Category: Mortgage (Page 29 of 60)

Now Is A Great Time To Refinance That Investment Property

June 25, 2020 / Tom Bonetto

Mortgage rates are at all-time lows. Many homeowner’s are taking advantage and locking in for the long term. But what about investors, are they doing the same?

Refinancing rental properties can unlock a good deal of wealth-building opportunities for investors, including the ability to lower interest rates and monthly payments, improve loan terms, and earn additional cash flow.

Interestingly, many investors have not taken advantage of today’s market.

For one reason or another, there are a number of investors that don’t even realize the opportunity that’s in front of them.

Should I Refinance My Rental Property?

In most cases, investors should consider a refinance to:

Lower the mortgage rate

Take cash-out to purchase new investment properties

Convert from an ARM to a fixed-rate

Turn a hard money loan into a conventional one

Pay off the loan more quickly

Upgrade a current investment property

Much has changed in a relatively short period of time regarding rates and valuations…and they are almost all in favor of the investor.

As mentioned earlier, interest rates are historically low…and they look a lot better than they did even this time last year, let alone a few years ago.

5.75% versus 4.5% example

If you purchased an investment property in October of last year, for example, many borrowers took on mortgages with an interest rate in the high 5% range.

Today, if that investor were to refinance their $250,000 loan from 5.75% to 4.5% for example, they would save nearly $200 per month.

There might be some discount points involved depending on the scenario, but they can be financed into the loan amount, so the only out-of-pocket cost would be that of an appraisal.

Assumptions: $250K loan, 70% loan-to-value and 760+ credit score

In Conclusion

When you own an investment property, the goal is to earn a solid rate of return…and refinancing that property can increase your short-term cash flow and help you build longer-term wealth.

Do reach out to me for more, as it would be my pleasure to help you look at different options and programs that might help you in today’s market.

Establishing and Building Credit

June 11, 2020 / Tom Bonetto

The dilemma: a credit card is the quickest way to build credit, but it’s nearly impossible to get a credit card without established and/or good credit.

If you’re trying to build credit or improve it, a secured credit card is one of the best tools to help you achieve that goal.

What is a secured credit card?

A secured credit card works the same as a traditional unsecured credit card, with one major distinction…a secured card requires a security deposit to use as collateral.

This deposit can be as low as $200 or $300 and is usually equal to your chosen credit limit. The credit card issuer holds onto the deposit in case you default on your payments.

What happens to that $300 deposit if you always pay your bill on time? You’ll eventually get it back. Use the card responsibly, and you can improve your credit enough to qualify for an unsecured card — one that doesn’t require a deposit.

How To Use It

Although they require a deposit, secured credit cards are a powerful tool for rebuilding credit. Most importantly, use the card carefully, making a few purchases every month – don’t go too close to your credit limit.

A generally accepted directive is to use less than 30% of your credit line each month.

When you keep your card balance at a reasonable level, it demonstrates to creditors that you are not relying solely on credit to meet your obligations.

Pay your balance in full (or just slightly short of it) every month before the due date. When you pay in full, you won’t be charged interest. Interest rates on secured cards are generally higher than those on unsecured cards.

Keep an eye on your credit score over time using a free service like Credit Karma; when it has meaningfully improved, ask your issuer about upgrading to an unsecured card

As you use a secured credit card regularly and make your payments on time (or even early) every month, you establish better and better credit through your payment history.

Key Tips to Follow

Make Sure It Will Help

Some secured cards don’t report your account activity to all three major credit bureaus. This means that even if you use the card responsibly, it may not help you build your credit history. Make sure that the card you choose reports to the credit bureaus.

Consider the Issuer

Some of the major credit card issuers offer secured credit cards, but most secured cards are issued by banks and credit unions you may not recognize. That’s fine, but do your research to make sure the issuer is reputable and offers a good customer experience.

Look Out for Fees

Some secured credit cards charge an annual fee and other fees. Others, however, won’t charge you a fee unless you take out a cash advance or request balance transfers.

“The score doesn’t look at a secured card any differently than an unsecured card,” said Barry Paperno, a credit score expert who has worked with FICO and Experian.

“It will look at the fact it’s a credit card, when the card was opened, the credit limit and the balance, and of course the payment history. In that way it will help establish credit just like an unsecured card.”

In Conclusion

With the right secured credit card, you will have the benefit of being able to add positive payment history to your credit report. Consider a secured credit card as a stepping-stone to qualifying for a better credit card in the future. Please reach out to me for more, as it would be my pleasure to work with you in building your credit.

For more, check out the following links:

Nerdwallet

Self-Inc

Credit.com

Will sellers or buyers have the advantage this summer?

June 10, 2020 / Tom Bonetto

In most years (and in most parts of the country), summer is the best time for home sellers.

