Tag: mortgage

4 Mortgage Myths Set Straight

Posted on | by Cuselleration

Going through the mortgage process can either be very frustrating, or surprisingly easy, depending on the circumstances. There are a lot of myths and half-truths that are commonly perpetuated in the industry, so be sure to read up on the four mortgage myths below so you can be well-prepared before starting the process.

Realtors Don’t Care About Your Lender: You are always free to pick whatever lender you want, thanks to the Real Estate Settlement Procedures Act of 1974. However, many realtors will pitch you their list of lenders.

If you go with a lender who is not from the area, the entire process might be slowed down a lot since they might not have the necessary experience dealing with situations in the area of your home. Realtors do notice this.

Plus, many realtors working for sellers usually opt for buyers who have better quality loan approvals. This means local lenders usually will win out, since they are known and respected by local listing agents.

You’ll Always Get The Quoted Rate: Rate quotes can and do change across the day because they are linked to daily mortgage bond trading. If you give a lender enough information, they might be able to lock a quoted rate so you do not have to worry about the price changing.

Locking a rate runs with a property and borrower, so you can’t actually lock your rate until you have come across a home you are ready to buy. Before this, you’ll need to stay in close contact with your lender as you are shopping to get new rates.

Always remember that a loan payment will be predicated on the locked rate, not the APR. The APR is merely a statistic which aides you in understanding fees.

Lenders Use Your Optimal Credit Scores: Many think lenders are going to use the best credit scores, especially if you are applying for a joint mortgage. However, the actually pick the middle across three credit scores, and then take the lowest one between middle scores (if you are applying for a joint mortgage).

Your rates are tied to your credit score, so this process could significantly drive up your rate, or even make you not eligible for the loan. Make sure to ask your lender about any possible exceptions to see what they can do, but keep in mind these types of exceptions are rare.

One exception, for co-borrowers, has to do with big loans over $417,000. Here, lenders might use the credit score that is associated with the higher earner, if that score is higher than the other borrower.

Click here to learn how to buy a home faster and smarter!

Fixed-Rate Is Preferred Over Adjustable Rate-Mortgages: A lot of people started to go with 30-year fixed loans after the financial crisis in 2008. People liked this idea because the rate and payment never changes, even though the rate is always higher for longer loans.

Before choosing a rate, think about how long you are willing to be in the home or keep the mortgage for. There are a variety of calculators out on the market that you can weight the pros and cons of each loan depending on your situation.

Just make sure the loan term is as close to the amount of time you are willing to stay inside of the home. This is to make sure your financing is maximized.

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 Kovacs Connection Team today!

Courtesy of Cuselleration

Tap the Equity in Your Home with These 5 Reverse Mortgage Tips

Posted on | by Cuselleration

If you’re in your sixties and own your home, chances are you have heard about reverse mortgages. Reverse mortgages allow you to tap the equity in your property. But they have risks and could be costly. Here are five tips you should consider:

1. Weighing your options

Whether you need money to pay bills or could use some extra cash, a reverse mortgage should be your last resort. Other options include selling your home and downsizing or renting. You can also take out a home equity loan or line of credit. If credit cards are the issue, you can consider consolidating that debt. If paying real estate taxes or house maintenance costs are the problem, look into local government assistance programs that could help. You have a lot of options. So ask your state agency on aging about lower-cost, less risky ways to fulfill your needs.

2. Understanding the costs, fees and risks

Even though you will not be making any interest payments as long as you live in your home, your interest rate matters. If you choose to move, you will have to pay back the reverse mortgage plus compounded interest. The same thing is true if you have to leave your home for more than twelve months. You should ask about all costs and fees which includes any prepayment penalties.

3. Recognizing the full impact of your decision

The income or lump sum you receive can affect your eligibility or your spouse’s eligibility for a variety of state and federal benefits. This includes Medicaid. It may not have the same home-equity protection that would otherwise apply if you have a health emergency and need to enter a nursing home that you can only pay for by liquidating assets.

