Dariany Santana: Hey guys, we’re here at Carrara Pastries, and we’re going to have some amazing pastries, as well as asking some top finance questions. I’m so lucky to be joined by the financial expert. Jamie Cavanaugh, she’s the COO of Amerifund Home Loans, and we have a bunch of loan questions today. I’m excited to dig in, and I’m excited to ask a bunch of questions that I know you guys want the answers to. By the way, if you have any questions for her, also I want to know, have you ever had their pastries before? If so, what are your favorite? Comment below.
The coffee’s flowing. The desserts are going, and I’m with financial expert Jamie Cavanaugh, she’s the COO of Amerifund Home Loans. And what are we talking about today?
Jamie Cavanaugh: We are talking about down payments. And how to save money for a home.
Dariany Santana: How to save money for a home. Okay. Obviously, a home is a massive and most likely people’s biggest purchase ever. Sometimes I hear that you need 20% down to buy one. What is the truth about that?
Jamie Cavanaugh: The truth is that’s a myth. Everybody sees things online about how you have to have 20% down. You have to have you don’t. There are down payment options for everybody. If you are a veteran, you can qualify for loans with zero down. FHA loans are catered to first time home buyers and allow as little as three and a half percent down. And they’re even conventional options for people with top-tier credit that allow as little as 3% down.
Jamie Cavanaugh: So there are tons of options out there for everybody with very little down to twenty thirty forty percent(20%, 30%, 40%).
Dariany Santana: And you’ve mentioned this FHA loan before. How does that work?
Jamie Cavanaugh: FHA loans are the perfect loan for first time home buyers. They are great loans. If you have limited credit, challenging credit, or not a lot of down payment. They’re a great loan if all three of those things apply to you. So FHA loans are backed by the federal housing administration, which basically means that they are government backed, and the purpose of those loans is to help. First time home buyers get into a house.
Dariany Santana: I’ve heard the term mortgage insurance. Even your mortgage needs insurance. What does that even mean?
Jamie Cavanaugh: So, mortgage insurance goes by a couple of different acronyms PMI, M I.PMI stands for private mortgage insurance. MI mortgage insurance. All that it really does is it insures the lender. Who’s lending you hundreds of thousands of dollars in the event that you have a tough time making your mortgage payment on any given month. So mortgage insurance is going to apply anytime you have an FHA loan, no matter how much down. And anytime you have a conventional loan, and you have more than 80% of your purchase price finance into that loan.
Dariany Santana: So when would you not need mortgage insurance?
Jamie Cavanaugh: So mortgage insurance would not be required if you were putting twenty percent (20%) or more down on your home, or if you had ten percent10% down. And you decided to do a first with a second mortgage behind it and split your financing up. So that one lender wasn’t taking on all the risk of the financing.
Dariany Santana: That makes sense. And is it like car insurance? It’s a fee that you pay every month.
Jamie Cavanaugh: That’s absolutely right. And the way that they calculate mortgage insurance differs depending on the kind of loan you’re doing. So for FHA loans, it’s a fixed amount, regardless of your credit score. Regardless of your loan amount. But for conventional loans, mortgage insurance is calculated based on a few different factors. Your credit score, the amount of your loan, the type of property you’re buying, the number of borrowers are all sorts of different factors. And the lender will actually go in and get a customized insurance quote. Just like you would do if you were shopping for car insurance.
Dariany Santana: Okay. So what’s the advantage of putting twenty percent ( 20%) down or not putting twenty percent 20% down. What’s the catch?
Jamie Cavanaugh: Well, you have to remember there is no catch, but the less you put down, the higher your loan amount, the higher your monthly payment, and the less you’re going to qualify for in terms of a sales price. So you could buy more house if you have more down. You may qualify for a little bit less of a sale price if you’ve got less of a down payment. Because; you’re going to have to show the bank that you can afford to make a higher mortgage payment every month.
Dariany Santana: Okay. I think for a lot of people, their parents want to help them with their first home. How does that work? If you get taxed on that?
Jamie Cavanaugh: Well, you should definitely consult your CPA to talk about the tax ramification, but I will tell you that gift funds. Which is what any gift from a direct family member is. They are completely acceptable on just about every loan type. Some loan types will require you to have about five percent (5%) of your own funds, but loans like FHA allow a hundred percent (100%) gift. And so you can definitely get gifts from family members and help you with your down.
Dariany Santana: We can only hope. Okay. Wow. So that was a lot. Is there anything else I should know in terms of a loans?
Jamie Cavanaugh: Well, it’s important that you understand that you don’t need 20% down to buy your first home and that there are down payment options for just about every scenario. And that is why it is so important to sit down with a mortgage specialist and talk about your unique situation and find the vessel and options for you.
Dariany Santana: It seems like there are a million different situations when it comes to buying a house, but it feels like almost everybody can if you really want to.
Jamie Cavanaugh: I think that’s really true. And I think that you know, we’ve talked about knowing before you began. The best place to start is really to understand the preapproval process because I say it all the time. The home search should be fun. Get educated, understand your options, that you could go out there, and know that you’re shopping for things that are in your price range. That you can afford. You understand all the steps, all the things that go into buying. And you can write some solid offers that sellers are likely to accept and hopefully realize the dream of homeownership.
Dariany Santana: Well, she’s answered so many questions, but if you do have any more questions to ask Jamie, please leave some comments below, or how can people reach out to you directly?
Jamie Cavanaugh: Well, you can visit our website at amerifund.com or give us a call anytime at 800 -570 loan (800) 570-5626.
Dariany Santana: Ooh. Well, all those questions made me built up a bit of an appetite. So I think it’s time to try their amazing pastries.
Jamie Cavanaugh: Oh, I cannot wait. Now, this is a Rum Baba. I’ve heard rum.
Dariany Santana: I heard rum. So I’m sold, and that’s a cheesecake, and you can never go wrong with cheesecake.
Jamie Cavanaugh: We’re totally sharing both of those.
Dariany Santana: Beautiful, okay guys, until next time.
Jamie Cavanaugh: Bye