The popularity of VA loans has soared in recent years, surpassing the 1 million mark in 2020, and is on pace to break that record in 2021. But despite the success of the VA home loan program, there is still some skepticism among prospective homebuyers when it comes to VA loans.

Read the top myths about VA home loans and learn the truth behind them so that you can make the best decision on whether or not a VA home loan is the right option for your specific requirements.  

Myth 1: Certification is a cumbersome process

The first step in the VA home loan application process is getting an official verification from the VA Office. This certification will assert that the veteran, active-duty military member, or spouse has met the basic eligibility requirements.

In the past, this took a long time to complete since you had to mail a letter to the VA and wait for a hard copy when they replied. Now, the process is done electronically which means you can get results in real-time.

Myth 2: VA appraisals and inspections take ages to finish due to red tape

One of the reasons why VA loans take longer is the smaller number of appraisers in rural areas who are approved to handle VA loans. However, the VA has upped its game by modernizing and streamlining processes.

Today, VA loans close within 55 days on average but there are cases where they close more quickly.

Myth 3: There is a huge chance that you’ll default

VA loans have more relaxed requirements compared to conventional loans. But even with less stringent requirements, VA borrowers rarely default. Furthermore, VA loans are known to have the lowest foreclosure rates when compared to other loan programs!

Myth 4: Sellers are wary about accepting a VA loan buyer’s offer

There are home sellers who believe that they will be required to pay the buyer’s closing fees. This is not true. Typically, the only seller requirement is payment for a termite report and that’s it.

Closing costs are the buyer’s responsibility and not the seller’s.

Myth 5: The savings you get on a VA home loan aren’t as good when compared to conventional loans

False. VA loans are half a point below conventional rates and you don’t have to pay for mortgage insurance.

Need More Information on Your VA Home Loan Application?

Now that we’ve addressed VA home loan myths, you can now gain access to all the great benefits a VA loan provides. If you have more questions, you can ask our VA home loan experts and they would be happy to clear things out with you.

Are you familiar with the benefits of mortgage refinancing? 

There are many reasons to refinance your mortgage, like lowering your monthly payments, saving on interest, or simply paying off your loan faster.

But before you commit, it’s important you know how refinancing works. In this article, we’ll share all that you need to know to make the best decision based on your current situation and financial goals.

The Basics of Refinancing

Refinancing means that you are applying for a new loan on your property. Ideally, your new “refinanced loan” should have better terms than the old one.

The Benefits of Mortgage Refinancing

Here are some examples of better terms that refinancing may offer you. 

Get a longer loan term.

If you realize that your monthly payments are too high, a refinance can help ease your burden.

You can refinance for a longer loan term, such as going from a 15-year mortgage to a 30-year mortgage which can significantly lower your monthly payments.

Lower the interest rate or switch to a fixed rate

For those who have adjustable-rate mortgages, switching to a low fixed rate may be the answer to your financial struggles. Many have already taken advantage of current low-interest rates, ensuring that no matter where the rate may go in the future, they will have a reliable monthly payment they can afford. 

Things to Consider Before You Refinance

While mortgage refinancing has its benefits, there are a few things to consider before committing to a new loan. For example, similar to a regular mortgage, refinancing loans have closing costs including credit report fees, appraisal fees, title services, lender fees, survey fees, and underwriting fees –all of which could be an additional financial burden.

If your financial situation is not stable, it might be better to put your refinancing plans on hold until your situation stabilizes.

The road to refinancing: Steps to refi your loan

1. Be clear with your goals.

Lower monthly payments? Shorter loan term? It would be best if you decided what your goal is with refinancing right off the bat.

2. Calculate your savings.

Use a mortgage calculator to get an estimate of how much you can save. We have one on our website that calculates down to the penny! 

3. Pre-qualify with a trusted loan advisor.

Get an even better estimate by applying with us. The obligation-free consultation won’t impact your credit score, and you can get solid advice from a local mortgage pro. 

