Tuesday, December 22, 2020

Loans And Mortgage

Loans And Mortgage

What Heirs Should Know About Reverse Mortgages When The Owner Dies

Posted: 22 Dec 2020 05:12 AM PST



For more information regarding reverse mortgages of deceased owners, call Attorney Williams at 786-831-9483. For help with creating your personal estate plan …

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Interest Only Mortgage Calculator Video

Posted: 22 Dec 2020 05:09 AM PST



Detailed explanation of the FREEandCLEAR.com Interest Only Mortgage Calculator which allows you to determine your initial monthly payment, potential future …

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Can You Refinance A USDA Loan?

Posted: 22 Dec 2020 05:07 AM PST

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Can you refinance a USDA loan?

USDA loans — mortgages backed by the U.S. Department of Agriculture — can be refinanced just like any other home loan.

As long as your credit is decent and your loan payments are up to date, you should be able to refinance into a lower rate and monthly payment.

Qualified homeowners can even skip the credit and income approval step using the USDA Streamline program.

The main challenge to refinancing a USDA loan is that not all mortgage lenders offer them. So shop around to find a few lenders that do, and compare interest rates to get the best deal on your new loan.

Check your USDA refinance options (Dec 22nd, 2020)

In this article (Skip to…) 

USDA refinance options

Refinancing a mortgage involves applying for a new home loan to replace your existing home loan. 

Most homeowners refinance to lock in a lower mortgage rate and reduce their monthly payments.

But refinancing can also help you:

  • Cash-out home equity
  • Stop paying for mortgage insurance
  • Switch loan programs
  • Pay off your house sooner
  • Remove someone's name from the loan

If you currently have a USDA home loan, you have several refinance options. The right one for you will depend on your end goal.

It also depends on what type of loan you can qualify for based on your credit, home equity, and current loan standing. Here's what you should know.

USDA Streamlined-Assist Refinance

A USDA Streamlined-Assist Refinance is a simplified refi process. It's usually the best option if you're looking to lower the rate and payments on your home loan. 

The big benefit to a USDA Streamlined-Assist Refi is that there's no credit approval required.

That means the lender doesn't have to verify your credit score, credit report, or debt-to-income ratio. (Though some do anyway, so ask about a lender's guidelines before applying.)

With the Streamlined-Assist refinance, you might qualify for a lower interest rate even if your finances aren't in the best shape.

In addition, you can refinance your home with little or no equity. There's no home appraisal required, so you may be able to refinance even if your home's value has fallen and the new loan amount exceeds it.

To qualify, the refinance must reduce your monthly payment by at least $50.

USDA Streamlined-Assist Refinance requirements include:

  • No new credit check or debt-to-income requirements
  • Refinancing the mortgage must reduce the monthly payment by at least $50
  • Borrowers can finance the principal, interest, closing costs, and upfront guaranteed fee into the new loan balance
  • The current USDA loan must be paid on time for 12 consecutive months prior to the refinance request
  • One original borrower must remain on the new loan
  • A new appraisal is only required when a direct loan borrower receives a subsidy

Check your eligibility for a USDA Streamlined-Assist Refi (Dec 22nd, 2020)

USDA Streamlined Refinance

Similar to the Streamlined-Assist Refinance, the Streamlined Refinance doesn't require a new appraisal (unless you're a direct borrower who receives a subsidy).

The difference is that this option requires credit approval. Your lender will need to check your credit report, credit score, and income before approving your refinance.

Guidelines for the USDA Streamline Refinance include:

  • Borrowers must meet the USDA's credit and income eligibility requirements
  • Borrowers can finance the principal, interest, closing costs, and upfront guaranteed fee into the new loan balance
  • The current USDA loan must be paid on time for 180 consecutive days prior to the refinance request
  • The borrower must have had the current mortgage for at least 12 months prior to the refinance request
  • One original borrower must remain on the new loan, with an option to add a new borrower
  • A new appraisal is only required when a direct loan borrower receives a subsidy

Verify your USDA Streamline Refinance eligibility (Dec 22nd, 2020)

USDA non-streamlined refinance

USDA loan holders also have the option to do a traditional, or non-streamlined refinance.

