Showing posts from 2017

August 18 - Why An Adjustable Rate Mortgage Can Be Beneficial

Why An Adjustable Rate Mortgage Can Be Beneficial

Adjustable or Fixed? That’s one of the decisions you’ll need when considering a new mortgage either for a purchase or for a refinance. When rates are at relative lows and the expectation is to keep the property well into the future it can make sense to latch onto a fixed rate loan. A fixed rate loan is much easier to budget for as the home owner knows how much the mortgage payment will be throughout the life of the loan. It’s easier to plan for. Pick out a fixed rate term, lock in the rate and forget it. But does that mean an adjustable rate mortgage is rarely an option? Should borrowers ever even consider a variable rate loan? The answer, even in times of low rates, is yes. There are times when an adjustable rate mortgage can be beneficial.
Adjustable rate home loans can have an interest rate change at various points throughout the life of the loan. For a 1-year loan adjustable rate loan, the rate can change once per year based upon a…

August 17 - Why a 15 Year Mortgage Makes Sense

Why a 15 Year Mortgage Makes Sense

When you talk to your loan officer and get an interest rate update more than likely the loan officer will turn directly to the 30 year fixed rate loan. Why? Because it’s the most popular loan choice, that’s why. It’s also the most heavily advertised and promoted. When lenders quote and advertise a home loan program they also are required to quote the appropriate annual percentage rate, or APR. Lenders have multiple loan programs from which to choose from fixed to adjustable to variable but there really isn’t the time or space when doing so to quote every loan program across the board. Instead, the 30 year loan term is the most common and most familiar with borrowers. But are borrowers short-changing themselves when they only look at a 30 year term? Let’s look at why a 15 year mortgage can make sense.
There’s a tradeoff between the 30 and 15 year loan. The 30 year loan, because it’s spread out over a longer period, will have lower monthly payments com…

August 16 - What Are the Biggest Obstacles to Home Ownership?

What Are the Biggest Obstacles to Home Ownership?

A recent survey asked renters a multitude of questions in order to get a better handle on what motivates renters to become home owners and two matters stood out- saving enough for a down payment and credit questions. Renters have the opportunity to check on their own credit profile for free at a site supported by the three main credit repositories of Equifax, Experian and TransUnion. This site is Yet far too often renters don’t check their credit and that can keep many from home ownership simply because there are mistakes on the report suppressing scores. However, the biggest obstacle by far was saving money for a down payment and closing costs.
As rents keep hitting record highs that also means renters have less disposable income to put back every month in a savings account. Mortgage lenders employ an ability to repay formula that compares gross monthly income with housing costs. Housing costs include amou…

August 15 - 3 Things You Need to Know About Mortgage Preapprovals

3 Things You Need to Know About Mortgage Preapprovals

You’ve read here before about the important distinction between a preapproval and a prequalification and why the distinction is important. First, when you make an offer on a home the sellers want to see how serious you are about the process and whether or not you’ve even talked to a mortgage company. Second, with a preapproval you can shop for a home with the knowledge that all you need next to do is find a property and provide a copy of your signed sales contract to your lender. Beyond that, here are three things you need to know about mortgage preapprovals.
Documentation. Be prepared to provide your fair share of paperwork. When a lender reviews an application for a preapproval the lender realizes there is no property as of yet but documents the loan application is if there were. Your credit report is pulled and credit scores examined. You’ll be asked to provide your two years most recent W2 forms along with recent pay check stubs…

August 14 - The Value of Mortgage Refinancing

The Value of Mortgage Refinancing

For those who currently have a mortgage and are perhaps curious about refinancing, is there a bona fide way to determine if refinancing is a good idea or not? Simply making a few queries about refinancing and soon online ads appear wanting to know if you’d like to refinance and why you should. But is there an independent method to find out if a refinance makes sense? Is there truly a value refinancing a mortgage? Yes, but it does take a little math to get to that point.
Home owners can have various motivations about refinancing. For most refinance transactions the primary reason is because interest rates have fallen and current market rates are lower than what is currently on the note. Mortgage rates have been at or near historical lows for years now and even though most expect rates to gradually rise over the next several months and perhaps into 2018, rates are still very attractive. All one needs to do is research where the 30 year fixed rate has be…

