Posted by Peggy Farber on 7/24/2019

Refinancing your home can have many benefits. First, youíll be able to take out money to address immediate needs in your home like improvement projects. These things can only benefit your homeís value in the long term. Before you take the leap to refinance your home, you should be sure that youíre actually ready to take this step. Knowing what youíre in for allows the entire process to go more smoothly. Read on for tip to understand more about the refinancing process and what youíll need.


Know Your Finances


Just like when you initially purchase a home, refinancing your home will require you to have your finances in order. Take a look at your budget and needs and determine if it makes sense for you to refinance your home. For example, your employment status or distance from life goals like retirement could have a factor on the term of the loan youíre willing to take out. A 15-year mortgage may make more sense than a 30-year mortgage, but your monthly payments will also be a bit higher. You need to take all of this into consideration before you refinance. 


Your credit score will also be a factor in refinancing your home just as it was when you initially bought your house. Check your score and see if any red flags pop up. Getting these corrected earlier rather than later can help you to get a better rate on the loan. There are plenty of free services that exist online that allow you to check your credit score.   


Know The Value Of Your Home


If you know the value of your home and understand how much equity youíve built up in the house, it will give you a better idea of your refinancing options. You canít get more than 70% of what your home is currently worth as a cash-out refinance. If you owe more than your home is worth, you might be in a tighter financial situation than you realize. You can do plenty of things to increase the value of your home; it will just take some time. You may even consider selling your house, making a move, and starting from scratch. Financially, this could be the best option, and you could also end up with a better interest rate.


Getting your finances in order and the simple act of preparing for a home refinance could give you some insight into your financial picture after being a homeowner for some time.


Stay out of debt. Donít open new accounts. Pay down any debt you may have. That is the standard advice for people who are trying to get in good financial standing before buying a home or refinancing a home. 


Do some research and find the best home loan refinance rates around. Then, look into your own finances and decide whatís best for you regarding refinancing your home loan.      





Tags: Mortgage   refinancing  
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Posted by Peggy Farber on 3/13/2019

Many first-time home buyers are worried about all of the documents and information theyíll have to gather when applying for a mortgage. If youíre anything like me, youíre probably dreading having to dig through the five places that these documents might be. Fortunately, the process is now somewhat streamlined thanks to lenders being able to collect most of your information digitally.

In todayís article, weíll talk about the documents youíll need to collect when you apply for a home loan so that you feel prepared and confident reaching out to lenders.

Documents needed to pre-qualify

Before going into applying for a mortgage, letís talk about pre-qualification. There are three types, or in some cases steps, of approval with most mortgage lenders: pre-qualification, pre-approval, and approval.

Pre-qualification is one of the earliest and simplest steps to getting pre-approved. It gives you a snapshot of the types and amount of loans you can receive. Pre-qualification typically doesnít include a detailed credit analysis, nor do you need to provide many specific details or documents.

Typically, youíll fill out a questionnaire describing your debts, income, and assets, and they will give you an estimate of the loan you might qualify for. Might is the key word here. Your pre-qualification amount is not guaranteed as you havenít yet provided official proof of your information.

Documents needed for pre-approval

Getting pre-approved for a mortgage entails significantly more work on the part of you and your lender than pre-qualification. First, the lender will run a credit analysis. You wonít need to provide them with any information for this step, as theyíll be able to automatically receive the report from the major credit reporting bureaus. However, itís a good idea to check your report before applying to make sure there arenít any errors that could damage your credit.

Now is where the legwork comes in.

Youíll need to gather the following documents to get officially pre-approved or approved for a mortgage:

  • W-2 forms from the previous two years. If you are self-employed, youíll still need to provide income verification, usually as a Form 1040, or ďIndividual income tax return.Ē

  • Two forms of identification. A driverís license, passport, and social security card are three commonly accepted forms of identification.

  • Pay stubs or detailed income information for the past two or three months. This ensures lenders that you are currently financially stable.

  • Federal and State income tax returns from the past two years. If you file your taxes online, you can often download a PDF version that includes your W-2 or 1040 forms, making the process of submitting tax and income verification much easier.

  • Personal contact information. Name, address, phone number, email address, and any former addresses which youíve lived in the past two years.

  • Bank statements from the previous two months. Also, if you have any assets, such as a 401K, stocks, or mutual fund,  youíll be asked to include those as well.

  • A complete list of your debts. Though these will likely be on your credit report, lenders want to ensure they have the full picture when it comes to how much you owe other creditors and lenders.





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Posted by Peggy Farber on 10/18/2017

Making the decision to buy your first home is a big step. One of the most uncertain parts thatís involved in buying a home is that of securing a first-time mortgage. Youíll need to know what types of programs exist to help you on your journey to homeownership. Even if you have owned a home in the past but are now renting your home, you may be eligible for first-time mortgage benefits. 


The first thing you should do is understand your options for getting a mortgage. The Department of Housing and Urban Development often provides you with agents to help you see whether you will, in fact, qualify for a first time mortgage and all the benefits that go along with it. They may also help you to see exactly what programs will work best for you. You can find agencies in your specific area on the HUD website. 


Each state and local municipality have its own resources for those seeking to buy a home as well. These programs may get more specific, helping low-income earners, first-time home buyers and people with disabilities. Of course, youíll need to meet certain eligibility requirements before qualifying for the programs. Your state and local housing offices are other great places to start when youíre searching for benefits for first-time home buyers.   


Save, Save, Save! 


