Setting the Record Straight: 3 Major Misconceptions About Mortgage Financing

March 18, 2022 by

Setting the Record Straight: 3 Major Misconceptions About Mortgage FinancingPurchasing a home is often considered an important step in one’s financial life, no matter what point you arrive at it, but there are things you should know about financing your home purchase before stepping into the fray. If you’re planning on buying a home soon and want to avoid some major missteps, here are a few tips that will set you up for success.

Taking The Lender You’re Offered

In the event that you’ve been pre-qualified for a certain amount, you’ll want to find a lender that will make the process towards a home purchase a little bit smoother. Instead of going with the first option that’s offered, do some research and come up with a shortlist of potential lenders that have good reviews and have been around the industry for a significant amount of time. The process will be a lot more comfortable if there’s someone on your side you know you can trust.

Keeping Your Credit History In The Dark

Without a doubt, the lender will be looking at your financial history in order to determine the amount of financing you will receive, but it’s still important to be prepared on your end so that you know what to expect. Start by acquiring your credit report so that you can correct any inaccuracies on it and be prepared for what this score will say about your financial viability. When it comes to the financing you’ll need down the road, the right information on your credit report will make a difference in the end result.

Forgetting About The Loan Officer

If you’ve already established who your lender will be, it’s still important to meet with the person who will be handling your loan and make sure they’re someone you can trust. Ensure that you are aware of their qualifications and that they have enough previous experience in their back pocket to provide you with insights that may come in handy. While having a reliable lender is certainly a good start, the right individual to handle your loan will be someone who is licensed and involved with a local, professional mortgage association.

All of the things involved with mortgage financing can be quite complicated, but by finding the right lender and preparing yourself for the tough financial questions, it can be a much easier experience. If you’re starting to consider your options for a home purchase, you may want to contact one of our local mortgage professionals for more information.

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Setting the Record Straight: 3 Major Misconceptions About Mortgage Financing

March 18, 2022 by

Setting the Record Straight: 3 Major Misconceptions About Mortgage FinancingPurchasing a home is often considered an important step in one’s financial life, no matter what point you arrive at it, but there are things you should know about financing your home purchase before stepping into the fray. If you’re planning on buying a home soon and want to avoid some major missteps, here are a few tips that will set you up for success.

Taking The Lender You’re Offered

In the event that you’ve been pre-qualified for a certain amount, you’ll want to find a lender that will make the process towards a home purchase a little bit smoother. Instead of going with the first option that’s offered, do some research and come up with a shortlist of potential lenders that have good reviews and have been around the industry for a significant amount of time. The process will be a lot more comfortable if there’s someone on your side you know you can trust.

Keeping Your Credit History In The Dark

Without a doubt, the lender will be looking at your financial history in order to determine the amount of financing you will receive, but it’s still important to be prepared on your end so that you know what to expect. Start by acquiring your credit report so that you can correct any inaccuracies on it and be prepared for what this score will say about your financial viability. When it comes to the financing you’ll need down the road, the right information on your credit report will make a difference in the end result.

Forgetting About The Loan Officer

If you’ve already established who your lender will be, it’s still important to meet with the person who will be handling your loan and make sure they’re someone you can trust. Ensure that you are aware of their qualifications and that they have enough previous experience in their back pocket to provide you with insights that may come in handy. While having a reliable lender is certainly a good start, the right individual to handle your loan will be someone who is licensed and involved with a local, professional mortgage association.

All of the things involved with mortgage financing can be quite complicated, but by finding the right lender and preparing yourself for the tough financial questions, it can be a much easier experience. If you’re starting to consider your options for a home purchase, you may want to contact one of our local mortgage professionals for more information.

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Setting the Record Straight: 3 Major Misconceptions About Mortgage Financing

March 18, 2022 by

Setting the Record Straight: 3 Major Misconceptions About Mortgage FinancingPurchasing a home is often considered an important step in one’s financial life, no matter what point you arrive at it, but there are things you should know about financing your home purchase before stepping into the fray. If you’re planning on buying a home soon and want to avoid some major missteps, here are a few tips that will set you up for success.

