mortgage Team for a recommendation. We can suggest REALTORS®, who strive for the same level of excellence that we do.  
  8. Adjustable or Fixed? Conventional Mortgage? USDA? Oh my! There is a lot of financial jargon involved in buying a home. This resource can help you sort through the different types of mortgages.
  9. Need help with your mortgage application? Don’t understand how interest rates work? Take the mystery out of mortgages.
  10. Understand your purchase and sales contract and other legal aspects using a real estate attorney. You can filter your search based on state, city, qualifications, etc. Or better yet, ask the Murphy Mortgage Team for a recommendation. We work with some fantastic attorneys with over a decade of experience and thousands of closings under their belt.
  11. Some loan programs require a down payment. Did you know that amount may be a gift? Check out this article for more details.
  12. If you like a great collection of home buying links – all about home buying – all in one place, this link may be up your alley.
  13. Back to school! If reading documents online isn’t always your thing, you can get together in person with others for a great learning opportunity – that’s free too!
  14. There’s an important step in home buying – finding the right home! You can use our online search tool to look at homes in your area, another area, and anywhere you want, all from the comfort of your comfy couch. Plus, you’ll get a monthly home buyer’s report.
  15. Of course, the cost of a home doesn’t end once you have completed the transaction. Homes require regular maintenance so that they remain in good shape. Here are some basic maintenance tips to help take care of your home and plan for it.
  16. Once you buy your home, there is a very important next step: moving! Moving day, and the tasks leading up to it, can easily become overwhelming. This handy checklist can make your move that much easier.
  17. If you want to use a winning strategy in your home buying quest, another great resource is The Path to Homeownership E-Book. This comprehensive guide will discover home buying tips from start to end and everything in between. It’s easy to read, easy to understand, and best of all, easy to get.
  18. Need to organize, paint, pretty up, or renovate? You will find hints, tips, house tours, and suggestions so that your new house becomes your amazing home. Inspiration abounds!
  19. There’s the inside of your home – and then there’s the outside. Whether you have a large yard or a quaint balcony, outdoor decorating can beautify all areas of your abode. Take a peek at plants, landscaping, decor, and more.

Congratulations on making it to the end of our comprehensive list of home buying resources! Whether you are a first-time home buyer or an experienced one, we hope you found this resource list helpful. If you’re ready to take the next step, sign up for Homebot and get started on your personalized home search.

And as always, don’t hesitate to reach out by phone at 508-407-8300 or email BillMurphyTeam@fairwaymc.com if you have any questions – we’re happy to help!

Considering Rental Property As A First Time Homeowner

Looking for an affordable way to become a first time homeowner? One strategy is to buy a rental property as a first home. As long as you live in one of the units for a specified period of time, you can rent the others units out, using the money to cover the mortgage. Best of all, you can purchase the home with a single, low down payment mortgage. This is called owner-occupied investing.

A first time homebuyer can certainly purchase a rental property. This can be a wise strategy for an important reason that is often overlooked. One way to earn money in real estate is to have your property grow in value over time. The sooner one enters the market, the longer the property can accrue in value.

At the same time, it’s important to be realistic in your expectations. As with any investment, rental property isn’t going to produce a large monthly paycheck right away, and picking the wrong property could be a catastrophic mistake. Still, rental properties can be a lucrative way to invest in real estate as well as provide you with an affordable first home.

“The key point to remember is that real estate rentals provide three powerful wealth-building forces: rental income, asset appreciation, and mortgage reduction.”       

Justin Pierce, Washington Post

The mistake most first time landlords make is paying market price for any old home on the market. Any house at any price won’t necessarily make for a good rental. Step one to making money is to buy the house at the right price based on both market value and rental income. You need to find the bargains.

Pros and Cons

Here are some of the pros and cons of purchasing a rental property as your first home:


  • You can live in one unit and rent out the other(s) to help pay your mortgage.
  • You can buy an owner-occupied property with a low down payment.
  • After living in the property for a period of time, you can move to another property and rent out all the units for rental income.


  • You’ll have to manage tenants.
  • You’ll have less privacy living right beside your tenant.
  • You’ll be responsible for maintenance and repairs on all units.

Owner-occupied rental properties allow for FHA loans with low down payments. These loans mean that as a first time homebuyer you can break into real estate rental investing quickly. You need to live someplace anyway, why not live in your investment?

Owner-occupied rental properties are a great way to buy an investment property at any time in one’s real estate business. However, it is ideal at the beginning. One reason is that the loan requires that you occupy the property for a number of years, typically two. Only after that can you move out and on and rent the whole property out.

Being a landlord can be a good way to earn real estate income, but it’s not easy or glamorous. In addition to choosing the right property, prepping the unit, and finding reliable tenants, there are always maintenance considerations.

Do you know your way around a toolbox? How are you at repairing drywall or unclogging a toilet? Sure, you could call somebody to do it for you or you could hire a property manager, but that will eat into your profits. Property owners who have one or two homes often do their own repairs to save money.

“The great thing about owning a property is that you can leverage it to purchase additional income-producing properties. In addition to the rental income you earn, you’ll also gain equity as you pay down the mortgage and as the homes’ values increase.” 

Erik Martin, Home.com

Remember, this is not your “forever home.” You don’t have to be in love with the setting or neighborhood. If you’re like most first time homebuyers, you are most likely going to buy and move out in a handful of years, so it’s important to look for the best value. 

The Bottom Line

Buying an owner-occupied rental property can be a smart strategy that allows you to receive a steady income stream that will lower your overall homeownership costs. It can also help you build equity and create new financial opportunities for yourself. But you have to be prepared for the responsibilities that come with being a landlord and managing a rental property.

