What Is Mortgage vs. Real Estate?

Real Estate is everything that mortgage needs, although Mortgage and Real estate relate to each other like peanut butter and jelly, In this article, I will give you a quick Mortgage101 and run down on how real estate transactions work.

What is Mortgage?

For the majority of people that buy real estate, the need for a mortgage in order to finance the cost of the property is essential for making real estate ownership a reality. If you have opted to buy a home, apartment, or other property you will probably need to take out a mortgage.

While a mortgage is usually considered to be a loan by many people, it is, in reality, a lien on the property. When the bank maintains a mortgage on a property, it means that the bank can reclaim ownership of the property if the buyer does not make loan payments on time.

A mortgage works in a similar fashion to a car loan. Taking out a mortgage means that the amount loaned out is secured by the property itself. Mortgages also have to be paid in monthly installments so that the principal and interest are covered.

Mortgage loans are typically calculated so that the principle and interest payments are spaced out over a set period of time. The terms are typically between 10 to 30 years for the average mortgage and last until the entire principal has been paid off.

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A mortgage is typically the largest debt that any homeowner will ever have. Before applying for a mortgage, you should have a good idea of what is involved in the application process so that you can be sure that you will be approved. In addition, understanding the terms of a mortgage before you sign a contract is important so that you will know whether or not you can really afford it.

Qualifying for a Mortgage

If you want to be approved for a mortgage, there are a number of criteria that need to be met in order to qualify. The first important point is to make sure that your credit score is good to excellent. At a minimum, you need a credit score of 680 or better.

Some of the other factors that will help you to become qualified include:

* A front-end ratio of 28 percent
* A back-end ratio of 36 percent
* Being employed at the same job for at least two years
* Verification of your earnings and employment
* Thorough documentation of your financial situation
* An appraisal performed by a professional
* Private mortgage insurance (applies in some cases, especially when the amount of the down payment is low).

Mortgage Types

There are several different options when it comes to the type of loan that you want on your property. In addition, only certain types of loans are available to specific individuals. The three main types of mortgages are conventional loans, VA loans, and FHA loans.

Conventional Loans: Conventional loans are offered by private lenders, typically banks. You can not obtain a conventional mortgage from the government. In addition, these types of loans often have strict requirements that mean that you must have good credit. In addition, you must have cash available to cover the down payment, which can be up to 20 percent of the value of the mortgage in order to get approved.

FHA Loans: FHA loans are offered by the Federal Housing Administration. These loans are given out by the government. FHA loans are designed for individuals that can not afford to make a substantial down payment or have other credit issues.

VA Loans: VA loans are guaranteed by the U.S. Department of Veterans Affairs. These loans are only available to military personnel that incisively on duty or are veterans. There are also some qualifications that must be met in order to obtain these loans.

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Real Estate Debt

While mortgages can be helpful for obtaining homeownership, occasionally homeowners run into financial problems.

These problems can be caused by issues such as unsecured debt, credit card debt, loss of employment or other problems. If you have a mortgage, there are options for helping you to pay your mortgage while getting your debt problems under control.

Mortgage Refinancing

Mortgage interest rates have reached the lowest levels in some time. If you want to find some money for paying your other bills, refinancing your mortgage to a lower rate could help. It is important to understand that refinancing does come with fees and it may also extend the length of your mortgage.

Cash-out Refinancing

Cash-out refinancing is available to homeowners that have a significant amount of equity in the property.

After a cash-out refinance you will have cash that you can use to pay other debts. A pitfall of this method is that unsecured debts are now tied to your property and you have compromised the equity in your home.

Home Equity Loans

Home equity loans or second mortgages can be used to pay off other debts. You are eligible if you have equity in your property. You will receive a lump sum of money at a fixed-rate.

Real estate transactions encompass both the buying and selling of property. In order to perform such transactions, decisions must be made regarding the home’s value, the current status of the local real estate market and what terms for buying or selling would be best.