Taking The Lender You’re Offered

In the event that you’ve been pre-qualified for a certain amount, you’ll want to find a lender that will make the process towards a home purchase a little bit smoother. Instead of going with the first option that’s offered, do some research and come up with a shortlist of potential lenders that have good reviews and have been around the industry for a significant amount of time. The process will be a lot more comfortable if there’s someone on your side you know you can trust.

Keeping Your Credit History In The Dark

Without a doubt, the lender will be looking at your financial history in order to determine the amount of financing you will receive, but it’s still important to be prepared on your end so that you know what to expect. Start by acquiring your credit report so that you can correct any inaccuracies on it and be prepared for what this score will say about your financial viability. When it comes to the financing you’ll need down the road, the right information on your credit report will make a difference in the end result.

Forgetting About The Loan Officer

If you’ve already established who your lender will be, it’s still important to meet with the person who will be handling your loan and make sure they’re someone you can trust. Ensure that you are aware of their qualifications and that they have enough previous experience in their back pocket to provide you with insights that may come in handy. While having a reliable lender is certainly a good start, the right individual to handle your loan will be someone who is licensed and involved with a local, professional mortgage association.

All of the things involved with mortgage financing can be quite complicated, but by finding the right lender and preparing yourself for the tough financial questions, it can be a much easier experience. If you’re starting to consider your options for a home purchase, you may want to contact one of our local mortgage professionals for more information.

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Save Some Additional Cash with Our Guide to Lowering Your Monthly Mortgage Payment

February 17, 2022 by

Save Some Additional Cash with Our Guide to Lowering Your Monthly Mortgage Payment If you are like many other homeowners, your home mortgage payment is the single largest expense in your monthly budget. This is a fixed expense that you will typically be responsible for until your loan is paid in full or until you sell your home, and you may have a 15, 20 or even 30 year term on your mortgage.

If your home mortgage payment has become unaffordable or burdensome for you to manage with your current financial situation, rest assured that you may be able to save some additional cash each month without selling your home. Refinancing your existing mortgage can provide you with important financial benefits to help you better manage your budget.

How Refinancing Lowers Your Mortgage Payment

Refinancing your existing mortgage essentially will replace your existing loan with a new loan, but you may not understand how this will result in a lower mortgage payment. When you initially applied for your current mortgage, your payment was fixed based on the interest rates at the time as well as the original loan balance. Since that time, you likely have reduced your loan balance considerably, and interest rates may be improved as well. In fact, some homeowners are able to refinance to a lower rate as well as pull equity out of their home in the process.

How Home Equity Could Further Reduce Monthly Expenses

While your main goal for refinancing a home mortgage may be to reduce the large monthly mortgage payment that you are responsible for, the fact is that you may be able to use your home equity to further reduce your monthly expenses. For example, you can use extra funds provided to you through a refinance to pay off an outstanding student loan, a car payment or a credit card balance. Some homeowners may even be able to pay off most or all of their debts by tapping into their home equity.

It is common for homeowners who have a high and unmanageable mortgage payment to feel overwhelmed and even trapped by their financial situation. However, as you can see, lowering your mortgage payment and even reducing some of your other expenses may be easier to do than you might think. If you are interested in learning more about how refinancing your mortgage may help you to improve your financial situation, you can speak with an experienced mortgage professional today.

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Making Sure You Are Ready To Take On A Mortgage

February 15, 2022 by

Making Sure You Are Ready To Take On A MortgageThere is so much to know when it comes to homeownership that even wading into all of the information can seem overwhelming, but if there’s one thing you need when the time comes to purchasing a home, it’s to be prepared. Here are a few ways that you can ensure you’re ready for what a mortgage entails so that buying your dream home will be a positive experience you won’t regret.

