Hall Financial Partners Partners - Mortgage Rates Savings

A fixed rate mortgage is a mortgage that has stable monthly payments over time. Its opposite, an adjustable rate mortgage or ARM has monthly payments that fluctuate depending on what interest rates are doing. There are several reasons why it is wise for first-time home buyers to try to arrange for a fixed rate mortgage.

Safe Loans

First, fixed rate mortgages are “safe” loans. The borrower always knows what he or she is expected to pay every month, and while the borrower does not benefit from a drop in interest rates, neither does he or she suffer when interest rates rise over time. Fixed-rate mortgages make budgeting a little easier, especially for first-time home buyers who may be somewhat new to the concept of financial management.

Refinancing for a Fixed Rate Mortgage

It’s wise for most home buyers to try to get fixed rate mortgages from the very beginning, but some borrowers are not eligible for this type of new mortgage. A low or even mediocre credit score can prevent borrowers from getting the best loan deals. Also, fixed rate mortgages typically start out at higher interest rates than do ARMs, and some buyers decide they would rather take the risk inherent in ARMs than pay the extra money for a fixed rate loan.

If you are refinancing and have an ARM, you might want to consider seeing if you can convert your new mortgage to a fixed rate loan. It is an especially good idea to take out a fixed rate loan if interest rates are creeping up, and if you are planning to stay in the home for a significant period of time, usually five years or more.

If you will not be living in the house for at least five more years, a fixed rate loan may not be your best plan. Fixed rate loans typically involve higher closing costs and a slightly higher interest rate than ARMs. If you plan to stay in the house, you’ll make up for this initial outlay of cash with years of steady payments.

If you are moving soon, however, you may not be in the home long enough to make the costs of refinancing to a fixed rate loan worthwhile. Use an online mortgage counselor or speak to a mortgage broker or financial advisor to help decide which option is the best one for you.

Hall Financial Partners Partners - Michigan Investment Home

If you are interested in purchasing real estate investment properties, there are a few items to consider. First, there are many types of investment homes to consider. Second, there are various financing options to consider. Third, the amount of income generated in relation to the expenses should be considered.

Types of Investment Homes

There are many types of property that can be invested in. An investor can purchase a single family home and rent it out. Or a multi family unit can be purchased and rented out to multiple tenants. Both of these types of properties would be considered residential property.

Commercial property is typically larger in size with more potential units to be rented out. There is more of a financial investment, so if you are new to real estate investment, you may want to start off with residential properties first.

Financing Options

Unless you have sufficient liquid assets to invest in, most investors will need to obtain and apply for a new mortgage. A new mortgage for an investment property has different requirements when compared to applying for a residential mortgage loan for your own residence. The lender may require much more of a down payment and may want to see more detail on the current rent roll for the prospective property before approving an investor for a mortgage loan.

Income and Expenses

If you are purchasing a property that already has tenants, the current owner can usually provide a rent roll. This document will show what each unit is renting for and let you see the total income generated for the property. However, income generated is not the only factor to consider. Expenses to maintain and upkeep the property should also be examined. Expenses may include such items as annual real estate taxes, property insurance and liability insurance. Another expense to consider is for the regular maintenance of the units. If a property manager is needed to take care of the property, that is an additional expense to budget in.

Ideally, a property that is considered to be a good investment will generate more income than the amount of expenses paid. Another aspect to consider is the future appreciation of the property. A property located in an area where there is a large field of potential tenants will most likely appreciate in value, while one located in an area with no large companies offering employment will not.

Hall Financial Partners Partners Mortgage-Refinance

Most home owners assume that the best time for mortgage refinancing is when mortgage rates drop. A mortgage rate of two percent or lower has traditionally been the point where home owners rush to refinance to lower their monthly payments as well as the lifetime cost of the loan. While paying attention to interest rates is certainly a good idea, there are some personal factors that might also make refinancing your mortgage a sound financial decision.

Increase in Credit Score

If you’ve had your current mortgage for several years, your FICO score may have improved. Perhaps negative items like bankruptcies and write-offs have aged off your credit report, while positive items such as making payments on time and maintaining a reasonable debt-to-income ratio have appeared. The better your FICO score, the greater your number of loan options. Even if overall interest rates aren’t dropping, you may find yourself eligible to refinance at a terrific rate that will save you money. It’s certainly worth talking to a mortgage broker to look at your options.

Change from ARM to Fixed Rate Mortgage

Another popular reason for mortgage refinancing is to pay off an adjustable rate mortgage, where your monthly payment rises and falls along with interest rates, and replace it with a fixed rate mortgage, where your monthly payment remains the same. It’s especially smart to refinance with a fixed rate mortgage if mortgage rates are dropping and you plan to be in your home for at least another five years.

