Mortgage News

A Qualified Mortgage Consultant Can Outline Your Options

Renters Have Much to Gain by Pursuing Home Ownership
 


 

Buying a home vs. renting is a big decision that takes careful consideration, as most mortgage consultants will agree. But the rewards of home ownership are great. For many years, purchasing real estate has been considered an extremely profitable investment. It is an achievement that offers a sense of pride, financial stability and potential tax advantages.

 

Yes, there are certain responsibilities associated with owning a home. Landlords will often argue the benefits of renting, and for obvious reason. If you are renting, you’re helping them make their mortgage payment.

 

The numbers are staggering if you look at it this way. If you are paying $1,000 per month for an apartment, and you know your rent will increase 5% every year, then over the next five years you will pay your landlord $66,309. If you are currently renting a house, you may be paying much more than that each month. Either way, you gain no equity by shelling out this monthly housing expense and you certainly won’t benefit when the property value goes up!

 

However, if you were to purchase your own home or condominium, you would be on your way toward building equity. By choosing a fixed-rate loan program, you can have the comfort of knowing that your monthly mortgage payment will never go up. In fact, you would have the option of refinancing to a lower interest rate at some point in the future should interest rates drop lower than the rate you’d currently be locked in at, and this would cause your monthly mortgage commitment to go down.

 

And not only would your own home give you added space, your own back yard and overall privacy—home ownership would also give you some tax advantages. Depending on your tax bracket, owning a home is often less expensive than renting after taxes. Interest payments on a mortgage below $1 million are tax-deductible, and your mortgage consultant should help you evaluate the tax advantages of various loan scenarios, and share this information with your tax consultant to glean feedback on your behalf.

To find the loan program that is right for you, your mortgage consultant will need to evaluate your monthly household income, current assets and savings, as well as any monthly obligations you may have for credit card payments, car payments, child support, etc. These prequalification factors, along with the report of your credit score, will determine how much house you can afford and what interest rate you will pay for financing. It is also important to let your mortgage consultant know what your future goals are, because this will help narrow down which loan option is the best fit for your long-term needs.

Posted in:Home Ownership and tagged: HomeOwnership
Posted by Chris M Caggiano MLO on November 2nd, 2018 8:48 PM

Many Loan Options Available

Home Improvements Turn Average Homes into Dreams Come True

 

CITY, ST – If you’re thinking about taking out a home improvement loan, there are several options to consider. First and foremost, your mortgage consultant needs to know why you want a home improvement loan. Here are some factors to take into consideration.

 

  • How long have you been in the home?

  • Will the improvements increase the property value?

  • Are you making improvements to increase energy efficiency?

  • Will improvements be made in one fell swoop, or in stages?

  • What is the current outstanding balance on your mortgage?

  • What is the appraised value of the home?

  • How much will the improvements cost?

  • What improvements will be tax deductible?

  • Do you have other revolving debt that you would like to pay off at the same time?

  • Are you making improvements because you plan to sell the property?

     

    The New Tract Home Blues

    Buyers of newly-built homes are often tapped out after making the initial down payment and closing costs, including upgrades to amenities and the inevitable need for new furniture. Shortly thereafter, they realize they’d like to make additional improvements to really have the home of their dreams.

     

    If you’re planning on putting down roots (pardon the pun), landscaping may be in order. The developer may have been kind enough to make the front yard a perky green, but if the back yard is a disturbing brown color sparse with weeds, you may be entertaining the vision of a pool or deck.


The Major Overhaul

 

If you have built up equity in your home and are geared up for some major renovation, the Home Equity Line of Credit (HELOC) is probably your best bet. This adjustable loan allows you to use your equity as a line of credit, so if you have improvements that are phased in over time you can simply write a check when you need to pay a bill.

 

It’s like a having a credit card with a much lower financing rate. In fact, the HELOC can be used for any reason at all – even paying off that credit card debt. In most cases, this action turns that revolving debt payment into a tax deductible payment with a lower interest rate. The HELOC is generally a 2nd Trust Deed, unless it is used to pay off and replace the 1st Trust Deed.

 

A construction loan is an alternative to the HELOC for borrowers who don’t want to use or don’t have equity, and this type of financing can be used for construction on an existing dwelling. The lender will ask a lot more questions about what the borrower wants to do with the money, and the home owner will need architectural designs, permits and a licensed general contractor on board.

 

Construction loans are short-term loans that usually require interest-only payments until completion of construction, but the balance is due when construction is done. Most often, that is managed up front by setting up construction-to-perm financing. In this scenario, the loan is automatically rolled over into permanent financing at a fixed rate when construction is complete, and a rate-lock agreement can be purchased to carry the borrower through that period of construction.

