...

minnesota

Waiting for lower rates could be costly

by

St Paul, MN: We get it. You want the lowest mortgage interest rates. What you may not realize is that waiting for that low rate could make you your own worst enemy.

When shopping mortgage rates, understand that the quote you got yesterday or last week is meaningless. Interest rates can change throughout the day and that may cost you dearly while you think about it. Face it, rates change daily – sometimes even multiple times in one day.

Did you know you can pick any interest rate you want? Do you know the difference between the rate and pricing for the rate? Are you willing to pay the price to get a rate? Do you want lower closing costs? Has your loan officer explained these options and differences?

Have you ever thought “When the rate hits (your rate here), I’ll lock.” When the rate does hit your mark there is nothing lenders can do because the application/approval process hasn’t begun. Knowing this here is a simple plan to position you to lock in rates that meet both your payment and equity objectives.

1. Call a local licensed loan officer (not a bank) and begin discussing the refinancing of your home, along with the best rate and cost options to fit your needs.

NOTE: It goes against the grain of what most people think, but your current lender is almost without fail, the most expensive refinance option.

2. If the refinance rate and savings makes sense, start an application with your local lender, but don’t pay any application fee. You may have to pay a small fee to have them pull your credit. If they request/demand an application fee, or have cancellation fees you should select another lender no matter how great their interest rate quote appears.

3. Once the lender has you in application you’re now in a position to lock in a rate that meets both your payment and equity objectives and in the interim you can begin gathering all the needed items to seek an approval for you loan. Starting an application and signing the initial disclosures does not constitute a contract. You are under no obligations at this time to continue.  It does however, allow for an approval, which simplifies the entire process and puts you in the best position of strength for obtaining and locking your rate or making an offer on a new home.

Should you lock a rate, or hold out for something better?

We are asked this question an untold number of times a week. Everyone wants “the lowest rate” and no matter what great refinance rate I quote, human nature takes over. Everyone panics about locking today, because “what if rates go lower next week?” The first question to ask yourself is “Does the rate meet my payment objective?” If so, then lock, it really is that simple.

When the decision to lock has been made there are three possible outcomes;

  • Rates drop – ok, not good, but usually not enough to realistically impact a decision.
  • Rates remain the same – No worries
  • Rates go up – Lucky me, I locked!

So using the three outcomes above you only have a 33% chance of a rate improvement, and a 66% of no change or rates going higher.  What kind of gambler are you?

Little change in Mortgage Rates this week following employment report

by

Mortgage Rates Change Little Following Employment Report

Minneapolis, MN: Freddie Mac (OTC: FMCC) today released the results of its Primary Mortgage Market Survey® (PMMS®), showing average fixed mortgage rates edging slightly higher while remaining near their all-time record lows coming off the employment report for September.

News Facts 

  • 30-year fixed-rate mortgages (FRM) averaged 3.39 percent with an average 0.7 point for the week ending October 11, 2012, up from last week when it averaged 3.36 percent. Last year at this time, the 30-year FRM averaged 4.12 percent.
  • 15-year fixed rate mortgages this week averaged 2.70 percent with an average 0.6 point, up from last week when it averaged 2.69 percent. A year ago at this time, the 15-year FRM averaged 3.37 percent.
  • 5-year adjustable-rate mortgages (ARM) averaged 2.73 percent this week with an average 0.6 point, up from last week when it averaged 2.72 percent. A year ago, the 5-year ARM averaged 3.06 percent.

Quotes
Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac.

“Mortgage rates were little changed this holiday week following the employment report for September. Payroll employment increased by 114,000 workers, although manufacturing jobs dipped for the second month in a row. Employment in the prior two months was revised up 86,000 and the unemployment rate fell to 7.8 percent, marking the lowest rate since January 2009.”

Freddie Mac’s survey is the average of loans bought from lenders last week, including discount points. Applicants must pay all closing costs at these rates. No cost loan rates higher.

Follow this link to view today’s MN and WI mortgage interest rates.

 

Are you a Serious Buyer or a Time Waster?

by

Serious Home Buyer?