August 11 - The Benefits of an FHA Cash Out Refinance

The Benefits of an FHA Cash Out Refinance

Do you have an FHA loan? Are you thinking of refinancing to get a better rate, change the term of the loan or switch from a variable rate loan to the stability of a fixed? Then you may also want to tap into the equity you have while you’re in the process of refinancing your existing FHA loan. There are two types of FHA refinancing. The most common is what lenders refer to as a “streamline” refinance. A streamline is an option when replacing one FHA loan with a new one. It’s referred to as a streamline due to the reduced documentation needed to close the loan.
How much documentation is reduced? There are no credit report or credit score requirements. There is no need to verify employment or even income. There’s no need for an appraisal, either. As long as there is no more than one payment made more than 30 days past the due date over the past 12 months and no such payments within the previous six, the existing FHA loan is eligible for the strea…

August 10 - Start Building Your Wealth Through Home Ownership Today

Start Building Your Wealth Through Home Ownership Today

You may have heard that real estate has created more wealth for more people than any other asset class but you may not be clear on how and why. There are those that invest in real estate and hold onto the property for both positive cash flow and property appreciation. Such investors may own multiple single family homes for those reasons and for some that’s their full time job. But you don’t have to be a real estate investor to take advantage of the benefits home ownership provides. Real estate investors charge more than enough rent to pay for all the expenses of owning the property including the mortgage payment, property taxes and insurance plus all maintenance costs. If you’re ever heard the phrase “let your tenant pay your mortgage for you” that’s what it means.
When you send your rent payment each month in return you get a place to live. But that’s a negative cash flow and an expense. You don’t get anything in return when you…

August 9 - Is HARP 3.0 on the Horizon?

Is HARP 3.0 On The Horizon?

Following the downturn of the housing industry in 2007-2008, millions of homeowners found they owed more on their home loan than the home itself was worth. So, is that a big deal? If you’re trying to sell the home it’s a very big deal. When borrowers begin to fall behind on their mortgage payments at some point many feel the only way out is to sell the property but if the local real estate market is in the middle of a slump they won’t be able to sell the home for enough cash to pay off the mortgage. They’re upside down.
The Federal Reserve made multiple attempts to rescue the market by lowering rates. Lower rates would mean borrowers could refinance into a mortgage with lower payments and avoid foreclosure. But the catch-22 in all that was there needed to be equity in the property to be eligible for a refinance. Upside down borrowers were stuck. They couldn’t refinance and they couldn’t sell. Enter HARP, the Home Affordable Refinance Program introduced in …

August 8 - 3 Tips you Must Know Before Buying a Vacation Home

3 Tips You Must Know Before Buying a Vacation Home

Most people who decide to buy a vacation home typically get the idea as the result of actually renting a vacation home instead of staying in a hotel. The home rental business is booming as vacationers can now search for homes to rent instead of looking at a hotel. A home is more relaxing and can be more cost effective compared to a pricey hotel room. But before you get too much further, here are three things you need to know about buying a vacation home.
Maintenance. You know that owning your own home also requires maintenance. When the hot water heater goes on the blink, you’ll need to call a service company or buy and install a new hot water heater. You have to pay utilities, property taxes and insurance on top of what pay each month on your mortgage. When you’re looking at a potential purchase, do some research about what the property uses in utilities each year. You can get that information from various utility companies. Second, y…

August 7 - How and Why Lenders Accommodate Bad Credit Home Buyers

How and Why Lenders Accommodate Bad Credit Home Buyers

For those with bad credit, getting a home loan seems as likely as flying to the moon. It’s just not going to happen. Yet there are lenders who do offer loan programs for those with damaged credit. There was a time however that such loan programs essentially vanished from the lending landscape just about 10 years ago when toxic loan programs began to falter. Today however, lenders have opened up home financing to those with bad credit in many instances. How do lenders approve bad credit and why do they do it in the first place?
The so-called “subprime” market refers to the mortgage marketplace where the loan programs cater to those with damaged credit. There are some variances on lending guidelines but in essence they all share the same basic characteristics. Applicants must be able to verify stable employment and income. They should be employed for at least two full years and be able to provide copies of their most recent pay chec…

August 4 - Should I Refinance Now or Will Rates Drop Again?

Should I Refinance Now or Will Rates Drop Again?

If you’re teetering on the brink of a refinance but you’ve yet to move forward, it’s very likely it’s because you’re waiting for interest rates to go down a bit more. After all, if it does make sense to refinance now but rates might go down even further then you’ll save even more, right? But let’s step back a bit from the interest rate question or even looking into the future and dig a little deeper.
If your loan officer has suggested a refinance it’s because rates have fallen compared to what you now have, changing loan terms saves long term interest or you’re getting out of a hybrid or adjustable rate loan into the stability of a fixed. That means should you decide today to go ahead and tell your loan officer you’re ready to close the deal it will be a wise choice. Yet many are out there trying to make it wiser by waiting. Here’s our advice- Assume whatever you decide it will be the wrong decision. How’s that?
Let’s say that right now…