 

Another option – depending on the value of your home and local loan amount limitations – is the FHA 203(k) Program. This financing is designed for the purchase or refinance and rehabilitation of properties that meet FHA guidelines. This is worth looking into if you need to bring a property up to compliance standards, finance eligible energy efficient improvements, or turn a single-family owner occupied dwelling into a duplex to accommodate Mom or Dad!

 

Just a Facelift, Please!

 

If you want to sell your home and you simply want to improve the curb appeal, it makes sense to go with a HELOC. Make sure you are aware of the current market value of homes in your area to make sure you’re not going over the limit on the fair market value of your home. You’ll want to get a return on your investment!

 

If you’ve had your home on the market too long and have not been able to sell, you might want to make some changes to give it a fresh new look and bring back the passion you once had for your home. Your mortgage consultant will help you weigh out your options for financing based on your outstanding mortgage balance, income and credit score.

 

Regardless of your reason for home improvement, make sure you share your goals with your mortgage consultant. He or she can walk you through the various loan options and confer with your tax advisor to make sure you’re getting the best deal possible.

Posted by Chris M Caggiano MLO on November 2nd, 2018 8:39 PM

Ready to Trade-In Your Home?
Perhaps You Should Remodel Instead!
 


 

Each year, millions of Americans move into the home of their dreams. As time goes by, families expand, kids grow older, and suddenly that home isn't quite so perfect anymore. Or perhaps you still love your home, but you really want a gourmet kitchen and a larger master bedroom. Should you start looking for a new house? Or would it be better to stay where you are and remodel instead?

 

Both options involve a significant investment of time and money, so it's important to take your time and make an informed decision. You'll also want to be sure to consider both the financial and the emotional sides of the equation. Let's begin by examining the financial factors involved.

 

Moving: A good local real estate agent should be able to assist you with estimates on these numbers.

 

  • How much will it cost to purchase a home that will meet your needs?

     

  • How much could you sell your existing home for? Don't forget to subtract the agent's commission from this total.

     

  • What will it cost to move? According to real estate consultant and best-selling author of Remodel or Move, Dan Fritschen, a typical move costs 10% of the value of your home.

     

  • How much will your property taxes increase as a result of the move?


    Remodeling:

     

  • What projects do you want to have done and how much will they cost? An architect or general contractor will be able to assist you with these figures.

     

  • How much will the improvements add to the value of your home, also known as the "payback"? A local real estate agent can assist with this as well.

     

    If the decision about whether to renovate or move were purely a financial one, then it would be quite easy to look at the numbers and come to the right conclusion. However, there are also emotional factors that come into play, and they have a value as well. Let's consider some examples.

     



    Reasons you may want to move:

     

  • If you relocate to a new neighborhood, your children could attend superior schools.

  • You would like to reduce your commute or have better access to local amenities, such as restaurants and shopping.

  • You're not particularly fond of your current neighborhood.

  • Your yard is too small, and you cannot expand it.


    Reasons you may want to stay and remodel:

     

  • You're happy with your location. It's convenient, you love your neighbors, and the schools are either excellent or are not a factor.

  • You love the layout of your home.

  • All you need is a little more space, and your home will be perfect.

     

    Of course only you know what is truly important for your happiness, so try to use these questions as a starting point. Create a list of the pros and cons of each scenario and leave it someplace accessible, so that you and your spouse can add to it as you think of additional factors. You may also want to consider attending open houses and visiting new housing developments to see what is available and how your home compares.

     

    Once you've completed your list and your financial assessment, it's time to draw some conclusions. Are the numbers and the emotional factors pointing you in a clear direction? If you're still feeling unsure and would like some additional assistance, you may want to read Dan Fritschen's book, Remodel or Move, or visit his website at www.remodelormove.com. Both contain a calculator that will assist you with the difficult task of quantifying the ramifications of your decision. In addition, you can learn tips to assist you with the next step, after you've determined what it will be.

     

    If you choose to remodel, then you'll need to have a clear idea of what you want to accomplish before finalizing any details with the contractor or architect. One of the most expensive things you can do is change the project midstream.

     

    If you decide to move, then there are low-cost improvements you can make to your existing home that will help it to sell more quickly. The kitchen and the bathrooms provide the biggest return on investment in this area.

     

    Whether you decide to remodel or buy a new home, it's important to ensure that you have proper financing in place prior to moving forward. If you decide to purchase a home, a mortgage originator will help you to determine how much you can afford, as well as which loan package works best with your overall financial plan. In the case of remodeling, you should meet with a mortgage professional before any construction takes place. Otherwise you may severely limit the type of financing options available to you.

