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No, You Don’t Need 20% Down….Or Even Close To It

July 12, 2016 / Tom Bonetto

Years ago, conventional wisdom said potential home buyers should make a down-payment of 20 percent.

Doing so, the logic went, would help them secure a great interest rate and make monthly mortgage payments less costly. These lower payments would help home buyers afford the expenses of home ownership — from closing costs to homeowner’s insurance to emergency funds.

But 20 percent down proved too large a hurdle for many potential homeowners as housing prices rose in the 1990s and beyond.

Today, large down-payments are nothing more than suggestions.

Source: The Mortgage Reports – Barbara Ballinger

Today, down-payment options from zero to 15% are completely reshaping the way people buy homes, especially first-time home buyers. Regardless of financial status, age, background, or nationality, home buyers are learning how to make a down-payment that suits their needs. They are no longer worried about adhering to outdated ideas about a “normal” down-payment.

There are equally good reasons for you to make a much smaller down-payment. By doing so, you retain available cash in the bank for emergencies, expenses, and other financial goals.

Conserve cash: Many say that “cash is king”. Experienced investors want to protect what they have and use the extra income to invest in other projects or the market.

Pay off debt: Many lenders advise using available cash first to pay off credit card debt. That debt is calculated at a higher interest rate than a mortgage and doesn’t offer the same tax deduction.

With debt paid off or lowered, you’re also likely to see your credit score climb. You need a minimum of between 640 and 680 to secure the most reasonable loan rates. Improve your score and hit 740, and you’ll secure an even better rate.

Tackle repairs: Having cash on hand will allow you to make essential repairs and upgrades. Few homes are so perfect that you move in without wanting to do some work.

Set aside for an emergency: Emergency funds are important to cover unforeseen repairs or other non-home related issues. If your car breaks down or furnace goes out, it’s better to have cash on hand rather than finance repairs with a credit card. That can lead to higher expenses later.

You can find the complete article here…..

What Is A Mortgage Refinance, In Simple English

July 6, 2016 / Tom Bonetto

Simply put, refinancing gives a homeowner access to a new mortgage loan which replaces its existing one. The best part is, the details of the new mortgage loan can be customized by the homeowner, including a new mortgage rate, loan length in years, and amount borrowed.

Refinances can be used to reduce a homeowner’s monthly mortgage payment; to take cash out for home improvements; and, to cancel mortgage insurance premiums, among other uses.

Source: The Mortgage Reports – Dan Green

To refinance your home means to replace your current mortgage loan with a new one. Refinances are common whether current rates are rising or falling; and you can get one here, as you are not limited to working with your current mortgage lender!

Some of the reasons homeowners do this include a desire to get a lower mortgage rate; to pay their home off more quickly; or, to use their home equity for paying credit cards or funding home improvement.

These loans typically close more quickly than a purchase mortgage loan and can require far less paperwork.

3 Types Of Refinance Mortgages

These mortgages come in three varieties — rate-and-term, cash-out, and cash-in. The refinance type that’s best for you will depend on your individual circumstance – and mortgage rates vary between the three types.

Rate-And-Term Refinance

In a rate-and-term refinance, the only terms of the new loan which differ from the original one are either the mortgage rate, the loan term, or both. The loan term is the length of the mortgage.

For example, in a rate-and-term refinance, a homeowner may refinance from a 30-year fixed rate mortgage into a 15-year fixed rate mortgage; or, may refinance from a 30-year fixed rate mortgage at 6 percent mortgage rate to a new, 30-year mortgage rate at 4 percent.

With a rate-and-term refinance, a refinancing homeowner may walk away from closing with some cash, but not more than $2,000 in cash.

“No cash out” refinance mortgages allow for closing costs to be added to the loan balance, so that the homeowner doesn’t have to pay costs out-of-pocket.

Most refinances are rate-and-term refinances — especially in a falling mortgage rate environment.

Cash-Out Refinance

In a cash-out refinance, the refinance mortgage may optionally feature a lower mortgage rate than the original home loan; or shorter loan term, such as moving from a 30-year mortgage to a 15-year mortgage.

However, the defining characteristic of a cash-out mortgage is an increase in the amount that’s borrowed.

With a cash-out refinance, the loan balance of the new mortgage exceeds than the original mortgage balance by five percent or more.

Because the homeowners only owes the original amount to the bank, the “extra” amount is paid as cash at closing, or, in the case of a debt consolidation refinance, directed to creditors such as credit card companies and student loan administrators.

Cash-out mortgages can also be used to consolidate first and second mortgages when the second mortgage was not taken at the time of purchase.

Cash-out mortgages represent more risk to a bank than a rate-and-term refinance mortgage and, as such, carry more strict approval standards.

For example, a cash-out refinance may be limited to a lower loan size as compared to a rate-and-term refinance; or, may require higher credit scores at the time of application.

Most mortgage lenders will limit the amount of “cash out” in a cash-out refinance mortgage to $250,000.

Cash-In Refinance

Cash-in refinance mortgages are the opposite of the cash-out refinance.

With a cash-in refinance, a refinancing homeowner brings cash to closing in order to pay down the loan balance and the amount owed to the bank.

The cash-in mortgage refinance may result in a lower mortgage rate, a shorter loan term, or both.

There are several reasons why homeowners opt for cash-in refinance mortgages.

