Highland Real Estate
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Posted by Highland Real Estate on 9/30/2019

If you are thinking of refinancing your mortgage, there are so many options available to you that address your needs. Whether you want to do some home improvement projects or provide a down payment for another property refinancing can be a good option for you. There are many different options when it comes to home loans and refinancing. Below, youíll find some of the most popular choices and what they mean for your mortgage and your finances. 


Standard Refinance


A standard refinances requires that you have a certain amount of equity in your home. If you want to avoid Private Mortgage Insurance (PMI on the refinance, you need 20% equity in the home. Different lenders have different requirements for the amount of equity that you need in order to do this primary refinancing of your home loan. Keep in mind that a good credit score is also a requirement to do this type of loan.


Refinancing With Cash Out


This option is great when you need to take some of the equity out of your home. This way, you can get some of the equity out of your home without selling the house. This way, youíre able to refinance the mortgage, get a good loan term thatís affordable, and borrow a part of the equity you have built up in your home.


You can use the cash that you take out for just about anything you need including college, home renovations, business start-up costs, or to consolidate other debt you have. The only drawback is that youíre not able to borrow 100% of your equity. Usually, the highest percentage youíre eligible to borrow is 80%. The amount is based on both the equity you have built up in your home along with your income. Also, keep in mind that after you take out one of these loans, the amount of equity you have in your home decreases.  


Short Refinance


Short refinances may not be offered by all lenders. If you donít qualify for a HARP loan or standard, refinance this could be a good option for you. If you hope to avoid foreclosure and are struggling to pay your mortgage each month, your lender may agree to the terms of this type of loan. The loan is in effect is a combination of a short sale and a refinance. The lender agrees to pay the existing mortgage off. The loan s replaced with a new mortgage. Beware that if you choose this option, your credit score may go down significantly. If youíre able to keep up with the new mortgage payments, youíll be able to repair your credit score over time.         





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Posted by Highland Real Estate on 9/23/2019

There are so many factors that go into finding and securing the financing to buy a home.   While lenders require quite a bit of information for you to get a loan, you still need to be aware of your own financial picture. Even if youíre pre-approved for a certain amount of money to buy a home, you still need to dig into your finances a bit deeper than a lender would. The bottom line is that you can't rely solely on a lender to tell you how much you can afford for a monthly payment on a home. Even if youíre approved to borrow the maximum amount of money for your finances to buy a home, it doesnít mean that you actually should use that amount. There are so many other real world things that you need to consider outside of the basic numbers that are plugged into a mortgage formula.   


Run Your Own Numbers


Itís important to sit down and do your own budget when youíre getting ready to buy a home. You have plenty of monthly expenses including student loan debt, car payments, utility bills, and more. Donít forget that you need to eat too! Think about what your lifestyle is like. How much do you spend on food? Do you go out to the movies often or spend a regular amount of cash on clothing? Even if you plan to make adjustments to these habits when buying a home, youíll want to think honestly about all of your needs and spending habits before signing on to buy a home. 


Now, youíll know what your true monthly costs are. Be sure to include things like home insurance, property taxes, monthly utilities, and any other personal monthly expenses in this budget. If you plan to put down a lower amount on the home, youíll also need to include additional insurance costs like private mortgage insurance (PMI).


The magic number that you should remember when it comes to housing costs is 30%. This is the percentage of your monthly income that you should plan to spend on housing. Realistically, this could make your budget tight so this is often thought of as a maximum percentage. By law, a lender canít approve a mortgage that would take up more than 35% of your monthly income. Some lenders have even stricter requirements such as not allowing a borrower to have a mortgage that would be more than 28% of monthly income. This is where the debt-to-income ratio comes into play.


As you can see, itís important to take an earnest look at your finances to avoid larger money issues when you buy a home.  





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Posted by Highland Real Estate on 12/3/2018

If youíre hoping to buy your first home in the near future, youíre likely wondering about the different types of mortgages that you may qualify for. Since the 1930s, the Federal Housing Administration (FHA) has been insuring home loans for first-time homeowners across America.

This program helps people achieve homeownership who typically wouldnít be able to afford the down payment or pass the credit score requirements to secure a traditional mortgage.

In todayís post, weíre going to answer some frequently asked questions about FHA loans to help you decide if this is the best option for your first home.

Does the FHA issue loans?

Although theyíre called ďFHA loans,Ē mortgages are not actually issued by the FHA. Rather, theyíre issued by mortgage lenders across the country and insured by the FHA.

Will I have to make a down payment?

With an FHA loan, your down payment can be as low as 3.5%, significantly lower than traditional loans at 20% down payment. However, you will be required to pay private mortgage insurance (PMI) in addition to your monthly mortgage payments until you have paid off 20% of the home. So, the best case scenario would be to save as much as possible for a down payment to reduce the amount of mortgage insurance you have to pay.

What are the benefits of an FHA loan?

The three main reasons to secure an FHA loan are:

  • You can qualify with a low credit score

  • You can make a smaller down payment than traditional mortgages

  • Your closer costs will be less expensive

Where do I apply for an FHA loan?

You can apply for an FHA loan through a mortgage lender. You can also work with a mortgage broker to help choose a lender.

Is an FHA loan the only loan option for low down payments?