What is Real Estate?

Here Are Some Real Estate Types

Real estate comes in three main types which are resident, investment and residential. Residential real estate refers to the individual properties that are owned for residential purposes. It is the most common form of real estate in the United States.

Commercial real estate refers to properties that are used primarily for business purposes. Investment real estate refers to real estate that the owner buys in order to earn income. The investor is not looking to live or use the property personally. Rather, the property is leased out to another individual, which can help generate income for the property owner.

Real Estate Benefits and Drawbacks

Since real estate transactions are taking place in an ever-changing market, there are some risks associated with owning real estate. These risks include:

* The potential for a decline in property values due to changing market conditions
* Potential liability for any problems that occur on the property
* Risk of going into debt due to mortgages

Although these drawbacks are significant, this has not stopped people from investing in real estate. When things do go well, owning real estate can result in significant financial rewards. Some of the benefits of owning real estate include:

* Short term profits realized upon selling the real estate in a market upswing
* The potential to take out additional loans for other needs while using the owned real estate property as collateral
* The diversification of an investment portfolio

source: usa.inquirer.net

Best Mortgage Rates: Wells Fargo Home Loans

With unparalleled experience in the mortgage arena, The Wells Fargo home loan team is here to assist you with every step of the home purchasing process. Whether you are in the market for a new home or looking to refinance your home, the expert mortgage team at Wells Fargo will help you find a home loan that is suitable to your financial needs.

Purchasing a New Home

When starting the home buying process, you need to first decide what price range you can afford. A big part of the Wells Fargo mortgage rates are determined based on your income, debts, and other financial data. This can be determined by looking into your current financial situation which includes both your gross annual income and credit score. The team of experts  at Wells Fargo can help you find ways to increase your credit score. Often times there are items placed on a credit score that can easily be disputed and rectified, even during the purchase of a new home.

Home buyers also have the option to get prequalified on a home loan. This can give them an up-to-date estimation of what they can afford. This estimation is helpful when making your final home buying decision. A Wells Fargo mortgage rates expert will walk your through the prequalification process and answer any questions that you may have.

Wells Fargo Mortgage Rates

When it comes to home loans, there are several options available to home buyers.

Fixed-Rate Mortgage

A fixed-rate mortgage guarantees that monthly payments and interest rates will remain the same over the course of the loan’s life.
Adjustable-Rate Mortgage (ARM): This is when you have a lower initial interest rate than compared to fixed-rate. The rates and monthly interest rates are subject to change after the initial fixed-rate period.

Jumbo Loans

These are for customers who need financing for higher loan amounts. They provide financing above standard Fannie Mae and Freddie Mac loan amounts.

Your First Mortgage

This is meant for first-time or repeat home buyers who have limited cash available for a down payment. Keep in mind that Wells Fargo mortgage rates are dependent on your credit score.

Government Loan Options

Eligible customers have availability to loans such as FHA, VA, and the Guaranteed Rural Housing. They offer low down payments, down payment assistance programs, and provide options for home buyers with credit concerns. Wells Fargo mortgage rates can fluctuate because of different loan programs.

New Home Loans

The home buyers who purchase a newly constructed home receive:

“Builder Best” extended rate lock program
A dedicated team that is specialized in home financing for new home builds.

Cash Out Refinance

This is utilized for home owners who want to access available equity from their home.This will replace your existing mortgage with a new loan that’s larger than original loan balance. Also, when you close this type of loan, you will be able to access the money you borrowed to pay for any major purchases.

Home Equity Line of Credit

This is meant for the homeowners who want ongoing access to the available equity in their home. During the “draw period” you can borrow money as you need,  up to your available line of credit. Relationship discounts can be accessed and your interest rate may be lower than other unsecured forms of credit.

