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Though the perks are many, watch out for these extra expenses.

Relatively low mortgage rates and soft prices in some residential real estate markets are creating renewed interest in homeownership, especially among young people who are tired of seeing their rent costs rise every year and like the idea of having equity—an ownership stake—in the place where they live.

A residence can indeed be a valuable asset and a path to a greater financial future. However, novice buyers may be shocked by the bite homeownership can take out of their wallet: In addition to their mortgage payments, the true cost of owning property involves a multitude of hidden expenses. Let's look at the most common, and how to deal with them.

The first three hidden costs are strictly financial; the rest add to money woes the extra stress of home maintenance and repair.


  • Though homeownership has many perks, there are some extra and unexpected expenses to watch out for.
  • Some costs are strictly financial and beyond your control to a large extent: property taxes and HOA fees.
  • Homeowners insurance can cost more than you expect if you live in a natural-disaster–prone area.
  • The most costly part of homeownership typically relates to upkeep and repairs of the roof; the HVAC, plumbing, and electrical systems; the grounds; and prevention of mold and termite damage.


Property Taxes

As a homeowner, you'll need to pay property taxes, a monthly or quarterly fee to the town and/or the municipality in which you reside. It's not the bank that determines the property tax, it's the township, city, or county in which the home is located. An ad valorem levy, assessed according to the value of your residence, a property tax payment can easily total $500 to $1,000 or more a month, particularly in the northeast United States, where real estate values have soared in recent years.

Property tax is basically a guaranteed annuity in perpetuity at the homeowner's expense. Although you don't have much say in how much it is, as with any tax, strategies exist for lowering it.

HOA and Condo Fees

If you buy a residence within a homeowners' association or a condominium association, you'll be required to pay a monthly or quarterly fee. This charge often includes costs for things that benefit the entire neighborhood, like garbage collection or snow plowing, if your association has contracted with a private company to perform these services. These fees can rise, or your association may need to charge a special assessment for projects such as repaving the parking lot, installing a new security system, or revamping common areas or buildings.

Homeowners Insurance

Homeowners insurance may not be that unexpected an expense: Banks and mortgage companies often require it before issuing you a loan, and the premiums may even be included in your mortgage payments (if your lender helped you obtain the policy). Bear in mind that premiums can and often do, rise annually—or if you increase coverage to reflect the rising value of your property or possessions (which you should periodically do).

What can also afford a nasty surprise: What your policy doesn't include. Typically, homeowners insurance does not cover "acts of God," meaning that you will need to purchase extra coverage against disasters like floods, hurricanes, and earthquakes. Even water damage from storms is very rarely covered in a basic homeowner's policy.

Unfortunately, this extra insurance can be expensive or have an unusually high deductible. For example, separate flood insurance typically costs between $1,000 and $4,000 per year over and above the $500 to $1,000 a year that most homeowners typically spend on their basic home policies.

The Roof

Water is your home's biggest enemy, and one of the roof's primary jobs is to keep water out. A leaky roof can cause cosmetic damage to the inside of a home and,
depending on how severe the leak is, destroy the belongings inside,
cause health problems and structural issues.

Roof damage usually results when the asphalt shingles (the most common roofing material in the U.S.) become loose, cracked, blown off by the wind or damaged by hail. The nails that fasten them to the roof could also raise, allowing water to get underneath and into your home if any part of the shingles or roof had been poorly installed in the first place. Asphalt shingles also have varying expected maximum life spans, depending on the quality of the shingle. Under normal circumstances, the roof will need replacement once at least every 20 years. However, roofs have varying life spans, depending on the type of shingle used, installation quality, climate, and weather.

The Heating, Ventilation and Air Conditioning (HVAC) System

Because of its complexity, your home's HVAC system—which controls heat, cooling, and the circulation of air throughout the residence—is not something you'll be able to inspect, repair or replace yourself. Unless you're an HVAC professional, you should be prepared to hire one from time to time.

You'll probably need to buy new units at some point, as the existing ones wear out over time. Replacing the furnace and air conditioner filters frequently helps keeps the machines running efficiently. Homeowners with gas furnaces should have them inspected once a year. In many areas, this service is provided at no charge.

The Electrical System

Arc faults, faulty wiring, and electrical shorts cause a fair number of electrical fires that burn down homes. All homeowners should have a basic understanding of how electrical systems work to keep homes and families safe, but should also understand the limitations of their skills. Why risk electrocution or damage save a few bucks? Whenever there's a systemic problem, or you're doing significant rehab work, call in the pros—trusted, trained and licensed electricians to make sure things are installed properly and according to current codes and safety standards.


Small plumbing problems (like clogged drains) happen from time to time no matter where you live, and they aren't a big deal to fix with basic plumbing knowledge.

Some older homes present larger problems when it comes to plumbing, though. These homes often contain galvanized iron water pipes, which become clogged with mineral deposits over time and gradually reducing the water pressure in your home. These pipes cannot be repaired; they have to be replaced. Trust us: You do not want to deal with the issues of frozen or burst pipes after the fact.

Also be sure to research whether your water could be contaminated with lead related to your plumbing. Sometimes the problem is pipes in the home and sometimes it is the pipes from the municipal system to your home.


Termites are attracted to wood and moisture, and they can get into your house through even the tiniest of cracks. You don't want your home turning to dust right under you.

To prevent expensive structural damage to your home, make sure there is no wood touching the ground near your house (like lumber, firewood, or tree stumps). Prevent any moisture from accumulating around your foundation by making sure the ground slopes away from your house, and hire an exterminator to regularly perform a pest inspection.


Mold can grow in humid or damp areas and can cause health problems. If your HVAC system is contaminated, you can spread mold throughout your home every time the furnace is running.

Preventing mold problems is a matter of keeping water out and fixing any leaks to eliminate any environments conducive to mold growth. If your home is very humid, an air conditioner or dehumidifier will help prevent mold growth. Mold is not always visible; it can be hidden behind wallpaper, under carpeting and in a variety of other places. Mold can cause allergic or irritating reactions and asthma attacks.

Landscaping and Lawn Care

Whether you handle your yard work yourself or hire a professional, you will have to pay something to keep your landscaping in check. Lawn equipment can be costly and, if you have a lot of acreage, you may need items such as a snowblower or a leaf blower, too.

This isn't just cosmetic. Hanging tree limbs can fall and damage roofs and windows; a plethora of leaves or overgrown plants can clog gutters, impacting drainage and plumbing systems—both yours and your neighbors. Many HOAs require members to maintain the grounds of their homes for these reasons.

