Types of Caps for Adjustable Mortgages

a couple looking at documentsThe two primary categories of mortgages on the market are adjustable and fixed mortgages. While the interest rates of a fixed mortgage remain unchanged, those of an ARM (adjustable rate mortgage) are periodically adjusted. Most home-buyers avoid an ARM because they want to cushion themselves against much interest in the future.

However, different regulations control the interest charged on an ARM. You can be confident that your ARM will have the best mortgage rate available in Utah at any one time with the right lender. Here are caps that control your interest rate’s adjustment:

Initial Adjustment Cap

When getting an ARM, you have an initial fixed-rate period that ranges from one month to five years. The initial adjustment cap controls how much your rate can increase after the expiry of your loan’s fixed rate period. The cap is typically 2-5%. This means that your mortgage’s interest rate cannot exceed 2-5% of the fixed rate that expired.

Subsequent Adjustment Cap

This controls how much your interest rate increases in the period following your first adjustment. The subsequent adjustment cap is generally 2%. This means that your new rates cannot exceed 2% of the previous one.

Lifetime Adjustment Cap

This limits how much your mortgage’s rates can increase cumulatively over the loan’s term. The lifetime adjustment cap usually is 5%. This means that your total mortgage rate will not exceed 5% of your initial price. Some mortgage lenders might have a higher lifetime adjustment cap.

The exact percentages of the given caps differ from one lender to another. When comparing an ARM, it is prudent to base your choice on these caps rather than the initial fixed interest rate a lender offers. This way, you will be well protected from exorbitant rates further down in your ARM repayment.

Top Tips to Lower Your Mortgage Closing Costs

mortgage loan agreement application with house keyringYou’re probably aware of closing costs that come with a mortgage if you’re contemplating of buying a house. And of course, you’d want to keep those costs at a minimum. In most cases, closing costs could be up to 5% of the purchase price of a house, which is a significant sum. To try to lower your closing costs, consider these tips.

Review and Understand your Loan Estimate

Take ample time to read and understand every single item, ideally with your broker or lender, and ask what every fee specifically covers and how the costs were calculated so you could determine if there are unnecessary or padded fees, advises an experienced broker from PRMI Cascade, a top mortgage company in Seattle. Check if the fees have similar names or else you might be charged twice for the same thing.

Compare Each Cost

This is why shopping around and speaking to different lenders is vital. Doing so would help you compare different costs from different lenders. Aside from obtaining quotes from different lenders, you could likewise obtain quotes for specific services, like the title search, survey fee, pest inspection fee, etc., because you don’t necessarily need to go with the providers suggested by your lender.

Negotiate with the Seller

Depending on how motivated the seller is to close the sale as well as market conditions, the seller might be willing to help you reduce your closing costs. You could try negotiating for a lower purchase price to reduce your closing costs, or ask the seller to cover some fees in your closing costs.

Negotiate Some Fees with Your Mortgage Lender

Try to ask your lender if they could do away with vague fees from your final estimate—this is, of course, considering that there are vague fees. Get the Closing Disclosure document from your lender, which details your final closing costs and compare what’s on your Loan Estimate to this document, and if you see any discrepancies, ask your lender to explain everything to you more clearly.

While you could probably think of many other ways to spend your hard-earned money, closing costs are simply one of those steps you just couldn’t skip on your way to homeownership. Even if you don’t like them, you still need to pay for them. Just focus on lowering your closing costs because that’s all you can do.

Your Guide to Finding the Best Mortgage Rates

Variable mortgage ratesIt takes more than comparison shopping to get a great deal on mortgage rates in Guilford. But lowering your mortgage rate by at least 2% or more could help you save more than a thousand dollars throughout the years. Here are a few ways you can get the best mortgage rate possible.

Fix Your Credit Score

One of the best ways to get competitive mortgage rates is by improving your credit score. Having a higher credit score shows banks that you’re more likely to be able to keep your loan current compared to others. You may improve your credit score by spending less than 30% of your credit limit and paying your bills on time.

