home loan

The Big Day: Closing Day

The big day has come.

Homeowners insurance- check

Home inspection- check

Now comes the day you have been waiting for. The day you officially close on your home. If everything is in place, the day itself should be a breeze.

 

What exactly should you expect?

First and foremost, give yourself ample time and bring as much patience as you possibly can. One big mistake people make is not allowing enough time for the actual closing. Your lunch break may not actually be enough time to close.

Besides, if you give yourself a half day (or even a full day) for the closing, you can always take time to enjoy and celebrate your new purchase!

In addition to planning for the time out of your day, it is typically a good idea to schedule your closing close to the end of the month, but not right at the end of the month. That will allow for enough time to address any issues or concerns that may come up over the course of the closing.

Don’t be afraid to ask for a final walk through

Many buyers are often allowed to do one final walk through 24 hours before the closing. This will allow for you to see if any damage has been done to the house or property since you signed the contract. If there is something to note, this final walk through provides the opportunity to negotiate any necessary repairs.

 

There are a few things to bring to the table

It is extremely important to bring all the papers you have collected and accumulated over the home-buying process. That means the good faith estimate, the proof of homeowners insurance, contract, your inspection reports, and any other documents that you have sent to the bank as a proof of your mortgage.

Besides the piles of paperwork, there can also be a handful of people present at the closing. While the actual people required to be present can vary from state to state. The people involved can range from your attorney, the home seller, your mortgage lender, and, of course, you.

Yes- it is a big day

But that does not mean it needs to be stressful, chaotic, or have anything go wrong. Talk it over with your attorney (if you have one) and definitely your mortgage lender. All of the preparation will be worth it- so you can sit back, enjoy the experience, and take the keys to your new home.

 

 

Total Home Lending

 

 

Natasha Mason

The Big Day: Closing Day2020-09-28T15:14:20+00:00

15 vs 30

Finding the mortgage that is best for you, best for your family, and best for your unique situation can take a little time (and a little research). So we decided to get down to the basics on the differences between short-term and long-term loan options.

If you have any experience in the world of home-buying and mortgages, you have, most likely, heard the terms 15-year fixed mortgage and 30-year fixed mortgage. These are the two standard types of fixed mortgages available.

Other than the duration of the payment period, are there many other differences? Well, yes! And the biggest one is whether or not you are in a financial situation to take on a shorter term loan.

To break it down- a 15-year mortgage cuts the repayment period in half, making your monthly mortgage payments higher.

 

Things to consider

There are two different frames of thought on this topic. The first is if you can realistically afford the higher mortgage payment each month. Now, if you can afford it and still have some disposable income remaining for other bills and emergency situations, repaying your loan over a shorter period of time may be ideal for you. Now, the other frame of thought is simply the amount of money you can save with a shorter term mortgage.

Over the span of 15 years, versus 30, you will save significantly on interest alone (usually 40 to 50% of the loan balance).

Is it too late to switch?

Regardless of the term you originally settled upon for your mortgage, there is a possibility of changing it, if the time is right. You are able to switch over to a shorter repayment period, but it definitely one that you need to make carefully.

While it is much simpler to switch to a lower repayment period, if things begin to get difficult, you are not simply able to fall back on your original 30-year mortgage. Rather, you will have to completely refinance the loan in order to do so. And refinancing, as we discussed in one of our previous blogs, comes with some additional costs of its own.

Getting down to the brass tax

Realistically, this is something to consider and to keep in mind as you begin your home-buying journey. And, honestly, it is a great idea to talk it over- with your mortgage lender, with your significant other, with your friends- before you are even ready to take the plunge.

Having a comprehensive understanding of mortgages and your options before getting pre-approved for a loan is one of the best pieces of advice we can give you. The more you know, the more you have discussed your options, and the better you understand the entire process will leave you feeling better equipped to move forward with your decision to purchase a home.

We do pride ourselves on providing excellent customer service, as well as making it our goal to ensure your entire mortgage process is as quick and as easy as possible. So if you have questions or need someone to talk loan logistics with- our experienced loan officers are available.

While we may have said it before, we are going to say it again, making a plan that is 100% right for your personal situation is the best first step you can take after beginning to educate yourself on the options available to you.

This is especially true when it comes to solidifying the length of your repayment period. Just because it seems ideal in the future, it may not be realistic for you to take on a 15-year mortgage at this point in your life. That is why it is great to keep in mind- there is always the opportunity and possibility of making adjustments to the loan (through refinancing and other tools) later on in the future.

 

Total Home Lending

 

 

Natasha Mason

15 vs 302020-09-28T15:14:20+00:00

The Reverse Mortgage

If you are considering a reverse mortgage, there are a few key things to consider before taking the plunge. Like any financial undertaking, it is important to ponder these decisions.

