Mortgage Tips – Page 7 – Joe Gonzalez at CrossCountry Mortgage, Inc.

3 Things That Determine Your Mortgage Interest Rate

Posted on September 20, 2016 by joeglez

Minimum FHA Mortgage Credit Scores Are Falling: Here's What You Need to Know When you initially start shopping for a home mortgage, you may be drawn to advertisements for ultra-low interest rates. These may be rates that seem too good to be true, and you may gladly contact the lender or mortgage company to complete your loan application. However, in many cases, mortgage applicants are unpleasantly surprised and even disheartened to learn that they do not qualify for the advertised interest rate. By learning more about the factors that influence your interest rate, you may be able to structure your loan in a more advantageous way.

Your Credit Rating

One of the most important factors that influence an interest rate is your credit score. Lenders have different credit score requirements, but most have a tiered rating system. Those with excellent credit scores qualify for the best interest rate, and good credit scores may qualify for a slightly higher interest rate. Because of this, you may consider learning more about your credit score and taking the time to correct any errors that may be resulting in a lower score.

The Amount Of Your Down Payment

In addition, the amount of your down payment will also play a role in your interest rate. The desired down payment may vary from lender to lender, but as a rule of thumb, the best home mortgage interest rates are given to those who have at least 20 to 30 percent of funds available to put down on the property, and this does not include subordinate or secondary financing. If you are applying for a higher loan-to-value loan, you may expect a higher interest rate.

The Total Loan Amount Requested

In addition, the total loan amount will also influence the rate. There are different loan programs available, but one of the biggest differences in residential loans is for very large loan amounts. The qualification for a jumbo loan will vary for different markets, but these loans qualify for different rates than conventional loans with a smaller loan amount.

While you may be able to use advertised interest rates to get a fair idea about the rate you may qualify for, the only real way to determine your mortgage rate will be to apply for a loan and to get pre-qualified. Contact your local mortgage lender today to request more information about today’s rates and to begin your pre-qualification process.

Thinking of Buying a Second Home? Assess Your Finances First

Posted on August 30, 2016 by joeglez

The decision to buy a second home may be made for a number of reasons. For example, you may have a destination where you and your family love to spend free time in, and you may be ready to settle into your own space in this location. You may be considering the tax benefits associated with a second home, and you may even have plans to live in the home as your primary residence after you retire.

While there may be numerous benefits associated with the purchase of your second home, you may be concerned about how affordable it will be for you to manage the additional expense of a second mortgage payment.

Consider All Of The New Expenses Related To The Purchase

A second mortgage payment may be a rather major expense to take on, but it is not the only expense related to buying the new property. In order to ensure that the mortgage payment is affordable, you need to ensure that all aspects of secondary home ownership are affordable for you.

For example, consider HOA dues, repairs and maintenance expenses, property taxes, insurance and cleaning or lawn care service since you will not be available to handle these chores on a regular basis. If you can comfortably take on all of these expenses, you may make your purchase with confidence.

Increase Your Emergency Savings Account Balance

While your current budget may easily accommodate the new mortgage payment and the related expenses, the unfortunate truth is that your income or expenses may not remain static in the future. You may suffer from unemployment or a serious illness that reduces your income. You may have extra expenses due to a car accident or severe damage to a home.

These are just a few of the many things that can happen, and it is important that you have an adequate cash reserve in your emergency savings account that allows you to pay for all of your expenses for at least several months. Because your expenses will increase substantially with your new mortgage payment, you may need to increase your emergency savings account balance.

While it can seem intimidating to take on a new mortgage payment and other related household expenses for a second home, you may be able to more comfortably take on this additional expense when you follow these tips. For more information, speak with your mortgage professional to get a quote for your new mortgage payment and interest rate.

Why Your ‘Debt-to-Income Ratio’ Number Matters When Obtaining a Mortgage

Posted on August 26, 2016 by joeglez

If you are looking to buy a home, you may want to consider shopping for a loan first. Having your financing squared away ahead of time can make it easier to be taken seriously by buyers and help move along the closing process. For those who are looking to get a mortgage soon, keep in mind that the Debt-to-Income ratio of the borrower plays a huge role in the approval of your mortgage application.

