Short Term Refinancing

mortgage applicationA growing trend we’ve noticed among San Diego home loan owners who are looking to refinance their loans, is that more and more are looking for shorter term loans.

According to a 2013 study from mortgage giant Freddie Mac, as many as 2 out of 5 home loan owners who were ready to refinance opted for shorter loan terms this go-around.  This represents a growing trend among many refinancing homeowners — Freddie says that at 37%, it’s the highest rate for short-term refi’s they’ve seen since 1992.

So, been thinking about going for a short term refinance?

If you’ve been hesitant to pull the trigger on a home refi up until this point, you should know that now is as good a time as any to take another look at your mortgage rates, whether over the longer or short term.  Another advantage to shorter-term mortgages are the waiving of certain fees under the Home Affordable Refinance Program.

You’ll want to try and lock in your current rates now, but also make sure you remember to ask for a provision for the loan to float.  What this essentially means is that, not only are you protected in case the loan rates continue to climb, but you’re also afforded the opportunity to re-lock you loan at a lower rate should it continue to spiral downward.

You can also lock you rates in and pursue the mortgage application process the conventional way.  If the rates should fall any lower between now and the time the refi is approved, you can then attempt to renegotiate a lower rate with your lender.

Got some refi tips of your own to share?  We wanna hear them!

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Tips for Winterizing Your Home

Winter is coming, and if you’re living in a part of the country that actually gets the full winter wonderland treatment — with snow in the gutters and ice on the road — you’ve likely started thinking about ways to winterize your home over the coming months (and if not, now would be the time to start).

winterizing-your-homeWhile most San Diego home loan owners don’t even think about what to do if they find a pile of snow in their driveway one morning, many other residents across the country — heck, even those still in California only a couple hours drive out of SD into the mountains — do have to make preparations for the next few months, so we’ve put together a helpful tip list of the top improvements for your home during the winter season.

Windows

Many homes now already come with double-pane windows, but if you’re living in an area that gets regular snowfall for the next few months, you may want to consider upgrading to triple-pane windows, if you haven’t already.  Sure, the cost might be a little much if you’ve got a larger home with lots of windows that need proofing, but you’ll more than make up for that on what you’ll save in monthly electricity bills from running the heat 24/7.

Air leaks

On those days when it feels like a blizzard is raging outside, any and every tiny air leak in your home is going to invite that bitter cold in to bite every inch of you not covered under layers of blankets.  If there are times when it seems like you can’t heat up your home no matter how much you blast the heater, you might want to start looking around for air leaks — or call a professional to do the job for you — and seal every one you find.  Most professionals who air-seal homes for the winter agree that the best place to start is sealing the attic floor to prevent hot air from rising out of the house and being replaced with cold air.

Heater

Improving your home’s central heating and cooling systems can be an expensive endeavor, but it’s certainly a smart one if your home is one of the older ones on the block.  This might be one of those times where you should consider taking out a home equity loan to help finance the repairs if your equipment is really out of date and requires extra work to fix, but again, the cost you’ll save on energy will help in the long run, as will having a new heating/cooling system should you ever decide to sell.

Have any tips of your own for winterizing your home?  We wanna hear them!  Hit us up in the comments or on Facebook!

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What Does My Monthly Mortgage Payment Include?

It’s pretty important to know what exactly makes up those monthly mortgage payments you’re making.  Most San Diego home owners these days take a pretty lackadaisical approach to not only paying their mortgage payments, but even understanding what all goes into those monthly payments.

monthly-mortgage-paymentContrary to popular belief, your lender doesn’t just take a giant bag of money from you each month, toss it onto a pile, and mark off that month’s transaction before wishing you a nice day — that money is actually divided up to cover various other costs as well.  I thought we’d take a minute today and go over exactly what it is you’re paying each month when you make your mortgage payment, conveniently broken down into four bite-sized chunks:

Principal and Interest

Most homeowners already know that at least a part of their monthly payment goes towards paying down the principal, or original loan balance.  How much of your payment goes towards the principal steadily increases over time and is also tied to the amount of interest that you’re required to pay on the loan.  Which one you pay more fluctuates — while you’ll be paying more in interest fees when you first get the loan, as time goes on, your interest payments will start to decrease and you’ll be focusing more on paying the principal.

