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5 Steps to Getting Mortgage Ready in 2019 1

 

New Year’s means new goals for many, and buying a house and beginning to gain equity may be one of them. January is a good time to buy, and many young families without school-age children can capitalize on the buyer’s market at this time of year. Here are some things you can focus on for getting a mortgage in 2019.

Check your credit score
Many first time home buyers will have newly established credit showing student loan repayment and beginners’ credit cards. Whether or not knowledgeable about credit scores, you should always check prior to and shopping for a mortgage. Given time and effort, your credit score may improve, and it will be highly effective getting a better mortgage rate and higher approval for a loan. In order to get a Federal Housing Administration (FHA) low down payment advantage of 3.5%, you must have a credit score of 620 or higher.

Determine your price range
Determining your price range will help you to find the right mortgage for you. Your down payment, monthly payment, interest rate, and loan term are all variables that can determine your price range. Having an overall house cost going in is a good idea, and other terms can be determined later, but remember to factor in real estate taxes, homeowners insurance, and any mortgage insurance to determine the overall cost of the home. This is also a good time to your research and home shopping method your areas of interests and their real estate history.

Shop for a mortgage lender
People are going online for services more and more now. Finding a mortgage lender with a reputable website and web presence will help you to find a match. Recently, “quick” loans have become popular as an alternative, but remember that these will incur different costs such as higher interest rates and higher down payments because those lenders are not really taking the time to learn who you are to evaluate your assets. This is why many home buyers prefer to work with a local, established mortgage lender. This is also a great time to determine which type of mortgage you will be shopping for. If you are having trouble finding a good mortgage lender, try going to a realtor first. They will inevitably know people in the business that they can recommend.

Start the pre-approval process
Getting pre-approved with a mortgage lender should be a comfortable process once you have determined the right lender. It will involve going over credit scores, assets, income, employment history, and other elements that will contribute to the pre-approval amount for purchasing a house, as well as the interest rate and term suggestions. Be open to working with the lender, they will be happy to calculate and recalculate new terms until you find an ideal match. Furthermore, ask about rate locks to determine if you can rely on a lender to “lock in” an interest rate before the final mortgage is calculated. Remember that this is not the finite meeting about a mortgage loan.

Get Shopping
Once you are pre-approved and have the confidence of knowing that you can purchase a home at your budget, you should feel eager to start the home buying process. Your realtor will be able to better determine your price range and understand the factors of your pre-approval. Realtors on both sides of the sale will be more open to negotiating to meet your pre-approved budget, as it leads to a quicker home sale and faster resolution for all parties. Remember that pre-approval is not the last meeting that you will have with your mortgage lender, and that there may be flexibility within your pre-approval determined by the cost of the home.

Buying a home may be the largest purchase that you ever make. Being aware of your credit score and income history will go a long way to finding a better mortgage. The New Year is a great time to determine how you can realize your goals of owning a home. Taking the time to meet with a mortgage lender at any point in the buying process will give you the confidence to move forward and to become a homeowner.

equifax

 

Here’s how the Equifax breach could impact your chances of getting a mortgage loan:

Credit scores are extremely important in getting a mortgage. Good credit can be the difference between getting a home loan when you are ready to make an offer, or having to wait to improve your credit score—even if you are prepared in other ways.

The consumer credit reporting agency Equifax reported that the unauthorized access occurred between mid-May and July, and was discovered on July 29. More than half of the US, an estimated 143 million consumers, could be affected by the breach.

Luckily, there are a few steps that you can take now to protect yourself from having your credit score compromised and your identity stolen:

1. Begin monitoring your credit and bank accounts

There are several agencies that will give you a free credit report, like www.annualcreditreport.com. This is not considered a “hard” credit pull, which could negatively affect your credit, but will allow you to see where your credit is being used. Monitor your credit report and bank accounts for any charges that seem unusual.

