22
Apr
By support
Home Mortgage Tips

Thinking About Buying a Rental Property? 3 Reasons You’ll Want to Get a Mortgage Pre-Approval

Thinking About Buying a Rental Property? 3 Reasons You'll Want to Get a Mortgage Pre-Approval A rental property is a wonderful investment option to consider, and it can provide you with everything from considerable tax benefits to appreciation and monthly cash flow. While you may be eager to get started searching for a new rental property to invest in, a good idea is to take the initial step to get pre-approved for your mortgage.

There are several good reasons why a pre-approval is an important first step to take.

Determining What Sales Price to Consider

The mortgage rules and guidelines for an investment or non-owner occupied property are different than those for an owner occupied property. For example, a key difference is that most lenders will require you to make a larger down payment. When you get pre-approved for your mortgage, you can more easily narrow down your property choices so that you only consider those that are affordable for your budget.

Estimating Cash Flow

When you invest in a rental property, you will need to estimate the cash flow for the property to ensure that it is a good investment. This may include reviewing the monthly rents and operating expenses, and it also includes analyzing the mortgage payment. When you get pre-approved for your mortgage, you can estimate your monthly payment and determine which properties are a better investment opportunity for you and which will generate the largest profit for you.

Structuring A Stronger Offer

By getting pre-approved, your mortgage professional will provide you with a pre-approval letter. This letter can be given to a seller when you structure your offer, and essentially this will strengthen your offer and make you look like a more serious and qualified buyer. When you are in a bidding war, this letter can make a big difference in your success. Furthermore, it can streamline your mortgage process once your offer is accepted by the buyer, and it will enable you to create a more realistic closing date on your offer.

While you may be ready to jump head first into your property search, you may benefit from taking time to get pre-approved for your mortgage. This process takes very little time to do, and it will facilitate the entire process. From searching for a great property and analyzing its strength as an investment opportunity to helping you pass through the loan process, you will benefit in a number of ways. You can reach out to a mortgage professional today to begin the pre-approval process.

21
Apr
By support
Home Mortgage Tips

The Pros and Cons of Putting in More Than 20 Percent as a Down Payment on Your New Home

The Pros and Cons of Putting in More Than 20 Percent as a Down Payment on Your New Home One of the most common questions home buyers ask today relates to how much money they need to put down on a home. There are mortgage requirements in place that establish minimum down payment requirements, and some home buyers will barely have enough to pay the minimum down payment as well as closing costs. However, if you have access to more money, you may be wondering if you should make a larger down payment. There are several points to consider to determine if making a larger down payment is right for your financial situation.

Having Liquid Assets Available After Closing

It is important to consider how much available cash you will have access to after closing if you do make a larger down payment. There are many costs associated with home ownership to think about, such as unexpected repair costs, paying a homeowners’ insurance deductible if a mishap occurs and even furnishing your new home. Once your funds are invested in your home, you will only be able to tap into those funds by refinancing. You may consider placing extra cash into a more liquid asset if you do not have a lot of extra cash available to you.

Qualifying for a Lower Interest Rate

Depending on your loan program, you may be able to qualify for a lower interest rate if you place more money down with your new mortgage. This is not always the case, so you will want to review this option with your mortgage representative. Keep in mind that interest will impact your mortgage payment as well as the amount of your mortgage interest tax deduction at the end of the year.

Having a Lower Mortgage Payment

When you obtain a lower loan amount with your mortgage, your mortgage payment will be lower. This can make your budget more affordable going forward. Because a mortgage payment is generally one of the higher expenses in a budget, the importance of this cannot be understated. An alternative to this is to establish the loan on a shorter term. Using a shorter term option generally makes your payments higher, but with a larger down payment, it may be easier for you to manage a shorter term length and to pay your mortgage off more quickly.

Using Funds for Other Purposes

You should also consider other ways that you could use your additional funds. For example, you may have high interest rates debts that you could pay off, or you may be able to invest the additional funds in the stock market. For some, tying funds up in a home is practical, but it is not always the best option available.

There is no catch-all answer regarding how much money you should use as a down payment. Each situation is unique, and you should speak with your mortgage representative to discuss the pros and cons of a larger down payment with your specific loan application.

15
Apr
By support
Home Mortgage Tips

You Ask, We Answer: How Often Should I Refinance the Mortgage on My House?

You Ask, We Answer: How Often Should I Refinance the Mortgage on My House? Refinancing a home mortgage can provide you with an incredible range of benefits. These include everything from reducing your mortgage term and lowering your payments to helping you more effectively build equity or pulling equity out to use for beneficial purposes.

One common question that many homeowners ask is how often a mortgage should be refinanced. While there are benefits associated with mortgage refinancing, there are also some points to consider before you rush into the process.

Think About Refinancing Costs

First, remember that each mortgage application will come with refinancing costs. These costs can equate to thousands of dollars in some cases, and they include title fees, lender fees, appraisal fees and more. While these costs can typically be rolled into your home mortgage so that you pay very little money out of pocket, these costs will increase the amount of debt that is tied to your home. When you refinance too often, you are negating the effects of principal reduction from your mortgage payments.

Consider the Impact On Home Equity

Some who refinance will choose a straight rate and term refinance, and they will not pull equity out of their home. Others, however, have the desire to tap into their home equity to pay off other debts, to fix up the house, to take a vacation or for other purposes. When you tap into your home equity, you may be having a negative impact on your financial situation, depending on how you use the funds.

Pay Attention To Your Final Loan Payoff Date

Before you make a decision to refinance your home mortgage, you also should focus on your loan payoff date. Many have the goal in mind of paying off their home mortgage before they retire, and this is especially true if you plan to live in the home after retirement. On the other hand, you may have plans to sell the home and downsize before retiring. Your refinance will adjust your loan payoff date, so this is an important factor to weigh into your decision making process.

You may know people who refinance every year, and you may know others who have owned their home for a decade or longer without ever having refinanced. Each homeowner has a unique financial situation. You can speak with a mortgage professional to learn more about the specific benefits associated with a refinance loan, and you may also keep these points in mind to assist with your final decision.