31 May 2023
By Kevin Gahagan

An Overview Of Mortgage Points

Mortgage

An Overview Of Mortgage PointsMortgage points, also known as discount points or origination points, are fees paid by borrowers at closing to reduce the interest rate on their mortgage loan. Each point typically costs 1% of the total loan amount and can lower the interest rate by anywhere from 0.125% to 0.25%.

There are two types of mortgage points: discount points and origination points. Discount points are used to buy down the interest rate on the loan, while origination points are used to cover the lender’s administrative costs.

Borrowers may choose to pay mortgage points in order to lower their monthly mortgage payments or to reduce the overall amount of interest paid over the life of the loan. However, paying points may not always be the best financial decision, as it depends on factors such as the borrower’s financial situation, the length of time they plan to stay in the home, and the current interest rate environment.

It is important for borrowers to carefully consider the costs and benefits of paying mortgage points, and to compare offers from multiple lenders to ensure they are getting the best deal possible.

When to Use Mortgage Points

Mortgage points can be used by borrowers to lower the interest rate on their mortgage loan and potentially save money on interest over the life of the loan. However, whether or not it makes sense to pay mortgage points depends on a variety of factors, including the borrower’s financial situation, the length of time they plan to stay in the home, and the current interest rate environment.

Here are a few situations where it may make sense to use mortgage points:

  • Long-term homeownership: If a borrower plans to stay in their home for a long period of time, paying mortgage points upfront to lower the interest rate could result in significant long-term savings.
  • High-interest rates: When interest rates are high, paying mortgage points may be a good strategy for reducing the interest rate and lowering monthly mortgage payments.
  • Large loan amounts: Borrowers with large loan amounts may benefit from paying mortgage points to reduce the interest rate and save money over the life of the loan.
  • Strong financial position: Borrowers with strong financial positions, including a high credit score and stable income, may be more likely to qualify for lower interest rates and may benefit from paying mortgage points to lower the rate even further.

The decision to pay mortgage points should be based on a careful analysis of your unique financial situation and goals and should take into account the costs and benefits of paying points compared to other options.

25 May 2023
By Kevin Gahagan

What is the Difference Between a Reverse Mortgage and a Home Equity Conversion Mortgage?

Mortgage

What is the Difference Between a Reverse Mortgage and a Home Equity Conversion Mortgage?A reverse mortgage and a home equity conversion mortgage (HECM) are both types of loan products that allow homeowners to tap into the equity they have built up in their homes. However, there are some important differences between the two.

A reverse mortgage is a type of loan available to homeowners who are 62 years of age or older. With a reverse mortgage, the lender makes payments to the borrower, which can be taken as a lump sum, line of credit, or regular payments. The loan is paid back when the borrower dies, sells the home, or permanently moves out of the property.

On the other hand, a home equity conversion mortgage (HECM) is a specific type of reverse mortgage that is insured by the Federal Housing Administration (FHA). To qualify for an HECM, the homeowner must be 62 years of age or older and own their home outright or have a low mortgage balance that can be paid off with the proceeds from the HECM.

One of the key differences between a reverse mortgage and an HECM is the way the loan is structured. With a reverse mortgage, the lender makes payments to the borrower, while with an HECM, the borrower can receive payments from the lender or choose to receive a line of credit that they can draw on as needed.

Another important difference is the cost. HECMs are insured by the FHA, which means that they come with certain fees, including an initial mortgage insurance premium, an annual mortgage insurance premium, and other closing costs. Reverse mortgages, on the other hand, may come with different fees depending on the lender.

Overall, while both a reverse mortgage and an HECM can provide homeowners with a way to access the equity in their homes, there are important differences to consider when deciding which option is right for you. It’s important to do your research and speak with a qualified financial professional to understand the pros and cons of each option and make an informed decision.

24 May 2023
By Kevin Gahagan

Running A Quick Financial Health Check Before You Apply For A Mortgage

Mortgage

Running A Quick Financial Health Check Before You Apply For A Mortgage Getting a mortgage is a significant financial decision, and it is crucial to ensure that you are financially prepared before applying for one. Conducting a quick financial health check before applying for a mortgage can help you determine your financial standing and your ability to afford a mortgage payment.

Here are some reasons why you should consider conducting a quick financial health check before applying for a mortgage:

  1. Check your credit score: Your credit score is an important factor that lenders consider when deciding whether to approve your mortgage application. Check your credit score to see where you stand and take steps to improve it if necessary.
  2. Review your debt-to-income ratio: Lenders will also look at your debt-to-income ratio, which is the amount of debt you have compared to your income. If your debt-to-income ratio is too high, you may not be able to qualify for a mortgage. Try to pay down debt and increase your income to improve your debt-to-income ratio.
  3. Calculate your down payment: Most lenders require a down payment of at least 20% of the purchase price of the home. Calculate how much you’ll need for a down payment and make sure you have enough savings.
  4. Determine your monthly housing costs: Take a look at your monthly income and expenses to determine how much you can afford to spend on your mortgage payment, including property taxes and insurance. Make sure you’re comfortable with the monthly cost before applying for a mortgage.
  5. Get pre-approved for a mortgage: Once you’ve completed these steps, it’s a good idea to get pre-approved for a mortgage. This will give you an idea of how much you can borrow and the interest rate you’ll receive.

