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Archive for January, 2016
Who Is Exempt From The VA Funding Fee?
Who is NOT required to pay the VA funding fee?
This video could save some veterans thousands. VA loan applicants pay a funding fee – as of 2014, 2.15% of the total loan amount – which can be thousands of dollars. Some veterans and spouses are eligible for exemption.
Broadly speaking, veterans who received disability benefits – current or former and who are NOT currently in debt to the government may be exempt from the funding fee. Some spouses may qualify as well.
The key thing to understand is, exemption from the funding fee is NOT automatic! Borrowers must certify their veteran status, government debt, benefits and active service state on VA Form 26-8937.
It’s important to tell your mortgage company that they need to submit this form EARLY in your home-buying process – if they just look up your records without submitting the form the VA will not begin the review and approval process and your home purchase could be delayed by weeks.
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Owning vs Renting: Why High Rents Are Worse Than a Mortgage over the Long Term
If you’re at the stage in life where home ownership is nearly within your reach, you’re probably wondering whether you should start looking for a home or whether you should just keep renting. Renting is easier, people say, and it gives you more mobility. But over the long term, all that rent money can really add up – and it eventually reaches a point where buying a home is a better deal.
So why is paying a high rent a worse option than buying a house and getting a mortgage? Here’s what you need to know.
Renting Doesn’t Generate Equity
One of the single biggest sources of wealth in the United States is home equity – as you pay down your mortgage, you invest more and more of your money into your property, and it appreciates in value. When you eventually sell that home, you make a profit. The monthly payment is something you’d have to make anyway, whether you rent or own – but when you rent, your monthly rent money lines someone else’s pockets, while when you own, paying down your mortgage actually creates wealth for you.
Renting Doesn’t Give You Access To Homeowner Tax Credits And Deductions
There are all sorts of tax benefits available to homeowners that renters simply can’t access. As a homeowner, you can deduct your mortgage interest from your taxes owing, reducing your taxable income – but there’s no such deduction for renters. You can also deduct property taxes and some closing costs when you buy a home – there are no corresponding tax benefits for renters.
There are also several tax credits available to homeowners that aren’t available to renters. Things like renovations or simply buying a home for the first time can give you tax benefits that renters can’t access.
If You Can Muster Up A Down Payment, Owning Is Cheaper In The Long Run
One of the biggest hurdles keeping young people out of the real estate market is the down payment. It’s not easy, but if you can save up enough money for a down payment, you’re actually better off buying a home than continuing to rent.
According to Trulia, the median home price in metro Houston in Texas is just under $163,000, while the median monthly rent for an apartment is $1,550. That means renting would cost $18,600 per year, while buying a home (assuming a 20% down payment and 30-year term) would cost $9,384 per year in mortgage payments. In other words, owning is about half as expensive as renting in the long run.
Renting may be a good short-term solution, but over the long haul, owning is almost always better. Call a local mortgage professional to learn more.
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Money Matters: Understanding How a Mortgage Loan Can Be a Productive Investment
Most people tend to think of a mortgage loan as a necessary evil, an expense that has to be managed. But under the right circumstances, your mortgage can become a smart investment – something that makes you money instead of costing you money. With a little bit of ingenuity and a lot of hard work, you can turn your mortgage into a money-making investment that will pay dividends for years to come.
So how do you turn your mortgage loan into a productive investment? Here’s what you need to know.
A Mortgage Can Help You Buy A New Rental Property
One of the simplest ways that a mortgage can become an investment that adds value to your portfolio is by using it to buy an income property. For a first-time investor, the simplest arrangement is to buy a single-family home and rent it out. And if you live in a college town, you’ll find no shortage of students looking for housing – meaning you’ll never have a hard time finding renters.
In order to make this work, you’ll need to first have enough money saved up for a down payment. You’ll also need to have your rental rates high enough to turn a profit, but not so high that you have difficulty finding renters. And finally, if it’s possible, you’ll want to consider turning the home’s basement into a secondary suite, allowing you to max out your rental income.
A Mortgage Can Give You A Home To Flip
The second major way that a mortgage can be a productive investment is by using it to flip a home. House flipping has become very popular in recent years thanks to a number of television programs like Flip This House – and although flipping a home can result in a major windfall, it’s not easy. In order to make a house flip work for you, you’ll need to carefully plan out the flip and ensure that you buy the right property at the right time.