What is a Debt-to-Income Ratio?

A debt-to-income ratio is the percentage of monthly debt payments compared to the amount of gross income that a person earns each month. Your gross monthly income is typically the amount of money you earn before taxes and other deductions are taken out. If a person’s monthly gross income is $2,000 a month and they have monthly debt payments of $1000 each month, that person would have a DTI of 50 percent. The lower the DTI the better. 43 percent is in most cases the highest DTI that potential borrowers can have and still get approved for a mortgage.

What Debt Do Lenders Review?

The good news for borrowers is that lenders will disregard some debt when calculating a borrower’s DTI. For example, utilities, cable, phone and health insurance premium would not be considered as part of your DTI. What lenders will look at are any installment loan obligations such as auto loans or student loans as well as any revolving debt payments such as credit cards or a home equity line of credit.In some cases, a lender will disregard an installment loan debt if the loan is projected to be paid off in the next 10-12 months.

What Is Considered Income?

Almost any source of income that can be verified will be counted as income on a mortgage application. Wage income is considered as part of a borrower’s monthly qualifying income. Self-employed individuals can use their net profit as income when applying for a mortgage, however, many lenders will average income in the current year with income from previous years. In addition, those who receive alimony, investment income or money from a pension or social security should make sure and include those figures in their monthly income as well when applying for a loan.

How Much Debt Is Too Much Debt?

Many lenders prefer to only offer loans to those who have a debt-to-income ratio of 43 percent or lower. Talking to a lender prior to starting the mortgage application process may help a borrower determine if his or her chosen lender offers such leeway.

A borrower’s DTI ratio can be the biggest factor when a lender decides whether to approve a mortgage application. Those who wish to increase their odds of loan approval may decide to lower their DTI by either increasing their income or lowering their debt. This may make it easier for the lender and the underwriter to justify making a loan to the borrower. For more information, contact your local mortgage professional today.

Why Your ‘Debt-to-Income Ratio’ Number Matters When Obtaining a Mortgage

Posted on August 26, 2016 by joeglez

What is a Debt-to-Income Ratio?

What Debt Do Lenders Review?

What Is Considered Income?

How Much Debt Is Too Much Debt?

What’s Ahead For Mortgage Rates This Week – August 22, 2016

Posted on August 22, 2016 by joeglez

Last week’s economic news included the NAHB Housing Market Index, Commerce Department releases on housing starts and building permits issued. Weekly reports on mortgage rates and new jobless claims were also released.

Shortages of available single-family homes have driven up home prices and increased competition among homebuyers; short inventories of homes for sale are affecting affordability in many areas, although buyers seem motivated by lower mortgage rates and some easing of mortgage requirements. Analysts have repeatedly said that the only solution to the shortage of homes is building more homes.

Fortunately, the National Association of Home Builders reported that builder sentiment concerning U.S. housing markets increased in August. The HMI moved up to a reading of 60 in August as compared to July’s reading of 58. Readings over 50 indicate that a majority of builders surveyed are confident about housing market conditions.

According to NAHB, home builders continued to face obstacles including shortages of buildable lots and skilled labor. Regulatory issues were also cited by some builders, but overall, builders remain optimistic about housing market conditions.

Housing Starts Up, Building Permits Issued Slip in July

Commerce Department reading s on housing starts and building permits issued were mixed; housing starts rose from July’s reading of 1.186 million permits issued to 1.211 million permits issued in August. July’s reading was the second highest since the recession but was driven by multi-family construction. Building permits were lower in August with a reading of 1.152 million permits issued against July’s reading of 1.153 million permits issued.

Analysts said that under present market conditions, there is little reason for homebuilders to increase single-family home production as current pricing has put many would-be buyers on the sidelines.

Mortgage Rates Mixed, New Jobless Claims Lower

Freddie Mac reported that average rates for 30-year and 15-year fixed rate mortgages dropped last week while the average rate for 5/1 adjustable rate mortgages rose. The average rate for a 30 year fixed rate mortgage was 3.43 percent and the average rate for a 15-year fixed rate mortgage was 2.74 percent; both readings were two basis points lower than for the prior week. The average rate for a 5/1 adjustable-rate mortgage was two basis points higher at 2.76 percent. Average discount points held steady for fixed rate mortgages at 0.50 percent; average discount points for 5/1 adjustable rate mortgages were lower at 0.40 percent.