As always, I am here to help with all aspects of purchasing your first home – whether it be a single-family home or an owner-occupied rental property.

Considering Rental Property As A First Time Homeowner? Find out what you qualify for.

The Ultimate Checklist of First Things to Buy for Your New Home

Congratulations – you just bought a new house! Moving into a new house comes with a lot of things to think about. Once you’ve gotten your keys, you will need to make a few more purchases to make your house a home. Some of the first things to buy for a new house are self-explanatory while others might just surprise you, or they might be things you simply didn’t consider.

The biggest part is making sure you have everything you need. If you are wondering what are the first things to buy for a new house, having a checklist can be helpful when making your purchases. Some of the things on this list might vary depending upon your specific situation. Let’s take a look at the necessities room by room.

General Necessities

Before we look at each individual space, let’s take a look at what you will need for the house as a whole. First, let’s look at home safety. The absolute first thing to purchase for your new home is new locks. You want to have control of who has keys to your new home, so replacing the locks is an essential first safety step.

Smoke detectors and fire extinguishers are next on the list of safety equipment you will need in your new home. Most homes have smoke detectors already, but if they aren’t working properly or if you would like to upgrade them to a newer style, this is an essential first purchase. The partner to the smoke detector is the fire extinguisher. You will want to have at least one for your kitchen.

Cleaning supplies are often forgotten, but necessary. Not only will you need cleaners for each area of the house, but also you will need trash cans, trash bags, a broom, dustpan, mop, sponges or cloths, and a vacuum for carpeted areas. And, don’t forget lightbulbs. While they aren’t exactly cleaning supplies, they are easy to forget, and replacing them as you clean is a good way to make sure you have working bulbs.

Now that you have new locks and cleaning supplies, take a long look at the home. Do you want to paint? Are the floors, walls, or ceiling in need of repairs? If so, repairs and cosmetic changes are easier to do before you move furniture in. If you are a DIYer, then purchasing the supplies for that should probably be next on your list. If like most homeowners, you are not able to make your own repairs it would be wise to find a contractor and make arrangements well in advance of your closing so they will be able to schedule your repairs to coincide with your closing.

While we’re thinking about repairs, a small home toolkit would be a good purchase as well. A hammer, screwdrivers (both Phillips and flat-head), a tape measure, a pair of pliers, an adjustable wrench, an assortment of nails and screws, as well as electrical tape, duct tape, and super glue are good things to have on hand for needed minor repairs.

Kitchen Essentials

The kitchen is probably the most expensive of the area in your new home that you will be filling with essentials. Sometimes, your home purchase includes the basic appliances, but if not, those need to go on your buy immediately list.

If this is your first home, or if you simply want a fresh start, other kitchen essentials to be purchased include cookware, sheet pans, pizza pan or stone, casserole dishes, plates, bowls, drinkware, coffee cups, eating utensils, cooking utensils, and items to serve your food. You will also need at least one good sharp knife, a cutting board, a mixing bowl, and measuring cups and spoons. Don’t forget sandwich bags, aluminum foil, plastic wrap, and parchment paper.

Dishwashing essentials are also necessary. Dish soap for both hand-washing and a dishwasher if you have one, cloths or sponges, and towels for both drying dishes and drying hands are also essential. A draining cloth or draining rack is also necessary if you hand-wash your dishes. Don’t forget paper towels for little spills!

Bathroom Essentials

The most often forgotten thing in the bathroom is toilet tissue. Surprisingly, most people don’t think about the fact they will need to use their bathroom when they are excited about purchasing a house. Another necessity in the bathroom is a plunger because you never know when you might need to free a clog. Cleaning supplies specific to the bathroom, like a toilet brush, are good things to put on your buy first list.

Towels and washcloths are among the first things to buy for a new house. Unless you have glass shower doors, you will also want to purchase a shower curtain. If your new home has a window in the bathroom, you’ll want to cover that with something—blinds, a curtain, even a matching shower curtain.

Bedroom Essentials

In the bedroom, the first things to buy for a new house are blinds or curtains for the windows. Most people can’t sleep well with light pouring in through the windows, so covering them is one of the first steps to making your house feel like home. Unless you have a well-established household, bed linens are also on your must-purchase list.

Wrapping It Up

Hopefully, buying your new home has been an exciting adventure. Now that you’re ready to move into the new space, don’t forget to buy the essentials to turn your house into your home. This list is by no means all-inclusive, but we hope that it will get you started. If you know you are ready to take the leap into homeownership, my team and I are here to help! Start by getting pre-approved before the house hunt, and you’ll be checking things off your list in no time.

The Ultimate New Home Checklist by Bill Murphy FIMC NMLS 2289

ROAR Part 2: Quarterly Business Planning for Realtors 

In my previous blog, I introduced you to ROAR (Register of Attack Regimen), a different kind of business planning tool for Realtors that takes a more holistic approach. ROAR incorporates your life and business goals, helping you visualize your dream life and plan the steps to achieve it. 

A key component of ROAR is reviewing your successes and failures in your professional and personal life and then taking a hard, realistic look at the things that went wrong and the things that went right. This helps you decide which behaviors to continue and which to change so you can create a clear vision for your business. The process is not a quick fix and requires you to review and revise regularly.

In this second part of the series, we’ll take a look at how quarterly business planning can you become a more successful Realtor. 

Quarterly Reviews Are Essential 

The most successful business plans are those that are fluid and change with the changing needs of the business. When you use ROAR faithfully, you will find yourself reviewing and revising the plan regularly. 

How do you know if it’s time to adjust your strategies or change your entire plan? 