2. Use Equifax’s free credit monitoring service

To make amends for the largest private information breach in the history of the U. S., Equifax is offering a free credit monitoring service for 1-year. Although this does not have a long-term solution, credit information that is stolen is usually used very quickly, so it can help you to keep your identity safe.

You can visit www.equifaxsecurity2017.com to sign up for this service.

 

 

3. Freeze your credit

When you freeze your credit, no business can open a new account under your name or Social Security number. It can be tedious to unfreeze, but it will not affect your credit score. After receiving criticism from customers, Equifax is now allowing consumers to freeze their credit without paying any fees. However, it’s still important to freeze your credit with the two additional credit reporting agencies, Experian and TransUnion.

To freeze your credit at Equifax, you'll want to go to freeze.equifax.com.

4. Set up monthly reminders to check your credit score

You and your family can better protect your financial security by using a monthly reminder to check credit reports and bank accounts. Checking your credit report on a monthly basis will not affect your score adversely.

5. Use a financial monitoring application

Mint is a financial planning application owned by Intuit, the creators of Turbo Tax. Mint, and other similar apps, allow you to monitor your spending, check your credit score, and create budgets. Mint will also notify you if an unusual charge is made to one of your accounts.

Although there is no way to guarantee that monitoring your credit will prevent a thief from stealing your identity or opening a credit account, following these steps may help you to prevent it from impacting your credit score. This can give you more peace of mind if you're preparing to purchase a new home.

 

Understanding conventional mortgage terms 1

The mortgage term is the length of time that it takes to repay your mortgage in full. It is one of the most controllable variables with your mortgage, but like other factors, it can be a huge determinant in the type of loan that you choose. Along with the loan amount and the monthly payment, it can decide the size of the home that you can ultimately buy. Choosing a mortgage term that fits your income and lifestyle is an important choice. This article will teach you how to do it.

15, 30, and more

Conventional mortgages are available in many different terms, but the most common are 15- and 30-year mortgages. The main difference between shorter and longer term mortgages is the interest rate and principal payment amount. Most conventional mortgages have a fixed rate, meaning that the interest rate is not adjusted over time. However, adjustable rates are also available.

This being said, shorter term mortgages can be seen as beneficial to mortgage lenders, and will, in most cases, allow for a lower interest rate. 15-year mortgages are ideal for those that have a stable career and source of income, as well as a low debt to income ratio.

30-year mortgages allow the homebuyer to plan on saving more in the future, but to ultimately pay more money in interest than what would be paid on a shorter term mortgage. Most mortgages allow homebuyers the ability to “pre-pay” if your income situation changes. This will allow you to pay an amount over your monthly principal on a regular or irregular basis in order to repay your mortgage sooner. A longer term mortgage can also allow a home buyer to purchase a home at a larger price point while knowing that they can pay off the loan amount in monthly payments over time.

Other mortgage terms can be between 10- and 20- years, but they are less commonly used.

Saving money in interest

Because interest is charged over time, a 15-year mortgage will allow the homebuyer to save money because the total amount of interest charged is less than that of a longer term mortgage. The monthly principal on a 15-year mortgage will be higher than a 30-year, but both will add up to the amount of the loan plus interest. If interest is compounded over 30-years, the amount paid would be significantly greater than what is paid on a shorter term mortgage.

For conventional fixed-rate mortgage loans, the interest rate will be fixed over the term of the loan, meaning that it will not increase or be adjusted. Because of this, a longer term mortgage will have a higher interest rate throughout the term of the loan. However, it is beneficial for homebuyers to not have variable interest rates through the term of the loan, especially if it is over 30 years.

Monthly payments

The main difference between shorter and longer term mortgages is the monthly payment. The principal payment amount for both mortgage terms will add up to the full amount of the loan, plus compounded interest. However, the principal of a shorter-term mortgage will be significantly higher and may require a higher source of income or lifestyle adjustment. Longer term mortgages will allow for lower monthly premiums so that the homebuyer can use these savings to pay off debt or save for retirement.

