Mortgage – Page 2 – Joe Gonzalez at CrossCountry Mortgage, Inc.

3 Ways To Avoid Mortgage Insurance

Posted on August 23, 2023 by joeglez

3 Ways to Avoid Mortgage Insurance When you are buying a home, you may run into a number of hurdles to complete the purchase. One of the items that you may be asked to purchase is called private mortgage insurance, often shortened to PMI. This is a unique insurance policy that your lender, such as the credit union or bank, may ask you to buy in order to protect themselves. In this insurance policy, the bank protects themselves against losing money if you end up defaulting on your loan.

Unfortunately, if you are asked to purchase PMI, this will increase your monthly mortgage payment. Therefore, most people try to avoid it. Fortunately, there are a few ways to do this.

Increase the Size of Your Down Payment

Typically, the lender will ask you to purchase PMI if your loan to value ratio is off. In most cases, the lender will ask you to buy PMI if you put down less than 20 percent. It is important to remember that this is still handled on an individual case-by-case basis and each lender handles this differently.

Invest in a Piggyback Mortgage

Another option to avoid PMI is to invest in something called a piggyback mortgage. In this case, you are splitting your mortgage into two policies. For example, if you put down 10 percent, you would need to take out a mortgage for the other 90 percent.

When you take out a piggyback mortgage, you split this 90 percent loan into one mortgage for 80 percent and the other for 10 percent. The drawback of this policy is that the second loan might have a higher interest rate than the first. This can help you avoid having to take out PMI.

Try Building the PMI Into the Loan

Finally, the last option is to roll them into the cost of the loan. In this case, the lender avoids asking you to purchase PMI and instead charges you a little bit more money for the loan. You won’t have a section on your bill for “private mortgage insurance” but you will have a slightly higher monthly payment anyways. Remember that you can refinance to a lower rate later, saving some money; however, it might be harder to eliminate PMI.

Avoiding Mortgage Insurance

These are a few ways that you can avoid purchasing PMI. This will help you keep your monthly payments low. As always, speak with your trusted mortgage professional for personal advice on your specific situation.

Reasons You Need an Insurance Binder and How to Get One

Posted on August 22, 2023 by joeglez

Reasons You Need an Insurance Binder and How to Get One An insurance binder for mortgage loans is a document that provides proof of insurance coverage for a property that is being financed with a mortgage loan. Mortgage lenders require borrowers to have insurance coverage on their property to protect their investment in case of damage or loss.

When a borrower applies for a mortgage loan, the lender typically requires proof of insurance coverage before they will approve the loan. An insurance binder is a document issued by the insurance company that provides temporary proof of insurance coverage until the official insurance policy is issued.

The insurance binder for mortgage loans will typically include information about the property being insured, the coverage limits, and the effective date of the policy. The lender will review the insurance binder to ensure that it meets their requirements for coverage and will usually require the borrower to maintain insurance coverage for the duration of the mortgage loan.

Here are some reasons why you may need an insurance binder:

Closing on a new home: If you are closing on a new home, your lender may require an insurance binder to ensure that the property is adequately insured.

Purchasing a new car: If you are purchasing a new car, you may need an insurance binder to show proof of insurance coverage before you can take possession of the vehicle.

Starting a new business: If you are starting a new business, you may need an insurance binder to show proof of coverage for liability, property damage, or other types of insurance coverage.

Renting a property: If you are renting a property, your landlord may require an insurance binder to ensure that you have renters’ insurance coverage.

To get an insurance binder, you will need to contact your insurance agent or insurance company. They will typically require you to provide some basic information, such as your name, address, and the type of coverage you need. Once they have this information, they will issue a temporary insurance binder that will provide proof of coverage until the official insurance policy documents are issued.

It is important for borrowers to understand that an insurance binder is a temporary document and should not be used as a replacement for the official insurance policy. It is also important to review the insurance policy carefully to ensure that it provides the necessary coverage for the property being insured.

What Do Appraisers Consider When Valuing a House?

Posted on August 21, 2023 by joeglez

What do Appraisers Consider When Valuing a House? Appraisers consider several factors when valuing a house to determine its fair market value. The goal of the appraisal is to provide an unbiased and accurate assessment of the property’s worth.

