Home Mortgage Tips Archives – Page 2 of 29

02 Nov 2023

Will Getting a Mortgage Help My Credit Score?

Credit, Homeowner Tips

Getting a mortgage can potentially help your credit score, as long as you make your payments on time and in full each month. Payment history is one of the most important factors that influence your credit score, so consistently making your mortgage payments on time can have a positive impact on your credit score over time.

It is important to carefully consider the financial implications of taking on a mortgage and to ensure that you can afford the payments before proceeding. It is also important to keep in mind that taking out a mortgage will also result in a hard inquiry on your credit report, which can temporarily lower your credit score.

Credit Diversity

Credit diversity refers to the different types of credit accounts you have on your credit report. Having a diverse credit history can have a positive impact on your credit score, as it shows lenders that you are capable of managing multiple types of credit responsibly.

When you apply for a mortgage, the lender will likely review your credit report to assess your creditworthiness. Having a diverse credit history, including a mix of credit cards, installment loans, and other types of credit accounts, can demonstrate that you are a responsible borrower and increase your chances of being approved for a mortgage.

Mortgages Get Reported

Mortgages are typically reported to credit bureaus and will appear on your credit report. This means that your mortgage payment history, including any late or missed payments, will be recorded on your credit report, and can impact your credit score.

Consistently making on-time mortgage payments can have a positive impact on your credit score, as it demonstrates that you are a responsible borrower. However, missing payments or defaulting on your mortgage can have a negative impact on your credit score and may make it more difficult to obtain credit in the future.

It’s important to regularly review your credit report to ensure that all information, including your mortgage, is being reported accurately. If you notice any errors or discrepancies, you should contact the credit bureau and the mortgage lender to have the issue resolved.

In summary, having a diverse credit history can be beneficial when applying for a mortgage, but it’s important to focus on maintaining a good overall credit profile, including making all payments on time and keeping your credit utilization.

03 Oct 2023

By Kevin Gahagan

4 Facts You Need to Know Before Setting Up a Mortgage Escrow Account

Home Mortgage Tips

4 Facts You Need to Know Before Setting Up a Mortgage Escrow Account Buying a home involves a variety of nuances and strange-sounding terms, and one of the least understood aspects of the home buying process is the escrow account. Essentially, an escrow account is a third party bank account your lender can require you to pay into in order to cover certain costs related to your home. Your lender uses an escrow account to ensure that property taxes and home insurance fees get paid on time.

But how exactly do escrow accounts work? Here’s what you need to know.

Escrow Accounts Are Mandatory With Certain Mortgages

Not all home buyers are required to have an escrow account. In cases where the buyer pays 20 percent of the purchase price down, lenders will typically waive the escrow, as the buyer has proven liquid assets that can be used to pay property-related fees. But depending on your type of mortgage, you might be required to have an escrow account.

If you bought your home with an FHA loan, you must have an escrow account. Similarly, if your down payment is less than 20 percent, you’ll most likely be required to have an escrow account.

You Can Choose To Pay A Lump Sum Or A Monthly Fee

As your lender uses your escrow account to pay property fees, you’ll need to ensure the account has the available funds to cover taxes and insurance. Typically, your lender will provide you with a set of payment options to keep the account topped up. You may be able to choose whether to pay your escrow fees in an annual lump sum or in 12 equal payments throughout the year, however paying monthly is the most common scenario.

Escrow Payments Can Change Over Time

When your escrow payments begin, you’ll be given a payment schedule with a set payment amount. But just because you start paying $150 per month into the account, that doesn’t mean your monthly payment will stay at $150 per month. If your insurance rates or taxes increase, you’ll need to make larger escrow payments to cover the difference in cost.

Cancelling An Escrow Account May Not Be Easy

An escrow account is a fairly permanent mortgage fixture – once it’s established, there are very few ways to get rid of it. Some escrow agreements do allow you to request a cancellation, but they’ll require you to have a set amount of equity in your home, or pay a cancellation fee, or both. Refinancing will close an escrow account, but you’ll need a 20 percent down payment equity position when doing the refinance to avoid opening a second account.

Setting up an escrow account is a great way to automate your bills and ensure your mortgage is paid on time. Call your local mortgage specialist to learn more.

28 Sep 2023

By Kevin Gahagan

A Quick Look at Reverse Mortgages: The Golden Ticket to Enjoying Your Golden Years

Home Mortgage Tips

A Quick Look at Reverse Mortgages: The Golden Ticket to Enjoying Your Golden Years With a high volume of millennials set to enter the real estate market this year, it may seem like all the available options out there were created to snag new home buyers. However, there are products available on the market that cater to those who are in their golden years too. If you’re older than 62 and are currently weighing the options with your mortgage, here are the basics on reverse mortgages and why they might positively benefit you.

The Scoop On Reverse Mortgages

It may seem like this mortgage option hasn’t been around that long, but it was actually created in 2009 following the recession. Known as the Home Equity Conversion Mortgage for Purchase (HECM), this product is specifically directed at those who are retired or close to retirement that want to tap into the equity in their home. This option is only beneficial for those who plan on staying in their home long term, the loan is paid off at the time the homeowner moves out or passes on.

