20
Sep
By First Rate Financial Group
Home Mortgage Tips

Looking to Pay Back Your Mortgage Faster? Three Reasons to Consider Switching to Bi-weekly Payments

Looking to Pay Back Your Mortgage Faster? Three Reasons to Consider Switching to Bi-weekly PaymentsWhile there are differing schools of thought when it comes to whether or not a person should pay off a mortgage before the loan term ends, there may be some benefits to making payments on a bi-weekly basis as opposed to monthly basis. What are some of the reasons why it may be beneficial to make two payments a month instead of one? Here are three reasons why you should ditch the monthly fees and make payments once every two weeks.

You’ll Make An Extra Payment Per Year

If you’re looking to pay off your mortgage ahead of schedule, making bi-weekly payments means you’ll make an extra payment every year. Instead of making 12 large payments every year, you’ll make 26 small payments. These 26 small payments would be equal to about 13 large payments.

This is the equivalent of an extra payment per year and 10 extra payments over 10 years. If you have a 30-year mortgage, you could pay it off between two and three years early because you will make your last payment 30 months ahead of schedule.

You’ll Provide Yourself With Financial Flexibility

Making extra payments can provide you with financial flexibility that makes it easier to deal with unexpected expenses or a job loss. As you are making a half-payment every two week, you can make your payments in smaller, more manageable chunks.

It may be a good thing if you are self-employed and may not be sure when a client will pay for services rendered. Additionally, you may have your next payment reduced or advanced if you pay more than you owe in a given month.

You’ll Reduce the Amount of Interest Paid on the Loan

Paying off your mortgage faster reduces the amount of interest that you pay on the loan. Even if you only make one extra payment per year, you could still save thousands of dollars in interest by paying your loan several months or years early.

To determine exactly how much you will save, you can use an amortization table or calculator to see how much interest you pay over the full 30 years as opposed to taking only 27 or 28 years to pay for your home. It is also important to note that making extra payments adds to the equity that you have in the home.

Making two payments instead of one each month may help you achieve financial flexibility while building equity in your home. By paying off your mortgage as soon as possible, it may enable you to put more money into a savings or retirement account. Contact a mortgage professional for more information about whether bi-weekly payments are right for you.

15
Sep
By First Rate Financial Group
Home Mortgage Tips

Understanding the Differences Between ‘Prequalified’ And ‘Preapproved’ For a Mortgage

Understanding the Differences Between 'Prequalified' And 'Preapproved' For a MortgageAre you in the market for a new home? If you are going to rely on mortgage financing to cover some of the purchase cost, you will need to start the application process as soon as possible. However, what if you just need to know how much you will be able to borrow so you can start finding homes in your price range?

Let’s take a quick look at the difference between being ‘prequalified’ and ‘preapproved’ for mortgage financing.

The Process Starts With Prequalification

The first step in obtaining mortgage financing is to speak with a mortgage professional to get prequalified. After sharing some quick information about your financial assets, income, and any debts, your advisor will share a range of financing options and amounts that you may qualify for. Prequalification is typically done free of charge and either in person or over the phone.

Note that your mortgage lender will not be doing any digging in the prequalification stage. There’s no credit check and no hard look at your assets. Don’t get too excited if you are prequalified for a large mortgage as you will still need to be approved.

Once You Are Preapproved, You Are All Set

Preapproval, on the other hand, is a firm commitment to access to a certain level of mortgage financing. Your mortgage lender will require a variety of information to get an idea of your financial situation, your current and future employment, your level of risk and more. Once they have a good idea of how much mortgage you can afford, you will be provided with a conditional commitment letter. This letter outlines how much the lender is willing to offer to you as well as other vital information like your mortgage loan interest rate.

Speed Up The Process By Preparing Beforehand

Finally, it is worth a mention that you can speed up the mortgage process by having all of your application paperwork ready before the initial meeting. Gather up your most recent income tax returns, pay stubs and bank statements. If you have investments or other financial assets, document those. You will also want to be up front about any outstanding debts that you are paying off. The more prepared you are, the faster the application and pre-approval process will go.

Have you found the home of your dreams? Our team of mortgage professionals are ready to help you finance it. Contact us today and we will be happy to assist you with getting both prequalified and approved for a mortgage.

20
Jun
By First Rate Financial Group
Home Mortgage Tips

Legal Documents You Need When Buying a House

Legal Documents You Need When Buying a HouseBuying a house can be an exciting but complex process that involves many legal requirements.

You will need to provide several documents to your lender and the seller. The specific documents required may vary depending on the lender and the type of loan you are applying for, but here are some of the most common documents you may need:

Proof of Income: This may include pay stubs, W-2 forms, and tax returns from the past two years.

Bank Statements: You will need to provide bank statements for the past two to three months to show your savings and checking account balances.

Credit Report: Your lender will obtain your credit report to assess your creditworthiness and determine your interest rate.

Employment Verification: Your lender may contact your employer to verify your employment and income.

Loan Application: This is the first step in the mortgage process, and it will require you to provide detailed information about your income, assets, and debts.

Pre-approval Letter: Once you have submitted your loan application, you may receive a pre-approval letter from your lender, which will state the amount of money you are qualified to borrow.

Loan Estimate: This document provides an estimate of the closing costs associated with your mortgage, as well as the interest rate, monthly payment, and other details about the loan.

Closing Disclosure: This document is provided to you three days before closing and includes a detailed breakdown of all the costs associated with your mortgage, including the interest rate, monthly payment, and closing costs.

Identification: You will need to provide a government-issued ID, such as a driver’s license or passport.

Purchase Agreement: This is a legally binding contract between you and the seller that outlines the terms of the sale, including the purchase price, closing date, and contingencies.

Mortgage Documents: If you are financing your home purchase, you will need to sign several mortgage documents, including a promissory note and a mortgage.

Deed: The deed is a legal document that transfers ownership of the property from the seller to the buyer.

Title Report: A title report is a document that shows the history of ownership of the property and any liens or other encumbrances that may affect the title.

Homeowner’s Insurance Policy: You will need to purchase a homeowner’s insurance policy to protect your investment in the property.

It is important to compile and review these documents carefully before submitting them to your lender. It is also wise to seek the advice of a real estate attorney or other qualified professional if you have any questions or concerns.