New Jobless claims fell by 4000 claims to 262,000 new claims, which was lower than analyst expectations of 265,000 new claims and the prior week’s reading of 266,000 new claims. Job security is important to home buyers and signs of strong labor markets can help propel would-be buyers into the market,

What‘s Ahead

This week’s scheduled economic news includes releases on new and existing home sales and consumer sentiment. Weekly reports on mortgage rates and new jobless claims will be released on schedule.

How to Determine the Right Mortgage for You: The Pros and Cons of Each Type

Posted on April 15, 2016 by joeglez

How to Determine the Right Mortgage for You: The Pros and Cons of Each Type Finding the right mortgage can be a struggle. There’s a wide array of mortgage products on the market, and you don’t always need to get a mortgage through your bank – and with so many options, it’s hard to know which one is your best bet.

Your ideal mortgage will depend on your own individual financial situation, but when you understand how different kinds of mortgages work, it’s easier to choose the right one. Here’s what you need to know about mortgage types.

Fixed-Rate Mortgages: Home Financing At A Guaranteed Rate

A fixed-rate mortgage is exactly what it sounds like: A mortgage with a fixed interest rate. With a fixed-rate mortgage, your interest rate is locked for the life of the mortgage loan and cannot change.

When interest rates are at historical lows, a fixed-rate mortgage is an ideal financing option. By purchasing a fixed-rate mortgage at a low interest rate, buyers lock in low payments and are protected from sudden rate increases. However, fixed-rate mortgages are more difficult to qualify for when interest rates are high.

Variable-Rate Mortgages: Lower Rates And Larger Loans

A variable-rate mortgage is a mortgage wherein the interest rate fluctuates over time. Typically, the interest rate will stay constant during a set period of time near the start of the mortgage, and then start to vary. These mortgage rates rise and fall in line with the prime lending rate or one of the financial indeces like Treasury Bills or the LIBOR.

The major advantage of a variable-rate mortgage is that its lower initial rates and payments allow buyers to qualify for larger homes. Buyers can also take advantage of falling interest rates without having to refinance. However, variable-rate mortgages can quickly become expensive if interest rates see a sharp rise – and while some mortgages put caps on the maximum annual increase, these caps may not apply to the first rate change.

Interest-Only Jumbo Mortgages: Flexible Terms For Wealthy Buyers

An interest-only jumbo mortgage is a specialty mortgage designed specifically for wealthy buyers purchasing luxury homes. The major advantage of this kind of mortgage is that borrowers can make interest-only payments for the first 10 years of the loan. A possible downside is that interest-only payments purposefully never pay down any portion of the principal balance of the mortgage. For this reason, interest-only mortgages are typically only available to well-heeled buyers who can afford a hefty down payment and prove that they have large cash reserves.

Finding the right mortgage can be a challenge. That’s why it helps to consult with a mortgage advisor who understands the terms and rates, and can negotiate a great deal for you. For more information or to apply for a mortgage today, contact your trusted mortgage professional.

Key Questions to Ask Yourself Before Deciding to Refinance Your Mortgage

Posted on April 12, 2016 by joeglez

Key Questions to Ask Yourself Before Deciding to Refinance Your Mortgage If you’re looking to reduce your interest payments or get more favorable loan terms, there are lots of ways you can change your mortgage. But one of the most effective ways to take advantage of low interest rates is with a mortgage refinance. That said, refinancing typically comes with a variety of costs and may not be a good solution or all homeowners.

So how can you tell whether it’s a good idea to refinance your home? Here are three questions you need to ask yourself if you want to find out.

How Much Equity Do I Have?

If you have less than 20 percent equity in your home, your lender can require you to get private mortgage insurance. While refinancing could get you a lower interest rate and better terms, extra PMI costs will usually devour any savings you may have had. Before you decide to refinance your mortgage, determine how much equity you have in your home and how close you are to the 20 percent mark – if you can pay down enough of the balance to drop your PMI, refinancing may be a viable option.