You Have More Money Available

Perhaps you’ve paid off some credit card debt or gotten a couple of promotions at work, and you now have more money available to devote to your mortgage. If your current mortgage penalizes you for early repayment, it makes sense to refinance to a mortgage that doesn’t level such penalties. Additionally, some people refinance with a ten or a fifteen year mortgage as opposed to a thirty year mortgage. Your monthly payment will go up, of course, but you’ll save a lot of money in interest by paying the mortgage off in half the time you originally anticipated.

The Value of Your Home Has Increased

Perhaps you are in the position of being “house rich” but “money poor.” If the value of your home, and therefore your equity, has increased, you might want to reconsider a “cash out” refinancing which allows you to borrow the money to pay the original loan as well as money you have tied up in your home’s equity. An alternative to refinancing is simply to take out a second mortgage against the equity in your home.

Home owners are well-informed about refinancing their mortgages when the interest rates fall, but it’s also wise to consider mortgage refinancing in other financial situations. Of course, it’s always a good idea to speak with a mortgage professional before making any changes to your mortgage. He or she can talk with you about pros, cons, and other options you may have.

Hallfinancialcorp.com Michigan-Mortgage

If you are interested in refinancing your home loan, you want to make sure your credit is looking its best. Depending on what your credit looked like when you originally obtained your mortgage, noticeable credit improvement can only help in obtaining a lower mortgage rate. Following the quick tips listed below can potentially cause credit improvement which will in turn allow you to qualify for lower mortgage rates.

1. Lower your debt

If you have the financial ability to do so, pay down the balances on any credit lines you have open. By doing this, your overall debt will be lowered. A mortgage lender will look at your overall debt to income ratio when qualifying you for a mortgage. The amount of credit you use in relation to the total amount of credit you have available will also be looked at. An individual with multiple credit lines all used to the credit line limits appears to be more of a credit risk to lenders than one who has lower balances on credit lines.

2. Pay off any collections or past due accounts

Any derogatory credit accounts will have a negative impact on your credit profile. By paying off any of these accounts, you will improve your overall credit. If you can’t afford to do this, try to reach a settlement with the creditor.

3. Make timely payments

By making timely payments on any accounts you owe, you will be establishing a good payment history. This is especially important regarding your mortgage payments. Most conventional lenders want to see a 12 month payment history showing no late payments.

4. Close unused accounts

All accounts are taken into consideration of your total available credit. If you are not using some accounts, then close these accounts so that you total available credit amount is reduced. If you have too much credit available already, you may not be able to obtain additional credit.

5. Improve your FICO score

While following these tips will improve your overall credit, it will hopefully also improve your credit score, or FICO score. The higher the FICO score, the better your chances at qualifying for the loan program that offers the lowest mortgage rates.

An established credit history, prompt payments, and good mortgage payment history, along with a high credit score will improve your chances at obtaining a loan with the lowest possible mortgage rates for a home loan.

Hallfinancialcorp.com Discussing-Home-Equity

If you are a homeowner and need some extra cash by utilizing the equity in you home, there are a few items to consider.

1. Find out the value of your home

If you have owned your home for a few years or more, chances are that the market value of the home has appreciated over the years. Check out the recent sales in your area for the last six months to get an idea of what your home may be worth currently. This will give you an estimate of what the current market value of your home will be.

When you apply for any type of home loan, the lender will calculate a maximum loan amount base on the appraised value of the property. Interest rates differ depending on the loan to value ratio. The lower the ratio, the lower the rate usually is.

2. Apply for a Home Equity Line Of Credit and not a fixed second loan

There are two main types of loans if you already have an existing mortgage. They are a Home Equity Line of Credit (HELOC) or a fixed second loan. A fixed second loan offers a fixed rate for a fixed term. These rates are typically higher than what is seen in a HELOC.

A HELOC is a variable rate that is usually based on the prime rate and can fluctuate over the years. Minimum payments are usually interest only. Once the HELOC has been paid down, the homeowner can use the available credit again, similar to the way a credit card works. Depending on what lender is used, there may be a minimal annual fee involved in keeping a HELOC open.

3. Look for a lender that offers low closing costs

Many lenders offer loan programs for borrowing against the equity in the home. Try your local bank first where you may already have an existing account with them. You have an established relationship already and they may be able to offer you a lower rate or less closing costs because of the existing relationship. Closing costs can cost hundreds of dollars. They include such items as an appraisal fee and government recording fees. Why pay for something if you don’t have to?

Home equity borrowing does not have to be a complicated battle. By following the tips described above, you will save yourself a lot of time and effort.

David Hall Financial Partners FHA-Makes-Changes

The FHA mortgage has become very popular over the last few years, but many people still have questions about it. This article is geared towards explaining FHA guidelines by answering five common questions people ask about FHA loans.