A USDA non-streamlined refinance requires a new appraisal, full income review, and credit check.

However, this is an option if you want to avoid the $50 monthly payment reduction requirement.

Guidelines for a traditional USDA refinance include:

  • Borrowers must meet the USDA's credit and debt-to-income requirements, subject to full underwriting
  • Borrowers can finance the principal, interest, closing costs, and upfront guarantee fee into the new loan balance (up to the new appraised value)
  • The current mortgage must be paid on time for 180 consecutive days prior to the refinance request
  • The borrower must have had the current mortgage for at least 12 months prior to the refinance request
  • One original borrower must remain on the loan, with an option to add a new borrower


USDA-to-conventional refinance

For some homeowners, it will make more sense to refinance out of their USDA loan and into a different loan type — usually, a conventional loan.

There are three main reasons you might refinance from a USDA mortgage to a conventional loan.

  1. To remove mortgage insurance
  2. To shorten the loan term
  3. To cash-out home equity

To refinance from a USDA loan into a conventional one, most lenders will require at least 3% equity.

If your goal is to remove mortgage insurance, you'll need at least 20% equity.

The lender will require a new home appraisal to compare your home value to your current loan balance to arrive at available equity.

You must meet also meet debt-to-income requirements for a conventional loan as well as the minimum credit score requirement, which is typically 620.

Check your conventional refi eligibility (Dec 22nd, 2020)

Remove mortgage insurance

All USDA borrowers pay an upfront guarantee fee and a monthly guarantee fee. 

The monthly guarantee fee is a form of mortgage insurance. This is similar to private mortgage insurance (PMI) with a conventional loan. 

The difference, though, is that conventional home lenders waive PMI once a property has about 22% equity. Mortgage insurance with a USDA is for the life of the loan. 

However, once your property has 20% equity, you can refinance your USDA loan to a conventional loan and eliminate mortgage insurance.

This will lower your payments and total loan costs by removing the extra MI charge on your monthly mortgage bill.

Shorten the loan term

USDA only allows refinancing into a 30-year, fixed-rate loan.

For homeowners who have had their current loan a long time, starting over at 30 years might actually increase their total interest costs.

To lower your total costs, or even pay off the loan sooner, you might refinance into a conventional loan. Conventional mortgage terms allow 20-, 15-, and even 10-year loans.

However, the monthly payment on a shorter loan term is significantly higher. So this is not the right move for someone looking to lower their monthly payment.

Cash-out refinance

Some people refinance and borrow cash from their equity, which is known as a cash-out refinance.

But while conventional, VA, and FHA loans allow cash-out refinancing, USDA loans do not.

In order to tap home equity, you'll likely have to refinance from a USDA loan to a conventional one. You'll need at least a 620 credit score and more than 20% equity to make the cash-out refi worthwhile.

Homeowners with credit below 620 but more than 20% equity might use the FHA cash-out mortgage. But be warned that FHA loans come with higher upfront and annual mortgage insurance premiums than USDA loans. So your payments may actually increase.

Check your cash-out refinance eligibility (Dec 22nd, 2020)

Pros and cons of a USDA home loan refinance

Refinancing from one USDA loan to another can be a good idea, especially if all you want is a lower rate and payment.

Pros of a USDA refinance:

  • Streamlined Refinancing is typically faster, easier, and cheaper than a traditional refinance
  • No new appraisal for a Streamlined Refinance means you don't need any home equity to qualify
  • USDA's upfront guarantee fee is cheaper than FHA's upfront mortgage insurance
  • USDA loans often have lower interest rates than conventional loans
  • You can refinance a USDA loan if you're underwater, meaning you owe more than the value of your home
  • A high debt-to-income ratio and low credit score isn't an issue with a USDA Streamlined-Assist Refinance
  • You can roll closing costs into your new loan balance and eliminate this out-of-pocket expense

However, depending on your credit and financial goals, a different refinance option might make more sense.

