Is It Time to Refinance? 5 Factors to Help You Decide

Beautiful curb appeal of American house in olive exterior paint.

When a new mortgage replaces an original mortgage, the process is known as refinancing. You, the borrower, can get a much better interest rate if you choose to refinance. In a shaky economy, funding a home mortgage can prove troublesome. Ignoring the problem will not only impact your credit score but could leave you financially unstable.Beautiful curb appeal of American house in olive exterior paint.

Not sure if you should to take out a new loan of this kind? Absorb the following factors to make an informed decision about refinancing:

  1. Your Credit History Has Improved - A lender will always take a borrower’s credit score into account before offering a loan. A credit score will be negatively impacted if a payment is failed to be made or if a payment is made late. These two reasons will cause interest rates to be higher. A borrower with a high credit score will be considered an ideal candidate for refinancing, which will in turn be given a lower interest rate.
  2. Your Income Has Increased - When your debt-to-income ratio changes, it will be the perfect time to refinance your mortgage. The extra monthly cash flow you are receiving, whether it is from working overtime or you were given a raise, can be used to fund a mortgage refinance. Using extra cash to pay off a mortgage loan will ensure your payments are made on time. As a result, your credit score will improve and your chances of obtaining another loan in future will increase.
  3. Your Debts Have Decreased - One of the main reasons why a lender will turn down a borrower for a loan is because their debts are too high. Committing to a mortgage refinance means that you need to be in a comfortable financial position to do so. Aim to repay your debts little by little and then explore your refinancing options.
  4. Your Home Value Has Increased – Have you thought about how much equity you have built up to refinance a mortgage? A great rate is guaranteed once your equity increases, so pay attention to changes in property value if you are keen to refinance with low interest rates. In order to estimate your home’s value, read news reports, assess property tax valuations, and investigate the recent sales of similar properties.
  5. You Want A Fixed Rate Mortgage - Fluctuating interest rates may leave you feeling worried. After all, how are you supposed to relax if your monthly payments increase and your income stays the same, or decreases? Replacing an existing loan with a mortgage refinance that has a fixed rate is a better option than an adjustable rate mortgage because you will know precisely how much you are paying and when.

Refinancing could leave you with a much fatter wallet since you will be spending less for your home in the long run. Lower interest rates will relieve you of some pressure and make it easier for you to avoid late payments. When you consider the fact that late payments will have a negative impact on your credit score, it’s pretty clear to understand why so many homeowners are refinancing a home mortgage.

Read More »

What to Look for During Your Final Walkthrough

Luxury Home Interior

Luxury Home InteriorThe excitement of buying a house and transforming it into a home can sometimes result in the buyer making an irrational decision. Nobody wants to make an investment that they later regret, which is what the purpose of a final walkthrough is. What is a final walk through, you ask? Well, it is essentially the last chance you will have to walk around the premises with your realtor.

Unless you are aware of what to look for, there is a chance you might miss something, such as an underlying problem that could potentially turn into an expensive repair job. With that being said, it is crucial that you use this time wisely to ensure the property condition has not changed in any way since the last time you inspected it.

Here are the main things you must focus on for the final walk through:

  • Check Repairs – Should there be a problem, get an estimate of how long the repairs will take to complete, so that you can move into the house with no worries about the condition. In most cases, the owner of a property will arrange to repair visible and invisible problems prior to the moving in date. This is the time to check if the repairs requested were made. In the event that the repairs are not required until after the moving in date, a home warranty will cover it.
  • Check Appliances – There are several things you should inspect when you attend the final walk through. Failure to do so might result in you spending thousands of dollars for repairs once you finally move in. Flip the light switch on and off when entering every room, test all appliances, and flush the toilet. Heating and air conditioning may encounter a fault if the appliances are not maintained properly, too.
  • Check for Leaks – Did you know that a leak inside a property can cost you a lot of money? In fact, even the smallest of leaks can increase water usage by a lot. If you don’t take the time to listen for hissing noises, check the leak indicator on the water meter, and investigate the average water usage, it will be you who is responsible for funding the repairs, not the seller.
  • Check for General Damage – Make sure there isn’t any damage from when the offer was submitted to time of the final inspection. If the property condition has changed from the first time you walked around it, you have the right to request the property owner to pay for repairs. An insurance policy will come in handy if you notice damages after you have moved in. However, the type of coverage you receive will depend on state laws, so bear this in mind and contact a claim representative if in doubt.

