The Pros and Cons of FHA Loans

A 30-second read by Nicholas Scheibner: The federal government has provided home buyers with a few mortgage-buying options to help purchase a home.  Below are some of the Pros and Cons for Federal Housing Administration (FHA) loans.

An important note:  FHA loans are for Primary Residences only.

Pros:

  • Flexible qualification criteria-Minimum down payment is 3.5%. Keep in mind that the less money you put down on a mortgage, the higher the monthly payments will be.
  • Anyone can cosign, if needed, including a friend or parent. However, from a practical perspective, usually the co-signor is a family member.  If a friend co-signs for you, you need to put at least 25% down.  Note: If you are purchasing a multi-family house, even if a family member co-signs, you still need to put at least 25% down. 

Cons:

  • Monthly Mortgage Insurance never goes away for low-down-payment mortgages. If the borrower puts at least 10% down, the mortgage insurance will remain for 11 years. If they put less than 10% down, it will remain for the life of the loan. 
  • An additional fee of 1.75% is required. This can also be paid at closing or rolled into the loan.

Baron Financial Group consults with independent mortgage professionals in order to explore options available to clients.  If you are thinking of purchasing a new home, refinancing a mortgage, or consolidating a HELOC (Home Equity Line of Credit), lean on us to help you through the process. Please contact your Baron Team if you have any questions.

Tips to Avoid Phone Scams

A 30-second read by the Baron Team: It is not uncommon to turn on the news or read an article and hear about a new scam. Lately, you might have heard about the “Can you hear me?” phone scam, as recently reported by CNBC.

Whether such scams wind up being legitimate or just hearsay, here are some helpful tips to keep in mind. Below is a brief snapshot of some of the phone-scam tips provided by the FTC (Federal Trade Commission).  To read the entire FTC article, “10 Things You Can Do to Avoid Fraud,” click here.

  • If you don’t recognize the phone number, don’t pick up your phone.  (If it is in fact a friend, family member or acquaintance trying to reach you, they will probably leave a voice mail.)

  • If you do pick up the phone and suspect it is a telemarketer or if it is a robo-call, hang up the phone. Don’t give out any personal or credit card information.

  • If you received a call that you think might be a scam number, search the number or caller id information, along with the word “scam” on the internet, to see if other people have written any complaints.

  • The FTC offers a free scam alert service that will send tips about scams to your email. Read more at https://www.consumer.ftc.gov/scam-alerts.

Feel free to reach out to us for any other questions.

Not all CDs are the same…

A 90-second read by Anthony Benante: When investing in a Certificate of Deposit (CD), you may have more options than you think.  You can purchase a CD at a local bank or you can purchase CDs in your investment accounts (such as a taxable account, IRA or Roth IRA, etc.).  These are typically known as Brokered CDs.  Even though the CDs you get from the bank and the CDs in your investment accounts are called Certificates of Deposit, you should know that there are differences.  In either case, we would recommend that the CDs you invest in are fully covered by FDIC insurance.  If you would like to learn more about FDIC insurance coverage, feel free to ask us or you can go online to www.fdic.gov.

Purchasing CDs from your local bank: If you were to purchase a CD from a local bank that is FDIC insured, you would receive interest and would get your principal investment at maturity. If you receive regular statements, the value of your CD would most likely never change because it is not tradeable.  If for some reason you wanted access to your funds prior to maturity, you would most likely be subject to a penalty, such as 90 days’ worth of interest (but this should be verified individually). Other factors to consider are that local banks can offer “teaser rates” (rates higher than the market) for CDs to attract deposits, but those rates may not be available after your CD matures.  Unless you want to consistently move your money from institution to institution, using time and effort, you will be subject to the rates being offered only by your bank.

Continue reading Not all CDs are the same…