Beginning flippers should usually start with an older bungalow. You’ll need a solid credit score to secure the mortgage, and ideally, you should make your down payment in cash. You’ll also want to ensure the home is in a good neighborhood – this will make it easier to sell the home when you’re done renovating.
A mortgage is often thought of as an expense, but if you plan on buying a rental property or flipping a home, it’s actually a very smart investment. There’s always risk involved, of course, but with the right mortgage and the right home, you’ll have no trouble turning a profit. Call your local mortgage professional for help in getting the right mortgage for your investment property.
Mark Taylor | Arizona Home Loans | Blarming | Will You Listen to Me | Arizona Short Sales | Arizona Foreclosures | Arizona FHA Loans | Arizona USDA Loans | Real Estate Websites | Arizona HUD Homes | Ariona VA Loans | Fix My Broken Credit | Arizona Mortgage | Arizona Short Sale | Power Ranch Bank Owned Homes
What’s Ahead For Mortgage Rates This Week – January 11, 2016
The first week of 2016 was quiet concerning housing and mortgage related news, but reports on construction spending and several labor-related reports were released. Construction spending is connected to housing markets as it provides evidence of builder confidence and also future housing supply. Labor market trends provide a sense of economic performance in general and can influence potential buyers on decisions about buying or not buying homes.
Construction Spending Dips in November
According to the Commerce Department, construction spending dropped by 0.40 percent in November to a seasonally adjusted annual reading of $1.12 trillion. November’s reading was short of the expected reading of 0.90 percent, which was based on October’s original reading of a 1.00 percent increase in construction spending. October’s reading was later revised downward to 0.30 percent. November’s construction spending was 10.50 percent higher year-over-year.
While private construction spending decreased by 0.20 percent in November, it was up 12.10 percent year-over-year due to housing construction. Housing markets have been squeezed due to consistently short supplies of available homes. New construction is seen as an important way to ease the bottleneck as buyers sit on the sidelines waiting for homes to come on the market.
Residential construction was up 0.30 percent in November and increased 10.80 percent year-over-year.
Mortgage Rates Mixed, Weekly Jobless Claims Lower
Freddie Mac reported mixed results for mortgage rates. The average rate for a 30-year fixed rate mortgage dropped four basis points to 3.97 percent; the average rate for a 15-year fixed rate mortgage rose two basis points to 3.26 percent and the average rate for a 5/1 adjustable rate mortgage rose by one basis point to 3.09 percent. Last week’s discount points averaged 0.60 percent for 30-year fixed rate mortgages, 0.50 percent for 15 year fixed rate mortgages and 0.40 percent for 5/1 adjustable rate mortgages.
New weekly jobless claims fell to 277,000 as compared to expectations of 275.000 and the prior week’s reading of 287,000 first-time claims. Fewer first-time claims for jobless benefits point to stronger economic conditions in general as evidenced by expanding job markets. National unemployment held steady 5.00 percent, which mirrored expectations and the same as November’s reading.
Labor Department: 292,000 New Jobs Added in December
According to the Labor Department, 292,000 new jobs were added in December, which resulted in the fifth consecutive year where jobs grew by 2 million or more year-over-year. Upward revisions to jobs reports for October and November supported stronger economic conditions. October’s reading was adjusted from 298,000 new jobs to 307,000 new jobs; November’s original reading for new jobs was raised from 211,000 jobs added to 252.000 jobs added.
Last week’s positive jobs reports were released against a backdrop of market volatility due to fears that the Chinese economy is slowing. As the second largest global economy, China’s economy could influence global financial markets and economic conditions if it experiences serious difficulties.
What’s Ahead
This week’s scheduled economic releases include reports on job openings, retail sales and the Federal Reserve’s Beige Book. In addition to reports on mortgage rates and new jobless claims, a reading on consumer sentiment will round out this week’s news.
Mark Taylor | Arizona Home Loans | Blarming | Will You Listen to Me | Arizona Short Sales | Arizona Foreclosures | Arizona FHA Loans | Arizona USDA Loans | Real Estate Websites | Arizona HUD Homes | Ariona VA Loans | Fix My Broken Credit | Arizona Mortgage | Arizona Short Sale | Power Ranch Bank Owned Homes
Have You Been Denied for a Mortgage? Here Are 3 Reasons Why You’ll Want to Keep Trying
If you’re in the market for a new home, you’ll most likely need a mortgage in order to afford it. But for some home buyers, getting a mortgage isn’t easy. Banks and other lenders are often hesitant to lend money to certain consumers, often for good reason.
