A new study shows that forty-three percent of 30-year mortgage holders are eligible for a refinance that would lower their mortgage rates. That means their credit rating is at least 720, they have at least 20% equity in their homes, and they can reduce their mortgage rate by at least 0.75% through refinancing, according to data compiled by research company Black Knight. Homeowners could save an average of $297 a month by refinancing. Mortgage rates have dropped to record lows, below 3%, in recent weeks.
The states with the largest populations have the most eligible homeowners for refinancing, a new breakdown of state-by-state eligibility compiled by Forbes Advisor shows. The highest number of eligible borrowers lives in California, where the population that would benefit from a refinance is more than double that of second-place Florida. Forty-five percent of homeowners in California could lower their mortgage payments by refinancing and could save an average of about $405 per month. Borrowers eligible for refinancing are seen most in California, Florida, Texas, New York, and Illinois.
Meanwhile, the five areas where borrowers may see the greatest savings by refinancing are Hawaii (a potential monthly savings per borrower of $483); Washington, D.C. ($445), California ($405), New York ($399), and New Jersey ($354).
Credit scores are the key to unlocking lenders’ lowest mortgage rates. The states with residents with the highest average FICO scores are Minnesota (734), South Dakota (728), Vermont (728), and North Dakota (727), according to Forbes Advisor’s analysis.
Why are so many homeowners hesitating to refinance? Some are leaning on credit to pay bills or hoping to see an even lower rate. They also might be concerned about having to pay high closing costs from refinancing. Some lenders may offer “no-closing-cost refinances.” They add the closing costs to the principal so the borrower doesn’t have to pay a large upfront sum.
Homeowners interested in a refinance should attempt to lock it in before Dec. 1, when the Federal Housing Finance Agency will charge an “adverse market fee.” That will add a 0.5% surcharge to most mortgages backed by Fannie Mae and Freddie Mac that are refinanced into lower rates, meaning borrowers may have to pay the extra fee. Homeowners refinancing mortgage loans with balances below $125,000 will not be charged the new fee.
Getting a pre-approval from a mortgage lender in Arizona Horse Property is a great first step in the homebuying process. When looking for a home, the temptation to fall in love with a house that’s outside your budget is very real. So, before you start shopping around, it’s helpful to know your price range, what you’re comfortable within a monthly mortgage payment, and ultimately how much money you can borrow for your loan. According to a recent survey from realtor.com, many buyers are making the mistake of skipping the pre-approval step in the homebuying process:
“Of over 2,000 active home shoppers who plan to purchase a home in the next 12 months, only 52% obtained a pre-approval letter before beginning their home search, which means nearly half of home buyers are missing this crucial piece of paperwork.”
The pre-approval letter shows sellers you’re a qualified buyer, something that can really help you stand out from the crowd in the current ultra-competitive market.
With limited inventory, there are many more buyers than sellers right now, and that’s fueling the competition. According to the National Association of Realtors (NAR), homes are receiving an average of 2.9 offers for sellers to negotiate, so bidding wars are heating up.
Pre-approval shows Arizona Horse Property homeowners you’re a serious buyer. It helps you stand out from the crowd if you get into a multiple-offer scenario, and these days, it’s likely. When a seller knows you’re qualified to buy the home, you’re in a better position to potentially win the bidding war and land the home of your dreams.
In addition, today’s housing market is also changing from moment to moment. Interest rates are low, prices are going up, and lending institutions are regularly updating their standards. You’re going to need guidance to navigate these waters, so it’s important to have a team of professionals (loan officer and real estate agent) making sure you take the right steps along the way and can show your qualifications as a buyer at the time you find a Arizona Horse Property home to purchase.
With national inventory down almost 30%, the Arizona Horse Property housing market has become more competitive. That’s especially true when it comes to mid-priced, affordable houses. So how do you get ahead in a hot market? The key is preparation. The sooner you start preparing to buy a house, the easier it’ll be to beat the competition. But even if you’re already house hunting, it’s not too late to take some of these steps and improve your Arizona Horse Property homebuying prospects.