4. Getting independent advice

Reverse mortgages are known to be complicated transactions. The federal government requires borrowers to meet with HUD-approved counselors prior to getting a federally guaranteed loan. You will need to confirm that any counselor recommended by your lender is truly independent. You could do this by asking whether he or she receives any funding from the lender or the mortgage industry.

While many loans are federally guaranteed, most lenders offer proprietary loans that are not. Even if you are applying for a proprietary loan, it is a good idea to get advice from a trusted financial adviser who has no interest in either the reverse mortgage or any investment you plan to make with the proceeds. Prior to agreeing to a reverse mortgage, you should consult with legal and tax professionals who know the consequences of reverse mortgages for residents of your state and who are not connected in any other way to the transaction or the lender.

5. Being skeptical of reverse mortgages

Be very skeptical if someone urges you to get a reverse mortgage to make an investment or buy an insurance product or a security. You should particularly do this if they are promising high returns. They are encouraging you to speculate with your home equity. You might need for more critical purposes down the road. If you cannot afford to get a low return or the loss of your home, you should not be investing with your home equity funds.

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!

Can You Pay your Mortgage Using Bitcoins?

Posted on | by Cuselleration

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

Posted on | by Cuselleration

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!

7 Mortgage Facts You Should Know

Posted on | by Cuselleration

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!

Benefits of a Veteran Home Loan

Posted on | by Cuselleration

VA home loans are one of the most powerful loan options on the market for veterans and active military. It’s becoming difficult for many military borrowers to build the credit and assets necessary to move forward with conventional home financing.

 

The advantages of the VA loan program over other loan types are a big reason why VA loan volume has continually increased over the last five years.

VA financing comes with significant financial benefits for those who have served our country. The requirements to secure them are often looser than what would be needed for a conventional or even FHA loan.

For a lot of active military and veterans, the VA home loan program is their only real path to homeownership. The increasing popularity has stemmed from the main advantages of VA loans. Let’s take a deeper look at the great benefits of VA mortgages:

No Down Payment

The VA loan program offers service members and veterans incredible benefits, from zero dollars down to no PMI and more.

Qualified veterans can get a VA loan without making any down payment. Compared to FHA and conventional loans, this gets converted into significant monthly savings.

The minimum down payment amount on an FHA loan is three and a half percent. In conventional financing, it’s oftentimes five percent. On a quarter million dollar mortgage, a military borrower would need to come up with eighty-seven hundred dollars in cash for an FHA loan and twelve thousand five hundred dollars for the conventional loan. These are significant and insurmountable sums for the average military borrower. The average VA borrower has just under nine thousand dollars in total assets.

The great benefit of being able to buy a home with a zero dollar down payment helps veterans and active military members get a slice of the “American dream” without having to spend years scraping and saving for a sizable down payment. This means those who serve our country can get into homes in the present, not in the future years down the road.

No Mortgage Insurance

Unlike FHA and conventional loans, a VA loan does not require monthly mortgage insurance. FHA loans come with both annual and upfront mortgage insurance charges. On a quarter million dollar mortgage, the FHA annual mortgage insurance can add about one hundred seventy dollars per month to your monthly mortgage payment.

According to VA estimates, veterans who secured a VA loan last year will save more than forty billion dollars in private mortgage insurance costs over the life of their loans.

Conventional borrowers who cannot put down twenty percent usually have to pay for private mortgage insurance.

This is an additional monthly fee that is tacked on to your monthly mortgage payment until you build twenty percent equity. The cost would vary by the loan amount, but it is not uncommon to pay more than one hundred dollars per month for PMI.

Competitive Interest Rates

Since the VA guarantees a portion for every VA loan, financial institutions could offer lower interest rates to VA borrowers that are typically one half to one percent lower than conventional interest rates. Rates are based on the inherit risk considered by the lender to finance the loan. The VA’s guarantee brings lenders a sense of security that allows them to charge competitively lower rates.

