Tag archive for ‘mortgage’

Do You Need a Second Mortgage?

by Admin - on Dec 16th 2016 - Comments Off on Do You Need a Second Mortgage?

Mortgage in Lake OswegoThere are times when there is a need to seek a second mortgage on your house. For some, they seek a second mortgage to raise down payment for a brand new car or to help pay for a long-planned vacation. Though these reasons may be valid for others, the same may not hold true for you.

Nevertheless, Primary Residential Mortgage, Inc. noted that seeking a second mortgage might be an ideal option when you need extra cash to spend on worthwhile endeavors. What are these?

Education

There are homeowners who seek a second mortgage to help finance their or their children’s education. Although you can always apply for a scholarship grant, you must be aware that only a few get them. This does not mean you will not be able to get one, though. You can apply, but would you rather hinge your hope on such an application? What if you will not get it?

Your Other Option

If you want to go ahead with your scholarship application, would it not be prudent to visit a mortgage lender at the same time? According to HSH.com, this last option may be better for you as it allows you a fallback position. Put it this way: If your scholarship application is accepted, then all is well and good. There may be no need for you to seek a mortgage. If not, at least you have an alternative ready in form of a mortgage.

Business

This is perhaps one of the most common reasons homeowners seek a second mortgage. According to Clark.com, this may even be the least costly alternative to finance a business idea. Working in a company is fine, but with the volatile situation in the employment sector, it might be wise to establish a new income stream. In fact, this could be a good time to realize that business concept you had been thinking about for some time now. You can use the proceeds from the second mortgage as a starting capital for your business.

While you can always seek a second mortgage to buy that new car you have wanted for so long, it might not be the best of ideas. Remember, securing a second mortgage is a smart move if the purpose itself is worthwhile and could deliver you benefits at some later time. Seek a mortgage only for the right reasons.

Applying for a Mortgage? Mind These 3 Things

by Admin - on Jul 26th 2016 - Comments Off on Applying for a Mortgage? Mind These 3 Things

Applying for a MortgageWhen applying for a mortgage, your lender will consider your down payment, credit score, and debt-to-income ratio. If your numbers look good, it is most likely that you will qualify for a mortgage and therefore pursue your dream of buying a home. The amount of loan you can borrow, of course, will depend on individual circumstances, but it may also exceed the amount you can afford comfortably.

Down Payment

If you don’t have a good credit history, paying a sizable down payment can be a great help. The more money you can pay, the less risk your lender will have to take on. You will no longer have to pay private mortgage insurance (PMI) if you can afford 20% down payment. This will then add a few hundred dollars to your monthly loan payment. Down payment ranges from 0% to 20%, but the ideal is 15% to 20%.

Credit Score

Most lenders are all about credit scores today. You can get your free credit score from one of the credit or consumer report agencies. FICO is a commonly used agency, giving scores between 300 and 850. If you want your lender to be flexible, you should aim for a high score (at least 700). Kalsee.com says that the higher your score, the more you can qualify for quality mortgage rates.

Debt-to-Income Ratio

It is common for lenders to follow the 28/36 rule, which means that no more 28% of your income should go to loan payment, and taxes and insurance, with debt payments no more than 36% of your salary. There will be no problem if you have to no other debt, as you can dedicate a portion of your income to the mortgage payment. For an FHA-backed loan, you may apply for as much as 41% of your income to debt.

Mortgages are easier to get this year, benefitting all types of buyers including retirees and those looking for a home in expensive markets. While the new rules help buyers, it still important to maintain a good credit score, eliminate debt, and save for a sizable down payment.

Second Mortgages: The Essentials You Need to Know

by Admin - on Jul 5th 2016 - Comments Off on Second Mortgages: The Essentials You Need to Know

MortgageA second mortgage, also known as home equity line of credit (HELOC), is simply a second loan on your house. As with your existing mortgage, your home will secure your second mortgage. This means that your lender could legally take your home if you default on your mortgage. When this happens, your lender will sell your home to pay off your original loan and the remaining money from the sale (if applicable) will then go into your second mortgage.

Second Mortgage Basic Facts

Shantel Matagi and other lending institutions noted that many homeowners nowadays are considering second mortgages since the mortgage rate they’re being offered are lower, even if the property values are higher.