However, a general rule for lenders is that a monthly payment, including principal, interest, insurance, and taxes, should not exceed more than 28% of a homebuyer’s monthly income. This amount, as well as the term, will all be considered during a pre-approval for a mortgage loan.

Mortgage insurance

Many different types of mortgages will require mortgage insurance, at least for a period of time. It can be discontinued after the homebuyer has paid 22% into the equity of a home. It may also be negated by providing a down payment of 20% when purchasing the home.

Because the payments on a shorter term mortgage will be higher, the homebuyer will reach the amount of equity that they need to cancel mortgage insurance sooner than with a longer term mortgage. This is the only way that mortgage term can affect mortgage insurance, as many lenders will require it when borrowing more than 80% of the purchase price, regardless of the term.

Paying off early

Any mortgage can be paid off early. There are other ways to change the length of your mortgage, such as refinancing with your original mortgage lender or a different lender. If you choose to sell the home, the amount of equity that you have in the home can be sold and used to pay off the remainder of the loan amount.

Some mortgages such as a 5/1 Adjustable Rate Mortgage are intended to be paid off early to avoid a large increase in interest rate. Other mortgages may be ended at different times due to relocation, refinancing, and more.

Mortgage terms are one of the reasons that homebuyers are able to work with lenders to find a home that meets their needs and fits into their budgets. Mortgage terms should be approached in the pre-approval process, as they can greatly affect the amount that you will be granted for the loan.

 


VA Loan

A VA loan is a mortgage loan that is offered specifically for active military and veterans and is guaranteed by the United States Department of Veterans Affairs (VA). A VA loan is issued by a mortgage lender, similar to other loan types, but is backed by the Department of Veterans Affairs. VA loans have additional benefits, making them an attractive option for buying a home if you are eligible. To purchase a home with a VA loan, you do not need to provide a down payment or purchase mortgage insurance.

Although costs are generally lower with a VA Loan, they do require a one-time funding fee of 2.15%. This fee is reduced to 1.25% if the buyer provides a down-payment of 10% or more, and is zero if the veteran receives disability. Another benefit of a VA Loan is that Veteran’s Affairs will renegotiate on behalf of the loan recipient should they run into financial difficulty.

Who is Eligible for a VA Loan?

VA Loans are specifically for United States veterans, service members, and widowed spouses of deceased service members. You are able to apply for a VA mortgage if:

  • You are on active-duty military
  • You were separated from military service in a situation other than “dishonorable discharge”
  • As a veteran or active military, if you meet specific length-of-service requirements
  • As a reservist or a member of the National Guard, if you meet specific length-of-service requirements
  • You are a qualified surviving spouse of a deceased veteran

In addition, the home must be intended as your primary residence. Also, you must have a valid certificate of eligibility from the VA.

Benefits of a VA Loan

There are many benefits that make VA loans an attractive option for those that are eligible, including:

1. You do not need to provide a down payment. Because the loan is backed by the VA, you are not required to provide a down payment. However, if you choose to provide one, your monthly payment will be reduced.

2. You do not have to purchase mortgage insurance. Again, because the loan is backed by the VA, there is less liability for the lender and you do not need to purchase mortgage insurance.

3. There is no minimum credit score. However, a lender can impose a credit score range for approving a VA loan from their firm, which is typically 620. The VA will not require a minimum mortgage score when granting approval.

4. Lower annual percentage rate. VA loans generally have a lower APR than other loan types, however, this is variable based on the lender and the type of loan.

5. You can reuse your VA loan benefit. Unlike an FHA loan, you can reuse a VA loan benefit, meaning that you may be eligible to receive a VA loan to purchase an additional home or to refinance.

6. VA loans have a lower closing cost. The VA requires loan recipients to pay a one-time lending fee, and the lender may receive a 1% origination fee that is similar to closing costs on other loans. Because of the reduced closing cost, VA loans are easier to qualify for if you do not have large savings.

Types of VA Loans

There are several types of VA loans, and each has separate qualifications.

