Jan 16, 2020 | Mortgage
For many, owning property is seen as a rite of passage. At the same time, for most people, accomplishing this dream is largely dependent on the approval of a mortgage. For this reason, it is important for people to think carefully when deciding who to ask for a mortgage. Some cities have a higher mortgage approval rate than others.
Identifying Problems With A Mortgage Application
Before applying for a mortgage, it is important to think about the most common reasons why someone might be rejected. First, if someone has a debt to income ratio that is too high, they are more likely to be turned down for a mortgage.
It is understandable that if someone already has too much debt, they are unlikely to be able to handle the added burden of a mortgage. Another possible reason for being turned down might be out of someone’s control entirely. This has more to do with geography.
Application Problems In The Sunshine State
For those who might not know, the sunshine state is Florida. Many of the cities with the highest rejection rates are right here. For example, Miami, Jacksonville, Tampa Bay, and Orlando are all among the cities with the highest rejection rates on mortgage applications.
Some of the other cities on the list include New York, San Antonio, San Jose, Detroit, Birmingham, and Houston. Those who live in these cities need to make sure that their mortgage applications are in excellent shape. Otherwise, it could end up in disappointment.
Take, for example, Miami, Florida. More than one in nine mortgage applications are rejected. The most common reason why someone might be denied a mortgage in this major city is debt to income ratio.
Another common reason why those applying for a mortgage in this city might be denied is a lack of collateral. Florida has a reputation for attracting retirees; however, most of the jobs in this state have to do with hospitality. This is an industry that is largely seasonal and has low wages, contributing to a high rejection rate on mortgage applications.
Preparing For The Application Process
Anyone looking to buy property, particularly in these cities, must make sure their application is in order. Getting approved for a mortgage is a critical part of buying a home. For this reason, try to maximize credit scores while minimizing outstanding debt. This can go a long way toward getting approved.
And as always, talk with your mortgage professional for personal guidance through the application process. They are experienced and have the best vantage point to make sure your application is set up for success.
If you are in the market for a new home or interested in listing your current property, be sure to contact your trusted real estate professional.
Jan 8, 2020 | Mortgage
One of the most common worries that people have is money. When it comes to those golden retirement years, many people worry about running out of money. At the same time, most people who reach their retirement years have a lot of equity in their home.
Therefore, many people think about drawing on the equity in their home as a source of income. A reverse mortgage will allow someone to do exactly that. On the other hand, can receiving payments from a reverse mortgage impact the benefits that someone can receive from Social Security or Medicare?
The Basics Of A Reverse Mortgage
First, people need to think about what a reverse mortgage truly means. When someone takes out a mortgage loan to purchase a home, they make regular monthly payments to the lender to repay this loan. A reverse mortgage is exactly that: a mortgage in reverse.
Instead, the bank pays the borrower. People withdraw money from the bank against the equity of the home. Then, this money doesn’t have to be repaid until someone sells the home, moves out of the house, or dies. Some of the fees that people may need to pay that are associated with a reverse mortgage include closing costs, origination fees, and insurance premiums.
Impact On Social Security And Medicare
First, people can rest easy. In general, a reverse mortgage is not going to have any impacts on someone’s Social Security benefits. The amount of income someone brings in from a reverse mortgage will not impact someone’s monthly benefits.
In addition, a reverse mortgage is not going to impact the benefits that someone receives from Medicare. On the other hand, it might impact someone’s Medicaid and SSI benefits (supplemental security income). Those who need clarification regarding this should speak with a trained and experienced attorney.
Is A Reverse Mortgage The Right Move?
Some people might be thinking about whether or not a reverse mortgage is right for them. It is important for everyone to think about their own individual financial situation because what is right for one person might not be right for the next. A reverse mortgage has the potential to provide someone with added financial security.
If you are in the market for a new home or interested in listing your current property, be sure to contact your trusted real estate professional.
Dec 20, 2019 | Mortgage
When someone is interested in buying a home, there are a number of factors that people need to consider. Some of these include the budget, the size of the home, and the mortgage interest rates.
The mortgage rate is going to play a tremendous role in whether or not someone is going to be able to afford their dream home. For this reason, it is critical for everyone to know how a mortgage rate is determined. There are a number of factors in someone’s financial history that are going to impact the mortgage rate the lender offers.
The Credit Score
One of the most important factors that a lender is going to consider is someone’s credit score. A credit score is a reflection of someone’s risk to the lender. The higher the credit score, the more likely the loan is going to be repaid, in the eyes of the lender.
If someone’s credit score is too low, the lender might not make an offer at all. In order to reduce the interest on someone’s mortgage, it is important to correct any inaccuracies on the credit report ahead of time. This will make someone more competitive when applying for a mortgage.
The Employment History
The lender’s biggest concern is making sure their loan is repaid. In order to make mortgage payments on time, the borrower needs to have a steady stream of money coming in. This means maintaining a steady job.
In order to predict this, the lender is going to look at someone’s employment history. The longer someone has been employed, and the fewer gaps someone has in their employment history, the lower the interest rate on the mortgage is going to be.
The Current Financial Market
Some of the factors involved in a mortgage rate are outside of the borrower’s control. Mortgage rates are also impacted by the current financial market. Like the stock market itself, the mortgage rates are going to rise and fall with the real estate market. It is important for everyone to think about the current financial market when applying for a mortgage.
Thinking About Mortgage Rates
These factors will play a role in the mortgage rate someone is going to be offered. Everyone should think about the interest rate on a mortgage when looking for a home.