The Bottom Line

When most people think about the costs of homeownership, they think only about the monthly mortgage payments on their residences. But there are also property taxes and insurance to consider and budget for. But maintenance and repair costs will eat up their fair share of your (not-so) disposable income, too.

In fact, unexpected repairs—think replacing or repairing the roof, fixing loose tiles in the shower, removing an overgrown or dead tree, or paying for mold mitigation in a damp basement—typically leads to the highest bills. The list of possibilities is endless, so the best thing homeowners can do is to set aside savings for an emergency. Some financial experts suggest budgeting for 1% or 2% of your mortgage balance as a yearly maintenance and repair fund, but the amount you should save depends on the age, condition, and size of your home.

Mortgage lenders won't factor this into their equations when determining a loan amount, but you should. It's a good thing to own your own home—but before you buy, make sure you're prepared for the true cost of your castle.

Source: To view the original article click here

Posted by Jackie A. Graves, President on November 17th, 2019 10:47 AM

IF YOU'RE SEEKING THE best mortgage rates, shop carefully or your credit score might suffer. Each time you apply for a home loan, a mortgage lender will make a credit inquiry to review your credit history. These inquiries are reported to the three major credit-reporting agencies: Equifax, Experian and TransUnion.

Because inquiries signal that you are thinking of taking on new debt, your credit score can dip. But the good news is that the damage from multiple credit checks by mortgage lenders is typically small.

Even better, a little planning makes keeping your score in top shape relatively easy as you shop for a mortgage.

Shopping Within a 45-Day Window

When lenders use the most recent FICO scoring model, consumers have 45 days to comparison shop for mortgages without damaging their credit.

Multiple credit checks from lenders within that window will be recorded as a single inquiry on your credit report. The effect on your credit is the same, no matter how many mortgage lenders you consult, according to the Consumer Financial Protection Bureau.

But the rules can differ slightly when lenders use older FICO scoring models, says Joanne Gaskin, vice president of scores and analytics at FICO. In that case, the window for multiple inquiries to count as just one inquiry can be as little as 14 days.

Lenders choose which FICO scoring model to use. That means borrowers under the new model get 45 days to rate shop, and others under the old model get only 14 days. For that reason, Gaskin advises taking a cautious approach and trying to complete your mortgage shopping in 14 days.

Two weeks might not seem long enough to complete your mortgage comparison shopping. But most borrowers should be able to compare plenty of lenders' offers within that window, says John Ulzheimer, a credit expert who has worked for FICO and credit bureau Equifax.

"It really shouldn't be that hard for you to do almost all of your rate shopping within a few days if you're really aggressive about it – certainly a week, certainly two weeks and absolutely within a month," he says.

Mortgage Shopping Beyond 45 Days

Even if your shopping extends past 45 days, don't sweat it. The negative effect on your score will be minor, the CFPB notes. And your savings from securing a lower mortgage rate often far outweigh any short-term damage to your credit score.

"The FICO score does count inquiries, but it's one of the smaller pieces of the pie," Gaskin says. "The inquiry is less than 10% of the weighting for your FICO score."

One new credit inquiry likely won't cause much damage if you have a long history of borrowing, a solid payment record and a recent past without dozens of inquiries, she says.

"A consumer who has sufficient experience and hasn't taken on any debt recently, they may not see any impact at all, or they may see something like (a drop of) five points," Gaskin says.

In contrast, newer borrowers might face a slightly higher risk of damage from credit inquiries. "It's not typically going to be a really substantial impact to a consumer's score unless they are just brand-new to credit and have been making a lot of inquiries recently," she says.

Pinning down exactly how much damage a new borrower's credit score might suffer from multiple inquiries can be difficult. And the damage will vary from borrower to borrower.

Even so, the impact should be minor. "Instead of looking like one inquiry, it may look like two inquiries," Gaskin says.

Your history as a borrower largely determines how long your credit score will need to heal from any damage inflicted by multiple inquiries, according to Gaskin.

Checking Your Own Credit Report

Before you begin shopping for a mortgage, look at your credit report, experts urge. That way, you can find and correct any errors on the report that might drag down your score and prevent lenders from offering you the best interest rates. Fortunately, checking your own credit report does not damage your credit score in any way.

By federal law, each person is allowed one free annual credit report from the three major credit-reporting agencies. You can get yours by visiting the official website,

Checking your credit score could cost you, though a growing number of banks, credit unions and credit card companies offer free access to scores as a perk for customers. Even if you have to pay for it, your credit score can help you choose the best possible mortgage loan.

Take Advantage of Prequalifying

If you're concerned about lender inquiries damaging your credit score, consider prequalifying for mortgages. Prequalification is sometimes referred to as a rate check.

When you prequalify for a mortgage, the lender estimates how much you could get if you applied for a loan. Before providing prequalification letters, lenders often check your credit.

Lenders use two types of credit inquiries:

  • A hard inquiry, or hard pull. Typically, hard inquiries occur when lenders look at your credit report after you have applied for credit. A hard inquiry often has a negative effect on your credit score. Lenders may do a hard inquiry when you request a preapproval or submit a formal application as you are mortgage shopping.
  • A soft inquiry, or soft pull. Lenders use less rigorous soft inquiries for prescreening your credit file. Soft inquiries do not affect your credit score.

A prequalification is a soft credit pull, which does not affect your score, Gaskin says. That's why prequalification can be a smart option for many borrowers.

"It's a good first step in the process," she says. "You can visit the lender's website, put in some information and see what type of offers that they may be able to make for you."

Usually, lenders want to know basic identifying information, such as your name and address, along with your annual household income. And a soft credit inquiry typically goes along with this.

Ulzheimer adds that prequalifying can be helpful because it sets a price point for home shopping. "If you can prequalify for $300,000, you shouldn't be looking at $700,000 houses," he says.

Meanwhile, a prequalification letter does not guarantee that a lender will give you a loan.

"Prequalification is exactly what it says it is: It's a prequalification," Ulzheimer says. "Whether or not you get a loan is going to be subject to the whole and entire – and quite invasive – mortgage underwriting process."

A more rigorous process involving a hard pull of your credit is needed to land a loan, he adds. "You're going to have to put together a collection of 2 or 3 inches of paperwork before you actually get a mortgage loan," Ulzheimer says.

