Category: Mortgage Tips

Feds Cut Rates But Not Mortgage Rates

Posted on October 30, 2019 by Anthony Bird - Buying a Home, Local Michigan, Mortgage Rates, Mortgage Tips

You may have heard that the Federal Reserve has been cutting rates to slow economic slowdown. Industry experts predict that they may cut the Fed rates again this week. It would be a surprise to the economy if they did not follow through with another cut. With this said, it is important to know that this does not mean that mortgage rates will be lowered.

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The only mortgage rates that may be tied to the Fed Funds Rates are home equity lines of credit (HELOCs). When it comes to primary 1^st mortgages the effects have already taken place. This is because the bond market dictates mortgage rates in real-time whereas the Fed only meets every 6 weeks.

Bond traders use expectations of what the Feds may do when trading bonds which determines mortgage pricing. This is what they have been doing for weeks and weeks up to this point.

“This leaves more potential for mortgage rate increases rather than rate drops. “

Even when it comes to long term rates like mortgages, they do not always follow the Fed Fund Rate trends. Currently, longer term loans are low relative to Fed Funds Rates. This leaves more potential for mortgage rate increases rather than rate drops.

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With this being said, borrowers should not focus on the Fed’s cuts/hikes. They should measure if this very moment makes sense to refinance or upgrade to a larger home. The current mortgage rate volatility makes it nearly impossible to predict if rates are going up or down from here.

Mortgage rates are already near historic lows. If you are interested in a mortgage quote, your preferred mortgage broker, Riverbank Finance would be happy to run the numbers. Call us at 800-555-2098 or request information below!

What are Today’s Mortgage Rates?

Posted on September 15, 2019 by Anthony Bird - Buying a Home, Local Michigan, Mortgage Rates, Mortgage Tips, Refinance

There is a lot of confusion when it comes to mortgage rates. You may see rates on the news, TV commercials, internet ads and promotions at your bank but what really are the today’s mortgage rates?

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The answer to this question is not straight forward to understand. When it comes to mortgage rates, there is not just a rate that a bank or lender is giving out for the day. Mortgage rates are determined by several factors including:

loan type
credit
loan-to-value ratios
loan term
loan costs
location
property type

Mortgage Rates for Loan Types

When comparing mortgage rates, it is important to look at what loan type is best for your situation. Generally speaking, government insured mortgages such as FHA Loan, VA Loan and USDA loans have lower rates than Conventional Loans.

While the rates may be lower, there are other factors to consider such as up-front funding fees that the government charges and mortgage insurance premiums. If you have great credit or a large down payment, you may be better off with a conventional mortgage loan.

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Mortgage Rates based on Loan-to-Value Ratios (LTV)

Mortgages are based on risk for the investors that fund the loans. One measurement of risk is the loan-to-value (LTV). For example, if a loan is based on 50% of the home’s value, there is little risk of loss for the lender if the home is foreclosed therefore mortgage rates are lower.

Mortgage rates based on LTV is not always linear. For example, mortgage rates are typically lower for a 15% down payment than if a borrower applies a 20% down payment. This is due to loan level price adjustments (LLPAs).

While this is counter intuitive, this is because a lender would have some form of mortgage insurance to protect against loss at 15% down but none at 20% down. To get the lowest rates based on LTV, we recommend a 25% down payment.

Mortgage Rates Based on Loan Term

Mortgage rates vary based on the term of the loan. The shorter the loan term, the lower the interest rates. 15 year fixed rates mortgage may have a lower rate than a 30 year fixed rate mortgage.

With shorter terms, the rate may be slightly lower however the mortgage payment will be more because you are repaying your loan more quickly.

Today’s mortgage rates are very close for 15 year and 30 year mortgages. It may make sense to seek a 30 year fixed rate and simply pay extra principal payments.

Loan Fees and Discount Points for Mortgage Rates

The biggest factor when comparing mortgage rates is the costs to get the loan. Be certain to compare the lender fees and discount points required to get the advertised rates. Most of the big banks and online lenders advertise mortgage rates with thousands of dollars in costs to get the loan.