Here are the key factors appraisers consider:

Location: The location of the property is one of the most critical factors in determining its value. Proximity to amenities such as schools, shopping centers, parks, public transportation, and the overall desirability of the neighborhood can significantly influence the value.

Size and layout: The square footage and layout of the house play a crucial role in its valuation. Larger houses generally have higher values, but the layout and functionality of the space also matter.

Condition: The overall condition of the property, including both the interior and exterior, is essential. Appraisers look for signs of wear and tear, structural issues, and the general maintenance level of the house.

Upgrades and renovations: Recent upgrades and renovations can positively impact the value of a house. Appraisers take into consideration improvements such as kitchen upgrades, bathroom remodels, flooring changes, or any other updates that enhance the property’s appeal and functionality.

Comparable sales (comps): Appraisers use comparable sales data from recently sold properties in the same or similar neighborhoods to establish a benchmark for the subject property’s value. They compare factors like size, age, condition, and location to determine the market value.

Market trends: Appraisers consider the current real estate market conditions. If it’s a seller’s market with high demand and limited supply, the property’s value may be higher, and vice versa.

Age and condition of the property: The age of the house and its overall condition, including the age and condition of the roof, HVAC systems, and major appliances, will be assessed. Newer and well-maintained properties tend to have higher values.

Lot size and landscaping: The size and quality of the lot, as well as the landscaping and curb appeal, can influence the property’s value.

Views and natural features: Properties with attractive views or access to natural features like waterfronts, mountains, or green spaces may have higher values.

Environmental factors: Appraisers also consider any environmental issues or hazards that might affect the property’s value, such as proximity to industrial sites, flood zones, or other potential risks.

It’s important to note that the appraisal process may vary slightly depending on the specific regulations and guidelines in a particular region or country. Appraisers must remain objective and follow professional standards to provide an accurate and impartial valuation of the property.

Vacation Home or First Mortgage Payoff?

Posted on August 17, 2023 by joeglez

Vacation Home or First Mortgage Payoff? Imagine having some extra cash on hand, enough to make a significant financial decision that could potentially shape your future. You’ve worked hard to build equity in your home, and now you find yourself at a crossroads. Should you invest in a vacation home or use the money to pay off your first mortgage?

Vacation Home-Pros

A Place to Escape: Owning a vacation home provides you with a tranquil getaway, a place to unwind and recharge. It offers the potential for making lasting memories with family and friends.

Rental Income: If you decide not to use the vacation home year-round, you can rent it out during the times you’re not there. This rental income can help offset the property’s expenses and mortgage.

Potential Appreciation: Depending on the location and market conditions, vacation homes can appreciate in value over time, potentially leading to a profitable investment in the long run.

Vacation Home-Cons

Added Expenses: Owning a second property means added expenses beyond the initial purchase price, such as property taxes, insurance, maintenance, and potential association fees.

Time Commitment: Managing a vacation rental or maintaining a vacation home requires time and effort, especially if you don’t live nearby.

Market Volatility: The real estate market can be unpredictable, and the value of your vacation home may fluctuate, potentially resulting in a financial loss if you decide to sell.

First Mortgage Payoff- Pros

Financial Security: Paying off your first mortgage eliminates a significant debt, providing you with increased financial security and peace of mind.

Interest Savings: By paying off your mortgage early, you save money on interest payments over the life of the loan, which could amount to substantial savings.

Improved Credit: Paying off a mortgage can positively impact your credit score, as it demonstrates responsible financial management.

First Mortgage Payoff- Cons

Opportunity Cost: Using your funds to pay off the mortgage means potentially missing out on the potential returns from other investments or opportunities.

Liquidity: Once you pay off your mortgage, the money becomes tied up in your home equity, making it less accessible for other needs or emergencies.

Potential Tax Implications: Depending on your location and individual circumstances, there may be tax implications associated with paying off your mortgage early.

Considerations and Decision-Making Process

Making the right choice between a vacation home and paying off your first mortgage requires careful consideration of your financial goals, risk tolerance, and lifestyle preferences.

Choosing between investing in a vacation home or paying off your first mortgage is not a decision to be taken lightly. Both options have their merits, and the best choice for you depends on your individual circumstances and priorities. Take the time to carefully weigh the pros and cons of each option, and if needed, consult with a financial advisor who can provide personalized guidance based on your unique situation. Remember that whichever path you choose, responsible financial planning and thoughtful consideration will lead you to a more secure and rewarding future.