Insurance

Gotta have insurance on your home, right?  Well, yeah, it’s kind of required, actually.  In fact, there are many homeowners who are required to carry homeowners insurance if they have yet to pay off their mortgages (which just about covers most of us, anyway).

Where you live can have a pretty big impact on how much you’re paying in insurance each month.  Those who live closer to areas prone to fires or floods will be paying more to insure their homes than those who don’t live around those parts of the country.

Taxes

You didn’t think you could just forget about the tax man, did you?  Well, don’t worry — he remembered you all the same.  And just like everyone of these other categories, the amount you pay each month can fluctuate all over the place, depending on the current assessed value of your home.  It’s important to pay attention to not only your home’s assessed value, but also your local property tax policy, so you’ll always know what you’re paying in taxes each month.

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What is an FHA Loan?

Most new homebuyers on the market for their very first house will look for just about any advantage they can get — including looking at any and every loan option available to them.  One of the most popular San Diego home loans many buyers end up choosing is an FHA loan.

fha-loan

What they are

It’s important to note from the get-go that Federal Housing Administration loans aren’t actually exactly home loans in the traditional sense of the word – the FHA itself doesn’t really make or even guarantee home loans, it merely insures them.  This insurance is used to either minimize or outright remove the default risk that comes from buyers who put down less than 20% for a down payment.  FHA lenders are allowed to take and process loan applications as well as underwrite and close the loan themselves.

Many homebuyers tend to favor them over other loan types because they offer the easiest refinance options, allowing for more flexibility in the homebuyer’s credit rating, their financial income, equity, and (probably most important to many) the amount required for a down payment.

Who they can really help

If you’ve already got a history of bad credit weighing down your chances of getting that home loan you’ve been working towards, an FHA loan is likely just right for you.  Having a bankruptcy or foreclosure (or even just a low FICO score) show up on your report is basically the credit equivalent of The Scarlet Letter whenever you try to borrow money or take out a loan, but the FHA might actually be able to see you through that all and still get that loan.

For example, even though a bankruptcy will remain on a consumer’s credit report for no less than 10 years, you can still apply for and obtain an FHA loan in as little as 2-3 years from the time your bankruptcy is discharged.  The same applies to foreclosures – so long as you’ve only got one on file and have been able to keep your other credit accounts up to date.

Wanna see if an FHA loan is right for you?  We’ve got a whole team ready to help!

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How To Determine Your Current Home Value

Finding out the exact value of your home is something a lot of San Diego homeowners want to know, but can be extremely difficult to determine.  Sure, there are plenty of programs out there that tell you they can determine your home’s value by tracking price and sales trends, but there still is no exact science behind it.

what-is-my-home-valueYour home’s value is determined by a number of factors, including its perception of value which is influenced by the other homes on the market, the current buyer population, and what kinds of homes have been selling recently.

 

 

 

Competition

When a potential home buyer is on the market for a new home, they’re going to be looking at every home on the market — including yours — and comparing them to each other.  You can get a head start on the competition by taking a look at the other homes in your area for sale and choosing a list price that helps you stand out from the current crop of hopeful sellers.

Of course, you’ll want to make sure not to overestimate your home’s worth.  If you list a price of $500,000 one day and a better home goes up for sale the next for the same price, most buyers are automatically going to discount your home, so keep that in mind when pricing.

Current buyer population

Another big factor in determining your home’s current value is seeing just how many people out there are actually buying.  Much like watching the stock market, determining real estate market trends can be tricky as they tend to fluctuate pretty often.  Things like interest rates and the availability of certain homes can help contribute to a sense of urgency in the current market.