  • Second mortgages come in two primary types: home equity loan and home equity line of credit. With HEL, your lender will provide you money in a lump sum, which you’ll have to pay off in a predetermined time period at fixed intervals. The interest rate is usually fixed. An HELOC, on the other hand, functions like your handy credit card so you can spend cash whenever you need it. The interest rate is usually adjustable.
  • The amount you can borrow will depend on several factors — how much equity’s in your home, your loan to value (LTV) ratio, and your credit rating. Most lenders won’t lend you more than 75% or 85% of the LTV ratio of your combined first and second loans.
  • You can’t simply use funds from your second mortgage for anything. Plenty of homeowners use their second mortgage for huge expenses like repaying debts, purchasing another home, paying for college tuition, huge medical expenses, or home renovations. Essentially, you wouldn’t want to take out a second loan if you’re just planning on spending it on a grand vacation or other unnecessary expenses since you’ll be risking your house in the event that you default on your loan.

Many lenders offer second mortgages to qualified borrowers. With this in mind, you don’t necessarily have to take out a second mortgage from the same lender. The most vital thing to do is research your options, compare total fees and interest rates, and then decide which one will be best for your specific financial circumstances.

Can’t Refinance Your Mortgage? Here’s Why

by Admin - on May 24th 2016 - Comments Off on Can’t Refinance Your Mortgage? Here’s Why

RefinanceLooking to refinance your home? Unfortunately, it’s up to lenders if you’ll be able to refinance or not.

Altius Mortgage Group enumerates crucial things that could deem you unqualified for a refinance.

Insufficient Equity

Plenty of homeowners took out option ARMs and interest-only mortgages way back in the housing boom since prices had nowhere to go but up. However, when the market became stable again, plenty of those homeowners ended with little to no equity. This inflated their LTV or loan-to-value ratio and made them unqualified for traditional refinancing.

Poor Credit Rating

Creditors normally consider a credit rating of around 620 poor. Couple a poor credit rating with a high LTV rating and you’ll have difficulty in find lenders who’ll risk giving you a refinance loan in today’s unstable market.

Massive Mortgage Amount

Jumbo loans are significantly more restrictive than conforming loans and come with increased interest rates. Lenders will scrutinize your application and your background more carefully if you’re asking for a large amount for refinancing.

Lack of Assets

The underwriter could deny your refinance application right off the bat if you can’t show seasoned and adequate assets. Financial experts recommend that you save money early and regularly by putting it in savings and checking accounts, bonds, stocks, and retirement funds, among others.

Inadequate Income

This is a major factor because if you don’t find yourself below the maximum DTI or debt-to-income ratio required by lenders, you won’t be able to secure a refinance loan.

Inconsistent Job History

If you don’t show absolute proof of consistent employment, normally for the last two years prior to refinancing, lenders could deny you even if you have sufficient assets or are presently earning lots of money.

These are only some of the things that could hinder your refinance goals. Contrary to what some homeowners think, you really have to be qualified to get any kind of loan. So if some or all of the above-mentioned scenarios apply to you, resolve your issues to increase your chances of securing a refinance loan.

Insufficient Funds for a 20% Down Payment? Go FHA-Loan Then

by Admin - on May 3rd 2016 - Comments Off on Insufficient Funds for a 20% Down Payment? Go FHA-Loan Then

FHA LoanThanks to the Department of Housing and Urban Development’s Federal Housing Administration (FHA), you can now obtain a home loan from a private lender much more easily. With the benefits that HUD FHA-backed loans offer, you should now consider making the transition from a tenant to a homeowner.

Why go HUD FHA instead of conventional?

The primary reason many home buyers in the country opt for loans backed by the FHA is because they can rest easy knowing that, in the event they default on their loan, the administration will take responsibility for repaying the lender. Bonneville Multifamily Capital points out because the government insures these loans, lenders are at less risk of losing money from defaulting borrowers.

The results? Lower loan interest rates as compared to conventional mortgages, which then give you a greater opportunity of home ownership.

The down payment advantage

Another advantage of securing an FHA-insured loan from the HUD is a smaller down payment requirement. Since you do not have to make the usual 20 percent down payment that most private lenders require, you will find it easier to buy a home and afford paying for your mortgage.