Once you decide to buy a home, the first thing you’ll need to do is check your credit. This involves getting your credit report from each of the three bureaus (Experian, TransUnion, and Equifax), and pulling your credit score. Your credit determines whether you’re eligible for a mortgage, and it influences your mortgage rate. The higher your score, the lower your rate. Ideally, you should check your credit at least six to 12 months before applying for a mortgage. This allows time to improve a low personal score, if necessary. To get your credit file, contact each of the three bureaus separately, or order all three copies from AnnualCreditReport.com. Each year you’re entitled to one free report from each of the bureaus.
Your debt-to-income (DTI) ratio is the percent of your monthly gross income that goes toward debt repayment. Mortgage lenders use this percentage to gauge affordability. Generally speaking, lenders prefer a DTI ratio that’s no higher than 36% to 43%, depending on the mortgage program.
To improve your DTI ratio, pay off as much debt as possible before applying for a mortgage. This includes credit cards, auto loans, student loans, and other loans. You don’t have to be debt-free to purchase a home, but less debt can increase purchasing power.
Today, the majority of mortgage programs require a down payment. This amount ranges from a minimum 3% to 5% for a conventional loan, and a minimum 3.5% for an FHA home loan. So if you pay $200,000 for a house, you’ll need at least $6,000 to $10,000 as a down payment. Keep in mind, too, if you purchase with less than a 20% down payment, you’ll likely pay mortgage insurance. This insurance protects your lender in the event of default. Some mortgage programs allow borrowers to use gift funds to cover all or a percentage of their mortgage-related expenses. There are also multiple down payment assistance programs (DPAs) in every state. These offer grants or loans — sometimes forgivable loans — to qualified homebuyers who need help with their down payments.
If you own a home in Arizona Horse Property, you need to have adequate homeowners insurance coverage. Nearly all mortgage lenders require it as part of the conditions for issuing a home loan anyway. However, as time goes on, you may find that you want to make certain changes to your homeowners insurance to create a better plan. Here are four ways in which to improve your insurance:
One of the easiest ways to improve your insurance coverage is to make changes to your coverage limits. For example, you may choose to raise your deductible in order to have a lower monthly premium or vice versa. You may decide that you can afford to reduce the coverage limit on roof repair and replacement or a similar coverage area. Small changes to coverage limits often result in small rate reductions that add up to bigger savings over time.
As with most types of insurance, you have the option of shopping around for better rates. You might be able to find another company that is offering similar coverage for a lower price. Be careful to only drop certain types of coverage if it’s advantageous to do so and don’t shop solely on price. Do note that you can usually get better rates by bundling homeowners insurance with other types of coverage, such as car insurance.
If you’re confused by the various homeowners insurance options and want to ensure you get the best policy for your needs, it might be best to consult a professional. A qualified insurance agent can explain all the details of various homeowners insurance policies and assist you in selecting or building a policy that’ll meet your specific needs. They will gather information about your Arizona Horse Property home and your unique situation to make suggestions regarding the types and limits of coverage you should have.
Some factors that impact your homeowners insurance rates are security and disaster preparedness features. This can include everything from home security systems to hurricane-proof windows. Insurers view homes that have these features as less of a risk to insure and reflect that in lower rates. Keep your insurer informed of changes that might affect your coverage, whether that’s installing a security system, removing a pool or bringing home a puppy.
If you’re looking to improve your homeowners insurance coverage, you have several options. Always weigh your choices carefully before making a decision. With the right changes, you can craft a homeowners insurance policy that better suits your needs!
Article provided by: Brooke Chaplan
A letter arrives in the mail and tells you your mortgage has been sold. It also informs you to send your monthly payments to a new address. Don’t panic! This happens all the time, and you shouldn’t see many (if any) changes. So why does your mortgage get sold—and why can it happen multiple times? Banks and mortgage servicers constantly check the numbers to find a way to make a buck on your big loan. It all takes place behind the scenes, and you find out the result only when you get that aforementioned letter in the mail.
The short version: When a loan is sold, the terms of that loan don’t change. But where a mortgage-holder submits payment and receives customer service may change as the loan gets sold. And that could affect a few things.
The level of service that you receive may vary depending upon who the servicer is. Certain servicers might offshore a lot of that work, so when you would call into servicing, you could get a call center somewhere and people were less than knowledgeable about the product.
The new servicer might offer different payment options and may have different fees associated with payment types, so be sure to check any auto payment or bill pay functions you’ve set up.