Many banks, lenders and credit unions have costs such as applications fees, underwriting fees, processing fees and origination fees which add to the costs to get a mortgage (Riverbank has Zero Lender fees!).

To get the lowest mortgage rate, you may have to pay discount points. Discount Points are paying extra fees up front to get a lower than market interest rate. Some people may choose to do this because in the long run a lower rate may save them more money than the up-front cost.

For example, you may have the option to pay $2,000 extra at closing to get a .25% lower interest rate; let’s assume this saves you $50 per month; the break even point would be $2000/$50 = 3.3 years. In this example if you have the mortgage more than 3.3 years you will save by paying discounts points up front.

In some scenarios paying points may be beneficial, however, discount points are one of the most misleading charges. When the advertised interest rates look very low, it is important to ask what fees are required to get that rate. Many times the big banks and lenders require large upfront costs to get their advertised rates.

How to Compare Mortgage Rates

When shopping for a mortgage, there is no truly easy way to compare mortgage rates on your own. Each bank and lender quote rates, fees and charges differently which makes it hard to determine what loan is best for your situation. The best way to compare mortgage rates is to talk with an independent mortgage broker.

Independent mortgage brokers are experience mortgage experts that can advice clients on how to get the best mortgage for their needs.

Why Use a Mortgage Broker to get a Home Loan?

Using a mortgage broker to get a home loan is the best way to get a mortgage. A mortgage broker will spend time learning your goals and requirements and compare rates at multiple banks and lenders simultaneously. Mortgage brokers offer wholesale rates which may be lower than a consumer can get going through a retail bank or lender.

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The best part about using a mortgage broker is that they do not charge you any fees for their services (for most loan products). They are compensated only by the lender for assisting the clients through the mortgage process. The end lender would rather compensate a mortgage broker for a loan because they are cheaper than having to pay employees as loan officers for their bank directly.

Clients can save a large amount in up-front costs and get a very competitive mortgage rate by working with a mortgage broker.

If you are looking to buy a home or refinance your current mortgage, talk with a mortgage broker today by calling us at 800-555-2098 or requesting information below.

How to Lower your Interest Rate without an Appraisal

Posted on July 10, 2019 by Anthony Bird - Local Michigan, Mortgage Rates, Mortgage Tips, Refinance

How to drop your mortgage rates. No Appraisal Required.

Did you know that many loans do not require an appraisal to drop your interest rate on your mortgage? One of the largest hurdles for people considering a rate reduction refinance is the up-front cost of an appraisal.

The good news is that there are options to lower your rate with no appraisal required!

How Much Does an Appraisal Cost?

Many times, when you get a home loan, an appraisal is required to report to the lender the condition of the home as well as the market value. By law, appraisals are completed by independent 3rd party licensed appraisers.

They typically charge the buyer up front for their services. The cost of an appraisal can vary based on the property location and property type. The average cost of an appraisal is between $450 and $550.

Can I Refinance a Conventional Loan without an Appraisal?

Refinancing a conventional loan can be done without an appraisal. While not all will qualify, Fannie Mae and Freddie Mac both offer property inspection waivers which are eligible on both Purchase Loans and Refinance Loans.

To get a property inspection wavier on a Conventional loan, you will need to have at least 20% Equity (80% Loan to Value). This is because Private Mortgage Insurance companies always require an appraisal to approve the PMI.

NOTE: Not all banks and lenders are able to offer Fannie Mae and Freddie Mac backed mortgages. This means that if you were told you are not eligible by another lender, Riverbank may still be able to help with no appraisal required!

Read about Conventional Loans

What restrictions are there to do a Conventional Loan without an Appraisal?

There are several restrictions on Conventional Appraisal Waivers Including:

No Cash-Out Refinances
No Investment Properties
Single Family Residences Only (No Multi-Unit Homes)
Loan must be under the Conforming Loan Limits
No Properties where Adverse conditions are present based on Sellers Disclosure or Inspections
No Manufactured Homes
No Constructions Loans
No Non-Arms Length Transactions

Appraisal Waiver Pre-Check

Riverbank Finance LLC can do an appraisal waiver pre-check to see if your property is eligible to refinance with no appraisal required.

We simply need your home address and estimated property value and our software will confirm if you are eligible for an appraisal wavier!

