16 Dec 2020
By Kevin Gahagan

Getting A Lower Interest Rate During A Refinance

Mortgage

Getting A Lower Interest Rate During A RefinanceThere are a lot of people who have spotted the record-low mortgage rates right now and are wondering if they can refinance successfully. While many people apply for a refinance of their current home loan, not everyone will be approved. Furthermore, a home refinance is not the best option for everyone. Those who want to qualify for record-low refinance rates need to keep a few key points in mind.

Be A Strong Refinance Candidate

First, homeowners need to make sure that it is actually worth their time to refinance to a lower home mortgage rate. In general, homeowners want to make sure they are able to save at least three-quarters of a percentage point when compared to their current home loan to make a refinance worth their while. If they cannot save this much money on their home loan, then they may end up spending more money on the refinance in closing costs.

Act Quickly

The real estate market is volatile right now. Therefore, home refinance rates are often moving targets. As a result, the interest rates that are published this week could change in the span of a few days. By the time loan packages are returned to the lender, the rates might not even be accurate anymore. Therefore, all homeowners need to be willing to act fast. Have pay stubs, bank statements, and tax returns ready to go when the lender asks for it.

Have The Money For Closing Costs

One of the most common reasons why homeowners lose out on the best interest rates is that they do not have the money ready to pay closing costs. By the time the homeowners get the money together, the refinance rate might have passed them by. Usually, closing costs fall somewhere between two percent and five percent of the total loan amount and this amount is usually due at signing.

Qualify For The Best Mortgage Rates During A Refinance

With mortgage rates falling to record lows, now is a good time for many homeowners to refinance. On the other hand, homeowners need to set themselves up to qualify for the lowest mortgage rates. Following these steps can place homeowners in a position to be successful when they apply for a refinance.

05 Dec 2019
By Kevin Gahagan

Should You Get A Second Mortgage To Pay For College?

Mortgage

Should You Get A Second Mortgage To Pay For CollegeCollege is expensive and everyone needs to think about how they are going to cover the costs. Some of the costs include tuition, room and board, meals, books, and spending money.

In order to pay for college, some people consider taking out a second mortgage instead of taking out a student loan. How can someone know if taking out a second mortgage is the answer for them? There are several factors to consider.

The Interest Rate

One of the factors that people need to consider is the interest rate on the second mortgage. The higher the interest rate, the more expensive the second mortgage is going to be.

The total cost of the second mortgage, including the interest rate, points, origination fees, and other expenses, must be weighed against the cost of attending college, which often comes in the form of a student loan. Which is going to be more cost-effective? The second mortgage or the student loan?

The Size Of The Loan

Another factor to consider is the size of the loan. Ultimately, the size of the loan is going to impact the final cost of attending college. The larger the loan, the more someone will have to pay in terms of interest. The size of the student loan should be compared to the cost associated with a second mortgage. 

The Tax Implications

Another aspect people need to consider is the tax implications. The interest on a first mortgage is tax-deductible. This is often the largest tax deduction that someone claims. People might assume that the interest on their second mortgage is going to be tax-deductible as well.

Unfortunately, this isn’t always the case. Interest on a second mortgage is tax-deductible only if the proceeds from that mortgage are going to be used to pay for the property. If they are being used to pay for education, they are not tax-deductible.

People need to compare the tax implications of a student loan versus the implications of a second mortgage.

Using A Second Mortgage To Pay For College

These are a few of the factors that everyone needs to think about when trying to finance the cost of higher education. These decisions can have significant impacts on someone’s financial future.

Consult with your trusted home financing professional for a review of your personal situation. They can guide you through the process to make the best decision for your family.

13 Mar 2019
By Kevin Gahagan

6 Ways to Fight Foreclosure

Mortgage

6 Ways to Fight ForeclosureSometimes, things don’t go as planned. Despite the best intentions, there are times when it’s impossible for homeowners to fulfill their mortgage obligations. When your misfortune turns into a foreclosure notice, these tips will help you control the situation and realize the best outcome.