Limit Other Borrowing Activity

Mortgage shopping may not hurt your credit score much, but other types of financial activity can impair your efforts to take out a home loan. In fact, applying for new credit, such as a credit card or an auto loan, while you are shopping for a mortgage is far riskier than ignoring the 45-day window for rate shopping, according to Ulzheimer.

Don't take on any new debt before applying for a mortgage loan, he says.

"Wait till you have the keys – wait till the closing is done," Ulzheimer says. "If you want to go out and apply for credit, then fine."

Source: To view the original article click here

Posted by Jackie A. Graves, President on November 16th, 2019 11:12 AM

Shopping for title insurance may not be the most thrilling step in buying a house, but it is one of the most important.

Before you can own a home, or "take title" to a property, most lenders will require a title search of public property records to make sure there aren't any issues in transferring the property into your name.

For example, title issues can crop up due to liens on the property (say, from a contractor who did work on the house but wasn't paid), unfulfilled financial obligations such as unpaid taxes, or claims of ownership from a long-lost heir. In such cases, a home seller may not have the legal right to transfer ownership of the property.

To protect against any financial loss, two types of title insurance exist: lender's title insurance and owner's title insurance. The lender's title insurance policy pays for the expense of researching a claim and any court costs incurred as a result of any disputes they uncover.


Owner’s title insurance, meanwhile, protects you as the homeowner during any future disputes over ownership of the property.

Lenders require borrowers to purchase lender's title insurance. Owner's title insurance, however, is optional—but, given the protections it provides, buying it is a smart move. (Generally, home buyers use the same title insurance company to purchase both policies.)

Unlike homeowner insurance, title insurance is taken care of as a one-time payment that's made when (or shortly before) you close on your house.

Now that we’ve got the basics of title insurance squared away, let’s look at some of the more surprising questions you probably never thought to ask a title insurance provider but totally should. After all, as the home buyer, it's your choice which title company you decide to use.

1. What are your title insurance rates?

Although this might seem like an obvious question, some home buyers forget to ask it. And that can be a big mistake. Why? Because even though the average cost of title insurance is around $1,000 per policy—which covers all upfront work and ongoing legal and loss coverage—the price can vary widely, depending on where you live and the price of your home.

In many states, including Texas and Florida, title insurance premiums are set by the state, meaning that you’ll pay exactly the same amount no matter what title insurance company you choose.

However, some states, like California and New Mexico, do not regulate title insurance fees at all, and rates can vary widely from one title agency to another, says Rafael Castellanos, a managing partner at Expert Title Insurance Agency in New York City. If rates aren’t preset by the state, they’re negotiable.

It's advisable that all home buyers find out what a title insurance company's rates are before they choose an insurance provider.

2. What has been your most challenging title search, and how did you handle it?

Some title searches are easier to clear than others. While there’s no telling how difficult yours will be, you want a title company that can handle complicated problems.

“There are issues that we run into on residential properties that can be complex, and we have to go to great lengths to resolve them,” says Tim Evans, owner of Evans Title Agency in Troy, OH.

Ask how a title company solved their most challenging title search, and you'll gain some valuable insight—and some assurance that the company will be able to troubleshoot issues during your title search if any should arise.

3. How much experience does your title insurance attorney have?

A title company's attorney is the person who is going to determine whether you can legally take title of the property and receive title insurance. Using a title company with a seasoned attorney, therefore, is crucial.

However, “in the early 2000s, it was very common to see people forming their own title insurance agencies after just a few months,” Evans says. “Though that’s less common today, you can still run into title attorneys who have very little experience.”

4. What's your company's ratio of title claims to customers?

Because title searches can be complicated, claims are an inherent part of the business. However, some title companies are more "liberal” than others, Castellanos says, with respect to whom they will—and whom they won’t—issue title insurance.

“Some title companies pay lots of claims, which can put a lot of stress on their clients,” says Castellanos. “You want a title company that is incredibly careful and conservative.”

So, how many title claims are too many? Title insurance claim rates are approximately 5%, according to industry estimates.

As a result, here's a good guideline: If a title company has had a lot of title claims relative to the volume of their business—say, 1 out of every 10 customers—you'll want to continue your search.

5. How long does it take for you to complete a title search, on average?

Depending on the terms of your home sales contract, you may be under a tight deadline to reach settlement, warns Kimberly Sands, a real estate broker in Carolina Beach, NC.

Of course, you won't know that until you actually make an offer on a house. But, since it's a possibility, you'll want to find a title company that can conduct a title search in a timely manner, Sands says.

Typically, the whole process takes about two weeks. If a title company says that it will take significantly longer to complete a title search, using that company could force you to delay closing, which could potentially cause your whole home purchase to collapse.

6. Do you belong to any professional associations?

While being a member of a professional association certainly doesn’t guarantee that a title company is good, title agencies that belong to industry groups are often held to a higher standard, says Evans.

Organizations like the American Land Title Association (ALTA) also offer their members unique education programs, business tools, and industry certifications that will serve clients well. Moreover, membership in an industry group adds a layer of credibility for an insurance provider.

The bottom line

Title insurance can be confusing for home buyers, but it’s an essential protection of homeownership. So, in addition to asking the questions above, take time to read online reviews and talk to your real estate agent before picking your title insurance provider.

Source: To view the original article click here

Posted by Jackie A. Graves, President on November 15th, 2019 2:16 PM

Ready to house hunt? It's a jungle out there: Prepare for a flurry of paperwork, stampedes of buyers competing for the same digs, and other challenges, before you get your hands on those house keys.

We won't lie: The process can be complex and stressful—especially if you are a first-time buyer. Having a real estate pro by your side can make all the difference.

You might have heard of buyer's agents, selling agents, listing agents, and so on. You're a buyer, so what is a buyer's agent?

True to their name, buyer's agents help real estate buyers navigate the real estate market; they can also save you tons of time and money on the road to your new home.

Read on to learn how a real estate buyer's agent can help, and how to find the right one for you.

Benefits of using a buyer's agent when buying real estate

"A buyer’s agent will guide you through the home-buying transaction and be at your disposal for any questions or concerns," says Shane Wilcox, a Realtor® with Partners Trust. Here are some of the things a buyer's agent can do:

  • Find the right property.After determining what the clients are looking for and what they can afford, the agent will schedule appointments to tour homes that fit the bill. The agent can also explain the ins and outs of various properties and neighborhoods, to help buyers decide which home is right for them, by explaining the pros and cons of various options.