Disputing Your Property Tax Assessment Can Save You Money

Posted on August 10, 2023 by joeglez

Property taxes can be a substantial financial burden for homeowners and property owners. Each year, local governments assess the value of properties to determine the amount of property tax owed. However, these assessments are not always accurate and can result in higher tax bills than necessary. Disputing your property tax assessment is a proactive way to potentially save money and ensure you’re paying a fair and equitable amount.

Reasons for Flawed Assessments:

Property tax assessments are not immune to errors and discrepancies. Several reasons can lead to an inaccurate evaluation of your property:

Market Value Misjudgment: Assessors may rely on outdated or incorrect data, leading to the misjudgment of your property’s market value.
Assessment Methodology: The methodology used to calculate property values might not consider all relevant factors, such as recent improvements or neighborhood changes.
Comparable Properties: Assessors may use inappropriate comparables that lead to an inflated assessment that does not accurately reflect your property’s true value.
Data Entry Errors: Mistakes can occur during the data entry process, resulting in incorrect information being used to determine your property’s value.

Steps to Dispute Your Property Tax Assessment:

If you believe your property tax assessment is flawed, follow these steps to initiate the dispute process:

Review Your Assessment: Obtain a copy of your property tax assessment and thoroughly review it for any inaccuracies or discrepancies.
Collect Evidence: Gather evidence to support your claim, such as recent property appraisals, photographs, or documentation of any property-related issues.
Contact the Assessor’s Office: Reach out to the local assessor’s office to inquire about their specific procedures for filing a property tax appeal.
File an Appeal: Submit a formal appeal with all the supporting evidence to the relevant authorities within the designated timeframe.
Attend the Hearing: If a hearing is scheduled, be prepared to present your case and provide evidence to support your claim.
Consider Mediation: Some jurisdictions offer mediation as an option to resolve assessment disputes. Mediation can be a less adversarial approach to reach an agreement.
Consult with Professionals: If necessary, seek advice from real estate professionals, appraisers, or tax consultants to strengthen your case.

Disputing your property tax assessment is a proactive way to ensure you’re paying a fair amount of property tax and not overpaying due to inaccuracies or flawed evaluations. By taking the time to review your assessment, gather evidence, and follow the appropriate procedures, you can potentially save a considerable amount of money and promote fairness within the local tax system.

Why Is My Mortgage Escrow Account Sending Me a Check?

Posted on August 9, 2023 by joeglez

Why is My Escrow Account Sending Me A Check If you’re a homeowner with a mortgage, you may be familiar with the concept of an escrow account. This financial tool is designed to simplify the management of property-related expenses by combining certain costs, such as property taxes and insurance, into one account. Typically, your mortgage servicer collects a portion of these expenses with each monthly mortgage payment and holds the funds in an escrow account to cover these bills when they become due.

Various factors can lead to fluctuations in these estimated expenses. If the actual costs turn out to be lower than anticipated, your escrow account may end up with an excess balance, resulting in a refund check being sent to you.

Overpaid Escrow Account:

One common reason for receiving a check from your mortgage escrow account is that it has been overfunded. An escrow account’s purpose is to ensure there are sufficient funds to cover property taxes, homeowners’ insurance, and, in some cases, private mortgage insurance (PMI) when they come due.

Reassessment of Property Taxes:

Property taxes are a significant component of an escrow account, and they can change over time due to reassessment by local authorities. If your area’s property tax rates decrease or if your home’s assessed value is reduced, the amount needed to cover property taxes may decrease.

Insurance Premium Reduction:

Similarly, if your homeowner’s insurance premium decreases for any reason, such as a change in coverage or a reduction in risk factors, your escrow account may have extra funds available. Your mortgage servicer will then send you a check for the surplus amount.

Escrow Account Audit:

Mortgage servicers occasionally conduct audits of escrow accounts to ensure accuracy and compliance with applicable laws. If the audit reveals that there is an excess balance, they will send you a check to rectify the situation.

Refinancing or Payoff:

If you recently refinanced your mortgage or paid off the loan entirely, your escrow account may have a surplus after all outstanding expenses are settled. In such cases, you’ll receive a refund check for the remaining funds.

