Gift-giving season is upon us — and did you know that you can potentially use gift money to help cover your down payment?

You most certainly can. However, there are some limitations and a few bases you’ll need to cover so your gift money is properly accounted for. Here are a few things to know:

Amount

There’s no maximum dollar amount of gift money that can go toward your down payment. But there might be a minimum borrower contribution depending on your loan, so we’ll double-check whether this applies to you.

Source

You’ll need to provide proof of where your gift money came from. If possible, ask the donor to gift it in a manner that has a paper trail, e.g., a bank transfer or check.

If you receive a check, it’s best to deposit it in person so you can obtain a receipt. Make sure your gift money is deposited into the account you’ll be using for your mortgage.

Who

There are certain rules for who can give you money toward your down payment, but they differ depending on your loan type.

Typically, any immediate family member, spouse or fiance is acceptable. Reach out if you’re unsure who can contribute gift money toward your loan.

Letter

A gift letter provides more information on the donor as well as written confirmation that they do not intend for you to pay the money back. Your letter should include key information such as:

• Their name(s), address and contact information.
• Their relationship to you.
• Exact dollar amount.
• The date it was gifted or transferred.

Signed confirmation that the money given does not need to be repaid.

Have questions about the right way to use gift money for your down payment? Let’s chat.

When you decide to retire, you’ll need to determine how much money it will take to live comfortably and remain financially sound. Social Security and retirement investments such as a 401(k) or IRA can help, but there may be times when you need more income. One often overlooked source of income is your home equity.

What Is Home Equity?

Home equity is the difference between the balance on your mortgage and your home’s current market value. For example, if you owe $90,000 on your home loan and your property is worth $350,000, your home has $260,000 of equity.

Equity can fluctuate based on the market. In a seller’s market, you may have more equity than in a buyer’s market. A real estate appraiser can provide you with an official valuation based on comparable home sales in your area. You can also get a general idea by reviewing real estate websites and searching for recently sold properties similar to yours in location, size, and age.

How to Turn Home Equity into Cash

Once you know how much equity you have, there are several ways to turn it into cash.

• Home equity loan or line of credit. A home equity loan generally offers a fixed amount of credit and interest rate that you repay over a set period of time, usually ranging from five to 15 years. A home equity line of credit is a revolving balance that can be drawn from when needed. Similar to a credit card, you make payments on the amount you borrow.
• Cash-out refinance. You can also draw on your home’s equity by doing a cash-out refinance. In this case, you refinance your mortgage for more than its current balance, taking the cash difference.
• Reverse mortgage. Another option for tapping into the equity in your home is generally available to homeowners 62 years or older. With a reverse mortgage, the lender makes payments to the borrower—the reverse of a traditional mortgage. The homeowner isn’t required to pay back the loan as long as it remains their primary residence, provided the borrower continues to meet all loan obligations, such as paying property taxes, fees, and hazard insurance, and maintaining the home. If the homeowner fails to meet these or other loan obligations, the loan will need to be repaid.
• Downsizing. You may decide your home is too large for your retired lifestyle or that you no longer need to live in an expensive area. You could sell your home and buy a smaller, less expensive place. This would allow you to keep some of the equity you had built.

Pros and Cons of Tapping Home Equity

Using your home equity can offer advantages, depending on the method you choose. Reverse mortgages, for example, allow you to tap into your equity while staying put and retaining ownership. And downsizing often comes with lower maintenance costs and work, and you won’t have to take on additional debt.

However, there are downsides. If you choose a new loan product, such as a home equity loan or line of credit or a cash-out refinance, you are taking on additional debt requiring monthly or another periodic repayment. This may not be the best choice if your income will be significantly reduced due to retirement. And while downsizing has its advantages, you’ll have to move, which can be emotional as well as costly.

There is no one-size-fits-all way to use your home equity for retirement. The best option for you will depend on your personal situation. Speak with a financial expert and take time to carefully consider each option to make the right choice for you.

By Stephanie Vozza

Mortgage rates have risen since the beginning of the year. As home prices still remain high and economic uncertainty creeps in, you might be considering pausing your home search.