Talk about your personal financial situation with your trusted home finance professional. They are a valuable and experienced resource that can answer all of your questions regarding the best fit for your mortgage.
If you are in the market for a new home or interested in listing your current property, be sure to contact your trusted real estate professional.
Dec 17, 2019 | Mortgage
College is expensive and everyone needs to think about how they are going to cover the costs. Some of the costs include tuition, room and board, meals, books, and spending money.
In order to pay for college, some people consider taking out a second mortgage instead of taking out a student loan. How can someone know if taking out a second mortgage is the answer for them? There are several factors to consider.
The Interest Rate
One of the factors that people need to consider is the interest rate on the second mortgage. The higher the interest rate, the more expensive the second mortgage is going to be.
The total cost of the second mortgage, including the interest rate, points, origination fees, and other expenses, must be weighed against the cost of attending college, which often comes in the form of a student loan. Which is going to be more cost-effective? The second mortgage or the student loan?
The Size Of The Loan
Another factor to consider is the size of the loan. Ultimately, the size of the loan is going to impact the final cost of attending college. The larger the loan, the more someone will have to pay in terms of interest. The size of the student loan should be compared to the cost associated with a second mortgage.
The Tax Implications
Another aspect people need to consider is the tax implications. The interest on a first mortgage is tax-deductible. This is often the largest tax deduction that someone claims. People might assume that the interest on their second mortgage is going to be tax-deductible as well.
Unfortunately, this isn’t always the case. Interest on a second mortgage is tax-deductible only if the proceeds from that mortgage are going to be used to pay for the property. If they are being used to pay for education, they are not tax-deductible.
People need to compare the tax implications of a student loan versus the implications of a second mortgage.
Using A Second Mortgage To Pay For College
These are a few of the factors that everyone needs to think about when trying to finance the cost of higher education. These decisions can have significant impacts on someone’s financial future.
Consult with your trusted home financing professional for a review of your personal situation. They can guide you through the process to make the best decision for your family.
If you are in the market for a new home or interested in listing your current property, be sure to contact your trusted real estate professional.
Dec 6, 2019 | Mortgage
There are a lot of steps that people need to take when buying a home. One of the most common issues that people discuss is the down payment. Most banks will require a down payment so that they aren’t the only ones taking on the risk of buying a home. The common question people have is how much of a down payment they should apply.
The Rule Of Thumb
Most people have heard about placing 20 percent down on a house as a solid rule of thumb. This number has been passed down from prior generations who purchased houses with similar down payments.
On the other hand, the price of housing has risen over the past few decades and this down payment might not be possible for some people. While 20 percent down might work for some people, it might not be feasible for others.
Other Considerations
There are several additional factors that homebuyers need to think about. First, how big of a down payment is the bank requiring? Some banks might not lend to someone at all if they don’t reach a certain threshold. In other cases, the lender might ask someone to purchase something called private mortgage insurance, often abbreviated PMI.
This is an insurance policy that the borrower will have to purchase for the lender. If the borrower loses the home in foreclosure, the lender gets its money back through this insurance policy. Obviously, borrowers do not want to have this added expense. This is where the down payment is important.
In addition, banks might also be willing to lower the interest rate on the mortgage if the borrower increases the size of the down payment. With a lower interest rate, this can save someone a substantial amount of money down the road. Try to see if the lender will lower the interest rate in exchange for a larger down payment.
Deciding The Down Payment
These are a few of the many factors that homebuyers should think about when thinking about the down payment. While nobody wants to pay more than they should, the down payment is only one of the financial aspects people need to consider.
If you are in the market for a new home or interested in listing your current property, be sure to contact your trusted real estate professional.
Dec 3, 2019 | Mortgage
Those who are looking at buying a home need to think about whether or not they are truly ready for this responsibility. When someone takes out a mortgage, this is frequently the largest loan someone will ever apply for in their life. Furthermore, owning a home also means homeowners insurance, real estate taxes, home maintenance, and home repairs.
There are a few signs that signal someone is not ready to buy a home. Identifying and rectifying these situations ahead of time will ensure that someone is the right position to take on the responsibility of homeownership.
Too Much Debt
One of the biggest signs that someone is not ready is own a home is too much personal debt. A mortgage is another (albeit different) form of debt. It someone already has a large amount of debt, they might not be able to handle an additional loan.
Some forms of debt that people might have include student loans, credit card debt, and car loans. Cutting down this debt before applying for a mortgage will make someone more competitive when applying for a mortgage.
Not Enough Savings
In addition to reducing debt, it is important to build up savings as well. First, people need to have enough money for the down payment. It is highly unlikely that a lender is going to hand out a loan to someone who is not able (or willing) to put up any of their own capital.
In addition, savings are important for potential home maintenance or home repair costs. Owning a house is a major financial investment. People should be able to put up some of their own money when buying a home.
Location Is Not Determined
People move from place to place. It is a reality of school, employment, relationships, and more. At the same time, it is hard for someone to buy a house they don’t know where they want to live.
While this might seem obvious, this factor is frequently overlooked. Think about where “home” is going to be before deciding to buy a home. Consider the overall cost of living in that location, the potential commute, and the potential HOA.
Buying A Home
It is important for everyone to think about whether or not they are truly ready to buy a home before applying for a mortgage. This is a significant responsibility that should not be taken lightly.
Talk with a home mortgage professional to discuss the options that will get you on the path to homeownership. Although it may take time and planning, buying a home is absolutely possible for everyone. When you are ready, your trusted real estate professional can help you find your new home.