    Additional Resources:

    Remodel or Move?: Make the Right Decision, by Dan Fritschen

Posted by Chris M Caggiano MLO on November 2nd, 2018 8:36 PM


Life After Bankruptcy


 

Bankruptcy is an uncomfortable subject for a variety of reasons. The most obvious is the potential havoc it can wreak on your finances. Running a close second is the negative stigma which is often attached to the process. This negativity is important to mention because strong emotions can sometimes lead to unsound financial decisions with devastating results.

 

Bankruptcy becomes a viable option for someone who is “upside down” in terms of cash flow. In other words, when a person has more money going out each month than coming in, bankruptcy should be considered if no reversal of this negative cash flow is within sight. The longer someone waits to explore the various options available, the more serious his or her situation may become.

 

One of the worst things people can do in this situation is to borrow more money to try and pay off their debts. On paper, this is clearly an unwise financial decision. In the real world, however, it is very common for individuals to pursue this strategy to buy time and hold off on filing for bankruptcy. On the surface, this is certainly a noble notion; however, it can often compound the problem and serves only to delay the inevitable.

 

For many homeowners during this upside-down cash flow, speaking to a qualified mortgage professional is a much better option. An experienced loan officer can objectively look at your finances and help you determine if restructuring your mortgage would not only help, but possibly even alleviate any need for bankruptcy.

 

If bankruptcy is the only option, seek out a reputable bankruptcy attorney and credit counselor. A qualified mortgage specialist can provide references for you as well, as he or she works with these professionals on a regular basis. Reliable references are essential in this case because experienced professionals greatly increase the odds of a successful bankruptcy experience. It’s that simple.

 

When filing for bankruptcy, be completely honest and accurate regarding every aspect of your financial situation. This includes any changes to your income which may occur throughout the process. Bankruptcy is a federal procedure, adjudicated by real judges, and scrutinized by representatives who coordinate with the Department of Justice, the FBI, and the IRS.

 

Here are some additional steps you can take to make the bankruptcy process as painless as possible:

 

  • Save all paperwork regarding your bankruptcy, and keep it organized. This will prove beneficial after your bankruptcy as you now have all the pertinent information in one place. Also, be sure to write down your discharge date. It’s surprising how many people forget to do this.
  • Establish a household budget. This can be accomplished in many ways, but there are several inexpensive computer programs available which do an excellent job.
  • Throughout the bankruptcy, do your best to not only live below your means, but to save as much cash as possible. You never know what you may need it for once the process is completed.
  • Be prepared for a barrage of junk mail. There will be sharks on the loose who are hoping to capitalize on your need for credit.

 

Tips for Rebuilding Credit:

 

  • If you must buy a car, focus on transportation as opposed to style. Buy an inexpensive, used car, and try to get a loan for it. It’s a good idea to figure out what your budget allows in terms of a dollar amount first. This means obtaining financing prior to looking for a car.
  • Get a secured credit card. Secured credit cards allow for the cardholder to deposit a said amount of money into an account, thus establishing the spending limit of the card. Missed payments result in deductions from the account. Some of these cards will reward responsible borrowers by upping the limit without an additional deposit. Some will even convert the account into a traditional credit card. (Be wary of offers of “easy credit” or any card which asks you to call a 900 number. You will be charged for the call.)
  • Meet with a credit repair specialist. Not only can they help you clean up the damage to your credit report, they can advise you on specific ways to rebuild the credit you lost as well.


While it does take time, there is life (and credit) after bankruptcy. Some mortgage lenders will even lend to you within a year or so after a bankruptcy. If you’re in serious financial trouble, the trick is to get the help and advice you need from professionals you trust.

Posted in:Bankruptcy and tagged: Bankruptcy
Posted by Chris M Caggiano MLO on November 2nd, 2018 8:31 PM


Protecting Your Credit During Divorce



 

CITY, ST – When a marriage ends in divorce, the lives of those involved are changed forever. During this time of upheaval, one thing that shouldn’t have to change is the credit status you’ve worked so hard to achieve.

 

Unfortunately, for many, the experience is the exact opposite. Unfulfilled promises to pay bills, the maxing out of credit cards, and a total breakdown in communication frequently lead to the annihilation of at least one spouse’s credit. Depending upon how finances are structured, it can sometimes have a negative impact on both parties.

 

The good news is it doesn’t have to be this way. By taking a proactive approach and creating a specific plan to maintain one’s credit status, anyone can ensure that “starting over” doesn’t have to mean rebuilding credit.

 

The first step for anyone going through a divorce is to obtain copies of your credit report from the 3 major agencies: Equifax, Experian®, and TransUnion®. It’s impossible to formulate a plan without having a complete understanding of the situation. (Once a year, you may obtain a free credit report by visiting www.AnnualCreditReport.com.)

