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Showing posts from August, 2017

August 18 - Why An Adjustable Rate Mortgage Can Be Beneficial

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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

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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?

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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 www.annualcreditreport.com. 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

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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

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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

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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

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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?

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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

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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

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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?

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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

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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?

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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

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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…