Receiving a check from your mortgage escrow account can be a pleasant surprise, as it indicates that you’ve overpaid into the account, or your expenses have decreased. The refund serves as a return of your money and can provide a little extra financial flexibility.

Remember that while having an overfunded escrow account is beneficial, it’s crucial to regularly review your escrow statements and communicate with your mortgage servicer about any changes that could affect the account’s balance.

Will Buying A New Car Impact The Ability To Buy A New Home?

Posted on August 4, 2023 by joeglez

Will Buying A New Car Impact The Ability To Buy A New Home? Making major life decisions often involves a delicate balancing act. Among the most significant choices individuals face are buying a new car and purchasing a new home. Both ventures represent milestones in one’s life, bringing excitement and anticipation. However, there is a complex interplay between these two financial endeavors that can significantly impact a person’s ability to achieve their dream of owning a new home. Here are some factors to consider:

Debt-to-income ratio: When you apply for a home loan, your lender will consider your debt-to-income ratio (DTI) to determine whether you qualify for a mortgage. Your DTI is the amount of debt you have compared to your income. High DTI ratios are a red flag for lenders as it indicates a greater risk of defaulting on the mortgage. Therefore, potential homeowners should carefully assess the impact of adding a car loan to their financial portfolio. If you take on a new car loan, it will increase your debt load and could make it more difficult to qualify for a mortgage.

Down payment: A new car loan will require a down payment, which means you’ll have less money available for a down payment on a new home. Lenders generally prefer borrowers to have a sizeable down payment as it demonstrates financial responsibility and lowers the loan-to-value (LTV) ratio, which affects the terms and interest rates of the mortgage. By prioritizing a home purchase over a new car, potential homeowners can better secure their financial position and increase their down payment amount.

Credit score: Taking out a new car loan can impact your credit score, which is an important factor in getting approved for a mortgage. If you have a high credit score, you’ll likely qualify for better interest rates and terms on a mortgage. However, if your credit score drops due to the new car loan, it could make it more difficult to qualify for a mortgage or result in a higher interest rate. Opting to purchase a new home before buying a new car allows borrowers to present a more robust credit profile, potentially resulting in a more favorable mortgage deal.

Overall, it’s important to consider how taking on a new car loan will impact your finances and your ability to buy a new home. It’s important to make sure that the cost of the new car fits within your budget. If you’re already stretching your finances to make car payments, it may be more difficult to save for a down payment on a new home or make mortgage payments. It’s always a good idea to speak with a financial advisor or mortgage lender to understand how your financial decisions will impact your ability to achieve your goals.

How To Find A New Home In A New City

Posted on August 3, 2023 by joeglez

How To Find A New Home In A New City Finding a home in a new city can be a daunting task, but there are several steps you can take to make the process smoother. Here are some tips:

Research the neighborhoods: Start by researching the different neighborhoods in the city you are moving to. Look into the amenities, crime rates, school districts, and transportation options in each area to help you narrow down your search.
Determine your budget: Figure out how much you can afford to spend on rent or a mortgage before you start looking for a home. This will help you focus your search on properties that are within your budget.
Use online resources: There are many online resources that can help you find homes in a new city. Websites like Zillow, Trulia, and Realtor.com are great places to start your search.
Hire a local real estate agent: Consider hiring a local real estate agent who knows the city well. They can help you find homes that meet your criteria and give you valuable insight into the local market.
Visit the city: If possible, plan a trip to the city before you move to view potential homes in person. This will give you a better sense of the neighborhoods and help you make a more informed decision.
Consider temporary housing: If you’re not able to find a permanent home right away, consider temporary housing options like short-term rentals.
Attend open houses: Attending open houses can give you a better idea of what’s available in the area and help you get a sense of what you like and don’t like.
Network with locals: Reach out to people in the city who may be able to offer insight into the housing market. This could include friends, family members, or even coworkers.
Be flexible: Be open to different types of housing, such as apartments, condos, or townhouses, and be willing to compromise on some of your preferences in order to find a home that meets your needs and budget.

Remember to be patient and keep an open mind when searching for a new home in a new city. It may take some time, but with persistence and a little bit of luck, you’ll find the perfect place to call home.

How Much Equity Can I Borrow from My House

Posted on August 2, 2023 by joeglez

How Much Equity Can I Borrow from My House The amount of equity you can borrow from your house depends on several factors, including the current market value of your home, the amount you owe on your mortgage, and your credit score.