Minneapolis, MN:  As a professional licensed Loan Officer, I encounter people everyday that say they want to purchase a home.  But when it comes down to it, they may not be ready for that responsibility of a home,  or they are can not get pre-approved for a home loan.

In our society, it seems everyone wants everything now.  Learning that it may take a little time and some effort on the buyers part frustrates many of them them.  Being told “no” simply doesn’t register.  It amazes me the number of people who apply with me, and when I look at their credit report, I see that they’ve applied with 9 other lenders.  Face it, it you’ve been told no 9 times, the 10th time is going to be a no too. Stop wasting my time.

When I deny applicants, we always tell them,  “you don’t qualify right now, but if you do these certain steps you will be able to purchase a home in the future.”

These people are not serious buyers, and just waste the precious time of Real Estate Agents and Mortgage Loan Officers though out all of Minnesota, Wisconsin, and the rest of the country.

Don’t take your frustration out on the messenger.  We want to approve you, but if you are not ready today – you are not ready. We will let you know that you need to alter to get an approval in the future.  Maybe pay off some debt, improve your credit score, or come up with more down payment money.  Sometimes this may mean you don’t get the latest iPhone,  or you keep your older car while you pay down your debt.

Maybe you have had some trouble paying your bills on time in the past and have poor credit.  I’m amazed at those who want, but don’t even come close to proving to a mortgage company that you are ready.  In today’s world, easy options, and loans for everyone don’t exist. You have to prove to lenders you are ready.  This means on time payments,  a good credit scores, prove your income, and have some skin in the game (down payment).

 

Mortgage Rates Back To Record Lows

by

Minneapolis, MN:  Freddie Mac  today released the results of its Primary Mortgage Market Survey® (PMMS®), showing fixed mortgage rates at or near their all-time record lows helping to keep homebuyer affordability high. The average 30-year fixed rate mortgage matched its all-time record low at 3.49 percent, and the average 15-year fixed fell to a new all-time record low at 2.77 percent.

News Facts

  • 30-year fixed-rate mortgagese averaged 3.49 percent with an average 0.6 point for the week ending September 20, 2012, down from last week when it averaged 3.55 percent. Last year at this time, the 30-year FRM averaged 4.09 percent.
  • 15-year fixed rate mortgages this week averaged 2.77 percent with an average 0.6 point, down from last week when it averaged 2.85 percent. A year ago at this time, the 15-year FRM averaged 3.29 percent.
  • 5-year adjustable rate mortgages (ARM) averaged 2.76 percent this week with an average 0.6 point, up from last week when it averaged 2.72 percent. A year ago, the 5-year ARM averaged 3.02 percent.

Quotes
Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac.

“Following the Federal Reserve’s announcement of a new bond purchase plan, yields on mortgage-backed securities fell bringing average fixed mortgage rates to their all-time record lows which should aid in the ongoing housing recovery. New construction on one-family homes rebounded in August, rising by 5.5 percent to the fastest pace since April 2010. In addition, existing home sales increased by 7.8 percent in August to its strongest pace since May 2010.”

Freddie Mac’s survey is the average of loans bought from lenders last week, including discount points. Applicants must pay all closing costs at these rates. No cost loan rates higher.

Follow this link to view today’s MN and WI mortgage interest rates.

Should you refinance, modify, buy, or run away?

by

Saint Paul, MN: These are certainly trying times, and 70% of homeowners have some sort of financing on their home. The economy is hurting, and fear of job loss is on many minds. But what you should be doing in today’s market isn’t always clear.

The economy is hurting largely because of the initial wave of foreclosures and high gas prices of earlier in 2008. This has spilling over into all aspects of American lives, but is it really as bad as the constant beat of the media drum has one to believe?

Unemployment nationwide is averaging in the 8% range. This is significantly below the highs of years past. Foreclosures are still at historic high levels. These reports sound bad, but sit back and take a look at your own individual lives to examine if it really is bad for you and what you should be doing.