Cons of a USDA home loan refinance:

  • You can't cash out your home equity
  • You can't shorten your loan term; you can only choose a 30-year, fixed-rate loan with a USDA refinance
  • USDA loans have higher minimum credit requirements. You need a minimum credit score of 640, compared to a minimum score of 620 for a conventional loan and 580 for an FHA loan
  • Refinancing a USDA loan requires paying the 1% upfront guarantee fee again

I was told I can't refinance my USDA loan?

Maybe you contacted a lender advertising low rates, only to be told you can't refinance your USDA loan.

There are a number of reasons this might happen.

For one, the lender simply might not offer USDA home loans. Not all lenders do, so you'll have to shop around for one that does.

The good news is that you won't have to look far. Many banks, credit unions, mortgage companies, and online lenders are approved to originate these loans nationwide.

For starters, you can check out the USDA's list of approved lenders by state. 

If you meet the requirements for a USDA refinance but a lender denies you, try again with a different company.

You might also run into issues if you don't meet the basic requirements of your chosen refinance program. 

For example, a lender might deny your Streamlined Refinance if your mortgage is less than 12 months old or you haven't made payments on time.

Or, maybe you're trying to refinance a USDA loan to a conventional loan without enough equity. 

Speak with the lender to figure out the exact problem. If you're unable to refinance at this time, you might be eligible in the next 6 to 12 months.

If you meet the requirements listed above but a lender still denies your refinance, try again with a different lender.

Mortgage companies can set their own lending requirements, so there's a chance you find one willing to refinance your mortgage even though the first lender you spoke with wouldn't.

Check your USDA refinance options (Dec 22nd, 2020)

USDA refinance FAQ

How soon can you refinance a USDA mortgage?

If you're refinancing a USDA loan to another USDA loan, your existing mortgage typically needs to be at least 12 months old (with on-time payments for the past 6 months).

If you want to switch from a USDA loan to a conventional loan, you may be able to refinance right away.

However, you'll likely need a minimum of 3% equity in the home. So you might have to wait to refinance if you took advantage of USDA's zero-down-payment allowance.

Does PMI go away on a USDA loan?

USDA loans don't have private mortgage insurance or 'PMI.' But borrowers do have an annual fee (paid in installments monthly) that acts as mortgage insurance. This fee lasts for the life of a USDA loan. 

Once the home has at least 20% equity, you may be able to refinance your USDA loan to a conventional loan and get rid of your mortgage insurance.

What is a USDA Streamlined Refinance?

A USDA Streamlined Refinance is a simplified refinance program that often doesn't require a credit check, income verification, or home appraisal. It's a good option for simple rate-term refinances on existing USDA loans.

If you're underwater or have little to no equity, you can apply for the USDA's Streamlined-Assist Refinance program.

Does USDA allow cash-out refinancing?

USDA home loans don't allow cash-out refinancing. If you're looking for a cash-out refinance, you'll need to refinance your USDA mortgage into another type of home loan, such as a conventional loan.

Do USDA loans cover closing costs?

To reduce homeowners' out-of-pocket costs, the USDA allows borrowers to roll closing costs into the new loan balance for Streamlined and non-Streamlined refinances. This is usually not an option for home buyers (unless your home value is greater than your purchase price) — only refinancers.

How much equity do you need to refinance a USDA loan?

USDA loan refinance programs don't have a loan-to-value ratio limit, so the program allows borrowers to refinance even with little to no equity. If you're underwater, you'll need to apply for a Streamlined-Assist Refinance.

To refinance a USDA loan to a conventional loan, the lender may require a minimum 3% equity. You'll need at least 20% equity to eliminate mortgage insurance.

Why would a USDA loan get denied?

Lenders can deny a USDA refinance for a variety of reasons. For example, if your new loan payments aren't reduced by at least $50 per month, you wouldn't meet the threshold for USDA's Streamlined Refinance program.

Lenders might also deny your refinance if you haven't had the existing USDA loan for at least 12 months.

And keep in mind that some USDA refinance programs require a new review of your credit and debt-to-income ratio. If your credit score falls below 640, or if your debt-to-income ratio exceeds 41%, the lender might deny your application.

Can you refinance out of a USDA loan?

Yes, you can refinance out of a USDA loan to another type of loan, including conventional, FHA, or VA. Different mortgages have different requirements, so you must meet the minimum requirements of the new loan program. 