In general, lenders typically allow you to borrow up to 80% of your home’s equity. For example, if your home is currently valued at $400,000 and you owe $200,000 on your mortgage, you may be able to borrow up to $160,000 (80% of the $200,000 in equity you have in your home).

However, it’s important to note that borrowing against your home’s equity comes with risks. If you are unable to make payments on the loan, you could potentially lose your home through foreclosure. It’s important to carefully consider the risks and benefits of borrowing against your home’s equity before proceeding. It’s also recommended to consult with a financial advisor or a mortgage professional to help you make an informed decision.

What Is My Loan-to-Value?

Your loan-to-value (LTV) is the ratio of the amount of money you borrowed (usually through a mortgage) to the appraised value of the property. It is typically expressed as a percentage.

To calculate your LTV, you need to divide the amount of your loan by the appraised value of the property, then multiply the result by 100. For example, if you have a mortgage of $250,000 on a property appraised at $400,000, your LTV is 62.5% (250,000 / 400,000 x 100 = 62.5%).

LTV is an important factor in determining the risk level of a loan. Lenders generally prefer lower LTV ratios, as they indicate a lower risk of default. A high LTV, on the other hand, can make it more difficult to get approved for a loan, or result in higher interest rates or additional fees.

How Can I Increase My Home Equity?

There are several ways to increase your home equity, which is the difference between the current value of your home and the amount you owe on your mortgage. Here are a few strategies to consider:

Make extra payments on your mortgage: Making additional payments towards your principal balance can help reduce the amount of interest you’ll pay overtime, and also help you build equity more quickly.

Increase the value of your home: Making home improvements or renovations can increase the value of your home, which can in turn increase your equity. Focus on upgrades that provide the best return on investment, such as kitchen and bathroom remodels or adding energy-efficient features.

Refinance to a shorter-term loan: If you can afford higher monthly payments, refinancing to a shorter-term loan can help you pay off your mortgage faster and build equity more quickly.

Avoid taking out additional loans: Avoid taking out additional loans against your home equity, as it will reduce the amount of equity you have in your home.

Regular maintenance: Regular maintenance, such as repairing leaks, repainting walls, and replacing worn-out fixtures can help maintain your property’s value and prevent the need for expensive repairs.

It’s important to remember that building equity is a long-term strategy and requires consistent effort and discipline over time. Consult with a financial advisor or a mortgage professional to determine the best approach for your individual situation.

The Difference Between A Home Equity Loan Versus A HELOC

Posted on August 1, 2023 by joeglez

The Difference Between A Home Equity Loan Versus A HELOC When homeowners need to tap into the equity they’ve built in their homes, two popular options are Home Equity Loans (HEL) and Home Equity Lines of Credit (HELOC). Both types of loans allow homeowners to access funds for various purposes, such as home improvements, debt consolidation, or unexpected expenses. However, it’s essential to understand the differences between these two mortgage products to make an informed decision that aligns with your specific needs and financial goals. Here are some important differences between the two.

Home Equity Loan
A home equity loan is a one-time loan that provides you with a lump sum of money that you repay over a fixed term, usually between five and 30 years. The interest rate on a home equity loan is fixed, meaning it remains the same throughout the life of the loan, and your monthly payments are fixed as well.

One advantage of a home equity loan is that you know exactly how much you are borrowing and what your monthly payments will be, which can make it easier to budget for. Additionally, since the interest rate is fixed, you can be sure that your payments won’t increase if interest rates rise.

HELOC
On the other hand, a home equity line of credit (HELOC) is a revolving line of credit that you can draw from as needed up to a predetermined limit. You only pay interest on the amount you borrow, and you can use the funds for a variety of purposes, such as home renovations, debt consolidation, or other expenses. HELOCs typically have a variable interest rate that can change over time, and your monthly payments will vary based on the amount you borrow and the interest rate.

A HELOC can offer more flexibility since you can draw on the line of credit as needed and only pay interest on the amount you borrow. This can be beneficial if you have ongoing expenses or projects that require funding overtime.

Ultimately, the choice between a home equity loan and a HELOC will depend on your individual needs and financial situation. It’s important to carefully consider the terms and interest rates of each option before deciding.