  • Negotiate the offer. The buyer's agent will advise clients on an appropriate price to offer and present it to the seller's agent. "Then they will negotiate on your behalf and write up the contracts for you," says Matt Laricy, a Realtor with Americorp Real Estate in Chicago. This is where the agent's experience in negotiating deals can save you money and help you avoid pitfalls like a fixer-upper that's more trouble than it's worth.

  • Recommend other professionals. A buyer's agent should also be able to refer you to reliable mortgage brokers, real estate attorneys, home inspectors, movers, and other real estate professionals. This can also help expedite each step of the process and move you to a successful real estate sale all the faster.

  • Help overcome setbacks. If the home inspector's report or appraisal brings new issues to light, a buyer's agent can advise you on how to proceed with the transaction, and then act as a buffer between you and the sellers or their broker. If negotiations become heated or hostile, it's extremely helpful to have an experienced professional keeping calm and offering productive solutions.

Buyer's agent vs. listing agent: What's the difference?

Buyer's agents are legally bound to help buyers, whereas listing agents—the real estate agent representing the home listing—have a fiduciary duty to the home seller.

"That's why it's in your best interest as a buyer to get an agent who is there to represent you," explains Alex Cortez, a Realtor with Wailea Village Properties in Kihei, HI.

"Think about it this way: If you were getting sued, would you hire the same attorney as the person suing you? Of course not. You need someone who will diligently fight for your interests and rights."

Let's say, for instance, you walked up to the listing agent at an open house. You might gush about how you love the home and want to buy it, but add that you will need to move soon—because you're expecting your second child and need to decorate the nursery, pronto, or because the lease on your rental is up in a couple of months.

A seller's agent could then use this information against you by informing the sellers that your clock is ticking, so they shouldn't budge too much on their asking price—if at all.

Yet make this same confession to the buyer's agent you're working with, and it's all fine—this professional would know to keep this info private from sellers (and their agents), so it can't be used against you.

Some states, recognizing this problem, required a disclosure of dual agency when a broker represents both sides of a real estate transaction.

However, you may still not be comfortable after signing an agreement saying you know someone is a double agent. You might want to hire an agent who is not representing the owner, and who is looking out for your best interests.

How to find a buyer's agent

A good buyer's agent can ease your way to homeownership—and a bad one can result in a bumpy ride.

You should not just take the first buyer's agent you meet (as two-thirds of home buyers do), or blindly accept the recommendation of a friend (more than half do this). Instead, it's best to interview at least three agents and ask them a few questions, including the following:

  • What neighborhoods do you specialize in? Real estate requires local expertise, so you should find an agent who's extremely familiar with the areas you're interested in.

  • What's your schedule and availability? Part-time real estate agents who are committed can do a fine job, but if the house of your dreams pops up or you encounter last-minute closing snafus, you want an agent who will be readily reachable.

  • How long have you been a real estate agent? You ideally want someone with a couple of years of experience, and a proven track record of selling homes.

To find real estate agents in your area, head to, where you can also read online reviews provided by past clients and learn more.

The agent/buyer contract

Once you agree to work with someone, you will have to sign a contract called an "exclusive buyer agency agreement," outlining the agent's services and compensation (more on that next).

This contract also means that this person will be your sole representative and that you won't work with other buyer's agents.

How much do buyer's agents cost?

Home buyers don't need to worry about the expense of hiring a buyer's agent. Why? Because the seller pays the commission for both the seller's and buyer's agents.

Typically, the commission is the equivalent of about 6% of the home's sales price, which is split evenly between both agents (on a $200,000 home, that would be $6,000 apiece).

Source: To view the original article click here

Posted by Jackie A. Graves, President on November 14th, 2019 6:24 AM

If you've been thinking of buying a home, by now, you've probably heard that you should be shopping around for a mortgage. While this advice is true, getting rates from a variety of different mortgage professionals does require a certain amount of legwork. Luckily, there is a way to make the process easier. You can use a mortgage broker. Keep reading to learn what a mortgage broker is, how using one works, and why you may want to include one in your home search.

What is a mortgage broker?

Put simply, a mortgage broker is someone who will act as a liaison between you and the lender. Instead of you having to worry about researching different lenders and finding the best rates, the mortgage broker will do all of that on your behalf. They'll essentially manage your pre-approval process for you so you only have to worry about choosing the best result for you.

Most mortgage brokers will help you through the underwriting and approval processes as well, meaning that you may not even have to speak to your lender until the day of settlement.

How mortgage brokers work

The first step to working with a mortgage broker is bringing him or her all of your financial documentation. Just like you would when working with a lender directly, you'll need to bring them documentation that shows your employment history, income, debts, and assets. However, the advantage here is that you'll only have to go through the trouble of submitting all of your paperwork once.

After that, the broker will take the reins. He or she will look through their pool of participating lenders to find options that may be a good fit for you. It's important to note that each broker will have a different pool of lenders available to them so you'll want to do your research and make sure you're working with a broker who has lots of connections.

After the broker looks into your options, he or she will submit your information and come back to you with a variety of quotes. From there, they will walk you through the process of choosing the best lender for you. When you eventually find a home, they will also submit your loan application on your behalf.

As you go through the process of being approved for a loan, your lender may require additional information. At that point, they would reach out to your broker, who would work with you to gather the information and submit it properly.

Why you may want to use a mortgage broker

There's no getting around the fact that shopping around for a loan, applying with a variety of lenders, and going through the mortgage approval process is hard work. If you don't want to be responsible for putting in all that time and effort or if you'd just rather have someone there to guide you through it all, working with a mortgage broker may be your best bet.

Source: To view the original article click here

Posted by Jackie A. Graves, President on November 13th, 2019 5:58 AM

FHA Streamline Refinance FHA MIP Refund Chart

FHA Streamline

The FHA Streamline is a refinance mortgage loan available to homeowners with existing FHA mortgages. The program simplifies home refinancing by waiving the documentation typically required by a bank, including income and employment verification, bank account and credit score verification, and an appraisal of the home. Homeowners can use the program to reduce their FHA mortgage insurance premiums (MIP).

NOTE: FHA mortgage guidelines change often. This FHA Streamline Refinance information is accurate as of today, November 12, 2019.

Click here to check your FHA Streamline Refinance Eligibility. (Nov 12th, 2019)

Jump to:

What is an FHA Streamline Refinance?

The FHA Streamline Refinance is a special mortgage product, reserved for homeowners with existing FHA mortgages.

FHA Streamline Refinances are the fastest, simplest way for FHA-insured homeowners to refinance their respective mortgages into today’s mortgage rates.

The FHA Streamline Refinance program’s defining characteristic is that it does not require a home appraisal.