How Long Do I Plan To Live Here?

When you refinance your home, you’ll pay administrative costs ranging from 3 to 6 percent of the loan’s value. You’ll need to do some calculations to determine your break-even point – the point in time when the money you save from a lower interest rate is equal to the amount of money you paid in administrative costs. If you’re close to paying off your entire mortgage or if you plan to move before you hit the break-even point, a refinance will only cost you money.

Is It A Good Time To Refinance?

Refinancing creates a new loan based on your home’s current value – and if your home has increased in value since you bought it, you can cash out your equity. However, refinancing may also lose you money. For example, if you have $300,000 worth of equity in a $750,000 home, refinancing allows you to cash out your $300,000.

But if your property value has decreased in recent years – for instance, if it’s dropped to $500,000 – then a refinance can change your equity status. Equity is your home’s current value minus your remaining loan balance. If you owe $450,000 and your property value drops to $500,000, then your equity is only $50,000 instead of the $300,000 you had before.

The key lesson? Always check market conditions before refinancing a home.

Refinancing is a complex issue with a variety of nuances. That’s why it pays to consult your local mortgage professional to learn whether a refinance is right for you.

Budgeting for a New Home?: 3 Unlikely Costs to Consider in Your Overall Budget

Posted on April 5, 2016 by joeglez

Budgeting for a New Home? 3 Unlikely Costs to Consider in Your Overall Budget If you’re planning to buy a new home in the near future, you’re probably working hard to prepare a budget and determine how much you can afford before you start viewing homes. While it’s good to have an idea of what you can pay for a new house, many buyers routinely miss several key home buying costs that can later cause a variety of problems. Before you start looking for your new home, make sure you add these three commonly forgotten costs to your budget.

Title Insurance: Critical Protection Against Title Claims

Title insurance is something that most buyers forget about until closing, but it’s a necessary form of protection for every soon-to-be homeowner. Title insurance provides you with protection against financial losses in the event that you later discover title defects. For example, title insurance can protect you from losses in situations where the seller doesn’t actually own the home, where there is a lien on the property, or where a previous owner accidentally omitted or deliberately falsified critical property records.

In a standard real estate contract the seller will pay for the buyer’s title insurance, but in most states, the buyer is also required to buy title insurance to protect the mortgage lender. Title insurance for lenders usually costs, on average, $2.50 per $1,000 of assessed property value.

Unexpected Renovations: Home Inspectors Aren’t Perfect

Typically, your home inspector will alert you to any issues requiring renovation or repair before you buy your new home. But if your home inspector is negligent and misses a critical problem with the home, you may need to find money for surprise renovations – and fast.

While you can file an insurance claim or sue the inspector for negligence in order to recoup damages, court cases and insurance claims take time – time that you may not have if you’re facing an urgent home problem. Most real estate agents suggest budgeting 1% of your home’s budget each year for maintenance costs.

Initial Interest: Your First Month Comes Due Before You Know It

Your mortgage starts accruing interest on the day you close the home sale, not on the day you move in. So in order to make sure that you have a consistent payment, the lender collects the first partial month of interest at the closing table. It’s called “prepaid interest” and is included in your overall closing costs. That means if you sign the contract on March 15, you’ll need to make an interest payment for the period of time lasting from March 15 to March 31 at closing. Your payment will then come due on May 1 – so be sure to include your first interest payment in planning for your closing costs.

Buying a home isn’t cheap. But when you clearly understand the various costs involved, it’s easier to plan your home purchase and budget for expenses, both expected and not. Contact your local mortgage professional to learn more about home buying costs.

Rookie Mistakes: Don’t Make These 4 First-Time Homebuyer Mistakes

Posted on March 31, 2016 by joeglez

Rookie Mistakes: Don't Make These 4 First-time Home-buyer Mistakes Buying your first home is exciting. Many young people view homeownership as the definitive mark of adulthood, the final milestone on a decades-long journey. And while becoming a homeowner is cause for celebration, you’ll want to ensure you keep your enthusiasm in check just a little while longer.

