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When you apply for a mortgage, a lender will decide how much money its willing to give you to put toward the purchase of a house. That doesnt necessarily mean that you should take out a loan for the full amount. In some cases, borrowing the maximum a lender will allow could leave you overwhelmed by debt.

How Lenders Decide How Much You Can Borrow
Lenders base their mortgage decisions on several factors, including credit score and length of credit history, but the most important factor is a borrowers debt-to-income ratio. This is the sum of all debts, including a mortgage, credit card minimum payments, and vehicle, student, and personal loans.

Most lenders want borrowers to devote no more than 28 percent of their gross income to a mortgage, property taxes, and homeowners and private mortgage insurance. They also want total debt payments to be no more than 36 percent of gross income. If your debt-to-income ratio is higher than these limits, a lender may reject your application or approve you for a loan at a high interest rate.

Reasons Not to Borrow as Much as You Can
A lender may approve you for a mortgage up to a high amount, but it might not make sense to borrow the full amount if your other, non-home-related debts are high. For example, if you have credit card payments that, when combined with home-related expenses, would put your total debt payments over 36 percent, you could find yourself struggling to meet all your obligations. You might have other expenses that take up a significant portion of your income. For instance, daycare costs, college tuition and medical bills could make it impossible for you to afford a high mortgage payment, even if a lender offered it.

Consider your long-term financial goals. If you have credit card bills you want to pay off quickly, you can pay more than the minimums due each month, but that might make your total debt payments too high to manage with a large mortgage. If you plan to buy a new car sometime soon, a car payment plus a high monthly mortgage payment could be hard to manage. If you want to set aside money for retirement or for your childrens college education, take those goals into account.

Dont Take on More Debt Than You Can Handle
When shopping for a home, its easy to get in over your head. Just because you can borrow a large sum of money, that doesnt mean you should. You probably have several other current and future expenses that could affect your ability to manage mortgage payments. Look at your entire financial picture and make a responsible decision that will allow you to cover all your bills and live comfortably.

This article is intended for informational purposes only and should not be construed as professional or legal advice.

Published with permission from RISMedia.

If you bought a house with a mortgage, odds are the lender required you to pay for private mortgage insurance (PMI). This insurance is designed to protect the lender if you stop making payments on your home loan.

Although lenders typically dont require PMI if a homebuyer makes a down payment of at least 20 percent, most buyers put down less and end up having to pay for PMI as part of their monthly mortgage payments. This extra expense can add thousands of dollars to the cost of homeownership over the years.

The good news is that you dont have to pay for PMI forever. According to the Consumer Financial Protection Bureau, federal law gives you the following rights to eventually remove PMI from your loan:

Request PMI Cancellation
You have the right to request that your mortgage servicer cancel PMI when youve reached the date when the principal balance of your mortgage is scheduled to fall to 80 percent of the original value of your home. This date shouldve been given to you in writing on a PMI disclosure form when you received your mortgage.

You can ask to cancel PMI earlier if youve made additional payments that reduce the principal balance to 80 percent of the original value of your home. For this purpose, original value generally means either the contract sales price or the appraised value of your home at the time you purchased it”whichever is lower (or, if youve refinanced, the appraised value at the time you refinanced).

If you want to cancel PMI, your request must be in writing and you must have a good payment history and be current on your payments. In addition, your lender may require you to certify that there are no junior liens, such as a second mortgage, on your home. Your lender can also require you to provide evidence, such as an appraisal, that the value of your property hasnt declined below its original value. If the value has decreased, you may not be able to cancel PMI at this time.

Automatic PMI Termination
Even if you dont ask your servicer to cancel PMI, your servicer still must automatically terminate PMI on the date when your principal balance is scheduled to reach 78 percent of the original value of your home. For your PMI to be cancelled on that date, you need to be current on your payments on the anticipated termination point. Otherwise, PMI will not be terminated until shortly after your payments are brought up to date.

Final PMI Termination
There is one other way you can stop paying for PMI. If youre current on payments, your lender or servicer must end PMI the month after you reach the midpoint of your loans amortization schedule. For 30-year loans, for example, the midpoint would be after 15 years have passed. This final termination applies even if you havent reached 78 percent of the original value of your home.

Notably, different rules might apply for Federal Housing Administration and U.S. Department of Veterans Affairs loans, and some lenders and servicers may also allow for earlier removal of PMI under their own standards.Contact your servicer regarding PMI questions.

This article is intended for informational purposes only and should not be construed as professional or legal advice.

Published with permission from RISMedia.

