The SCOOP! Blog by ChangeMyRate.com® 'Your Best Rate Guru'

First-time home buyers aren’t shying away from the competitive housing market, but they are showing a willingness to expand their searches to be more successful. They’re homing in on markets that offer affordability and job opportunities, and that is increasingly leading them past major urban hubs to more rural or secondary cities, according to realtor.com®’s newly released “Best Markets for First-Time Home Buyers” analysis.

First-time buyers hope that they’ll face less competition for a home by expanding their searches beyond major cities.

The Midwest may offer them some of the greatest housing options, according to realtor.com®. Bloomington, Ill., topped realtor.com®’s list as the best market for first-time home buyers, with a median list price of $160,000. All 10 of the markets on realtor.com®’s list have a median home price below the national median price of $370,000.

First-time buyers make up about one-third of this year’s home buyers, according to data from the National Association of REALTORS®. But a shortage of homes for sale and rising home prices are making it more challenging for first-time buyers.

"With 50% fewer homes on the market this year than last, the U.S. housing market is competitive for all buyers,” says Danielle Hale, realtor.com®’s chief economist. “First-time buyers are at a bigger disadvantage since they don't have the funds from a previous home sale to help with their down payment or compete with bidding wars. Our recent survey of potential first-time home buyers confirmed this with 44% indicating they haven't saved enough for a down payment.

“While relocating isn't an option for everyone, the pandemic has caused many to rethink their priorities, including where they want to live,” Hale continued. “This analysis was meant to provide some insight for those who are open to expanding their search as they weigh their homeowner options."

Realtor.com®’s research team identified the top markets for first-time home buyers—the majority who are in the millennial age demographic between ages 25 to 34—by weighing the following six factors: home prices relative to local incomes; the share of 25- to 34-year-olds living in the market; the availability of homes for sale; job opportunities; distance to work; and amenities such as bars and restaurants. To ensure geographic diversity, the rankings were limited to one city per state.

Top 10 Markets for First Time Buyers

Source: Click here

Posted by Jackie A. Graves, President on April 9th, 2021 9:56 AM

Beware: Your buyers could struggle to be approved for a home loan. As lenders tighten standards, home loan approval is becoming more difficult, The Wall Street Journal reports.

The Mortgage Bankers Association reports that mortgage credit availability, which measures lenders’ willingness to approve mortgages, is at its lowest level since 2014.

“Because mortgage credit is more difficult to obtain, it is a more competitive environment overall,” Lawrence Yun, chief economist at the National Association of REALTORS®, told The Wall Street Journal.

Mortgage lenders are issuing more home loans at record levels. But those mortgages are most often going to those with stellar credit histories and borrowers willing to make large down payments. About 70% of mortgages granted in 2020 went to borrowers who had credit scores of at least 760. That is up from 61% in 2019, according to data from the Federal Reserve Bank of New York. Among borrowers with approved mortgages, the median credit score was 786 in the fourth quarter of 2020.

Lenders are being cautious in issuing loans as the housing market surges from strong homebuyer demand and higher home prices. Mortgage loan availability plunged about 35% annually in 2020. Lenders are being cautious as they look to protect themselves from making loans to borrowers who might lose their jobs amid the pandemic.

Forbearance is another fear of lenders. To receive approval for a mortgage, some borrowers are reportedly being asked to sign statements saying they have no intention of requesting forbearance after they are approved for a mortgage.

As The Wall Street Journal reports: “The meteoric growth of home prices has made some lenders reluctant to take on first-time home buyers or others they view as slightly risky. Lenders who were comfortable offering mortgages of $300,000 or $320,000 to borrowers with good-but-not-great credit histories might not be willing to lend the $350,000 or more now required to buy the same property.”

Mortgage lenders weigh multiple variables in approving applications, including the borrower’s employment history, income, credit score, and debt level.

Rejected mortgage applicants may find better luck soon, however. Credit requirements likely will loosen slightly this year as mortgage rates rise and prompt a decline in lenders’ bustling refinance business, Mike Fratantoni, the MBA’s chief economist, told The Wall Street Journal. “Since lenders aren’t being flooded with calls to refinance, more of their resources can be used to reach out to first-time buyers for purchases.”

Source: Click here

Posted by Jackie A. Graves, President on April 8th, 2021 10:37 AM

Competition is tight for home buyers and real estate professionals alike: Most markets have scant inventories of homes for sale, and there are about twice as many working real estate professionals as available listings.