For example, while possible job loss is on a lot of minds, examine your own ability to market yourself? No job is guaranteed. If you did lose your job, how quickly can you replace it with a similar income, even if in a different field.

I am in the mortgage business, which clearly is suffering. I don’t worry about my home or income, because I know that if needed, I would take two or three jobs (even menial jobs) to always make sure my family has the three most important items: Shelter, food, and clothing. I know I can cut off cable TV, sell cars, cut expenses, and go into survival mode and that I will always be able to provide the basics.

If unemployment is averaging 8%, this means 92% of people are working. If foreclosures are averaging 10% of homes, this means 90% of people are OK. Turn off the TV, stop reading the paper. If you didn’t hear and read all the “bad news”, how would YOU personally view your situation?

BUYING A HOME: We all need a place to live. Home prices are extremely attractive, with great deals to be found everywhere. Mortgage rates are near historic lows. If you have OK or better credit, can come up with a small down payment, plan on staying in the home for at least four years, you are almost foolish to not buy something TODAY.

MODIFYING YOUR EXISTING LOAN: Many people bought homes they shouldn’t have and took risky loans to do so. Simply because a lender said yes, doesn’t mean you should have. Even more people who originally bought right used their homes as ATM machines, with a constant “cash out” refinance to pay credit cards and live lifestyles they couldn’t afford. I just spoke with a customer who bought this home 15-years ago for $85,000 who is losing it to foreclosure owing $300,000.

As little as two years ago, getting a bank to modify your loan was rare, and required you to be seriously behind in payments. Today, banks are very willing to help keep you in your home by modifying your payments. Workouts vary greatly depending on many variables, but the best ones we see lower your rate to around 3% for 5-years. Then the rates start adjusting back to where they originally were.

Unfortunately, we are seeing two problems emerge with modification. The first, is many people who got loan modifications fairly quickly fall behind again. While no one wants to lose a home, you must be realistic. Many times I speak with people where I calculate a payment based on ZERO percent, and they still tell me they can’t make the payment. Modifying only delays the inevitable. Getting out completely and into a situation you can afford releases untold weight off your shoulders.

REFINANCING YOUR EXISTING LOAN: Minnesota refinance rates are currently hovering near historic lows and it is well worth thinking about getting something better if you qualify. The basic criteria is that if you can lower your rate and you’ll be there long enough to at least break even on the closing costs, then it is a smart move.

Today, programs like VA IRRRL streamline refinances, FHA streamline refinances, and HARP 2.0 loans make refinancing available to most people.

So, should you be buying a home, modifying your existing loan, refinancing, or running away? It all depends, but I suggest we all stop living in fear, properly analyze our lives and personal situations, take our heads out of the sand, and make well educated decisions to put our lives in a better place.

An original article by Joe Metzler (C) 2012 Metzler Enterprises, LLC for www.MnRealEstateDaily.com

Can a HARP refinance help you?

by

Can a HARP refinance help you?

Minneapolis, MN:  A HARP refinance, in short, allows you to refinance with expanded eligibility requirements in regards to loan-to-value, or debt-to-income. That could mean that you are allowed to refinance, even though your home may have lost value., or the payment is a bit higher than normally allowed for your income. That flexibility allows many homeowners to refinance when they otherwise would not be able to. The idea is that even though the new loan might be a risky loan compared to other loans files with lower ratios it is still less risky than just leaving the home owner in their current position. Fannie Mae or Freddie Mac is on the hook for your loan if it’s a HARP refinance, so they want to allow you to get a lower payment and be in a position where you are less likely to default on your mortgage.

What do I mean exactly by expanded eligibility?

Well, Fannie Mae and Freddie Mac have what we call Automated Underwriting Systems. Fannie Mae and Freddie Mac each have their own system and they have certain thresholds that are known in the industry. For instance, we know that a total debt ratio of 45% is a very important number. Why? Normally, if your total debt ratio is over 45% then you are denied. On new loans, these systems will both issue approvals up to a 50% total debt ratio but if you are over 45% you need to have what we call “compensating factors” to get approval. With a HARP loan this 45% number is basically thrown out the window and the Automated Underwriting Systems are much more flexible with their approvals.