To understand why mortgages are sold, it’s important to understand some basics.
First, when you take out a mortgage to buy a home in Arizona Horse Property, a lender approves your loan and you make payments to a loan servicer. Sometimes, the servicer and the lender are one and the same. More often, they’re not.
The servicer collects the payment and disburses it out. They distribute the payment to the investors, send property taxes to the local taxing entity, and pay homeowners insurance. They are taking care of all the payments coming in and getting them distributed to the people they belong to.
Lenders can enter agreements with servicers to purchase batches of loan servicing. Or lenders may shop around for a servicer if they’re carrying too many loans on their books.
Servicers are interested in buying loans in order to sell other products to their new-found customers. Many lenders originate loans, and then proceed to sell off the servicing or the loan itself. If the servicer changes, the customer must receive a notification. There will be a grace period in case a borrower accidentally sends payment to the wrong place.
Lenders often sell the loans to financiers as a mortgage-backed security for investors or to government-sponsored entities like Fannie Mae, Freddie Mac, and Ginnie Mae.
The average mortgage payment is about $1,500 per month, according to the U.S. Census Bureau, coming in at about the same amount as the cost of renting (the average cost to rent was $1,476 in October).
Mortgage payments have decreased about 3% since mid-2018. They’re expected to get even lower this year, possibly 3.3% to 5.9% below this year, The Mortgage Reports notes.
The trend is occurring even as home prices rise. Mortgage rates, currently at around three-year lows, are helping more homeowners see a decrease in their monthly mortgage payments.
Census Bureau data shows that mortgage payments can vary quite a bit by location. For example, the Pacific region of the U.S., which faces some of the highest home prices, has an average mortgage payment of $2,096. On the other hand, the East South Central area has the lowest average for a mortgage, at $1,140.
This table from The Mortgage Reports shows the breakdown:
|Pacific||$2,096||Washington, Oregon, California, Hawaii, Alaska|
|New England||$1,912||Maine, New Hampshire, Vermont, Massachusetts, Connecticut, Rhode Island|
|Middle Atlantic||$1,856||New York, Pennsylvania, New Jersey|
|Mountain||$1,439||Montana, Idaho, Wyoming, Nevada, Utah, Colorado, Arizona, New Mexico|
|South Atlantic||$1,437||West Virginia, Maryland, Delaware, Washington D.C., Virginia, North Carolina, South Carolina, Georgia, Florida|
|West South Central||$1,397||Oklahoma, Arkansas, Louisiana, Texas|
|West North Central||$1,321||North Dakota, South Dakota, Nebraska, Kansas, Minnesota, Iowa, Missouri|
|East North Central||$1,296||Wisconsin, Michigan, Illinois, Indiana, Ohio|
|East South Central||$1,140||Kentucky, Tennessee, Mississippi, Alabama|
Chances are good you know all about your credit score. Also called a FICO score, this magical number is a major factor in many financial transactions, including qualifying for a mortgage and renting apartments in Arizona Horse Property. In October 2018, the Fair Isaac Corp. (the creators of FICO) announced a whole new scoring method called the UltraFICO. Currently in beta testing with a small, undisclosed group of lenders, this new scoring method is expected to be more widely released in April 2019. So, what is this exciting new scoring model? Will it help? Will it hurt? Here’s what you need to know.
Your traditional FICO score looks only at the money you borrow from lenders (e.g., through credit cards, and car and college loans). FICO scores generally do not factor in any traditional bank accounts, be it checking or savings.
The UltraFICO, in contrast, does look at your banking behavior, adding it to the mix along with more traditional metrics like your credit card payments. UltraFICO examines your checking, savings, and/or money market accounts (which are similar to savings accounts but offer a higher interest rate in exchange for maintaining a higher balance), and reports on details such as the following:
If you show “responsible financial behavior” in these accounts, this could improve your credit score. If you have imperfect credit or no credit but you have a positive banking history, your score may see a nice boost.
“If you have even a few hundred dollars in your account, and if you haven’t bounced checks or gone under the minimum balances, that will now count in your favor,” says Howard Dvorkin, a certified public accountant in Fort Lauderdale, FL.
No. “Most banks and lenders are going to use it initially as a backup scoring model,” says Danus.