Keep a level head and you’ll easily avoid these common mistakes first-time buyers make.

Don’t View Your Home As An Investment

First-time buyers commonly think that they can invest everything they’ve saved into a home, fix it up, and then sell it for a large profit in a few years. However, a home is a fixed asset that can be hard to sell off quickly. Economics professor Art Carden says “for people looking to start an investment, a stock or bond is a better option than a house, as I’ve never had to call a plumber because a mutual fund started leaking.”

Don’t Skip The Home Inspection

The American Society of Home Inspectors says 10 percent of home purchases happen without an inspection. Quite simply, buyers decide it’s better to save the fee for the down payment – but often, issues arise later that can result in multi-thousand-dollar repair bills. Foundation problems can be especially nasty, sometimes requiring a teardown.

Before signing a contract, make sure you have a licensed home inspector view the property.

Don’t Believe Everything You Read On The Internet

While it’s good to start researching neighborhoods, mortgage terms, and home valuations online, keep in mind that online estimates are just that – estimates. Not all mortgages are created equal, and the many differences between loans can result in significant changes in the overall cost. For example, just because a lender is giving you a mortgage without an origination fee, that doesn’t make it a good deal – you could be paying a lot more in interest rates.

Always make sure you thoroughly check and understand loan terms before signing anything.

Don’t Go For The Most Expensive House You Can Afford

When you qualify for a mortgage, your lender will tell you the maximum home purchase price they’ll fund, based on your annual income as well as your debt-to-income ratio. However, just because you can afford a $500,000 two-story townhouse, that doesn’t necessarily make it a good idea to buy said townhouse. You’ll want to give yourself a cushion in the event that you lose your job, have children, need to pay medical expenses, or go back to school.

First-time buyers often make a variety of mistakes when buying a home, but a mortgage advisor can help you to make the right decisions – decisions that set you on the best possible path toward homeownership. Contact your local mortgage professional today to learn more.

How the Truth in Lending Act Protects You When You Take Out a Mortgage

Posted on March 24, 2016 by joeglez

How the Truth in Lending Act Protects You When You Take Out a Mortgage If you’re planning to get a mortgage, it’s critical that you know your rights under the law. The Truth in Lending Act (TILA) is a piece of federal legislation that governs how mortgage lenders can and cannot operate their businesses.

So how does the Truth in Lending Act protect you, and what are your rights under this legislation? Here’s what you need to know.

Your Lender Must Give You A Timely Loan Estimate

A Loan Estimate (previously known as a Good Faith Estimate) is a document your lender provides you that details information about what kind of a mortgage you’ve applied for. Your Loan Estimate includes terms such as your estimated monthly payment, your estimated interest rate, and whether or not your mortgage balance is able to rise even if you make payments.

Under the Truth in Lending Act, your lender is obligated to give you a good-faith Loan Estimate within three days of when you apply for your mortgage. If your lender fails to provide your Loan Estimate within three days or fails to fix reported errors within 60 days, you can sue for damages and report the lender to the federal government.

Your Lender Must Notify You Of Rate Changes

The Truth in Lending Act states that your mortgage lender is required to give you an annual percentage rate estimate within 1/8 of one percent of government guidelines. Your lender must use the government-approved mathematical formula to provide your rate estimate.

If your estimated rate may be subject to change, your lender is obligated to disclose the first possible change you’ll see to your interest rate, and the maximum degree to which it may change. Your lender is also required to disclose the maximum possible changes for subsequent rate adjustments.

There Are Strict Rules About How And When Lenders Can Charge Late Fees

If your lender typically administers fees for late payments, TILA will specify that your lender must notify you – in advance – the date on which a late fee will be imposed and how much the late fee will be. TILA states that no late fee can exceed 4 percent of the amount past due, and a payment is only considered late if it is 15 or more days past due (or 30 or more days past due if you prepaid your interest). Your lender also cannot charge you a late fee on top of a late fee.

TILA is a powerful consumer protection law that gives would-be homeowners a great deal of power. By knowing your rights under TILA, you’ll be able to confidently negotiate with lenders and avoid any unnecessary problems. Contact your local mortgage professional to learn more.