Instead, the FHA will allow you to use your original purchase price as your home’s current value, regardless of what your home is actually worth today.

In this way, with its FHA Streamline Refinance program, the FHA does not care if you are underwater on your mortgage. Rather, the program encourages underwater mortgages.

Click here to refinance with FHA even if you are underwater.

Even if you owe twice what your home is now worth, the FHA will refinance your home without added cost or penalty.

The “appraisal waiver” has been a huge hit with U.S. homeowners, allowing unlimited loan-to-value (LTV) home loans via the FHA Streamline Refinance program.

Homeowners in places like Florida, California, Arizona and Georgia have benefitted greatly, as have homeowners in other states and cities affected by last decade’s housing market downturn.

Beyond this “no appraisal” feature, however, the FHA Streamline Refinance behaves very much like any other loan product.

It’s available as a fixed rate or adjustable mortgage; it comes as a 15- or 30-year term; and there’s no FHA prepayment penalty to worry about.

Another big plus is that FHA mortgage rates are the same in the FHA Streamline Refinance as with a “regular” FHA loan. There’s no penalty for being underwater, or for having very little equity.

Shop low FHA Streamline Refinance rates here. (Nov 12th, 2019)

FHA Streamline: No verification of job, income, credit

Another big plus is that the FHA Streamline Refinance is fairly easy for which to qualify.

Earlier this decade, in an effort to help U.S. homeowners, the FHA abolished most of the typical verifications required to get a mortgage. So, today, as it’s written in the FHA’s official mortgage guidelines :

1.      Employment verification is not required with an FHA Streamline Refinance

2.      Income verification is not required with an FHA Streamline Refinance

3.      Credit score verification is not required with an FHA Streamline Refinance

There’s no need for a home appraisal, either, so when you put it all together, you can be (1) out-of-work, (2) without income, (3) carry a terrible credit rating and (4) have no home equity. Yet, you can still be approved for an FHA Streamline Refinance.

That’s not as crazy as it sounds, by the way.

To understand why the FHA Streamline Refinance is a smart program for the FHA, we have to remember that the FHA’s chief role is to insure mortgages — not “make” them.

It’s in the FHA’s best interest to help as many people as possible qualify for today’s low mortgage rates. Lower mortgage rates means lower monthly payments which, in theory, leads to fewer loan defaults.

This is good for homeowners that want lower mortgage rates and for the FHA — but mostly for the FHA.

Check today's FHA Streamline Refinance rates here. (Nov 12th, 2019)

Are you FHA Refinance eligible?

Although the FHA Streamline Refinance eschews the “traditional” mortgage verifications of income and credit score, as examples, the program does enforce minimum standards for applicants.

The official FHA Streamline Refinance guidelines are below. Note that not all mortgage lenders will underwrite to the official guidelines of the Federal Housing Administration.

Perfect, 3-month payment history is required

The FHA’s main goal is to reduce its overall loan pool risk. Therefore, it’s number one qualification standard is that homeowners using the Streamline Refinance program must have a perfect payment history stretching back 3 months. 30-day, 60-day, and 90-day lates are not allowed.

One mortgage late payment is allowed in the last 12 months. Loans must be current at the time of closing.

210-day “waiting period” between refinances

The FHA requires that borrowers make 6 mortgage payments on their current FHA-insured loan, and that 210 days pass from the most recent closing date, in order to be eligible for a Streamline Refinance.

Click here to check your FHA Streamline Refinance eligibility now. (Nov 12th, 2019)

Employment and income are not verified

The FHA does not require verification of a borrower’s employment or annual income as part of the FHA Streamline process.

There is no Verification of Employment, nor are there paystubs, W-2s or tax returns required for approval.

You can be unemployed and get approved for a FHA Streamline Refinance so long as you still meet the other program requirements.

Credit scores are not verified

The FHA does not verify credit scores as part of the FHA Streamline Refinance program. Instead, it uses payment history as a gauge for future loan performance.

This means that FICO scores below 640, below 620, below 580, and below 500 are eligible for Streamline Refis.

Some lenders, however, create their own minimums. Check your lender’s guidelines before applying.

The refinance must have “purpose”

Streamline Refinance applicants must demonstrate that there’s a Net Tangible Benefit in the refinance; a legitimate reason for refinancing.

Loosely, Net Tangible Benefit is defined as reducing the “combined rate” by at least one-half of one percent.

For instance, the homeowner has an FHA loan opened in May 2013 with a rate of 5.00%, and a monthly mortgage insurance premium equal to 1.35%. The combined rate is 6.35%.

The homeowner receives a rate quote at 4.75% with MIP of 0.85%. She saves on her rate and mortgage insurance, since FHA MIP was reduced in January 2015.

The new combined rate would be 5.60%, or three-quarters of one percent lower than the existing combined rate. The FHA refinance is eligible.

Another allowable Net Tangible Benefit is to refinance from an adjusting ARM into a fixed rate loan. Taking “cash out” to pay bills is not an allowable Net Tangible Benefit.

Click here to verify your FHA rate reduction. (Nov 12th, 2019)

Loan balances may not increase to cover loan costs

The FHA prohibits increasing a Streamline Refinance’s loan balance to cover associated loan charges. The new loan balance is limited by the math formula of (Current Principal Balance + Upfront Mortgage Insurance Premium). All other costs — origination charges, title charges, escrow population — must be either (1) Paid by the borrower as cash at closing, or (2) Credited by the loan officer in full.

The latter is called a “zero-cost FHA Streamline”.

Appraisals not required

The FHA isn’t concerned about home value — it’s insuring your loan regardless.

Therefore, the FHA does not require appraisals for its Streamline Refinance program. Instead, it uses the original purchase price of your home, or the most recent appraised value, as its valuation point.

Homes that are underwater are still FHA Streamline-eligible.

No cash out

You can’t take extra cash when refinancing with an FHA streamline loan. This refinance is mainly for the purpose of dropping your rate and payment.

However, the FHA cash out refinance is another product offered by the FHA. It allows you to open a loan of up to 80% of your home’s value. If that amount is larger than your current loan balance, you take the difference in cash.

Use these funds for any purpose: pay off debt, improve your home, or create an emergency fund.

Infographic: Should you apply for an FHA Streamline Refinance?

Is An FHA Streamline Refinance Right For You - Infographic | The Mortgage Reports

FHA Streamline Refinance mortgage insurance premium (MIP) requirements

The FHA Streamline Refinance is an FHA-insured mortgage, and FHA borrowers are required to make two types of mortgage insurance payments — an upfront mortgage insurance payment paid at closing, plus an annual payment split into 12 installments, paid with your mortgage payment each month.