Work With Your Lender

Open the lines of communication with your lender to stall the foreclosure process.

  • Call your lender and explain your predicament. Give them specific details about the nature and estimated length of your circumstances. Many lenders are willing to temporarily modify payment terms to temporarily accommodate certain hardships.
  • Apply for a loan modification. If your credit rating has improved or market values have shifted in your area, it’s possible to negotiate friendlier terms that lower your monthly payments.
  • A forbearance allows you to pause or drastically reduce your mortgage payments for a short period. However, you’ll have to pay everything owed in a lump sum or via larger monthly installments.

It is in your lender’s best interest to keep you in your home. Contact them early to avoid unnecessary issues.

Take Legal Action

Keep the law on your side to ensure you have the best chance at keeping your home.

  • If you believe your foreclosure is unlawful or in error, you will have the chance to present your case in court. Respond in writing to the official foreclosure complaint as soon you receive it. This eliminates quick default judgments.
  • Talk to a lawyer about your case. Even if you can’t afford to retain one for the trial, invest in a short sit-down session with a knowledgeable legal representative to get the facts straight and ensure you’re ready to present your defense.
  • Personal bankruptcy is a final strategy for saving your home. Most chapter 7 and 13 filings allow you to keep your primary residence while reorganizing your debt.

Foreclosure is less of a threat when you understand the laws and procedures that govern the process. Educate yourself on your legal options.

A temporary setback doesn’t have to ruin your entire life. With these tips, you won’t have to lose your dream to foreclosure.

Contact your trusted home mortgage professional to discuss current financing options.

12 Mar 2019
By Kevin Gahagan

Is Now a Good Time to Cash Out Your Home Equity?

Mortgage

Is Now a Good Time to Cash Out Your Home EquityFor many Americans, their home is their primary investment. The equity stored in your residence can be a source of available cash for home repairs, upgrades, or for financing the purchase of investment properties. However, few homeowners really understand the process that results in home equity. 

What Is Home Equity?

Your monthly mortgage payment goes towards two different amounts. The first is the interest that you pay for the loan. The other is your principal payment or the amount that counts against the initial amount that you borrowed for the purchase. Depending on the details of your loan contract, each payment is generally split between these two types of charges.

Over time the amount that you’ve paid towards the loan’s principal grows your equity position. With each payment, your equity grows as well. Once enough equity is accrued, many lenders allow homeowners to access those funds via an equity line of credit, home equity loan or a cash-out refinance. 

You’ll have to pay interest on any monies you withdraw from the second mortgage or higher loan amount upon your refinance. With home equity lines, however, these loans only charge interest on the money that you actually use. You can secure a home equity line of credit for a certain amount and not be liable for a penny in interest until your first withdrawal.

How Can You Calculate Potential Equity?

There are 4 main factors to consider when calculating your home’s equity.

  • Home value.
  • Monthly mortgage payments.
  • Down payment.
  • Any liens or additional mortgages on the property.

Imagine your home is currently valued at $300,000. With cash down payment of 20%, your home’s starting equity is equal to your initial $60,000 payment. Each payment slowly increases your equity until you have full financial ownership of your home.

Talk to your lender to understand how interest in applied to each payment. For fixed rate loans, you can easily figure out how much of your mortgage payments are immediately applied to the loan’s principal. An easy way to see this equity build up on a monthly basis is to reference an amortization schedule. Your lender should be able to provide this for you at no charge.

For property owners with liens and additional mortgages, add the value of those items to what’s still due on your primary mortgage loan before completing the calculations.

Home equity is a flexible financial tool that you can use to improve your property, expand your business, or treat yourself to something special. Plan carefully to get the most out of your home equity line of credit.

If you are interested in a refinance or a home equity loan, be sure to contact your trusted home mortgage professional.