Loan to value ratio is also very important in any loan transaction. The normal rules are if the property is your primary residence then you can have as little as 3.5% equity and you can refinance. If the property is a rental then you’ll need 25% equity to get a refinance.  HARP allows you to be significantly underwater and still get the loan done. That means instead of having to have equity in the property you can have a property that is worth less than what you owe and still refinance.

MY LENDER said NO to HARP

Understand this important fact, Fannie Mae and Freddie Mac do NOT do loans. They BUY loans from lenders. Not all lenders feel the same about the risk to them about doing HARP refinances. Most lenders are very conservative today.  Keep in mind that lenders can have “overlays” to the basic HARP guidelines that restrict what that company decides to refinance. You don’t have to go through your current lender to get a HARP 2.0 refinance done.  Shop around to find the best HARP mortgage interest rate just like you would with any other refinance. And good luck!

An original article by Joe Metzler (C) 2012 Metzler Enterprises, LLC for www.MnRealEstateDaily.com

Mortgage Rates Change Little, Remain Near Record Lows

by

Mortgage Rates Change Little, Remain Near Record Lows

Minneapolis, MN:  Freddie Mac today released the results of its Primary Mortgage Market Survey® , showing fixed mortgage rates declining or remaining the same from the previous week amid mixed economic data, and continuing to hover around their all-time record lows.

News Facts

  • 30-year fixed rate mortgage averaged 3.55 percent with an average 0.7 point for the week ending September 6, 2012, down from last week when it averaged 3.59 percent. Last year at this time, the 30-year FRM averaged 4.12 percent.
  • 15-year fixed rate mortgages this week averaged 2.86 percent with an average 0.6 point, the same as last week. A year ago at this time, the 15-year FRM averaged 3.33 percent.
  • 5-year adjustable mortgages (ARM) averaged 2.75 percent this week with an average 0.7 point, down from last week when it averaged 2.78 percent. A year ago, the 5-year ARM averaged 2.96 percent.

Quotes
Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac.

“Mortgage rates were little changed over the holiday week amid mixed economic data releases. Although consumer spending rose 0.4 percent in July, representing the largest gain in five months, the core price index was unchanged suggesting little threat of inflation. Consumer confidence picked up slightly in August according to the University of Michigan, but remained below this year’s peak in May. And the manufacturing industry contracted for the third consecutive month in August.”

Freddie Mac’s survey is the average of loans bought from lenders last week, including discount points. Applicants must pay all closing costs at these rates. No cost loan rates higher.

Follow this link to view today’s MN and WI mortgage interest rates.

.

Do You Qualify for a Mortgage?

by

Do You Qualify for a Mortgage?

Minneapolis, MN: Every year, millions of potential new home owners ask the question, “can I qualify for a mortgage?” It’s a scary question for many people, but getting the answer isn’t anywhere as hard or difficult as people think.First, ask yourself some of these basic questions, then contact a local licensed non-bank lender and fill out an application. There are no obligations to let a lender review your situation.

Can I afford the payment?

This is obviously a major questions. I always tell people if they have been comfortably making a rent payment similar to what the anticipated mortgage payment will be, you’ve passed this test!Many people on the other hand have “payment shock”, which simply means the new home payment will be significantly more than what the pay now, if anything.

Lender use a term called “debt ratio”, which is simply a measure of a percentage of your income that would go towards the house, and all other debt. There are two different ratios they measure. The first number is your “housing debt”, which they don’t like to see over 28%. This is a measure of just the cost of the house {principal, interest, taxes, insurance) versus your income.  The next number, which most people are more familiar with is your “total debt ratio”, takes in all debt. The house payment, car payments, credit cards, student loans, etc. This number they generally do not like to see over 41% of your income.

There are slight variations to these ratios depending on loan program, so be sure to consult your Licensed Mortgage Loan Officer for details. Here is a link to some popular mortgage calculators to help you determine debt ratios.