4. Apply for a new loan.

After discussing several loan scenarios with your mortgage advisor, apply for a new loan. 

5. Lock your interest rate.

Locking your interest rate means that it can’t be changed within a specified timeframe.

6. Close the loan

Pay the closing costs to seal the deal. You’ve now successfully refinanced your mortgage!

Are You Ready to Refinance?

Whether or not refinancing is for you depends on your goals and financial situation.  If the rates are low and you have a stable income. then refinancing is worth considering. Do you need professional help with your refinancing situation? Connect with one of our mortgage experts today!

Multi-unit investing involves buying properties like apartment complexes, duplexes, condo buildings, or other properties that offer multiple spaces for renting to tenants. They offer great opportunities for building your personal wealth without the day-to-day demands of running a business.

If you’ve been curious about multi-unit property investing, this article is for you! In it, we’ll share the best reasons why you should get in the game along with the pitfalls you need to avoid.

The Advantages of Multi-Unit Real Estate Investing

Here are the top 4 advantages of investing in multi-unit complexes:

1. Easier to Finance

You may be thinking that it would be harder to secure a loan for a million-dollar complex but this is not the case. Many lenders are more likely to approve a hefty investment loan on a multi-unit property than a single-family home because multi-unit real estate is more likely to generate steady cash flow –helping you to avoid possible foreclosure. 

Here’s how: if you have a single-family rental home that becomes vacant, you lose 100% of your rental income.

On the other hand, if you have a 10-unit apartment, one vacancy means that you lose only 10% of your rental income.

Because of this phenomenon on multi-unit properties, you can expect competitive interest rates and a higher chance of approval.

2. Easier to Grow Your Portfolio

For the serious investor, multi-unit property investing is a great way to expand your real estate portfolio. There are many real estate investment pros who have built their careers and wealth on investing and operating multi-unit rental properties.

If you wish to build a large portfolio of rental units, buying one 5-unit complex is the simpler route to accomplish this goal rather than buying 5 single-family homes.

3. Generate Additional Income

A mu-unit deal will help generate added income right away unlike investing in the stock market where you need to wait for your stock price to increase to make a profit.

Not only can the rental income add immediately to your revenue, but over time, your property will appreciate and earn you significant profits should you decide to sell the property in the future.

4. Lower Risk

Investing in multi-unit properties is generally considered a “safe” investment compared to other real estate types because people will always need a place to live no matter the economic climate.

Even during a recession where some may have to sell their homes, rental properties will often remain unaffected.

Condo buildings, duplexes, apartments, and other types of multi-family properties also accrue added appreciation which means you can earn a decent profit if you decide to sell.

Ready to Invest in Your Multi-Unit Property?

If you are looking for a tried and tested real estate investment strategy, multi-unit family investing is one of your best bets. Get in touch with one of our loan officers to learn more and to qualify today!

If you are thinking about refinancing your mortgage but lack the closing costs funds, then a no-closing-cost refinance may be the loan option you need to get it done. Read on to learn more about what a no-cost refinance is and how you can qualify for one. 

What Happens In A No-Closing-Cost Refinance? 

Simply put, a no-closing-cost refinance is a home loan where you don’t have to pay your closing costs upfront the way you typically would. 

This doesn’t mean that your loan provider waives your closing costs or pays for them for you. Rather, the closing costs are instead included in your loan, allowing you to pay them in monthly installments.

This convenience isn’t without a few pitfalls. In exchange for avoiding upfront costs, you may be charged a higher interest rate, and your monthly payments may be higher than they would without the closing costs added onto the loan. But still, avoiding the upfront costs is a convenience that many homeowners desire and can benefit from. 

What Costs Are Dispersed In Your Loan Repayment Plan?

Closing costs are made up of various expenses that accompany the refinancing of a mortgage, such as:

Lender Fees

The amount varies depending on the lender and the type of loan. Lender fees are a catch-all term that may include fees for processing, origination, and prepaid interest on your first month’s payment.

