Can You Pay your Mortgage Using Bitcoins?

Bitcoins are all the rage right now and are changing the way people think about money. But can you pay your mortgage using this new digital currency? Find out below!

If you are looking to buy a house, there are a number of financial assets that could help you qualify for a mortgage including your current home, cash in savings and checking, retirement accounts and other investments. But what if you have assets that include bitcoins? While the cryptocurrency was recently labelled as an asset by the Internal Revenue Service, most lenders remain wary about how to value and accept this new digital currency.

Bitcoins as Assets

Bitcoin has been around for about eight years. It could be used in the mortgage transaction just like any other form of money. But there are a few problems. What is one Bitcoin worth? Will anybody accept them?

Let’s start with the worth of a Bitcoin. We would treat it like any other foreign currency. It would need to be converted in terms of value if not in terms of actual conversion to United States dollars. The good news is that there are exchanges for them. One Bitcoin was worth $16,490 on December 14, 2017 3:29pm PST.

Until more consistent rules are put into place, here are some ways you may be able to use Bitcoin during the mortgage process.

To pay closing costs and fees: A Manhattan mortgage provider made history in late 2013 when it became the first firm to accept bitcoins for real estate closing costs and fees. While this is an exciting milestone for the cryptocurrency, the trend has yet to catch on with most lenders. And do not expect to be able to make your mortgage payment in bitcoins because most experts think that is a long way off.

Use bitcoins as an asset on your mortgage application: Valuing bitcoin on a mortgage application is new territory for most mortgage lenders, so you might struggle to find one who will take this asset into consideration. But there is anecdotal evidence that a handful of mortgage providers are becoming more bitcoin-friendly. Just like all assets used to qualify for a mortgage, you will need to verify the value of the bitcoins you hold and submit proper and often extensive documentation to your mortgage provider.

Use bitcoins for proper documentation of transactions in a bank account: Even if you don’t plan on using your bitcoins to boost your assets when you apply for a mortgage, your mortgage provider may still request documentation for any large transactions in and out of your bank account. Your mortgage provider would want to confirm how that money entered your bank account if you cashed out a large amount of bitcoins to use for a down payment. This is similar to accounting for large cash gifts. Mortgage providers need to be sure you have not borrowed money from somewhere else to boost your liquid assets. For this reason, you should be prepared with a record of your bitcoin-to-bank-account transaction history.

Are you in the market to purchase a home in Rancho Santa Margarita, Coto de Caza, or Mission Viejo? Click here to talk to the Ryan Grant Team today!

Loan Prequalification vs. Loan Pre Approval in Orange County

You are finally ready to make the move into homeownership. From all of the online searching you have done, you know that you need to get a “pre-something” to prove you are a serious home buyer. But which is it: preapproved or prequalified? These both sound good, but they have different purposes.

Getting preapproved

The preapproval process is like a test drive before you submit your formal application for a mortgage. The loan officer and an underwriter will verify the figures, facts and your credit history. This process could help pinpoint things you may want to improve or errors that you will want to correct before entering the formal application review process. A loan officer will also start looking for mortgage programs that might apply to your financial situation. The preapproval process is more precise because it is fully underwritten and helps ensure your home buying process will go smoothly.

In addition to ordering your credit report, a loan officer may ask for copies of last year’s W-2s, brokerage, savings account statements, current pay stubs and your credit history..

Getting prequalified

When you ask a loan officer to do a prequalification, it can be done online, in-person or by phone. They will verbally ask you to share information on your income, assets, credit and the amount of debt you owe.

It’s a conversation that helps establish some financial parameters before you make offers on properties and helps you find the ideal price range when starting your search.

The process is useful for first-time buyers and is not rigorous enough to distinguish you from the other attendees at an open house or when you request a showing. The reason is that the letter is based off something similar to a best guess by a loan officer. It’s not reviewed by an underwriter and doesn’t address what to expect in regards to the type of mortgage needed to buy a home.

Your monthly bills

When you are preapproved, you will receive a letter to share with real estate agents and home sellers. After you have an offer accepted on a home, you will still need to formally apply for a mortgage. This review process will involve a deeper dive into the information you have already given. Having a pre-approval letter also means faster service and turn times to get you into your house sooner. The official mortgage application is more likely to be easier than with just a prequalification.

Why should you bother getting prequalified?

The prequalification process does not take a lot of time or effort on your part. Any cost is usually limited to that of requesting a credit report. When you already have an idea of the South Orange County area you want to look in and the type of home you can afford, skipping the prequalification step could make sense. It is a preliminary step for those who need a starting point.

In comparison, for most buyers, a pre-approval is a step that they should not skip. Obtaining a letter from a lender that states you are preapproved can be especially helpful in neighborhoods where the existing home inventory is tight and when the home you are looking at is perfect. Being pre-approved makes it easier for the seller to accept your offer over that of a buyer that has not taken this extra step.

Are you in the market to purchase a home in Mission Viejo, Rancho Santa Margarita or Coto de Caza? Click here to talk to the Ryan Grant Team today!

