Tag Archives: Mortgage
A loan is a lump sum of money that you borrow with the expectation of paying it back at once or over a period of time with interest. Loan amount and interest may vary depending on your income, debt, credit history, and other factors.
The reasons why you would want a loan may differ. Some needs it to buy a new home, while others will use it for a new car. Whatever your reasons may be, you need to be familiar with the different loan options available to you to make an informed decision.
Secured loans require a collateral so you would need to leverage a personal property or asset in order to acquire one. And since there is a collateral, interest rates are also often lower for secured loans. But, it’s not that easy as your assets are often appraised to confirm its value and you are only allowed to borrow the amount it was assessed for. Getting title loans from reputable lenders, such as Easytitleloansutah.com, for houses and vehicles are a good example of a secured loan. Defaulting on a secured loan will result in the confiscation of your property or asset.
It is more difficult to qualify for unsecured loans and interest rate may be higher as these kinds of loan do not need an asset for collateral. Qualifying for unsecured loans will require that you have a good income and exceptional credit history. A solid payback plan is also an advantage. If you default on this, be ready for a lawsuit.
Conventional loans can be classified as mortgage loans from mortgage lending institutions not insured by a government agency, such as the Federal Housing Administration (FHA), Rural Housing Service (RHS), or the Veterans Administration (VA). These loans may be conforming or non-conforming. Conforming loans follow the guidelines set by Fannie Mae and Freddie Mac while non-conforming loans do not.
You can avail of these loans repeatedly, however, there is a fixed credit line limit. Once you’ve reached the credit limit in question, you need to pay the amount first before you can borrow again. Credit cards are a good example of these loans.
Close-ended loans, unlike open-ended loans, can only be borrowed one time. Your loan balance decreases for each payment you make but your credit line does not replenish. The only way to borrow again is to go through the whole loan process again.
Before applying for any type of loan, make sure that you arm yourself with the right information to avoid costly problems later on.
Mortgage rates are volatile and if you’re planning to buy a home or to refinance one, you will want to know what the future holds for mortgage rates. Rates are known to change on a daily, and even hourly basis. Since all home buyers are looking for the lowest rates, this nature is bound to cause anxiety.
Here are some trends for mortgage rates for the rest of 2016.
Past predictions for 2016
The good news is that all the predictions in 2015 for rates in 2016 have thus far been wrong. The rates were predicted to rise but haven’t done so and are at a 3-year low. It has varied between 3.5% and 4.25% in the first half of 2016. In fact, the rates have been displaying a downward trend for most part of the year. Mortgage rates are affected by economic factors like employment rates, GDP, the stock market, home sales, Federal Reserve policy changes, oil prices and Britain’s exit from the EU.
What could affect interest rates?
Geopolitical unrest and changes in the political landscape are other factors likely to affect rates. The US Presidential race and China’s banking woes are also likely to influence it. Rates will increase or decrease depending on how these economic factors improve or deteriorate. Of course, this applies to local circumstances as well, such as in Salt Lake City, where mortgage rates are at an all-year best, claims Altius Mortgage Group.
Some players in the market predict that the rates will rise marginally in the 4% – 4.625% range. The market generally agrees that the rates will rise gradually towards the close of the year. Others, however, say that you cannot predict the rates based on what has happened in the first half of the year.
Meanwhile, still others opine that it is unlikely that the world or the US will improve dramatically to drive up mortgage rates and that should be good news for home buyers, at least.
Mortgage refinancing brings many benefits to the table. It lets you snag today’s record-low rates and even turn your property into an ATM by tapping into your home equity. But despite the fresh start it offers, it’s not without downsides, particularly in the credit department.
According to an expert from Altius Mortgage Group, many homeowners are not aware that applying for a mortgage refinance in Utah and other parts of the country may affect their credit rating. The extent of damage varies, but you need to remember these to minimize its impact:
Avoid Being a Serial Refinancer
When you apply for a refi, your lender would pull your credit report to scrutinize your history. One credit inquiry or a series of inquiries for a single refinancing application would normally just count as one and shave about five to 10 points off your score.
The credit pulls would begin to hurt if you refinance on a regular basis, however. For serial refinancers, the credit inquiries would add up and drag your score to a less acceptable level. As your credit score comes into play in loan applications, applying for your second or third refi may sabotage your chances of approval.