Check Eligibility Now!

Refinancing a VA loan with no appraisal with an IRRRL

Military veterans that currently have a VA loan on their primary residence may be eligible to drop their interest rate with a VA IRRRL (Interest Rate Reduction Loan).

This streamlined refinance loan required limited documentation to allow veterans to take advantage of lower rates and payments. No Income and No Appraisal and only a mortgage credit rating is required.

Get Info on a VA IRRRL

Refinance an FHA loan with No Appraisal with an FHA Streamline Refinance

Similar to the VA IRRRL, homeowners that currently have an FHA mortgage may be able to lower their interest rate with no appraisal with an FHA Streamline Refinance loan.

This loan allows a homeowner to take advantage of lower mortgage rates with limited documentation. They may be able to close quickly with no appraisal, no income documentation and only a mortgage credit rating.

What are the Benefits of Refinancing my Mortgage?

Refinancing you mortgage may be a great financial decision. It never hurts to review your options to see if a mortgage refinance is right for your goals.

You may be able to save thousands of dollars in interest payments or pay off your loan more quickly.

Refinance Benefits may Include:

Lowering Your Interest Rate – Dropping your rate may save you thousands in Interest.
Paying off your home more quickly – Shorten your mortgage term may help you be debt free quickly.
Dropping PMI off your mortgage – If your equity has increased you may be able to save on your monthly payment by dropping PMI.
Getting Cash-Out for Home Improvements – Tap in your home’s equity for upgrades, family vacations or to get Cash-in-Hand.
Consolidating Debt and Lowering your overall Monthly Payments – Pay off high interest debts by consolidating them into your low rate mortgage.

Talk with a Refinance Expert

Riverbank Loan Officers are experts on refinance loan options. We may be able to save you thousands in interest compared to your current mortgage.

Call us today at 800-555-2098 or request information below.

5 Questions to Ask Yourself Before Buying a Home

Posted on May 29, 2019 by Anthony Bird - Buying a Home, First Time Home Buyer, Mortgage Tips

How Long Do I Plan to Live in the House?

Before you decide to buy a home you should review your goals and timelines. It is important to know how long you plan to live in your home.

Each timeline will have different goals for financing so plan this up front to save the most money with your mortgage!

Short Term Housing

If you plan on staying in a home for a very short amount of time, under a year for example, you may be better off renting. Closing costs and costs to sell a home may take away any financial benefits of owning.

The Starter Home

If you know you will be moving within 1-3 years you will want to structure your financing to get the lowest closing costs for your mortgage. Ask your loan officer about Lender Paid Closing Costs.

No Plan on Moving Soon

If you plan on living in your home between 3-5 years, getting a balanced mortgage with a low rate and low closing costs will be the best fit.

Buying the Forever Home

If you are buying your “forever home” and plan to stay in your home for at least 5 years, then getting the lowest rate should be a priority. Even if you have more costs up front, the monthly savings from having a lower rate and payment will pay off in the long term.

Do I Plan to Do Home Improvements?

When you buy a home, the first rule is Location, Location, Location. You can make any home into your dream home but you cannot change the location. Sometimes you have to sacrifice some of your needs and wants to get a home in the “Right” location.

This may mean that you need to buy a home and do home improvements after you purchase. If you know the home you are buying will need some work, it is important to budget for these repairs.

Ask yourself these key questions when it comes to home improvements:

How do you plan to pay for the home improvements?
How quickly will the upgrades need to be completed?
Will you save up and pay cash or finance the repairs?
Will you do the repairs yourself or hire it out?

If the repairs are significant, you may want to consider a Home Renovation Mortgage when you purchase which allows you to finance in repairs.

Do I Want to Keep Cash on Hand or Make a Large Down Payment

There is an old saying when it comes to money, “Cash is King!” This saying holds true when it comes to owning a home. It is important to have some cash saved up when buying a home.

There are several things to consider when it comes to using your cash when buying a home:

Should you keep money in the bank for emergencies or home repairs?
Should you use your cash for investments or retirement?
Should you make a large down payment to lower your monthly mortgage payment?