Homeowner Fees

As a homeowner, you’re probably familiar with these fees. But as a quick refresher, monthly obligations as a homeowner will include:

• Property Taxes

• Homeowners Association Fees

• Homeowners Insurance

Third-Party Fees

Your loan provider outsources services when you get a mortgage, and your closing costs pay for these fees, including: 

• Title Insurance Fees

• Appraisal Fees

• Credit Score Report Fees

Mortgage Points

Some lenders give you an option to pay mortgage points or discount points. Paying this fee will reduce your interest rate and monthly payment.

Situations Where a No-Closing-Cost Refinance Makes Sense.

If you are planning to sell your home within a 5 year period, a no-closing cost refinance may be a great option.

Typically, a loan with a higher interest rate will cover the amount you owe in closing costs within the 5 year period. In this way, you get to avoid paying closing fees upfront and you won’t stay in the property long enough to pay more interest.

For homeowners who plan to renovate the home but lack the budget for the project, a no-closing cost refinance also makes sense.

Paying for a loan with higher interest to avoid closing costs may be less costly in the end than applying for a home equity loan to fund the renovation.

Thinking About Refinancing Your Mortgage?

Are you planning on refinancing your mortgage but lack funds to pay for closing costs?

Our team of home loan advisors can help you explore your refinancing options like a no-closing-cost refinance.

We can provide a detailed analysis of your closing costs so that you can see how much you are paying over the life of your loan to help you determine if paying for the closing costs upfront is better than rolling over the costs.

Give us a call and talk with our loan advisors today! We’ll be glad to help you out.

A reverse mortgage is a loan for homeowners over 62 years of age who have substantial equity in their homes. With this loan, they can borrow against their equity and get access to cash to pay for any cost-of-living expenses they may have. Rates typically start at less than 3.5% per year, and the loan lasts until the borrower dies or moves from the property, after which they (or their heirs) repay the loan or sell the property to repay the lender. 

Most reverse mortgages are government-insured programs that have stringent lending standards. Private or proprietary reverse mortgages are also available, but those are less regulated. Use caution with unregulated loans from private, non-bank lenders as there is an increased risk of scams with this option. 

How Does A Reverse Mortgage Work?

It starts with a borrower who already owns a property with considerable equity –usually at least 50% of its value. Once the borrower picks a loan program with help from their loan advisor, they can apply for a loan. After a credit check, reviewing the borrower’s property, its title, and appraised value, the lender can either approve or decline the application. 

If the loan is approved, the lender funds it as either a lump sum, a line of credit, or periodic payments (monthly, for example), depending on the borrower’s choice.

Some reverse mortgages limit how the funds are used, such as for home improvements or renovations. Others are unrestricted and can be used for any variety of life’s expenses. 

Reverse Mortgage Eligibility

To qualify for a government-sponsored reverse mortgage, the applicant must be 62 years old or more. Also, they can only borrow against a primary residence and must have at least 50% equity or own the property outright. There also can’t be a second mortgage on the property. The following are reverse mortgage-eligible properties:

• Single-family home
• Multi-unit properties -up to four units
• Manufactured home built after June 1976
• Condo or townhome

Private reverse mortgages have qualification requirements that vary by lender.

Reverse Mortgage Costs

The two primary costs for government-backed reverse mortgages are:

• Interest rates: Possibly fixed for lump-sum payouts with rates comparable to a conventional mortgage. Variable rates are based on LIBOR, with a margin added for the lender.
• Mortgage insurance premium: Government-backed reverse mortgages have a 2% upfront insurance premium with an annual premium of 0.5%.

Mortgage insurance protects lenders in case of default. So while reverse mortgages can’t default in the same way as a conventional mortgage (such as missing a payment), the loan can still default if the owner fails to pay property taxes or the insurance.

