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Refinancing to Pay for Renovations? Consider the VA’s Energy Efficient Mortgage Program

June 8, 2016 Comments off

Refinancing to Pay for Renovations? Consider the VA's Energy Efficient Mortgage ProgramMaking renovations that are energy efficient is not just a great way to reduce energy output, but it’s also an effective way of decreasing monthly utility costs. It serves as a one-time investment that will save money in the long run.

However, renovations are costly and not everybody has the extra finances required to make energy efficient changes. This is where the VA’s energy efficient mortgage (or EEM) program comes into play.

The program is designed to allow veterans to apply for a new mortgage or refinance an existing one with extra funds to renovate the home to be up to energy efficient standards.

The Three Tiers Under The VA’s Energy Efficient Mortgage Program

The VA has three tiers for the cost of renovations to be done under the EEM program. The lowest, and easiest to be accepted for, is for improvements that will total under $3,000. A list of costs or a contractor’s quote may be required in the application process.

The second tier is for renovations that will cost between $3,001 and $6,000. This will require the homeowner or homebuyer to get a Home Energy Rating System report to detail how efficient a home is currently and what can be done to decrease its HERS rating.

The final tier is for any improvements to the home that will cost over $6,000. This is the most difficult tier to receive acceptance for as both the Department of Veterans Affairs and the private lender will need to approve the renovations.

Types Of Improvements Under The EEM Program

The program covers a variety of renovations for the home. These include: new insulation to walls, floors and ceilings, solar powered heating and cooling systems, thermal doors, thermal windows and new caulking and weather stripping.

There are also items that will not be covered by the program, including new roofing, vinyl siding and air conditioning units.

Using The EEM Program To Receive A Larger Loan

Any veteran or currently active military member looking to buy a brand new home can still benefit greatly from the energy efficient mortgage program. If a new home undergoes a HERS report and passes as being energy efficient, this can be applied to a VA mortgage to receive as much as $6,000 extra on the loan.

Speak with your local mortgage professional to go into more detail on the intricacies of refinancing under the EEM program and whether or not your home will qualify. 

The HARP Refinance Program Has Been Extended into 2016: Here’s How You Can Take Advantage

April 28, 2016 Comments off

The HARP Refinance Program Has Been Extended into 2016: Here's How You Can Take AdvantageWith the Home Affordable Refinancing Program recently being extended until the last day of December, 2016, many homeowners who have found their assets in a challenging situation have been given a second chance to apply and receive an affordable mortgage.

By taking advantage of the HARP program, eligible borrowers can refinance to the current mortgage rates on their homes while avoiding paying for private mortgage insurance or putting down the principal.

A Quick Primer On The HARP Refinancing Program

With the economy in a strong downturn in 2008, the value of millions of American homes plunged and the owners found themselves owning property with negative equity.

The Home Affordable Refinancing Program was created by the government to assist people whose home values were lower than the outstanding balance on their mortgages. Previously it would have been impossible to refinance for a better interest rate on the current value of the home, so HARP was designed to help any of these borrowers stay above water.

Who Is Eligible For HARP Refinancing?

There is a certain set of criteria that needs to be met in order to qualify for the HARP refinancing program, but two major points stand out: The mortgage must have been granted earlier than May 31, 2009 and it must have been granted by either Fannie Mae or Freddie Mac.

It is important to point out that many banks do not back their own mortgages and work as a servicer, a middle-man to collect the mortgage that is actually backed by Fannie Mae or Freddie Mac. Many borrowers believe they do not qualify without double checking with their lender to see if the mortgage was granted by Fannie Mae or Freddie Mac, so it is imperative to contact the lender or check online to see who granted the mortgage.

There are also several disqualifiers that should be known. With certain exceptions, many borrowers who have previously refinanced their home under the HARP program are ineligible. The other major factor is that homes must have a loan-to-value ratio of 80% or higher.

What Is The Next Step For Eligible Borrowers?

The next step for anybody eligible for the HARP refinancing program is to check the current rates and see if refinancing would be beneficial. Your local mortgage professional will have experience with the HARP application process and will be able to confirm today’s rates to see if applying is the right move.

You Ask, We Answer: 5 Ways That You Can Proactively Build and Improve Your Credit Score

April 26, 2016 Comments off

You Ask, We Answer: 5 Ways That You Can Proactively Build and Improve Your Credit ScoreIf you’re planning to buy a house or take out a business loan in the near future, you’ll want to work hard to boost your credit score well ahead of time in order to improve your likelihood of getting the loan you need. A great credit score can also make you more desirable to employers and help you to negotiate lower car insurance rates.

But what can you do in order to build your credit score over time? What are the best strategies for boosting that score as high as possible? Here’s what you need to know.

Dispute Errors On Your Credit Report

According to the FTC, 25% of Americans have significant errors on their credit report. Whether it’s a fully paid debt erroneously reported as still owing or even another consumer’s debt listed on your credit report, these errors can be costly. That’s why you’ll want to regularly review your report for inaccuracies.

If you find any inaccuracies, you can dispute them and have them removed from your credit report – which will increase your score.

Negotiate Your Debts Owing With Creditors

If you owe money to creditors and are past due on the balance, chances are they’ve reported the debt to the credit reporting agencies – and it’s on your credit report. The fastest way to have the debt removed from your credit report is to negotiate with your creditors for its removal. Get your lender to agree in writing that they’ll report the account as “paid as agreed” if you pay the balance.

Keep Your Credit Utilization Ratio Low

Credit utilization refers to the percentage of available credit you use at any given time. So if you have $1,000 in credit available to you and you use $500, that’s a utilization ratio of 50%.

Generally speaking, it’s best to keep your utilization ratio below 30%. If you’re constantly using a high amount of credit, lenders will assume you’re not a responsible borrower.

Pay What You Owe On Time

Paying your bills on time is one of the best ways to build your credit score. Your payment history accounts for 35% of your credit score, so if you pay your bills on time and in full every month, your credit score will increase.

Make More Than One Payment Every Month

Using a large amount of credit at any given time doesn’t look good on a credit report. By making multiple payments every month, you’ll lower the amount owing that gets reported to the credit bureau and increase your score.

Building a credit score is a lifelong skill, which is why you’ll want to learn it early. Contact your local trusted mortgage professional to learn more about credit scores and mortgage finances.

Understanding the CFPB’s New Mortgage Rules and How They Might Affect You

April 19, 2016 Comments off

Understanding the CFPB's New Mortgage Rules and How They Might Affect YouIf you’re getting a mortgage, you’ll want to ensure you’re well versed in all of the government regulations surrounding mortgages and how they affect you. One government agency that dictates a number of the rules surrounding mortgages is the Consumer Financial Protection Bureau. The CFPB has several regulations that lenders need to follow, some of which have only recently come into effect.

So how do the CFPB’s new mortgage rules affect you? Here’s what you need to know.

Know Before You Owe: Mortgages Just Got Easier To Understand

The CFPB’s new Know Before You Owe mortgage disclosure rule has rolled four previous forms into two. You’ll now receive your Loan Estimate and Closing Disclosure documents when you are about to close on a mortgage, making it easier to understand what exactly is in your mortgage. The new law also requires lenders to give you three business days to review your Closing Disclosure and pose questions before you sign the closing paperwork.

These forms are also standardized across the country – they are now shorter and written in simpler language, and all lenders are required to use the same forms. The forms must clearly state what your closing costs will be and what your monthly payment will be throughout the term of the loan.

More Power For Borrowers Who Are Behind On Payments

For decades, the mortgage system worked like this: If you run into trouble with your mortgage and find yourself behind on payments, your lender can foreclose on your home. But now, new rules state that lenders must take certain steps before they start the foreclosure process. Lenders must reach out to borrowers who are struggling and provide them with the opportunity to make a payment or work out an alternative arrangement.

The lender doesn’t have to give the borrower options that aren’t available, but if there is a non-foreclosure option on the table, the lender is now legally obligated to pursue it.

Mortgage Providers Will Need To Be More Transparent

The new rules also make the mortgage system much more transparent.

Under the new law, your lender is legally obligated to give you a mortgage statement with all of the information about your monthly payment in one place. If you run into trouble with payments, your lender is obligated to assign an employee to track your documents, answer your questions, and guide you through your options. There will be no more surprise foreclosures, no more administrative red tape, and no more debt traps.

Getting a mortgage is a complicated endeavor, and the new rules that have come into effect are designed to simplify the process. Contact a mortgage professional near you today to learn more about how mortgages work.

Three Tips to Ensure That a Reverse Mortgage Makes Sense for Your Financial Situation

April 14, 2016 Comments off

Three Tips to Ensure That a Reverse Mortgage Makes Sense for Your Financial SituationIf you’re having financial troubles, or if you need to free up a large sum in a short period of time, a reverse mortgage is a great way to get the money you need without having to take on new debt or make monthly payments. When you apply for a reverse mortgage – also known as a home equity conversion mortgage – you’re essentially borrowing money from the equity you’ve built up in your house. The great advantages of a reverse mortgage are that you don’t need to make any loan payments until you decide to move out of the house and that in spite of the interest rates attached, you’ll never owe more than the value of your home.

However, there are tight restrictions and requirements with respect to who can get a reverse mortgage and what needs to be done before you receive any money. In order to qualify, you must meet an age requrement and the property must be your primary residence. You also can’t owe more money on the property than it is worth.

So how can you tell if a reverse mortgage is a good solution for you? Here are three factors you’ll want to consider.

Will You Use The Money Responsibly?

In general, the high-cost, high-risk nature of a reverse mortgage makes it ideal for people who are having trouble meeting their everyday living expenses. That means you’ll need to ensure you use the money responsibly. Good uses of reverse mortgage funds include paying living expenses and medical costs when no other options are available, and paying for emergency care after a serious injury if you’re uninsured.

Have You Exhausted All Other Avenues?

A reverse mortgage can have significant upfront costs. The fees may be higher than other loans, which means even if you don’t actually use any of the credit you obtain through a reverse mortgage, you’ll still may be paying a large sum out of pocket. Furthermore, your lender has the authority to recall the loan if you let your home insurance expire, if you fall behind on your property taxes or home maintenance, or if you spend a full year in an assisted living facility.

These risk factors mean that a reverse mortgage is typically best used as a last resort. If you have other options – for instance, if you have stocks or investments you can cash out, or if you can sell your home to your children and then rent it back from them – you’re better off going down another route. But if you’ve already exhausted all other options, a reverse mortgage may make sense.

Are You Planning To Stay In Your Home For The Foreseeable Future?

A reverse mortgage generally works best for people who intend to stay in their homes for several years. When you get a reverse mortgage, you’ll need to take out insurance to protect against the possibility of your loan balance growing beyond your property value. That means you’ll need to pay monthly insurance premiums – and if you only plan to stay in your home for a short period of time before selling, it’s very unlikely that your loan balance will grow beyond the value of your home.

A reverse mortgage can be a convenient way to access emergency cash reserves – and when used responsibly, it’s a great tool that can help you to help you with otherwise unmanageable expenses. However, reverse mortgages can also be risky and complicated – and you’ll want to consult a professional before applying for one. Call your local mortgage expert to learn more about whether a reverse mortgage is right for you.

Can You Refinance into a VA Mortgage from Another Type of Mortgage? Yes, If You Qualify

April 8, 2016 Comments off

Can You Refinance into a VA Mortgage from Another Type of Mortgage? Yes - if You Qualify VA mortgages stand out as one of the biggest benefits to men and women serving in the military. Although private lenders make the loan, the Department of Veterans Affairs guarantees all VA mortgages, which is why these loans come with favorable terms and benefits not found with other mortgage types.

The Benefits Of Refinancing To A VA Mortgage

A VA loan may very well be the borrower’s only option for putting no money down, as many lenders will cover 100% of the value of the home, thanks to the backing of Veterans Affairs. There is a ceiling on the amount covered depending on the area of the country, so contacting a qualified VA mortgage professional is the preferred way to discover limits locally.

VA loans also require no mortgage insurance, cover many of the costs associated with closing or refinancing and, in many cases, have lower mortgage rates than comparable loans.

Veterans who had never considered a VA mortgage may wish to take advantage of the flexible terms and the favorable market to refinance their current mortgage into one that offers tremendous benefits.

Qualifying For A VA Mortgage

Veterans Affairs mortgages are limited to service men and women and their spouses, a benefit for serving their country. After a set amount of service time veterans are able to apply for a certificate of eligibility that will allow them to apply for the loan.

Those who are eligible include most military members in active duty, members of the National Guard, veterans both discharged and retired, military academy cadets as well as any spouse of a deceased serviceperson.

Eligible Homeowners Can Refinance Through Cash-Out Refinancing

The Department of Veterans Affairs considers a conventional mortgage to VA mortgage refinancing to be the same as cash-out refinancing and treats it accordingly.

This process is as intensive as an initial mortgage because it will replace the current mortgage altogether, so all applicants are expected to go through the standard credit and underwriting process.

VA loans are incredibly beneficial to current military members as well as retired veterans who may have never considered taking advantage of the program. Although the mortgage can cover 100% of the value of a home, the actual amount varies depending on the area. The only way to know for sure how much will be covered and whether it’s the right time to refinance is to contact a mortgage professional who has experience with VA mortgages.

Retiring Soon? Learn How a Reverse Mortgage Can Add to Your Retirement Security

March 22, 2016 Comments off

Retiring Soon? Learn How a Reverse Mortgage Can Add to Your Retirement SecurityIf you’re nearing retirement, you’re likely starting to think about your savings and retirement plan and how you can ensure a financially secure retirement. With your peak income-earning years largely behind you, you’ll need to work with what you have in order to ensure a livable retirement income. That’s where a reverse mortgage may be a sensible option.

How does a reverse mortgage work, and how can it help you to have a more financially secure retirement? Here’s what you need to know.

A Reverse Mortgage Is Tax-Free And Saves Your Social Security Benefits

Social Security benefits offer a basic form of income for senior citizens, but if you tap into your Social Security too early in your retirement, you could use up your available benefits in a short span of time. Deferring Social Security until later on in your retirement means that you’ll get an extra 7 to 8 percent per year you defer, which is why you’ll want to save your Social Security for as long as possible. But in order to do that, you need another income source to live on.

A reverse mortgage is a tax-free income source that you can use to fund the early part of your retirement, allowing your Social Security benefits to mature. Best of all, a reverse mortgage frees up your budget so you can invest more of your funds and collect returns later.

You’ll Never Owe More Than Your Home’s Value – And There’s No Set Repayment Date

A lot of loans have high interest rates and fixed repayment periods. This means that if you use credit cards or take out a personal loan, for instance, you’ll be locked into a set repayment date or won’t have a high enough borrowing limit – or if you do have a high borrowing limit, you’ll find that interest charges quickly add up.

Reverse mortgages have no set repayment date, which means that you can use the money from a reverse mortgage as needed without having to worry about repayment. You’ll also never owe more on your reverse mortgage than what your home is worth, so you’ll never find yourself underwater.

A reverse mortgage is a great way to ensure that you have a safe, stable retirement – and it can add an extra layer of security on top of your social security benefits. Are you considering taking out a reverse mortgage on your home? A qualified mortgage advisor can help – contact a mortgage professional near you to learn more.

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