These are all important things to consider when budgeting to buy a home. For some, applying a 20% down payment will help them to avoid Private Mortgage Insurance (PMI) which will result in a lower monthly payment.

For others, getting a zero down mortgage or putting down only 3% may allow them to buy the home they want and have money left over for Home Improvements or repairs.

How Quickly Do I want to be Debt Free

When buying a home, it is important to plan for the long term future. You should ask yourself how quickly you want to become debt free by paying off your mortgage.

For some, buying a home is only the start of their adult life and they need to have flexibility to have low monthly mortgage payments. A 30 Year Fixed rate mortgage may be the best fit in this scenario.

For others that are nearing retirement age, going with a shorter term mortgage, like a 15 Year Fixed Rate Mortgage may be the best fit. Typically a shorter term will have a lower interest rate and will help you to pay off your mortgage more quickly.

Home Buyer Advice

There are several things to consider when buying a home which makes it important to work with an experience mortgage professional such as a mortgage broker.

A mortgage broker will help you to review your goals and structure a loan to help you save money. They can do calculations such as a break even analysis to advise if you would be better off with a low closing cost mortgage or a low rate mortgage.

To Speak with a Licensed Michigan Mortgage Broker call Riverbank Finance today at 800-555-2098 or request information below.

5 Tips to Make Moving Easier

Posted on May 8, 2019 by Anthony Bird - Buying a Home, Mortgage Tips

Why Michigan Mortgage Rates Dropped in 2019

Posted on April 24, 2019 by Anthony Bird - First Time Home Buyer, Local Michigan, Mortgage Rates, Mortgage Tips

March 2019 was the best month for Michigan Mortgage Rates in a Decade! Rates dropped the sharpest they had in a single month since the mortgage meltdown which led to a recession in the late 2000’s.

This is great for anyone that is buying a home or looking to drop their mortgage rate. Many are wondering why rates dropped and will they go up or down.

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Why did mortgage rates drop in Early 2019?

The slow economy in Europe is a factor resulting in lower mortgage rates. With the effect of Brexit causing uncertainties for business and long term investment plans, Europe’s economy has been suffering.

When major global economies are halted, investors demand more predictable investments like bonds and mortgage backed securities which create lower mortgage rates.

The Federal Reserve Decided to Leave the Federal Fund Target Range Unchanged

The Federal Reserve does not directly set mortgage rates however they do have a major effect on them. The Federal Funds Rate is the rate at which banks can borrow money from Federal Reserve Funds.

Banks use this rate to base interest rates on loans. If banks can borrow money cheaper, they can lend it out in the form of mortgages and other loans at lower interest rates.

The Federal Reserve released its policy statement showing that they do not expect to hike Federal Reserve Rates for the rest of the year due to the slower growth in the economy.

This caused Treasury Yields to Fall which helps mortgage rates. The Treasury Yields dropped to levels not seen for 10 years which could indicate a future recession.

Home Sales Decline and Housing Inventory Increased

The National Association of Realtors (NAR) reported that the seasonally adjusted rate for sales of existing homes dropped 4.9% in March 2019 from the previous month and were also down year over year 4.7%.

NAR also confirmed that home inventory increased from 3.5 to 3.8 months’ worth which indicates slowing home sales. Although sales appear to be slowing, this may be due to the 3.8% increase in median home sales prices.

Jobs Report Numbers Low

While the real estate market shows strength, job grown has dwindled. The headline nonfarm payrolls may have disappointed some with only 20,000 new jobs.

The average since taking the survey from 1939 is 125,000 new jobs created. This is the worst number in job growth since September 2017 when two major hurricanes hit.

US Trade Deficit Worst in 10 Years

Recent reports show that the U.S. trade deficit jumped to $59.8 billion. This is the largest it’s been in the last ten years. The uncertainty with Chinese trade tariffs have had a negative impact on US manufacturing and exports.

Will Mortgage Rates go Up or Down?

The million dollar question from all people considering a mortgage is, “Will Mortgage Rates go Up or Down?” If this were easily predictable then everyone would not be wondering this.

There are several factors pushing upward on mortgage rates for the long term. Progress in the US / China Trade Negotiations, Brexit decisions postponed, Oil Prices Rising, the US stock market hitting record highs; these all are negative forces on mortgage rates.