Down Payment

Mortgage lenders love it when you put at least 20% down. That down payment size or more will get you a loan without mortgage insurance, a nice money saver. Realistically many people simply can’t afford that much. Conventional loans may be available with as little as 5% down, and the very popular FHA Loan is available with as little as 3.5% down payment.  The minimum down payment can also be effected by credit score.  Someone with a 660 credit score for example, will need at least 10% down on a conventional loan, while someone with a 720 score will only need 5% down.

Zero down payment is a potential option for some people. Military veterans can possible obtain a zero down payment VA Loan, and those seeing to live in rural areas of the country may also qualify for a no down payment USDA Rural Development Loan.

Your down payment will also affect your interest rate. All other things being equal, the best interest rates go to borrowers who put down larger down payments; you’ll pay a somewhat higher rate if you put down only 5 percent or 10 percent.

Credit score

Credit scores clearly are a major factor, but it is actually pretty simple. If you have great credit (over 720), you’ll have no problems.  If you have OK or average credit (660 – 720), you’ll likely qualify for most programs, but not necessarily all, or not with the best mortgage interest rates. If you have bad credit (below 620), you will not qualify for anything, and should work on repairing your credit before attempting to get a mortgage loan.

To review your credit go to www.annualcreditreport.com. You can get a copy of your report for free once every year. This service does NOT include scores. Another free option is http://www.creditkarma.com. This DOES include scores, but they offer similar, but not the actual FICO scores lenders use, so your numbers may be different than what a lender gets, but at least it gets you an idea of where you are at.

Your Income

To qualify for a mortgage loan, you will be required to fully document all of your qualifying income. Lenders want to see your past two-years job history. Do not confuse this with needing to be at the SAME job for two-years. It is OK if you’ve changed jobs.

If you’re self-employed, get commission, or tipped income, it’s another story. You’ll need to be at the same position for at least two-years, and provide the past two-years Federal Tax returns. Your income is based on your AFTER deductions. If your income is stable, or increasing, you’re in great shape.  If your income is declining, this may be an issue.

Income from child support, alimony, social security, pensions, etc, are all acceptable.  You’ll need to fully document what is is, and that you are actually receiving it.  You will also need to prove it will continue for at least three years.

Bottom Line

If you feel you meet these basic requirements, contact a local licensed Loan Officer to submit an application. Before you do, understand who you should contact, and some of the myths:

  • 80% of Loan Officers are unlicensed application clerks. Only deal with a licensed Loan Officer. Learn How.
  • Your Bank doesn’t know you or care about you
  • Credit Unions DO make a profit
  • Get off the Internet. There are no deals there you can’t get locally – Sit down with a LOCAL Lender

An original article by Joe Metzler (C) 2012 Metzler Enterprises, LLC for www.MnRealEstateDaily.com

Fixed Mortgage Rates Ease Going Into The Labor Day Weekend

by

Fixed Mortgage Rates Ease Going Into The Labor Day Weekend

Minneapolis, MN:  Freddie Mac today released the results of its Primary Mortgage Market Survey® (PMMS®), showing fixed mortgage rates pulling back and following bond yields lower after gradually moving higher over the past month.

News Facts

  • 30-year fixed-rate mortgages  averaged 3.59 percent with an average 0.6 point for the week ending August 30, 2012, down from last week when it averaged 3.66 percent. Last year at this time, the 30-year FRM averaged 4.22 percent.
  • 15-year fix rate mortgages this week averaged 2.86 percent with an average 0.6 point, down from last week when it averaged 2.89 percent. A year ago at this time, the 15-year FRM averaged 3.39 percent.
  • 5-year adjustable-rate mortgages (ARM) averaged 2.78 percent this week with an average 0.6 point, down from last week when it averaged 2.80 percent. A year ago, the 5-year ARM averaged 2.96 percent.

Quotes

Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac.