Once you have completed the final walk through and have deemed the condition to be good, a contract will need to be signed. The contract addendum serves as proof that you are satisfied with the property. Furthermore, it confirms the completion of any agreed-upon repairs.

Read More »

5 Qualities to Look for in a Realtor

Realtor Showing Hispanic Couple Around New Home

Realtor Showing Hispanic Couple Around New HomeThe process of buying a house is not as simple as searching through the real estate listings, contacting the seller, and putting your money on the table. In fact, there is a lot more to the whole process, which will be challenging if you lack the help of a professional realtor. From submitting an offer to attending open house tours, the stages of buying a home should not be rushed.

When investing in a home with a helping hand from a broker, a realtor will keep a percentage of the final sale price. After all, he or she must make money in some way or another! This commission will be well deserved if the realtor is good at what they do. Feel confident when choosing a realtor by assessing their qualities.

If he or she boasts the following attributes, you are onto a winner:

  1. Great Communication Skills – The way in which a realtor communicates with his or her clientele will have a direct effect on the realtor’s success in the property industry. The real estate agent must know what you, the buyer, is searching for specifically. From the location to the budget and the interior/exterior design, a realtor will be a good listener. Furthermore, they will keep the client(s) up-to-date with the latest information regarding best offers and real estate market trends.
  2. Full Time Real Estate Agent – Understanding the local housing market is absolutely essential for a realtor to perform their job properly, make a commission, and satisfy the buyer. The most successful real estate agents will be self-motivated and have the ability to hustle in a fast-paced environment. With the local housing market changing on a daily basis, it is crucial that the realtor is able to solve problems with tenacity and attention to deal. Hiring a full time realtor allows the buyer to communicate with the agent whenever need be. Hiring a part-time realtor can potentially cause communication and scheduling issues.
  3. Knowledge of Current Real Estate Market – Not only will a good real estate agent have knowledge of the property but also, the area. From the future developments that are expected to take place in the future to the conveniences, schools, and transport in the local area, a realtor must do their homework.
  4. Honesty and Integrity – Never buy a home with the help of a realtor who does not possess these critical qualities. An honest realtor will have your best interests in mind and not just have the commission in mind. Trustworthiness is absolutely essential and in order to get a true understanding of a realtor’s integrity.
  5. Negotiation Skills – Dealing with tricky situations is all part of a realtor’s job. Focus on how well the real estate agent is able to build rapport when you meet with them for the first time. Can they solve problems and eliminate misunderstandings before they arise? Ask yourself these questions to ensure you choose a realtor who can negotiate the best deal on your dream home.

Experience is absolutely paramount for a real estate agent to help you find your ideal home for the best price. In addition to their level of experience, it is crucial that you find out how many years the realtor has worked in the industry. Preferably, he or she will have gained the title of professional realtor at least five years ago. A realtor who has a lot of contacts in the industry is someone worth teaming up with for a house hunt.

Read More »

The Benefits of a Home Warranty

Plumber Fixing Domestic Washing Machine

Plumber Fixing Domestic Washing MachineA home warranty plan is something that every real estate investor ought to be thinking about ahead of buying a property. This type of warranty will protect your finances in the event of something going wrong with the property, whether it is an appliance fault or the wear and tear of a boiler system. Do not get home warranty confused with homeowner’s insurance because an insurance plan does not offer the same kind of coverage.

In fact, if you don’t have warranty in place, you will not be covered for the cost of repairing/replacing home system components. Also known as HSA, home warranty offers a whole host of benefits for both the buyer and the seller.