Satisfy the requirements set by the HUD for their FHA loans, and you would only need to come up with a minimal 3.5 percent down payment.

Less worries about closing costs

Most traditional lenders charge borrowers closing costs, further taking mortgage payments higher and making it even more difficult for home buyers to secure a loan. Although FHA loans still come with closing costs, they are far lower than traditional loans. Through an FHA-backed loan, your HUD multifamily lender may only charge you up to one percent of the amount you borrow.

You still need to meet certain requirements and qualifications when applying for an FHA loan, but these are far easier to satisfy and complete compared with conventional loans.

3 Things to Consider When Choosing a Mortgage

by Admin - on Apr 7th 2016 - Comments Off on 3 Things to Consider When Choosing a Mortgage
Mortgage Loans in Salt Lake CityFinally deciding that it’s time to buy that home you’ve always dreamt of can be thrilling. Purchasing a home is a huge investment and knowing what to expect can help you avoid falling into common pitfalls first-time buyers find themselves in. With a variety of mortgage products in the market, how do you decide which home loan to choose? 

Here are some guidelines that will make the process of choosing home loans in Salt Lake City much easier.

Types of Mortgages

There are mainly two types of mortgages: the government-insured loans and conventional loans. Government-backed loans can come in three forms: USDA loans which are backed by the Department of Agriculture, VA loans backed by the Department of Veterans Affairs, and FHA loans which are insured the Federal housing Administration.

Conventional loans are backed by a banking institution or a private company. These types of loans are available for various terms such as 15, 20 and up to 30 years. Furthermore, they require at least 5 percent down payment which can sometimes go up to 20 percent depending on your credit history and the type of lender you choose.

Government insured loans only require you to have a solid credit and a stable source of income. For example, FHA loans only require a 3.5 percent down payment and a credit score of at least 580.

Type of Interest Rate

There is a fixed and adjustable rate. Fixed rates never change and are perfect for people who are looking to repay their loan within 15-30 years and have a stable income. Nonetheless, it’s important to note that other fees such as homeowner’s association dues and annual property taxes may result in fluctuation.

Adjustable rates are those that reset after a certain time. At the start, they may be lower than fixed rate loans. However, after the initial terms end, your monthly payments increase annually based on a margin and on an index.

Size of the Loan

Classified as either conforming or non-conforming, the size of the loan is another issue to consider. Conforming loans are limited to $417,000 for single-family homes. For high-cost areas, the price may go up to $625,000. Non-conforming loans are riskier and come with a high down payment requirement.

Getting a home loan largely depends on your credit history, your income and future financial goals. Before applying for any loan, check to see if your credit score allows you to borrow. And if not, try to boost it. Talk to a mortgage broker to get the best rates.

Refinancing Makes Sense If Not for These Reasons

by Admin - on Mar 31st 2016 - Comments Off on Refinancing Makes Sense If Not for These Reasons

RefinancingAs interest rates continue to stay at historically low levels and house prices tend to surge in many markets, it’s not unusual for homeowners to consider a refinance. Especially if your credit score and debt-to-income ratio have significantly improved in the past years, your confidence must be skyrocketing to snag these tempting rates.

But much like other types of home loans, a refinance is not for everybody —  specifically, not for all situations. It might pay for your neighbor to get a fresh rate and term, but it wouldn’t necessarily make sense to you. If you’re seriously considering to refinance in Apple Valley or any other city, you might be better off to stick to your current loan when:

You Would Be Forced to Take an ARM for a Lower Rate

If you currently have a low fixed rate and the only way to bring it down is by switching into an adjustable-rate mortgage, then the odds are against you. You may profoundly drop your repayments with incredibly low ARM interest, but that is most likely going to increase, even higher than what you pay now, down the road.

An ARM lacks stability since the rates have been consistently low for the past years now, they’re bound to head north. The best possible practice is to refinance before the ARM resets, not to refinance to move into an ARM.

It Might Be Too Long for You to Break Even

The break-even period is the time it takes for you to recoup your new loan’s closing costs. Once you know how much exactly these costs are, calculate the amount of savings you would get every month with your new rate to see when you can truly save.