“This is not the time for amateurs,” Dana Bull, a real estate professional in Boston, told CNBC. “This is the big leagues here.”

Fierce bidding wars are common for the limited supply of homes for sale. There are 20% fewer homes listed for sale than there were last March. REALTORS® have reported four offers for each home sold, according to the latest REALTOR® Confidence Index.

Real estate pros report leaving no stone unturned searching for more housing choices for their buyers. “We’re pulling out all the stops in terms of mailers, in terms of getting on social media,” Bull told CNBC. Having strong networks in place is critical, she added. “We are tapping our network, trying to facilitate some of these transactions, and some of them are happening, going into Boston, out of Boston, out of state, across the country,” she said. “We are networking and doing everything we can, working our channels and working our connections.”

Ryan Waller, a real estate professional with Home Group Realty in Ontario, told Money.com that, when buyers can’t find a home to buy, he will walk around their chosen neighborhood with them and hand-pick which houses interest the buyer. They draft a letter to each of the owners to see if they would consider selling. The idea has worked, Waller said. Some homeowners may not be aware of how much their home has appreciated and may be open to selling when they find out how much it’s worth and that a buyer is already interested.

Also, some real estate professionals are turning to the media to get the message out to homeowners that now is a great time to sell. “We’re big marketers in town and have also resorted to the media to help us—running ads on local radio stations with messages like ‘We have buyers looking for the following…,” Waller told Money.com. He will even include specific neighborhood names, number of bedrooms, and more details to help his buyers find what they want. His team also has been publishing full-page newspaper ads to try to find potential sellers.

Some real estate pros have even resorted to using local divorce announcements, obituaries, and foreclosure notices. They may call the homeowners or heirs to inquire about the property, discuss the benefits of selling, or even make a cash offer on the spot.

Many homeowners may be concerned to list their home from fears that they won’t have a home to move to. As a result, real estate pros are trying to entice sellers with other available properties in their areas.

“It kind of feels like a game of Tetris,” Bull told CNBC, “where we’re looking at the whole playing board, and we’re trying to place people and strategically move people around in a way that best fits their lifestyle.”

To view the original article, click here

Posted by Jackie A. Graves, President on April 7th, 2021 7:58 PM

Shopping for a mortgage? Now’s the time to familiarize yourself with one of the most popular types of home loans: a conforming loan. It’s the go-to mortgage for borrowers with solid credit and enough cash or home equity for a sizable down payment. In a marketplace with lots of mortgage options, a conforming loan is the standard, and a good place to start when looking for financing.

What is a conforming loan?


Conforming loan definition

A conforming loan is a mortgage eligible to be purchased by Fannie Mae and Freddie Mac, the government-sponsored enterprises, or GSEs, because it meets — or conforms — to their standards, including limits on the amount that can be borrowed.


The 2021 conforming loan limit for a single-family home is $548,250 in most housing markets. In higher-cost areas, the limit is $822,375. Here’s a breakdown of conforming loan limits by county. 

A common example of a conforming loan is a mortgage with a 20 percent down payment, a 15- or 30-year term, monthly principal and interest payments, no prepayment penalty, no balloon payment and no private mortgage insurance.

What are conforming loan standards?

Fannie Mae and Freddie Mac buy conforming loans from mortgage lenders and package them together to create mortgage-backed securities (MBS), which are then sold to investors. By selling conforming loans to Fannie Mae and Freddie Mac, lenders can obtain new capital to fund additional mortgages.

As such, a mortgage has to adhere to certain standards in order to be considered conforming and eligible to be purchased by the enterprises. Mortgages that conform to Fannie Mae and Freddie Mac requirements are easy for investors to buy and sell because they meet these standards, which include:

  • Loan limit – $548,250 for a single-family home in most markets and $822,375 in higher-cost areas
  • Credit score – At least 620
  • Debt ratios – Ideally, a front-end ratio of 28 percent or less and a back-end ratio, also known as the debt-to-income (DTI) ratio, of 36 percent or less
  • Down payment/equity – Ideally, at least 20 percent down for a purchase or 20 percent equity for a refinance; however, Fannie and Freddie also back conventional loans with as little as 3 percent down
  • Loan-to-value (LTV) ratio – Ideally, 80 percent or lower; again, Fannie and Freddie also back conventional loans with an LTV max of 95 percent to 97 percent, depending on whether it’s an adjustable- or fixed-rate mortgage

A conforming loan can have a lower down payment as long as the borrower pays private mortgage insurance, or PMI. (In effect, you swap a big down payment for backing by a strong third party.) By paying for PMI, you can get a conforming loan with just 5 percent down in many cases, or as little as 3 percent down if you have a Conventional 97, Fannie Mae HomeReady or Freddie Mac Home Possible mortgage.

