03
Dec
By First Rate Financial Group
Mortgage

An Overview Of A Deed Of Reconveyance

An Overview Of A Deed Of ReconveyanceWhen someone purchases a house, they might have to take out a loan. Because a house is expensive, most people end up with a mortgage. Some people decide to go with a 15-year mortgage while other people decide to go with a 30-year mortgage. Eventually, after all these years, someone might receive a deed of reconveyance. What does this mean, and how does it work? 

Homeowners Own The House, But With a Lien

After purchasing a house, homeowners legally own the house, even if they have financing tied to a mortgage. Even if someone purchases a home with only 3.5 percent down, they own that house, but there might be a mortgage lien to it. What this means is that the mortgage has to be paid off when the house is sold. Or, the lender has to agree to a short sale. Once the loan is paid off, that mortgage lien is removed. To remove the lien, the lender will issue something called a deed of reconveyance.

How Does This Deed Work?

Laws can vary from state to state, most jurisdictions require the lender to submit a deed of reconveyance to the borrower within 30 or 60 days of the mortgage being paid off. In some cases, the lender will send the notice directly to the homeowner. Then, the homeowner has to contact the county to record it. Homeowners might be required to work with the county to get the deed of reconveyance recorded. Otherwise, they could face a penalty. 

What Happens When Selling a Home?

If the mortgage has not yet been paid off and the home is sold, the proceeds from the buyer need to be used to pay off the mortgage. Then, the seller collects the money left over. Once the mortgage is paid off at closing, the title company usually handles the deed of reconveyance. 

It is important for homeowners to have a deed of reconveyance if they pay off the mortgage before they sell the house. Sometimes, if the home is owned by the homeowner outright, it can make for an easier sale. This is another reason why homeowners should work with a real estate agent when they go to sell their homes. 

 

18
Nov
By First Rate Financial Group
Mortgage

Qualifying For A Mortgage Credit Certificate

Qualifying For A Mortgage Credit CertificatePurchasing a house can be expensive, but there are measures in place to make it easier, particularly for people buying a home for the first time. One option is a mortgage credit certificate. What is the certificate, and how does it work?

A Mortgage Certificate Is A Tax Credit

A mortgage credit certificate, usually shortened to MCC, is a credit issued to first-time homebuyers by the local or state government. This certificate allows first-time homeowners to claim a federal tax credit for mortgage interest paid on the loan, with a limit of up to $2,000. When someone takes out a mortgage, the majority of the payments go toward interest. This credit certificate allows homeowners to recover some of the interest paid in the form of a tax credit.

Who Qualifies For This Credit?

Not every homeowner will qualify for this certificate. Usually, this is a certificate reserved for low-income people purchasing a home for the first time. Or, these credits are limited to people who purchase a house in a certain area. Usually, these programs are run by the states. Every state has a slightly different income limit for people purchasing a home. Everyone needs to check the local rules and regulations set by their states.

Is The Certificate Different From A Tax Deduction?

Yes, the mortgage credit certificate is different from a tax deduction. A tax credit is directly applied to the amount of money someone owes in taxes. In contrast, a tax deduction is a deduction from someone’s gross taxable income. A tax credit is better for tax purposes than a tax deduction. It is possible for someone to be awarded a mortgage credit certificate and deduct the interest paid on the mortgage from their taxes. Anyone who has questions about how deductions and credits work should work with a tax professional. 

Do Not Leave Money On The Table

It is true that purchasing a house for the first time can be a challenge; however, there are financial measures in place to make this process easier. Anyone who is buying a home for the first time should take a look at the state qualifications for the mortgage credit certificate program. This could help people save money on their taxes.

 

16
Nov
By First Rate Financial Group
Mortgage

What Is A High Enough Credit Score For A Mortgage?

What Is A High Enough Credit Score For A Mortgage?There are many people who are interested in purchasing a home for the first time. Even though many first-time homeowners are interested in the sticker price of a home, it is just as important to consider credit scores. Anyone who requires financing to purchase a home will have to go through a credit check. What credit score is considered high enough for a home loan? What do people have to do if they want to increase their credit scores?

What Credit Bureaus Do Lenders Use?

First, a credit score is a reflection of someone’s overall financial health. A lender wants to make sure someone has the ability to pay back a mortgage before they give that person a home loan. The higher someone’s credit score is, the more likely the lender believes he or she will have that loan repaid. 

In general, there are three major credit bureaus. They include Experian, TransUnion, and Equifax. Most lenders are going to run something called a triple merge (or a trimerge) when they check someone’s credit. This means the lender is going to check someone’s credit score with all three major credit bureaus before deciding if someone should receive a home loan. All three major credit bureaus calculate credit scores using the Fair Isaac Corporation, or FICO, numbers, but they calculate credit scores slightly differently. 

What Is Considered A Solid Credit Score?

Every lender has a slightly different metric, but a credit score less than 580 is considered poor. In contrast, a credit score over 800 is considered excellent. The maximum credit score someone can have is 850. If a loan is given to someone with a score under 620, this is considered a “subprime” loan. It is possible for people to qualify for a home loan with a low credit score, but they may be facing a higher interest rate.

Those who are interested in raising their credit score should pay all of their bills on time. It is also important for individuals to pay down as much of their debt as possible before applying for a home loan. This could help them increase their credit scores and get approved for a loan with a solid interest rate.