There are multiple loan programs offered at the state and federal level to help individuals secure a mortgage with a lower down payment. They can be provided by the Department of Veterans Affairs, the USDA, or state-sponsored programs. Lenders also often sponsor their own programs to attract potential borrowers. However, always make sure you compare these programs to make sure youíre making the best long-term financial decision.

Do all FHA loans offer the same interest rates and costs?

No. Since the loans are only insured by the FHA, itís up to the lender to determine your interest rate and fees. So, itís a good idea to shop around for the best lender.

How high does my credit score have to be to qualify for an FHA loan?

You can secure a mortgage with a down payment as low as 3.5% with a credit score of 580 or higher. However, if you can afford to make a larger down payment, you can secure an FHA loan with a credit score as low as 500.

If your score is in the 500-600 range, itís typically a better idea to spend a few months building credit before applying for a home loan.

What information will I need to apply?

Youíll need to gather all of the same information that you would for a typical mortgage. This includes W2s from your employer(s), two years of submitted tax forms, your current and former addresses from the past two years, and your gross monthly salary.

Iíve owned a house before, can I still qualify for FHA loans?

Even if youíre not a first-time homebuyer you can still qualify for an FHA loan. However, you cannot qualify if youíve had a foreclosure within the last three years or have filed for bankruptcy within the last two years.




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Posted by Highland Real Estate on 12/18/2017

Most homeowners would love to be able to pay off their mortgage early. However, few see it as a possibility when they take into account their earnings and other bills.

 There are, however, a few ways to pay down your mortgage earlier than planned. But first, letís talk about when it makes sense to try and pay off your mortgage.

 When to consider paying off your mortgage early

If you recently got a promotion, have someone move in with you who contributes to paying the bills, or recently got a secondary form of income, you might want to consider making extra payments on your mortgage.

However, having extra money doesnít always mean you should spend it immediately on your home loan.

First, consider if you have a large enough emergency savings fund. It might be tempting to try and throw any extra money at your mortgage as soon as possible, but there are other financial commitments you should plan for as well.

If you have kids who will be applying to college soon, remember that student aid takes into account their parentsí finances. If your children plan on applying to institutions with high tuition, then your equity will be counted against you.

Refinancing to pay your mortgage early

Refinancing your home loan is one option if youíre considering increasing the payments on your mortgage. If you can refinance a 30-year loan to a 15-year loan with a lower interest rate, youíll save money in two ways--your lower interest rate and the fact that youíll be accruing interest for less time.

There is a downside to refinancing. Once you refinance, youíre locked into your new payment amount. So, if your higher income isnít dependable, it might not make sense to commit to a higher monthly payment that you arenít sure youíre going to be able to keep paying.

Thereís also the matter of refinancing costs. Just like the costs associated with signing on your mortgage, youíll have to pay closing costs on refinancing. Youíll need to weigh the cost of refinancing against the amount youíll save on interest over the term of your mortgage to see if it truly makes sense to go through the refinancing process.

Paying more on your current loan

Even if you arenít sure that refinancing is the best option, there are other ways you can make payments on your mortgage to pay it off years sooner than your term length.

One of the common methods is to simply make thirteen payments each year instead of twelve. To do this, homeowners often use their tax returns or savings to make the thirteenth payment. Over a thirty year mortgage, this could save you over full two years of added interest.

A second option is to make two bi-weekly payments rather than one monthly payment. By making biweekly payments you have the ability to make 26 payments in a year. If you were to just make two payments per month then you would make 24 total payments. Over time, those two extra payments per year add up.




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Posted by Highland Real Estate on 5/1/2017

If youíre finding that your finances are a bit tighter these days, you might need to adjust your budget a bit. Have you ever thought about alternatives in helping you to pay your mortgage? Thereís a few things that you might be able to do in your home to save a few bucks and be more comfortable with your budget and finances. 


Share The Space


This might sound crazy, but it works for many people. If youíre willing to share your living space with others, it could help you to make a dent in your mortgage. This works especially well if you have a home with a separate entrance like an in-law apartment or something similar. 


Make Adjustments To Your Expenses


There are many different costs that come along with owning a home. If you reduce some of these expenses, youíll be able to cut your overall spending. You donít need to completely adjust your entire way of living to do this. Some ideas:


  • Cut the cord on cable and install streaming devices
  • Go on a family cell phone plan
  • Skip the gym membership
  • Use public transportation
  • Cook at home instead of eating out
  • Use coupons


Put Tax Refunds To Good Use


If you normally get a tax refund, you can apply that money to your mortgage instead of using it to buy something else. You could also adjust your withholdings. This would allow you to get a bit more money in your paycheck each week. Youíll get less of a refund during tax time, but the extra money may help you to pay down bills throughout the year. 


Pay More Towards The Principal 


To make the most of your hard-earned savings, use your money wisely and pay down the mortgage faster. Just be sure that thereís no penalty for a prepayment of the loan. You can either make an extra loan payment each month or you can pay a bit over what you owe on the mortgage each month. If you pay the mortgage faster, youíll save potentially thousands of dollars in interest over the life of the loan. Youíll need to check with your mortgage company to see what their process is for paying more towards the principal of the loan. Keep in mind that the first few yearsĎ worth of your mortgage payments will be going towards interest unless you specify extra payments to go elsewhere.


Whether youíd like a little more of a financial cushion or are just looking to get rid of all those pesky monthly bills, itís never a bad idea to focus on paying your mortgage down as quickly as possible.




Tags: Mortgage   finances  
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