With a 20 percent down payment, however, there’s much more cushion for the lender if something goes wrong with repayment. In the event of a default, the lender can sell the home for as little as 80 percent of its value and still break even.

Because a bigger down payment reduces their risk, lenders are willing to accept a borrower with a credit score as low as 620 for a conforming loan — but with two important caveats:

  1. Individual lenders can and do have their own, often higher credit standards, in addition to Fannie Mae and Freddie Mac requirements.
  2. A 620 credit score generally will not be enough to get the lowest interest rate. When offering the best rate possible, lenders look for borrowers with higher credit scores who represent less risk. If your credit score is 780 or higher, you’ll be much more likely to get the best available rate.

To qualify for a conforming loan, lenders will also look to make sure you can afford your monthly mortgage payments by evaluating your debt ratios. There are two measures, sometimes expressed as 28/36:

  • Front-end ratio: The front-end ratio measures how much of your gross monthly income is allocated to your mortgage, including the monthly payment (principal and interest), property taxes, insurance and HOA fees (if applicable). Typically, lenders look for a front-end ratio of 28 percent or less. For example, if your gross monthly income is $8,000, your allowable mortgage cost could be no more than $2,240 to be considered a conforming loan.
  • Back-end ratio: The back-end ratio, also called the debt-to-income (DTI) ratio, includes the front-end ratio plus other monthly debt obligations, such as auto loan, student debt, personal loan and credit card payments. To be considered a conforming loan, the maximum back-end ratio is 36 percent. So, if your gross monthly income is $8,000, your allowable debt payments could be no more than $2,880 to be considered a conforming loan.

It is possible to get a conforming loan with higher debt ratios, but lower is generally the better case for both borrower and lender.

One of the immovable standards for conforming loans is the loan limit — you can only borrow so much and no more. Loan limits are generally adjusted each year, with higher limits for properties with two, three and four units (as long as you live in one of the units).

Keep in mind that requirements can vary in other ways, as well. For example, standards might be stricter for a cash-out refinance than for a rate-and-term refinance.

What are the benefits of a conforming loan?

  1. If you make at least a 20 percent down payment, that means there is less money for you to borrow and more home equity at the time you purchase your home. The result is that your monthly payments are lower compared to a loan with less money down.
  2. If you do put at least 20 percent down, you won’t need to pay for private mortgage insurance, which represents significant monthly savings. Depending on your loan amount, PMI can cost a few hundred dollars per month.
  3. If you can put 20 percent down and have good credit and strong reserves, you’re likely to be looking at the lender’s best rate and the lowest monthly payments overall.

If you make at least a 20 percent down payment, that means there is less money for you to borrow and more home equity at the time you purchase your home. The result is that your monthly payments are lower compared to a loan with less money down.

  1. If you do put at least 20 percent down, you won’t need to pay for private mortgage insurance, which represents significant monthly savings. Depending on your loan amount, PMI can cost a few hundred dollars per month.
  2. If you can put 20 percent down and have good credit and strong reserves, you’re likely to be looking at the lender’s best rate and the lowest monthly payments overall.

What are the disadvantages of a conforming loan?

  1. Your DTI ratio must meet conforming loan standards. The maximum DTI ratio is typically 36 percent, but that can stretch to 45 percent or even 50 percent if you have other “compensating factors,” such as a higher credit score.
  2. The home you want to buy could exceed conforming loan limits, especially if you are in a higher-priced market. 

Conforming vs. non-conforming loans

  • A conforming loan conforms to, or meets, Fannie Mae and Freddie Mac standards pertaining to the borrower’s credit, down payment, and other factors like loan size.
  • A non-conforming loan does not conform to, or meet, Fannie Mae and Freddie Mac standards. For example, a jumbo loan is a non-conforming loan because the amount borrowed exceeds the Fannie Mae and Freddie Mac limit. The fact that a loan is non-conforming doesn’t mean it’s bad, however; it simply means that it doesn’t meet the criteria to be purchased by the enterprises.

Conforming vs. conventional loans

  • A conforming loan must meet specific criteria set by the Federal Housing Finance Agency, including conforming loan limits. 
  • A conventional loan is any loan that isn’t guaranteed or insured by the government (including FHA, VA and USDA loans). Conventional loans can be either conforming or non-conforming.

