How a Refi Can Help You Care for Aging Parents

No one likes the idea of sending their parent away to a nursing home to be surrounded by strangers all day. But is there anything else that can be done? Maybe you want to have them live with you in a spare bedroom. But what about the cost of upgrading your home to meet their needs and disabilities? Some of the changes don’t come cheap! So if you haven’t saved up, what’s a caring child of aging parents to do?

One option you could explore is refinancing your mortgage to finance home improvements. A cash-out refinance would allow you to get a great deal of money for renovations to provide the best home environment for an aging loved one.

Cashout Refinance for Home Improvements

How easy is your home to navigate for an elderly person? Are there steps at the entrance? Are the railings easy to grasp? Can your entryways become slippery when wet?

If you want to upgrade your home so an older parent can live with you, consider these three important upgrades: mobility, dexterity, and hygiene.

Mobility. It’s important that steps become ramps, handrails are placed in key areas (like bathrooms), and things your parent needs the most are easily accessible. For example, it’s a good idea to have their bedroom close to a bathroom they can use. Hallways and doorways need to have proper and current lighting so they can see obstacles in their way. Stairways can be upgraded to have chair lifts to reduce the risk of falls.

Dexterity. This might seem trivial, but as we age, our hands aren’t what they used to be. Does the oven get stuck, or is the freezer hard to pull open? Does the coffee maker need to be upgraded to decrease the amount of steps your parent needs to make if they want a cup? Upgrading cabinets with more lazy susans or putting more pantry items at eye-level can increase their comfort.

Hygiene. Bathrooms can be a potential disaster when it comes to the elderly and the potential for falls. Including non-slip mats in and around a bathtub or shower, hand rails by the toilet, and curbed or walk-in/sitting tubs can reduce that risk. Keep in mind, removing your existing tub and purchasing a more elderly-friendly tub can be expensive.

Some of these renovations can add up to thousands of dollars or more, depending on how many changes your home needs. But who can put a price tag on keeping a family member at home, rather than at a care center? With that in mind, here are a couple of options: 

Cash-out refinance. You refinance your home for more than it’s worth, and the money you’ve put into the original mortgage is available to use as cash. This is a more advantageous option than a second mortgage, because you still only pay one loan and it often comes with a lower rate than a second mortgage.

Cashout Refinance Alternatives

Alternatives to doing a cashout refinance may be a Home Improvement loan or a Reverse Mortgage. These are unique loan options that can be used to finance the costs of home renovations.

HomeStyle Renovation Loans

Our HomeStyle Renovation Home improvement loan may be a great fit to allow you to finance the costs of home improvements into your mortgage. This program is a conventional home loan that is different from standard mortgages because it uses the future improved value.  The appraiser will prepare your home appraisal valuation based on similar homes that have sold with the amenities and improvements that you are planning. You can still avoid PMI if your loan-to-value is under 80% although this loan option allows up to 95% financing for primary residences.

Reverse Mortgage for Home Improvements

A reverse mortgage loan may be another great solution for the elderly to improve their home’s safety and accessibility. A reverse mortgage is a loan type that allows homeowners to access the equity in their home without having to make monthly principal and interest mortgage payments. At the closing they may be able to receive a lump some in proceeds which can be used to pay for home improvements.

If you are serious about upgrading your home, contact us at Riverbank Finance (800-555-2098) so we can help you find the best way to afford the renovations you need.

Request Information Now!

Reasons to Get a Second Mortgage

If you have a major financial need looming over you that you’re just not sure how you’ll afford, you may want to consider taking out a second mortgage. Keep in mind, there are some pros and cons that come along with doing that, so let’s look at the options and you can decide whether this is the right solution for you.

Reasons to Get a Second Mortgage

Are you wanting to take your dream vacation to Fiji? A dream vacation is a want, rather than a need. It would be better for you to save your money and take the vacation when you’re truly financially ready. A second mortgage isn’t a good option for those who just want to spend money. It’s a mortgage, so if you can’t repay for any reason, you could lose your house.

Paying for your child’s college tuition, adding an office onto your house, and paying down medical bills or credit card debt might be better reasons to take out a second mortgage. If you have a pressing need that just has to be financed one way or another, this might be a good solution for you.

Types of Second Mortgages

There are two types of second mortgages you’ll want to consider.