Let’s look into into the perks associated with this type of coverage:

  1. Protection Against Costly and Unexpected Repairs - Although you will have the chance to inspect the property for any damages or underlying problems during the open house, this does not mean that a problem will not surface in the near future. Wear and tear from using appliances, such as the lights, heating, and air conditioning, is inevitable. Rather than digging deep to fund unexpected repairs, you can rely on home warranty to cover the costs. Most major systems and appliances are covered on the standard plan.
  2. Full Replacement - There may come a time when the technician is unable to resolve the problem and make the appropriate repairs. In the event that this does happen, a full replacement will be provided with the costs covered by the home warranty plan. What’s more, the contractors are guaranteed to be completely professional and licensed to perform the job, so you can feel confident that the end result will be satisfactory.
  3. Small Service Fee – When you have no option but to contact a technician to visit your home and perform a repair or service on your home appliances, the fee will not leave you strapped for cash. Considering you will be paying a monthly fee for warranty coverage, the service fee will be considerably less than it would be if you weren’t investing in coverage.
  4. Annual Renewal - Once your yearly coverage is up, the home warranty plan can be renewed. It is completely up to you whether or not you go ahead and renew the plan, but since you have the opportunity to call for service as many times as you wish, chances are you’ll want to renew the plan before it actually expires.

There are some things you should know before purchasing a home warranty, such as the fact that policy prices vary from $200-$600 annually and when/if you make a claim; you will be required to pay a deductible. Take it upon yourself to find the best possible home warranty plan available by browsing your options first. Generally, service agreements will last for a year or more, but this totally depends on the provider of HSA. For the best protection, consider gaining coverage from a warranty plan and a homeowner’s insurance plan.

Read More »

Add A Personal Touch When Submitting Your Offer

Business women hands working writing notebook on wooden desk, lighing effect

Business women hands working writing notebook on wooden desk, lighing effectJust because you have your eye on a property and have been shown around the premises by a professional real estate agent, it does not mean that you will be the only person interested in submitting an offer. In fact, there could be multiple people making an offer at the same time, which is why it is imperative that your offer really stands out!

It is rare for a buyer to offer the seller the asking price, with most buyers putting their haggling skills to the test in order to land their dream home for a desirable price. So, how can you peak the seller’s curiosity and improve your chances of receiving a positive response?

Capture the seller’s attention with a personal letter. A traditional tactic that has not lost its touch, personal letters can make you stand out among a sea of bidders.

How to Write the Perfect Personal Letter

Including a personal letter with your offer is known to help get an offer accepted. Below, we discuss the three main points to include in your letter:

  • Personal Information - Opening up to the seller will strike a chord with them. It will help them to get to know you, without even meeting you. Furthermore, it will allow them to make a choice based on who they would (ideally) like to transfer home ownership to. Including personal information in your offer letter that is related to your profession, your pets (if any), and your family size will make your offer stand out. Plus, the inclusion of personal information will prove to the seller that you are a serious and honest buyer.
  • Express Emotion - Connecting with the seller on an emotional level can be a challenge, but if you accomplish it, the chances of your offer being accepted are far greater. Perhaps you have decided to buy a new home so that you can use the leftover expenses to fund a relative’s surgery or a child’s college education? Maybe you want to relocate as a way of feeling safer in the neighborhood? Whatever your reason(s) for wanting to buy a particular property, don’t be afraid to express emotion in your letter.
  • Show Appreciation - It is nice to be nice! Even if the seller already has someone else in mind, this doesn’t mean that they don’t deserve some gratitude. After all, they invited you into their home and took the time to read your letter, right? Be polite and you never know – the seller could change their mind and accept your offer over someone else’s.

When you realize the difference a personal offer letter could make to your chances of being accepted for a property purchase, you won’t want to approach a seller without writing a letter ever again! A well-written letter that demonstrates your suitability for the house can be read over and over by the seller, thus enabling them to make an informed decision. After all, it is their pride and joy they are selling, so they won’t be willing to hand the keys over to just anybody.

Read More »

What is a VA loan?

little girl hugging her military father

little girl hugging her military fatherDown payments are a critical step to securing a good deal on a mortgage. The general percentage of the total amount required ranges depending on the lender and the personal applicant. In some cases, whereby the property a buyer is hunting is relatively large and expensive, a higher down payment will be requested.