On a thirty-year quarter million dollar loan, the difference between paying a four percent and four and a half percent rate can mean approximately forty thousand dollars in savings over the life of the loan.

Closing Cost Limits

Closing costs and fees are included in all mortgages. But the VA actually limits how much veterans could be charged when it comes to these expenses. Some fees and costs need to be covered by other parties involved in the transaction. These safeguards assist in making homeownership affordable for homebuyers that are qualified.

Do you have a question on a VA loan for a home in Rancho Santa Margarita, Coto De Caza and other Orange County surrounding cities? We recommend you talk to the Ryan Grant Team, OC’s top mortgage lender!

Mortgage Do’s and Don’ts

Posted on | by Cuselleration

If you are looking forward to venturing into mortgage investments in Orange County, it is important for you to have a clear understanding about what you should do and should not do. This will assist you in avoiding frustration when you are dealing with your investments.

First time home buyers should learn more about the loan process to be adequately prepared for buying their first home.

Here is a list of DO’s and DON’Ts to keep in mind when you are dealing with mortgage investments in OC.

DO

Take a look at your credit report
Initially, you should take a look at your credit report. If you have a high credit score, you have the opportunity to go for a better mortgage. If you can pay it in a timely manner, you will be able to improve your credit score in the future as well. If you want to get a better understanding of your credit score, you should take a look at your FICO score. It is offered to you for free by financial institutions at the end of the month. You are also provided with the ability to purchase FICO from one of the reputed credit rating agencies. If your credit score is not good, you don’t need to worry because there are effective tips that you can follow to improve it within a short period of time. It includes paying your bills and debt on time and reducing the number of debt you owe. Click here to get your free credit report.

Reduce the debt to income ratio
Your debt to income ratio tells how you are capable of managing your monthly payments. As a result, the mortgage lenders take a look at it before lending the requested amount. To create a positive impression on an Orange County mortgage lender, you will have to reduce the debt to income ratio. It would be better if you can reduce the ratio down to 36%. If you have a stronger ratio, you will be provided with the opportunity to go for a better mortgage rate. Increasing your monthly gross income and reducing your monthly recurring debt can be considered as two of the best options available.

DON’T

Spend too much on your mortgage
After you obtain the mortgage, you shouldn’t spend most of your money on it. If you do, you will end up with financial difficulties in the long run. Based on your income, most companies push you to take the largest loan you are approved for,  which is why you want to find the right mortgage provider. Ryan Grant is a great Orange County mortgage company who provides a more educated loan process and look at all your finances to help you determine the best mortgage for your overall financial situation. This doesn’t mean you need to go ahead and obtain that maximum recommended amount. If you do, you will have to spend most of your monthly income on the mortgage payment. As a result, you will have to compromise on many other things in your life. Just take a look at how many years are left for you to pay the mortgage installments. You will realize how much frustration you will have to go through and the sacrifices you will have to make when you have pay too much on your mortgage.

Expect refinancing to reduce the interest rate
There is a possibility for you to save money. You just have to focus on shortening the term of your loan. In other words, you will be able to save money if you go for a 10 year fixed rate by giving up your 20 year mortgage.

On the other hand, cash out financing can also assist you with some major savings. With this approach, it would be possible for you to let your home equity settle down the other debts. This way, your monthly installment would increase because you shorten the duration of the mortgage. Also, you would be able to reduce the rate of interest, which can help you save money in the long run.

All in all, we conclude that the mortgage rates are always changing. If you’re interested in learning more contact Orange County’s top lender, Ryan Grant.

Ryan Grant’s team of mortgage experts focus on giving their clients a more educated, more motivated and more confident home buying experience so we trust you will be in good hands!

We take great pride in ensuring all clients have a phenomenal experience buying a home. Visit us at cotoconnection.com and a member of our team will contact you shortly. We look forward to speaking with you soon!