With respect to mortgage insurance premiums, homeowners using the FHA Streamline Refinance program are split into two classes:

1.      Homeowners whose new loan replaces an FHA-backed mortgage endorsed prior to June 1, 2009

2.      Homeowners whose new loan replaces an FHA-backed mortgage endorsed on/after June 1, 2009.

Homeowners in the first class — those with “old” FHA mortgages — are assigned different mortgage insurance than newer FHA homeowners.

Specifically, these older FHA mortgage qualify for a reduced upfront premium of just 0.10% of the loan amount, or $10 for every $100,000 borrowed. Additionally, monthly mortgage insurance is just 0.55% of the loan amount annually, compared to “regular” MIP of 0.85% per year.

FHA Streamline MIP For Loans Endorsed On/After June 1, 2009

If you are refinancing an FHA mortgage via the FHA Streamline Refinance program and your existing FHA mortgage was endorsed on, or after, June 1, 2009, your mortgage insurance premium schedule on your new FHA loan is as follows.

Upfront Mortgage Insurance Premiums (UFMIP)

For an FHA Streamline Refinance replacing a loan endorsed on, or after, June 1, 2009, the FHA upfront mortgage insurance premium is equal to 1.75 percent of your loan size, or 175 basis points.

This is $1,750 for every $100,000 borrowed. The FHA automatically adds the $1,750 premium to your loan balance for you — it’s not paid as cash. However, not all refinancing households will pay the full amount.

For FHA-backed homeowners refinancing within the 3 years of their existing loan’s start date, the FHA provides a refund on your previously-paid upfront MIP.

The size of the refund diminishes as the 3-year window elapses.

For example, a homeowner who refinances an FHA mortgage after 11 months is granted a 60% refund on his initial FHA UFMIP. 30 days later, the refund drops to 58%. After another 30 days, it drops to 56%, and so on.

FHA MIP Refund Chart

Months After Closing

MIP Refund

Months After Closing

MIP Refund

Months After Closing

MIP Refund









































































This is why is rarely a good idea to “wait to refinance” with the FHA. With the FHA Streamline Refinance program, the sooner you refinance, the bigger your refund, and the lower your total loan size. This lowers the monthly payment and preserves the home equity — two huge positives.

An FHA mortgage insurance refund check accompanies every rate quote. Request that here. (Nov 12th, 2019)

Annual Mortgage Insurance Premiums (MIP)

The annual MIP schedule for an FHA Streamline Refinance which replaces a loan from on, or after, June 1, 2009 is as follows :

  • 15- & 30-year loan terms with an LTV over 90%: 0.55 percent annual MIP, payable for the life of the loan

  • 15- & 30-year loan terms with an LTV under 90%: 0.55 percent annual MIP, payable for 11 years

Note that these MIP costs may be lower than what you’re paying currently.

In January 2015, the FHA lowered its mortgage insurance premiums on 30-year loans, making it less expensive to carry an FHA home.

If your current FHA MIP is higher than what’s shown above, consider starting a refinance immediately to benefit from a new, lower FHA MIP.

FHA Streamline Refinance MIP (For Loans Endorsed Before June 1, 2009)

If your existing FHA mortgage was endorsed prior to June 1, 2009, your mortgage insurance premiums have been “grandfathered”.

You can refinance via the FHA Streamline Refinance program and pay reduced rates for both for upfront MIP and your annual mortgage insurance premium.

Click here to see how much you can save by reducing your FHA MIP. (Nov 12th, 2019)

Upfront Mortgage Insurance Premiums (UFMIP)

For an FHA Streamline Refinance that replaces a loan endorsed prior to June 1, 2009, the new FHA mortgage’s upfront mortgage insurance is equal to 0.01 percent of the loan size, or 1 basis point.

For example, if your new FHA Streamline Refinance is for $100,000 mortgage, the FHA will assess a $10 upfront mortgage insurance premium (MIP) to be paid at closing. The FHA automatically adds the $10 payment to your new loan balance.

Annual Mortgage Insurance Premiums (MIP)

Annual MIP is similarly cheap for older FHA loans. For an FHA Streamline Refinance replacing an FHA loan endorsed prior to June 1, 2009, the annual MIP is 0.55% annually, or 55 basis points.

The complete annual MIP schedule is as follows :

  • 15- & 30-year loan terms with an LTV over 90%: 0.55 percent annual MIP, payable for the life of the loan

  • 15- & 30-year loan terms with an LTV under 90%: 0.55 percent annual MIP, payable for 11 years

FHA MIP Cancellation Policy

The FHA requires some homeowners to pay mortgage insurance for as long as their loan is in effect.

If your FHA Streamline Refinance replaces a loan from on, or after, June 1, 2009, the rules on your FHA MIP cancellation are as follows:

  • LTV of 90% or less at the time of closing: MIP is required for 11 years

  • LTV greater than 90% at the time of closing: MIP required for life of loan

The FHA MIP cancelation policy applies to 15-year loan terms and 30-year loan terms equally.

Note that refinancing homeowners are welcome to bring cash to closing in order to reduce their loan balance and change their MIP disposition. However, not everyone will have the cash to make such a move.

This is why, when exploring an FHA Streamline Refinance, you should also look other refinance programs including the conventional mortgage loan via Fannie Mae or Freddie Mac, which is available with nearly every mortgage lender.

The FHA allows its homeowners to refinance to cancel FHA MIP.

What Are Today’s Mortgage Rates?

FHA mortgage rates are low and homeowners typically close in less than 30 days. Remember: the faster you close, the bigger your FHA MIP refund.

Get today’s live mortgage rates now. Your social security number is not required to get started, and all quotes come with access to your live mortgage credit scores.

Show me today's rates (Nov 12th, 2019)


Source: To view the original article click here

Posted by Jackie A. Graves, President on November 12th, 2019 7:40 AM


  • Saving up for a sizable downpayment is a big part of knowing if you should be in the market for a home, but it is far from the only consideration.

  • Interest rates, credit scores and life situation are all big factors.

Owning your own home has long been part of the American dream. It’s a goal most of us rightfully aspire to, and one that can often help build wealth. Indeed, 64% of Americans own a home today. If you’re considering buying a house, you’ll want to look at a few things first, such as your overall financial picture and the total cost of home ownership. You’ll also want to understand current interest rates and home market prices.