1. Home purchase
Also called a VA purchase loan, this loan allows veterans and active military, who meet the requirements of the VA, to purchase a home.

2. VA refinance
Similar to other refinance loans, a VA refinance loan allows the homeowner to cash-out their equity in their home.

3. Interest rate reduction refinance loan
A VA interest rate reduction refinance loan, or IRRRL, lowers your interest rate by refinancing your current VA loan. This is similar to other refinance loans, and allows the homeowner to find a lower APR or monthly payment.

4. Adapted housing grants
The VA provides grants to active military or veterans that require modifications in their home in order to live with a permanent disability. These grants are not found through a mortgage lender but come from the VA directly. However, if you are seeking an adapted housing grant, it may be important to begin the process before your loan is finalized.

Shop Around

When applying for a VA loan, homeowners should still shop for the best lender that will meet their specific needs. Interest rates may vary from one lender to another.

 

Why you should get pre approved for a mortgage 1

 

Let's be honest—Homes move FAST! We are currently in a sellers’ market, and people are seeking homes for their families at an accelerating rate. Now more than ever, pre-approval is an important factor in getting the home you want when you have the chance.

What is pre-approval?

Pre-approval is part of the mortgage loan process, but it doesn’t have to be a difficult one. It involves meeting with a mortgage lender before an offer is made on a property in order to get approved for an amount that you can then include in an offer to buy a particular home. Many mortgage lenders will be able to grant pre-approval for your home loan within the same day.

Being pre-approved will allow you to make an offer on a home when you are ready without having to wait for mortgage lender approval. Although pre-approval is not necessary to make an offer, most offers without pre-approval will not be taken seriously. Pre-approval shows the seller that your finances have been evaluated by a professional and you are actually in a position to pay the money that you’ve offered for the home. Many sellers and real estate agents won’t review an offer unless it comes with a pre-approval letter from a mortgage professional indicating that you will most likely qualify for a loan and that way the seller knows that the offer is a real opportunity for them to close the sale on their property.

Pre-approval is actually to the benefit of the seller, but it’s useful for buyers to get pre-approved early in the shopping process, especially if they are shopping a competitive market, so that when they find the home they love they can put an offer in and not then have to spend an extra day or two meeting with mortgage professionals to get pre-approved while the seller is potentially reviewing other offers, and likely selecting one to accept.

Make an offer with confidence

Pre-approval will allow you to get excited about the home buying process without having to worry about the possible loss of the property you love. Meeting with a mortgage professional should be a comfortable and easy task, but it should not be part of the process that slows you down.

You can also more confidently look into homes that you are interested in without worrying about your approval because you will better understand your home buying budget. Pre-approvals come with a maximum loan amount that will give the buyer an ideal range for purchasing price. This can also aid in making offers if a listing price is slightly above your pre-approved budget. If the offer is seen as legitimate, the seller may yield to a lower price in order to make the sale.

When is the right time?

Getting pre-approved is free, easy, and should not be time-consuming. If you find the right mortgage lender, which may be the first step towards buying a home, you should be able to ask for a pre-approval at the beginning of the home-buying process. This will give you an idea of your price range, as well as the ability to make an offer at any time when you find the perfect home.

Pre-approvals will often have an “approved” time period of 60-90 days to make an offer on a home. This is negotiable with your mortgage lender and should be an ideal time period during which to find a home. If the home buying process exceeds this time, you will need to reapply for pre-approval.

What will you need?

• Proof of income, either by 30 days’ worth of paystubs, 2 years of tax returns, or 2 years of W2 forms.

• Assets, such as bank statements or other documents that show your savings.

• Good credit. A score of 620 or higher for approval of an FHA loan.

• Documentation. A social security card, passport or ID, or other legal identifying documents.

If you want real speed with the homebuying process, schedule a meeting with a local mortgage lender to get pre-approved. This should be a comfortable, transparent, and informative meeting that will help you to realize your goal of owning a home. Pre-approval is a great time to learn more about mortgages, answer questions about the loan process, and to talk about your loan options.

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