Consider All Of Your Options

Instead of accepting the mortgage that your bank is offering you, it’s very important to do some research and determine what some of the best options out there are for you. While it’s entirely possible that the option pushed forward by your bank will work out, in the days of so much information online it’s silly to go into your biggest purchase blindfolded. Take some time out and read about the products available so that, when the time comes, you can make an educated decision.

Know Your Credit History

Lenders will most definitely be digging through your finances and credit history for anything that might make them leery of your financial state, but you’ll want to be aware of your own standing so that you can be prepared for what this might entail. By getting your credit report and score before going through the process of acquiring a mortgage, you can fix any errors that might be on your credit report so that you’ll be prepared for the result when the time comes for pre-approval.

Plan For The Future Possibilities

If the mortgage amount you are planning on paying seems feasible on a month-to-month basis, it’s certainly a good place to start, but if you not on a fixed rate mortgage, you will need to consider the ever-fluctuating state of interest rates, and you need to prepare for this reality at the same time. It’s important to base the amount you’ll be spending each month off of the income and expenditures that you’ve worked out in a budget, but you’ll want to add in some wiggle room so that a jump in the rates won’t sink your dream of home ownership.

There are many things to be aware of when starting the process of purchasing a home, but delving into your credit history and doing the necessary background research can make for a smoother experience. If you’re looking for advice on purchasing a home, contact your local mortgage professional for more information.

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How to Calculate Your True Cost of Living and Determine How Much Mortgage You Can Afford

February 11, 2022 by

How to Calculate Your True Cost of Living and Determine How Much Mortgage You Can AffordA monthly mortgage can seem like enough of a financial responsibility on its own, but there are many factors involved in home ownership that affect its fiscal feasibility. If you’re in the market for a house and are wondering how your income will stack up against the rest of your expenses, here’s how to determine a home cost that’s reasonable for you.

Determine Your Down Payment

Before you start with anything else, you’ll want to determine the amount of money you can put down so you can estimate your monthly payments. The traditional amount for a down payment is 20% of the home’s purchase price, so if you don’t have anything close to this amount it might be worth waiting a little longer so you can minimize your payments and the amount of interest or mortgage insurance you’ll be paying in the long run. Each person’s situation is different, and there may be programs available with less than 20% down. This is an excellent question to pose to your trusted mortgage advisor.

Calculate Your Monthly Budget

If your mortgage cost already seems high, it will definitely be worth carefully calculating your monthly expenditures. Instead of a wild guess, take the time to sit down and calculate what your costs are including food, utilities, transportation and any other monthly necessities. Once you do this, it’s also very important to add any debt repayments you’re making to the mix. The total amount of your estimated mortgage costs, debt payments and living expenses should give you a pretty good sense of if your mortgage is viable in the long term.

Don’t Forget About The Extras

When it comes to purchasing a home, many people envision that they will be eating and sleeping their new home so don’t pay attention to all of the additional costs that can arise with living life. A new home is certainly an exciting, worthwhile financial venture, but ensure you’re realistic about what it entails. If you’re planning to go back to school or have children in the future, you’ll want to add a little bit of extra cushion in your budget so that you don’t have to put your other dreams on hold for the sake of your ideal home.

It can be very exciting to find a home you feel good about, but it’s important before making an offer to realize the amount of house you can afford so you don’t find yourself in a hole down the road. If you’re currently on the market for a new home, contact your trusted mortgage professional for a personal consultation.

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Refinancing Your Mortgage: Understanding the Various Types of Refinancing

February 2, 2022 by

Refinancing Your Mortgage: Understanding the Various Types of RefinancingWhether you’ve been thinking about ways that you can draw on your home equity to fund a renovation project or you want to take advantage of low interest rates before they rise again, refinancing your mortgage is an excellent option.

In today’s blog post we’ll introduce mortgage refinancing and discuss a few of the ways that you can use this tool to help accomplish your financial goals.