 

Once you’ve gathered the facts, you can begin to address what’s most important. Create a spreadsheet, and list all of the accounts that are currently open. For each entry, fill in columns with the following information: creditor name, contact number, the account number, type of account (e.g. credit card, car loan, etc.), account status (e.g. current, past due), account balance, minimum monthly payment amount, and who is vested in the account (joint/individual/authorized signer).

 

Now that you have this information at your fingertips, it’s time to make a plan.

 

There are two types of credit accounts, and each is handled differently during a divorce. The first type is a secured account, meaning it’s attached to an asset. The most common secured
accounts are car loans and home mortgages. The second type is an unsecured account. These accounts are typically credit cards and charge cards, and they have no assets attached.

 

When it comes to a secured account, your best option is to sell the asset. This way the loan is paid off and your name is no longer attached. The next best option is to refinance the loan. In other words, one spouse buys out the other. This only works, however, if the purchasing spouse can qualify for a loan by themselves and can assume payments on their own. Your last option is to keep your name on the loan. This is the riskiest option because if you’re not the one making the payment, your credit is truly vulnerable. If you decide to keep your name on the loan, make sure your name is also kept on the title. The worst-case scenario is being stuck paying for something that you do not legally own.

 

In the case of a mortgage, enlisting the aid of a qualified mortgage professional is extremely important. This individual will review your existing home loan along with the equity you’ve built up and help you to determine the best course of action.

 

When it comes to unsecured accounts, you will need to act quickly. It’s important to know which spouse (if not both) is vested. If you are merely a signer on the account, have your name removed immediately. If you are the vested party and your spouse is a signer, have their name removed. Any joint accounts (both parties vested) that do not carry a balance should be closed immediately.

 

If there are jointly vested accounts which carry a balance, your best option is to have them frozen. This will ensure that no future charges can be made to the accounts. When an account is frozen, however, it is frozen for both parties. If you do not have any credit cards in your name, it is recommended you obtain one before freezing all your jointly vested accounts. By having a card in your own name, you now have the option of transferring any joint balances into your account, guaranteeing they’ll get paid.

 

Ensuring payment on a debt which carries your name is paramount when it comes to preserving credit. Keep in mind that one 30-day late payment can drop your credit score as much as 75 points. It is also important to know that a divorce decree does not override any agreement you have with a creditor. So, regardless of which spouse is ordered to pay by the judge, not doing so will affect the credit score of both parties. The message here is to not only eliminate all joint accounts, but to do it quickly.

 

Divorce is difficult for everyone involved. By taking these steps, you can ensure that your credit remains intact.

Posted in:Credit and tagged: Divorce
Posted by Chris M Caggiano MLO on November 2nd, 2018 8:26 PM

7 Essential First-Time Homebuyer Facts | Infographic

7 Essential First-Time Homebuyer Facts – Mortgage Infographic: Recently the National Association of Realtors released their annual Profile of Home Buyers and Sellers. We found some of the first-time homebuyer facts quite interesting and wanted to share these mortgage insights from the report with you. For example, did you know the primary reason given by first-time homebuyers for purchasing a home is simply the desire to own a home of their own? Yes, the American Dream of Homeownership is alive and well! Take a closer look at our mortgage infographic below to see all of these essential first-time homebuyer facts, so that you may better serve your mortgage customers!

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Posted by Chris M Caggiano MLO on June 13th, 2018 9:08 AM

The art of real estate appreciation

 Eric Fox June 7, 2018

Open commentary on everything impacting the U.S. housing economy. The opinions expressed here represent the author's alone.

In this coastal MSA, rising property values go with its cultural scene

After our first 10 weekly HousingWire columns looked at predicted real estate appreciation in Metropolitan Statistical Areas in the Northeast, Northwest, Southeast, Southwest and Midwest, we now check in with the West and the nation's most populous state.

In the March 2018 VeroFORECAST from Veros Real Estate Solutions, which forecasts changing property values through March 2019 in 342 of the more than 360 MSAs in the United States, California's San Diego-Carlsbad-San Marcos MSA was ranked 20th with a projected rate of 8.3% appreciation over the next 12 months.

Coincidentally, that is the same percentage of California's population that lives in America's most southwestern MSA. According to a U.S. Census Bureau estimate, 39,536,653 people lived in the Golden State in 2017 and more than 3.3 million of them call the San Diego-Carlsbad-San Marcos MSA home. That makes it California's fourth largest and the nation's 17th largest.

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Posted in:Real Estate and tagged: realestateappreciation
Posted by Chris M Caggiano MLO on June 8th, 2018 6:15 PM

CoreLogic: Home equity gains top $1 trillion in first quarter

   Alcynna Lloyd

84,000 residential properties regain equity

Homeowner equity topped $1 trillion in the first quarter of 2018, according to the Q1 2018 home equity analysis from CoreLogic, a property information, analytics and data-enabled solutions provider.

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