What Makes a Property’s Value Rise and Fall in Orange County?

In today’s Orange County housing market, buyers and sellers alike try to understand the concept of home value appreciation.

The value of your home may appreciate over time, unlike the purchase of a car which depreciates when you drive it off the lot. Appreciation is based on a few factors.

Location is as important as the home

It’s all about the location, location, location! You have heard this before. Where you buy your home may be the most important and controllable factor to appreciation. If value increase is important to you, make sure to give thought to where you buy.

Ask yourself these questions when buying as it relates to location. Is the house close to major highways? Are there good schools nearby? Is the home conveniently located to entertainment and shopping? Does it have a nice view?

Investing in a desirable location may contribute to equity in your home down the line and can mean more money in your pocket if you decide to sell.

Acres and land accumulate

Another factor to consider is how much you buy. We are talking land, not the physical structure of your house. Think about supply and demand. Land is a precious commodity in Orange County and we are not getting any more of it. As the Earth’s population increases, so does the need for land.

If your budget does not allow for both a big, gorgeous home with a considerable piece of land, you might wish to consider opting for a more conservative home and keep the land.

The benefit of upkeep

Take care of your house. While it may not be as huge a factor as the location and land itself, having a well-maintained house with attractive details and modern amenities might increase the equity of your home. It will also help it sell faster when you are ready. Separate your home from the rest with our home selling tips here!

The external effects

It’s smart to give thought to how your home will appreciate. The reality is that appreciation rates vary based on factors beyond the control of the homebuyer.

The local, national and global economy affects the real estate market. This affects what your home is worth at any given time. To put it simply, the more people could afford to buy homes, the greater the demand becomes for homes. This makes home values rise.

Move fast! Timing is everything

If you are shopping for a house right now, you know that it is a seller’s market. In some locations in Orange County, a house could be under contract within days or hours. This trend has had a positive impact on home values across the nation.

In May of this year, Zillow has reported a national home value index of $199,200. This is an increase of .5% from April this year and 7.4% from last year. To put it simply, sellers have a great chance of getting the most bang for their real estate buck in the current market.

Are you in the market to buy a home in Coto de Caza, Rancho Santa Margarita, or Mission Viejo? Click here to talk to the Ryan Grant Team today!

7 Mortgage Facts You Should Know

The seven mortgage facts below will give you an advantage when shopping for a home or refinancing an existing loan.

1. Mortgage rates are always changing

Similar to the stock market, mortgage rates are changing throughout the day. Mortgage rates you see today might not be available tomorrow. If you are in need of a mortgage loan, make sure to check the current rates being offered by lenders. If you have already done your research and have found your dream house, you should consider locking in your rate as soon as possible.

2. Different mortgage lenders charge different fees

Don’t expect all lenders to charge the same fees for a mortgage loan. Each lender structures their fees differently. The next time you apply for a mortgage loan pay close attention to the rates, closing costs and points being charged.

3. Lenders could sell your loan to another bank

Most home buyers have experience getting a mortgage loan with a certain lender only to find out that the loan has been sold to another bank. This happens because lenders need to free up their liabilities in order to make room to give out more loans. However, it doesn’t affect your mortgage whatsoever and it’s important to pay close attention to your mortgage statement and any correspondence you receive in the mail to make sure you don’t make payments to the wrong bank.

4. Your middle credit score

When you’re applying for a mortgage loan, the lender will pull your credit scores from Transunion, Experian and Equifax to assist them in determining your credit. Your middle score of the three is what lenders will use to qualify for a loan. But the underwriter will review all three scores as part of the loan underwriting process. If you pull your own credit score through an online website, the credit scores displayed to you might be different than what lenders use because they use different credit reporting systems.

5. It’s possible to have a low down payment for a mortgage

You don’t necessarily have to come up with a 20% down payment to get a mortgage loan. You can get an FHA mortgage loan with a 3.5% down payment. The VA and USDA loans require no money down. VA loans are used for military veterans and their families. USDA loan are usually used for farming or rural properties.

You should take note that many lenders will require some type of mortgage insurance for loans that have less than a 20% down payment on a purchase loan or less than 20% equity available on a refinance.

6. You could refinance your home loan anytime

You’re allowed to refinance your mortgage at anytime, but this doesn’t necessarily mean you should. Think about why you would like to refinance. Is it because you want to lower your monthly payments, to take cash out from your equity, or to change the type of loan you are in? Make sure your reason makes financial sense.

7. You could get a mortgage loan after a foreclosure

Most homeowners have experienced a foreclosure after the recent mortgage crisis. There’s good news for these borrowers because they could obtain a mortgage loan after foreclosure. But there are waiting periods involved. For instance, to apply for an FHA loan you need to wait three years after foreclosure to apply. If you would like to get a conventional loan, you will need to wait seven years from foreclosure. For those who would like a VA loan, the waiting period is two years.
Do you have a mortgage question? Click here to contact our partners at the Ryan Grant Team today! And if you’re ready to start searching homes let us know!