Pick up the phone | You Should Call Your Mortgage Lender in 2017

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We all fall into the same bad habit: Once we take out our mortgage loan, we tend to forget about it – at least until it’s time to send in our payment each month.

U.s Dollar Bills Pin Down on the GroundBut vow to take a different approach in 2017. Instead of mostly ignoring your mortgage this year, take an active role in managing it.

To do this, give your mortgage lender a call. You might be able to tweak your home loan so that you can save some serious dollars this year. Here are three big reasons to call your lender, and take control of your mortgage loan, this year:

It might be time to refinance: Mortgage interest rates have been low for a long time. And they continued to drop throughout the end of 2016. So maybe it’s time to talk with your mortgage lender about the possibility of refinancing your home loan.

Sure, a refinance isn’t free. But if you can drop your interest rate by a point or more, you’ll generally pay back your upfront investment quickly. If you plan on staying in your home for more than five years, the odds are good that refinancing your loan to one with a lower interest rate might make financial sense.

You’ll never know, though, unless you give your lender a call. Your lender will be able to run the numbers to determine if a refinance is the right move.

You might be able to eliminate a ton of interest by shortening your loan’s term: Maybe your interest rate is already low. You can still save money by refinancing your mortgage loan to one with a shorter term. Say you are paying off a 30-year fixed-rate mortgage today. By refinancing to a 15-year version of this loan, you can reduce the amount of interest you’ll pay over the life of your loan by tens of thousands of dollars.

Again, though, you should talk to your mortgage lender to determine whether the interest savings make the cost of refinancing worthwhile. A lot of this depends upon how long you plan to live in your home.

You might be able to pay off your mortgage early—but doing so might not make sense: Maybe you’re coming to the end of your mortgage loan’s lifespan. That’s good news. You might even be tempted to pay off your loan early just to get rid of the monthly payment.

But often, paying off a mortgage loan early isn’t the wisest of moves. Again, checking in with your mortgage lender might be in order.

Mortgage debt generally comes with lower interest rates than do other forms of debt, especially credit-card debt. If, then, you are paying off this kind of debt, it makes more sense to concentrate your money on reducing it than it does to pay off your mortgage loan early.  kaybakerassociates@ec.rr.com

www.cbbaker. com

Categories: mortage planning, Mortgage choice, Mortgage Fine Print, Mortgage ideas

Mortgage Planning For The New Year

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Free stock photo of eye, macro, human, seeA new year is nearly here. That means it’s time to take a closer look at your mortgage loan.

You might not give much thought to your home loan, other than to pay it on time each month. But remember that your mortgage bill is probably the largest payment that you are responsible for each month. It makes sense to review your loan details to make sure that it is still the best fit for you and your family—and your budget.

Here are our recommendations for possible changes to make to your mortgage loan in 2017:

Time to refinance? Your mortgage interest rate might already be low, but that doesn’t mean that you can’t save potentially hundreds of dollars every month with a refinance. As a general rule, if you can shave a full point off your interest rate, you’ll save enough money each month to make the cost of a refinance worth it.

Call us today to ask whether you might qualify for a lower interest rate. We’d be happy to study your loan to determine whether a refinance might make financial sense for you.

Shorten your loan term? You don’t have to refinance merely to earn a lower interest rate. You can also refinance to reduce the term of your loan. If you are now paying off a 30-year fixed-rate loan, for instance, it might make sense to refinance to a 15-year or 10-year fixed-rate loan.

Yes, shortening your term will usually result in a higher monthly payment. But you’ll also potentially save tens of thousands of dollars in interest during the life of your loan. If you’re ready to reduce the amount of interest you’re paying each month, refinancing to a shorter-term loan could be a smart move. Again, contact us if you’re ready for a shorter-term loan. We can help you determine if this is a wise financial step.

Pay a bit more? Another way to reduce the amount of interest you’ll pay over the life of your mortgage is to pay a bit more each month than is required. Even paying $100 more toward your loan’s principal balance each month can dramatically reduce the amount of interest you’ll pay. Just make sure to indicate that the extra money you are sending in is earmarked to pay down your principal balance. There should be an option for this on your payment stub or your online payment plan.

Categories: Mortgage, new year, refi, Uncategorized

No Brainer | Pre-Approval Is The Smart Choice

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happyYou know that getting pre-approved for a mortgage loan before you even start shopping for a home is the smart move.

When a lender pre-approves you—telling you exactly how much mortgage money it is willing to lend you—you know how expensive a home you can truly afford. You won’t waste time looking at residences that fall outside your price range.

But how do you go about getting pre-approved? Fortunately, the process isn’t overly complicated.