  • “Treasury bond yields fell, allowing mortgage rates to follow, after the release of the July 31st and August 1stminutes of the Federal Reserve’s monetary policy committee. Committee members agreed that economic activity had decelerated more in recent months than they had anticipated at their last meeting in June. Some members even saw room for additional stimulus fairly soon if needed.
  • “Nonetheless, the housing market continued to show improvement over the past few months. New home sales rose 3.6 percent in July matching May’s pace as the strongest month since April 2010.  Similarly, pending existing home sales also rose in July to its highest rate since April 2010. And, the S&P/Case-Shiller® National Home Price Index rose 1.2 percent between the second quarter of 2011 and 2012, reflecting the first annual increase since the second quarter of 2010.”

Freddie Mac’s survey is the average of loans bought from lenders last week, including discount points.

Follow this link to view today’s MN and WI best mortgage interest rates.

#

Turn your Jumbo Loan into a lower rate Conventional Loan

by

Minneapolis, MN: As mortgage interest rates continue to sit at historical lows, many homeowners have taken this opportunity as a time to refinance into a fixed rate home loan. Inevitably interest rates will rise and for this reason it makes sense to lock into a great low mortgage interest rate sooner rather than later.

While interest rates are very low for all home loans, if you are looking for a fixed rate loan and you have a jumbo mortgage (over $417,000 in 95% of the country and ALL of Minnesota and Wisconsin), you will see a higher fixed rate available. That is because the Jumbo market is essentially a private market for mortgages, as opposed to conventional loans, which are backed by Fannie Mae and Freddie Mac.

Given this fact, many homeowners who have Jumbo mortgages and are looking to lock into a fixed rate loan, are now considering paying down their mortgages to the conventional loan limit of $417,000 and then refinancing. As this would allow them to trade in their jumbo loan for a new fixed rate conventional loan, at a lower interest rate. The current difference between a 30-yr fixed rate jumbo loan versus a conventional loan is about 1/2%.  Dropping your rate by that much can amount to huge savings over time.

Now obviously, this only applies to those who have the funds to do so, but here in Minnesota especially, there are many homeowners with home mortgages just slightly above the conventional loan limits. For those homeowners, it may make sense to pay down the mortgage and lock into the lower conventional fixed rate.

If you are considering refinancing your Jumbo mortgage and paying down your existing loan to a conventional loan, as always please contact a local licensed Loan Officer, not an unlicensed bank application clerk, to discuss all of your options.

This pay down options isn’t right for everyone, but for many homeowners it could be a wise decision to lower your loan balance and lock into a low fixed conventional loan rate.

An original article by Joe Metzler (C) 2012 Metzler Enterprises, LLC for www.MnRealEstateDaily.com

USDA Loan Eligibility Map Changes effective Oct 1, 2012

by

USDA is changing the property eligibility map effective Oct. 1, 2012.

Cities and towns that formally qualified for the Zero Down USDA Rural Development Loans may no longer qualify.

This change is due to a number of reason, including larger populations, elimination of special consideration zones, or they no longer meet the definition of rural.

The effected cities in MN are listed here.

Click this link to view the full list of cities across the county that are losing their ability to get a USDA Rural Development loan.

 USDA INCOME Eligibility Check
USDA Property Eligibility Check

 

 

Fixed Rates Move Higher for 2nd week in a row

by

Fixed Mortgage Rates Move Higher for Second Consecutive Week

St Paul, MN: Freddie Mac today released the results of its Primary Mortgage Market Survey® (PMMS®), showing fixed mortgage rates moving higher following stronger-than-expected employment reports. The 30-year fixed averaged 3.59 percent, and the 15-year fixed averaged, 2.84 percent, still near the historic low.

News Facts

  • 30-year fixed rate mortgage (FRM) averaged 3.59 percent with an average 0.6 point for the week ending August 9, 2012, up from last week when it averaged 3.55 percent. Last year at this time, the 30-year FRM averaged 4.32 percent.
  • 15-year mortgage rates this week averaged 2.84 percent with an average 0.6 point, up from last week when it averaged 2.83 percent. A year ago at this time, the 15-year FRM averaged 3.50 percent.
  • 5-year adjustable-rate mortgage (ARM) averaged 2.77 percent this week with an average 0.6 point, up from last week when it averaged 2.75 percent. A year ago, the 5-year ARM averaged 3.13 percent.
  • 1-year ARM averaged 2.65 percent this week with an average 0.4 point, down from last week when it averaged 2.70 percent. At this time last year, the 1-year ARM averaged 2.89 percent.