You would reach this period at some point, but the problem is when that stretch is longer than the period you plan to stay in the house. If you feel the period’s length is unacceptable, then a refinance might not work for you.

It Would Cost You More in the Long Run

When you refinance, a low monthly repayment is usually irrelevant if the term is too long. Especially if the difference between your new and old rate is almost insignificant, and your term doesn’t change, you might discover that you would pay more money over your new loan’s lifetime if you do the math.

Only you could tell if you really need a refinance. Your personal situation is the single most important factor in determining if this move is worth your while.

Mortgage Matters: Is It Still a Good Time to Refinance?

by Admin - on Mar 13th 2016 - Comments Off on Mortgage Matters: Is It Still a Good Time to Refinance?

Mortgage MattersThe interest rates on home loans dropped to record lows a couple of years ago, but the rate has risen since then. Nonetheless, mortgage rates are still favorable for many homeowners if they act now.

Here are some things you have to know if you are considering to refinance for your home in Apple Valley:

Good credit

You need to have good credit to apply for a conventional refinance. That means you have been paying your mortgage regularly and on time; in short, you have no history of bad debt. On average, people that have successfully applied for refinancing had a FICO score of 727. You can still qualify for a loan with non-traditional lenders, but the lowest rates are from conventional sources.

Equity

Generally, you need at least 20% of your principal loan paid up before you can qualify for refinancing. The average equity help for those who applied successfully for refinance is 31%. There are exceptions, of course. The rule of thumb is, the more equity you have, the better your interest rates will be. It also means you pay less every month.

Fixed rates

If you have a long-term loan you took out before the rates started dropping, you are likely stuck with high interest rates. If you can reduce it by just one percentage point from your rate, that can make a big difference to what you pay in total. For example, if you have a 30-year fixed loan at 5.6% interest a year, you might think you already have a good deal. However, you can pay about $110 for every $100,000 of your mortgage every month.

Jumbo payments

If you can afford jumbo payments, and you have a 30-year mortgage, you are definitely in the market for refinancing. The rates for these are good right now.

The interest rates for new mortgages and refinancing are still good for most homeowners today. Nonetheless, you have to decide if your circumstances make it practical to apply for one at this time. Make sure you choose a mortgage broker than can give you the best deal.

Understanding the Differences Between Conforming and Nonconforming Loans

by Admin - on Nov 19th 2015 - Comments Off on Understanding the Differences Between Conforming and Nonconforming Loans

home financingThere is indeed no place like home. Finding your dream house may not be hard, but owning one is never easy. Usually, the reason is not having enough savings to pay for a new house. This circumstance is probably the motivation on how mortgage was developed.

Say you already found a lender or a broker; the next step is to check what type of loan you will get. If conforming and non-conforming loans are vague knowledge to you, take time to learn their basics so that you will be rightfully led to the one you want to take advantage of.

Conforming Loans

Conforming loans are mortgages that meet the guidelines set by home loan market drivers, Fannie Mae and Freddie Mac. The most critical condition for a loan to be considered conforming is the size. The Federal Housing Finance Agency (FHFA) fixed the limit or the maximum size of a conforming loan at $417,000. Loans below that figure are conforming fixed and anything above that are considered non-conforming. In areas with greater demand for housing, limits may be higher.

Nonconforming Loans

If you are buying a luxury primary residence, you might need a jumbo loan or a non-conforming loan. This type of mortgage exceeds the set loan limit. But, borrowers who take out mortgages below the limit can still be disqualified from getting a conforming loan when other guidelines are not met such as:

Low credit score or poor credit history
Bankruptcy within the previous two years
High debt with respect to income
Documentation Issues

For Borrowers and Lenders

Conforming loans are appealing for most borrowers because they are paired with lower interest rates and fees. Furthermore, lenders find conforming loans attractive because they can put these types of mortgage on the secondary market, free up capital, and then provide more loans. On the contrary, jumbo loans are hard to sell. As less funds become available, fewer loans are offered too. Lending companies offset this financial risk by charging the borrowers higher interest rates and greater fees and insurance requirements.

Getting a mortgage is a sensible way of fulfilling your dream to own a new home. Both conforming and non-conforming loans may be decent, but choosing one that fits your needs is a surefire measure not to mess up with your dues until the entire loan is settled.