Consider Your Debt-to-Income Ratio

Another factor that you may want to consider is your debt-to-income ratio. A person’s DTI comes in two different forms. One is the back-end ratio, which comprises all your monthly minimum loans payments, and the front-end ratio, which focuses on your housing expenses. Most banks want to see a person’s front-end ratio to be less than 28% and the back-end ratio less than 36%. A mortgage lender may allow you to go over the limit if you have proof that you have the capacity to take care of your loan.

Increase Your Savings

Keep in mind that you’ll be paying more than just the loan’s down payment. You also have to think about the private home loan insurance and other fees associated with the loan. So it’s essential to have at least three months’ worth of savings as a backup plan.

Getting the best mortgage rates requires a lot of effort from your end. Work with your mortgage provider to see if there are any other options available for you to lower down your loan.

4 Ways to Make Home Buying Process Faster

a couple signing a contractIf you already have experience in the purchase of a residential property, you know how long and tough the entire process can be. The application and approval process with the bank or financial institution alone can take a month or so.

Fortunately, there are trusted and proven ways to assist those who do not have the patience to wait for months. These are four ways that will help you speed up the entire process so that it will be finished within a few weeks:

1. Borrow from a hard money lender.

Hard money lenders are among your best options if you are looking to speed up the process. These lenders usually have fewer requirements compared to banks and financial institutions.

Plus, they do not really have a minimum credit requirement that you have to adhere to. Search for residential hard money lenders in Florida so that the process of purchasing the house will be faster.

2. Hire a reliable broker.

Brokers have a lot of experience in the purchase of a house. This experience will be useful in avoiding errors in the process. If you want to speed up the process, the brokers are your friends as they will be able to steer you in a direction that will make things faster.

3. Prepare the paperwork in advance.

Getting the paperwork ready for the purchase of a house sounds easy. But you would be surprised how much of a struggle it can be. To make things simpler, make sure that you prepare them in advance.

4. Already have a house in mind.

Keep a list of must-haves and no-no’for the house that you will buy. This will make the process of narrowing down the houses you will consider more efficient.

The purchase of a house does not have to entail an absurdly long process. When there are strategies you can do to make the process faster, you should definitely consider doing them to save you some time.

How to Avoid Costly Hospital Bills

Hospital BillMillions of people are still uninsured or under-insured even after the implementation of the Affordable Care Act (ACA). Unemployment, temporary work, low wages and high co-pays prevent people from enrolling for the ACA, but if a medical emergency happened, could they afford the bill?

The ACA was introduced to give access to medicine for those least able to afford it. The act outlawed the practice of refusing coverage to people with pre-existing conditions.

Most people received aid from the ACA, but some have still fallen through the cracks. The unemployed, ill or disabled may not be able to afford even the cheapest policy. Sadly, policies with the most affordable premiums also have a greater number of out-of-pocket expenses.

Patients Drowning in Bills They Can’t Pay

A hard-working nurse faced a $100,000 medical bill when she had mini-strokes, migraines, and trips to the ER. The hospital reduced it to $32,000 because of her low income – but she already had a previous $22,000 bill that she was paying off at $650 a month.

Despite working three 12 hour shifts a week, one employer told her she hadn’t worked enough to qualify for insurance.

In another case, a 60-year-old man faced a $2,691.50 bill for a two-mile ambulance ride when he passed out at the doctor’s office. Even with insurance, his out-of-pocket charges were more than $770.

Situations like this lead some people to conclude they’d rather avoid medical care and not take out insurance. But what would they do in a life-threatening emergency?

Ways to Save Money on Healthcare

  • The ACA Marketplace – Patients can get help with affordable care act enrollment to find the right policy for their needs. Low premiums are attractive but don’t always offer the best coverage.
  • Medicaid – Depending on location and income, patients may be entitled to Medicaid.
  • Charity applications – Some charities and hospitals have a fund they can tap into to help patients in financial need.