That’s because buyer competition typically accelerates from May through August.

This year, however, the Covid-19 pandemic might have altered that trend.

Could those changes be enough to alter the summer market in favor of home-buyers? For some, the answer might be yes!

Experts are split, but they agree on one thing: No one can say for sure how the market will move in the coming months.

I’m linking to an article from Eric Martin at The Mortgage Reports and I’d invite you to take a look.

Summer is normally a seller’s market

From Martin’s article:

A recent report by ATTOM Data Solutions had some interesting findings:

Sellers reap the greatest home sale premiums as the weather warms up
The months yielding the highest premiums are: June (9.6%); May (8.3%); and July (7.3%). August yields a 6.0% premium

Overall, says ATTOM, home sales completed in May, June, and July usually net 7% to 10% above market value.

That equates to roughly $17,000 to $25,000 extra for sellers.

Judging by the numbers, it would appear that sellers have a solid leg up on buyers in the summer months.

How COVID-19 changes the home buying balance

Martin states “some experts think that the coronavirus could alter the usual summer housing market patterns.”

“Consider that the aforementioned data is based on sales between 2011 and 2019. This year is a hard one to predict for numerous reasons — most of all a pandemic that’s likely to have long-lasting effects.”

“We are in uncharted territory,” says Caleb Liu, a real estate investor and owner of House Simply Sold.

“The longer this pandemic lasts, the more economic damage it may cause. Many sellers may be forced to sell their homes. That means an increased housing supply. And when inventory goes up, prices fall.”

That doesn’t necessarily mean homes will priced to sell quickly.

“But if the pandemic extends into the second half of 2020, I believe prices will start to drop,” says Liu.

“If the pandemic extends into the second half of 2020, I believe prices will start to drop” –Caleb Liu, Owner, House Simply Sold

Real estate attorney Rajeh Saadeh also feels buyers may have more leverage than many expect this summer.

“The economy is still relatively strong. And the buyer pool this year will likely be smaller due to job and income loss. Those factors can help give buyers the advantage,” explains Saadeh.

Remember that mortgage rates have recently dropped to all-time lows. Most experts also predict that this low-rate atmosphere will most likely continue throughout the rest of 2020.

Today is a Good Time to Buy

For buyers with stable employment, good credit, and enough cash for the down payment, closing costs, and mortgage payments, this summer could be an excellent time to make that purchase.

Martin quotes Suzanne Hollander, a Florida International University real estate faculty and attorney:

“Interest rates remain enticingly low,” says Hollander. “And if you live in a condo or apartment with common areas and are worried about coronavirus risks, a detached single-family home with your own yard might be just the place for you.”

You can check out another article here on the opportunity that’s presented itself in the housing market during the last few months.

“When the coronavirus pandemic subsides, home prices could very well be higher, and financing could be harder to come by, so buyers should try to find deals now, if they are able.”

In Conclusion

Now really is a good time to act, if you are able. Do reach out to me if you would like some help with financing or to talk strategy this summer – as it would be my pleasure to help!

Mortgage Qualification: What is a Debt-to-Income Ratio and Why is it Important?

June 2, 2020 / Tom Bonetto

Debt-to-Income Ratio (or DTI) is a personal finance measure that compares the amount of debt you have to your overall income.

Mortgage lenders use it as a way to measure your ability to manage the payments you make each month and repay the money you have borrowed.

When you apply for a mortgage, you’ll need to meet maximum DTI requirements so your lender knows you’re not taking on more debt than you can handle.

Lenders prefer borrowers with a lower DTI because that indicates less risk that you’ll default on your loan.

A mortgage debt-to-income ratio leaves out monthly expenses such as food, utilities, transportation costs and health insurance. Although lenders may not consider these expenses and may approve you, it’s important not to borrow more than you’re comfortable paying.

So keep these additional obligations in mind as you evaluate how much you’re willing to pay each month.

Understanding Debt-to-Income Ratio

A low debt-to-income ratio demonstrates a good balance between debt and income. In general, the lower the percentage, the better the chance you will be able to get the loan or line of credit you want.

On the contrary, a high debt-to-income ratio signals that you may have too much debt for the income you have, and lenders view this as a signal that you would be unable to take on any additional obligations.

To a lender, someone with a high debt-to-income ratio can’t afford to take on any additional debt…and if the borrower defaults on his mortgage loan, the lender would lose money.

How High Can You Go?

Evidence from studies of mortgage loans suggest that borrowers with a higher debt-to-income ratio are more likely to run into trouble making monthly payments. A 43 percent debt-to-income ratio is important because, in most cases, that is the highest ratio a borrower can have and still qualify for a loan backed by Fannie Mae and Freddie Mac.

Larger lenders may still make a mortgage loan if your debt-to-income ratio is more than 43 percent, but they will have to make a reasonable, good-faith effort, following regulatory rules, to determine that you have the ability to repay the loan.