Putting a big chunk of money on the table is not always achievable for people on a lower income or people with a poor credit score. This is where a VA loan comes in – one of the few loan types made available to homebuyers with an undesirable lending history.

Five Things to Remember About VA Loans

The thought of being granted that all-important loan that could transform your dreams into reality is definitely something to get excited. Since they are a lot more straightforward and easier to get granted acceptance for than unconventional loans, there is no wonder why they are such a popular option. Get clued up on the subject before you decide whether or not VA loans are right for you.

Here are five valuable and beneficial pieces of information to keep in mind ahead of the application stage:

The Fees – A variable funding fee will be required just once to set up an account of this kind.

Eligibility – The majority of people who apply for a VA loan will be approved during the pre approval phase.

Military Members – Although most applicants will be accepted, lenders prefer active veterans and Military members.

Simple Application – The fact that VA loans can be granted without mortgage insurance makes it a much more appealing choice for borrowers.

No Down Payment – Financial stress is relieved for borrowers who don’t have access to a great deal of funding.

Tips for Improving Credit Score

Taking the time to make some small changes to your finance habits will aid you in boosting your credit score. Make payments, even if they are very small, to improve lender trust. This will also put you back in the good books of lenders you failed to pay in the past. Following a budget plan is another viable option.

Do you really need to borrow?

Let’s say for example, you are planning on sprucing up a property that is currently for sale at a price that is hard to beat, the temptation to borrow will be irresistible, for sure. Nevertheless, thinking things through is crucial because you might find yourself in a spot of future financial bother if you are not capable of repaying now. Take the time to boost your credit score and approach a lender again.

Figuring Out a Repayment Plan

The importance of understanding if you are able to commit to regular mortgage payments cannot be stressed enough. Getting in touch with a lender is the best way to figure out how much you can realistically afford to repay. The calculations will be based on a few factors, such as:

– Your incomings

– Your outgoings

– Your reliability with previous payments

Don’t worry too much about that last one, because even if you have been unreliable in the past, some lenders will consider you based on other determining factors. To improve your chances at obtaining a VA loan from a trusted lender, aim to make a fee changes. For example, try to reduce existing debt as a way of improving credit score.

Read More »

5 Questions to Ask During an Open House

Home for sale

Home for saleOne of the longest standing real estate traditions is an open house. If you are new to buying properties, take a moment to understand what an open house is and how it could aid you in making a purchasing decision. A way of generating traffic and luring in interested buyers for a potential sale; open houses are usually organized on weekends. The real estate agent will do a number of things to prepare for an open house, such as create ads in the local newspaper, put signs up in the surrounding area, and even embellish the property with banners and balloons to capture the attention of passers-by.

It’s not just the real estate agent who has a duty during an open house, however. As someone who is considering investing in a property, it is your duty to ask questions at this stage. Below, we expand on the five main questions you should be asking prior to purchasing a commercial or residential property.

  1. Why do the sellers want to move? - By asking this question face-to-face, rather than over the phone, you can get an honest answer from the seller or the seller’s realtor. Should the homeowner be transferring ownership of the premises due to relocation, work-related issues, or finances, you needn’t worry. If the seller is transferring home ownership because of constant repairs or if the area or schools are unsafe, you should think about this decision further.
  2. How long has the property been on the market? – The longer a property has been on the market, the more questions you should be asking. A desirable piece of real estate will not be on the market for long before it is snapped up. If a home has been on the market for a while, be sure to check the market value and condition of the home. Some seasons attract more buyers than others, so take this into account as well.
  3. How many offers have been made? - When you know you are competing with other offers, decide whether or not you want to proceed or walk away. Asking this question is essential because it gives you an idea of what the seller deems a reasonable offer. Additionally, it enlightens you about how much interest the property is getting.
  4. Are there any issues with the home? – Not every property featured on the real estate market will be perfect. In fact, a lot of buyers will be on the hunt for properties that they can acquire for a discounted price and renovate. If you are looking for a home that doesn’t need too many repairs, be sure to ask major repair questions, such as when the roof was last repaired.
  5. When was the house last updated? – You can figure out if the property is worth the asking price based on how often it has been maintained and/or updated over the years. If you are looking to avoid making updates down the road, we suggest finding a property that has been recently updated.