There are also origination fees, and the amount varies by lender but typically ranges from 1% to 2% of the loan amount. Lenders may also have fees for other closing costs, such as credit checks and property appraisals.

However, these are usually rolled into the loan, so you won’t need to pay it upfront. 

Are you a homeowner over 62 years of age? A reverse mortgage may be just the thing to have more liquid cash flow! Contact us today to learn more about your loan options. 

One of the pluses of property ownership is the opportunity to build equity. If there’s ever a time that you need a considerable amount of cash (such as for paying off debt or a home remodel), you’ll have access to it by borrowing against your home equity. That’s essentially the purpose of a home equity loan. 

In this article, we’ll review what a home equity loan is as well as alternatives that also give you access to lump sums. 

What is “Home Equity”?

Equity is based on the difference between what’s owed on the mortgage and the home’s current worth. For example, if your mortgage is $150,000, but your home appraises at $200,000, your equity is $50,000. The amount you’re approved for in a home equity loan is based on this difference. 

Advantages Of Home Equity Loans

Home equity loans have fixed interest rates that are lower than personal loans or credit cards. So if you are looking to borrow a large sum, you’re often better off with a home equity loan rather than a personal loan or charging it all to your card.

Disadvantages Of Home Equity Loans

The biggest downside of a home equity loan is the requirement of using your home as collateral. So if you can’t pay back the loan, you may lose your home to foreclosure. 

Alternatives To A Home Equity Loan

Home Equity Line Of Credit

A home equity line of credit (HELOC) acts similar to a credit card in that it has a credit limit, and you only pay back what you use. The credit limit is based on the amount of equity. 

For example, if you get a HELOC of $45,000 but only use $15,000, you’ll make payments just on the $15,000 (plus interest) not the full amount that you were approved for.

Cash-Out Refinance

This option requires you to refinance into a new, higher-balanced loan where you then receive the additional funds in one lump sum.

For example, let’s say your current loan is $145,000. You then refinance it into a new mortgage that now has a balance of $165,000. The $20,000 difference is what you’d receive in a lump sum, to use however you want.

Whichever option you choose, they all begin the same way –with an application. We’ve made it easy for you by offering a secure, online method of applying for a second mortgage. We’re also available by phone and email to assist and answer any questions you may have about your loan options, qualifications, or the process. We aim to make this process as breezy and affordable as possible.

Start the process today and discover how easy it is to tap into your home equity to get the funding you need. 

Have you been asked to cosign by someone looking to get a home loan approval? You may be wondering why they would ask or how this affects you. This article will help you to understand both of these points. 

Why Were You Asked To Cosign? 

These are the top reasons that home loan applicants seek a co-borrower:

• Income: People may ask for a cosigner to include more income on their mortgage application. Higher income on the application can make it easier to get approved or borrow more from the lender.
• Credit score: Having someone with a higher credit score may help to secure a lower rate. 
• Employment: Little or poor employment history can prevent mortgage approval. Having a cosigner with better employment history can aid in getting a mortgage.

Cosigner Responsibilities

Cosigning affects your credit and finances, so you must trust the person you’re cosigning for. Should they be unable to pay the mortgage, the responsibility falls on you. Also, any late payments or foreclosures will negatively affect your credit score.

Additionally, this new debt could make it more difficult for you to get approved for future credit. Ironically, it could mean that the only way you could get a loan is by getting a cosigner, too. 

While there may be an option for the cosigner to be released from the loan, you should still be prepared to take over the mortgage (and accept the risks) if this option is not available. 

Cosigner Requirements: Occupant versus Non-Occupant

Non-occupant means that the cosigner will not live in the home, while occupant means that they will. Here’s how that affects the loan:

For Conventional Loans

A non-occupant co-borrower on a conventional loan means that they are on the loan but not on the property’s title. The co-borrower’s credit is pulled, and the score is used to help determine loan qualification. However, the non-occupant co-borrower does not own the property. 