Your equity, credit score, debt-to-income ratio, and loan-to-value ratio influence whether you're able to qualify for another type of mortgage. 

What are today's USDA refinance rates?

Mortgage rates are low across the board, and USDA loan rates are no exception.

If you're eligible for a USDA Streamlined Refinance, you may even be able to lower your rate without the hassle of a credit check or home appraisal.

Check your rates and eligibility to see what you qualify for.

Verify your new rate (Dec 22nd, 2020)

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Social Media Marketing For Mortgage Brokers

Posted: 22 Dec 2020 04:43 AM PST



In episode 010 of FundLoans’ The Mortgage Minute, CEO of FundLoans, Jon Maddux, sits down with social media expert, Tanner Helm, to shed light on how …

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How To Find The Best Home Loan Rate In 2020 (Australia)

Posted: 21 Dec 2020 03:11 PM PST



How to find the best home loan rate in 2020 (Australia) // 2020 has arrived, so how do you make sure you’re on the best interest rate possible this new year?

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Reverse Mortgage Myths | The Truth about Reverse Mortgages | Part 1

Posted: 21 Dec 2020 12:30 PM PST



Reverse mortgage myths are very common. Reverse mortgages are different than a traditional forward mortgage, therefore many people are afraid of them.

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The Interest Only Epidemic

Posted: 21 Dec 2020 12:28 PM PST



RealEstate #Economy #HeiseSays A potential epidemic of interest-only loans is about to reset. Will this affect the housing market? My Kit Rodes Podcaster …

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First-Time Home Buyer Grants & Loans

Posted: 21 Dec 2020 12:25 PM PST

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Being a first-time home buyer has its perks

As a first-time home buyer, you'll
have access to special mortgage programs with low down payments and flexible
guidelines.

You might even be in line for a grant to help with your down payment and closing costs.

First-time home buyer grants are available in every state. If you've got decent credit but you're low on cash, you just might qualify for one.

Check your home buying options (Dec 21st, 2020)

In this article (Skip to…)

How to find first-time home buyer grants

As a first-time home
buyer, coming up with cash for the down payment and closing costs is one of the
biggest hurdles.

Luckily, there are grants and loans available to help home shoppers become homeowners.

The best way to determine if
you're eligible for any grants or assistance is to reach out to the housing
authority in the town or city where you want to purchase a home.

Down payment grants and closing cost
assistance generally aren't widely advertised, so be sure to ask around.

  • Your real estate agent could help you find local grant programs. An experienced Realtor has likely worked with other borrowers who need a little help to get into their new home
  • Your loan officer can also help you find down payment and closing cost assistance. In particular, they can suggest programs the lender is willing to work with and has used in the past
  • If you work in the public sector, ask your employer.  In some areas, nonprofits have grant programs to help law enforcement officers, teachers, or emergency medical technicians, for example

Many grant programs are also income-based, and many require borrowers to take a homebuyer education course to learn about homeownership and mortgage borrowing.

You may have to do some digging on your own to locate
resources available to you and for which you qualify.

Verify your first-time home buyer eligibility (Dec 21st, 2020)

How to qualify for first-time home buyer grants

The requirements to qualify for a first-time home buyer grant depend on the programs available where you live.

"Every state in the country has a housing
finance agency, and all offer special programs for
first-time buyers," says Anna DeSimone,
author of Housing Finance 2020.

She explains that first-time home buyer assistance typically
comes in one of two forms:

  1. First-time home buyer grants — Money towards your down payment and/or closing costs that does not have to be repaid
  2. First-time home buyer loans — Money towards your down payment and/or closing costs that's either repaid at a very low interest rate, or does not have to be repaid until you sell the home or refinance. First-time home buyer loans may even be forgiven (meaning, they don't have to be repaid) if the buyer stays in the home a set number of years

DeSimone notes that agencies
typically offer grants around 4% of the home's purchase price.
"And many programs also provide additional assistance to cover closing costs."

Of course, whether or not you
qualify for a first-time home buyer grant will depend on local guidelines.