What are conforming loan rates?

You can find conforming loan rates through Bankrate, which provides mortgage rates for both 30-year and 15-year loans daily. When comparing mortgage rates, consider the following:

  • If you think interest rates will rise in the coming month or so, you might prefer to lock your rate to ensure the lowest rate possible.
  • Beware of rates that seem too low to be true given your financial position. Currently, the benchmark 30-year conforming conventional loan rate is 3.280%. If you do encounter a low rate, it could be that the value of the low rate will be offset by bigger upfront costs. Be sure to evaluate the complete cost of the loan carefully.
  • Different lenders have different funding available and different costs. For this reason, it pays to shop around for the best rates and terms.
  • Remember that you can get either a fixed- or adjustable-rate mortgage. A fixed-rate mortgage generally ranges from 10 to 30 years, and the interest rate remains the same for the life of the loan. With an adjustable-rate mortgage, your interest rate can fluctuate based on market factors. 

Tips for applying for a conforming loan

There are a number of steps you can take that can help you get the best conforming loan for your circumstances:

1. Check your credit report

As much in advance as possible — several months if doable — check your credit reports at AnnualCreditReport.com. Due to the coronavirus crisis, credit reports are now available at no charge on a weekly basis from Experian, Equifax and TransUnion through April 2021. Check your reports carefully for things such as out-of-date items and factual errors. Dispute any errors you spot, because even minor issues can result in a lower credit score.

2. Get your documents in order

Next, get your paperwork together so you’re prepared for the mortgage application process. Lenders can now get a lot of information directly from banks and the IRS, but it’s still a good idea to have documents like payroll stubs, bank statements, retirement accounts, W-2 forms and tax returns handy.

3. Get preapproved

Once you find a lender you’re interested in working with, you can get preapproved for a loan, which can help expedite the financing process and uncover any issues related to your credit before they show up when you formally apply for a mortgage. Getting preapproved can also help demonstrate to a home seller that you’re a serious buyer, which could give you an edge over others.

4. Avoid excessive spending

Lenders can check and re-check your credit report and score and various financial accounts right up until your mortgage closing date. Think of the time between when you apply for a loan and when you close as a “quiet” period, when you spend as little as possible. While your mortgage application is in process, don’t apply for any new credit, such as a credit card or personal loan, and avoid spending on things you don’t really need. This will help ensure the closing process goes smoothly and you receive the financing you are expecting.

To view the original article, click here

Posted by Jackie A. Graves, President on April 6th, 2021 7:38 PM

Something that many consumers may not be aware of is that lenders typically carry the very same loan programs. In the mortgage market, lenders don’t open up their vaults to finance a new home loan. That old process vanished years ago. When lenders did use their own funds, they would soon get to the point where they ran out of money to lend. Think about that for a moment and it makes complete sense. 

Let’s say a bank had $1,000,000 specifically to issue home loans. Soon thereafter, they funded 10 home loans at $100,000 each. The vault is now empty. There’ no more money to lend. The lender’s profit comes from the interest paid each month. But until one of the homes they financed sells to someone else and retires that note, they’re no longer lenders. If you don’t lend money, you’re not a lender, right?

That’s when the concept of the secondary market came into play. Fannie Mae and Freddie Mac were formed to provide an answer to the problem of liquidity, to allow lenders to make home loans over and over again. Fannie and Freddie both came up with standard guidelines that mortgage companies and banks could follow. When approving a mortgage loan that met these pre-established standards, the lenders could sell those loans directly to either Fannie or Freddie. That essentially frees up the lender’s credit lines allowing more home loans to be made. 

Today, it’s rare that a mortgage company issues a home loan with the intent of keeping it. There are lenders who do just that, called ‘portfolio’ lenders, who cater to a specific market niche. But the vast majority of loans are sold soon after they’re issued. In fact, most lenders sell loans before they’re even made. It’s committing to Fannie or Freddie the lender will sell a certain amount of home loans.

Okay, so that’s a brief overview of the mortgage markets, referred to by lenders as the ‘secondary’ market because a loan is issued initially to buy the home but then sells that loan again to another buyer, the ‘second’ buyer. Remember, lenders carry the same suite of mortgage programs. So how can one lender approve a loan when another won’t using the very same program? The answer lies in ‘overlays.’

An overlay is an additional approval guideline lender apply on top of the standard guidelines issued by Fannie, Freddie and even government-backed home loans such as VA or FHA mortgages. Lenders can add overlays to existing guidelines in order to cater to a niche market or to strengthen the quality of loans they issue. That’s the very reason why one lender can approve a home loan application while another won’t…on the very same program. 