1. Contact a lender that offers loans in the area where the property is located. Ask about interest rates and fees. If you’re comfortable, explain that you’d like to get pre-approved for a mortgage.The lender will ask to run your credit. Give your permission. Your credit scores determine the interest rate for which you might qualify—if you qualify for a mortgage loan at all.

2. You will need to provide financial documents that prove your income. Documents will include your last two paycheck stubs, last two months of bank-account statements, last two W-2 forms and, maybe, copies of your tax returns from the last two years.

3. All this information will then be sent onto the underwriting team, which will study your finances to determine how much of a lending risk you are. Once the underwriting team finishes its study, your lender can tell you exactly how much they are willing to lend you.

4. Finally, your lender will send you a pre-approval letter that will state this amount. Now you’ll know not to look at $300,000 homes if you can only qualify for $200,000 in mortgage money.

We are local Wilmington NC people who love real estate.  Let us help you.  www.cbbaker.com – app.seacoastrealty.com/househunter – kaybakerassociates@ec.rr.com

Categories: Get Pre-approved before house hunting, Mortgage 101, Pre Approval for Mortgage

Need to Renovate? A Mortgage Loan That Can Help Pay For Your Home’s Renovations

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1Want to renovate your home’s 20th century-era kitchen? Or maybe you’d like to build that master bedroom of your dreams. You can—with the help of two mortgage programs designed to help homeowners pay for renovations designed to improve the value of a residence.

Fannie Mae offers the HomeStyle Renovation Mortgage, while the Federal Housing Administration (FHA) provides the 203(k) Program. Buyers can take out these mortgages when buying a new home. But they can also refinance their existing mortgage loans into a HomeStyle or 203(k) loan if they need to make improvements to their current homes.

These loans allow consumers to borrow more than a home is worth, as long as you use the extra money you are borrowing to pay for home repairs or renovations.

For instance, if borrowers want to buy a $150,000 home, they can take out a HomeStyle or 203(k) loan for $175,000. They can then use that extra $25,000 to fund the renovation of an aging kitchen or add another bathroom.

Borrowers will have to work with consultants who will study borrowers’ renovation plans and make sure that the homeowners are using the money for the repairs they promised to make.

But that extra work is worth it if it allows you to improve the value of your home while making it a better place to live for you and your family.

If you have questions about these loan programs, don’t hesitate to call us. We can help you determine which program is best for you. And we can guide you through the application process for both types of loans.

Don’t Keep It To Yourself!
After you’ve read and reviewed this newsletter, we hope you’ll pass it on to those you know who are thinking about selling or buying a home this year. They’ll appreciate you thinking about them, and we’ll certainly appreciate the referrals. Your positive word-of-mouth is greatly valued. Thank you!

 

Categories: Get a Mortgage to Renovate, Uncategorized, wilmington beach homes, wilmington nc, wilmington real estate stats

GOT APPLIPHOBIA? Mortgage 101

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banjoYou know the old story: Mortgage interest rates are at near-record lows. But mortgage lenders are passing out fewer home loans. Strict loan qualification rules are a reaction to sky-high foreclosures that hit the lenders during the housing bust.

What’s wrong with that story? It’s not entirely true. Yes, mortgage rates are at low levels. But, no, mortgage lenders aren’t nearly as tight-fisted with home-loan dollars as some say. In fact, it’s far easier today to qualify for a mortgage loan than you might think.

Here’s some friendly advice: If you haven’t applied for a mortgage loan because you think your credit or income levels aren’t good enough, give us a call. There are mortgage programs available for borrowers of all kinds today. You may be surprised just how attractive a borrower you truly are in this market.

Here’s what you’ll really need to qualify for a mortgage loan. If you didn’t know how reachable these numbers are, don’t feel bad. You’re far from alone.

Credit score: You might have paid a few credit-card bills late. Maybe you forgot to send in your auto-loan payment one month. That’s not good, and it will drop your credit score. But know this: You don’t need perfect credit to qualify for a mortgage loan.

If your FICO credit score is 740 or higher, you’ll qualify for the lowest interest rates and the widest variety of loan programs. But even if your score is lower, you can still qualify for a mortgage loan. You’ll just have to pay a higher interest rate. Even if your score is under 600, you can still qualify for a mortgage loan insured by the FHA.

Down payment:
Fannie Mae and Freddie Mac are now willing to back mortgage loans with down payments as low as 3% of a home’s final purchase price. Consider that $180,000 house again. A down payment of 3% on that home comes out to a more affordable $5,400.

Income: Many would-be borrowers think that they don’t make enough money for a mortgage loan. But mortgage lenders only care that your total monthly bills—including your new mortgage payment—equal 43% or less of your gross monthly income. This means that you don’t have to be a millionaire to afford a home today.

Self-employment: Others worry that because they are self-employed they won’t be able to convince lenders to loan them mortgage money. This isn’t exactly true. Lenders need to see proof that your income is consistent each year. Providing this proof might be more challenging if you are self-employed, but it is doable. Just send your lender copies of your most recent tax returns showing your annual income over the last three to five years. Your lender will look to make sure that your income has been stable, and hasn’t risen or fallen sharply during this time. Your lender might also ask for more information about your business—such as profit/loss statements. The quicker you can provide this information the faster the mortgage process will go.

We look forward to working with you!

Categories: Mortgage, Uncategorized

Rehab Junkie? Buying A Fixer-Upper? An FHA 203k Loan Might Be Right For You

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jones 91011 278You’ve found your dream home. Only one problem: Its foundation is sinking and it needs a new roof. The purchase price is right, but you’re worried that you’ll never be able to afford all those repairs.

Here’s some good news, though: The Federal Housing Administration (FHA) offers a loan product designed for buyers who want to purchase and renovate a fixer-upper.

An FHA 203k loan lets you borrow enough money to not only buy a fixer-upper, but to repair it, too. So if your home costs $150,000, and contractors estimate that you’ll need $50,000 to modernize an outdated kitchen and repair a leaking roof, you’ll be able to borrow enough to both buy the home and fund repairs.

Here’s how it works: Say you come up with a down payment of $5,250 on the $150,000 home. That would leave you with a mortgage loan of $144,750 with a typical loan product. With an FHA 203k loan, though, you can add in contractors’ estimated cost of repairs. You, then, could borrow $194,750 to cover both the purchase of the home and the needed repairs.

If you’re in the market for a home that needs some TLC, give us a call. We’re happy to discuss the FHA 203k program with you. We can help you determine if the program is a good fit for you and the home you want to buy.

 

Categories: Fixer Upper Loans, Sell your home, Wilmington NC homes, Wilmington NC Market Statistics, Wrightsville Beach NC

16 Things Every Home Buyer Should Know About Adjustable Rate Mortgages – But Shouldn’t Be Afraid To Ask

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When Wilmington NC  home buyers go shopping for the best Adjustable Rate Mortgage (ARM) they can find, these are the 16 essential things they should ask about:

Up/Down on Paper

  1. The initial interest rate or “qualifying” rate.
  2. The length of time the interest rate and monthly payment will remain the same as at the start. Also the length of time between rate and payment adjustments.
  3. The index to which the ARM is keyed (Treasury bills, etc.)
  4. The current index level.
  5. The margin percentage between the index and the mortgage interest rate.
  6. How the index and margin are combined to arrive at a loan interest rate (both initial and adjusted rates).
  7. The adjustment (if any) to be made in interest rate and monthly payment, if the index remains the same.
  8. Whether or not the loan has an interest rate cap (limit). If so,
    1. the limit to the increase in the interest rate at the time of each adjustment,
    2. whether or not there is a carryover to the next adjustment period of any increase in the index rate that goes over the specified limit, (that is, can increases be applied in subsequent years when the rate increase is below the cap), and
    3. whether or not a periodic rate cap applies to the first adjustment and/or rate decreases.
  9. Whether or not a life-of-the-loan interest rate cap is available. If so, the minimum and maximum rates.
  10. Whether or not a periodic payment cap is available. If so, ask about:
    1. the maximum monthly payment increase possible at any adjustment, and
    2. the payment cap, does it apply to the first payment adjustment?
  11. The initial annual percentage rate (APR) of the loan, which may fluctuate in later years.
  12. In case of negative amortization, how often the loan is recast to pay off the increase in principal. After recasting, the limit (if any) on the amount of increase in payment.
  13. Whether or not negative amortization may occur if an interest rate increase causes a monthly payment to accrue over the cap limitation. Whether or not the payment cap applies to any increase caused by periodic recasting of the loan because of negative amortization.
  14. Whether or not the loan can be assumed by a future buyer. If assumable,
    1. the qualifications involved, and
    2. whether or not the original interest and payment caps will hold. If not, the specifications for new caps.
  15. Whether or not the ARM can be converted to a fixed-rate loan at any time.
  16. Whether or not the loan has open-end credit.
  17. If you would like a further explanation of ARM features, give us a call or send an e-mail question. We’ll be glad to discuss this sometimes-complicated subject with you.

 

Categories: Adjustable Rate Mortgages, Wilmington NC homes, wilmington real estate stats, Wrightsville Beach NC

New Loan Rules | 2014 Wilmington NC Real Estate

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Back on January 1 of this year, new lending regulations came into effect capping what lenders can charge in points and fees to no more than 3% of the loan amount.

On the one hand, know that origination fees average only 0.87% and typically are not more than 1%, according to Bankrate.com. What’s more, the new fee rules do not include non-lender (third-party) charges for escrowed taxes and insurance, notary fees, appraisal fees, flood hazard reports, pest inspections, document preparation, title insurance or credit reports—as long as these fees all come from independent companies not affiliated with the lender. Also, loans of less than $100,000 are exempt and can have lender fees of more than 3%.

Some experts thought the new rules would impact mortgage brokers more than banks. Yet so far, homebuyers have not been dramatically impacted, even though the cost to comply with the new rules can be more burdensome to smaller lenders.

Bottom line: Lender fees are limited to 3% of the loan amount (over $100,000), which means borrowers won’t be overpaying for their loans. However, the cap on fees tends to make some lenders less likely to offer loans in the $100,000 to $200,000 range.

Call us 910-202-3607 for more information.

Categories: wilmington nc real estate, wilmington real estate stats, Wrightsville Beach NC

How to Win the Mortgage Game When Relocating | Wilmington NC real estate

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Money Scale The single smartest move you can make is to put off Wilmington NC house hunting until you have a firm idea of your buying power. If you are pre-approved for a loan, you can save considerable time house hunting and mortgage shopping.

A pre-approved mortgage loan is an excellent guideline to help relocating home buyers know how much home they can afford. For the seller, pre-approval is proof that the buyer’s lender feels confident a loan commitment would not be a problem if all the financial documentation were in order.Pre-Approval Benefits:

  • Streamlines house hunting.
      A pre-approval identifies how much money the transferee can obtain, so precious time isn’t wasted looking at too-costly homes.
  • Offers peace of mind.
      You know for sure how much home you can afford, and there is little chance a lender will not make the requested commitment.
  • Prevents “house poor” homeowners.
      Pre-approval reduces the possibility of you becoming overextended and unable to meet payments later on.
  • Boosts bargaining power.
      Pre-approved buyers tend to be in an advantageous position when bidding against other buyers, as sellers like knowing your loan is guaranteed.
  • Pinpoints best mortgage option.
    The pre-approval process helps you identify ahead of time which type of mortgage best meets your personal needs.

Before you jump into planning your move, there are some terrific services we offer to relocating families moving into or out of our area. Let us help you take advantage of them. Send us an e-mail or give us a call. Please visit www.cbbaker.com for more information.

Categories: Mortgage options, wilmington nc foreclosures, Wilmington NC homes, Wilmington NC Neighborhoods, wilmington nc real estate

Do You Know Where Your Mortgage Money Comes From? | Wilmington NC real estate

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Mortgage companies and banks are working overtime these days processing new mortgages – which raises an interesting question: Will they ever run out of money to lend?

The chances of that happening are virtually nil, thanks to a highly complex investment market for mortgages that has grown immensely since the 1970s. The key players in this game are “Fannie Mae” (Federal National Mortgage Association), “Ginnie Mae” (Government National Mortgage Association), and “Freddie Mac” (Federal Home Loan Mortgage Corp.). These agencies, along with several private companies, turn homeowners’ mortgages into investment vehicles for individuals, pension funds, insurance companies and other large institutions. Altogether, these investment groups make up the bulk of what is known as the “secondary market.”

When a bank or mortgage company writes a mortgage, the loan is lumped with other mortgages in a bundle (or “pool”) that is often sold to one of the agencies. With the sale of the mortgage, the bank or mortgage company again has money to lend to another home buyer.

Fannie Mae, Ginnie Mae, and Freddie Mac differ as to the type of mortgage bundle they buy and in the type of investment vehicle they use to attract investors. But the process they use is the same: Assembling large packages of mortgages and issuing securities backed by the mortgages.

While the original lending bank may no longer hold the mortgage it gave to a home buyer, it still services the loan. That means collecting the monthly payments, keeping escrow accounts to pay for insurance and property taxes, and – through the agencies or companies that issued mortgage-backed securities – paying investors.  Coldwell Banker Sea Coast Advantage is a full service real estate company with in house mortgage brokers from Alpha Mortgage.  Contact  us about all your Wilmington NC real estate needs.  Visit www.cbbaker.com to search or catch us on mobile at mobile.cbbaker.com

 

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Kay Baker Associates | 1001 Military Cutoff | Ste 101 Wilmington, NC 28405 | kaybakerassociates@ec.rr.com | 910-202-3607 | Fax 910-338-2428

Copyright © 2017 Wilmington NC Real Estate Guide. All rights reserved. Disclaimer: All content on this blog is my own opinion and should not be treated as fact or relied upon when purchasing or selling real estate.