Conducting a quick financial health check before applying for a mortgage is a smart move. It can help you identify any financial issues, improve your mortgage eligibility, and ensure that you are prepared to take on the financial responsibilities of homeownership.

By following these steps, you’ll be able to quickly assess your financial health to increase your chances of being approved for the loan and determine whether you’re ready to apply for a mortgage.

19 May 2023
By Kevin Gahagan

Important Things You Should Know About Land Surveys

Mortgage Tips

Important Things You Should Know About Land SurveysA land survey is an essential tool that is used to determine the exact boundaries of a piece of land or property. It is often required when buying, selling, or dividing land, and is also important for resolving property line disputes.

Process: The process of land surveying typically involves a licensed surveyor visiting the property to take precise measurements and create a detailed map or plan of the land. This may include identifying any physical features of the property, such as trees, buildings, or natural landmarks, as well as any easements or encroachments.

Types: There are several different types of land surveys, each with its own specific purpose. For example, a boundary survey is used to establish property lines, while a topographic survey is used to map the physical features of the land. Other types of surveys include ALTA/NSPS surveys, subdivision surveys, and construction surveys. It is important to select the appropriate type of survey based on the specific needs of your project or property.

Land Surveys Can Be Used For Insurance Purposes

Land surveys can be used for insurance purposes. A land survey can provide valuable information about the physical characteristics of a property, such as the location of buildings, trees, and other features. This information can be used by insurance companies to assess the risk of insuring the property and to determine appropriate coverage and premiums.

For example, if a property is located in a flood zone, a land survey can identify the exact location and elevation of the property, as well as any nearby bodies of water or drainage patterns. This information can be used by insurance companies to assess the risk of flooding and to determine appropriate flood insurance coverage.

Similarly, if a property is located in an area prone to wildfires, a land survey can identify the location of any vegetation, structures, or other features that may increase the risk of fire damage. This information can be used by insurance companies to assess the risk of fire and to determine appropriate coverage and premiums.

Does a fence help a land survey?

Yes, a fence can help a land survey by providing a physical marker of the property boundary. A land surveyor can use the fence to determine the location of the property line and ensure that the fence is placed within the boundaries of the property. This can be particularly useful in situations where the property line is not clearly defined or where there may be disputes over the location of the boundary.

It is important to note that a fence alone is not sufficient to establish the legal boundary of a property. In order to accurately determine the property line, a land surveyor will need to conduct a thorough survey that considers all available evidence, including property records, physical markers, and other relevant factors. Additionally, it is possible for a fence to be installed in the wrong location, either intentionally or accidentally, which can result in boundary disputes and other legal issues. Therefore, while a fence can be a useful tool in a land survey, it should not be relied on exclusively to determine the property boundary.

Overall, a land survey can provide valuable information for many purposes and can help property owners make informed decisions about insurance coverage and risk management.

18 May 2023
By Kevin Gahagan

What is a Bridge Loan and How Does it Work?

Mortgage

What is a Bridge Loan and How Does it Work?A bridge loan, also known as interim financing, is a short-term loan used to provide temporary financing until a borrower secures long-term financing or sells an asset. Bridge loans are commonly used in real estate transactions, such as when a buyer needs to close on a new home before selling their current home.

Bridge loans are typically secured by the borrower’s current property, which serves as collateral. The amount of the loan is determined by the equity in the borrower’s property and the value of the property they are purchasing. The loan is intended to bridge the gap between the purchase of a new property and the sale of the existing property.

Bridge loans often have higher interest rates and fees than traditional loans, due to their short-term nature and the increased risk associated with them. They may also require a lower loan-to-value ratio, which means that the borrower may need to put down a larger down payment to secure the loan.

Once the borrower secures long-term financing or sells their existing property, they can use the proceeds to pay off the bridge loan. In some cases, the borrower may choose to refinance the bridge loan into a traditional mortgage if they are unable to sell their existing property within the loan term.

Requirements for A Bridge Loan

The specific requirements for a bridge loan can vary depending on the lender and the purpose of the loan, but there are a few general requirements that borrowers should be aware of:

Collateral: A bridge loan is typically secured by collateral, which is often the property being purchased or the borrower’s current property. The lender will require a valuation of the collateral to determine the loan amount.

Creditworthiness: Although bridge loans are often easier to qualify for than traditional loans, lenders will still look at the borrower’s credit history and credit score to determine their ability to repay the loan.

Exit strategy: Lenders will want to see a clear plan for how the borrower intends to repay the loan. This could include selling the existing property, securing long-term financing, or other means.

Loan-to-value ratio: Bridge loans typically require a lower loan-to-value ratio than traditional loans, which means the borrower may need to provide a larger down payment to secure the loan.

Fees and interest rates: Bridge loans often come with higher fees and interest rates than traditional loans due to the increased risk and short-term nature of the loan. Borrowers should be aware of these costs when considering a bridge loan.

It’s important for borrowers to carefully consider their financial situation and their ability to repay the loan before taking out a bridge loan. Consulting with a financial advisor or a reputable lender can also help borrowers determine if a bridge loan is the right option for them.