But sometimes, lenders’ reasons for declining you aren’t entirely valid. That’s why, if you’ve been denied for a mortgage, you’ll want to keep trying to get mortgage funds. Here are three factors that can influence the likelihood of approval on the second try.
A Second Appraisal Might Change Your Circumstances
Sometimes, a mortgage lender will deny a loan because the property value of the home in question isn’t large enough to back the loan. If your mortgage lender declines you because of a poor loan-to-value ratio, getting a second appraisal could help. A lot of appraisal companies will give wildly different appraisals on the same property, with some brokers reporting valuation differences of up to $1.3 million.
Bear in mind that you cannot get two appraisals through the same lender, so if you choose to have the home appraised a second time, you’ll need to find a new lender.
Cleaning Up Your Credit Report Can Work Wonders
What’s on your credit report will have a large role in determining whether or not you get the mortgage you want. If you’ve been denied because of entries on your credit report, you’ll want to take every step possible to correct those report issues. If you’ve been more than 30 days late on a payment in the past, it will show on your credit report and affect your score – but by calling your creditor and asking them to remove the negative, you can bring your credit report back into good standing.
You’ll also want to pay off any and all past due balances as soon as possible. If you can’t pay what you owe in full, you’ll want to negotiate with your creditor to pay part of the amount. This will result in the debt showing on your credit report as “paid as agreed”, which will boost your credit score.
An Extra Down Payment May Be A Good Idea
affect your scoreOftentimes, a lender will decline a borrower if the borrower is asking for too much money. If you’re pursuing a mortgage worth more than 95% of the property value, you’ll probably be declined. But if you make an extra down payment, you can lower your loan amount – which may incline your lender to approve your application.
If you’ve been declined for a mortgage, don’t give up. There are steps you can take to get approved. Call your local mortgage professional for more advice on mortgage applications.
Mark Taylor | Arizona Home Loans | Blarming | Will You Listen to Me | Arizona Short Sales | Arizona Foreclosures | Arizona FHA Loans | Arizona USDA Loans | Real Estate Websites | Arizona HUD Homes | Ariona VA Loans | Fix My Broken Credit | Arizona Mortgage | Arizona Short Sale | Power Ranch Bank Owned Homes
A Quick and Easy Guide to Using an Online Mortgage Calculator
If you’re in the market for a new mortgage, using an online mortgage calculator is a great way to determine what kind of terms you can expect to see and how they’ll affect your home purchase. Visualizing what a 3.9% interest rate looks like can be difficult, which is why a mortgage calculator is so useful – it shows you exactly what a certain mortgage will do to your finances. Here are just a few ways that you can use an online mortgage calculator to learn more about your mortgage needs and find the mortgage that is best for you.
Start With A Solid Set of Sample Data
In order for your mortgage calculator to be of any use, you’ll need to start the calculations with a set of sample data that is a fairly accurate representation of what you can expect to find in the market. For example, if your gross annual salary is $30,000, you won’t want to look at mortgages for $1 million homes (unless you’re doing so out of idle curiosity). Instead, try to represent your actual take-home earnings and interest rates available to someone with your credit as faithfully as possible.
Try Adjusting The Settings And Terms
Once you have your sample data and have done a quick initial calculation, you’ll want to play around with some of the settings and terms to see how minor changes in your mortgage arrangement can affect your finances.
For instance, what happens if you keep your monthly payment the same but increase your interest rate? What happens if you change your 15% down payment to 20% and you suddenly don’t have to pay mortgage insurance? When you understand how all of the different variables impact both each other and your monthly payments, you’re in a better position to judge what kind of mortgage is a good fit for you.
Survey Multiple Lenders And Input Their Terms
When you use your mortgage calculator, you’ll want to avoid simply using one mortgage plan from one lender. Different lenders can vary in their mortgages available and can offer you different terms, which will impact your monthly payments and possibly even what kind of home you can afford. So shop around and use different terms from different lenders – this has the dual effect of both helping you understand how mortgages work and saving you some rate shopping time later.
Online mortgage calculators are an easy way to learn how mortgages work, but you’ll want to enlist the help of a professional mortgage advisor when it comes time to choose a mortgage and a lender. Contact your local mortgage professional today to get expert home buying advice.
