How We Can Help You With Your Home Equity Line of Credit

We specialize in many different types of mortgages at Intercoastal Mortgage Company to get you into the house you desire; we also originate second trusts and home equity lines of credit. Many of you have more than likely heard the term, but are you aware of just how available it may be to you? You can't use a home equity line of credit (HELOC) on its own to purchase a house or for proof of funds, but it may be helpful to show you have available credit and your payment history. In this blog I discuss what a HELOC means to you and how you can use it to get into the house you want, pay for your child's education, or add that addition onto your house.

So what is a HELOC, and how does it work? A home equity line of credit is a loan from a bank or other lender, which has an limit amount determined by the equity in your home. Yet, this type of loan differs from others significantly. Some specifics and guidelines involved:

·         The lending institution establishes the amount of the loan based on the equity in your home. Rather than giving you a check for the amount, they make the money available to you like a credit card

·         Payment of the amount taken from the line of credit is made monthly. Payments are  based upon how much of the loan you have used plus an added amount of interest. While there may be a minimum monthly payment, you are only repaying on the amount you have taken from the account.

·         The interest rate on a home equity line of credit is usually variable. It can change over time because it is based on an index such as prime rate

·         While there are monthly payments, the loan has a period over which the entire principal  must be repaid

·         A home equity line of credit can be used by the borrower for whatever purpose they deem necessary

·         At the basis of the home equity line of credit is your home. So, just like a mortgage, failure to pay can result in foreclosure

·         A Home Equity Line of Credit can be very useful to a homeowner and in some instances the interest is deductible from your income tax.

The best time to apply for a HELOC is when it isn't needed. It will be available to you as credit should you ever need to borrow from it. With that being said, it’s also an available option if you come to a point where you do need a large sum of money fairly quickly. It is also great for help purchasing a house (mortgage down payment) and we specialize in this. Contact me to see if your home equityline of credit can be used to get you into the house you desire.

A Proper Closing

If you’re in the process of obtaining a mortgage loan then you are probably interested in getting to closing as quickly and efficiently as possible.  In previous blogs we have discussed how to get to closing; what you need to have and what you can expect through the process, but what happens when you get to the finish line? Your application for a mortgage loan has been approved and you have received a commitment letter from us. The final step before you can call the house your own is the closing, or settlement, of the purchase transaction and mortgage loan. You will have to sign a purchase agreement and your loan request will be approved, but you still have no rights to the property, including access, until the legal title to the property is transferred to you and loan is closed. You should have an understanding of what is involved in the closing process, and here I discuss what you need to do to finish up this process.

When you get to closing, you will sign the necessary documents, the seller will transfer the deed to the property, funds will be collected and disbursed and the closing agent will record the necessary instruments to give you legal ownership of the property. Settlement of a mortgage loan is a legal process, so specific procedures and requirements will vary according to state and local laws. This information applies to closing practices in our area.

As soon as you receive firm approval from us, the lender handling your loan, you will want to confirm the actual date of loan closing. An estimated closing date was probably specified in the sale contract, but a firm date needs to be set by your agent.  The loan closing date will include representation, either in person or through documentation, of all the necessary parties - the buyer, the seller of the property, the party’s agents, the title company, and your lender. Your loan commitment can expire, as can the rate lock agreement, so the settlement date should be set with that in mind.  The settlement date also has to allow adequate time to assemble all of the required documentation. The real estate agents involved in the sale transaction and the lender are often the best people to coordinate the closing arrangements, since they are the most knowledgable and experienced in this area. Most lenders require at least three to five days advance notice of the closing date in order to prepare the loan documents and get them to the closing agent.

Examples of documents that may be required for closing:

§  Title Insurance Policy

§  Termite Inspection and Certification

§  Survey or Plot Plan

§  Water and Sewer Certification

§  Homeowner’s Insurance

§  Flood Insurance

§  Certificate of Occupancy or Building Code Compliance Letter

Closing your home loan is a standard process in home ownership, but it there are variances for individual situations. Your process may be shorter or longer than your neighbors and this could be due to the documents needed, the seller’s specifications, the house’s necessary repairs, and your financial agreement. Contact me for only the highest quality lending and begin the process of homeownership.https://kbrown-icmtglo.mortgagewebcenter.com/

So You Want a New House But You Already Own

Many people are faced with the challenge of needing to buy a new house while they already own one. This is most often the case when a move warrants switching houses. What is the best way to handle this situation? Buying a house isn’t as easy as it used to be.  Buying your new home while maintaining your current living situation may be the preferred choice for ease of transitioning from one place to another, but this approach can be a bit tricky. In this blog I will address the proper technique for handling a situation like this.