First, we should start with what a reverse mortgage actually is. Essentially, it is a type of home loan that allows you to turn the equity you have on your home into cash. So, all of the equity you have built over the years from paying on your mortgage can become accessible funds for you to use. Typically referred to as a Home Equity Conversion Mortgage (HECM), these loans do not need to be paid back until you move out of the house. And generally speaking, with a reverse mortgage, you do not have to make a monthly mortgage payment.

And for a bit of history- the first FHA-insured reverse mortgage was issued back in the late 1980’s. Generally speaking, these types of loans allow older, long-term home owners to access part of their home equity without ultimately having to move.

Now, who actually benefits from a reverse mortgage? People who do not plan to move, people who can afford the cost of maintaining their home, and people who want to access the equity on their home (whether it is to supplement their income or simply to have for one of those “rainy days”).

The longer that you have been living in your home and the older you are, typically your mortgage balance is much smaller and you have built up more equity in your home. So, life expectancy does play a factor in your reverse mortgage and how much money you will receive.

 

Here’s an example: Bill and Sue are both 80 years old. They do not have any plans to move and are looking for a way to supplement their monthly income. After meeting with a loan officer, they get their house appraised at $300,000. With only $35,000 left to pay on their mortgage, the available reverse loan amount available to them is about $195,000. After settlement costs, their remaining mortgage balance, and other taxes & fees, there is still a sizable amount of money left to supplement their monthly income. Even to take a small vacation.

While a reverse mortgage sounds like a great idea, they are most beneficial when you have been living in the same home for quite some time (and have been regularly paying on your home mortgage) and if you are planning on staying in the same home.

Wondering if you are in a good situation for a reverse mortgage or simply want to discuss all of your options, speak with one of our loan officers. We are happy to talk through your unique situation and find out what options are best for you.

 

 

Total Home Lending

 

Natasha Mason

The Reverse Mortgage2020-09-28T15:14:20+00:00

Refinancing: is it right for you?

Refinancing. That’s a term you regularly hear thrown around in the mortgage industry.

It is, in fact, exactly what it sounds like- replacing your current mortgage with a new one. While there are a variety of reasons that lead people to refinance, these are some of the most common:

The first is to lower your interest rate. If you took your mortgage during a time where interest rates were slightly higher, choosing to refinance could, ultimately, save you thousands of dollars. This type of refinance is typically referred to as rate-and-term refinancing. You refinance the remaining balance on your mortgage for a lower interest rate and a term (or number of years it will take to repay) you can afford.

The second reason to refinance is to convert an adjustable rate loan to a fixed rate loan. Just like it sounds, an adjustable rate loan has an interest rate that fluctuates based on market conditions. So, when interest rates are low, converting your loan to a fixed rate loan secures that low interest rate for the remaining duration of your mortgage.

The third is a way to “free up” cash. Typically referred to as cash-out refinancing, this entails taking out a new loan for a greater amount than your previous balance. You can then take the difference in cash or even use it to pay off other forms of debt.

Other reasons to refinance are to eliminate FHA loan insurance or even to settle a divorce.

The potential benefits seem pretty obvious. Lower interest rates means less money paid over the life of the loan. It even means you could lower your monthly mortgage payments. Having additional cash on hand. All of these benefits are compelling.

houses-on-scrabble-pieces

To refinance or not to refinance

Refinancing, however, is not for everyone. There are a variety of other factors that contribute to the entire refinancing process. The length of your loan, the amount of money you owe, even the amount of time you plan on staying in that particular home.

Both the length of your loan and the amount of money you owe can directly affect the additional costs to refinance. These “hidden costs” are important to factor into your decision to refinance (or to keep your current loan). Cost of a house appraisal, loan origination fee, plus a variety of other costs for filing documents, purchasing title insurance and even fees for your new mortgage application.

 

Time to break out your calculator

Before you take the plunge, take a minute to crunch the numbers. Is refinancing something you can afford, at this time? And, will you ultimately save money over the duration of your loan?

The goal is to not only “break even,” but to do so in a time frame that is affordable and beneficial to you. Essentially, how long it will take for the refinance to pay for itself. For example, you have $2,000 in costs to refinance, but you are saving $100 in your monthly payments. In that situation, you will “break even” after 20 months of payments.

 

What now?

Are you considering refinancing? Take a look at your current mortgage and financial situation. You can even discuss the benefits of refinancing with one of our loan officers. In doing so, you can determine whether or not refinancing is the smartest move for you (at least for now).

lending6

 

By Natasha Mason

Refinancing: is it right for you?2020-09-28T15:14:21+00:00
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