After our blog post last week, we received a lot of questions regarding refinancing. As we reminded you last week, there are so many factors to take into consideration. This is because every situation is different – including a homeowners future plans, financial situation, etc. Unfortunately there is no rulebook available out there to help you with your decision. You have to truly figure out what works best for you and our family. We will give you some ideas to take into consideration, though.

To start, will the new mortgage rate be decreased by at least 2%? This is a very conservation way to think but you would save a significant amount of money. There are possibilities that you will save a lot of money by even just a 1% lower rate. You really need to do the math and figure out what the savings would be. For example, if your loan is $500,000 and the rate is 1% lower, you will be saving more money from someone who has a $150,000 loan. The decrease may be beneficial for the person with the $150,000 loan as we do not know their financial situation. But we wanted to clearly point out how different every situation is and how 1% to one person can be different from one person to another.

We also want to remind you to read the fine print! There may be fees, especially for smaller loans, in closing cost that may outweigh what you will potentially save. If that is the case, there is no logical reason to refinance.

Something else to consider is the term of the loan. This does wind up boiling down to how much of a savings you would ultimately receive from it. If your mortgage as originally a thirty-year and you are looking to refinance to a ten year, how much of savings will you be making?

We hope that these specific examples have reminded you of how important it is to look at each situation on a case-by-case basis. If you would like to discuss your specific case with us, we would be happy to.

We have been getting a lot of calls recently asking if it is the time to refinance. There is a lot of uncertainty in the air right now with what is going on and what the future actually holds for everyone – even the mortgage industry. Currently, mortgage rates are decreasing and they recently hit a new all-time low. The last time they were this low was eight years ago…another election year. There is also a lot of uncertainty because of the virus, of course. The stock market has been making some crazy moves, too!

No one knows what is going on and no one can predict what will happen, either.

So even though mortgage rates are record breaking low right now in this moment, it does not mean it hast stopped decreasing. There are many factors that go into it and many possibilities.

With so much uncertainty in the world right now, we do not feel comfortable giving a direct “yes” or “no” – as far as if the time is right or not. What we do feel comfortable doing is making sure that you are aware that there are many pieces of the puzzle. Beware of companies or individuals who may be forceful in making you feel a particular way about refinancing or even getting a mortgage on a new home in these uncertain times. There may be some sort of ulterior motive for them.

If you would like to discuss your options with us further, please be sure to give us a call. We would be more than happy to chat and give you guidance.

Everyone wants things done fast nowadays. After all, it’s the era of Amazon Prime. There are many advertisements that talk about how quickly you could get approved for a mortgage or closing on a mortgage. But lets think about it…is faster always better? As a society, we are definitely less patient than ever before. Think about it. If you don’t get your Amazon Prime shipment in two days, are you okay with that? I bet you have some sort of issue with it!

But a mortgage is something that should take some thought. You are not buying a new pair of sneakers from Amazon. You are committing to the next fifteen or thirty years of your life.

There really is no benefit to closing on your mortgage in a speedier manner – or even being approved. There may be some fine print, too, where you find yourself paying more. And you may not even be guaranteed the closing date is as soon as you want it as it is out of the hands of most people.

Instead of choosing a mortgage that is fast, choose a mortgage that has the right interest rate for you, the least amount of closing costs, and the best terms. Buying a house is a big decision. We urge you not to make your decision on what is the quickest and advertised as the easiest! We know that if you are on the hunt for a new home, moving in is important to you. But we are talking about your future here – not just living in a beautiful home.

If a residential mortgage loan is not insured or guaranteed by the federal government, it is known as a conventional mortgage. The word “conventional” means normal – which indicates that it is a common/typical loan. The majority of Americans have a conventional mortgage. The number of government mortgages is much less.

Conventional mortgages include all different types and different term lengths as well, etc. Keep in mind that a conventional mortgage is not a conforming one. Conforming mortgages are conventional but not all conventional mortgages are conforming. If you are interested in the details and specifics as to why this is the way it is, give us a call and we would be happy to explain it to you further.

Since conventional loans are not governed by any one entity, especially the government, there is not a limit on the maximum amount the loan is. Any private entity can loan has much as they want. Private entities can also require as much of a down payment as they want and require whatever credit score they want us well. They do require a minimum credit score of 620, though. Most conventional loans usually require a bigger down payment than other loans, as well. Since the government doesn’t back them, though, they do offer more flexibility.

Most lenders do give you the ability to choose from a conventional or government loan. If you have average or above average credit, you will have your options in the kind of loan you qualify for.

Now that you know what “bad credit” is considered to be, lets chat about refinancing if you have bad credit.

Your credit score is one of the biggest elements to the pricing of your mortgage loan. If you have bad credit, you can expect to have a significantly higher rate than what is advertised. Like we mentioned last week, that reason for that is that you are a much greater risk for not making your mortgage payment. When a borrower refinances, they are looking for a lower interest rate on their mortgage or shortening their loan terms.

If you have bad credit, refinancing does not make much sense. It would be highly unlikely that a lender would offer you better terms. (For those of you who may be in the other boat, the opposite holds true, too! If your credit has improved since you took out your mortgage initially, refinancing might be a good idea!)

Don’t get sucked into the “advertised on TV” or “advertised on the internet” refinancing tactics that are out there. These advertisements are usually for “well-qualified” borrowers. If you have bad credit or close to it, you would not fall into that category. Once you mention that your FICO score is 640 (or below) your interest rate will skyrocket and refinancing will not make any sense.