The most common reason to do a cash-in refinance to get access to lower mortgage rates which are only available at lower loan-to-values. Refinance mortgage rates are often lower at 75% LTV, for example, as compared to 80% LTV.

Another common reason to cash-in refinance is to cancel mortgage insurance premium (MIP) payments. When you pay down your loan to 80% LTV or lower on a conventional loan, your mortgage insurance premiums are no longer due.

For more, see Dan’s full article here….

Think Big – Why Home Ownership Matters

June 30, 2016 / Tom Bonetto

Your home is likely the biggest investment you will make in your life, which brings with it some fear and anxiety. Don’t let it! While home ownership may seem a bit scary, buying your home should be an exciting time.

Enjoy the process and engage the right people.

“Twenty years from now, you will be more disappointed by the things you didn’t do than by the ones you did do. So throw off the bowlines. Sail away from the safe harbor. Catch the trade winds in your sails. Explore. Dream. Discover.”

— Mark Twain

Sure, it’s nice to walk into a perfectly stage, move-in ready house where the price is right. But don’t discount a place just because the carpet is worn, the paint isn’t your color, or the fixtures are a bit outdated. These are easy fixes – and great bargaining chips! Use your imagination and really take a look at the big picture.

The USDA Mortgage – A Primer

June 28, 2016 / Tom Bonetto

USDA home loans are regular mortgages backed the U.S. Department of Agriculture as part of its USDA Rural Development Guaranteed Housing Loan program. These types of loans are not just for farmers – the USDA home loan is widely-available for all types of places and individuals. 97% of the geographic United States is in USDA loan-eligible territory. These loans are available to home buyers with below-average credit and income, offer 100% financing with reduced mortgage insurance premiums, and feature below-market mortgage rates.

Using a USDA loan, buyers can finance 100% of a home’s purchase price while getting access to better-than-average mortgage rates. This is because USDA mortgage rates are discounted as compared to rates with other low-down payment loans.

Here’s the big news: beginning October 2016, USDA fees will drop to 1.00% paid at closing, and 0.35% paid annually!

USDA loan rates are often lower than comparable conventional 30-year fixed mortgage rates. Plus, because mortgage insurance rates are lower, with your small down payment, USDA loans can often be a better deal as compared to FHA loans or conventional loans.

The USDA Rural Development loan is meant to help households of modest means get access to housing and mortgage loans in some of the less-densely populated parts of the country. By enabling home ownership, the USDA helps to create stable communities for households of all sizes.

How do I check if my home eligible for a USDA loan?

With the USDA Rural Housing Program, your home must be located in a rural area. However, the USDA’s definition of “rural” is liberal. Many small towns meet the “rural” requirements of the agency, as do suburbs and exurbs of most major U.S. cities.

You can click here and hit the “Property Eligibility” tab to search a specific address to see if it can be considered eligible for USDA loan financing.

97% of the United States is USDA loan-eligible. Only 3% is ineligible.

There are also income specific limits – and they vary by county.

What’s the maximum USDA mortgage loan size?

There is no maximum loan size for the USDA loan program. The amount you can borrow is limited by your household’s debt-to-income.

The USDA typically limits debt-to-income ratios to 41%, except when the borrower has a credit score over 660, stable employment, or can show a demonstrated ability to save.

Is the USDA loan program limited to first-time buyers?

No, the USDA Rural Housing Program can be used by first-time buyers and repeat buyers.

Can I finance the Upfront Mortgage Insurance into my mortgage?

Yes, the USDA will let you finance your Upfront Mortgage Insurance payment into your loan size.

For example, if you bought a home for $100,000 and borrowed the full $100,000 from your lender, your Upfront Mortgage Insurance would be $2,000. You could then raise your loan size to $102,000.

Please feel free to contact me to find out more!

Source: The Mortgage Reports

The Mortgage Interview – Why All of the Questions?

June 23, 2016 / Tom Bonetto

It’s one of those “need-to-know” situations – a time where most everything needs to be laid out on the table.

An IRS audit? No.

Homeland Security interview? No.

It’s the sit down with your mortgage lender. It doesn’t sound like a ton of fun, does it?

Actually, a few of the questions that will make you furrow your brow are actually pieces of information that are required as part of the process. They really aren’t that intrusive, but do make sure to share the information accurately – as it might make the difference between qualifying and not!

In all seriousness, if your lender doesn’t take the time to ask these, and a myriad of other questions, he or she really isn’t doing their job. It’s in your best interest as a customer to share as much as possible with your lender-of-choice, as they should be then able to put together the best possible options for you that meet your goals and objectives.

Read on for more…..

Source: The Mortgage Reports

5 Nosy Questions To Expect From Your Mortgage Lender

The Lending Coach

Page 70 of 78

No, You Don’t Need 20% Down….Or Even Close To It

What Is A Mortgage Refinance, In Simple English

3 Types Of Refinance Mortgages

Rate-And-Term Refinance

Cash-Out Refinance

Cash-In Refinance

Think Big – Why Home Ownership Matters

The USDA Mortgage – A Primer

Here’s the big news: beginning October 2016, USDA fees will drop to 1.00% paid at closing, and 0.35% paid annually!

How do I check if my home eligible for a USDA loan?

What’s the maximum USDA mortgage loan size?

Is the USDA loan program limited to first-time buyers?

Can I finance the Upfront Mortgage Insurance into my mortgage?

The Mortgage Interview – Why All of the Questions?

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