Cash-In and Cash-Out Refinancing

Many homeowners refinance their mortgage in order to take some of the home equity out for other purposes. In a “cash-out” refinancing, you take out a new mortgage loan which is greater in value than your current loan. After paying off the existing mortgage you’ll receive a check for the difference which can then be reinvested in home upgrades or put to use elsewhere in your financial portfolio. You may also be able to get a better interest rate in this type of refinancing, saving additional money over the long term.

Do you owe more on your mortgage than your home is currently worth but still want to take advantage of lower interest rates? If so, “cash-in” refinancing is an option that can help you to avoid the mortgage insurance costs that you may be facing when you refinance. As the name implies, cash-in refinancing will provide you with a loan that is for less than the amount that you currently owe, so you’ll need to add “cash-in” to make up the difference.

Home Affordable Refinance Program or “HARP” Refinancing

If you find that you’re unable to refinance your mortgage as the value of your home has declined, the federal government’s Home Affordable Refinance or “HARP” Program may be an option. If you have been making your mortgage payments on time, have a mortgage guaranteed by Fannie Mae or Freddie Mac and your current “Loan to Value” ratio is greater than 80% it’s likely that you’ll qualify for HARP refinancing.

The above are just a few of the ways that you can refinance a mortgage to better suit your needs and financial goals. Contact your local mortgage professional today to learn more about refinancing and to discuss how you can tap in to the home equity that you’ve built up over time.

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5 Uncommon Mortgage Terms You Need to Know

February 1, 2022 by

5 Uncommon Mortgage Terms You Need to KnowWhen it comes to finding a new home, there are lots of complex ratios, terms, and contracts that you’ll encounter – and at times, it’ll feel like you’re trying to navigate a minefield. Here are five mortgage terms you may not encounter regularly that you’ll need to know when buying a home.

Escrow: Money Held In Trust To Pay Taxes

An escrow account is a bank account that your lender maintains on your behalf. When you close your mortgage, you’ll need to deposit a certain percent of your annual property taxes into the escrow account, which your lender will hold in trust and use to pay your property taxes.

PITI: How Your Lender Calculates Your Monthly Payments

Your lender uses a specific formula used to calculate exactly how much money you need to pay your lender each month. Each month, your mortgage payment will include portions that go toward your principal loan amount (P), your interest payment (I), your property taxes (T), and your homeowner’s insurance (I). If you have private mortgage insurance, it’ll be included with this PITI payment.

Rate Buydown: Lowering Your Interest Rate With A Larger Down Payment

A rate buydown, also known as a discount point, is a chunk of your mortgage interest that you pre-pay in order to get a lower monthly interest rate over the life of the loan. Each point you buy reduces your interest rate by a small amount.

Loan Estimate: What Your Lender Must, By Law, Give You

A loan estimate is a form that your lender is required to give you when you apply for a mortgage, as per the Truth in Lending Act. Your loan estimate will include your estimated costs of carrying the loan – including monthly payments, interest rates, and processing fees. Loan estimates allow you to compare terms and rates across different lenders.

Loan-To-Value: Determining How Much House You Can Afford

Your LTV (loan-to-value) ratio is a ratio that is used to calculate the amount of equity you have in your home and to assess your risk as a borrower. Typically expressed as a percentage, your LTV is determined by dividing the total amount of your mortgage loan by the property’s fair market value. Borrowers generally prefer to see lower LTV ratios.

Mortgages contain a variety of legal terms that can be challenging for the uninitiated to understand. But with a qualified mortgage advisor on your side, you’ll have no difficulty navigating mortgage contracts and finding the right mortgage for you. Contact your local mortgage professional to learn more.