Calculating Debt-to-Income Ratio

To calculate your debt-to-income ratio, add up your total recurring monthly obligations (such as mortgage, student loans, auto loans, child support, and credit card payments), and divide by your gross monthly income (the amount you earn each month before taxes and other deductions are taken out).

For example, assume you pay $1,200 for your mortgage, $400 for your car, and $400 for the rest of your debts each month. Your monthly debt payments would be as follows:

$1,200 + $400 + $400 = $2,000

If your gross income for the month is $6,000, your debt-to-income ratio would be 33% ($2,000 / $6,000 = 0.33). But if your gross income for the month was lower, say $5,000, your debt-to-income ratio would be 40% ($2,000 / $5,000 = 0.4).

In Conclusion

Your debt-to-income ratio (DTI) – how much you pay in liabilities each month compared to your gross monthly income – is a key factor when it comes to qualifying for a mortgage. Your DTI helps lenders gauge how risky you’ll be as a borrower.

Keeping your debt-to-income ratio low can help you qualify for a home loan and pave the way for other borrowing opportunities. It can also give you the peace of mind that comes from handling your finances responsibly.

Please do reach out to me for more, as it would by my pleasure to help you qualify for a mortgage!

You can find out more here:

A Credit Repair Primer – Removing Items Yourself or Hiring a Pro

April 28, 2020 / Tom Bonetto

Since credit scores have become such an integral part of our financial lives, it pays to keep track of yours and understand how your actions dictate the numbers. You should absolutely build, defend and take advantage of great credit regardless of your age or income.

Yet a lot of people still have doubts as to how credit scores work and why it’s important to make sure the information contained in your credit report is correct.

You can leverage high scores into great deals — on loans, credit cards, insurance premiums, apartments and cell phone plans. Bad scores can hammer you into missing out or paying more.

Money Magazine Article

I’m linking to an article from Money Magazine called How To Get Items Removed From Your Credit Report.

The article goes into great detail on on how to remove items from your credit report – as well as a specific explanation on the credit reporting system and what goes into it. I highly recommend that you take a look at it.

One of their recommendations is to hire a professional credit repair service – and I really believe that can be a good idea.

Money Magazine writes “when looking at the lifetime cost of bad credit, or if your report is riddled with inaccuracies, paying a reputable company…to help repair your credit is often a reasonable solution.”

Credit repair services can help you with the following items:

Cleaning up credit report errors
Disputing inaccurate negative entries
Creditor negotiations

The Debt Rescue Network – Jennifer Amsbaugh

If you need to improve your credit score to qualify for a mortgage or earn a lower interest rate, I recommend that you reach out to Jennifer Amsbaugh at DNS and see what she can do.

Their program is designed for individuals and families struggling to pay debts while saving money for daily expenses at the same time. They have a particular methodology that has proven to be effective in improving scores.

Jennifer Amsbaugh, Certified Debt Affiliate, Debt Negotiation Services

Toll Free: 888-501-7206
Direct: 602-789-3225
Email: Jenn.Amsbaugh@outlook.com
Website: https://thednsway.com/

Why Is Credit So Important?

It seems like those with good credit catch all the breaks when it comes to getting lines of credit. It’s easier for them to qualify, and they get lower interest rates.

Well, there’s a pretty good reason for it.

A person that has good credit has a low statistical probability of defaulting on a loan. Therefore, they are given a lower interest rate. A person with a lower credit score has a much higher probability of defaulting, therefore they are charged a much higher interest rate to cover the losses incurred by lenders by those who do default.

At the very least, your score will affect the type of interest you’ll pay on any type of loan, from home mortgages to credit cards. At most, a low credit score will seriously impact your ability to purchase a house or a car.

If you have more questions about your credit and how it impacts your ability to finance a home, please do reach out to me, as it would be my pleasure to help!

Category: Mortgage (Page 29 of 60)

Now Is A Great Time To Refinance That Investment Property

Should I Refinance My Rental Property?

5.75% versus 4.5% example

In Conclusion

Establishing and Building Credit

What is a secured credit card?

How To Use It

Key Tips to Follow

In Conclusion

Will sellers or buyers have the advantage this summer?

Summer is normally a seller’s market

How COVID-19 changes the home buying balance

Today is a Good Time to Buy

In Conclusion

Mortgage Qualification: What is a Debt-to-Income Ratio and Why is it Important?

Understanding Debt-to-Income Ratio

How High Can You Go?

Calculating Debt-to-Income Ratio

In Conclusion

A Credit Repair Primer – Removing Items Yourself or Hiring a Pro

Money Magazine Article

The Debt Rescue Network – Jennifer Amsbaugh

Why Is Credit So Important?

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