Refinancing Your Balance Faster

You refinance to a lower rate, and you get a lower payment. But the opportunities don’t stop there.

Reduce your balance faster. With a lower interest rate, you pay more principal with each payment, especially in the first years of the loan. Example: After five years of payments on a 30-year loan of $200,000 at 4%, you would pay $19,706 in principal vs. $17,105 on the same loan at 5%. That’s an extra $2,601 in benefit on top of the $7,052 of interest savings. Total advantage = $9,653

Own Free and Clear Sooner. There are two ways to make this happen:

• Pay extra principal. Apply your monthly savings toward principal to shorten your loan term by several years. Example: Using the same loan terms from above, pay your $118/month savings as extra toward principal and cut the loan from 30 to 24.33 years.
• Refinance for a shorter term. Rates on 15-year loans are typically lower than 30-year loans, so a payment on a shorter term may still be within a comfortable range for you.

Maximize Your Rate of Return Through Investments. If you deposit the $118 monthly savings from the example above into a tax deferred account earning 6% over time, it will grow to $81,852 in 25 years. If you use the savings to increase your 401K contribution with a 50% employer match, that figure would equal $122,782. Earning 6% on your money may be tough right now, yet historically, returns on a properly balanced and diversified portfolio are 7% or better. Always consult with a properly licensed financial advisor when making investment decisions.

Tap Into Your Equity. If you need to make repairs or improvements, you may be surprised at how much cash you might be able to free up without increasing your monthly payment. The same can be said for financing college educations or purchasing a second home or investment property.

Enjoy Peace of Mind. There’s comfort in making a prudent decision and putting a plan into action.

We’re here to review your options and help you decide what might be right for you.

How Much Can You Save By Consolidating?

Do you think the value of refinancing is gone?

Rates may be off the lows but can still be an amazing bargain compared to consumer and installment rates. Total interest, total term and cash flow savings can be significant with the right plan.

Consolidating multiple debts into one home loan is not for everyone. For instance, using your equity to have the equivalent of a 30-year car loan is rarely a great idea. But it may work if you have the discipline to take advantage of a low rate to speed up—rather than slow down—payment terms.

Consolidation can make debts disappear with less total interest expense than they would otherwise.

Want to explore what a good consolidation plan could mean for you? Reach out, and we’ll be happy to help!

Stop Before You Toss Blank Pages

Not sure why the banks do it, but it happens.

You may be tempted to throw away a numbered page on your statement if it is blank or contains an advertisement. Unfortunately, if the other pages are marked 5 of 8, 6 of 8, etc., the underwriter can’t be sure a missing page 8 of 8 had no important information.

To be sure there’s no delay in processing your loan application, please save and provide ALL numbered pages of your bank and other asset statements, even if they’re blank.

Thanks for your cooperation!

Follow These Tips for Refinancing

As you’re getting ready to refinance your mortgage loan, here are a few tips to ease the process:

DO

Continue to make your regular payments. However, if you have a payment due just prior to your scheduled closing, consult with me first. It may be best to pay at the closing rather than to risk having the payment and payoff letter cross in the mail.
Prepare your home for the appraisal. The appraiser will take photos inside and out. While a messy house is not really worth less than a clean one, property appraisal is part art, part science. First impressions can make an impact with an appraiser just as with a prospective purchaser.
Keep your ongoing paystubs and bank statements available. Underwriters may request the latest documentation before loan approval or as a condition of loan commitment.
Understand that things have changed. Underwriters require more documentation than in the past. Even if requests seem silly, intrusive or unnecessary, please remember that if they didn’t need it, they wouldn’t ask.

DON’T

Apply for new credit. Changes in credit can cause delays, change the terms of your financing or even prevent closing. If you must open a new account, please consult with me first.
Change jobs during the process. Probationary periods, career or even status changes (such as from a salaried to a commissioned position, leave of absence or new bonus structure) can be subject to very strict rules.
Make undocumented deposits. Primarily large but sometimes even small deposits must be sourced unless they are identified. Make copies of checks and deposit slips. Keep your deposits separate and small. Avoid depositing cash.
Start any home improvement projects. Small cosmetic projects like painting are not usually a problem. Anything that can disrupt functionality can be an issue if undertaken before the appraisal. Delay projects that require a building permit, involve a bathroom or kitchen renovation, or create structural changes.
Ever be afraid to ask questions. If you’re uncertain about what you need or what you should do, I’m here to help you through the process.

Together, we’ll get you on your way to saving money and achieving your goals.

If you can afford to rent…

 

Did you know that if you can afford to rent, you can probably afford to own?

Here are three basic factors for qualifying for a home loan:

Income – If you have a job or steady source of income, you’re off to a great start.

Down Payment – Many programs will work with 5%, 3.5%, and in some cases, even 0% down. Sometimes, closing costs can be paid for you as well.

Credit – Even if there are a couple of dings on your credit report, there’s probably a loan program for you.

That’s it. These three items are the fundamentals of mortgage lending. If you work and pay your bills on time, you may already be well on your way to homeownership.

Now, would you like to see how far your rent payment might go when applied to principal and interest on a mortgage payment? Check it out here!

 

Benefits of Mortgage Pre-Approval

When you’re shopping for a new home, it’s important to leave as little to chance as possible. Mortgage loan pre-approval allows you to act quickly when you find the right property, and the seller will take your offer more seriously.

When you’re pre-approved, you can:

•    Make an offer with confidence, knowing the lender is already on your side.
•    Save time by looking at homes you can afford.
•    Negotiate a better price for the home you want to buy.

