Weekly Tips

This page that includes all his weekly tips so that if you are a new visitor to his website, that you can look back at the tips and review what was said. 

Please check back weekly to see the new tip or mortgage term that will help you in the process of financing your home loan.

 

Getting Pre-Qualified To Buy Getting ready to buy a house? What should be done? The most important thing before submitting an offer on a house is to make sure you are pre-qualified to ensure that you will be able to receive financing.  Pre-qualification is sitting down with a mortgage consultant, going over your credit scores, and your finances.  Lenders look at several things,  but the most important are your credit score, and job history.  They look at credit history to make sure that when they offer financing, the borrower will pay it back on time and miss no payments.  An individual does not have to have perfect credit, it helps with the interest rates, but if someone has missed a few credit card payments, financing may still be offered, depending on each individual situation.  Lenders also want to see a consistent job history.  They prefer two years at the same job, but if you have been in that same job industry and only at your new job for a short while, but you have had no job gaps, that can acceptable too.  Lenders do not want to see job changes on a regular basis from industry to a different industry.  If you are consistent at your job history, lenders believe the borrower will be consistent with their mortgage payments.

When Is the Right Time To Refinance? Time to refinance? Is there a right time to refinance your current mortgage or home loan? A good time to refinance is when the rate is lower, which means your mortgage payments will be lower.  Another good time is if you have bills, such as credit cards or other debts you want to pay off.  The advantage of paying bills off in a refinance, is that the interest paid, you can now write off on your taxes.  Home improvements, when you want to put a new roof on or new siding, refinance and pull cash out to pay for those home improvements.  Advantage in home improvements, is that it will increase the value of your home.  A time NOT to refinance, is when you will only be saving a nominal amount each month.  It costs money to refinance, even though you can pay those costs through the refinance, it might not be worth the savings in the long run.  For example, if your payments are lowered $75 a month, and to refinance, all costs included, are $5000, it would take 5 years to break even.  If you are saving $75 a month, and paying off large credit card bills with a high interest rate, then that would be a perfect time to refinance.

Closing Costs What are closing costs? Closing costs are the brokers, lenders, title, and escrow fees that they charge to close the loan.  The difference between them all are that the broker is the person that finds the rates and terms for the client.  The broker works with the lender who provides the money or loan for the house.  Title and escrow can be the same company or two different companies.  Titles job is to ensure the transaction between the lender and borrower is in accordance with the law, basically a neutral third party.  They also record the transaction with the county and state.  Escrows job is optional, meaning if you want to pay you taxes and insurance with your mortgage payments, their job is to make sure that when taxes and insurance are due, that bill is paid. This is usually the preferred way to pay taxes and insurance, if not, every month or when taxes are due, make sure money has been set aside to pay those bills.  If your taxes have not been paid, the state will put a tax lien against the house, so when you sell or refinance your house, the state will get their money first, before you see any.

Mortgage Payments When someone receives a quote from a mortgage consultant, ask whether that payment includes taxes and home owners insurance.  A mortgage payment alone may seem affordable, but what must be included at some point, are taxes and insurance.  Those combined will give you the total amount of what your home will cost you every month.  You can postpone paying taxes every month, and pay a large sum when taxes are due, or they can be broken up every month and added into your mortgage payment. This option of paying taxes along with your mortgage payment is called an escrow account.  The taxes are paid every year from the escrow account and when paid a receipt will be sent.

Banks vs. Mortgage Brokers:

I get a lot of questions about what the difference is between using a bank for a home loan and using a Mortgage Broker.  The difference huge - As a Mortgage Broker, I can offer more programs, better rates, and better terms.  I have access to hundreds of lenders and loan programs to find the mortgage or home loan program that best fits your situation or needs.  Banks offer only a limited number of programs, and if you as a client do not fit their desired client profile, then you are turned down for the home loan or mortgage, usually without exploration of other loan programs. 

The bottom line - working with a mortgage broker, you have a lot more options, and do not need to fit into the 'box' that a traditional bank requires.

Comparing Good Faith Estimates

Good Faith Estimate or GFE, is an estimate of what the broker, lender and title fees of the loan will be.  It will show, what the broker charges, as in their processing fee and what the broker charges, usually as a percentage of the loan.  It will also show what the lender, or whom the broker is using to fund your loan, fee's are as well. The GFE will also show what the title company will charge. Title Company is a third party in this to ensure that the deal is a legal transaction between two parties.  Why is it a good idea to compare good faith estimates? To see if the broker you are working with is giving you a good deal.  If you have a good faith estimate that you have questions about, email Mike, and he will let you know if you are getting the best deal available or how he can help you save additional money.

Hard Prepay vs. Soft Prepayments Penalties

Hard Prepay Penalty vs. Soft Prepay Penalty-A hard prepay is a pre-payment stating which you can NOT sell or refinance in a stated amount of time, usually 2 or 3 years. A soft prepay says you can sell, but you can not refinance in a stated amount of time, once again, 2 or 3 years.  Usually you can get better rates with a hard prepay because you are locked into that loan for a certain amount of time.  It is present in some mortgages, preventing borrowers from rapidly refinancing. There are options for a no prepayment penalty, but usually the rates are increased.

Inquires On Your Credit

Credit scores are on everyone's mind when applying for a home loan or refinancing. Inquires on your credit can hurt your score if there are too many. To keep the inquires down, 'opt out' from receiving offers from credit card and insurance companies.  Too many of these inquires on your report will bring down your score.  Please read the information on the site to make sure this is option would suit your individual needs

https://www.optoutprescreen.com