The way it will likely work, according to Danus, is that when you apply for a loan or mortgage, if your regular FICO score isn’t high enough to qualify you, the lender may ask for your UltraFICO.
The UltraFICO is also voluntary. You don’t have to volunteer your banking information with a prospective lender for review unless you want to. This is a major difference from your FICO score, which is calculated whether you like it or not.
Building a credit history takes time. If you have little or no credit history but do have a banking history, you may be able to generate an UltraFICO score even if you don’t have enough of a credit history to generate a FICO score.
As such, the UltraFICO has a lot of potential, especially for consumers with borderline credit (meaning you’re at the cutoff between having poor and fair credit or between having fair and good credit) or who have a limited credit history. FICO estimates that over 15 million consumers who don’t have a FICO score could receive an UltraFICO score.
If you already have a good FICO score, then you probably don’t need to worry about the UltraFICO. Whether the UltraFICO will help you depends on your banking history.
“If the consumer finds themselves among the 60% of Americans who have very little to no savings funds, the UltraFICO will likely not help build their credit rating,” says Todd Christensen, education manager at Money Fit by DRS in Boise, ID.
Consumers who don’t have a recent pattern of positive savings may not want to opt in to the UltraFICO, according to Christensen.
The UltraFICO is currently in beta testing. Ultimately whether the program is expanded depends on how well it does for consumers as well as lenders, according to Danus.
If everything goes well, consumers may soon see this option available with lenders in April. And there’s a way to prepare: Start building up your savings now, so that if you have the chance to opt in, you’ll have a positive banking history for lenders to review.
Ultimately, though, don’t let the UltraFICO distract you from taking steps to improve your FICO credit score. It’s still important to make on-time payments to lenders, to pay down your credit balances, and to make payments arrangements if you have any delinquent accounts.
Unless you’re sitting on a ton of cold, hard cash, you’re going to need a mortgage to buy a home in Arizona Horse Property. Unfortunately, you can’t just show up at a bank with a checkbook and a smile and get approved for a home loan—you need to qualify for a mortgage, which requires some careful planning. So, how do you please the lending gods? It starts with arming yourself with the right knowledge about the home loan application process. Here are three things you need to know before applying for a mortgage in Arizona Horse Property.
Ah, the all-mighty credit score. This powerful three-digit number is a key factor in whether you get approved for a mortgage. When you apply for a loan, lenders will check your score to assess whether you’re a low- or high-risk borrower. The higher your score, the better you look on paper—and the better your odds of landing a great loan. If you have a low credit score, though, you may have difficulty getting a mortgage.
So, what’s considered a good credit score in the mortgage realm? While a number of credit scores exist, the most widely used credit score is the FICO score. A perfect score is 850. However, generally a score of 760 or higher is considered excellent, meaning it will help you qualify for the best interest rate and loan terms.
A good credit score is 700 to 759; a fair score is 650 to 699. If you have multiple blemishes on your credit history (e.g., late credit card payments, unpaid medical bills), your score could fall below 650, in which case you’ll likely get turned down for a conventional home loan—and will need to mend your credit in order to get approved (unless you qualify for a Federal Housing Administration loan, which requires only a 580 minimum credit score).
What’s an acceptable down payment on a house? In a recent NerdWallet study, 44% of respondents said they believe you need to put 20% (or more) down to buy a home. So, if you do the math, you’d have to plunk down $50,000 on a $250,000 house. Of course, that’s a big chunk of change for many home buyers.
The good news? That 20% figure is common, but it’s not set in stone. It’s the gold standard because when you put 20% down, you won’t have to pay private mortgage insurance, which can add several hundred dollars a month to your house payments. Another advantage of putting down 20% upfront is that that’s often the magic number you need to get a more favorable interest rate.
But, if you’re unable to make a 20% down payment, there are many lenders that will allow you to put down less cash. And there are a number of loan products that you might qualify for that require less money down. FHA loans require as little as 3.5% down. The U.S. Department of Veterans Affairs loan program gives active or retired military personnel the opportunity to purchase a home with a $0 down payment and no mortgage insurance premium. Same with USDA loans (federally backed by the U.S. Department of Agriculture Rural Development).