Angel Merritt, mortgage manager with Zeal Credit Union, explains that each of these programs has different qualification requirements.

"Typically, you'd need a 640 minimum
credit score. And income limits may be based on family size and property
location," says Merritt.

First-time home buyer loan programs

Plenty of home loan programs cater
to first-time
buyers. Many of these programs have
looser guidelines to accommodate borrowers with lower credit, income, or down
payments.

Here are the basic requirements to
qualify for some of the most popular first-time home
buyer loans:

First Time Home Buyer Loan How to Qualify
FHA Loan 3.5% down payment, 580 FICO credit score minimum, 50% DTI (debt-to-income) ratio maximum. No income cap. 1-, 2-, 3- and 4-Unit properties are eligible
Conventional 97 Loan 3% down payment, 620-660 FICO credit score minimum, 43% DTI maximum, must be a single-family property. No income caps
Fannie Mae HomeReady Loan 3% down payment, 660 FICO credit score minimum, 45% DTI maximum, 97% LTV maximum, annual income can't exceed 100% of median income for that area
Freddie Mac Home Possible Loan 3% down payment, 660 FICO credit score minimum, 45% DTI maximum, 97% LTV maximum, annual income can't exceed 100% of median income for that area
VA Home Loan 0% down payment, 580-660 FICO credit score minimum, 41% DTI maximum, must be a veteran, active duty service member, or un-remarried spouse of KIA/MIA veteran
USDA Home Loan 640 FICO credit score minimum, 41% DTI maximum, annual income can't exceed 115% of the US median income, must buy in eligible rural areas
FHA 203(k) Rehab Loan 3.5% down payment, 500-660 FICO credit score minimum, 45% DTI maximum, $5,000 minimum rehab costs

Not all the rules listed above are
necessarily set in stone.

For example, you might be able to
qualify for an FHA loan with a credit score as low as 500, as long as you can
make a 10% down payment.

Or you might qualify for a Fannie Mae loan with a debt-to-income ratio as high as 50%, instead of 43%. But you'll need other compensating factors (like a bigger savings account) to qualify.

So explore your loan options. Even
if you have special circumstances, it's likely easier to qualify as a first-time home
buyer than you think.

Check your home loan options (Dec 21st, 2020)

Who is
considered a first-time home buyer?

Anyone buying their very first
home is automatically a "first-time buyer."

But repeat buyers can sometimes qualify as first-time home buyers, too, letting them qualify for special loan programs and financial assistance.

"Under most programs, a first-time home buyer is a person who has not had any ownership in the past three years," says Ryan Leahy, Sales Manager at Mortgage Network, Inc.

If you haven't owned a home in the past 3 years, you're considered a first-time home buyer

Nonprofits and local governments, which offer the majority of
first time home buyer grants, use this three-year rule to define first-time
homeownership.

That's especially good news for
"boomerang buyers" who owned a home in the past but went through a short sale,
foreclosure, or bankruptcy.

Under the three-year rule, these people have an easier road back to homeownership through first-time home buyer grants and loans.

Advice for
first time home buyers in today's market

In general, first-time buyers need to verify at least two years of income and steady employment to qualify for a home loan. Though there may be ways to qualify with less than two years of employment.

Home buyers should also keep a close eye on their credit.

Although FHA allows credit scores as low as 580, lenders may set their own, tougher guidelines. 

And credit requirements may be subject to change from time to time, as we saw at the height of the COVID pandemic. 

"Some lenders who previously accepted a 580 credit score for an FHA loan have increased that minimum to 620 to 660," says Randall Yates, CEO of The Lenders Network.

"If you have any credit issues,
I'd recommend using all the extra time we have during this shutdown to get your
credit in order."

To improve your credit score, try:

  • Calling your
    credit card company and request an increase in your credit line
  • Keeping your
    balance below 30% of your allowed credit limit
  • If you
    can't pay a bill on time, call your credit card company and ask for a deferral
    of payments without a negative report to your credit agency

And remember — first time home
buyer or not, you might find lenders willing to offer some flexibility with
their guidelines.

Especially if you're right on the edge of
qualifying for a mortgage, make sure you shop around and ask plenty of
questions before settling on a loan.