The simplest answer is by completing quarterly reviews. Some realtors feel that once a year is often enough to review their plans, while some do this monthly. However, at minimum, a quarterly review can be effective in helping you keep on track. 

The quarterly business planning process for realtors can be overwhelming, but it’s important to stay on top of your game. You will need to track data such as profit margins, listings, buyers, sellers, open houses, and advertising tactics that worked (or didn’t work) to make informed decisions about how you operate going forward. Reviewing monthly may not be feasible with time constraints and reviewing annually can give you an overwhelming amount of data. Quarterly reviews break your year into three-month segments, making the data you collect much easier to manage. 

For a more concrete example, let’s say you’ve had 10 closings this quarter. Of those 10, 8 were your listings, and 2 were represented by another agent. That means that 80% of your time was spent selling your listings, and only 20% was co-brokering other properties. If you planned to focus on buyers, then you would likely shift your plan to work with and target more potential buying clients. However, if you planned to work solely on listings, then you might want to adjust your plan to focus on getting in front of more potential sellers.

Why use ROAR?

ROAR isn’t your standard tool for budget planning for realtors. Traditional business planning tools for Realtors only focus on the numbers and don’t focus on work-life balance, but as a Realtor, your life and your business are intertwined. The tools that are available with ROAR look at your entire life and all your personal and professional goals. 

When you download the tools, you will find that they cover all aspects of your world. From fitness to finances, from your spiritual life to your relationships, you will find assessment tools in the ROAR packet. This is an important aspect because your business can thrive if you treat it as part of the whole of your life rather than as only a part of your life.

Quarterly business planning for Realtors in the ROAR tool involves self-assessment so you can review and revise your plan. These tools are valuable for the initial creative process of solidifying your vision for your business as well as formulating your plan to achieve your vision. You can use the assessment tools to help you and your network of associates work together more efficiently. When you are performing more efficiently, it has a trickle-down effect on those who work alongside you. 

Why Look at Life Events in your Quarterly Business Planning?

When you review quarterly, you have the chance to assess life changes beyond the workplace as well to determine how they affect your business. It’s been said that your life changes every 90 days, so reviewing quarterly can help you see these changes and control the good and the bad before it’s too late to correct. 

Do your profit margins indicate you need to spend more time showing homes? Do you need to spend more time on fitness, so you have more energy for your day? Are you missing key events in your family’s lives? 

You may be wondering why life events matter to your business planning, but as we said earlier, your business and life are intertwined. The effects of your personal life are reflected in your business practices. If you are unusually stressed outside the office, then you will have a more difficult time concentrating inside the office. 

Conversely, if things are going poorly at the office, it will affect other aspects of your life. This is why it’s best to look at business as a part of the whole rather than as the whole. The effects of a bad day, week, month, or quarter will not recognize imaginary lines between work and home life. So, does it benefit you to keep those lines in place? 

Final Thoughts

ROAR is a different kind of business planning tool for Realtors that takes an innovative approach, incorporating your personal and professional life into your plan. However, the process is not a quick fix and requires you to review and revise regularly. We recommend at least a quarterly review, since monthly may not be feasible and annually can come with an insurmountable amount of data. When used regularly, the ROAR tools can help you to become successful in life and business. 

Download the ROAR tools to get prepared for your quarterly business planning review today! 

ROAR: Business Planning Tools for Realtors

A solid business plan is essential for any business – especially for establishing goals, measuring successes, and analyzing problems. Real estate business plans are no different. By taking the time to plan your business goals and strategies, you can ensure that you stay on track and reach your targets. However, most business planning tools for Realtors focus only on the business and don’t focus on work-life balance.

As a Realtor, your life and your business are intertwined. You are the brand – and your life and your story are center stage when you present yourself as a trusted advisor to your clients. Your level of integrity, background, education, and experience are all factors that clients consider when choosing to work with you. Whether you represent a small brokerage or a national brand, you are still responsible for yourself and your level of success.

Traditional business planning tools for Realtors only focus on the numbers – how many clients, how much commission, how many houses sold, etc. Business is an integral part of your life, so the key is to include your life in your plan. Whether you’re just getting started in this industry or you’re looking for ways to improve your current business strategy, read on for some valuable advice.

We’ll be releasing part 2 of this series next week so keep your eyes peeled.

Traditional Business Plans

Business planning tools for Realtors traditionally focus on sales goals, monetary goals, metrics, and measurable data. You would begin by setting objectives like total sales volume, annual commission income, and the number of houses sold. Then you can map out the goals you hope to meet and outline the steps you need to take to achieve those goals.

Unfortunately, a traditional plan stops there. It’s business goals and sales metrics only. Traditional business planning considers your business as a separate entity within your life but doesn’t take a look at the other factors that contribute to your success.

The ROAR Difference

ROAR, or the “Register of Attack Regimen,” is a different kind of business planning tool for realtors that takes a more holistic approach. Created by Fairway Ignite, ROAR incorporates your life and business goals and helps you plan the steps to success for both. It all starts with visualizing your dream life and then creating the steps to get you there. This tool has three basic steps for business planning; let’s look at each of them now.

Make a Plan

Begin with reviewing and evaluating the successes and failures of the previous year. On the business side, know your numbers, including how many transactions you closed, total dollar volume, average commission per transaction, etc. Use journals, calendars, photos, and social media for jogging your memory on the life side. Then take a hard, realistic look at the things that went wrong and the things that went right in both areas so you can decide which behaviors to continue and which to change. From there, you can create a clear vision for your next year in business.