Last week, we share some ideas and things you can do to increase your credit score. If you need any more ideas, please reach out to us. We would be happy to help in any way possible!

Some of you are unsure what “bad credit” is. The reason that this is confusing to many is because the opinions vary. The opinion is different from different lenders. Typically, it is defined as a 620 FICO score. Fannie and Freddie and VA and USDA require 620 as a minimum. However, FHA can go as low as 500 if you have 10% equity in your home. You are likely to have very few options if your score really is that low.

If you think or aware that your credit score is low, it is important to realize what this means for you. Also, if you have a feeling that it is low, you should check to see what it is so you can start making adjustments to get that score higher.

Missing mortgage or credit card payments – especially chronically – is one clear indication that your credit score is likely low.

The lower your score, the more of a risk you are to borrowers. The risk being – if they let you borrow money from them, are you going to pay back what you owe? Creditors and lenders will charge you a higher interest rate since you are such a risk. About 39% of Americans fall in this category. So know, if you are here, you are not alone.

Also know, that there are ways you can increase your credit score. To start, begin to pay your loans back in a timely fashion. Pay down any debts you have as much as you can. You could also become an authorize user on a close family member’s credit card. Make sure this is someone who you know will pay back on time – it would need to be someone responsible and trustworthy. If you are already aware of why your credit score is low, work on fixing those areas. There are many other reasons you may have such a low score, as well, these are only a few.

Remember that “bad credit” is not the end of the world. There is a way out of it!

April 15, 2020 will be here before you know it! As you know, time flies. (And as you age, I feel like time goes by even quicker. Can anyone relate to that?)

So you aren’t incredibly stressed out come April 1, here is your reminder to start doing your tax preparation now. Not only will it save you time, but it will also be less likely to cause you stress and anxiety. If you have had any major changes in your life in the past year (buying a house, getting married, etc.) it is best to start preparing early. This is because events such as those can potentially affect your tax withholding. Any important documents that you think whoever is helping you file your taxes will need, be sure to put those to the side as well.

Don’t forget that you will not receive your W-2s or 1099s until about this time. Make sure your employer and investment providers have your correct address so you will receive your W-2 and 1099 in a timely manner.

The IRS encourages taxpayers to file their taxes electronically. Filing electronically is not only quick and secure, but you will also likely receive your tax return quicker. (Be sure to have your bank account information in there so you will receive your refund via direct deposit!)

As you are likely aware, when you increase the value of your home, you are also increasing your equity. It is a win-win on both sides. You will see a return on your investment when you decide to sell your home. You will also have a lower loan to value ratio while you are still living in the home. This lower loan to value ratio can play a role in refinancing options.

Remodeling your home is also fun and can make your home more comfortable. Just be sure you stay in your budget and do not spend more than you have!

A “2019 Cost VS Value Report” was done recently. This report tells you what the average cost of certain home renovations are and the highest percentage of return on investment.

If you are interested in the nitty gritty details of the report, please let us know. We would be happy to share it with you.

To keep it simple, the following are renovation ideas (with the highest return on investment first): garage door replacement, manufacturer stone veneer, kitchen remodel, wood deck addition, and siding replacement. As always, keep in mind the “need” VS “want” aspect when you are making a decision of where to go when it comes to renovations.

Either way, whatever your decision is, do what makes you happy and will keep your pocketbook happy, too!

Besides being extremely over the moon happy, there are more reasons to buy your home this year! The employment rate is low, wages are higher, and the economy is strong – these are even more reasons to snag your dream home in 2020! There is no time like the present.

Living in your dream home is reason enough. But on top of that, buying a home is an investment. A great investment, at that! Some say that it is even superior to gold, stocks, and bonds. Owning a home helps build equity. Over the past couple of years, there has been an increase of equity, too.

It is expected for the mortgage rate to not only decrease but also stay low for the rest of the year. What better time to get in on the low rate! These projections are for the thirty-year mortgage.

Unless you are miraculously not paying rent, why would you want to pay the mortgage for someone else when you could pay for your own mortgage? Keep that in mind the next time you pay your rent check. This will continue to be something to think about as the price of rentals continues to increase.

When savings are on the line, along with financial growth, we would recommend you really look into purchasing a home. Before making a final decision, make sure you have a chat with someone educated in the field!

Every year around this time, the Federal Housing Finance Agency changes the conforming loan limit for the next year. It was expected for the limit to increase, and that is exactly what has happened.

For a one-unit property, the loan limit in 2020 will be $510,400.00. The limits for two, three, and four-unit properties are even more. The loan is backed by Fannie Mae or Freddie Mac. From 2019, the limit has increased by $26,050.00!

This increase will likely help more homeowners qualify for a mortgage as they are already more available than others and possibly easier to get approved. This will also be beneficial for those planning to refinance their mortgage this year.

In order to get approved for a conforming loan, you only have to put three percent down. Keep in mind that there are other qualifications to get approved, as well.

In 2006, the conforming loan limit was $417,000.00. That means it has risen almost $100,000.00 in 14 years. The likelihood of the limit to continue to rise as the years go on is low. (However, if appreciation increases, then it may be possible.)

If you live in an extremely expensive area in the United States (Los Angeles, NYC, DC, etc.) will actually have a higher loan limit due to the Housing and Economic Recovery Act.