There are many reasons why you may need to buy a house while you still own one; 

§   You need to relocate for work or personal reasons

§   You may have found the house of your dreams at a great price and you don’t want to let it go

§   Hotels can run you thousands if you stay in one after your house sells while waiting for your next

§   You want to meet the deadline for a specific tax credit

§   The mortgage rates are excellent and you want to take advantage of that to upgrade to a better house 

In the past, purchasing a new house before selling the old house was not a difficult task – you could rent the home and use the new rental payments to help offset the existing mortgage payment. Now it is more difficult because the laws have changed to protect lenders from losing money on “walk-away borrowers”, a person who strategically defaults on their mortgage to avoid foreclosure.

Fannie Mae, Freddie Mac and the Federal Housing Administration (FHA) have gotten tougher with their requirements for sellers who are in the market to buy and want to rent their existing homes. If you want to use the new rental payments to offset the existing mortgage, the lender will require that you have 30% equity in your home as evidenced by an appraisal (FHA requires only 25% equity). Again, this is to stop strategic defaulters. If you don’t have the required equity in your residence, whether you rent your home or not, you will have to qualify carrying the entire existing mortgage payment. Additionally, if you already have an FHA loan you will not be able to obtain another one as FHA, for the most part, only allows borrowers to have 1 FHA open loan at a time.

You may have enough equity in your home and the ability to carry your existing mortgage payment; you intend to sell your home, but you want to purchase your new home before you sell (thus having the ability to write a contract that is not contingent on your sale). In this scenario you may need to borrow funds until you can sell your current home. You have some options, such as a “bridge loan” - tapping into your home equity, or as your last resort, you could borrow from your retirement savings. You should run these numbers by your mortgage lender to understand the consequences of each action.

You may feel that you just don't have a choice and moving into a new home while you still own another is unavoidable. It is not impossible to do, just be prepared for some extra hoops to jump through, and let your mortgage lender guide you to the best options for your situation. This is a situation we handle frequently, and it's only one of the many things we're good at. Contact me and I can help you with the processof transitioning into your new home.

Does It Cost More to Buy or Rent

This week’s blog post is about the cost related to value of buying vs. renting a home. I will compare the 2 options with some detail, to demonstrate why choosing to buy is a financially sound decision. In a previous blog, I talked about the advantages of getting pre-approved for mortgage loans. Now I will explore the financial advantages of home ownership.

 You may have wondered about the relative value and expense of both options and asked the question, “Is it better to rent or buy?”; It's very common for someone in the market for a new home to look only at the sale price . For instance, you may be looking in a specific neighborhood for a house, but come to the conclusion that it is out of your price range, based on the asking price. You see the sales price and get intimidated, without stopping to think about what the realized cost will be. By “cost” we typically mean out of pocket expense. For example, a home listing at $400,000 does not mean that is what you will spend on it. With our wide array of loan options, and historically low interest rates available, mortgage payments now are now very comparable to current monthly rents. .

 Owning your own home comes with tax benefits. Homeowners get the benefit of being able to write off the interest on their mortgage payments. In the fist few years of owning your own home this is very helpful, especially when borrowers with fixed-rate mortgages pay a decent amount of interest on their home loans. There is a very good chance that you will get a tax benefit from owning your own home, this should be considered when making the decision to rent or buy.

Rent

$2,000 per month

3 year total - $72,000

Equity - $0

Not Tax Deductible

Rent can increase year over year

Mortgage

Mortgage - $2,500 per month (PITI)

3 year total - $90,000

Equity - $22,006

Mortgage interest and mortgage insurance are tax deductible

Principle and Interest portion of mortgage is fixed and will not increase

This may seem like a time and energy consuming process, but when you compare the pro's to the con's you will likely see that buying is significantly better. It's time to take a leap and start building your equity rather than someone else’s. Contact me to complete the loan process and launchyour future as a home owner.

Locking In Your Rate

You never know when the lowest mortgage rate will be available to you, but with good timing, a little knowledge, and the help of your mortgage lender, you can lock in the interest rate once you have a ratified contract on a property.

 In a previous blog we discussed why the mortgage rates are so low, however they're constantly changing. This fluctuation makes it difficult to know when is the perfect time to lock in a rate. The last thing you want is to find your perfect house, only to learn the interest rates have gone up, or that you have to pay thousands more in points. In this blog I will be discussing how to lock in the lowest rate possible to save you the most money.

The process of locking in an interest rate varies from lender to lender.  Interest rates can vary on a daily basis.  While there are many variables that can impact interest rates, the most common reason for interest rate fluctuation is whether economic news is stronger or weaker than anticipated.  It will sound funny, but in order to have lower interest rates, you want to hear weaknesses in the economy with low inflation.  This combination will keep interest rates low to stimulate the economy.  Lenders typically have set times, Monday through Friday when the quotes are available and when you must lock in by in order to secure the agreed upon quote.

There are a few things to keep in mind regarding a mortgage rate lock-in to help ensure you are getting the best rate:

·          A rate quote is different than a rate lock - a quote has not legally binding and subject to change as the rates change; a rate lock secures that interest rate at the time of closing and is a binding agreement

·          Be organized and prepared; you may lock in once you have a ratified contract on a property and your settlement date is within a lender’s lock period.

·          It is best to have a specific property in mind and even better to be close to closing

·          Get the rate lock in a legally binding document, not just a verbal offer

·          Make sure the lock covers you to the settlement date

When locking in a mortgage rate, let your mortgage lender guide you through the process. Know your estimated closing date, and try to time your rate lock with that date. If you estimate 30 days to close, find out what the interest rate would be if you locked it for a 45-day period. You can't afford to take more time then you should.

You can save a lot of money by locking in the lowest rate possible to you, so it is worth the effort. The important thing is to get your rate on a day it's low and lock for enough time to close your loan. Interest rates are constantly changing, and currently they're the lowest they've been in years. Intercoastal Mortgage Company can help you obtain the best possible rate for you. Contact me and Iwill assist you in locking the interest rate for your loan.

How Should I Start the Loan Process

Chances are you are well aware that now is a great time to purchase your next home, but what steps do you need to take? This blog is going to cover the steps you must take to obtain a loan. You may want to start the process by contacting me for an initial consultation. After listening to your specific goals and needs, I will suggest the program that is appropriate for your situation. At this time I will ask you to fill out the mortgage application. It is recommended, for efficiency sake, that you apply over the telephone or through our safe and secure website. If you prefer, you may apply in person or through the mail. I will be happy to provide you with a good faith estimate based on the programs you are interested in and eligible for.

After you have completed the application I will initiate the conditional approval process. At this time, I may ask you for some personal documentation such as pay stubs, W2’s, tax returns, bank statements or other pertinent information. I will be able to quickly determine what documentation will be necessary based on your application and interview. Normally, we are able to issue a conditional approval within 24 hours, though this varies for individual circumstance. The approval will normally be conditioned upon some tasks that have not occurred yet, like the appraisal or title work being completed.

Now that you have completed these steps your loan will be placed in a conditional approved status. This will enable us to issue a conditional approval letter. This letter is normally drafted when you are ready to make a contract offer on a home after your property search. The letter will contain specific information on the property you have selected. If you are refinancing a property you already own, I will help you take the necessary steps to complete that process.

Once you have a ratified contract to purchase a home or have decided to refinance and given me permission to order your appraisal, we will "lock in" the interest rate on one of the many competitive Intercoastal Mortgage programs you may select. You will sign all verifying application documents in the loan package and return it here. I will complete all matters of due diligence. I will then submit the loan to our in-house underwriters. There, it will be validated and sent to our in-house closing department. The closing department will then interface with your chosen title company to insure that your settlement occurs on time and without any glitches. We excel at making this process as stress free as possible.

When purchasing your next home, you must utilize the best possible resources available to you. We strive to be the best lender to assist you with your next home buying experience. We are professional and, with the exception of the required 3^rd party appraisal, complete all other phases of the mortgage process in-house. Start the process today, and contact me.

What Is a Non-Conventional Loan

These types of loans are for the borrower or property that does not meet the traditional guidelines for a typical mortgage loan. They provide us, as your lender, a way to ensure that we have a solution to the issues or obstacles you may encounter in trying to obtain a mortgage. Non-conventional loans are often used for purchasing private residences and for building or renovating them. This blog discusses the non-conventional loan. Three types of non-conventional loans that we offer and will be discussing are:

·         Construction Loans

·         Renovation Loans

·         Bridge Loans

A construction loan takes a borrower through lot acquisition, construction, and conversion to a permanent loan upon completion of the project. A construction loan is a one-time close loan program to finance the construction of your dream home, providing both the construction funds and the permanent loan. This means you will save thousands by not having additional closing costs from multiple loan settlements.

A Renovation Loan is a construction loan for a primary residence that the applicant already owns. This program allows the homeowner to borrow funds based on the fully renovated value.

Bridge Loans facilitate a non-contingent contract for the purchase of a new primary residence using equity in a borrowers existing primary residence.

We provide conventional and non-conventional loans, and would be happy to assist you in either process. Contact me for aquality lending relationship and experience.