Set Goals

An integral part of business planning for realtors is defining your goals. Do you have an income goal? Do you want to win an award? Get a special designation or license? Decide what you want to achieve next year, then break that down into smaller actions that will get you there. ROAR encourages you to take a realistic look at all aspects of your business and personal life and set reachable goals for each area. Without holding back, take a hard look to define what you want from your life, family, future, fun, business, relationships, wellness, finances, and more.

It’s important to set measurable goals to achieve optimal success. ROAR encourages you to use “SMARTER” goals – specific, measurable, actionable, relevant, time-keyed, exciting, and risky enough to demand your best effort.

Work With Someone

Accountability can make a difference in your ability to achieve your goals and successfully implement your plan for success. ROAR encourages you to work with someone to help you stay grounded and realistic with your goals. Constructive feedback can help you see the areas you need to revisit. Working with another person improves our view to be realistic about our successes or failures. Sometimes a simple conversation with an accountability partner can help you get back on track with the goals you have set and are determined to achieve.

The Tools

Using the ROAR method of business planning for realtors is not a simple five-minute process. You have to really reflect on and define what you want to achieve in every aspect of your life. Worksheets for each area of your life are available to help you consider the things you find important and guide you on the right path.

Real business planning begins once you’ve completed the assessments for each area of your world. After completing ROAR, you will have a business plan that takes your values, goals, and needs into account, along with ways to track your progress and stay accountable.

Review and Revise Regularly

A business plan should not be set in stone; it is meant to be fluid and change as the business evolves. ROAR encourages you to review your plan each quarter and determine which things are working well and need editing. Take a look at your success and failures and learn from each experience. Keep the goals that work and change the ones that don’t. After your quarterly review, rework your plan based on your new information.

When new things occur in your life or business, you can review these plans and goals again. A fluid plan means it can change as many times as you need it to. Some people review their plan monthly, but ROAR recommends you should at least review your plan quarterly and annually.

Big Dreams Get Big Results

You are encouraged to create your plan as if your goals have already been achieved. This visualization technique helps you build confidence in your ability to achieve success.

Don’t be afraid to account for large profit margins, increased customer traffic, and overall business growth when making your plan. Set your goals so that you can take small, manageable steps toward achieving them. Create an action plan as if you have already achieved your goals rather than as if they are still long-range ideas.

Final Thoughts

As a Realtor, your business and personal life are intertwined. That’s why it’s important to use business planning tools that help you balance work and life while still achieving success. Most traditional business planning tools for Realtors only consider metrics and income goals and don’t incorporate your personal goals. ROAR takes a holistic approach that fuses your professional and personal goals to create a plan that helps you achieve a work-life balance.

ROAR can be a great way to help you and your business reach new heights. Download our free guide, which provides templates and worksheets for all of the important components that go into creating an effective plan tailored specifically around YOU!

Be on the lookout for part two of this three-part series which will dive deeper into your quarterly business planning.

So what are you waiting for? Start planning for success today!

Download our free guide to get started using ROAR for your own business planning needs.

How To Get Rid of PMI on a FHA Loan

If you’re in search of how to get rid of PMI on a FHA loan, you’ve come to the right place. Contrary to what you might think, the monthly premium you pay on your FHA loan does not have to be a permanent expense. In fact, you might be eligible to get rid of it right now. Keep reading to find out.

In this post, we’ll answer some pressing questions you might have, including:

  • What is PMI or MIP?
  • How does PMI work?
  • How to get rid of PMI on a FHA loan (yes, it is possible!)

Let’s get into the details of PMI and see how you can eliminate it from your monthly payment.

What is PMI or MIP?

Private Mortgage Insurance (PMI) is a monthly premium you have to pay on your loan. It’s a form of insurance that protects your lender if you were ever to stop making payments on your mortgage.

FHA loans are government-backed loans. These have their own kind of PMI, which comes in the form of the monthly Mortgage Insurance Premium (MIP).

Because PMI and MIP are basically the same things (one is for private loans, the other for government-backed loans), you’re probably going to use the term PMI regardless of your loan type.

How does PMI work for a Conventional loan?

PMI is required for a Conventional loan if your down payment is less than 20% of the home’s purchase price. It’s also required if you’re refinancing and have less than 20% equity in your home.

With a Conventional loan, your monthly PMI automatically goes away once you have 20% equity in your home.

How does PMI work on an FHA loan?

If you already own your home, or you’re still wondering what your down payment options are, you should know how PMI works on a FHA loan. PMI/MIP is required for FHA loans but may go away after a certain length of time (more on that below). Two types of MIP get applied to an FHA loan:

  • The upfront MIP – This form of MIP is a one-time fee equal to 1.75% of your loan’s original balance. This MIP is due at closing, but you could have it added to the balance of your loan if you’re unable to pay upfront. The good news is you might be eligible for a refund if you already have an FHA loan.
  • The annual MIP – This form of MIP is an annual expense equal to between 0.45% and 1.05% of your loan’s balance, broken up into monthly payments every year. The rate varies based on your financing term and your original loan amount. But the good news is that the amount you pay decreases over time because it’s charged as a percentage of your loan’s size.

Whether you used an FHA loan recently, or you’ve been living in your home for more than a few years, you’re probably wondering: can you get rid of your PMI? The short answer is yes!

How to get rid of PMI on a FHA loan

Now that you understand a little more about PMI on your FHA loan, it’s time to show you how you can get rid of it. There are two ways to get rid of PMI on a FHA loan:

  • If you’re eligible, your PMI will go away automatically after a certain period
  • The other way to get rid of PMI is to refinance to a Conventional mortgage

How to get rid of PMI: Wait for it

Before you contemplate refinancing, you might be eligible to have your FHA loan’s PMI go away on its own. This could be the case if you took out your loan before June 3, 2013, or if you put at least 10% down on your loan.