Even before you think you might be ready to buy a home, you need to start saving. Youíll need a significant down payment, especially if youíre hoping to avoid private mortgage insurance or PMI. If you canít swing a 20% down payment, thereís good news: First-time home buyers are eligible for loans that require a lower down payment- as little as 3%! 


Youíll also need a significant amount of savings to pay upfront for closing costs. These fees can come in somewhere between 3 and 4% of the purchase price of the home. It wonít be very pleasant if your bank account is completely empty by the time you reach the closing table. This is why itís a wise idea to save long before you even think you might want to buy a home.      



Look At Your Finances


In the same light of saving money, youíll want to keep your financial health in check in order to prepare to secure your first mortgage. First, check your credit score and see where you stand. You can take the time to dispute any discrepancies you may find on your report. Then, start paying off any credit card balances that you may have. Remember that the higher your credit score is, the better your chances are of securing a mortgage and being approved for a first-time home buyer program.





Posted by Peggy Farber on 10/4/2017

First time homeowners aren't the only people who are making this financial mistake. Millennials also aren't alone when it comes to approaching home ownership with short sight. Even the Great Recession hasn't stopped everyone who wants to own a house from thinking that they'll come out ahead if they wait until after they buy a house to starting putting money toward their mortgage.

Preparing to buy a house smartly could take years

Settling for making monthly mortgage payments, despite what the lender equates those payments to be, is a mistake. Negotiating for lower mortgage payments is only part of it.

The size of your mortgage down payment is significant. Don't wave this off. In fact, as soon as you become serious about buying a house start saving for your mortgage down payment.

Ways to save for your mortgage down payment include investing half (or more) of your quarterly or annual bonus toward your down payment and depositing your tax refund in an interest bearing account.

Money that you earn from a part-time job, including a virtual gig, could also go toward your mortgage down payment. Instead of tossing out clothes that you no longer wear, sell them to a consignment store and deposit the money into an interest bearing account.

Forward movement pays off

Keep saving  until you save at least 20 percent of the total cost of the house that you want to buy. Don't get fooled into thinking that there is only one house that you'll love. After all, you could buy land and have your dream house built on that land.

In addition to having the leverage to put a hefty down payment toward your mortgage, you'll have leverage to negotiate a better mortgage deal from your lender. You might even secure a mortgage with a lender who would never have approved you for a home loan if you didn't have a huge down payment.

Tax write offs may not be enough to subtract pain caused by this single mortgage regret

The government gives people tax deductions for owning a house for good reason. A house is probably the biggest expense that Americans will take on. Buying a house also helps the economy. It makes good sense to reward home buyers with a tax deduction.

But, even tax deductions may not help homeowners recoup the money that they'll lose by overpaying on their mortgage because of poor decisions that they made before they met with their lender. Poor home buying financial decisions could set Americans up for years of hard-to-make mortgage payments.

This single decision damages personal credit, destroys marriages and causes unsuspecting homeowners to lose their houses, sometimes years after struggling to pay their mortgage. Root of the single act that leads to years of mortgage regret is wishful thinking. The price of this wishful thinking is too high to want to take on. It leaves you unprepared.




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Posted by Peggy Farber on 9/13/2017

 

Two thirds of American homeowners are somewhere in the process of paying off a mortgage. It may seem like common sense that everyone should try to pay off their mortgage sooner rather than later. However, there are circumstances when it benefits a homeowner more to hold onto their mortgage longer.


In this article, weíll offer some tips on paying off your mortgage, when you should refinance, and offer some tools that will help you along the long road to debt-free homeownership. If youíre a homeowner and find yourself asking these questions, read on.

I can afford to pay more each month on my mortgage, but should I?

In many cases, paying off your home as quickly as possible saves you money in the long run. A shorter loan term means less interest applied to your loan which could save you thousands of dollars in accrued interest.


What many people donít think about is whether that money could be better spent elsewhere. If your mortgage interest rate isnít too high, you might be better off allocating that extra income toward investments or retirement funds where they could earn you more in the long run.


This technique is typically most beneficial for younger homeowners. In your 20s and 30s you stand the most to gain from long-term investments, especially tax-benefitted retirement funds. Ultimately youíll have to do the math, which is tricky because circumstances change; markets vary, our income goes up and down, etc. However, a good starting place is to determine whether you could earn more in retirement and investments than you could by paying off your mortgage sooner and therefore saving on interest. 

Iíve owned my home for a few years now, should I refinance?

Refinancing is a term that has become ubiquitous for homeowners. There are a few important things to understand about refinancing. First, lowering your monthly payments is not always ideal if it means youíll end up paying more interest in the long run. Ideally, refinancing your mortgage will help you pay the least amount in total.

One way this can be accomplished is by refinancing to a 15-year fixed-rate mortgage which often darry slightly lower interest rates. This option is designed for people who have improved their credit and increased their income since signing their first mortgage.

Math isnít my strong suit. How can I figure out my finances?

If all of the numbers and percentages associated with mortgages and refinancing seems overwhelming--youíre not alone. Fortunately, there are mortgage and refinancing calculators that will give you a good idea of where you stand if you decide to increase your payments or to attempt to refinance your loan. Here are some great tools:
  • Use this mortgage calculator for determining how much you would save by making extra payments.

  • This refinance calculator will help you understand the potential benefits of refinancing your mortgage.

  • To determine how much you could earn through investments (rather than paying more toward your mortgage) use this helpful tool.

  • You might be able to increase your savings by creating a better budget for yourself. This website will help you make a detailed budget and hold yourself accountable each month.






Tags: Mortgage   home   refinancing   finance  
Categories: Uncategorized