Medical care is expensive but going without insurance can be a costly mistake. Assistance is available for patients who can’t afford the bill.

Practical Tips to Do Mortgage Numbers Properly

Piggy Bank, Calculator and CoinsWhen shopping around for mortgages, it’s imperative to do the numbers to determine whether you can truly afford to be a homeowner. Unless you can purchase a property with cash, you need to master mortgage math to find a home loan that fits into your budget.

The fastest way to achieve this goal is to use a home loan calculator in Utah, New Mexico, or any state where you’ll buy the house. Although this application can generate countless, possible monthly payments in an instant, it can be prone to misuse. To get accurate computations, American Loans recommends you do the following:

Remember PITI for Principal, Interest, Tax, and Insurance

Many calculators focus on the principal and the interest only, but these aren’t the only two things that affect monthly mortgage payments. Consider property taxes and insurance premiums too. Although typical fixed-rate mortgage amortization schedules only feature principal and interest portions of the payment, disregarding other regular expenses would skew computations. In some cases, monthly HOA fees are part of monthly housing costs.

Get Figures Direct from the Source

The most reliable source of information is always the lender. The list of charges you might be obliged to pay depends on the deal you qualify for. Crunching the numbers in the comfort of your home helps give you an idea of your expenses, but the most important figures will come from your prospective lender. After all, tax duties vary from one area to another, and insurance premiums different among insurers.

Don’t Forget About One-Time Expenses

The down payment and closing costs may be a one-time expense, which must be paid up front. Nevertheless, they affect the affordability of your mortgage. Fortunately, they’re negotiable. You may be able to minimize your down payment with a lender who’s willing to loan you more money. In terms of closing costs, some lenders may eliminate them in exchange for higher interest.

Dig into your financials before concentrating on property search. If you optimize mortgage calculators to narrow your best home loan options down, finding a house to buy becomes more fun and less stressful.

When Should You Get a Reverse Mortgage on Your Home?

Mortgage agreement with a key and house-shaped keychainThe right time to consult with reverse mortgage lenders is when you are at least 62 years old and have no plans of moving out of your current home, among other important factors.

While staying put seems easy, note that you would need to pay the loan in full if you need to move away. Primaryresidentialmortgage.com explains that by knowing the downsides, you can better gauge them against the possible benefits of a reverse mortgage.

How It Benefits You

The total home equity owned by all American homeowners reached more than $908 billion in 2017, which translates to around $15,000 per household, according to CoreLogic. In some states, it even reached an average gain of $44,000.

By tapping into your home’s higher equity, you can increase your retirement fund without having to sell your property. Most retirees have paid off the original mortgage on their houses, so there is a higher possibility of lower monthly payments and interest rates. These will depend on the value of your house.

The Downside of Higher Values

Rising property values are a boon for retirees. If you live in California, some counties have registered up to 60% higher median values between 2010 and 2016. However, this came at the expense of population growth.

In Los Angeles County, for instance, the birth rate fell by almost 2,600 babies among women from 25 to 29 years old. Median home prices in the county have increased by 31% over the six-year period, which indicated that more people are focusing less on having a child than buying a house.

Retirees and other eligible homeowners should consider a reverse mortgage only if they fully understood the risks, as the financial obligations can be overwhelming when you breach certain terms.

What are the Types of Fixed-Rate Mortgages?

Mortgage contractWithout a mortgage, owning a home would not be a reality for a vast majority. There are many factors you will consider when evaluating the best home loan for you. One of the crucial ones is the interest rate.

fixed rate home loan is the most popular choice for most homebuyers. This is because buyers already know their monthly payments. In an uncertain economy, this is the type of mortgage you may choose as it brings some measure of security. Its predictability allows you to plan your payments efficiently.

Here are the common types of fixed-rate mortgages you can select.

7-, 15-, 30-, and 40-Year Mortgages

The 40-year fixed-rate mortgage is the longest in the market though not very common. It has the lowest interest rates and monthly payments because of its extended payback time. The 15- and 30-year residential property mortgages, however, have lower costs in the long run compared to the 40-year one. Seven-year mortgages are generally for commercial properties.