  • If you took out your FHA loan before June 3, 2013, your PMI would go away automatically once you have 22% equity in your home. The only catch is you must have made all your payments on time.
  • If you took out your FHA loan after June 3, 2013, and put at least 10% down, your PMI will go away after paying on your loan for 11 years.

However, many people choose the FHA loan because it allows for a smaller down payment (only 3.5%). If you recently bought your home and put less than 10% down, your PMI will remain for the life of your loan. But does that mean you’re stuck with PMI for the next 30 years? Not at all.

How to get rid of PMI: Refinance

One of the best ways to save money every month is to refinance your mortgage. This includes being able to eliminate your PMI from your existing FHA loan. In this case, you’ll need to refinance to a Conventional loan.

To do so, you need to have a loan-to-value (LTV) ratio of 80% or lower. In other words, you’ll need at least 20% equity in your home.

The final step is to team up with an experienced lender specializing in helping you refinance out of your FHA loan. Let them know that you’re refinancing to eliminate PMI, and they’ll guide you through the rest of the process, including:

  • Getting a new appraisal to see your home’s current value
  • Verifying your credit score
  • Verifying your income

From there, it’s as simple as applying and getting approved for a Conventional mortgage.

Ready to get rid of PMI?

Apply now to see what you qualify for, and we’ll show you how much you can save every month.

Want more info about refinancing?

Download this free flyer to discover more benefits of refinancing, including lowering your interest rate, shortening your term, and removing PMI.

What No One Tells You About Getting Your First Mortgage

If you’re curious to know what no one tells you about getting your first mortgage, you’re in the right place. You’re already caught up on what to know before getting a home loan, but you’d like a little more than just the basics. Whether you’re just starting to think about homeownership or you’re ready to get serious, you’re probably wondering things like:

  • What goes into a mortgage payment?
  • How much of a down payment do I need?
  • Can I change jobs during the application process?

I’m here to answer ten of the most important questions you might have about getting a home loan. Let’s dive into what no one tells you about getting your first mortgage.

What no one tells you about getting your first mortgage: 10 things

Your monthly payment includes more than just your mortgage

When you take out a loan for a home, you’re going to pay it back. That seems pretty straightforward. Once you get your interest rate figured out, some simple arithmetic is all you need to calculate your monthly payment, right?

There are actually four components of a typical mortgage payment: principal, interest, taxes, and insurance.

  • Principal — This is the loan amount you borrow. For example, if you finance $200,000 to buy your home, your principal is $200,000.
  • Interest — Like any type of borrowing, interest is tacked onto your monthly payment. The higher your interest rate, the more that gets added to your monthly payment, which could total hundreds per month. That’s why it’s key to search for the best rate you can get and work alongside a mortgage professional.
  • Taxes — Property taxes are also typically added to your monthly payment. These are assessed by your local government and go toward funding government services in your area. Your lender usually sets aside each month’s tax payment you make into an escrow account, and they’ll pay these taxes (usually twice per year) on your behalf.
  • Insurance — Private mortgage insurance, or PMI, is what gets added to your monthly payment if your down payment is less than 20% of your loan. The good news is that once you pay your loan down to 78% of its original value, you don’t pay PMI any longer and can instead save that money.

For a more detailed breakdown, check out this post about the mortgage payment structure.

Don’t have kids? School district matters still

Even if you don’t have kids, consider buying in an area with a good school district. This will give you a win no matter which way you look at it:

  • If you do eventually have your own children, you’ll have great schooling options and peace of mind when it comes to their education.
  • Kids or no kids, when it comes time to sell your home, being in a great school district helps you sell faster. Think of all the parents who will be eager to buy in order to provide the best schooling for their kids.

It’s also a safe bet for you to buy in a great district because it can protect the value of your home even if market values decline. Check out this article for more details about why you should buy in a good school district.

You don’t need 20% down

Though you usually put 20% down for a conventional mortgage loan, there are now many more options to help get you into your first home. Down payment assistance programs can help you cover some or all of your upfront costs. There are also low- to no-downpayment loans available through the federal government, such as:

  • FHA (Federal Housing Administration) loans, which allow you to have a down payment as low as 3.5%.
  • USDA (US Dept of Agriculture) loans, which allow you to finance 100% of your mortgage without a down payment.
  • VA (Veterans Affairs) loans, which allow you to finance 100% of your mortgage, get a low interest rate, and even eliminate PMI.

There are, of course, eligibility requirements for each of these loans. Don’t hesitate to get in touch with me to see if there are any down payment assistance or special financing programs you qualify for.

Don’t open or close lines of credit when you’re buying

Lenders are all about assessing risk when giving you a mortgage loan. What no one tells you about getting your first mortgage is that you shouldn’t do anything drastic to the lines of credit you have. You might be tempted to open a credit card so you can buy new furniture. On the opposite side of the coin (no pun intended), you might want to pay off some debt to show how financially responsible you are now. Here’s why you shouldn’t do either of these things:

  • Opening and using a new credit card will negatively impact your debt-to-income ratio, which is a key metric lenders use to calculate how much they’ll loan to you.
  • Paying off and closing a line of credit might give you some immediate relief, but could negatively impact your total credit utilization percentage. Say you have two credit cards each with a $2,500 limit. Of the $5,000 total credit, you have one card maxed out, while the other has only $500 on it — a total of $3,000 used, or 60%. If you’re suddenly inspired to pay off the $500 balance and close the card, you’ll now only have $2,500 total credit, of which you’re using 100%. Lenders see this as added risk, so if you do pay off your balance, resist the temptation to close the card.