And don't be afraid to ask questions
about the qualification requirements, suggests Merritt. "If your loan
professional isn't willing to explain everything, find another lender."

Verify your home buying eligibility (Dec 21st, 2020)

Helpful information for first-time home
buyers

As a first-time home buyer, you'll learn a lot about the
mortgage process as you go.

But there are a few things all first-time home buyers should
be aware of before getting started.

Conventional loans vs. government loans

Conventional loans are what most of us associate with a mortgage.

Backed by Fannie Mae and Freddie Mac, conventional loans
typically offer low rates and affordable mortgage insurance — especially for
borrowers with high credit.

But many first-time home buyers end up taking out subsidized
mortgage loans. These include FHA, VA, and USDA mortgages.

Government backing for subsidized loans helps lenders offer
low rates and low down payments — even to borrowers without great credit.

  • FHA loans are the most common government-insured loans. They're backed by the Federal Housing Administration, and allow credit scores starting at 580 with a down payment of just 3.5%
  • VA loans are generally the best option for veterans and service members. They allow zero down payment and come with exceptionally low rates. Only veterans, active-duty service members, and their qualifying surviving spouses can get a VA loan
  • USDA loans, backed by the U.S. Department of Agriculture, also allow no-down-payment financing. However, they're restricted to low-income and moderate-income buyers in rural areas

Subsidized loans are designed to help homebuyers purchase or
refinance a primary residence; they're not intended for vacation homes or
investment properties.

It's also important to remember the government does not lend
the money to home buyers. Rather, it insures loans provided by approved
lenders.

Lenders offering FHA, VA, and USDA loans can apply their own
underwriting criteria. This means requirements and rates vary by lender — so
it's important to shop around for your best offer.  

Mortgage insurance

Most home loan types require mortgage insurance if the
borrower puts down less than 20%.

Mortgage insurance helps protect the lender in case you default on the loan. It's paid for by the borrower.

The type of mortgage insurance depends your loan type and
down payment.

  • Conventional loans require private mortgage insurance (PMI), but only if the loan-to-value
    ratio (LTV) exceeds 80%. That means a 20% down payment lets you avoid PMI
  • FHA loans require upfront and ongoing mortgage insurance premium (MIP).
    Unless you put down at least 10%, MIP payments continue throughout the life of
    the loan. If you make a 10% down payment, MIP continues for 11 years
  • USDA mortgage insurance works like FHA MIP, with both an upfront
    and annual fee. But USDA mortgage insurance rates are lower
  • VA loans do not require ongoing mortgage
    insurance, but they do charge an upfront 'funding fee' which can be rolled into
    the loan amount

Mortgage insurance sometimes gets a bad rap, but the cost is often
worth it if it allows you to secure a new home loan at today's low interest
rates.

Other monthly costs

Your housing costs will include more than repaying your
mortgage loan and interest.

Monthly mortgage payments also include:

  • Property taxes: Your mortgage loan servicer can
    split your annual property tax bill into 12 installments, with one added to
    each month's payment. That will help you avoid a big bill from your county
    every 6 or 12 months.
  • Homeowners insurance: Lenders require homeowners' insurance
    in case the property is damaged. Insurance companies charge premiums annually,
    but once again, your loan servicer can split up the cost and spread it across
    all 12 months
  • Mortgage insurance: Mortgage insurance is also paid
    monthly. Upfront mortgage insurance, if required, could be added to your loan
    amount which would affect your monthly payments

When combined, these costs could add several hundred dollars
a month to your mortgage payment — so it's important to include them in your
budget. 

What are
today's mortgage interest rates?

A first-time home buyer grant or loan could help cover your
down payment and closing costs, and remove your final hurdle to homeownership.

Combined with today's low interest rates, these programs are making homeownership more accessible and affordable than ever.

Verify your new rate (Dec 21st, 2020)

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What does a Mortgage Broker do?

Posted: 21 Dec 2020 12:01 PM PST



Colton and Alex discuss what mortgage brokers do, and how they can benefit you. Calgary Mortgage Guys are powered by Canada Mortgage Direct.

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