Is that the right move, though? The truth is, no homebuying journey is the same — and that’s exactly why the potential costs and savings of waiting are best determined on an individual basis.

Unsure whether to hold off or not? Here are some helpful points to help guide your decision making:

Mortgage rates were at unusual, record lows.
In the ‘90s, for example, interest rates were between 8% and 10%. They could always go down, but it’s important to keep in mind that the low rates we saw until this year were a result of pandemic policies, so it’s unclear when we could see rates like that again.

Higher rates can bring some market relief.
Higher rates can help reduce competition, which could help ease buyer pressures like bidding wars. They can also help keep homes more affordable by slowing price growth.

Real estate trends are often location-specific.
Most of the market trends in headlines are national averages. In reality, your market of interest might not behave anything like this (and can differ even by neighborhood), so it’s always important to check in with your agent about local real estate market conditions.

Personal finance, goals and needs matter most.
Timing the market isn’t as helpful as it might sound if it isn’t in line with your economic situation and accommodation needs. Are you paying for rent while you wait? Factors like this can cut heavily into the potential savings from waiting to buy.

Want to get the full scoop on your best mortgage loan options? Reach out today for personalized, expert help.

Buying a house can be challenging, but the work doesn’t stop once you sign those closing papers.

As a new homeowner, there are a number of tasks you’ll want to prioritize to ensure your home is safe, secure and primed for success before moving in.

Here are seven tasks to put on your post-closing to-do list:

1. Locate the breaker box and water shut-off valves. Knowing where and how to shut your water and electricity off can be critical in emergencies like a burst pipe.
2. Change the locks. There’s always a chance copies of the keys you received are floating around somewhere. A locksmith can install brand-new locks on all entryways before you move in.
3. Reset the garage door opener. Similarly, the garage door opener will need resetting. You might want to have the manual lock changed out as well.
4. Install or replace batteries in carbon monoxide and smoke detectors. Make sure these safety devices are operating at move-in — though hopefully you’ll never need them.
5. Meet the neighbors. Get the names and contact info of your next-door neighbors. You never know when members of your new community could lend a helping hand (or vice versa), so the sooner you introduce yourself, the better.
6. Check and replace air filters. For optimal performance, HVAC systems need new filters about every three months. Check the unit and note the correct size and brand as soon as possible.
7. Clear the gutters. Clogged gutters won’t drain properly and can potentially damage your roof. It’s a good idea to check on your gutters seasonally after moving in.

Need help covering home repairs or buying your new home? Get in touch to discover your options today.

Adjustable-rate mortgages (ARMs) are a hot topic for a reason: Not only can they help borrowers avoid committing to higher interest rates, but initial rates for ARMs have also remained lower than fixed-rate mortgages.

For example, these were the average rates in late May:

• 30-year fixed-rate mortgage: 5.1%
• 5/1 ARM: 4.2%

Seems like a no-brainer, right?

Not quite — important details are hidden behind these numbers.

Here’s what you need to know about ARMs for financing or refinancing your home:

1. The rate is temporary.As per the name, ARM interest rates are not meant to last. This means the aforementioned 5/1 ARM would only offer that 4.2% interest rate for the first five years; rates adjust yearly thereafter.

The higher current rates are, the more people who believe these adjustments will provide lower rates later — but their rate could increase instead, and there’s no way to know for certain when you sign.

2. Rate adjustments are capped.Adjustments have a maximum potential increase or decrease each period. The rate cap is important to make note of when reviewing loan terms.

That being said, it’s possible avoid steep rate hikes using strategies like refinancing into a fixed-rate mortgage. However, exit plans can come with caveats: Refinancing, for example, could mean losing progress in your amortization schedule.

3. There are many different ARM options.The first number represents the fixed-rate period (e.g., five, seven or 10 years) while the second refers to adjustments (e.g., every year or six months). This means a five-year ARM can be either a 5/1 ARM or a 5/6 ARM.

The variety creates differing risk (and reward) levels; shorter fixed-rate and adjustment periods can be more volatile but can offer lower interest rates.

Want to find the right mortgage for you? Reach out to discover your best options.