03
Feb
By First Rate Financial Group
Home Buyer Tips

Three Tips To Get The Best Financing On Your Second Home Purchase

Three Tips To Get The Best Financing On Your Second HomeAre you buying a property as your second home? Perhaps you are looking for a small cottage or apartment where you can escape to for your vacations, or maybe you want to have another home closer to your relatives?

Maybe you want to rent out your second property and make a steady income from your investment. Whatever the reason, a second piece of real estate can be a fantastic investment. However, sometimes getting a mortgage on your second home can present a challenge.

Generally, a mortgage lender will have tougher standards for vacation home — or second home — loans than primary home loans. This is because usually when you are buying a second home your finances will be stretched thinner and you will have less money to spare due to already paying a mortgage on your primary home.

This additional risk may mean that your second home mortgage can be more difficult to close and likely could carry a higher interest rate.

Here are three tips to keep in mind that will help you to get the best mortgage on your second property:

Build up a decent amount of savings.

Your mortgage lender will want to be able to see that you have a large amount of savings in reserve so that you will have enough to pay for the mortgage even if you were to lose your job or other income source.

Pay off any credit card or installment debt.

Many lenders will be hesitant to approve your second home mortgage if they see that you have a lot of debt on your credit card. They will want to see that you have a low debt to income ratio so that you will be able to pay back the loan.

Use your primary home as a resource.

If you have always made your payments on time and you are well on your way through paying off your first house, you may have equity to borrow against for some or all of your second home purchase.

These are just a few tips to keep in mind in order to make getting a mortgage for your second property as easy as possible.

To find out more about investing in a second home or vacation property, contact your trusted real estate professional today. 

10
Apr
By support
Mortgage

Manage These 3 Items Before Applying For A Mortgage

Manage These 3 Items Before Applying For A MortgageMortgage lenders weigh the risk of getting their principal and interest paid back by looking at the qualities of the prospective borrrower. And due to the amount of money being requested and lent to purchase homes, those requirements can become daunting.  Working with a trusted and qualified mortgage professional makes this sometimes confusing process a little clearer.

To this end, there are three things that a potential homebuyer can do to prepare for the mortgage approval process.

Manage Debt And Credit Levels

For many homebuyers, managing their credit score is the biggest challenge. Mortgage lenders like buyers with strong credit. While getting strong credit usually isn’t something that can be done overnight, paying bills on time, all of the time can help to build a positive profile.

Using as little credit as possible is also helpful, since high utilization of existing credit lines can harm a borrower’s score. Having less debt can also reduce monthly payments, making it easier to qualify for a larger mortgage.

Manage Income And Qualifying Ratios

Lenders look for two things when it comes to a borrower’s income:

  1. Stable incomes are preferred, so being able to prove the income with a W-2 form or other documentation is usually required. Self-employed people will typically need to prove their income with their tax returns, so taking high write-offs can make it harder to qualify.
  2. A borrower’s income should be significantly higher than his total monthly debt payments. Lenders divide a borrower’s monthly payments — including their proposed mortgage — into the gross monthly income. If the payments exceed a set percentage, the lender will shrink the mortgage until it considers the payment affordable.

Collect Required Paperwork Early

To qualify for a mortgage, borrowers typically need to submit a comprehensive file of supporting documentation. This can include tax returns, pay stubs and bank and investment account statements.

Since lenders frequently want some historical data, it can be a good idea for people considering applying for a mortgage to start collecting documentation before they actually begin the mortgage application process. Once again, working with a qualified mortgage professional will make this process a lot more comfortable.

10
Jul
By support
Home Mortgage Tips

Nearing Retirement? Three Reasons Why You Might Consider a ‘Reverse Mortgage’

Nearing Retirement? Three Reasons Why You Might Consider a 'Reverse Mortgage'If you are nearing retirement, a reverse mortgage might be right for you. This type of mortgage essentially allows you to turn your home equity into cash. If you find yourself with little money, a reverse mortgage could be the perfect solution, and here’s why.

No Worries About Monthly Payments

After taking on a mortgage, there are many costs that you have to worry about. One of these problems is mortgage insurance premiums. Add interest and fees from lender service providers to the mix, and you’ve got yourself many costs.

All of these fees can create tremendous headaches, as a large chunk of the loan amount goes into covering these costs.

When you undertake a reverse mortgage, you don’t have to worry about any of that. The loan is paid back with home equity, not ongoing cash flow, so monthly payments aren’t a worry.

Your Income Won’t Affect Your Eligibility, And The Income You’ll Get Won’t Create Problems

If the reason you’re hoping to get a reverse mortgage is your low income, the last thing you want is that income to be the deciding factor. With this type of loan, it’s not an issue. That’s because the thing that determines eligibility is your house’s value.

In fact, the income you’ll be getting from this loan is not taxable, which means you’ll be able to keep it in full. Plus, any benefits you get from Medicare will not be affected, and neither will your Social Security.

As such, what you’ll be getting is a loan that doesn’t take into account your current income. Rather, it adds on to it, without creating any issues for you. Plus, you’ll be able to get the money in several different ways, which means you’re in control.

Lastly, the money you get is fully yours. That means that you can use it for anything you want, whether that means you’ll be paying off other loans, or simply funding your day-to-day needs.

You Won’t Be Taken Away From Your Home

Your house is yours because it feels that way. It’s the place in which you’ve invested money and effort. It’s also the place where many loved memories were created, and where they’ll keep on being created.

One of the hardest things for the elderly is being removed from their loved homes and placed into care. They have to leave the place they’ve grown to love. Worse than that, they’re thrown into a world they don’t know.

With a reverse mortgage, this doesn’t need to happen. With this type of loan, you get additional income, and you get to stay in your own house.

Not only that, but you’re also keeping the title to that place until you move, pass away, or reach the end of the loan’s term. Your home will stay yours, both effectively and in the documents.

There are many more reasons why a reverse mortgage is a great idea. However, the fact that you’re in complete control of the income you’ll be getting is one of the most important things.

If you’d like to learn more about reverse mortgages, be sure to contact your mortgage professional.