August 3 - The Smarter Way to Shop for Home Loan Interest Rates

The Smarter Way to Shop for Home Loan Interest Rates

Shopping around for interest rates at some point can get a bit overwhelming. There are so many different loan programs from which to choose and each individual program has a variety of interest rates from which to choose…for the very same loan. You can get a rate quote for 15 days or for several months. You can get a rate quote today and tomorrow it might be a little different even if nothing has changed except the day of the week. To easily clear up the confusion and compare rates the smart way, here are some tips that will make the process go easier.
Stick to It. One thing you absolutely must do is to decide on a loan program and stick to it. But don’t do this on your own but speak with an experienced loan officer who carries the full suite of mortgage options from government-backed loans to conventional. After a conversation with your loan officer you’ll identify the type of loan that’s best for you. When you compare rates from on…

August 1 - Can You Afford a House?

Can You Afford a House?

There are so many people that have thought about buying and owning their own home but don’t think they can afford it. Surprisingly though, mortgage payments can be lower than rent payments while at the same time creating wealth with ownership. But if you’re of the notion that you can’t afford a home but you’re renting now, let’s pull back the curtains a little bit and show you how lenders determine affordability.
First, lenders take into consideration your gross monthly income. Not take-home income, but the amount before any deductions are taken out. Then, the lender looks at any monthly credit obligations you may have such as a car payment or a credit card payment. Items that won’t appear on a credit report such as food or utilities are not included in the affordability factor. Lenders then calculate a mortgage payment that would be approximately one-third of gross monthly income using today’s interest rates. In this payment is included principal and interest, a…

August 2 - 3 Ways to Restructure Your Mortgage and Save Thousands

3 Ways to Restructure Your Mortgage and Save Thousands

There are ways home owners can restructure their home loan. Typically, when changing the nature of an existing mortgage it means refinancing out of one loan and into another. For those who might consider refinancing a mortgage, the biggest reason is usually because rates are lower than when they locking in the interest rate on their loan while it was being approved. Interest rates don’t have to fall to a “magical” level in order for a refinance to make sense. Instead, borrowers should compare how much they would save each month with the closing costs involved in the transaction. Doing so will provide how many months it will take to “break even” as it relates to closing costs. It’s less about the interest rate and more about recovering the cost of refinancing through lower payments. Once accomplished, it’s a real money saver.
But there are costs involved, no doubt. Borrowers can work with their lender to see if a closing cost credi…

July 31 - Using your VA Earned Benefits

Using Your VA IRRRL Earned Benefits

The VA home loan is a phenomenal mortgage program, unlike any other available in today’s mortgage marketplace. The VA loan’s most visible feature is the lack of a down payment requirement. VA loans ask for zero down yet still provide some very competitive mortgage rates. And even with a zero down program, there is no monthly mortgage insurance premium payment found with other low money down government or conventional loans, helping more borrowers qualify. Veterans are also limited to the types of closing costs they’re allowed to pay. No money down, low payments and restricted closing costs make for a very attractive financing package when it’s time to buy and finance a home.
But the VA loan also has an important feature that can be used again after the home has been purchased and it’s called the Interest Rate Reduction Refinance Loan, or IRRRL. Lenders often refer to the IRRRL as a streamline loan due to the vast reduction in documentation required.…
The No Appraisal Refinance

Are you thinking of refinancing your mortgage but the process along with the closing costs involved are holding you back? You can remember when you got your first mortgage you were a bit surprised at the amount of paperwork involved and how many different services were needed in order to close your loan. We understand that completely.  But when refinancing an existing mortgage there are ways to reduce your closing costs and one of them is waiving the requirement for a brand new appraisal, saving you a few hundred dollars. How can that happen? Don’t lenders need to know what your home is worth before approving a loan application?
There are a couple of ways. Loans today receive their initial approval through an automated underwriting system. Lenders digitize your loan application and submit it through the portal and in just a few moments your loan is preapproved and a list of required documentation is provided. When refinancing, one of the pieces of required d…
3 Neighborhood Demographics You Need to Consider Before Buying

Many home buyers start their home search with a pretty good idea of where they want to live but others may not. Others might be renters and have just started the home buying process. Renters typically want to live near where they work and access to their job is a priority. Or, buyers can be those who are moving from one city to another and have no real idea of where the best place to live will be. But there are resources that can help narrow down the search process. Here are three primary neighborhood demographics you need to look into.
Safety. You want to live in a safe and secure neighborhood so the local crime rate will be in your top three demographics to research. You can contact the local police department about property crime in the neighborhood or visit any of the online resources that tracks and logs reported crime by location. Simply enter an address of a potential purchase and crime statistics will be reported.
Loan Officers: Private Lender vs. Bank