You don’t need to spend a lot of time researching finance options; that’s my job! I’d love to help you find the loan that’s best for you and complete the pre-approval process, so you’re one step closer to home ownership.

Make House-Hunting Easier

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Knowing how much house you can afford is just a starting point in your search for a new home. By answering the following questions, you can narrow down what features are most important to you:

•    How many bedrooms and bathrooms do you need?
•    Do you want a new home or would you prefer an older one?
•    Are there special features you must have?
•    Is the school district a factor for you?
•    Do you want to be close to a shopping center?
•    Is commuting to work an issue? If so, how far are you willing to drive?
•    Will you accept any style of home? What about colors?
•    Do you want a fireplace, pool and/or air conditioning?

Searching for a new home can be overwhelming.
Here are a few tips to make it a bit easier!


•    Take a notepad and map with you. Save each home’s fact sheet.
•    Limit the homes you look at in one session to three, so you can focus on the details.
•    Take a picture of the homes that appeal to you, so you can remember their features.
•    Make sketches of floor plans to help you compare the homes you like.
•    Ask questions about any problems in the home before you make an offer.


I hope these tips help you find the home of your dreams!

When to Refinance

Refinancing can be a great strategy to save money or reach other financial goals. It is equally important to make sure your home provides a “safe haven” for you and your family for many years to come.

With that in mind, here are some useful tips on fire prevention.

•    Install smoke detectors on every level, especially outside bedrooms. Test them regularly and change the batteries at least once a year.

•    Have an escape plan. Everyone should be aware of two ways to exit each room to avoid walking through smoke. If that’s your only option, crawl close to the floor, where the air is cooler and cleaner.

•    Establish an outside meeting place where everyone will go if evacuation is necessary.

•    Make sure your home address is clearly visible from the street, so emergency vehicles can locate you quickly.

•    Create a 30-foot safety zone around your house that’s free of flammable vegetation.

•    Keep fire extinguishers in the kitchen and garage, and be sure everyone knows how to use them.

•    Clear the roof and gutters of leaves, needles and dried twigs.

•    Store firewood away from the house.

I hope you find these tips useful and pass them along to your friends and family. And, if you know anyone in need of a mortgage advisor, feel free to relay my contact information. I’m here to help!

How to Improve Your Credit Scores

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On a scale of 300-850, people with top tier credit scores (760 to 850) have a footprint of financial responsibility, and lenders have a tendency to reward this elite group with lower interest rates.

If you’re not in this category, then take a look at your current scores and see what you can do to kick it up a notch. Set your personal goal and stick to it!

Pay Your Bills on Time

Paying your bills on time is a good habit to have, when it comes to improving your credit scores! If you need help in this area, set up a spreadsheet or even a handwritten monthly checklist, so you can see all your current bills and their due dates.

You can also set reminders in your calendar or cell phone, or make arrangements for automatic payments, to stay on top of it. Do whatever it takes to program yourself into a regular pattern of paying bills on time.

Your credit card payments are generally due on the same day each month. So, if your current due date puts you in a money crunch, call your credit card company and ask them to change your due date, so it doesn’t coincide with other large payments you have to make (such as your rent or car payment). That way, you can regulate your cash flow and avoid relying on credit cards for random spending in between paychecks!

Pay More Than the Minimum Payment

If you only pay the minimum payment on your credit cards, then you’re paying just a little more than the monthly interest fees. Set a realistic goal for yourself. If you can pay double or triple the monthly payment for the next six months, then you’re starting to chip away at that larger balance. But, at the same time, don’t revert back to using the credit cards again to make it through your monthly living expenses.

Here’s a quick guideline to follow:

•    Make sure your balance is below 50% of the spending limit to maintain your current credit scores.
•    Reduce your utilization down to 30% of the total credit line to improve your credit scores.
•    To get in the “800 Club”, use no more than 10% of the allowed spending limit.

When an emergency pops up that absolutely requires you to use a credit card, make an educated decision as to which credit card you should use. Pick the one that won’t vault you over that 50% utilization mark.
Having credit cards helps you establish credit scores. But, using them responsibly helps you attain great credit scores.

Make Regular Payments on Installment Debt

If you’re making payments on a student loan or a car payment, make your regular payments on time.

Do not try to pay it off early! That won’t increase your credit scores. However, if you make the regular payments on time, then you’re proving that you have the ability to fulfill a financial commitment.

Don’t Cut Up Old Credit Cards

If you have a stagnant credit card with a zero balance, make a small purchase and pay it off quickly. Or, use the old card to make automatic payments on a regular monthly expense, such as a utility bill. This doesn’t change your monthly budget, it only changes who you’re paying the money to. This can raise the Credit History portion of your scores, based on how long you’ve had the credit card!

Make Sure Your Credit Reports are Accurate

Last, but definitely not least, go through your credit reports carefully (you should have one each from Experian, Equifax and TransUnion) and look for errors.

•    Make sure the items listed on your card are yours. If you find charges you didn’t make, you may be a victim of identity theft, or someone else’s data is being reported to the wrong file.
•    Make sure “on time” payments are not listed as “late”.
•    Make sure any collections that you’ve paid off have been removed.
•    Make sure all creditors you are faithfully making payments to are being recorded.
•    Look for negative comments that are older than seven years. You can ask to have these removed.
•    Look for bankruptcies older than 10 years, or accounts associated with the bankruptcy that are still showing up. You can ask to have these removed.

If there are errors on your reports, start taking action to remove those errors. We’ll talk more about that in my next credit score tip!