For instance, Fannie might require a minimum credit score of say 620 on a particular program but another will need a score of 640. Same program, different results. This means that if someone applied for a home loan and didn’t get an approval, it’s quite possible another lender will go ahead and approve that very same loan.

To view the original article, click here

Posted by Jackie A. Graves, President on April 5th, 2021 9:38 PM

Four ways to help your opponent walk away feeling they got a good deal.

Is it the Feeling or the Fact?

Which is more important or satisfying - to get a good deal or to simply feel you got a good deal?

Some say that getting a good deal will typically elicit a good deal feeling. I agree. But consider, if one feels they got a good deal, when actually they didn't, aren't they happy too?

Don't underestimate the influence of feelings when negotiating. In this context, I'm not talking about your feelings but those of your opponent. How many opportunities are missed by negotiators who fail to properly influence the feelings of their opponent?

Here's my motto: I want my negotiating opponent, whenever possible, to walk away feeling good about the deal. Some disagree with me on this point. Some have the distorted objective to crush, humble and even humiliate their opponent.

How misguided and even sad. Especially so when it takes so little to foster that good deal feeling in someone else.

During your next negotiation, be more attentive to building up the good deal feeling. You take the good deal but let them have that good deal feeling also.

Following are some hints and techniques to help establish that good deal feeling for your opponent.

1. Don't be too quick to accept a proposal, even a good one. If you quickly accept something, without a significant pause, a flinch or consultation with others, you literally deny your opponent from thinking they got a good deal. Accept quickly and your opponent will think they should have asked for more.

2. Compliment your opponent's negotiating skills. After a series of proposals and counter proposals, you realize you've reached the end of the concessions, interrupt the discussions by saying, "Wow. You're a tough negotiator!" Your opponent will immediately think their current position is a good deal for them whether it is or isn't. Complementing someone's negotiating skills is typically taken as an "I surrender, you got the better of this deal." message.

3. As per usual, employ a sincere and observable FLINCH upon receiving a proposal. That pained look, grimace, sigh or the comment such as, "Are you serious?" seems to tell one's opponent that they've gotten to us. Should we later accept that proposal, or one close to it, the good deal feeling is firmly planted in our opponent.

4. Employ the time out. We tend to stay with a negotiation or bargaining session, without interruption, no matter what. To stop, step away or take a break has the misguided reputation of 'blinking first' or 'being driven off'. In actuality, taking a break and rejoining the negotiations later causes both sides to rethink their current position and the prospects of putting a deal together. When we take the initiative to come back later, our opponent assumes they've won and adopts that good deal feeling. The final terms, however, are still open for discussion.

Good negotiators focus more on fostering the good deal feelings for their opponent while negotiating a good deal for themselves.

To view the original article, click here

Posted by Jackie A. Graves, President on April 4th, 2021 11:25 AM

A down payment is not the only thing you need to save for when you're thinking about getting a mortgage. There are many other expenses that could come up so it's best to prepare your finances, so you won't be stretched too thin. 

Looking forward to buying a new home? Before making such a big purchase, know that while your down payment may be one of the largest expenses, there are some additional fees and hidden costs to prepare for.

Understanding which specific costs to save for when buying a new house can help you live comfortably without stretching your finances.

How much money should I save before buying a house?

How much money you save for a home can depend on a variety of factors including:

  • The housing market in your area
  • The type of house you’d like (size in square feet, number of bedrooms and bathrooms, etc.)
  • Your credit score (with a lower score, you can expect to pay a higher interest rate)
  • How much you want to put down

While the general rule of thumb is to put down at least 20% so you can avoid private mortgage insurance (PMI), you can still get a mortgage by putting down less. By making a smaller down payment, you can free up more money for the other expenses that come with buying a home.

5 costs to save for when buying a new house

1. Closing costs

How much should you save for closing costs? Closing costs typically range from 2% to 5% of your home’s price. This means, if you purchase a $250,000 home, your closing costs could be anywhere from $5,000 to $12,500. Closing costs include things like your home inspection, appraisal, attorney fees, and taxes.

Sometimes you can negotiate that the seller pays some or all of the closing cost fees but this is not guaranteed so it’s best to save for these costs in advance so you can secure the purchase of your home.

2. Origination fee

Most lenders charge an origination fee which could be included in the closing costs. This fee ranges from 0.5% to 1.5% of your loan and covers things like underwriting and processing fees. Origination fee amounts can vary by lender. Shop around with ChangeMyRate.com to compare different mortgage and mortgage refinance rates and get a preview of how much your fees could be.

