23
Dec
By support
Home Mortgage Tips

Are You Applying for a Reverse Mortgage? Here Are 3 Considerations You’ll Need to Make

Are You Applying for a Reverse Mortgage? Here Are 3 Considerations You'll Need to MakeIf you’re a homeowner who is looking to tap in to the home equity that you’ve spent years building you may be interested in a “reverse mortgage” or “home equity conversion mortgage”. While these unique financial tools aren’t for everyone, if you qualify for a reverse mortgage you’ll find that this might be the perfect financial solution which allows you to pay off your existing mortgage, or for some other regular expenses that you have.

Let’s take a closer look at how reverse mortgages work, including how to qualify, what happens to your existing mortgage and what a reverse mortgage might cost.

Do You Meet the Requirements for a Reverse Mortgage?

In short, a reverse mortgage is a type of home loan in which the lender pays you monthly payments or a lump sum based on the equity that you’ve built up in your home. At some point in the future – when you move out of the home, or pass away – the reverse mortgage loan will become payable.

As mentioned above, reverse mortgages aren’t for everyone. You’ll need to be at least 62 years of age and be a homeowner who has enough equity built up in your home to qualify. You’ll also need to understand that your lender will scrutinize your current financial position to ensure that you can keep up with property taxes and other regular costs that you may incur.

What Happens to Your Existing Mortgage?

If you have a regular mortgage it’s still possible to qualify for a reverse mortgage, but you’ll need to use some of the proceeds to pay off your existing mortgage. For example, if you have $50,000 owing on your mortgage and you receive a reverse mortgage for $100,000, you can pay your initial mortgage off and still have $50,000 to use as you see fit.

Do You Know What a Reverse Mortgage Costs?

Keep in mind that like a traditional mortgage, a reverse mortgage has costs attached. You’ll need to pay mortgage insurance premiums, service fees, lender fees and other third-party fees that are typically referred to as “closing costs”.

Learn More About Your Reverse Mortgages Options

A reverse mortgage can be an excellent way to take advantage of the equity that is currently locked up in your home. To learn more about reverse mortgages, contact your local mortgage professional and they’ll be able to share their guidance and expertise.

09
Dec
By support
Home Mortgage Tips

Understanding Mortgage Insurance and the Difference Between FHA, VA and USDA Mortgages

Understanding Mortgage Insurance and the Difference Between FHA, VA and USDA MortgagesAre you thinking about using mortgage financing to buy a new home? If so, you’ve likely heard about mortgage insurance policies requirements and you may be wondering how they will affect you. In today’s blog post we’ll explore mortgage insurance and explain the difference between conventional, FHA, VA and USDA mortgage insurance policies.

How Does Private Mortgage Insurance or “PMI” Work?

While there are a number of reasons that your lender may require mortgage insurance, in general you’ll be required to purchase a conventional PMI policy if you are putting less than 20 percent of the home’s value in as a down payment. Another way your lender might explain this is that you have a “loan to value” or “LTV” ratio of higher than 80 percent, which means that the amount of your loan divided by the value of your home is higher than 0.8.

The cost of your private mortgage insurance policy will vary depending on a number of factors, such as your financial situation, FICO credit score, the cost of your home and more. Generally speaking you’ll be required to pay from one-half to one percent of the cost of your monthly mortgage payment in insurance fees. Once your LTV ratio moves below 80 percent you may no longer be required to pay for PMI.

How Does VA Mortgage Insurance Work?

If you qualify for a mortgage from Veterans’ Affairs you’ll be pleased to know that you won’t be required to pay for mortgage insurance. In some instances you actually won’t be required to pay a down payment either, meaning that you may be able to borrow up to $400,000 to purchase a home without having to invest a cent of your own capital.

How Does USDA Mortgage Insurance Work?

Did you know that the Department of Agriculture runs a mortgage program? The USDA Rural Development mortgage offering is government-backed and like the VA mortgage program above you can finance 100 percent of the cost of your home without investing a down payment. However, unlike the VA program you’ll be required to pay for mortgage insurance. Currently the annual mortgage insurance premium on USDA loans is 0.5 percent.

How Does FHA Mortgage Insurance Work?

Finally, don’t forget about the Federal Housing Administration’s mortgage program. If you qualify for a FHA-backed mortgage, you’ll be paying about 1.35 percent in mortgage insurance premiums if you make the minimum down payment.

As you can see, there is a bit of a learning curve involved with fully understanding how all of the different types of mortgage insurance work. To learn more about mortgages and how insurance can benefit you, contact your local mortgage professional today.

03
Dec
By support
Home Mortgage Tips

Understanding the Difference Between a Mortgage Pre-qualification and a Pre-approval

Understanding the Difference Between a Mortgage Pre-qualification and a Pre-approvalIf you’re in the market for a new home and you’ve been researching mortgages, you’ve likely come across the terms “pre-qualification” and “pre-approval”. While these terms are self-explanatory in some circumstances, they are quite different in regards to mortgage financing.

In today’s blog post we’ll explain the difference between a mortgage pre-qualification and a pre-approval.

Pre-qualification: an Initial Look at Your Mortgage Options

The first – and easiest – step on the way to receiving mortgage financing to buy a home is known as pre-qualification. During this process you’ll meet with a mortgage advisor or lender who will assess your financial history including your current income and any debts that you might have. Using these numbers they’ll perform a quick calculation that suggests how much mortgage financing you might qualify for when you’re ready to buy a home.

Your mortgage professional will also answer any questions that you might have about the process, including what interest rates you may qualify for, how much you’ll need to invest in your down payment and more.

Pre-approval: A Conditional Mortgage Commitment

After you’ve been pre-qualified for your mortgage and you’re ready to start looking for a new home you’ll go through the pre-approval process. At this time your mortgage advisor or lender will take a much deeper look into your current financial situation, including pulling a credit report to assess how much risk they will have in lending you money. You’ll also complete a full mortgage application as this will allow your lender to get a conditional approval for a certain amount or range. Finally you’ll be informed about the interest rate and the terms of the mortgage once you find your new home and complete the purchase.

The Final Step: Finding the Perfect Home

Now that you’ve been pre-approved and have received a conditional commitment from your lender, you’re ready to find that perfect new home. On top of having a better idea of your price range and what you can afford, you’ll find that sellers are far more receptive to your offers as having a pre-approval signals that you’re a serious buyer who is ready to make your move.

When you’re ready to buy your new house or condo, your local mortgage professional is ready to help. Contact them to learn more about pre-qualification, pre-approval and your financing options. Enjoy your new home!