See Michigan Mortgage Rates

Mortgage Rate Lock Advice

No one can predict the future with certainty. My advice to my friends, family and clients is to review benefits of locking in a mortgage rate or refinancing right now.

If it makes sense do it!
Do not wait or you will be late!
No one can predict Mortgage Rates!

If your mortgage rate is over 5%, now may be a great opportunity to drop into the 4’s for a Conventional 30 year fixed mortgage or even 3’s for a 15 year home loan.

With upward pressure on mortgage rates, it is a risky gamble to wait to see if they will go lower. If the numbers make sense and add benefit then take advantage of it immediately!

FHA vs Conventional Loans

Posted on March 20, 2019 by Anthony Bird - Buying a Home, FHA Mortgage, First Time Home Buyer, Local Michigan, Mortgage Tips

Conventional Loans are home loans that conform to the underwriting guidelines set by the Government Sponsored Entities, Fannie Mae and Freddie Mac. In the past, conventional loans were only for elite borrowers that had 20% or more for their down payment. Times have since changed opening up great new programs for low to middle income earners and first time homebuyers.

Why are Conventional Loans Better than FHA Loans

Conventional Loans are now an affordable option for those without the highest credit scores. Mortgage Interest Rates are currently in a tighter spread. By this I mean that the best creditor borrowers and the lower score borrowers will have an interest within 1% to 1.5% of each other.

This is helped by programs like Fannie Mae’s HomeReady Loan and Freddie Mac’s HomePossible Loan. These programs limit the loan level price adjustments (LLPAs) which increases the par offering rate. These programs also allow first time homebuyers to buy a home with only 3% down while FHA requires a minimum down payment of 3.5%.

In the past, Private Mortgage Insurance (PMI) rates would also be absurdly high for lower score borrowers seeking Conventional mortgages. With the competition between PMI companies, mortgage insurance rates have dropped significantly in the past few years. This allows Conventional loans to be very competitive with Government Insurance Loans like FHA mortgages.

Related: See our Conventional Mortgage Calculator

FHA Mortgage Insurance Cost May Cost More than Conventional Loans

Conventional loans may be a better option for homebuyers than FHA Mortgages because of the mortgage insurance savings. On Conventional loans, there is typically a monthly PMI fee if a borrower does not put a 20% down payment towards their purchase. FHA has a similar fee plus an up front charge.

Related: See our FHA Mortgage Calculator

FHA Mortgage insurance VS Private Mortgages Insurance

FHA Mortgage Insurance	Private Mortgage Insurance
Required on all Loans	Required on conventional mortgages with less than 20% down
Two Types of mortgage insurance	May be dropped once loan to value is under 78%
Cannot be removed if down payment is less than 10%	What is an FHA Up Front Mortgage Insurance Premium?
May be more expensive	Many options for PMI payments
	Offers Reduce Premiums for First Time Homebuyer Programs

FHA Loans charge two types of Mortgage Insurance Premiums (MIP). There is Upfront Mortgage Insurance Premiums (UFMIP) which are payable to HUD at close. The UFMIP is calculated as a percentage of the original loan amount. This fee is currently set at 1.75% of the base loan amount. For example, If you borrower $200,000, the FHA UFMIP added to your loan amount is $3,500. This is an extra expense not found on Conventional Loans.

What is an FHA Annual Mortgage Insurance Premium?

The Second type of Mortgage Insurance on FHA Loans is Annual Mortgage Insurance Premiums (MIP). This calculation varies based on loan-to-value and loan term but is as high s .85% of the original loan amount. For example, if you borrowed $200,000 the annual MIP would be $200,000 * .0085 = $1,700 which is split up over 12 months and added to your monthly mortgage payment. In this example, your payment would increase by $141.67 for MIP.

April 2013, FHA made a major change which started the shift away from this loan type. They changed the way annual FHA mortgage insurance fees were charged by making FHA Mortgage Insurance Premiums payable for the life of the loan. In past years, it would drop off under certain circumstances similar to Conventional Loans when your loan was paid under 78% of the home’s value.