Mark Taylor | Arizona Home Loans | Blarming | Will You Listen to Me | Arizona Short Sales | Arizona Foreclosures | Arizona FHA Loans | Arizona USDA Loans | Real Estate Websites | Arizona HUD Homes | Ariona VA Loans | Fix My Broken Credit | Arizona Mortgage | Arizona Short Sale | Power Ranch Bank Owned Homes
What’s Ahead For Mortgage Rates This Week – January 04, 2016
2015 said farewell with reports on Case Shiller home prices, pending home sales, and consumer confidence. The details:
Case-Shiller Home Prices Post Double Digit Gains in October
According to Case-Shiller’s 20 City Home Price Index, Denver, Colorado, Portland, Oregon and San Francisco, California tied for the highest home price gains in October with year-over-year home price gains of 10.90 percent. Lowest annual price gains were posted by Chicago, Illinois at 1.30 percent followed by Washington, D.C with a year-over-year –reading of 1.70 percent. Home prices rose at their fastest rate since August 2014 according to Case-Shiller.
Month-to-month home prices showed mixed results in October. Miami, Florida posted the highest month-to-month gain of 0.70 percent. San Francisco, California posted a gain of 0.60 percent; Phoenix, Arizona and Portland, Oregon posted month-to-month home price gains of 0.60 percent.
Cities posting month-to-month declines in home prices included Chicago, Illinois where home prices declined 0.70 percent, Cleveland Ohio and San Diego, California posted month-to-month declines of 0.40 percent, Washington, DC home prices dropped 0.30 percent month-to-month. Home prices in Boston, Massachusetts and Las Vegas, Nevada were unchanged in October from September readings.
While Case-Shiller’s 20-City Index remains 11 to 13 percent below 2006 peak home prices, the index is approximately 36 percent higher than lowest home prices posted in 2012.
Pending Home Sales Dip in November
According to the National Association of Realtors®, pending home sales dipped 0.90 percent in November after posting a gain of 0.20 percent in October. Analysts expected a 1.0 percent gain in pending sales for November. Pending home sales peaked in May 2015, but short supplies of available homes and rising prices have caused home sales to slow. Pending home sales are defined as homes for which a sales contract is signed, but aren’t yet closed. November’s pending sales were 2.70 percent higher than for October and represented the 15th consecutive month of annual gains in pending home sales.
Regional results for November’s pending sales were mixed. The Northeast reported a reading of 91.8, which was nearly three points lower than October’s reading. The Western region posted a reading of 100.4, a decline of nearly 6 points. The Midwestern region posted a gain of one point to a reading of 104.9. The South had the strongest reading for pending home sales in November with a reading of 119.9, which represented an increase of 1.50 percent.
The National Association of Realtors® expects sales of pre-owned homes to top out at 5.25 million for 2015, which would be the highest reading since 2006. The national median home price for pre-owned homes is $220,700, which is six percent higher than in November 2014.
Mortgage Rates, Consumer Confidence Rise
Freddie Mac reported that the average mortgage rates rose across the board last week. The average rate for a 30-year fixed rate mortgage was three basis points higher at 4.01 percent; the average rate for a 15-year fixed rate mortgage was two basis points higher at 3.24 percent and the average rate for a 5/1 adjustable rate mortgage also rose two basis points to 3.08 percent. Average discount points were unchanged at 0.6, 0.6 and 0.4 percent respectively.
On a positive note for year-end, consumer confidence increased to a reading of 96.5 in December as compared to November’s upwardly revised reading of 92.6 and an expected index reading of 93.50. Analysts were relieved to see increasing consumer confidence after an unexpected decline in November.
What’s Ahead
This week’s scheduled economic news includes reports on construction spending, the government’s Non-farm Payrolls report and ADP’s payroll reports. Labor reports act as potential indicators of future housing markets as steady employment is typically a major factor in home-buying decisions.
Mark Taylor | Arizona Home Loans | Blarming | Will You Listen to Me | Arizona Short Sales | Arizona Foreclosures | Arizona FHA Loans | Arizona USDA Loans | Real Estate Websites | Arizona HUD Homes | Ariona VA Loans | Fix My Broken Credit | Arizona Mortgage | Arizona Short Sale | Power Ranch Bank Owned Homes