20
Jan
By First Rate Financial Group
Mortgage

An Often-Overlooked Trick Can Help You Afford A Second House

An Often-Overlooked Trick Can Help You Afford A Second HouseThe whole idea of investing is to use a portion of your money now to get more down the road. It is important for everyone to diversify their investments, and you might be thinking about buying a second house to do so. Investing in real estate is a goal that a lot of people have, but how can you get started? It was challenging enough to buy your first house, so how can you afford a second one? 

Use A Cash-Out Refinance To Buy Your Second House

One trick that many people overlook is that they can actually conduct a cash-out refinance to purchase a second house. In general, your lender will allow you to cash out up to 80 percent of the value of your home during a cash-out refinance. This can give you a tremendous amount of flexibility that you can use to purchase a second house. For example, if your house is worth $300,000, you may be able to withdraw tens of thousands of dollars in equity.

What To Consider When Using A Cash-Out Refinance

When you apply for a cash-out refinance, there is a chance that the interest rate on your new loan might change. This might mean that you end up with a higher interest rate than before. You must make sure you can afford this new interest rate. Furthermore, you will be required to pay closing expenses. You need to have enough money set aside to cover those closing expenses. Keep in mind that the term of the loan might change as well. If you were close to paying off your house, this type of refinance might reset that clock. It might take you longer to pay off your mortgage than it did before. Consider these factors carefully before conducting a cash-out refinance.

A Cash-Out Refinance Might Be Right For You

In the end, a cash-out refinance could be a great way for you to withdraw equity from your home, using it to purchase an investment property. On the other hand, you need to ensure you can still afford the new loan after you take that equity out of your home. Work with an expert who can help you find the right option to meet your needs.

 

19
Jan
By First Rate Financial Group
Mortgage

VA Loans: Are They Assumable?

VA Loans: Are They Assumable?Members of the military, their family members, and veterans have access to a unique mortgage option called a VA loan. This can be a strong option because it provides borrowers with an opportunity to purchase a house for less than 20 percent down. While not everyone is eligible for a VA loan, there are a lot of people who are wondering, are VA loans assumable? There are a few key points to keep in mind.

What Is An Assumable Loan?

An assumable loan means that the buyer is essentially going to take over the mortgage held by the seller. Essentially, this means that the buyer is going to take over the remaining balance of the loan as well as the interest rate attached to that loan. The buyer will have to compensate the seller for any equity the seller has already accumulated. This means either providing the seller with cash for his or her equity or taking out a second mortgage to cover the difference. The biggest advantage of assuming a loan is that you may be able to secure a lower interest rate than you would in the current market. 

Who Can Assume A VA Loan?

The great news is that a VA mortgage loan is assumable. Even though a VA loan is only available to retired service members, active service members, and members of their immediate families, anyone the lender qualifies to take over the loan can assume it. In general, this means that the buyer needs to have a credit score of at least 580 and a debt-to-income ratio of 45 percent. The buyer and seller must also have at least 12 months without any missed payments. Finally, the person assuming the loan must also occupy the property and the buyer must be willing to take over the terms of the original loan.

Should I Assume A VA Loan?

Assuming a VA loan could be right for you because you can access a lower interest rate and potentially save thousands of dollars on closing costs and expenses if you do not have to take out a second mortgage. On the other hand, this also means that you might need to put more money down to compensate the seller for his or her equity. 

 

18
Jan
By First Rate Financial Group
Mortgage

How Do You Actually Write The Check To Buy A House?

How Do You Actually Write The Check To Buy A House?After you have found the right house to meet your needs, you need to make the down payment to complete the transaction. Can you show up at the closing table with a suitcase full of cash? Of course, that would be a bit suspect, so that is not actually how it happens. What do you need to do to actually hand over the funds to buy the house? 

The Down Payment Is Verified Beforehand

First, understand that the down payment is usually verified before you agree to the deal. Your real estate agent will work with you and the seller’s agent to ensure that you actually have the funds needed to buy the house. For example, you might need to send screenshots of your bank balance or investment portfolio as proof that you have the money. Your agent will work with you to ensure your confidential information remains so.

The Funds Are Typically Given Using A Wire Transfer

When it is time for you to complete the actual transaction, the real estate attorney will handle just about everything. The attorney will be responsible for collecting the money from the sale and ensuring that everyone gets the money they are owed. The attorney will provide you with the account information for where you need to wire the money. Prior to the closing date, you need to go to the bank and work with one of their experts to ensure the money is in your account and wired to the correct account destination.

The Real Estate Agent Will Confirm The Process Is Done

It is best not to wait until the last minute to wire the money into the account. Try to do this process ahead of time, and make sure either the attorney or your real estate agent says that the process has been completed. You do not want to run the risk of missing your closing date. If you have questions about the process, make sure you give the attorney’s office plenty of time to respond to you.

Determine Your Budget With The Help Of Your Real Estate Agent

This process is important for making sure you can afford the house you want. Work with your real estate agent to ensure you have the necessary funds for the down payment.