  • Home Equity Loan. This is like a typical home loan, where you can choose to get a 15 or 30-year fixed-rate loan or an adjustable rate mortgage for shorter term.
  • Home Equity Line of Credit (HELOC). This is a little bit different, in that you get a line of credit based on how much equity you have in your home. The interest rate is a variable, and the term of the loan doesn’t have a specific timeline. Like a credit card, you’re only using as much money as you need, but you’re borrowing against your house.

Keep in mind, the interest on a second mortgage is typically lower than that of a credit card, but higher than a first mortgage. Also, if you want to refinance your mortgage in the future, you will have to combine both your first and second mortgages into one loan. You’ll end up with a smaller interest rate, but your overall debt will be higher, making your monthly mortgage payments higher.

How Can I Get Approved?

Your lender will want to make sure you can pay off the second mortgage, so you’ll need to provide proof that you have enough income to repay the debt. Additionally, the better your credit is, the more likely you are to get approved.

Call us at Riverbank Finance, (800) 555-2098, to schedule an appointment with one of our professional loan officers to find out whether a second mortgage might be a good option for you. We can take a look at your financial needs and help you find the best solution.

 

Will changes to HARP hurt or help mortgage seekers?

If you’re seeking to refinance after October 1, 2017, you should know there are some changes coming from Freddie Mac regarding HARP. HARP, or the Home Affordable Refinance Program, is in the waning years of its existence, which is a good thing. How Freddie Mac is changing, in relation to HARP, could be a benefit to those seeking to refinance.

History of HARP

Back during the 2008 Housing Crisis, there was an overabundance of homes that were going under and being repossessed. One reason was because homeowners, who had a home with a LTV (Loan to Value) of over 80%, couldn’t refinance.  Because they still owed 80% or more of the loan, no lender would allow them to refinance. So they were stuck paying a big loan with huge interest rates.

Enter HARP. Harp allowed these homeowners a chance, through Freddie Mac, to refinance their loan and get a lower interest rate with more affordable payments. This allowed homeowners who were in over their heads with their mortgage a solution that didn’t cost their home.

Why the Change?

HARP was never created with the intention of staying around forever.  In fact, one requirement of HARP was that the loan had to be older than 2009 for the homeowner to qualify. Since then, the number of applicants has dwindled, as there are fewer mortgages from before that period in need of HARP.

The good news is both Fannie Mae and Freddie Mac are starting new programs to help homeowners who are underwater with their mortgages. No program existed before 2008. Since then, the government has seen the value in allowing more homeowners options to keep their homes.

Freddie Mac is replacing HARP with what is being called the Relief Refinance Mortgage. One key difference is that there is no requirement that the loan must originate before 2009. So if the loan is more recent, a homeowner can take advantage.

Do you Qualify?

Homeowners could qualify for a Relief Refinance Mortgage if they meet the following requirements:

  • The mortgage must be at least 15 months old.
  • The borrower should not have any delinquent payments in the past six months.
  • They can only have one delinquent payment in the past year.

 

Keep in mind, those three requirements aren’t the only ones, but they are the biggest obstacles to qualifying for the Relief Refinance Mortgage, according to Freddie Mac. Homeowners who do meet those qualifications can contact a Riverbank Finance Loan Officer (1-800-555-2098) for more information about getting relief in the form of a refinanced mortgage.

 

How to avoid or get rid of PMI

Private Mortgage Insurance (PMI) protects the lender in case you default on your loan. In most cases, unless you have a 20% down payment, you would have to pay PMI. But if that sounds like one more expense you can’t afford, here are some ways you can avoid PMI or get rid of it if you’re already paying for it.

Lender-paid PMI

The way PMI usually works is that you, the borrower, would have to pay an extra fee, along with your monthly mortgage. That extra fee can really squeeze your budget, especially if it’s already tight.

However, some lenders will offer to pay your PMI. Here’s how that works: They’d pay the full amount of the PMI up front, and you’d have to pay it back in the form of interest. It would slightly increase your mortgage rate, meaning that you’d have a higher monthly payment.

To figure out whether this is a good option for you, you’ll have to calculate whether the monthly cost of PMI would be more or less than the increase to your mortgage rate if your lender chooses to pay the PMI for you. Either way, the lender isn’t really paying it — you are. It’s just being distributed differently.