What Are The Requirements?

Because a reverse mortgage enables the homeowner to tap into the equity they’ve already paid into their home, there are many requirements involved in using this type of mortgage product. In addition to being 62 or older, the homeowner will have to have a high amount of equity in their home. They will also have to prove that they have the financial ability to make their monthly payments, in addition to being able to pay the insurance and property taxes on the property. The homeowner will also have to comply with the requirements set out by the Federal Housing Administration.

Is It The Right Choice?

Like any mortgage product, it’s important to determine before choosing this mortgage product that it’s right for you. While a reverse mortgage gives the benefit of providing access to cash and allows you to put your money elsewhere, it can end up costing more down the road since interest will continue to accrue on the principal amount owing. Before diving in, ensure that you do the calculations and consult with a professional to ensure it’s going to be a financial benefit in the end.

A reverse mortgage can be a great means of accessing cash for homeowners who are 62 or older, but it’s important to weigh all the financial aspects before making a final decision. If you’re currently looking into your mortgage options, contact your trusted mortgage professionals for more information.

27 Sep 2023

By Kevin Gahagan

Understanding Mortgage Amortizations and Why Longer Periods Can Cost More

Home Mortgage Tips

Understanding Mortgage Amortizations and Why Longer Periods Can Cost More Buying a home is one of the largest investments you will make in your life, and that’s why so many people have longer mortgage amortization periods to pay down the principal. While it may seem appealing to have a longer amortization period, here’s why an extended loan term can end up costing you more and may be less financially beneficial when it comes right down to it.

About Mortgage Amortization

Generally speaking, a 25-year mortgage amortization period can be typical, but there are many loan periods that a homebuyer can choose for amortization. While a longer-loan period may seem enticing because it will mean a smaller monthly payment, a shorter amortization will enable you to own your investment sooner, which can be a great boon for many people. It’s worth being aware of what works best for you as this will depend on your financial situation.

Paying Off The Principal

For those who have a high monthly payment, a longer mortgage period can seem like a benefit. However, while this will lower your monthly payment, it also means that you will be paying less on the principal over time and this can cost you when it comes to interest. A shorter loan period, on the other hand, may force you to re-do your budget to make the monthly payment, but you’ll be paying more on the principal each month and less on interest over time. A 25-year term may sound good at first, but a shorter term may be more financially lucrative in the long run.

What Works Best For You?

It may seem like a shorter loan period is the right financial decision, but there are a lot of factors that go into determining what will work best for you. If your interest rate is low and you’re struggling to make your monthly payment as it is, a longer loan period may be for the best. However, if you have the money in the bank and you can still live your life while saving a little bit extra, a shorter loan period may be an option that saves money in the end.

On the surface, a longer loan period and a shorter monthly payment may seem optimal, but it’s important to weigh all of the variables before deciding on your mortgage amortization. If you’re currently getting prepared to invest in a home, you may want to contact one of our mortgage professionals for more information.

15 Sep 2023

By Kevin Gahagan

Understanding the Differences Between ‘Prequalified’ And ‘Preapproved’ For a Mortgage

Home Mortgage Tips

Understanding the Differences Between 'Prequalified' And 'Preapproved' For a Mortgage Are you in the market for a new home? If you are going to rely on mortgage financing to cover some of the purchase cost, you will need to start the application process as soon as possible. However, what if you just need to know how much you will be able to borrow so you can start finding homes in your price range?

Let’s take a quick look at the difference between being ‘prequalified’ and ‘preapproved’ for mortgage financing.

The Process Starts With Prequalification

The first step in obtaining mortgage financing is to speak with a mortgage professional to get prequalified. After sharing some quick information about your financial assets, income, and any debts, your advisor will share a range of financing options and amounts that you may qualify for. Prequalification is typically done free of charge and either in person or over the phone.

Note that your mortgage lender will not be doing any digging in the prequalification stage. There’s no credit check and no hard look at your assets. Don’t get too excited if you are prequalified for a large mortgage as you will still need to be approved.

Once You Are Preapproved, You Are All Set

Preapproval, on the other hand, is a firm commitment to access to a certain level of mortgage financing. Your mortgage lender will require a variety of information to get an idea of your financial situation, your current and future employment, your level of risk and more. Once they have a good idea of how much mortgage you can afford, you will be provided with a conditional commitment letter. This letter outlines how much the lender is willing to offer to you as well as other vital information like your mortgage loan interest rate.

Speed Up The Process By Preparing Beforehand

Finally, it is worth a mention that you can speed up the mortgage process by having all of your application paperwork ready before the initial meeting. Gather up your most recent income tax returns, pay stubs and bank statements. If you have investments or other financial assets, document those. You will also want to be up front about any outstanding debts that you are paying off. The more prepared you are, the faster the application and pre-approval process will go.

Have you found the home of your dreams? Our team of mortgage professionals are ready to help you finance it. Contact us today and we will be happy to assist you with getting both prequalified and approved for a mortgage.