Take your time looking around when you attend an open house and try your hardest to envision yourself living in the home. Think about how your furnishings will look inside each room, and if the price of the home falls within your budget. Don’t forget to factor in the closing costs, to avoid unexpected surprises.

Read More »

How to Understand the Impact of your Debt-to-Income Ratio and How It Affects the Loan Process

Businessman's hands with calculator and cost at the office and F

Businessman's hands with calculator and cost at the office and FGearing up for a loan application can stir up a mixture of emotions, from euphoria to anxiety about the entire process. All that is required for a plain sailing experience is knowledge on the subject and in particular, on the topic of debt-to-income (DTI) ratios. Many loan applicants will be unaware of the fact that this is considered by a lender before the applicant is accepted for a loan.

What is considered a good debt-to-income ratio?

Dividing your total gross income with your recurring monthly debt is the easiest way to understand what your DTI income ratio is. Once you are aware of this, you can take a step forward and arrange a meeting with a lender. By doing so, you can discuss your loan options and talk about whether your DTI is good or could do with some improvement.

The Negative Impact on Financing

Put it this way: if a lender looks at a borrower who has a DTI of 50% or above, you are instantly in the red. In many cases, they will not give you a second look since you will be deemed “dangerous” in their strict book of lending. This can make it a struggle to obtain financing. On a brighter note, there are multiple lending options out there now that consider applicants with a poor credit history and DTI.

Tips for Being Approved for a Loan

Fear not if you fall into the red category when it comes to calculating DTI because it does not mean that your chances of loan approval have gone completely out the window. In fact, the following tips could actually teach you how to handle your finances overall:

– Pay off any debts you have accrued.

– Reduce your DTI by paying in affordable amounts.

– If you are able, settle high-interest debts.

– Stop spending so much and start saving more.

– Write a monthly budget and stick to it.

– Cut off direct debits or subscriptions that you no longer require.

Improving the Debt-to-Income Ratio

Sit down and really get stuck into your finances. It will be worth it when you get one step closer to being accepted for a loan, despite having a low DTI at the beginning. Pay attention to the higher debts on your list, if possible. Paying off larger amounts faster will ensure that your credit rating boost at a quicker rate. This will also lift that credit rating arrow from the red spot to the amber or, if you really commit, close to the green.

There are plenty of ways in which you can improve your DTI, prior to applying for a loan. This will boost your chances of acceptance and will have a positive effect on your credit score as a whole. Take it upon yourself to perform a recalculation of your DTI every month, as this will paint a clearer picture of how your financial situation is changing, for the better!

Read More »
Copyright © 2003-2017 Paramount Equity® Blog. All rights reserved.
"Paramount Equity®", "Paramount Equity Mortgage®" and "Savings Made Simple" are trademarks of Paramount Equity Mortgage®, LLC.
   

Paramount Equity Mortgage®, LLC is licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act, License #4170047; Arizona Mortgage Banker License #0922160, NMLS# 30336; regulated by the Colorado Division of Real Estate NMLS# 30336; Connecticut - Connecticut Mortgage Lender License # ML-30336; D.C. - Mortgage Lender License #MLB30336; Florida Mortgage Lender Servicer License # MLD 898; Kansas - Kansas licensed mortgage company License # MC.0025206; Maryland - Mortgage Lender License # 21172; Nevada Mortgage Banker License #3919; Licensed by the N.J department of Banking and Insurance NMLS#30336; Oregon Mortgage Lender License #ML-3256; Texas – Paramount Equity Mortgage®, LLC NMLS #30336; Utah DRE Mortgage Entity License #6967176; Washington Consumer Loan Company License #CL-30336; and Wisconsin – Wisconsin Mortgage Banker License #30336BA; NMLS ID #30336.