Convertible Mortgage

This fixed-rate home loan allows you to convert your mortgage to one with a lower interest rate if the market rates decrease once your loan is in effect. Before converting, however, your lender has setup fees that you need to pay. If you are considering changing to a lower interest loan, therefore, you should be sure the rate you are going for warrants this extra upfront fee.

Balloon Mortgage

This loan allows you to make small repayments monthly for the first five to seven years of your loan. After this period, you are required to pay off your remaining balance in a lump sum. Balloon mortgages, however, have a contingency that if you are unable to pay the lump sum, your loan is converted into a fixed-rate loan.

The above mortgage options are the best for manageable homeownership. But your choice of lender is very crucial since you will be dealing with the professional for years. Ensure you choose one who will have your best interests at heart and one who is willing to guide you through the process.

How to Make the Most of a 1031 Property Exchange

people working at the officeSurprising as it might seem, the IRS can give you a leg up when playing the real estate market, explains an expert in 1031 exchange services here in Nevada. Under the section 1031 of the US tax code, you can hold on to the capital gains of a property you hold for productive use or investment.

Such properties include industrial warehouses, office complexes, apartment blocks, rental houses, and any property with an income. However, you need to play by a few rules to enjoy this support.

Designate the replacement property

Tax on capital gains can be anywhere from 15 to 30 percent of the profits you realize from a sale. Therefore, deferring the tax will amount to considerable savings. To realize these benefits, you need to identify the replacement property when making a sale.

Ideally, the property should be an equivalent value if not higher. The earlier you do, the better your chances of success as you have 45 days to identify the target property. Meanwhile, you need to appoint a qualified intermediary to handle the cash from the sale of your original property.

At no point during the exchange does the money find its way to your possession.

Avoid boot

Ideally, you shouldn’t make any financial gains from a 1031 exchange except for the new property. For further gains, commonly known as boot, are taxable. As such, you need to approach the process with a great deal of care. Otherwise, this is money out of your pocket.

Sometimes, working out the boot might prove tricky as it involves other issues that the selling and buying price.

You need to account for mortgage and other debts. Failing to balance your liabilities on both properties can lead to serious headwinds. Even if you don’t receive any cash back, a decrease in liabilities on the acquired property is considered a gain and as such, taxable.

How to Get More Out of Your Paycheck

hand receiving moneyAfter paying the bills, mortgage, and if you have kids, tuition fee, is there enough money left to cover other costs? According to financial specialists, 50% of your income should cover food, housing, and other necessary payables, while 30% should go to things like travel and other hobbies. So, where does the 20% go? The remainder of your pay should go to insurance and savings. But is there even enough left after paying the necessities?

If you find yourself not having enough after paying all the bills, you’re not alone. In fact, only 19% of Americans think they’re earning enough. Here are some tips on how you can stretch that dollar:

Get Insured

Many still find getting insurance unnecessary. What they don’t realize is having vehicle insurance in Cicero, Illinois, for instance, can save you hundreds (if not thousands) of dollars in the long run. The same goes with a health insurance policy. Depending on your coverage, most insurance policies protect the holder from financial liability and provide medical coverage.

Pay Off Debt

In the age of credit cards and online shopping, acquiring more debt can only take a few seconds. Before swiping that credit card or applying for a loan, pay off existing ones first. You might not notice it, but keeping your debt for years can cost you even more money long term. Once you’ve paid off any existing loans, you’ll find you have enough money for saving up.

Avoid Shopping Online

Rather, shop only when you need to, especially if it’s online. It’s so easy to find and buy something online, making it easier to shop on impulse. You might have heard this before, but the same rule applies to online stores—visit them only when you’re looking for something specific to buy. Otherwise, avoid downloading shopping apps or visiting these websites.

These are just simple measures that can help you stretch the money you make. Saving money is a habit that eventually becomes a lifestyle. Take small steps and see how this would eventually change your financial status.