One of the most important things to do when shopping for a mortgage loan is to lock-in when mortgage rates are at their lowest (so you can improve your mortgage rate outcome). But let’s back up a bit. First, what is a mortgage rate? A mortgage rate is the interest rate affixed to a home loan (mortgage). Mortgage rates are derived from the price of mortgage-backed securities (bonds backed by U.S. mortgages). There is quite a variance in interest rates when you compare conventional loans, VA, FHA, USDA and jumbo loans. And the rates vary between mortgage lender. Part of your responsibility in the pre-borrowing phase is to understand what factors contribute to mortgage rates and what you can do when you are shopping for a mortgage rate to maximize your investment and minimize costs. When it comes to getting a great mortgage rate, your credit score will make a sizeable impact. The higher your credit score, the easier it will be to qualify for a low rate. Loan applicants with a great credit score can successfully obtain a mortgage rate that is a full percentage point or more lower than other loan applicants with just average credit scores. A mortgage…

First-time home buying can be challenging due to steep down payments, tougher mortgage requirements, and higher home prices. The NY Times says, “It’s never been easy for first-time buyers to get into the real estate market, but that’s been especially true in recent years. In 2010 (or July 2009 to June 2010, to be precise), they bought half the homes sold nationally. In 2016 (or July 2015 to June 2016), only 35 percent went to first-timers. In only three of the last 35 years have they had a smaller share.” But, if you are a first-time homebuyer, don’t worry. There are a myriad of financing options/strategies out there for you to consider. When planning for your down payment, at a minimum, plan to save 20 percent. 30 percent may be needed if you are planning to purchase a more expensive home and are relying on more financing that average. Some lenders sympathize with first-time home buyers and will permit as low as 3 percent down. But, before you get too excited, it is important to understand that a smaller down payment can translate into higher costs and paying for mortgage insurance. (For example, a 5% down payment on a $200,000…

VA Loans are offered through private lenders, mortgage companies or banks. Through this program, the Department of Veterans Affairs works to support the needs of servicemembers, veterans, and qualifying surviving spouses and helps them purchase affordable mortgage loans.   VA Loan candidates are evaluated based on length of service, duty status, and character of service. The following VA Loan Sub-categories are available for consideration – each with differing benefits and options depending on each borrower’s unique needs and circumstances: – Adapted Housing Grants: These loans assist Veterans with a permanent and total service-connected disability purchase or with the construction of an adapted home or to alter an existing home to accommodate the disability. – Native American Direct (NADL) Program: Eligible Native American Veterans finance the acquisition, building, or improvement of homes on Federal Trust Land, or reduce the interest rate on a VA loan. – Interest Rate Reduction Refinance Loan (IRRRL): This type of loan allows borrowers to receive a lower interest rate by refinancing an existing VA loan. – Purchase Loans: The benefits of this type of loan is that you can get a competitive interest rate usually without the need of a down payment or private mortgage insurance. – Cash-Out Refinance: These loans permit the…

If you’ve ever heard someone say they are taking out a “second mortgage,” they are talking about a home equity loan. This is a type of mortgage where homeowners can borrow money by “leveraging” the funds in their home, or the money they’ve already paid into the principle of their mortgage. Home equity loans became popular in the mid 1980s as a way for homebuyers to gain back what was lost in the Tax Reform Act of 1986 which would no longer allow deductions of mortgage interest. With a home equity loan, homebuyers could borrow back $100,000 of the value of their homes and receive tax deductions on the interest. However, taxes have changed and now homeowners can only receive tax deductions on a home equity loan if the loan money is used for significant improvements and home renovations. There are two types of home equity loans that a lender can give a homebuyer, and they both are created to be paid off in 5-15 years. Those include: – Fixed-Rate Loans: A homebuyer receives one lump sum upfront and then pays it back over time with a set interest rate. Requirements of the loan are locked in when the loan is taken…

Choosing between a 15-year mortgage or a 30-year mortgage requires a diligent review of the pros and cons of each and how they relate your individual goals/needs.  Taking the time to research this before seeking a loan package can help ensure that you plan mortgage repayment in a way that will most benefit your future financial health. If you are able to qualify for a 15-year mortgage, one of the major benefits is that you can get your debt eliminated more quickly with a shorter loan term. Not only that, you will save more money because borrowers can secure a lower interest rate with a shorter-term loan. By being able to pay down the principal balance more quickly, and should you need to refinance, you will have a lower loan-to-value ratio which will make that process easier for you. One of the chief benefits of homeownership is the equity you build.  This equity becomes a major asset that can then be used for a variety of situations and needs. When you sell the home the value you sell it for becomes cash in your pocket. Equity is a home is also something you can borrow against with a home equity…

Choosing between a 15-year mortgage or a 30-year mortgage requires a diligent review of the pros and cons of each and how they relate your individual goals/needs.  Taking the time to research this before seeking a loan package can help ensure that you plan mortgage repayment in a way that will most benefit your future financial health. If you are able to qualify for a 15-year mortgage, one of the major benefits is that you can get your debt eliminated more quickly with a shorter loan term. Not only that, you will save more money because borrowers can secure a lower interest rate with a shorter-term loan. By being able to pay down the principal balance more quickly, and should you need to refinance, you will have a lower loan-to-value ratio which will make that process easier for you. One of the chief benefits of homeownership is the equity you build.  This equity becomes a major asset that can then be used for a variety of situations and needs. When you sell the home the value you sell it for becomes cash in your pocket. Equity is a home is also something you can borrow against with a home equity…

Buying a home requires a careful analysis of your future financial and personal goals so you can enjoy home ownership, not stress over it. Part of knowing how much you can afford takes into account both current expenses and future expenses (and expenses that you don’t know you will have down the road.) Mortgage payments need to be able to flex to accommodate the unknown and the known. The following tips can help you to estimate the amount of mortgage you can afford. When you’re preparing to buy a home, it’s important you dive into your finances to explore what room you have in your budget. When looking at what you’ll be able to afford, you will have to examine several factors, like: your household income, monthly debts (car loans, student debt), and how much you have saved for a down payment. It’s important to truly understand your budget and have a comfort in knowing what exactly you’ll be able to contribute to a monthly mortgage payment. Buying a home is exciting, but you will need to set realistic expectations so you don’t get into a mortgage you can’t handle. A down payment on a home essentially is the money…