3. Moving costs

Have you thought about how much it might cost you to move? Whether you’re moving to a different state or the next town over, moving costs could add up quite a bit. You may have to rent a truck, boxes, and packing supplies. Plus, if you’re looking to hire movers, this should also increase your savings goal.

4. Initial repairs

As a homeowner, you’re in charge of all repairs and maintenance. Home repairs can sneak up at any time including just after you’ve bought the house. During the home inspection, you may see things you want to change or fix. Or maybe the seller gives you a deal on the home’s price in exchange for you taking over any necessary repairs.

Sit down and make a repair budget for your new home and save for these unexpected and horribly-timed repair needs for your home. Maintenance and repairs, after all, are a hidden cost of home buying. By saving money in advance, it'll help offset the inevitable expense.

Homeowners insurance and private mortgage insurance

In order to get a mortgage, you’ll need to set up and pay for homeowner’s insurance. Homeowner’s insurance can cover damage and destruction to your home, personal property, and even detached structures like an outdoor shed or garage. An insurance company can help give you the financial protection you'll need - although it will be tacked on to your monthly payments. ChangeMyRate.com helps you learn more about home insurance premiums and can help you compare insurance premiums before you commit to a policy.

Private mortgage insurance, on the other hand, is a cost you’ll incur if you don’t put 20% down. PMI payments go to an insurer who will cover a portion of the balance on your mortgage should you default on your loan. Freddie Mac estimates you might pay anywhere from $30 to $70 for every $100,000 for PMI.

 Knowing your costs upfront can help you prepare enough savings

Buying a home comes with all types of fees and added costs. Still, this shouldn’t deter you from becoming a homeowner if it’s what you truly want. The key is to make sure you understand and prepare for the total costs of buying a home before committing to a mortgage. Visit ChangeMyRate.com to learn more about costs associated with homeownership and to compare rates and offers from lenders for free.

To view the original article, click here

Posted by Jackie A. Graves, President on April 3rd, 2021 12:32 PM

An experienced loan officer, that is. Gone are the days when your loan officer gathers up absolutely everything needed for the loan file before sending it over to another individual, the underwriter, for a loan approval. Even if some of the documentation isn’t ultimately needed for an approval. Paper loan files would be several inches thick. Consider not just tax returns and bank statements but title work, appraisals and W2 forms just to name a few. With the advent of automated underwriting however, an approval is essentially approved upfront before any physical underwriting has even begun.

When someone submits a loan application, the loan is converted to a format that allows for an electronic approval. The basic information on the application is input. Income, assets and other financial aspects of the applicant is entered and then transmitted to the loan officer. The loan officer then submits the file to a digital approval. Within moments, the ‘findings’ tell the loan officer what is needed for a final approval. This is where the loan officer sees whether or not the loan can be approved.

But it doesn’t stop there. The automated approval is issued without the benefit of reviewing supporting documentation. If the initial application says the applicant makes $7,000 per month, the automated approval will assume that amount. The documentation will come later. The higher the quality of the loan file will typically result in less documentation needed. Someone with a 760 credit score and a down payment of 25% of the sales price will submit less supporting documentation than someone with 5.0% down and a 620 score.

Upon an initial loan submission and right after receiving the preapproval conditions, your loan officer will know whether or not you’re going to be approved. This is the stage when your preapproval letter is issued. The preapproval letter basically means that all that needs to be done is to find a home and then make sure the appraised value comes in as needed. 

Even at this juncture, the quality of the loan file can dictate what type of appraisal is needed. Is a ‘drive-by’ appraisal needed, where the appraiser simply drives by the property for a visual inspection? Or maybe just a desk appraisal is needed, where the appraiser doesn’t visit the property at all but gathers research from the desk regarding recent sales of similar properties in the area.

The appraisal can shake things up a bit. The loan officer can issue a preapproval for the applicant, but the property must also be approved. This can mean that a preapproval was issued but for some reason the property didn’t appraise at the sales price. A preapproval can also be declared void if the income or employment documentation doesn’t support the information that appeared on the initial loan application. Yet, when the supporting documentation does indeed verify what appears on the loan application, the loan approval should sail through. This is why your loan officer should know in advance if you’re going to get across the finish line with a solid, final loan approval.