For FHA Loans

There are some restrictions with an FHA loan when it comes to a non-occupant co-borrower. First, you can have up to two non-occupying co-applicants. Second, the person occupying the property must have no more than a 70% debt-to-income ratio when the downpayment is less than 20%. 

Thirdly, non-occupant cosigners must be on both the title and the loan, and the property must be a single-family residence. Additionally, the non-occupant co-borrower must be a relative. 

The Bottom Line

Of course, this article doesn’t cover all the requirements for cosigning on a mortgage. But it does help you to better understand your responsibilities as a cosigner and how to qualify with one. Need help getting approved for a home loan on your own? Need more answers about cosigning on a mortgage? We’re here to help! Contact us today for all your mortgage needs. 

If you’re considering buying a home, you might wonder how much is required as a down payment. Here is a quick run-down of the requirements of the down payment per loan type.

Do You Need To Put 20% Down On A House?

You’ll often hear the down payment expressed as a percentage. For example, a 20% down payment on a $300,000 mortgage loan means you’ll pay 60k down. 20% down can make homeownership feel out of reach, but very few lenders still require such an amount.

In fact, you can even get a conventional loan with 3% down!

Benefits Of A 20% Down Payment

If you’re able to put 20% down, you’ll get some key benefits.

• Avoid PMI
• Access to better interest rates
• Payless interest over time
• Lower monthly payments
• Home sellers often prefer buyers who have a 20% payment. 

Can You Buy A Home With No Money Down?

Yes, it’s possible to buy a home without a downpayment. However, it won’t be with a conventional loan but rather a government-backed loan.

VA loans are home loans for current and former members of the armed forces and their surviving spouses. USDA loans are home loans for properties in qualifying rural and suburban areas. 

Both of these options have a zero-down payment guarantee. However, you must meet the qualifications. Contact us for more information. 

Minimum Down Payment Requirements By Loan Type

Conventional Loan

Conventional loan requirements vary by lender. Some lenders require 5% down, while others only need 3%. Often higher credit scores give you the opportunity for a lesser amount of down payment.

FHA Loan

You’ll need at least a 3.5% down payment for an FHA loan plus a credit score of 580 or higher. If your credit score is less than that, you’ll need at least 10%.

VA Loan

VA loans don’t require a down payment. However, some other requirements to determine your eligibility.

USDA Loan

Like a VA loan, you don’t need a down payment for a USDA loan. However, to qualify, the home must be located in an approved rural or suburban area, plus your household members must also meet specific income requirements. 

Summary

It’s possible to buy a property with as little as 3% down, and maybe with no money down if you qualify for a VA or a USDA mortgage. Buying a home is more obtainable than you think, and having little down payment doesn’t need to hinder your homeownership plans. Contact us today to learn more about your options and to get started with qualifying for a low-rate mortgage today!

If you own an investment property, you already know that getting a mortgage for this type of property is different than a refi of a primary home. If you recall, the qualifying requirements for getting an investment load are more stringent than a primary home loan. 

Let’s take a look at everything you need to know about refinancing an investment property.

Why Refinance Your Investment Property?

Owning a second property comes with costs, and some may feel that these additional costs tie up too much of their free cash flow. Others choose to refi to free up some money for repairs or improvements to the property. 

If this sounds like you, it could make sense to refinance into a better rate –possibly lowering your mortgage payment –and maximizing your earnings on your investment.

Yet others want to use the funds from the refinance to invest in more properties. With a cash-out refi, you can utilize the equity to purchase another property. 

What To Expect When Refinancing Your Rental Property

Many begin their investment property refi by researching its value and starting the mortgage application. Since the application and document submission can be completed online, the process moves fairly fast.

However, keep in mind that interest rates for investment property loans are higher than with primary property loans. So when researching mortgage rates, the rate you end up getting may be higher than most rates that are posted. The best thing is to contact a mortgage professional –like us–to get the most accurate and lowest rates possible for investment properties.