1. Does the money for FHA mortgages come from the government?

No, the money comes from an FHA-approved lender such as a bank or credit union. The Federal Housing Administration’s role is to insure the loan against default.

If you default on your FHA mortgage, the FHA will make your lender whole. Knowing that they won’t lose money allows lenders to feel much more secure approving loans for people with lower credit scores or higher debt-to-income ratios.

2. Can I get an FHA mortgage with a bad credit score?

It depends on what you mean by “bad.” Your credit score, sometimes called your FICO score, is a complicated formula that credit unions apply to your financial history to determine how likely you are to repay your loan. FICO scores range from 300 to 850. The higher the number, the better your score. To get a loan through the FHA, your credit score usually has to be 620 or above.

Additionally, if you’ve had a bankruptcy, FHA guidelines specify that you must wait two years before you are eligible for an FHA loan – and your credit during those two years must have been perfect. If you’ve had a foreclosure, it will take three years with perfect credit before the FHA will work with you again.

3. What is the least amount of money you can put down?

FHA mortgages allow you to put down as little as 3.5% of the value of the property you are buying. If you are buying a $100,000 house, you can put down as little as $3000. You should be aware, though, that if your equity in the home is less than 20%, you will need to purchase private mortgage insurance (PMI) which further ensures your lender against default.

4. How much income do I need to qualify for FHA mortgages?

Rather than specifying a minimum amount of income, FHA guidelines look at your debt-to-income ratio. Specifically, monthly payments on the property you are buying cannot exceed 31% of your gross monthly income. Monthly payments on all of your debt, including your mortgage, cannot exceed 43% of your gross monthly income.

5. Does the FHA handle reverse mortgages?

Yes, the FHA has a program called HECM or Home Equity Conversion Mortgage. This program allows senior citizens over the age of 62 to tap into equity in their homes. The loan does not become due until the last borrower dies, sells the house, or moves out of the house for a period of twelve consecutive months. The loan may also come due if the borrower allows the house to fall into disrepair or if the borrower fails to pay taxes on the home. In order to access this program, borrowers must seek free or low-cost financial counseling from an HECM-approved counselor.

Prepare Your Finances

Look at your finances and determine how you will be able to purchase a property. If you need to obtain a mortgage, get prequalified for a mortgage. You will probably need to put some money down as a deposit when you execute a purchase contract, as well as a down payment later on. The more money you put down, the higher the appeal to a Seller, but it depends on your individual financial situation and what you can afford.

Work with a Realtor

Work with a Realtor who is knowledgeable and experienced with foreclosures. The Realtor will be able to show you the available properties that are within your price range and provide you interior access to the property. As a foreclosure is bank owned, there is a different procedure as compared to a regular purchase transaction. There may be special forms that are needed. The bank may be accepting multiple offers at the same time, so you want to make sure your offer has the most appeal to the bank. The Realtor can handle all of this for you and advise you every step of the way.

Get a Home Inspection

Many times a foreclosure property is not in good condition and may need some repairs. A home inspection by a licensed inspector is essential so that you can be informed of any potential structural problems that may not be visible to the eye. The cost of repairs should be considered as well as the purchase price so that you have a more accurate value of what the property will cost you to purchase. Some homes may have a very low purchase price but need a lot of repairs. You will probably have to pay these repair costs out of your own existing funds after you purchase the property. Make sure you have the liquid assets available for this.

Being prepared and having a plan of action before you buy a foreclosure will help avoid potential problems in the future. Do not be disappointed if your first offer does not work out. There are plenty of foreclosure homes for sale in the current real estate market.

hallfinancial.com michigan-home

If you own a home, at some point in time, you may want to take some cash out, using the existing equity in your home. You may need the cash to make home improvements or just to have extra money in the bank. There are two main options to accomplish this: by mortgage refinancing or by adding on a second mortgage, a home equity loan.

Mortgage Refinancing

By refinancing your existing mortgage for a higher amount, you can pull out the equity. Keep in mind that there is a certain loan to value allowed, which will determine how much cash you can take out. As with any mortgage, there will be closing costs involved that can be paid out of the existing equity of the home, so you would not have to cover it out of pocket. A new appraisal will most likely be done to determine what the current market value is of your home. Refinancing your mortgage would be best if your existing mortgage rate is higher than what the current mortgage rates are.

Home Equity Loan

Another alternative to refinancing your mortgage is to add a second mortgage and maintain your existing mortgage. This would be ideal if you have a low interest rate on your existing mortgage. The interest rates for a second loan are typically higher compared to a first mortgage. However, the closing costs for a second loan are much lower than that for a mortgage refinance.