To view the original article, click here

Posted by Jackie A. Graves, President on April 2nd, 2021 10:27 AM

If you have high-interest debt and some equity in your home, you might be able to get a cash-out mortgage refinance. This article will explain the pros and cons of doing a cash-out mortgage refinance along with some alternative options to pay off you.

Did you know that your primary home is an asset - even if you have a mortgage? This is because you can gain equity in your home with each monthly mortgage payment. This equity can be used for various purposes including helping you consolidate debt.

Home equity represents a combination of the amount of principal you’ve paid off along with the increased value of your home. So if you own a home valued at $250,000 a current mortgage balance of $175,000, this means you have $75,000 in home equity.

Mortgage refinance rates are very low right now, so if you have some equity in your home, it may not be a bad idea to consider a cashout refinance loan to pay down debt. Visit ChangeMyRate.com to compare mortgage lenders and rate and find the right cashout refinance loan for you.

Should I refinance my mortgage to consolidate debt?

A mortgage refinance involves getting a new home loan with possibly a new mortgage lender at a lower interest rate. Refinancing can help homeowners save money by lowering their monthly mortgage payments and paying less interest over time. One type of mortgage refinance is a cashout refinance, which is when you borrow more than you owe on the home and receive the difference in cash. This can be used to fund projects for home improvement or even debt consolidation.

Personal factors as well as the housing market can affect mortgage and mortgage refinance rates over time. Luckily, right now low mortgage refinance rates are still available. Check out ChangeMyRate.com to compare your current mortgage rate to your prequalified mortgage refinance rates without affecting your credit score.

Pros and cons of refinancing your mortgage to pay off debt

 A benefit of doing a cashout refinance to pay off debt are securing a lower interest rate, especially if you bought your home when mortgage rates were much higher. You can also pay off high-interest credit card debt and other loans all at one time. With the average credit card interest rate ranging from 15% to 24%, taking advantage of low mortgage refinance rates can help you pay down debt quicker and save money. Plus, paying off outstanding debt can boost your credit scoring.

You can explore your mortgage refinance loan options and use ChangeMyRate.com's free mortgage calculator to see if this is the right money move for you.

One of the biggest drawbacks of getting a cashout mortgage refinance is that you may be putting your home at greater risk. If you are unable to make your monthly mortgage payment for whatever reason, you would risk losing your home and might owe more on it than you did originally. Also, your loan repayment term could be extended depending on how much home equity you had.

It’s also important to note that if you don’t have enough equity in your home, you may not qualify for a cashout refinance. Most lenders will not approve you for a mortgage refinance until you have at least 20% equity in your home.

On top of this, you will be faced with paying for closing costs and possible origination fees all over again. Visit ChangeMyRate.com to compare loan options from multiple lenders and assess fees before you commit to filling out a mortgage refinance application.

 Other options to pay off debt

 Refinancing your mortgage is not the only way to consolidate debt. If your credit is in good standing, you can try consolidating your debt with a personal loan.

ChangeMyRate.com can connect you with lenders that offer rates as low as 3.99% and loan amounts from $600 to $100,000 and it just takes two minutes to get prequalified. If you’d like a better idea of what your monthly payment would be, you can check out ChangeMyRate.com’s personal loan calculator.

Another alternative to consider is a HELOC or home equity line of credit. This allows you to tap the equity in your home and draw from the funds regularly like you would with any line of credit. If you can get a much lower rate with a HELOC than the current rate for your debt, it could be a solid option to help you save.

If you have credit card debt, you can also consolidate it by getting a balance transfer credit card. That way, you’ll have a 0% APR for a certain number of months to help you pay down your balance without interest charges.

To learn more about 0% APR credit cards — which enable you to avoid paying interest charges for up to 18 months in some cases, check out ChangeMyRate.com's partners and what they have to offer.

Final thoughts

The equity in your home is a powerful personal finance tool that can help you meet certain financial goals like consolidating your debt. So long as you have at least 20% equity in your home and have carefully weighed the pros and cons of a cashout mortgage refinance, consider taking the next steps by visiting an online marketplace like ChangeMyRate.com to view refinance rates and obtain the cash to pay off your high-interest debt.

To view the original article, click here

Posted by Jackie A. Graves, President on April 1st, 2021 7:58 PM

Refinancing a mortgage can help homeowners secure low interest rates and flexible loan terms. However, there are some costs to refinance mortgage payments including closing costs and a home inspection. 

In fact, the home appraisal value can be more important than the homeowner’s credit score and debt-to-income ratio. A low appraisal value can make it difficult to get the best mortgage refi terms. But there are remedies to improve your appraisal value and save on mortgage costs. 