Another option worth pursuing is qualifying for down payment assistance. There are 2,290 programs across the country that offer financial assistance, kicking in an average of $17,766, according to one study. (You can find programs in your area on the National Council of State Housing Agencies website.)
There are some cases, though, where you’ll have to put more than 20% down to qualify for a mortgage. A jumbo loan is a mortgage that’s above the limits for government-sponsored loans. In most parts of the country, that means loans over $417,000; in areas where the cost of living is extremely high (e.g., Manhattan and San Francisco), the threshold jumps to $625,000. Since larger loans require the lender to take on more risk, jumbo loans typically require home buyers to make a bigger down payment—up to 30% for some lenders.
To get approved for a mortgage in Arizona Horse Property, you need a solid debt-to-income ratio. This DTI figure compares your outstanding debts (on student loans, credit cards, car loans, and more) with your income.
For example, if you make $6,000 a month but pay $500 to debts, you’d divide $500 by $6,000 to get a DTI ratio of 0.083, or 8.3%. However, that’s your DTI ratio without a monthly mortgage payment. If you factor in a monthly mortgage payment of, say, $1,000 per month, your DTI ratio increases to 25%.
Lenders like this number to be low, because evidence from studies of mortgage loans shows that borrowers with a higher DTI ratio are more likely to run into trouble making monthly payments, according to the Consumer Financial Protection Bureau.
For a conventional loan, most mortgage lenders require a borrower’s DTI to be no more than 36%. The good news? If you’re above the 36% ceiling, there are ways that you can lower your DTI. The easiest would be to apply for a smaller mortgage—meaning you’ll have to lower your price range. Or, if you’re not willing to budge on price, you can lower your DTI by paying off a large chunk of your debts in a lump sum.
After not increasing the maximum conforming loan limits on mortgages to be acquired by Fannie Mae and Freddie Mac for 10 years, the Federal Housing Finance Agency has now increased the conforming loan limit for the third straight year.
The FHFA announced Tuesday that it is increasing the conforming loan limit for Fannie and Freddie mortgages in nearly every part of the U.S.
According the FHFA, the conforming loan limits will rise from this year’s total of $453,100 to $484,350 for 2019. That’s an increase of 6.9% from this year’s loan limit to next year’s.
As stated above, this marks the third straight year that the FHFA has increased the conforming loan limits after not increasing them from 2006 to 2016.
Back in 2016, the FHFA increased the conforming loan limits from $417,000 to $424,100. Then, last year, the FHFA raised the loan limits from $424,100 to $453,100 for 2018. And now, the FHFA is doing it again, increasing the loan limit from $453,100 to $484,350 for 2019.
The conforming loan limits for Fannie and Freddie are determined by the Housing and Economic Recovery Act of 2008, which established the baseline loan limit at $417,000 and mandated that, after a period of price declines, the baseline loan limit cannot rise again until home prices return to pre-decline levels. But, as the FHFA noted earlier Tuesday, home prices are still on the rise, which necessitates a third straight yearly increase in the conforming loan limit.
The FHFA’s third quarter 2018 House Price Index report, which includes estimates for the increase in the average U.S. home value over the last four quarters, showed that home prices increased 6.9%, on average, between the third quarters of 2017 and 2018. Therefore, the maximum conforming loan limit in 2019 will increase by the same percentage to $484,350.
Loan limits will also be increasing in what the FHFA calls “high-cost areas,” where 115% of the local median home value exceeds the baseline loan limit. Under HERA, the maximum loan limit in those “high-cost areas” is calculated as a multiple of the area median home value, while setting a “ceiling” on that limit of 150% of the baseline loan limit.
According to the FHFA, median home values “generally increased” in high-cost areas as well in 2018, which drove an increase maximum loan limits in many areas. The new ceiling loan limit for one-unit properties in most high-cost areas will be $726,525, which is 150% of $484,350.
Per the FHFA, special statutory provisions establish different loan limit calculations for Alaska, Hawaii, Guam and the U.S. Virgin Islands. In those areas, the baseline loan limit will be $726,525 for one-unit properties.
“As a result of generally rising home values, the increase in the baseline loan limit, and the increase in the ceiling loan limit, the maximum conforming loan limit will be higher in 2019 in all but 47 counties or county equivalents in the U.S.,” the FHFA said.