Do Not Wait for Your Current Loan to Mature
A refi is a completely new loan. In essence, the refinance would pay off your current mortgage to begin a new line of credit. In doing so, the history in your old credit account would eventually lose its value. Especially if it’s good, it would fall off your credit report in about 10 years.
In addition, replacing an old account with a new one would shorten your credit history’s average length. For this not to be an issue, keep the age gap between your old and new lines of credit to a minimum.
Keep Your Loan Size Small
Especially in a cash-out refinance, a huge loan amount would usually result in a lower credit score. The size of the loan would increase your credit utilization. The more you use your available credit, the deeper you push your credit score down.
A refi has its consequences, but they shouldn’t hurt your credentials that much if you’re careful. Considering its potential impact to your credit, you have another compelling reason to exercise your due diligence before you reset the clock of your mortgage.
While interest rates on mortgages have been so low for years, shopping for a loan is still a tricky process, especially if you’re a first-time home buyer. But don’t fret. The following tips will help you navigate the rough waters of mortgage shopping, and they will save you money and time.
1. Determine what you can afford.
Review your budget to determine what you can afford to pay for a house, including the home mortgage loan, insurance, property taxes, and utilities. In general, your total debt payments should not be more than about 36 percent of your income.
2. Compare loans from lenders.
You can get a home loan in Utah from mortgage brokers or lenders. Brokers arrange home mortgage loans with lenders rather than lend money directly to consumers. Brokers and lenders offer different fees and interest rates to different consumers for mortgages.
3. Fill out a loan application.
A mortgage application helps the lender decide whether to lend money to the consumer. The home loan application form asks for information about you and the property you want to purchase and requires documentation about your finances.
4. Get advice from an attorney.
A house is one of the biggest investments you will ever make. Don’t be afraid to ask for help. Speak with an experienced real estate attorney before you sign any paperwork. Buying a home involves the law of real property, which raises issues not present in other transactions. Real estate attorneys are trained to deal with these issues.
5. Obtain a copy of your credit report.
Check your credit report to make sure there aren’t any errors. If there are errors on your credit report, you could be missing out on several points that will make a difference when you apply for a mortgage. Your credit rating is one of the most important factors in determining if you will get approved for a mortgage, as well as what kind of rates you qualify for.
The mortgage process can be incredibly intimidating, especially for first-time home buyers, but it doesn’t have to be. It is far less complicated if you take the right steps in advance. Search for a broker or lender in your area to get started on your new home adventure.
When mortgage rates drop, most borrowers automatically consider refinancing their mortgage to take advantage of reduced rates. But, not all borrowers will actually qualify for refinancing. Below, Utah Loan Pros shares the top reasons some borrowers don’t qualify and their possible solutions.
An Extremely High Loan Amount
If your loan amount is around that of jumbo loan proportions, and you have a high loan-to-value ratio and low credit rating, you may find it difficult to qualify for refinancing. Instead, you can consider applying for a cash-in refinance where you pay money during closing, so you can lower your mortgage amount below the limit. This can also get you a reduced interest rate and loan-to-value ratio.
A High Loan-to-Value Ratio and Lack of Home Equity
Among the top reasons for being denied a refinance loan is insufficient home equity and consequently, a loan-to-value (LTV) ratio that is significantly above the conforming limit. Don’t fret; there are some loan programs out there that are not that strict concerning loan-to-value ratios. One of these programs is the government’s Home Affordable Refinance Program (HARP) that does not have LTV ratio limits.
Less than Stellar Credit Score
Yet another common roadblock to refinancing is having a low credit score. If your credit score is below the lender’s allowable limit, you won’t qualify for refinancing. The most popular refinance option for borrowers with low credit scores is the FHA Streamline Refinance program. But, you can only use this refinance option if you’re refinancing your existing FHA loan. Otherwise, take some time to get your financial affairs in order and then shop around to find reputable mortgage companies willing to work with you.
If your current income is not nearly as high as what you receive back when you took out your mortgage and if you’re over the maximum debt-to-income (DTI) limit, you won’t qualify for a refinance. Although producing more money at the drop of a hat isn’t possible, you can consider repaying some of your debts to lower your DTI ratio, add a co-borrower so you can qualify, or look around and find a mortgage company with more lenient limits.