Closing on Homes

It is recommended that home buyers hire a home inspector to conduct a house inspection on the home they are considering to purchase. This includes not only items that can be seen in plain sight, but also the overall structural integrity of the home, inside and out.

Home buyers themselves are also encouraged to get involved in the inspection process. Look around for any major repairs in walls, flooring, the foundation, and any other areas that need to be addressed.
Closing on a house generally takes anywhere from 30-90 days.

What is Included in the Origination Cost?

This includes all charges that lenders and brokers included during the entire transaction. These include application fees, processing expenses, underwriting fees, as well as payments to the lender.

What is Included in the Closing Costs?

Your down payment, prepaid property tax costs, and insurance escrow amounts are all included in the closing cost.

Calculate!

Wells Fargo mortgage rates offers several home lending online calculators in order to determine how much house you can afford. These tools allow you to see the different loan options and show you how committing to a larger down payment can help save you money and time. This last task can be completed by using an amortization calculator.

Refinancing

Refinancing is a great option for homeowners that want to lower their monthly payment. For example, if you are paying a certain amount for a twenty year loan, the Wells Fargo mortgage rate advisor could work with you to lower your down payment by extending the loan out over more time. Our team of experts are ready to help you achieve your refinance goals! Refinancing can allow you to take money from your home equity and place it towards other expenses. Many homeowners will choose this option to fund home improvements or a potential remodel.

Rent vs. Buy

This decision is ultimately left up to the individual. However, looking into several factors associated with this process can help a potential home buyer make a better purchase decision. Gross annual Income, tax credits, credit scoring, down payment amounts, and the size of the home are all variables taken into consideration when determining whether you should rent or buy a property.

Wells Fargo mortgage advisors are qualified and eager to work with home buyers. The team of experts will help you with the entire process, from the initial online applications to closing day. We want to make your home purchasing goals come to life. Come by any Wells Fargo branch or search for a local Wells Fargo mortgage consultant today!

source: usa.inquirer.net

3 Signs To Refinance Your Mortgage

Refinancing your mortgage simply means replacing your existing mortgage with another one. Homeowners often refinance their mortgages in order to get better interest terms and lower mortgage rates. When you refinance your mortgage, your existing mortgage doesn’t simply disappear. Rather, it is paid off and a new loan is created. You may be thinking of refinancing to get lower mortgage rates, or perhaps you’d like to change your interest terms, for instance, from a variable to a fixed rate. Here are some signs that it could be a good idea to look into refinancing:

1.Current Interest Rates Are Lower
Most lenders advise the best time to refinance is when the interest rate is at least two percentage points below your existing mortgage rate. If the current interest rate is substantially lower, refinancing can be a good way to save money. By getting a lower mortgage rate, you will be able to build equity in your home more quickly.

2. Making a Big Purchase
If you need to make a big purchase, such as a car or education, you can refinance your mortgage in order to take out a line of credit on your home. A home equity line of credit allows you to use your home equity as collateral in a substantial loan. If you choose to refinance and take out a home equity loan, then the value of your home will be appraised. This means that if you’ve made substantial improvements to your home over the years, or the market has gone up, you can take out sizable home equity lines of credit, while paying off your mortgage.

 3. Home Equity
Having greater home equity, meaning the percentage of the home you own outright, can make it easier to qualify for refinancing. Most lenders want to see that your equity is at least at 20% before approving a refinance, however in some cases you can still qualify with less than that. Put simply, the more equity you have in your home, the better your refinance terms will be.

Refinancing can be risky and the best way to determine if it’s right for you is to speak to one of our mortgage professionals. Mortgage rates can change quickly and we are dedicated to finding you low mortgage rates, as well as short-term rate promotions. If you are considering refinancing, but would like more information about how to proceed, contact us today.

source:  northwoodmortgage.com

Home Equity vs. a Loan: How to Choose the Best Option

For many Canadian homeowners, their home is the biggest investment they will make in their lifetime. There are several options for loans for homeowners, and in this article we’ll look at two options: an equity mortgage versus a mortgage loan.