20% Down Payment on a Conventional Loan

The best, and most obvious, way to avoid PMI is to have a 20% down payment on a Conventional Loan. Since you’re putting down 20%, the lender wouldn’t need that extra protection against defaults. So you’d be in the clear.

However, if you couldn’t afford a 20% down payment and had to opt for an FHA Loan, for example, you could still get rid of your PMI once you reach 20% in home equity. Some types of loans have PMI attached to them for their entire lifespan, so in that case, you’d have to refinance to a Conventional Loan when you have 20% in home equity in order to drop the PMI.

VA Loans

If you are a veteran or are currently serving in the military, you are eligible for a VA Loan. The government created this loan program so that returning military members could purchase their own home with zero down payment, low monthly payments and more flexibility than traditional loans. The best part is, VA Loans require no PMI because the government provides a guaranty on the loan in case of default. So if you qualify, you can get a 15 or 30-year fixed VA Loan with zero down and no PMI.

The gift of equity

If you are purchasing your home from a family member, you can accept a gift of equity to lower the loan-to-value ratio. A gift of equity is when a family member sells you his or her house for a lower price than the listed price, and the difference can be used to make your down payment or pay off debt so you can qualify for the loan.

You can’t use a gift of equity on a VA Loan or Jumbo Loan. With an FHA Loan, you could also get a gift of equity from your in-laws or a non-profit organization. In any case, it must come with a letter that says it’s a gift.

For more information on avoiding PMI or getting rid of PMI on your existing loan, contact Riverbank Finance at (800) 555-2098 to schedule an appointment with one of our professional loan officers.

Request Information Now!

How can I lower my monthly mortgage payments?

So, you’ve had a home for awhile, but you feel like your budget is just too tight. You scrimp and save, but it’s never enough. If the biggest expense you have is your mortgage, maybe it’s time to refinance your mortgage.

Refinance to a lower rate

Rates are very low. Right now, for a 30-year mortgage, the fixed rate can be as low as the high 3’s to low 4’s. Fifteen-year loans may even be in the high 2’s. Refinancing may be a great way to lower your overall mortgage payments by dropping your interest rate. This could help to save you thousands over the life of your loan. If your interest rate is over 4.5% now is a great time to review refinance options.

Drop your PMI

The only type of mortgage where Private Mortgage Insurance (PMI) drops off when you have 20% equity is the Conventional loan. Other types of loans, like the FHA, require PMI for the life of the loan. PMI usually costs 0.5 or 1% of the entire loan. It protects the bank from defaults. For you, it’s an extra cost — one that, once you’ve paid off 20% of the original loan value, you can refinance to remove. While it may not seem like a lot of money, 1% of a loan over the life of a 30-year mortgage can really add up over time. 

Extend your mortgage term

One reason folks often have trouble paying their monthly mortgage is that they think that a 15-year term is better than the 30-year. While it’s true that a 30-year mortgage takes longer to pay off, the monthly payments are lower. If your goal is a lower monthly budget, switching from a 15 to a 30-year will certainly do the trick. The only downside is the term of the loan is longer if you pay the minimum payments.

Also, if you already have a 30-year mortgage and refinance to a new one, you could still reduce your monthly payments.

Refinance from an FHA loan to a Conventional loan

You may have started with bad or low credit when you initially bought your house and had an FHA loan as the result. Or maybe you didn’t have enough money for a larger down payment. As your credit improves, you could have an opportunity to refinance your loan to a conventional mortgage. There are two advantages when refinancing an FHA to a Conventional loan: First, you could get rid of the Private Mortgage Insurance payments if you’ve paid 20% of the mortgage. Secondly, the interest rates for a Conventional loan may be lower than they are for FHA loans.

If you are thinking about refinancing your mortgage, contact one of our professional loan officers at 800-555-2098 to schedule an appointment. We can sit down and look at your financial situation and help you figure out the best way to lower your monthly mortgage payments.

Request Information Now!

VA Loans for Reservists and National Guard

As a Reservist or member of the National Guard, did you know that you could be eligible for a no down payment VA Loan? If you’re thinking about refinancing or buying a house, maybe you didn’t even realize the VA Loan could be an option for you. Although your role is different than that of a regular military member, you are still eligible to receive VA Loan benefits, with a few different qualifications. Here’s what you need to know.

VA Loan Requirements

The VA Loan was created to help veterans purchase homes, and the U.S. government provides a loan guaranty on it. It is a zero down-payment home loan with more flexibility and lower payments than conventional loans, which require 20% down. The VA Loan is only available to U.S. veterans and current military members — and that includes Reservists and National Guard.

VA Loan requirements for Reservists and National Guard are a bit stricter than those for regular military members. To be eligible for a VA Loan, you have to meet at least one of the following qualifications:

  • Six years in the Selective Reserve or National Guard, and you must have either been honorably discharged, retired, or transferred to the Standby Reserve or an element of the Ready Reserve
  • 90 days of active duty service during a wartime period
  • Discharged or released from active duty service for a service-related disability

VA Funding Fee

When you take out a VA Loan, you will have to pay a funding fee, which goes to the VA to help offset the cost of any loans that end up in default. If you have a service-related disability and are currently receiving disability compensation or are entitled to it, you would not have to pay the funding fee.

Related: Use our VA Loan Calculator to estimate total mortgage payments and VA guaranty fees!

The difference for Reservists and National Guard members is that the funding fee is slightly higher than it is for regular military members. If you take out a VA Loan with zero down, as a regular military member, you’d have to pay 2.15 percent for the first loan and 3.3 percent for any subsequent loans. As a Reservist or National Guard member, your funding fee would be 2.4 percent for the first loan and 3.3 percent for any subsequent loans.

If you have a 5-10 percent down payment, as a regular military member, you’d pay 1.5 percent funding fee for the first and any subsequent loan. With a 10-20 percent down payment, you’d have to pay a 1.25 percent funding fee for the first and any subsequent loan.

With a 5-10 percent down payment, as a Reservist or National Guard member, your funding fee would be 1.75 percent for the first and any subsequent loan. With a 10-20 percent down payment, your funding fee would be 1.5 percent for the first and any subsequent loan.

We, at Riverbank Finance, are grateful for our service members and would like to help you own the home of your dreams or refinance on your current home. To find out whether you are eligible for a VA Loan, contact one of our loan officers at (800) 555-2098 to schedule an appointment.

Request Information Now!

You’re recently divorced. Can you buy a home?

So, the marriage is over. Does that mean your dream of owning a home is, too? The short answer: No! You can still get a loan, as long as you keep in mind the following:

Keep Good Records

This is usually a good practice to have for any person, but especially true if you are recently divorced and are buying a home. Make sure you also keep your records updated. Keep a copy of any checks you’ve paid to show that you’ve paid your debts and bills in time. Any new addresses or changes in income also need to be recorded for when you meet with a loan officer.  

Behave Yourself

The urge to “get back” at the ex is not uncommon, but very bad if you’re trying to get a loan. A new criminal conviction (for verbal threats, violence, or slashing tires) will definitely hurt your chances. A more common and petty way that spouses get revenge are things like not paying a bill at the home you no longer occupy or using the credit card in excess to hurt your ex’s credit. Typically, that hurts both of you and could also count as FRAUD. Don’t do it!

Pay Your Bills

If you are legally obligated to pay a bill, alimony, or a rental agreement, do it. If you feel the child support is too high or unfair, pay it anyway. Failing to pay those hurts your credit and makes you look like a bad investment. So, it’s always good to make sure that all bills are paid on time.

Know Your Worth

Properties or vehicles that need to be sold, spousal support, and child support can all help you get a mortgage if you benefit from them. You can count spousal and/or child support as income toward paying a mortgage. So, while you might be going from a two-income household to one, it may not be as bad as you fear. (Side note: it’s always good to inform the lender how long you expect the child support income will last.)

Be Vigilant

Even though you might behave yourself, your former spouse might not. Check your credit score to make sure they don’t make charges in your name. As much as it is in your power, be sure any payments the ex makes, per the divorce settlement, are in time.

Explore Your Options

Moving out of a shared home that you love doesn’t have to be the solution. If you and your ex agree that you can keep your current home, refinancing options are available that can separate a joint loan. Speak with one of our experienced loan officers today about this and more options for divorcees.

Request Information Now!

What to do when you’re facing foreclosure

If you’re facing foreclosure, you’re not alone. According to RealtyTrac, 1 in every 3,426 homes in Michigan are being foreclosed in 2017. Muskegon is the worst county for foreclosures in the state, with every 1 in 1,063 homes being foreclosed. What should you do when you’re facing foreclosure?

Communicate with your lender

Your first instinct may be to avoid your lender. But honestly, the best thing you can do is contact them and find out about your options. We at Riverbank don’t want to see you default on your mortgage. If you’re in danger of facing foreclosure, contact us right away to set up an appointment with one of our professional loan officers. We can help evaluate your situation and figure out the best solution for you, as long as you’re committed to saving your home.

Know your rights

Make sure you understand your rights as a homeowner, and what your lender can and can’t do if you default on your mortgage, by reading through your loan documents. Contact the Michigan State Housing Development Authority toll-free at (855) MI-MSHDA   (1-855-646-7432) to find out about foreclosure laws in your area.

Be money-wise

If you’re in danger of falling behind in your mortgage payments, reevaluate your budget. Besides your own health, keeping the roof over your head should be the highest priority. Is there anything in your budget you can cut or reduce, such as cable TV or other entertainment expenses? Can you call your student loan company to find out whether you can delay payments due to hardship? Can you pay the bare minimum on credit card debt until you’re all caught up with your mortgage?

If you have an extra car you’re not using that often, you could sell it to make some extra money to pay toward your mortgage. Could you or someone in your family take an extra job temporarily? Even if you don’t make enough to catch up with your mortgage payments, at least your efforts will show the lender you are serious about saving your home.

Get foreclosure assistance

The U.S. Department of Housing and Urban Development recommends that you get assistance as soon as possible. Whether you’re in danger of missing a mortgage payment or have already missed several, make sure you are regularly communicating with your lender. Help is available. Contact a HUD-approved housing counselor to discuss your options by calling toll-free, (800) 569-4287. There are federal government programs that can help you prevent foreclosure.

The state of Michigan also has a program called Step Forward, which was created in 2010 to help those who are in danger of foreclosure. Since its inception, Step Forward has given more than $307 million to 34,567 homeowners in the state of Michigan, according to the Michigan State Housing Development Authority. The program still has $40 million available to struggling homeowners until it expires in 2020, MLive.com recently reported.

The way the program works is that homeowners can get a five-year, zero-interest loan of up to $20,000 in the form of a lien against their property in order to help pay back debts. To be eligible, you must have less than $10,000 in savings and prove that you can pay all of your future mortgage payments, condo or homeowners association fees, and taxes. To find out whether you qualify for Step Forward assistance, go to stepforwardmichigan.org or call (866) 946-7432.

Be sure to contact us right away at Riverbank Finance at 800-555-2098 if you think you might have to miss a mortgage payment. Our professional loan officers can help you evaluate your options.

Request Information Now!

Could you save money using an automated appraisal?

Much of our world is becoming automated. It should be no surprise that this is also true of the housing and mortgage industry. While some automation changes are feared, this change will be good for the mortgage lender and the mortgage seeker alike.

The Rules Have Changed

Fannie Mae and Freddie Mac have revised their rules for appraisals this past June. While it only affects first and second homes at the moment, it will likely go into other areas of borrowing in the near future.

What has changed? Fannie and Freddie are both accepting of AVMs, or Automated Valuation Models, for mortgages. During the housing crisis of 2008, too many homes were being overvalued by appraisers, which was a contributing factor to why the bubble burst. By using more AVMs, the appraisal process is less costly for everyone involved and more objective.

How does an AVM work?

AVMs use something called “appraisal analytics” to model the value of the home based on data on the region, tax assessment value, prices homes similar in the area, previous appraisals, and any information on improvements to the home, like adding a garage or a deck, that’s on record.

How do AVMs help mortgage borrowers?

The immediate benefit is there is no appraisal cost. Appraisals can average anywhere from $200-500. This also speeds up the home-buying process overall. What proponents of the new system like is that regardless of who inputs the data, the outcome is based on facts. So there’s a much lower risk of home prices being inflated during the mortgage process.

Is there a catch?

There’s often a drawback in removing a human element to a process. Appraisers actually do set foot in the home to check things out. AVMs don’t. So while it saves money and time, there’s also the risk of missing something key that could be wrong with the home in question. An algorithm can’t smell mold, for example, or notice if a support beam is weaker than it ought to be for its age. The data also takes a long period of time to compile. So the home’s valuation could be three or six months old, which could be significant or not, depending on housing market stability.

Is AVM right for me?

That answer could go either way. AVMs have been around for several years. Initially, some were concerned that homes were being either undervalued or hyper-inflated, but the data has remained consistent. Of course, there is the value of the human element being “hands on” in the appraisal. It’s best to have a conversation about the cost benefit of using an AVM with one of our loan counselors who can help explore the options with you.

Request Information Now!

 

 

Can I get a co-signer for a home loan?

Things to avoid when buying a home in Michigan.

If you want to buy a house, you have to meet certain requirements in order to secure a mortgage. What if you do not meet the requirements for income and credit history? The good news is you can ask someone to cosign on your loan, even if they won’t live at your house. Here’s what you need to know about having a cosigner on your loan.

Who can be a cosigner on my loan?

Depending on what kind of loan you are applying for, you’ll have to abide by certain regulations on who can serve as a cosigner.

With a conventional or FHA loan, you may ask your spouse, a relative, or anyone who’s going to co-own the home with you to cosign the loan. The cosigner will need to sign an application and provide full financial information to your mortgage company.

Conventional Mortgage Cosigners

A cosigner on a conventional loan may be beneficial to help get your loan approved. The cosigner will have to be related or have a close familial relationship with you that can be clearly documented for underwriting.

FHA Mortgage Cosigners

A cosigner for an FHA loan may help to get your loan approved. Similar to Conventional mortgages, the cosigner must be related or have a documented close relationship. The cosigner may be a non-occupying co-borrower meaning that they do not have to occupy the property as their primary residence to qualify. FHA cosigning example: Mother or Father cosigning for this child’s first home.

VA Loan Cosigners

If you’re applying for a VA loan with a cosigner, the requirements are a little different. If you are married, the cosigner must be your spouse. If you are not married, the cosigner can be another unmarried veteran who’s eligible for the VA Loan. You can ask a civilian (such as your parent or significant other) to cosign the loan, but the guaranty will only apply to your portion. That means you will likely need a down payment on the loan.

What are the requirements for a mortgage cosigner?

Before you ask someone to cosign on your loan, make sure the person has a good credit history and adequate income. Otherwise, they’re only going to hinder the loan process for you. For example, if you did not make enough income to qualify on your own, your co-signer will need to make enough income to cover their own liabilities and also add enough income to make up the difference for you.

Cosigner Requirements:

  • Good Credit History
  • No recent bankruptcies or foreclosures
  • Good Jobs History
  • Low expenses
  • Documentation of Income
  • Relationship to you

Remember, the cosigner is just as responsible for paying the loan as you are. So if you default for any reason, they will have to make the mortgage payments.

Why won’t a cosigner help get my loan get approved?

Getting a cosigning on a mortgage allows you to qualify based off your joint income and credit history however all applicants must meet the minimum criteria for approval. Generally speaking, when an underwriter reviews your file, they will go of worst case scenario. This means that if your credit score is too low to qualify, getting a cosigner will not help you because the qualifying credit score would still be yours.

A cosigner will not be helpful if you did not qualify for financing independently due to major derogatory events such as a recent foreclosure or bankruptcy. The wait times for these major credit events is based off the most recent event date. All parties applying for financing must meet the minimum credit scores and wait periods to be eligible for financing.

How can I get a loan without a cosigner?

If you can not find someone who can (or will) be a cosigner for you, or you do not want to ask anyone else to share responsibility for your loan, the lender will require you to fix your credit history and/or increase your income before you can acquire the loan. You may still be eligible for loans with flexible credit such as low credit FHA mortgages.

To improve your credit, you may want to take out a small line of credit that you can repay to build positive credit history. You should also check your credit report to find out if there are any errors. You can correct those by contacting the creditor or going straight to the credit reporting agency.

You could also work on saving more money toward a down payment so you can borrow less on your home loan or have a larger down payment available which may help with loan approval. Another way to improve your chances of getting the loan is to pay down your debt, including your student loans to lower your current monthly expenses.

If you are not sure whether you need a cosigner, contact Riverbank Finance at (800) 555-2098 to make an appointment with one of our professional loan officers. We can help review cosigner options for all of our mortgage options.

Request Information Now!