Conventional Loans are more Attractive to a Seller than FHA Financing

In many areas of the country, there is a shortage of homes for sale which creates a sellers market. This means that sellers can be more picky when accepting offers from buyers on their homes.

When a buyer is making an offer with FHA financing, a seller may be reluctant to accept due to additional requirements for the home’s conditions compared to Conventional Financing. Having a Conventional Loan Pre-Approval may make the difference from getting your offer accepted or getting rejected by a seller.

Why Would Anyone Still Do FHA Loans over Conventional Loans?

There are certain circumstances where FHA finance may be a better option than a Conventional Loan.

FHA Loans with Down Payment Assistance

Many Mortgage Down Payment Assistance Programs (DPA) work only in conjunction with FHA financing. If a borrower does not significant funds available or down payment, DPA programs may help the buy a home.

FHA Loans Allow for Lower Credit Scores

Conventional Loans have minimum credit score requirement of 620. If a borrower has a credit score lower than this, FHA financing may be the only option. Currently FHA allows for credit as low as a 530 with a 10% down payment or as low as 580 with only a 3.5% down payment. Many borrowers with a credit score lower credit scores may have no problems qualifying for FHA financing when Conventional loans are not an option.

FHA Loans Have Shorter Wait Periods Than Conventional Loans

FHA loans have shorter wait periods for major life events such as bankruptcy or foreclosure.

FHA loans only require a 2 year wait period from Chapter 7 Bankruptcy while Conventional requires 4 years.
FHA requires a 3 year wait period for foreclosures while Conventional Loans require 7 Years.
These wait periods may allow a borrower to buy a home with FHA financing while conventional is not an option.

FHA Loans allow for Higher Debt To Income Ratios than Conventional Loans

A borrower may be better off with an FHA loan over conventional financing if they have a high Debt To Income Ratio.

Conventional Loans typically require a borrower to have a Debt-to-Income (DTI) of 45% or less to qualify with a maximum DTI of 50%.
FHA is more flexible with higher debts allowing a maximum of 56.9%. Borrowers with higher debts may only qualify for FHA Loans.

FHA Streamline Refinance

If a borrower already has an FHA Loan but does not have a significant amount of equity in their home, they may qualify for a rate reduction through an FHA Streamline Refinance. This loan type may allow them to drop their rate and payments without an appraisal or documenting income and with little to no costs. This is a program unique to FHA financing and can help a borrower that purchased their home when their credit scores were lower but have since improved.

Summary of Why Conventional Loans are Better Than FHA Loans

With the current guidelines set by FHA, Fannie Mae and Freddie Mac, Conventional Loans may be a better fit for buyers than FHA loans. Conventional loans offer lower down payments of only 3% for first time homebuyers while FHA loans require 3.5% down. Mortgage insurance may be significantly cheaper on Conventional loans versus FHA loans. Lastly, submitting an offer with Conventional Financing may be more attractive to sellers over an FHA Pre-Approval.

To get more information on what loan type maybe the best fit for your situation, call a licensed loan officer today at 800-555-2098 or request information below.

Top 3 Myths About Using a Mortgage Broker

Posted on February 23, 2019 by Anthony Bird - First Time Home Buyer, Local Michigan, Mortgage Tips

Mortgage Broker Myth #1

One of the biggest myths of using a Mortgage Broker is that they do not have control of the underwriting process. Many retail lenders and banks claim this because they have employees that underwrite the file whereas a mortgage broker works directly with the end investor to underwrite the file.

Retailers claim they can go directly to the underwriter and have them clear any unusual conditions however the retail underwriters are typically more cautious because they have to underwrite to the end investor’s standards and sell the mortgage to them after closing. If they make a mistake, the end investor may refuse to purchase the loan.

Local Mortgage Brokers have a choice on which bank or end investor they want to send their loans. If one does a poor job by not clearing the loan quickly, the mortgage broker may choose to no longer do business with them. This forces underwriters to remain accountable and nimble on clearing conditions.

If a retail loan officer at a bank or direct lender is having difficulties clearing the conditions on their loan, they have no other options because they are held captive to their once underwriter which is the only option they have.