If you’re thinking of refinancing, consider using ChangeMyRate.com. You can use ChangeMyRate.com's free online tool to easily compare multiple lenders and see prequalified rates in as little as three minutes

Why should I refinance my mortgage? 

Refinancing lets homeowners reduce their monthly payments when qualifying for low mortgage refi rates or when ending private mortgage insurance.

Some mortgage borrowers get a “cash-out refinance” and use the extra funds to make home improvements. Another option is to consolidate high-interest outstanding debt at a lower rate.

Banks are currently offering record low refi rates that let borrowers save on mortgage interest. Low rates are helping homebuyers get competitive mortgage terms, too.

A 15-year refinance mortgage can offer the lowest rates (fixed interest rates are competitive for 30-year terms). Having a low credit utilization rate and clean credit history can help borrowers qualify for a low mortgage refinance rate. Banks may lock rates for up to 60 days to complete the appraisal.

ChangeMyRate.com lets you compare today’s best interest rates and mortgage refinance lenders all in one place

What are today’s mortgage rates? 

Today’s mortgage refinance rate is 2.45% for a 15-year fixed mortgage refi. Despite mortgage refi rates fluctuating slightly as of late, they are still hovering near historic lows. If you're considering refinancing to the new rate (assuming you qualify), an online mortgage refinance calculator can help estimate your new monthly payment.

What does an appraiser review as part of a refinance application?

Homeowners pay for the home appraisal which normally costs between $200 and $500. The appraiser performs a basic home inspection looking for these details:

  1. Interior home layout (i.e., size of rooms and number of bedrooms and bathrooms)
  2. Special home features (i.e., swimming pool or a mother-in-law suite)
  3. Type and age of building materials and interior finishing
  4. Quality and age of the roof and the home structure
  5. Needed repairs.
  6. Comparable “comp” value of recently sold homes with similar traits. 

The lender and homeowner receive an appraisal report that includes the home appraisal value and a detailed property summary.

What should I do if my home has a low appraisal value?placeholder

A lower-than-expected home appraisal value is disappointing, but it doesn’t mean you can’t get a refinance mortgage loan. Consider all of the following:

  1. Dispute the home appraisal
  2. Increase your home’s value
  3. Seek a second opinion
  4. Consider alternative financing
  5. Consider a cash-in refinance

 Look over your home appraisal report and look for errors to dispute such as inaccurate dimensions or the incorrect type of countertop or exterior siding. Also, look at the housing comps. Appraisers don’t always find relevant matches. You can submit sold properties similar to yours for a more accurate appraisal value.

Making necessary repairs or upgrading smaller items like doors or painting walls can improve your home value quickly and at a minimal cost. Costly upgrades may not provide a high increase in the appraisal value.

A second home inspection may provide a higher appraisal value. The new appraiser may do a more accurate assessment and choose better comparable properties.

Existing federal-backed mortgages can qualify for “streamlined” refinancing that may not require a home appraisal. Two options are the VA-backed Interest Rate Reduction Refinance Loan and an FHA Streamline Refinance

Choosing a cash-in refinance to secure a low rate can be tricky. Your upfront closing costs will be higher to avoid private mortgage interest with a loan-to-value ratio above 80%. ChangeMyRate.com can help in the process. Visit the financial marketplace today to see what refinance mortgage interest rates you qualify for. 

4. Does a mortgage refinance require an appraisal? 

Most banks require a home appraisal for home mortgage refinances. Existing federal loans can qualify for a “streamline refinance.” However, the total refinance amount and loan terms may be lower than paying for a home appraisal.

Participating agencies include:

  1. Federal Housing Administration (FHA)
  2. United States Department of Agriculture (USDA)
  3. United States Department of Veterans Affairs (VA) 

Mortgage refinance servicers can also discuss a no-appraisal refinance. You can also visit ChangeMyRate.com to get in touch with experienced loan officers to answer your mortgage questions. 

Final thoughts 

There are several ways to counter a low home appraisal value by making improvements and correcting mistakes in the first appraisal. Your home's equity offers some form of financial protection, so it's important that the appraisal process is done fairly and accurately. Refinance appraisals offered by an appraisal management company are key when trying to refinance a mortgage.

Today’s low mortgage interest rates make refinancing your mortgage with ChangeMyRate.com now a good option. Have your credit and home in the best shape to prequalify.

To view the original article, click here

Posted by Jackie A. Graves, President on March 31st, 2021 10:55 AM

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