Mortgage lenders typically want borrowers to put down 20 percent of the purchase price toward a home. For borrowers who do not have a lot of money for a down payment, it can be difficult to qualify for a mortgage. Some lenders approve mortgages with less money down, but those borrowers are considered a higher risk than those who put down 20 percent. Lenders often require borrowers with lower down payments to obtain private mortgage insurance (PMI). This is insurance provided by a private company that is designed to protect the lender if the borrower is unable to make the monthly mortgage payments.

When Is Private Mortgage Insurance Required?
If you obtain a mortgage through a conventional loan and put down less than 20 percent, the lender will likely require you to purchase PMI. It may also be required if you refinance your mortgage and you have less than 20 percent equity.

In some circumstances, you may be able to obtain a conventional loan with a low down payment that doesn’t require PMI. In that case, you will probably have to pay a higher interest rate. That option may or may not be more expensive than purchasing PMI. Talk to your lender about your specific circumstances and how much each scenario would cost. Also talk to a tax advisor about how paying for private mortgage insurance would affect your taxes and whether you might be better off accepting a higher interest rate to avoid paying for PMI.

If you do not have enough money for a 20 percent down payment, you may be able to qualify for an alternative type of loan, such as one through the Federal Housing Administration (FHA). Talk to your lender to find out how your down payment, credit score and other factors would affect your payments and whether that would be cheaper than obtaining a loan with PMI.

How Is PMI Paid?
Depending on the lender, you may have one or more options to pay for PMI. Some lenders charge monthly premiums that are added onto the cost of the mortgage. Others require a one-time premium paid at the time of closing, and some require both an upfront fee and monthly payments. Some lenders allow borrowers to choose the option that works best for them, while others offer only one method of payment.

Carefully Weigh Your Options
If you do not have enough money for a 20 percent down payment, you may still be able to obtain a mortgage, but you could have to pay extra for private mortgage insurance. Consider various options and talk to your lender about how much a variety of scenarios would cost you, both monthly and over the course of several years, to decide which type of loan and down payment amount are best for you.

Published with permission from RISMedia.

Before listing your home, improving curb appeal is a top priority. Luxury homebuyers want a turnkey residence that requires zero work before they move in and if your house is looking a little worse for wear from the street, they could be turned off before even stepping through the front door.

In order to get your home in tip-top shape, be prepared to show a little love to the exterior. Here are a few ways to add major curb appeal that will have potential buyers excited when they pull up to your property.

Landscape Design

Bringing in a professional landscape team to do their magic is always a good idea. Lush plantings and flower gardens, as well as neatly pruned hedges and trees, will instantly transform your front yard.

Stage the Front Porch

If you want prospective buyers to feel that the home is welcoming before they even get inside, staging the front porch is the way to do it. Potted plants and beautiful light fixtures will set the tone and, if space allows, a wooden bench or small seating area always feels inviting.

Tend the Exterior

Power washing the exterior and adding a fresh coat of paint or stain will have your home looking brand new in no time. Replacing the front door, or simply painting it a charming new color, can also do wonders. If your garage door is nothing special, upgrading it to a stylish, high-end model is another opportunity to set your home apart.

Welcoming Walkway

Dont make visitors trudge across your lawn. A thoughtfully designed stone or pebble path that meanders through your front yard is the perfect way to guide them from the curb to your porch.

Redo the Driveway

Often overlooked, a stately driveway can have prospective buyers impressed upon arrival. There are plenty of different options to explore depending on the style of your home, like cobblestone, pea gravel, or blue stone.

Published with permission from RISMedia.

Nothing says fun like a home bar. From intimate dinner parties to full-blown banquettes, it provides a space to gather and enjoy conversation. For luxury buyers who plan to frequently entertain friends and family, this is a lifestyle amenity that is worth getting excited over. If youre considering adding a watering hole to your home, here are a few tips to help design the perfect bar.

Identify the Details
First, youll have to determine where the home bar will work best. Pick a space that doesnt interrupt the flow when youre playing host and is large enough to meet your needs. Consider seating, storage, as well as equipment that will be needed, and try to incorporate it into or nearby your entertaining areas.

Get Inspired
Think about the atmosphere and dcor of your favorite bars or restaurants. Try to pinpoint what it is that you love about them or, next time youre there, make note of the ambience and how it can be replicated with your home bar.

Tailor to your tastes
The style of the bar should be both consistent with your homes aesthetic and a reflection of what you enjoy drinking. Is this going to be an Art Deco style bar where youre serving up Manhattans or will it be a rustic vibe with craft beers on tap? If youre an enthusiastic mixologist, make sure youll have all the accoutrement to shake, muddle, and stir the latest concoction.

Presentation
As the epicenter of entertainment, theres an element of showmanship that needs to be taken into account. Its all in the details, like a mirrored backsplash or moody lighting that sets the tone. There should be a sense of cohesion, from the finishes and the upholstery to the bottles being displayed and how the glasses are stored.

Published with permission from RISMedia.