Quotes

Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac.

  • “Fixed mortgage rates inched up again this week following stronger-than-expected employment reports. The economy added 163,000 jobs in July, well above the market consensus forecast of 100,000, and the largest increase since February. In addition, the number of announced corporate layoffs fell 45 percent in July compared to last July and was the third time this year that announced layoffs were less than the same month in 2011 according to The Challenger Report. This suggests further net gains in employment are likely in the near future.”

Freddie Mac’s survey is the average of loans bought from lenders last week, including discount points. Follow this link to view today’s MN and WI mortgage interest rates.

 

Ways to pay off your mortgage debt faster

by

St Paul, MN: If you surf the cable TV channels, listen to talk radio, or search online, you will find numerous financial and debt management experts offering tips and tricks on managing debt such as mortgage, credit card debt, student loan and so on.

However, it is important to evaluate one’s own personal financial situation before implementing any such debt relief tips. This is to ensure that you benefit from such advice and not further pile up debts that you become responsible for. So, here are 5 strategies to repay your Minnesota  mortgage faster.

Make Extra Payments: If there is no pre-payment penalty, you can make extra payments on the mortgage loan. The extra amount of money is taken off from the principal mortgage amount. For example, a $400,000 loan at 4% rate for 30 year fixed will pay off in only 25 years if you make $200 extra payment every month.

Make Bi-Weekly Payments: Bi-weekly payments on Minnesota mortgage loans are better than a monthly payment. In doing so, at the end of the financial year, you are paying one month extra payment. Therefore, the extra month’s payment will shorten the term of the mortgage. Every penny counts when you’re repaying any sort of debt. For example – Using the same numbers as above, by making bi-weekly payment you would pay off the loan is 25.8 years instead of a regular 30 years.

Get a shorter-term refinance loan: This financial strategy has gained in popularity among the borrowers in Minnesota. The rate of interest has nose-dived and it is much simpler for the homeowners to repay their mortgage debts. The advantage of this refinance loan is that by paying high monthly payments you pay off the loan in considerably shorter period of time. For example – Instead of taking a regular 30 Year Fixed mortgage, consider taking a 20, 15 or a 10 year mortgage. If you can afford the payment, you save on interest cost and also pay off the loan much quicker. A few mortgage lenders even let you pick whatever mortgage amortization term you want, from 8 – 30-years. For example, if you have only 12-years left, you can get a new 12-year mortgage loan.

Make a One Time Big Payment: If you get inheritance, gift or a big bonus, you can make one large lumpsum payment. That will reduce your principal balance substantially and thus pay off the loan quicker. You can also ask the lender to “recast” the loan and reduce the monthly payment without refinancing. Don’t just make the extra payment. Talk to your lender first.

The ideas mentioned here are not meant to be a tax advice. You are encouraged to contact your CPA/Financial Adviser before making any significant money decision.

 

What is Homepath and Homesteps?

by

You’ve seen the logo’s, but what is HomePath and HomeSteps?

Fannie Mae HomePath lender in MN and WIThe HomePath and HomeSteps programs allows a person to buy a specially designated Fannie Mae or Freddie Mac owned foreclosed property with a low down payment, flexible mortgage terms, no lender-requested appraisal and no mortgage insurance. Expanded seller contributions to closing costs are allowed as well making the buyers

Freddie Mac HomeSteps lender in MN and WIHow Does It Work?
Simple. Just follow these steps:

  • Apply with a lender. Get Pre-Approved. Just qualify for a traditional financing with at least 3% down.
  • Meet with a Realtor – Look at homes, buy your dream house.  You MUST select a home to buy from a special list of available foreclosed properties
  • Close and move in!

Where can I see the list of available houses?
Easy. Contact a Real Estate Agent,  and they’ll show you a list of qualified HomePath and HomeStep properties.