We’ve all heard the rule of thumb that you should ideally have 20% of the purchase price saved for a down payment on a home. Although you can qualify for FHA mortgage loans with as little as 3.5% down, a 20% down payment is still a much better idea, because you won’t need to pay private mortgage insurance, will have lower monthly mortgage payments, and will pay less interest over the life of the loan. You’ll also be less likely to end up underwater on your mortgage should housing values decline.

So, one way of gauging when it’s the ideal time to buy a home is when you can afford a 20% down payment on the home of your choice. But wait — you’ll also need to factor in other costs, such as insurance, closing costs, moving costs, repair and maintenance, property taxes, and so forth. Use a mortgage and housing cost calculator to determine whether you can still afford your home when all these costs are combined.

Another rule of thumb: Are you depleting all your savings with the down payment? If you’ll have no emergency savings left, or if you need to liquidate retirement accounts, then you should likely continue saving until your overall financial situation can accommodate the major expense of home ownership.

You’ll also want to assess interest rate offers: Mortgage rates have been historically low for years now, but even so, you’ll qualify for the lowest rates only if your credit is good, above a 720, or so. The best time to buy a home, according to this rule of thumb, is when your credit score is strong, and you have access to the lowest rates. Work on paying down debt and improving your credit score in order to receive the best interest rate offers from lenders.

And finally, deciding when it’s the best time to buy a house also rests on how long you envision yourself in the home. If you can foresee needing to move within a few years, consider the costs involved in selling the home and moving, which may erode any gains. If you are planning on growing your family, downsizing, or otherwise significantly altering your life circumstances (including slowing down in your career, or retiring), you might also find yourself seeking a new housing situation sooner, so plan your purchase accordingly.

In short, the best time to buy a house is when you have enough saved for a down payment such that your overall financial condition won’t suffer after the purchase; when your credit score is strong and you’ll qualify for the lowest rate; and when property market conditions in your area reflect realistic pricing. And don’t forget to consider how long you intend on living in the home, as this may affect your finances, too.

Happy house hunting!

Source: To view the original article click here

Posted by Jackie A. Graves, President on November 11th, 2019 9:11 AM

home mortgage refinance may sound like a good idea in theory, but it’s not always possible or desirable.

For starters, lenders have tightened up the approval process, making it more difficult to get a loan.

“Homeowners today need to be triathletes to qualify for a loan, with great income, great credit and great value in their home,” says Anthony Hsieh, founder and CEO of, headquartered in Irvine, Calif.

In addition, a refinance may not make sense financially, particularly for borrowers who plan to sell their homes in the next few years.

Before taking the leap and opting to refinance, homeowners should ask themselves the following six questions.

Do I have equity in my home?

Homeowners need to have at least 20 percent equity in their home to qualify for a new loan without paying private mortgage insurance. Adding PMI to the cost of a new loan could negate the benefit of a refinance.

Today, many homeowners are underwater — meaning they owe more on their mortgages than the house is worth. However, being underwater or having little equity does not necessarily rule out a refi.

“Homeowners should still apply for a refinance even if they have low equity, because there are some Fannie Mae and Freddie Mac programs and FHA loans that may accept them,” Hsieh says. “The best way to find out if you fit into a program is to go to a lender.”

Roy Meshel, district vice president for W.J. Bradley Mortgage in Phoenix, recommends homeowners refinance quickly in case the housing slump deepens, causing values to depreciate even more.

Patrick Cunningham, vice president of Home Savings & Trust Mortgage based in Fairfax, Va., recommends an increasingly popular approach — the so-called “cash-in” refinance.

“Some people are opting to bring cash to the settlement in order to pay down their loan balance to qualify for a refinance,” he says.

Do I have good enough credit?

Borrower credit scores play a big role in securing a good mortgage rate. In fact, you’ll need a good credit score to qualify for any type of mortgage at all.

Mortgage rates operate on a sliding scale, with the lowest rates going to applicants with the highest credit scores of 720 or higher.

Borrowers with scores below 620 will have trouble qualifying for a mortgage at any rate.

What are my financial goals?

Many homeowners refinance to lower their monthly payments. A mortgage calculator can give borrowers a sense of what their new payment would be after a refi.

Others choose a shorter-term loan with higher monthly payments so they can reduce overall interest payments and own their homes faster.

“Some people are restructuring their loans to a 20-, 15- or 10-year mortgage, which works well for people with plenty of disposable income,” Cunningham says. “But I worry that people are too focused on paying off their mortgage and not integrating this decision with their overall financial plan.”

Cunningham urges borrowers to make sure they contribute to retirement savings and college savings, pay off high-interest debt, and save six to 12 months’ of expenses “before opting for a shorter, more expensive mortgage.”

Meshel says people should consider whether they want to retire without a mortgage before opting for a new 30-year loan. Those who have employment concerns may want to refinance into the lowest possible payment in case they experience a job loss.

How long do I plan to stay in this home?

Mortgage professionals generally tell borrowers to expect a home refinance to cost 3 percent to 6 percent of the loan amount. A simple calculation shows how long it will take to reach the break-even point when the savings outweigh the costs.

“If the break-even is at 15 months and you plan to stay in the home for five years or longer, it is probably worth it to refinance,” Cunningham says. “But if you plan to move in two years, it may not make sense.”

Meshel says long-term homeowners who are close to paying off their mortgages might not want to refinance because of the costs incurred.

What are the terms of my current loan?

Borrowers with adjustable-rate mortgages or interest-only loans should consider the potential benefit of switching to a fixed-rate loan. Hsieh says all borrowers with ARMs should switch to a fixed-rate loan unless they intend to move within one year.

However, Cunningham says some borrowers can benefit by sticking with their current ARM.

“Consumers with a subprime ARM should definitely switch to a new loan,” Cunningham says. “But some with conventional ARMs may find that they are in a good loan and that their rates are actually dropping.”

While new loans today rarely have a prepayment penalty, many homeowners still have loans with that restriction, which could reduce the financial gain of a refinance, Meshel says.

Do I have a second mortgage or line of credit?

Cunningham says borrowers with a second mortgage will face additional complexity when refinancing.

“Borrowers can either pay off the second loan or combine the two loans into a larger first mortgage,” Cunningham says. “Otherwise, the lender holding that second loan must agree to stay in second position behind the lender of the first mortgage, which the lender may or may not be willing to do.”