Another type of second loan is called a Home Equity Line of Credit, or HELOC. This is actually a line of credit and not a loan, which means that you can pay down the balance on the HELOC and utilize the line more than once. When you apply for a HELOC, you are applying for the full line of credit, though you do not have to use the whole amount available to you. The rate for a HELOC is typically based on the prime rate and varies monthly. It is typically an interest only minimum payment. This affords you the lowest monthly payment, but the rate is not a fixed rate.

Each alternative has positive and negative aspects. Depending on your current financial situation and how much cash out you want to take, any of these types of loans may work for you.

Hallfinancialcorp.com Discussing-Home-Equity

A home equity line of credit, commonly called a HELOC, is a line of credit that can be obtained using real estate property as collateral. This can be the home you currently reside in and currently have a mortgage on. The HELOC would then become a second mortgage. Mortgage rates for this type of line of credit are usually a variable rate, based on the prime rate. The following information may help those interested in obtaining a home equity line of credit.

Where can I Obtain a HELOC?

As with any mortgage loan, a HELOC can be obtained through a mortgage professional. A mortgage broker has access to multiple mortgage lenders or you can seek out a lender directly. A lender is usually a financial institution such as a bank. Using a bank you have an existing relationship with may make the application quicker and easier, as they already have some of your financial information. Once you start an application, an appraised value will need to be obtained.

How Do I Know My Appraised Value?

Depending on the lender, either a desktop appraisal or a full appraisal will be performed in order to calculate the current market value of your home, the appraised value. A desktop appraisal usually looks at the recent sales in the last 6 months in the area that are similar in size and age to your home. A full appraisal requires a licensed appraiser to visit your home and look at the interior of the home, noting any improvements or upgrades you may have added. Then the appraiser will look at comparable homes in the area that have sold and take into consideration any upgrades added. This type of appraisal will give a more accurate representation of value.

How Much of a HELOC Can I Obtain?

Once an appraised value is obtained, the desired loan to value ratio will determine the exact limit of your home equity line. The interest rate may be affected by the loan to value ratio, with a higher rate for a higher loan to value ratio.

A HELOC can provide a homeowner with an opportunity to access the existing equity in the home and cash that out. The funds can be used for anything from home improvements to purchasing a new car to just having extra cash in the bank. Consider applying for a HELOC today while mortgage rates are low!

Hallfinancialcorp.com New-Home-Planning

When a lender looks at your credit reports, he or she wants to make sure that your monthly debt ratio is no more than 43% of your gross monthly income if you are getting and FHA loan and no more than 36% of your gross monthly income if you are getting a traditional loan. Therefore, the last thing that you want to do is to finance expensive items in the days before you apply for your new mortgage loan. These are some of the most common purchases that increase debt ratio and trip borrowers up on their mortgage applications.

1. Transportation – Cars, Trucks, Boats, Motorcycles

Getting a new house and a new vehicle can make you feel like you’re starting a whole new life, but vehicles can be expensive, and if you choose one that has to be financed, it can do bad things to your FICO score. If you absolutely must have different transportation, either buy an inexpensive model that you don’t have to finance, or wait until a few months after your home loan closes.

2. Furniture

When you move into a new place, it’s natural to want to start decorating immediately. It’s also natural to want to finance the furniture purchase so you don’t have to pay for a living room set, a bedroom set, and a remodeled kitchen all at once. Again, though, financing extra debt can get you into trouble and make you look like an unstable borrower.

3. Vacations

Even if you’ve always dreamed of visiting Hawaii or the British Isles, this probably isn’t the year to go unless you can afford to pay for the trip out of pocket. If you put it on your credit card, it will affect your income-to-debt ration and your FICO score. Plan to stay home this year and travel next year, when you can celebrate getting your new mortgage loan approved.

4. New Electronic Equipment

A new living arrangement simply begs for new, sophisticated electronics such as new computers, a wall-size television, and surround-sound speakers. It’s the same story, though. If you can’t pay cash for them, don’t buy them. The last thing your lenders want to see is a bunch of high-priced “frivolous” items on your credit reports.

5. New Appliances

If the home’s appliances simply aren’t functional, or if there are serious problems with the plumbing or electric wiring, you may be able to qualify for a 203k fixer-upper loan and borrow the money to modernize or replace problem elements at the same time you receive the money to obtain the property. If the appliances work well but simply aren’t to your taste, get your mortgage approved first, then worry about a new oven or refrigerator.

6. Optional Medical Procedures

If you must run up debt to have a medically necessary procedure, such as a biopsy or treatment after an accident, you really don’t have much choice. While you are waiting for your new mortgage loan, though, you don’t want to finance a nose job, braces for your teenager’s teeth, or any other type of cosmetic procedure.

7. New Pets

Bringing a new pet into your home has nothing to do with your credit scores or your debt-to-income ratio. It simply isn’t a wise idea to bring an animal into one home when you know that you will soon be moving to another. Get your mortgage approved, get settled in your new home, and then go out and find your perfect animal companion.