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Struggling to Get Approved Because of Your Income? 5 Reasons to Consider a FHA Loan

January 27, 2022 by

Struggling to Get Approved Because of Your Income? 5 Reasons to Consider a FHA LoanBuying a home isn’t cheap. But if you’re determined to become a homeowner, the FHA home loan program can help. This loan program, ideal for first-time buyers with low incomes, can help you to build your credit and make home ownership a reality.

So why should you consider an FHA loan? Here are just a few ways you’ll benefit from these government-backed mortgages.

You Can Get Approved With Just 3.5% Down

Traditional mortgage lenders typically require you to pay 20% down on your mortgage, or 5% if you have good credit and agree to pay mortgage insurance premiums. But for a lot of younger people with lots of debt and low incomes, even a 5% down payment is an unrealistic burden. With an FHA loan, you can be approved for a mortgage with a down payment as low as 3.5% – which means a $200,000 home can be yours for as little as $7,000 down.

You Can Get A Loan Even With A High Debt-To-Income Ratio

Standard mortgages are difficult to get if you have a high debt-to-income ratio. Typically, lenders will want to see that your mortgage costs will consume no more than 28% of your income, and your total payments toward debts from all sources will be no more than 36% of your income. But with an FHA loan, the maximum DTI is 57%, although it’s lower in some cases.

You Can Qualify With A Low Credit Score

If you have a credit score under 700, you’ll pay higher interest rates on typical mortgages – and if it’s below 660, you may not get approved at all. But with an FHA mortgage, you can get approved for a 3.5% down payment with a credit score as low as 580 – or lower, if you agree to a 10% down payment.

FHA Closing Cost Regulations Are Better For Low-Income Buyers

FHA loans have different closing cost regulations than traditional mortgages. With an FHA loan, you can bundle closing costs into the mortgage or even use gift funds for 100% of the closing costs. That means home ownership is more accessible for people with lower incomes.

An FHA Loan Can Help You Find A Good Home

With most mortgages, you’re free to buy any home you wish as long as you stay within a set price range. But with an FHA loan, any home you buy must be habitable, sanitary, and safe – otherwise the FHA won’t approve your loan. That means using an FHA loan will ensure you get a good home.

Buying a home with an FHA loan is a great way to become a homeowner if a traditional mortgage isn’t an option for you. Call your local mortgage professional to learn more.

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What Financial Preparations Should I Make Before Applying For A Mortgage?

January 20, 2022 by

What Financial Preparations Should I Make Before Applying For A Mortgage?Getting a mortgage isn’t an easy thing to do. Before a lender will put down tens of hundreds of thousands of dollars, it wants to know that the borrower can handle the loan so that it will get paid back. to this end, there are three things that a potential homebuyer can do to prepare for the mortgage approval process.

Managing Debts

For many homebuyers, managing their credit score is the biggest challenge. Mortgage lenders like buyers with strong credit. While getting strong credit usually isn’t something that can be done overnight, paying bills on time, all of the time can help to build a positive profile.

Using as little credit as possible is also helpful, since high utilization of existing credit lines can harm a borrower’s score. Having less debt can also reduce monthly payments, making it easier to qualify for a larger mortgage.

Managing Income

Lenders look for two things when it comes to a borrower’s income:

  • Stable incomes are preferred, so being able to prove the income with a W-2 form or other documentation is usually required. Self-employed people will typically need to prove their income with their tax returns, so taking high write-offs can make it harder to qualify.
  • A borrower’s income should be significantly higher than his total monthly debt payments. Lenders divide a borrower’s monthly payments including their proposed mortgage into the gross monthly income. If the payments exceed a set percentage, the lender will shrink the mortgage until it considers the payment affordable.

Managing Paperwork

To qualify for a mortgage, borrowers typically need to submit a comprehensive file of supporting documentation. This can include tax returns, pay stubs and bank and investment account statements.

Since lenders frequently want some historical data, it can be a good idea for people considering applying for a mortgage to start collecting documentation months before they actually begin the mortgage application process. That way, they will have everything the lender wants and when the lender needs it.

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