When financing real estate, borrowers soon discover they have more options than they perhaps originally thought. They must decide how much money to put down as well as pick out the right loan program. Once the loan program is decided upon the borrower then decides which rate is best for their particular situation. And we haven’t even touched on the property itself. Borrowers must decide not only where they want to live but what type of property they want to purchase. But before any of that, borrowers must decide where they want to get their loan from, a bank or a private lender. What are the differences? Is a loan officer at a bank the same as a loan officer at a private lender?
Typically at a retail bank, the bank down the street or downtown, the loan officer is there to accept the loan application and document the loan file. The loan officer has a list of loan programs the bank offers and reviews them with the applicant. Once the loan applicati…
How to Negotiate Closing Costs

Getting a home loan involves closing costs. There really is no other way around it. Buying and financing real estate means various entities get involved at the behest of the mortgage company in order to keep the loan in mortgage guideline compliance as well as provide necessary documentation and information the mortgage company needs in order to make a decision about a home loan. Some of these fees however can be negotiable while others not so much so.
Closing costs are divided into two basic categories- lender fees and non-lender fees. Lender fees are those that the lender charges the borrower for directly. A lender might require an underwriting fee. An underwriter is the individual at the mortgage company who reviews the submitted loan file and determines whether or not the loan meets the required guidelines for an approval. A lender might also charge a processing fee which covers the overhead of preparing the loan for submission to the underwriter. Th…
Basic Mortgage Terms Every Mortgage Shopper Should Know

The mortgage industry certainly has its fair share of “mortgage lingo” that can sound a bit foreign to those not in the lending or real estate business. Sometimes loan officers can have a conversation with potential home owners and speak way over their heads, while the loan officers never realize that’s what they’re doing. Especially very early on in the process when potential applicants begin shopping for a mortgage and getting information on financing. Here are a few basic terms you need to know before you pick up the phone or send that email.
APR.  APR stands for Annual Percentage Rate. When you shop for rates and request a formal rate quote, you’ll also see the APR. The APR is described as the cost of money borrowed expressed as an annual rate. It is calculated using the note rate on the mortgage plus associated finance charges. It’s not what your payment will be based upon.
Term. The term is how long the loan will amortize, or…
Mortgage Industry Changes... Who Wins?

The mortgage industry has mostly settled in now that 2008 and 2009 are in the rear view mirror. Guidelines have been mostly standardized and given a few exceptions mortgage lenders offer the same suite of mortgage programs. And lenders like this uniformity. They know that when they approve a mortgage loan it’s in full compliance with lending requirements. Yet there have been changes over the past year or so and we wanted to point out a couple that we think are the most important.
Perhaps the most significant change was the first loan limit increase in nearly a full decade. That’s because the average home values finally increased across the country to the point where Fannie Mae and Freddie Mac could authorize an increase in the loan limit. The loan limits went from $417,000 to $424,100 for most parts of the country. The Federal Housing Finance Agency, or FHFA, compares October to October average home values and the year-to-year increase justified …
Why Millennials Still Have Difficulties Finding a Home

Today the class that has the biggest impact on our economy is the millennial class. This group, roughly aged between 18 and 34 has replaced the so-called Baby Boomers as the ones that buy more things and spend more money. Baby boomers are retiring and saving their money. Yet the real estate industry has been keeping a keen eye on millennials and wondering when they’ll start buying their first home. Why is there a perception that millennials are sitting on the sidelines instead of actively searching for real estate?
One big factor is saving up for a down payment. Millennials can go shopping for a home but once they’re told how much down payment they need to have as well as how much closing costs will be, they have to rethink their plan. Rents are up in most areas of California and that means less money each month available to sock back in a savings account. Even for a loan down payment loan such as an FHA mortgage needing just 3.5%…
Buying or Refinancing Your Home This Summer? Tips for Success

Summer’s here. That means schools are out, vacations are planned and the daily drill changes. One great big change is to buy a home and the summer months are the most popular for those buying a new home. It’s easier to make the switch when public schools are out for the summer and if moving to a new system the kids will be in their new home and ready for the fall. Or, maybe you already have a home and a mortgage and are thinking of refinancing your current loan. Perhaps rates have fallen for you or you want to switch from an adjustable rate loan into a fixed. Either way, if you’re seeking financing this summer, you need to know these tips.
First, know exactly where you stand regarding your credit history. Even though you certainly think your credit report is just fine, thank you, you should pull up a credit report on your own if not for anything but to look for mistakes. Reporting errors are unfortunately relatively common …