Keep tabs on your credit

Going along with the previous point, it’s a good idea to keep an eye on your credit even after you’ve been approved for your mortgage. You can actually be denied a mortgage even after your closing disclosure document is issued, meaning you’re pretty much back at square one in terms of shopping for a lender.

Think about it this way: your mortgage lender is trying to see how risky you are. The less risky you are with your finances, the better your chances are of getting approved and closing on your home. A general rule is to just keep all your finances as steady as possible right before, during, and after you’re approved. Even then, it’s a good idea to have a few mortgage payments made before you open any new lines of credit.

Don’t move money around

Again, lenders are trying to assess how much risk they’re taking when lending you money. They want to be able to properly account for all your funds, which helps them meet compliance and eliminate any potential for fraud. If you’ve moved money around in recent months, especially any large sums from checking, savings, mutual funds, or even 401(k) accounts, it can be tedious for you to track down all the documentation that your lender needs. You’ll need a paper trail for any money you move, which could prolong the process and make you frustrated.

Don’t change jobs

Seeing the theme of this post yet? Lenders want to see you as a safe bet in terms of loaning you a large sum of money. Having a steady income is part of it. Now isn’t the time to switch careers or take a pay cut to pursue something else. If you’ve got a stable job, keep it — unless you have the opportunity to move up to a higher-paying role. In that case, you’ll need the offer in writing to prove your job change and your salary increase.

See what building and development plans are upcoming

Realtors always harp on location, location, location — and for good reason. That’s because the areas around and nearby your house will have a major impact on your lifestyle, whether you plan to stay for years or sell in the future. If you’re house-hunting in a neighborhood, visit the local planning office to see if there are upcoming development plans. You might have only a few neighbors now, but how will you feel if ten more houses get built in the next two years after you move in? What if traffic gets crazy when a shopping plaza is put in across the road? These kinds of things can also affect you when it comes time to sell because they’re the things potential buyers will see when they look at your property.

Get a good home inspection

Home inspections aren’t required, but they protect you as a buyer. They can reveal serious issues that cost a lot of money to fix. You might be tempted to save the inspection cost now, but you might end up paying for it many times over if you’re left dealing with a deteriorated septic system, cracked foundation, or defective furnace. Pay the extra money to get a quality home inspection, and take it a step further by hiring a contractor to quote you on the real cost of any needed repairs.

You are your landlord

When the dishwasher leaks, it’s your time and money that go into fixing it. Same with simple things like a slow drain, or more serious issues like a flooded basement. You are your own landlord. It’s up to you to care for and maintain your castle, so get advice or help wherever you can find it.

It’s never too early to prepare

No matter where you are in your house hunt, it’s never too early to prepare for the next step. Download my free Path to Homeownership Guide for details to keep you on track for a successful home purchase.

Feeling ready now?

Book your in-person or virtual home buying consultation with yours truly. See what it’s like to have 25 years’ worth of experience working for you.

How Much of a Down Payment Can Be a Gift? Here’s What to Know.

“How much of a down payment can be a gift?” This is a question people often ask me, especially first-time home buyers. The short answer is this: you can use gift money to pay for all or some of your down payment and closing costs. But there’s plenty more to consider when buying a home, and in this article, I’m going to clear up a few of the big concerns you might have surrounding down payments and gift funds.

Some of you are blessed to have wonderful parents, grandparents, or other relatives ready to help you buy your first home. And I don’t mean they’re just willing to spend their afternoons hunting for houses with you. More than that, they’ve promised to help fund your dream of homeownership with the gift of cold hard cash (in the form of a check, but more on that later).

Super nice of them, right? And then your lender tells you that there’s a little more to it than just dropping mom and dad’s check in the mail. Suddenly you find yourself feeling grateful…but stuck, too. Your head begins swirling with questions like:

  • What is a down payment?
  • Where can I get my down payment from?
  • How do I use gift money for a down payment?
  • I’m buying my relative’s house — what’s a gift of equity?

It’s a lot to think about. But don’t worry, because I’m here to answer all these questions and keep you on track for a smooth buying experience. Let’s go!

What is a down payment?

A down payment is a payment that you make upfront when purchasing a home. This is usually a lump sum of money that you’ve saved up over time and have been keeping safe in a savings account. The amount of your down payment typically adds up to be a percentage of your home’s total purchase price, which could be 5%, 10%, 20%, or more.

The point of a down payment is to show your lender that you’re invested in the home you’re buying and minimize the risk that they’re taking on giving you a loan. Keep in mind that it’s common for conventional loans to require a 20% down payment, but there are plenty of alternative down payment options I’ll discuss in a minute.

As an example, let’s say you’re looking to buy a home that costs $300,000. A conventional loan will require a down payment of at least 20% of the $300,000 price tag. In other words, you’ll need to pay $60,000 upfront. That means you’ll finance the remaining $240,000 and make monthly payments to pay down that balance as we advance gradually.

I know what some of you are thinking. 20% down is a lot, and you don’t have that much saved. What now?

There are still plenty of options that will get you into your first home. How do I know? Besides being a seasoned professional, I’ve got this 2020 survey from the National Association of Realtors showing that in 2019, first-time buyers made a median down payment of only 6%. I promise you’ll get there, and here’s how…

Where can I get my down payment from?