Source: To view the original article click here

Posted by Jackie A. Graves, President on November 10th, 2019 9:57 AM

When you’re shopping around for a loan, the interest rate you’re given is one your most important considerations. After all, it has a big impact on how much you’ll be expected to pay each month. You probably know that it’s in your best interest to get a loan while mortgage interest rates are low, but have you ever wondered how these rates work?

If so, keep reading. In the post below, I’ll cover how mortgage interest rates are determined, as well as why each person can receive a different rate.

How mortgage interest rates are determined

Secondary markets

Believe it or not, once your lender gives you your mortgage, they don’t keep your debt in-house. If they did, they’d have to wait a long time for their investment to pay off. Instead, they sell your debt to third-parties known as mortgage aggregators.

The aggregators - like Fannie Mae and Freddie Mac - then take your mortgage debt, bundle it with other debts, and repackage it into what’s known as mortgage-backed securities.

Those mortgage-backed securities are then broken down into shares, which are sold to individual investors, who hope for a return on their investment.

In this case, mortgage interest rates are determined by two things: the price at which your debt is sold to the aggregators and the price at which the investors are willing to buy their shares. It’s a supply-and-demand scenario that’s affected by a mix of economic factors.

The economic factors

Multiple economic factors go into the prices at which mortgage-backed securities are bought and sold. One important one is the Federal funds rate, or the rate at which banks are allowed to borrow money. In weak economies the Fed lowers this rate to encourage people to keep borrowing. In strong economies, the Fed raises the rate to stave off inflation. For their part, the lender must charge enough to cover the cost of borrowing the money.

The rate of inflation also plays a role. Inflation is the phenomenon which occurs when the price of goods and services rise across the board. Inflation poses a problem for investors because it means that the money people borrow now will be worth less when they pay it back and when the investors see their returns. When a rise in inflation is predicted, investors are less eager to buy into mortgage-backed securities because their returns will be lower.

How you’re given your interest rate

All of those factors listed above play into what interest rates are available on the market. But the truth is the rate you’re given could be very different.

Again, the rate you’re given is going to be based on multiple factors. They may include:

  • Your credit score
  • If you’ve had any bankruptcies or other financial events
  • Your income and employment history
  • Your debts
  • Your cash reserves and assets
  • The size of your down payment
  • Your loan type, term and amount

In general, the bigger the risk the lender sees in approving you for a mortgage, the higher your interest rate will be. However, keep in mind, different lenders may offer you different rates, which is why it’s important to shop around for a loan.

Source: To view the original article click here

Posted by Jackie A. Graves, President on November 9th, 2019 10:23 AM

Homeowners who want to shave off dollars from their monthly mortgage payment as well as save money on interest, might consider a mortgage recast.

What is mortgage recasting?

A mortgage recasting, or loan recast, is when a borrower makes a large, lump-sum payment toward the principal balance of their mortgage and the lender, in turn, reamortizes the loan. This means that your loan is reduced to reflect the new balance.

Recasting cuts your monthly payments and the amount of interest you’ll pay over the life of the loan. It does not, however, affect your interest rate or the terms of your loan.

In this way, mortgage recasting offers two — and possibly three — attractive benefits for homeowners with some extra cash in their pocket to pay down the balance:

  • Lower monthly payments.
  • Less interest paid over the life of the loan.
  • If you have a low interest rate, that will stay the same. (Conversely, if your interest rate is high, recasting won’t help that.)

How mortgage recasting works

In order to do a loan recast, borrowers must make a large lump-sum payment toward the loan principal. Lenders usually require $5,000 or more to recast a mortgage. The remaining balance is then amortized to reduce the monthly payments. There are usually fees associated with recasting. The fees vary by lender; but they typically don’t exceed a few hundred dollars.

Recasting not only results in lower monthly payments but borrowers will also pay less interest over the life of the loan. For example, if your 30-year mortgage carries a principal balance of $200,000 with a 5 percent interest rate, you might pay $1,200 per month. If you spend $50,000 to recast your mortgage, plus a $250 recasting fee, you’ll end up saving almost $35,000 in interest payments and about $300 per month in monthly mortgage payments. Of course, the money you sink into the house in the recast won’t be available for investing or other purposes.

Keep in mind, recasting doesn’t reduce the term of your mortgage, just how much you pay each month.

Mortgage recasting qualifications and availability

Before you get excited about lower monthly payments, first make sure your lender offers recasting – many don’t. It’s also not something that’s normally advertised, but most of the big banks offer it, including Chase, Bank of America and Wells Fargo. Plus, not all mortgages qualify for recasting; some types of loans, like FHA loans and VA loans, can’t be recast.

Mortgage recasting vs. refinancing

There’s a big difference between recasting a mortgage and refinancing one, even though both can help borrowers save money. Recasting is easier than refinancing because it requires only a lump sum of money in exchange for lower monthly payments.

With recasting, you’re keeping your existing loan, only adjusting the amortization. You wouldn’t be able to get a lower interest rate with recasting, like you might with refinancing. On the other hand, if your interest rate is already low then refinancing could have a negative effect — especially if the current rates are higher.

Refinancing, conversely, requires that you apply for a brand-new loan and pay all the fees that go with it, such as closing costs and appraisal. The new loan would pay off your existing loan, so you could end up with a new mortgage as well as new interest rates.

People typically do this to get a lower interest rate or to go from an adjustable-rate mortgage to a fixed-rate mortgage. If you already have a fixed-rate mortgage with a low interest rate, then a refi wouldn’t help you. On the other hand, if you have a low-interest, 30-year fixed-rate mortgage and want lower monthly payments, then you might consider a recast.

The benefits of mortgage recasting

Recasting has some appeal because it’s fairly easy to do and it’s a relatively inexpensive way to lower monthly payments if you have the cash. Here are a few reasons you might want to consider recasting your existing mortgage:

  • Lower your monthly payments by making one lump sum.
  • Avoid having to requalify for a new loan.
  • Keep your interest rate if you currently have a low interest rate.

The drawbacks of mortgage recasting

The biggest financial drawback of recasting is that you’re putting a large sum of money into equity. These are a few reasons you might want to rethink recasting:

  • It doesn’t shorten the length of your mortgage.

  • Your interest rate stays the same, a disadvantage if you have a higher interest rate.

  • More of your cash is tied up in equity.

  • Lender charges a fee, typically no more than a few hundred dollars, to recast a loan.

In the current climate, with relatively low mortgage rates and a strong market, a loan recast might not make sense for some.

Source: To view the original article click here

Posted by Jackie A. Graves, President on November 8th, 2019 7:50 AM


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