Mortgage Broker Myth #2

The second myth about using a mortgage broker is that they take longer than a retail lender or a bank. According to the January 2019 Ellie Mae Mortgage Origination Survey of many major banks and lenders, the average time to close a mortgage is 45 days!

Using a mortgage broker, the average closing time is 21 days which is less than half of the retails and bank lenders. Taking over 30 days to close a loan with a mortgage broker would be uncommon or the result of 3rd party issue.

Mortgage brokers operate more quickly because all they do is mortgage loans. While banks may have other services such as auto loans, credit cards and checking accounts, these are distractions from closing mortgages quickly!

Mortgage Broker Myth #3

The third mortgage broker myth is that mortgage brokers cost more than banks and retail lenders. This could not be further from the truth!

For nearly all loans that mortgage brokers close, there are zero origination fees. This means no underwriting fee, no origination fee and no processing fees. For many banks and lenders these fees could be thousands of dollars that are charged to the clients and add to the cost of buying a home.

Mortgage brokers have access to the lowest rates in the mortgage industry. As a mortgage broker, they receive wholesale rates from the end investors. Generally speaking, mortgage brokers have low overhead and thinner margins which allows them to pass huge savings on to their clients. Lower costs and overhead result in lower than average rates.

Why to Use a Mortgage Broker

With mortgage rates on the rise, consumers are becoming more aware of high rates and fees that are charged by large retail lenders and banks. By simply getting a 2nd quote from a local mortgage broker, a client could save thousands of dollars on the up front costs of their mortgage and tens of thousands of dollars over the life of their loan by getting a lower interest rate.

Mortgage Brokers: Low Rates, No Fees, Quick Closings.

Mortgage brokers are mortgage experts that specialize only in home loans. They work directly with the end investors to close loans quickly and efficiently and pass on low rates and, for most loans, zero lender fees!

To speak with a mortgage broker, give us a call today at 800-555-2098 or request information below!

How to get the Best Mortgage Loan

Posted on October 5, 2018 by Anthony Bird - Buying a Home, First Time Home Buyer, Local Michigan, Mortgage Tips

When it comes to home loans, there are hundreds of loan programs and options that you may want to consider. Many first time home buyers do not know where to start when they want to buy a home. It is overwhelming to most people who do not have experience buying a home or getting a mortgage. The good news is, a loan officer can be your tour guide to help you get the best mortgage loan.

A loan officer’s job is to review your financial situation and provide home loan options. They will help to narrow down mortgage programs that do not fit your goals and also ones that you may not be eligible for. Here are the basic categories that you should review with your loan officer to get the best mortgage for your situation.

What Mortgage Program is the Best?

There are several loan programs that you can apply for including Conventional Loans, FHA Loans, VA Loans, USDA Rural Development Loans, Jumbo loans, and Portfolio Loans. Each loan program has its pros and cons.

You may not be eligible for some programs. VA Loans, for example, require that you have served in the military. If you haven’t served, then this would not be a loan option for you. Conventional loans typically require higher credit scores and are more rate sensitive to lower credit scores. USDA RD Loans, have income limits and restricted areas where you can purchase.

As you can see it is nearly impossible to quickly learn all the ins and outs of each program when you are buying a home. A loan officer can help offer options on what loan program may be the best fit for your situation.

What Mortgage Term is the Best?

Once you decide on what mortgage program will be the best fit for your situation, you will need to decide on a mortgage term. Loan terms range anywhere from 10 years to 40 years for some programs. For most loan programs we could even offer a 17 year loan or a 27 year mortgage based on your goals. The most popular mortgage option is a 30 year mortgage.

Many financial advisers recommend a 15 year fixed rate mortgage. This allows you to get a great rate and pay off your mortgage quickly. Typically loan rates are lower for shorter term loans. The downside is that the monthly payment will be higher the shorter your loan term is.

A traditional 30 year mortgage term has low payments but most of the payment goes directly to interest for the first several years. Many people are shocked at how little their loan balance goes down after a year or two of mortgage payments.

Be sure to ask your loan officer what mortgage term is best for your goals.

Include Escrows or Waive Escrows?

When you get a mortgage you may have the option to include escrows into your mortgage payment. An escrow account is a savings account held for you by your mortgage servicer that is specifically for paying the property taxes and home owners insurance on your home.

Typically, government insured mortgages including FHA, VA and USDA require you to have an escrow account included with your mortgage.

Conventional loans may allow you to waive escrows. This means that you would be responsible to pay your own taxes and home owners insurance bills when they become due.

Many people like escrow accounts for the ease of payment. It is one less thing homeowners need to worry about when buying a home. On the other hand, some people would rather waive escrows and keep their own savings where they can earn interest and be more in control of their funds.

Fixed Rate or Adjustable Rate?

A major choice to consider when getting a mortgage is if you would rather have a fixed rate or an adjustable rate. Most homeowners choose to have a fixed rate that does not change for the life of your loan. This gives predictable payments and certainty that your payment will not adjust.

Other homeowners wish to choose an adjustable rate mortgage, commonly refereed to as an ARM Loan. Typically ARMs start off with a lower rate which is locked for a set number of years (3, 5, 7, or 10 years). Once the initial fixed period is up, the rates are subject to adjustments to the LIBOR or other indexes. If the rates go up, your mortgage payment goes up. If the rates go down, your mortgage payment goes down.

Choosing a fixed rate is thought to be a more safe and secure loan option. ARMs should be carefully considered for financially savvy homeowners. Be sure to ask your loan officer about ARM Loans if you are interested otherwise a fixed rate mortgage is most likely the best choice.

What Interest Rate Should I Pick?

Lastly, when getting a mortgage, you have to pick a mortgage rate. Many people do not realized that they have options for different mortgage rates. Once you select all of your other mortgage details, your loan officer will present your mortgage rate options.

When it comes to mortgage rates, you also need to consider the fees associated with getting the loan. Typically, the lower the rate, the higher the fee. Conversely, the higher the rate, the lower the fees.

Should I Pay Discount Points?

If you want the lowest rate possible, you can certainly request a rock bottom interest rate but be prepared to pay discount points for a rate lower than the market rates.

If you want to make sure you are having the lowest costs to get a mortgage, then you may want to consider a slightly higher interest rate. Picking a higher rate may allow you to have no lender fee or even receive a lender credit that will apply towards other closing costs and pre-paid items like taxes and insurances.

Deciding what rate and fee combination can seem difficult, but your loan officer can help you do a break even analysis to compare the time to break even on your investment of paying points for lower rates.

Lets look at an example: If you were to pay 2 points on a $100,000 loan for a lower rate, this would cost you $2,000 in extra closing costs. By getting the lower rate, lets say you save $50 per month.

To find your break even point, you will divide your extra costs of $2,000 by your savings of $50 which would give you 40 months, or 3.33 years to break even on your up front investment.

If you plan on staying in the house for 5 years, then you will save more than your costs therefore paying points may make sense. If you plan on selling your home in 2 years, then you would not benefit from the up front investment and you would be better off taking the higher rate with lower fees.

There are many factors to consider to get the best mortgage for your situation. It is not as easy as simply picking the lowest rate. Be sure to work with a trusted loan officer that can help review all the mortgage programs to get you the best mortgage for your situation.

For more information on home loan programs or to review the best loan for you, request information below or call a loan officer at 800-555-2098.

Doctor Home Loans In Michigan

Posted on October 2, 2018 by Anthony Bird - Buying a Home, Mortgage Tips

Are you currently in, or recently completed a medical residency or fellowship? Our Doctors’ Loans exclude student loans from your debt-to-income ratio! Call us today at 800-555-2098 and let us discuss your options!

Benefits of Doctors Loans in Michigan

Doctors can now easily qualify for a mortgage without including student loans in the debt to income ratios. Let’s face it, becoming a doctor costs a lot of money. Most doctoral graduates have hundreds of thousands in student loans which may prevent them from becoming home buyers. With our Michigan Doctor Loan Program, recent graduates can stop renting and buy a home.

Up to 97% Financing
No Monthly PMI
Free Appraisals for all loans that close by December 31st, 2018 (credit given up to $525)
Student Loan Deferment up continue at lease 12+ months from closing date

For more information on our Physician’s Mortgage Loan, call us at 800-555-2098 or request information below: