Negotiating Fees: How to Lower the Costs of a Mortgage Loan

Homeowners everywhere, are you still living with that sky high interest rate you were given when you first bought your house? Sure, your credit may not have been great then, but have you been keeping up on your house payments, car payments, and even your credit card payments? If you have, chances are that your credit scores that you could use to negotiate a better interest rate on your mortgage loan.  

The Costs of Refinancing

When refinancing your mortgage loan, there are a few things to keep in mind. There is quite a bit of interest rate payments that increase the overall mortgage loan over those 30 years you signed up for that you might be able to reduce significantly with a refinance. There are often many costs involved though and many are unnecessary.

Unfortunately, through all the recent economic problems, many companies have appeared overnight to offer their ‘help’ – assistance that has often cost way more than it should because they are trying to scam homeowners into thinking a refinance has to be expensive.

What Happens during Refinance Applications?

When you talk to your lender about refinancing, they will first want your credit report. It’s important to get copies of these reports from the three main credit reporting agencies and see what may need to be corrected and updated prior to applying for a refinance.  

You will also hear from the lender about what fees or costs may be involved with a refinance. The good news is that there are new refinance opportunities like the FHA Streamline Refinance where you may avoid costs altogether.

Lender Fees

Lenders fee for refinancing mortgage loans can be negotiated and even waived completely, especially in this current economy where many homeowners need a lot of assistance to ensure that they can keep their homes even when they are underwater due to the significant reduction in home values. The old adage of “don’t ask, don’t get,” certainly applies here.

Discount Points

Essentially, you pay upfront for getting your interest rate lowered, which are called points. This can be avoided as your credit score goes up and as more refinance programs become available to help the homeowner in need.  

Most importantly, get all terms in writing that clearly delineates any fees associated with discount points or other lender fees.

Get Our Assistance

No one cares more about your mortgage loan than we do. That's why we willingly help each and every homeowner to determine their best refinancing options. 

Guided by a higher power, our team lives by integrity and transparency in everything we do to ensure you have the best mortgage loan for your situation. Contact us now to learn more!

Posted by Indigo Mortgage at 10:53 AM No comments:

Homeowners Rejoice: June 2012 Update to the FHA Streamline is Here

Buying a new home in the current market seems to be the trend as prices have dropped considerably, offering a world of opportunity to first-time buyers who didn’t think they could afford a house before.

The bad news with this is that homeowners are currently suffering due to the significant value drop, putting many Albuquerque homeowners and New Mexico homeowners in the red and underwater because their mortgages are so much higher than the current value of their home. 

Many also have a mortgage loan interest rate that is considerably higher than the current record low interest rate. However, they are stuck – most cannot refinance to the lower higher interest and save money due to not qualifying because of their high balances and low home values.    

Yet, help has arrived in the form of the FHA’s Streamline Refinance Program.

New Opportunities to Refinance

On June 11^th this year, the FHA updated its FHA Streamline Refinance Program for homeowners, providing some more relief. Here are some of the changes:

• As of now, almost all fees have been sliced and diced from Mortgage Insurance thanks to the streamline. Your Mortgage Insurance can essentially be .01% if your current FHA loan was taken out prior to June 1, 2009.
•  Through the FHA, the monthly premium has been reduced by nearly one third, which means lower monthly payments for homeowners in New Mexico and around the country.
•  Simply put, these changes are allowing those with FHA home loans to take advantage of the new record low mortgage interest rates now below 4% -- something that has not happened since the 1950s.

Things You Should Know

Here are some other things to know about the changes to the FHA Streamline Refinance Program:

• There is no 'employment verification process' for the mortgage loan. Through this mortgage refinance program, no one will be checking into your employment status as part of the criteria for approving you for the home refinance program.
• Since there is no employment verification, there will also be no check into your income or finances.
• Finally, with the program’s 'No credit, no problem' mantra, there is no credit check requirement either, letting past mistakes stay in the past while you help build a better future.

In this housing market, the FHA Streamline Refinance Program is helping homeowners keep their homes and weather the current economic conditions until the market turns around and home values slowly return to a normal rate where those with mortgages are back in black and no longer underwater.

Be sure to contact us at Indigo Mortgage so we can answer your questions about the changes to this home refinance program and how you can benefit from it. After all, no one cares more for your mortgage loan than we do and are here to show you just how much we care!

Posted by Indigo Mortgage at 9:06 AM No comments:

The Rental Investment: What to Consider with Second Homes and Rental Properties

Right now all you ever hear about is how the economy is terrible and that this is the worst housing market the country has seen. It's true it is a buyer's market in New Mexico and across the country, which is no good to a seller, but if you're a first time house buyer or you’re looking for a second house or a good rental property, then the time to buy couldn't be better.

In Albuquerque, Santa Fe, and major cities throughout the state and U.S., people are buying houses for a fraction of their original price so if you have the money, there has never been a better time to invest in your future.

Defining Second Homes and Rental Properties

Borrowers wishing to purchase a second home or a rental property or non-owner occupied property will need to know what classifies homes as such.

·        Second Home: The rule of thumb is that a second home is just that. It is a second residence that is not their primary home and where a homeowner will spend extensive time throughout each year and not rent it out. A second home cannot be purchased in the same city as their primary home and must be at least 55 miles in distance from their primary residence.

·        Rental Property: A rental property or non-owner occupied property is a property that is within 55 miles of their primary or any property that will be used to generate income by renting it out. Even if a home owner wishes to buy a home for kids or parents and not charge them rent if that property is in the same city or less than 55 miles away, then it is still considered a rental property purchase.

It important to classify it correctly as the down payment is much higher and the interest rates are much higher for non-owner occupied properties.

Second Homes and Rentals

People talk highly about having a second home mainly because they are a great tax deduction and it's always fun to brag about your vacation home on the water that you only visit once a year. Yet, it may sit there, collecting dust for 11 months out of the year all for a simple tax deduction. This may not be the best investment if it does.

Instead, consider a different strategy for that second home. Rent it out as this is becoming a popular alternative for people rather than staying in a hotel. Larger groups and families alike are looking for a vacation house rental on a lake, at the beach, or in the mountains. All of these places appeal to people while you can make the most of the other 11 months of the year in terms of getting your mortgage covered.

Rental Homes aren't as Tax Deductible

There is just one caveat to making it into a rental property that you might want to weigh. 

If you rent your home out full time, then it will no longer qualify as a second home. This will make it useless to Schedule A on your taxes and you will then be forced to claim on Schedule E.

However, there is a way around this glitch that would allow you to have a rental income as well as a tax deductable and obviously that is why renting is always the way to go. 

For starters, the IRS requires you to live in the house at least 14 days out of the year or 10% of the days it was rented, whichever is more. This means that you could purchase a vacation property and rent it out as a vacation home to whomever is interested and then stay there for a month-long vacation. 

This also allows you to make money renting, have a nice tax deduction, and enjoy a great vacation spot, making rental an awesome investment if done correctly. 

Posted by Indigo Mortgage at 11:01 AM No comments:

 

Advantages of Refinancing to a Short-Term Mortgage Loan

Let’s talk about home loans. While loan rates and interest can be applied to all loans, we are going to stick to home loans; though one could definitely take something home from this blog post on regular loans.

When you first buy a home, chances are you do not have the $200,000 to just throw down on the house. Instead, you will find yourself needing to get a loan from a lender otherwise known as a mortgage company. When you do this, depending on your credit score, you will be given a few different options with a bunch of fine print.

Let’s review those options first, which include long-term mortgage loans and short-term home loans. 

Long-Term Mortgage Loans

A longer term loan tends to be 30 years in length. This means you do not have to pay the loan back in full for thirty years. Basically, you will get a monthly bill similar to that of credit card bill where your payment includes principle, interest, and sometimes an escrow account payment.

With over 30 years at 12 times a year to pay off a $200,000 house is not so bad and for many it is the way to go. As noted, part of the monthly payments is an interest rate. It is where the lender makes money for giving you so much money to cover your house. 

What does happen is that the amount you have to pay back can double from the original $200,000 if you take the entire 30 years to pay it back because of the amount of interest you would have paid over that length of time. For many, this is all they can do because of their budget, but there are alternatives if you can pay a higher monthly payment.

Short-Term Home Loans

To pay out less interest, you can shorten the term of the mortgage loan to 15 years, for example. Although the monthly payments are higher with these types of home loans, the interest is lower. This means that you will pay considerably less over the 15 years than you would if you had stuck with a 30-year home loan.

So, if these loans are so much better than the long-term mortgage loans, why doesn't everybody use them? Typically, this is because most people cannot pay that much out of their salary in a house payment each month and need to budget for a smaller payment.

It can take quite a chunk out of your monthly income despite saving you considerably in the long run.

There may be uncertainties that keep many opting for a longer loan with a smaller payment now. Others may not want to stay in the house for a long time or are using it as an investment property so a short-term home loan may not work for them.

Options for Switching to a Short-Term Mortgage Loan

That is not to say that, when your situation changes that you cannot shorten the term of your home loan by refinancing to a short-term mortgage loan or simply making extra principle payments each year. Either way, you can find ways to cut your interest payouts.

For more information about mortgage loans and available options, please visit Indigo Mortgage today.

Posted by Indigo Mortgage at 10:09 AM 1 comment: