Most people don't have resources to pay cash for a house. Instead, they apply for loans. Mortgage lending is a big business; and like any business, lenders are paid for their services. This is why banks charge mortgage loan origination fees and mortgage interest. But there’s one fee you may not expect when applying for a home loan: a prepayment penalty A prepayment penalty is less common today, but it’s still included with some loans. When a bank gives a borrower money for a home purchase, it doesn't just want repayment of principal—the bank also wants to earn interest. To earn the most interest, banks need borrowers to keep their mortgages for an extended length of time. For this reason, some banks include a prepayment clause in the mortgage agreement. A prepayment clause is a statement that gives a mortgage lender the right to charge a fee if a borrower pays off the mortgage before a specified length of time. The fee varies depending on the lender. It can be a percentage of the remaining mortgage balance, or a borrower… Read more
Now that you’ve made the decision to buy a house, the next step is getting your financing together. Applying for a home loan through your personal bank may seem like the obvious choice, but this isn’t the only place to secure financing. You have the choice of working with a mortgage lender or a mortgage broker. Some people use the terms “broker” and “lender” interchangeably, but these are not one and the same. Before you can decide which one is the right fit, you have to understand how brokers and lenders differ. What is a Mortgage Broker A mortgage broker is not a bank or lender, but rather a middleman that connects borrowers with lenders. Mortgage brokers represent lenders and their loan programs. These professionals are mortgage experts, so they're in a position to explain and recommend various loan products based on your circumstances. Shopping around is one of the best ways to find a mortgage with a low interest rate. But since comparison shopping can be tedious, you may not have the patience for the job. A mortgage broker… Read more
Getting a mortgage can be complicated, so your mortgage lender doesn’t expect you to have all the answers or know everything about the lending process. This is why they provide guidance and offer information on various programs available to you. But although you're not expected to have an extensive knowledge of mortgages, there are a few things your lender wishes you knew—which can make their job easier and result in a smoother process. We can help you qualify for a home loan If the bank denies your mortgage application, don't disappear on your lender. You may not qualify for a mortgage today, but with the help of your lender you might qualify in the future. Underwriters know what to look for when approving a home loan application. And if your application falls short of the bank’s requirements, some mortgage officers can help with credit repair or offer a guide for improving your financial outlook. Speak with the lender to find out what you need to do. We need the truth, no matter how ugly it is A mortgage lender can… Read more
A home equity line of credit (HELOC) is a second mortgage that uses your home’s equity as collateral. It’s similar to a home equity loan. But rather than receiving a lump sum of cash, you gain access to a credit line up to 80% of your home’s equity. You can withdraw cash on an as-needed basis and use the money for many purposes from paying for college to home improvements. A HELOC may seem like a good idea if you have plenty of equity, but you have to consider whether this is the right choice for you. Can you afford the monthly payment? Before getting a HELOC, take a look at your monthly cash flow and determine whether you can afford another monthly payment. And if you can, how much can you afford? Money you receive from a home equity line of credit isn't free money. It’s a second mortgage, so you have to repay borrowed funds. Monthly payments are based on your interest rate and how much you withdraw from the account. With cash so readily available, it can… Read more
Your financial situation can change at a moment’s notice. An illness, divorce or job loss can make it difficult to stay current on your mortgage loan. And unfortunately, the inability to pay your mortgage can result in foreclosure. A foreclosure can devastate your credit history, and in many cases, it can be up to seven years before you're able to qualify for another home loan. The good news is that you have options that aren’t as damaging as a foreclosure. These include a short sale, a mortgage modification or a deed-in-lieu of foreclosure. These hardship provisions can be less expensive for lenders, but not every homeowner qualifies. Lenders will need to look at your income and assets to make sure you meet the criteria for a hardship provision, plus you'll need to write a hardship letter. A hardship letter is basically your explanation of the situation and why you need assistance. Lenders will take the hardship letter into consideration when determining whether you qualify, so it's important to write a strong, compelling letter. Here are five tips for preparing your… Read more
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