Home Equity Mortgage

A home equity mortgage is different than a regular mortgage loan in that it acts more as a line of credit. If you take out an equity mortgage, the bank will agree to lend you a certain amount, but with the equity in your home acting as collateral.

An equity loan will usually have lower interest rates than a line of credit, and these rates will usually be variable, fluctuating with the market.

An equity mortgage does not require a monthly payment like a traditional mortgage loan does. Rather, it works like a credit card where you will need to make a minimum monthly payment. Taking out only what you need rather than having to make a set monthly payment can help homeowners save money on interest rates.

Many homeowners prefer the flexibility of an equity mortgage. However, it can be riskier than a traditional mortgage in that if you cannot make your payments, your home is at risk.

Mortgage Loans

A traditional mortgage loan can come as a fixed rate mortgage or variable rate mortgage. First, you will need to be approved by your lender. Once you have been approved, your mortgage is calculated based on your income, any existing debt, and the price of the property. Mortgage rates are based on the mortgage market.

Whether you have a fixed or variable rate mortgage, you will make the same monthly payment for the duration of your mortgage term. With a variable rate mortgage, the interest rate fluctuates based on the rates set by the bank. A variable rate mortgage, though riskier than a fixed rate, can save homeowners money if interest rates fall, and offer greater flexibility.

The biggest factor in deciding which loan is right for you is your financial planning. A mortgage loan is best for people who want to pay off their mortgage in a specific amount of time and make the same payment each month. A home equity mortgage allows greater flexibility and can be more adaptable, especially if you have unexpected expenses.

There are many complex factors when it comes to choosing the right loan. Consult one of our professional, experienced mortgage agents today to discuss which option is right for you!

source: northwoodmortgage.com

Five Tips For Increasing Your Home’s Equity

Equity is the magic word when it comes to homeownership. There are equity mortgages and other products that you can tap into when you’ve increased the value of your home. However, equity doesn’t grow on trees, so here are five tips for increasing your home’s equity:

  1. Pay off the principal: The quicker you pay off the mortgage principal, the more equity you build up. Look into acquiring prepayment privileges from your lender. Or if the prepayment penalty isn’t that great, it may make sense to pay off your principal as quickly as you can even if you’re penalized because you’ll be that much closer to getting an equity mortgage (or similar product).

  2.  Hire an inspector: A certified home inspector will tell you how much your home is currently worth and what improvements are necessary to up its equity.

  3.  Make upgrades to the kitchen and bathrooms: Get rid of old tiling, upgrade your appliances, get a new showerhead – do whatever it takes to upgrade your bathrooms and kitchen. Moreover, if you have an unfinished basement, finish it. You can even add a basement apartment if there’s enough room to have a full bath, kitchenette, bedroom and living area.

  4.  Create more curb appeal: Curb appeal is how enticing your home is from the street. Ask yourself this: “When people drive by, do they stop and marvel at how beautiful my home is?” If the answer is no, then you have work to do. To create more curb appeal, make sure that your front door, roof, porch, windows – basically any area of the home that is visible from the street – is revamped or at least looks new. Manicure your lawn as well because overgrown hedges and grass can make a property look uninviting.

  5.  Clean your house: A clean house is an attractive house. Even if you’re not planning on selling your house, hiring professional cleaners to clean your home’s eavestroughs, windows and doors can increase its equity. Make sure everything gets a deep clean, from the light fixtures to the furnace to the garage door. Another bonus of cleaning your house is that you can declutter. Getting rid of old clothes and boxes from your attic or garage will not only create space, it will make moving easier when/if you do sell your home.

Once you’ve put money back into your home, you can take money out of it. Equity mortgages are available that use the amount of equity built up in your home to determine how much you can borrow. You can also refinance or take out a HELOC (home equity line of credit).

source: northwoodmortgage.com