Your down payment will likely come from money you’ve been saving over time. But if you don’t have enough, you can make up the difference a few different ways:

  • Ask the seller: Though it’s not super common, sometimes all you need to do is ask, and the seller will credit you the down payment, or pay your closing costs, or even do both. But there are some restrictions, so be sure to ask a mortgage pro first.
  • Use retirement funds: If you have a 401(k), you’re usually allowed to borrow from it to help with your home purchase. Certain rules typically apply, though. Again, check with a mortgage pro if you’re considering this option.
  • Apply for assistance: Look into local, state, and federal programs that offer assistance to first-time home buyers.
  • Qualify for 100% financing: If you have really good credit, you may qualify for 100% financing through special programs or government loans such as a USDA loan.

Finally, gift funds are common and are what many people use to purchase their first home. If you’re receiving gift money, here’s what you need to know…

How do I use gift money for a down payment?

Gift money is money that someone gives you to help with your home purchase, and that doesn’t come with the expectation of repayment. When you’re using gift money, you need a letter signed by the donor stating that the funds are a gift and are not a loan that you have to repay. This letter will include things like:

  • The donor’s name and contact info
  • The donor’s relationship to you
  • The address of the home you plan to buy
  • The exact amount of gift money
  • The donor’s bank account info
  • Names and signatures of donor and recipient

Your lender will also likely ask for proof of the funds transfer from your donor’s account to your account, usually in the form of a bank statement. They essentially want a paper trail showing the donor’s intent and proof that you’re using the money for your down payment.

Gift money usually comes from family, but there are rules for this depending on who is servicing your mortgage:

  • Primary residence and down payment/closing costs: Conventional loans and most government loans allow gift money to be used for your down payment and/or closing costs if you’re buying the home as your primary residence. If you’re buying a second home or investment property, there are additional restrictions. Talk to a mortgage pro like me for details.
  • Family requirement: Fannie Mae, Freddie Mac, and FHA loans require gift money to come from a family member. However, VA and USDA loans don’t. There are some gray areas here, though, so contact me, and I’ll explain them.
  • Minimum borrower contribution: Depending on your lender, your property type, and your down payment amount, you might be required to contribute some of your funds in addition to gift money toward your down payment. This can influence how much of a down payment can be a gift, so get in touch to clarify your specific situation.

What’s a gift of equity?

Besides how much of a down payment can be a gift, people also wonder about what’s called a gift of equity. This is basically when someone sells a property to a family member or friend, selling for a lower price than the current market value. Imagine your uncle Gordy sells his $300,000 house to you for only $240,000. The $60,000 difference is considered the gift of equity and can serve as your down payment.

Want to see how far your gift money will go? Get preapproved

You can use gift money for your down payment and closing costs. But the first step is knowing how much home you can afford. Start your preapproval online or call the Murphy Mortgage Team at 508-407-8300.

If you’re still thinking, get our Path to Homeownership Guide so you can understand just what to expect during your buying journey.

Get Ready for These Condo Financing Changes Coming in 2022

Condo financing is going to change indefinitely come January 1, 2022. This is mainly because of the Surfside condominium collapse that occurred in Florida in June, where the 12-story Champlain Towers South crumbled and killed 98 people after much-needed maintenance was repeatedly deferred. The collapse renewed the regulatory focus on the condo market, and new rules are being put in place to prevent similar disasters from happening.

If you’re in the market to buy a condo, you don’t want to miss this post. I’m going to tell you what you need to know about the coming changes, the challenges you’re likely going to face, and what you can do to ensure the smoothest experience when securing your condo.

But first, let’s cover some basics about condo financing.

What is condo financing, and how does it work?

You’re probably familiar with some of the physical differences between condominiums and single-family homes. These differences are important because they are what make condo financing more tricky than financing a single-family home.

When you purchase a home, you’re buying the structure and the land attached to it. A condo, on the other hand, is a unit that’s attached to or within a larger building. When you buy a condo, you’re buying only the unit. You’d think that this would make condo financing simpler than financing a home, but it’s actually the opposite. That’s because condos are usually managed by a homeowner association, or HOA.

The HOA is made up of members of the condo community (including you). It’s like a small governing body responsible for setting rules for condo owners, providing amenities and maintenance, and more importantly, helping potential owners get the mortgage loans to become actual owners. And this is where a lot of the extra steps come into play regarding financing.

Now, you can take advantage of most of the same types of loans as if you were buying a single-family home. These loans include:

  • FHA
  • USDA
  • VA
  • Conventional

One major difference of condo financing is your loan will typically be subjected to a slightly higher interest rate than if you were buying a home. This is because your HOA can impose rules, restrictions, and special assessments that you can’t control, which lenders see as an added level of risk. If you want to get a better idea of what your interest rate might be, check out my post about 5 key ways to understand mortgage interest rates.

Another difference is that because your condo is part of property owned by a separate entity such as a developer, additional documentation must be submitted to your lender for review. The goal here is for your lender to ensure that the condo project meets regulatory requirements, which helps assess the risk they’re taking when financing your purchase. Part of this extra documentation often includes inspection and maintenance records on the structure itself. With the Florida condo collapse, there’s now more scrutiny surrounding this portion of the review/approval process.

How the Florida disaster impacts condo financing everywhere

The Champlain Towers South collapse was a first-of-its-kind tragedy. If you’re not familiar with what happened and what caused the tower to crumble, here are some key takeaways:

  • Significant repairs and maintenance were needed ever since the building opened in 1981
  • Inspections consistently revealed concerning problems with structural components such as concrete
  • Maintenance was continually deferred due to cost concerns

The collapse has prompted regulatory action, and Fannie Mae has changed its guidelines to more heavily scrutinize applications for condo financing. Because many residential condominiums were built more than 20 years ago, people are now concerned that similar disasters will occur as buildings continue to age. The new changes hope to address this concern, and will go into effect on January 1, 2022. I’ll get into some of those shortly.

The TL;DR for you (the buyer and borrower) is that the process is going to be even more tricky when the new year comes. The new guidelines will restrict your buying options to condo projects that are really on top of their maintenance and building codes. Underwriting times are also likely to increase and prolong your move-in date. That’s why it’s important to partner with an experienced loan officer like yours truly, who can steer you away from the hassles and anxiety that can come with the new guidelines.

What condo financing changes to expect in 2022

Here’s what you need to know regarding Fannie Mae’s upcoming guideline changes to condo financing:

  • If you buy on or after January 1, 2022, the changes will affect you
  • The new guidelines will be in effect indefinitely and apply to all condos, not just high-rises
  • You won’t be able to get a loan for a condo that’s been inspected and documented as having unsafe conditions
  • You won’t be able to get a loan for a condo that’s unable to pass inspections, or that hasn’t obtained a certificate/recertification of occupancy
  • When you do find an eligible condo to finance, your HOA must submit even more documentation to your lender, which can prolong your buying process

What else do you need to apply for a mortgage?

All these guidelines might seem scary, but don’t get discouraged. I’ve helped many buyers like you get into the condo of their dreams. Just call 508-407-8300 and let me show you how.

In the meantime, download our document checklist to see just what you need when applying for a mortgage.

New Down Payment Assistance for First Time Home Buyers Could Be On the Way

At some point during the home purchase process, you’ll likely search for down payment assistance for first-time homebuyers. After all, the down payment is usually the biggest barrier to homeownership. First-time home buyers often feel they either don’t have enough funds to put down, or they just let saving for a down payment completely deter them from even getting started on the path to homeownership. That’s where down payment assistance can be a benefit.

On a mission to promote homeownership, lawmakers are currently evaluating three pieces of legislation that could have significant benefits for first-time homebuyers. These programs are not guaranteed to pass in their current form and would likely look very different from what’s currently proposed. Yet, it’s worth keeping an eye out for what these initiatives would mean for first-time buyers as they indicate a turn toward a national conversation about the accessibility of homeownership and closing the gap in wealth between renters and homeowners.  

Here’s what we know so far.

The First-Time Homebuyer Act of 2021

This legislation would provide a tax credit of $15,000, or up to 10% of a home’s purchase price, to eligible first-time home buyers. This program aims to get more renters into homes and close the wealth gap between renters and homeowners in the post-forbearance world, where equity for homeowners is at a high and rent continues to rise higher and higher. In some cases, renters may even pay a lower monthly payment for a mortgage than their current rent, all while building equity and, ultimately, their net worth.

The assistance provided by this act would be available come tax time during the following tax year. However, according to the website of U.S. Congressman Earl Blumenauer (D-OR), who introduced the bill, “Taxpayers may elect to treat the purchase of their home as occurring in the prior taxable year to receive the credit sooner.”

While not finalized, specifics regarding eligibility requirements and other program elements are still being discussed in Congress. Expect negotiations to change the final version of this act should it eventually be signed into law. Still, the current version has some very attractive options for down payment assistance for first-time homebuyers.

The DASH Act

Another impressive piece of legislation currently being negotiated is the “Decent, Affordable, Safe Housing for All (DASH) Act. This would also give a $15,000 tax credit to those who qualify as first-time home buyers. Some programs allow you to qualify if you haven’t owned a home in 3 years or more – however, to qualify for the DASH Act, you must have never owned a home before at all and plan to live in the home you purchase. 

Unlike certain statewide programs that offer financial incentives to qualified buyers, this bill has income limits in place to make sure the funds go to home buyers who are in the most need of assistance.

Here’s what eligibility could look like:

  • The down payment credit could cover up to 20% of the home price, max of $15,000.
  • Your new home must be lived in as a primary residence.
  • Not available if you earn above $100,000 a year.
  • Not available if you earn more than $150,000 a year for those filing as head of household.
  • Not available if you earn more than a total of $200,000 if filing jointly.

Also, you’re expected to observe a five-year taxable holding period, so be prepared to live in the property for at least five years. If you move within those five years, you’re expected to repay the tax credit. Every year you spend outside of the property comes with a decreased amount owed. Your tax professional can guide and advise you on the best way to take advantage of this program if passed.

The Down Payment Toward Equity Act of 2021

If you’re a first-generation and first-time homebuyer, this one’s for you. Congress is currently evaluating a grant of $25,000 of down payment assistance for first-time homebuyers. The best part is that this is not a tax credit; it’s a grant. If passed, this money would be available to eligible buyers at the closing and would not have to be repaid if the buyer remains in the home for at least five years.

In total, the bill would give $20,000 in down payment assistance and another $5,000 of assistance for individuals deemed “socially disadvantaged,” as determined by ethnic, economic, or other objective factors. If passed, renters who have previously struggled with barriers to buying a home will have a huge advantage to start building wealth through homeownership.

If you meet the first generation requirement, have not purchased a home in the past three years, and meet the income guidelines, then this is something to keep an eye on.

You don’t need to wait to make homeownership affordable

I regularly work with first-generation and first-time homebuyers to help them begin building wealth through homeownership. While these three pieces of legislation have some very attractive components, they are still in the early stages and have no guarantees of passing. If you’re ready to jump into homeownership and don’t want to wait to see if this down payment assistance for first-time homebuyers is passed, then I can give you some options you may qualify for right now.  From government-backed home loans to credit-building strategies, I know how to get you on the pathway to homeownership. My website makes it easy to see what you qualify for – check it out today or contact me for one-on-one guidance through the entire process.

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