Requirements For A Rental Property Refinance

Here are some of the basic requirements to qualify for a refinance of your investment property. The specific requirements ultimately depend on the lender and the type of loan:

• A minimum credit score of 620
• A max debt-to-income ratio (DTI) of 50%
• For term refi: Max loan-to-value (LTV) of 75%
• For cash-out refi: Max loan-to-value (LTV) of 75% for 1 unit, 70% for 2 – 4 units

You’ll also need to show you have about 6-month’s worth of cash in a savings account should you lose your income and need alternate means to pay your monthly obligations.

You’ll also need to provide documentation, such as:

• Proof of income (all sources)
• Copy of your homeowner’s insurance
• W-2s, tax returns, and 1099s
• Statements from any asset-holding accounts
• Statements from debts you owe
• Copy of the title insurance

Is Refinancing Your Investment Property A Smart Move For You?

Refinancing your investment property is often a great idea, helping you to maintain and achieve your financial goals. However, considering that it’s still a big financial decision, it’s essential to consider every perspective.

Curious as to whether a refinance makes sense in your situation? Apply now to connect with one of our mortgage professionals and see!

Ever wonder why it’s essential to keep your debt in check when applying for a mortgage or what debt matters to your approval? This article will help you answer these fundamental questions so that you’re in a great position to get approved for a home loan.

All About Debt-To-Income Ratio (DTI)

Your debt-to-income ratio (DTI) is one of the most critical metrics lenders use to determine how much home you afford because it directly influences the monthly payment you can qualify for.

DTI is a ratio that compares your existing monthly payments with your gross monthly income before taxes. Depending on the mortgage program and your qualification metrics, two types of calculations are used in mortgage qualification: 

• Front-end DTI -looks at the amount you spend on housing as compared to your total income
• Back-end DTI – looks are installment and revolving debts

The front-end DTI is used on specific government loans if you’re considered a bit more of a risk. For example, getting approved for an FHA loan with a credit score below 620 will require a front-end DTI no higher than 38%. 

A back-end DTI, however, is always calculated. 

What Is A Good Debt-To-Income Ratio TO Have?

As a general rule, it’s best to keep your DTI at or below 43%. However, the exact limitation depends on other qualifications and the type of loan you’re applying for.

For example, with a conventional loan through Fannie Mae or Freddie Mac, you can have a DTI as high as 50%. However, Fannie Mae will also consider your credit card behavior. Someone who pays off most or all of the monthly balance is regarded as a lower-risk borrower than someone with an otherwise identical credit history and makes only the minimum payment on their credit cards. Thus DTI requirements for each of these borrowers may vary. 

What Debts Are Included In Debt-To-Income Ratio?

Not every payment counts toward your DTI. Typically, only the items that appear on your credit report will be part of your DTI calculation, such as:

• Mortgage payments
• Home equity loans or home equity lines of credit (HELOC)
• Car loans
• Student loans
• Personal loans
• Child support or alimony payments
• Credit cards

Items like utilities, cell phone, or cable tv bills may not show up on your credit report, but it’s still necessary to stay current on these payments. Late or non-payments on these accounts can lower your credit score if it goes into collections.

Special Considerations For Debt-To-Income Ratio Calculations

Student Loans

Many factors determine how student loans are counted in your DTI calculation. It depends not only on the type of mortgage loan you’re getting but also on whether the student loan is in a repayment period, deferment, or forbearance. 

Alimony Payments

Different regulations apply when it comes to alimony. For example, suppose you’re getting a conventional, FHA, or VA loan. In that case, alimony payments are subtracted from your income rather than included as part of your debt, which could make it easier for you to qualify. 

However, existing alimony payments are included in your DTI as debt with a USDA loan or a jumbo loan.

Now that you know more about your DTI and how it’s factored into your mortgage qualification, you’re ready to apply! Get started online or connect with us over the phone to learn more about the best loan option for you and your DTI standing.