What about closing costs?
Closing costs can be rolled into the transaction, up to 6% of the loan amount.

How do I get started?
It all starts with a no obligation application, and a visit to a special lender offering the programs.

Investors Welcome. Investors can participate in the program too!

Buying a home in MN or WI?  Click here for a HomePath, HomeSteps lender in MN and WI, or call (651) 705-6261, where one of their specially trained Loan Officers will assist you.

Common First Time Home Buyer Mistakes

by

It happens every day. First-time home buyers, partly due to enthusiasm or partly due to ignorance, make costly mistakes during the home buying process.  Like buying more house than you can reasonably afford, or simply buying the wrong house because they thought they were getting a deal.

To help you keep your sanity and your cash, become an educated consumer and avoid the mistakes others have made before you. Here are a few common mistakes new home buyers should avoid:

Big Mistake #1

Not planning ahead. From the moment you think about buying a home, start planning. Start by requesting a copy of your credit report. Carefully examine it for errors and be prepared to answer questions about items on your credit report. Talk to your MN based mortgage lender before you attempt to rectify errors on your report – in some cases your attempts to rectify credit report errors can cause a delay in the approval of your loan.  Talking with a licensed Mortgage loan professional (not an unlicensed bank application clerk) can provide you valuable guidance when it comes to improving your credit score or correcting errors.

Are you currently renting? Check your lease for an early release clause. If you’ll be subject to penalties, try to time your closing with the expiration of the lease.

During this planning phase, consider your life over the next five to seven years. Do you plan to start a family? Will an in-law eventually move in with you? Will you be working from home? The number and layout of the rooms you require will depend on your answers. If you qualify for financing based on a dual income, will you be able to survive on one salary in order to fulfill a long-range plan, such as one parent staying home to raise a child? Once you’ve answered these questions, establish a plan. Then direct the process with reference to the plan. Don’t let the process dictate to you.

Big Mistake #2

Failing to understand the home buying process. First-time home buyers need to ask questions, lots of questions. Choose a real estate agent and licensed mortgage professional who each have experience working with new home buyers. Experienced Realtors and financing professionals should be willing to explain the entire home buying process – from viewing homes, to negotiating, to financing, to escrow and closing in detail, and explain it again until you understand it. Do NOT tolerate a Realtor or Loan Officer you are not comfortable with or someone who treats you like a number.

Big Mistake # 3

Getting in too deep. It can happen when home buyers shop outside their budgets or over-extend themselves. What can you do to avoid getting hooked? Monitor your expenses for a couple of months. Then, based on your findings, develop a budget that truly reflects your lifestyle. Talk to a real estate agent who can provide insight into new home expenses and taxes. Then revise your budget.

Don’t buy a home thinking you’re getting a deal because the previous tax value was high, and the current price is low. If it was worth the previous tax value, that is what it would be seller for!

 

Trick to Pay Off Your Mortgage In Half The Time

by

A Trick to Pay Off Your Mortgage In Half The Time

Minneapolis, Minnesota:  Sounds like a claim you might see on a SPAM E-Mail you receive. The fact is, smart people are doing this everyday to pay off their mortgage in half the time and there is nothing special about it.

What is it you ask?  Easy, simply shorten your term to a 10-year or 15-year mortgage loan.

Mortgage Refinance Rates in MN and WIMany homeowners are thinking of refinancing to today’s historically low mortgage rates here in MN, WI, and the rest of the country. Great, yet many people make the mistake of refinancing back into another 30-year loan.  Sure, you may save a few hundred dollars, but how much is it going to cost by adding back all those years?  How about retirement?  Wouldn’t it be nice to go into retirement WITHOUT a mortgage payment?

By lowering your term, you get a better interest rate than on a 30-year, and you save untold thousands of dollars in interest.

Fear of higher payments on the shorter term loans keeps many people from selecting this mortgage savings option.  But a quick peak at a mortgage calculator can show you the savings – and I’ll bet most people can easily afford the payment if they simply put their mind to it.