Recent home sales

What kinds of homes have been selling recently in your area?  Single story, or two-story?  Maybe something with a pool?  Of course, no two houses are exactly the same — which is why a lot of home buyers seem to prefer homes that have been remodeled or added to, over homes in their original condition.  If you’ve got some fixer uppers that need attending to, you might wanna see to that sooner rather than later.

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Home Repairs Every Homeowner Can Expect to Make

I thought we’d continue on the topic we delved into last week (home repairs and improvements) and expand on it a little further this week.  As every homeowner knows, it takes an awful lot of green to be able to pay for the keys to your new front door (and, y’know, the rest of the house, too).  On top of having enough money stored away to be able to pay for the San Diego home loan itself, buyers need to have extra funds set aside to cover closing costs and insurance, not to mention any moving expense that inevitably come up and the real estate fees — all of which need to be taken care of before that first monthly mortgage bill even shows up.

home-repairs

As we discussed last week on the subject of needed home repairs, a savvy-eyed home buyer would keep a look out for any part of the house that might need repair (fixing the roof, or upgrading any older appliances such as a kitchen stove) so they can report those and gets some credit towards those much-needed repairs.  But even if you didn’t notice those fixtures that needed repairing until AFTER you moved into your home, you shouldn’t fret too much, so long as you’ve found what needs to be fixed or replaced, and started setting aside funds for it now.

Many different home components — like your roof, electrical system, refrigerator, etc. — have a general life expectancy of anywhere between 18-30 years, according to most home inspectors.  Whenever a new or refinanced home is appraised, these components are inspected to gauge how close they are to the end of their “serviceable life”.  Depending on the quality of components, how often they’re used, and how well they’re maintained, serviceable life can vary quite a bit.

So what are some of the common repairs you can expect to make?

No need to worry about what to inspect, we’ve got your handy checklist right here on what to check for maintenance:

  • The roof.  That thing can take quite a beating, especially if you live in an area prone to more severe weather than, say, any of us in SD.  Standard-issue roofs last around 20 years.
  • The fridge.  Make sure you’re frequently checking your ice box for any dust build-up around the vents that make it run hotter.  A good refrigerator should last you at least 15 years.
  • Garbage disposal.  I learned the hard way as a kid that you’re not supposed to dump anything hard (like, say, popcorn kernels or chicken leg bones) in the disposal because, surprise!, those things can’t really ground anything that tough up.
  • The A/C.  Again, living in SD, this isn’t something most of us think about all that often (at least until those Santa Ana winds start blowing in), but you should always check you A/C unit for any signs of leakage and plug those up sooner rather than later to save on your energy bill.

Got some home repair tips of your own of what to look out for?  We wanna hear them!

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Home Improvement FHA Loans

Buying a “fixer-upper” is something many San Diego home loan buyers have done, and continue to do, when they’re looking for a starter home on the market.  In truth, quite a few starter homes require a bit of maintenance, so don’t feel too bad when you discover the hot water heater goes out shortly after you settle in.

home-improvement-fha-loans

Fortunately, there’s an option available for home buyers who may not have as much money stored away for home repairs as they had for the mortgage loan in the first place.  The FHA 203(k) mortgage program makes it possible for borrowers to take out a loan not only for the purchase of a home, but to cover any improvement or repair expenses as well.  The great thing about these types of loans is they generally let you borrow even more than the home itself is worth, so you can absolutely use those extra funds to repair and improve the look (and value) of your home.

Two types

The first thing you should know about the 203(k) loan is that it comes in two different types — the standard (great for more major repairs and improvements), and streamlined (better if you don’t need as many improvements at the start).  The most you’re allowed to borrow is either 110% of the purchase price, or the purchase price + improvement costs — whichever comes out to less.  Either way, the money is included as part of the loan itself, rolling into your mortgage payments from there on out.

So, what types of improvements can I make?

Now, don’t let your imagination run wild as you read this — there ARE limitations to the types of “improvements” you can make to a property with this loan.  You can shelve any ideas of putting in a fancy new swimming pool or any other “luxury” improvements, as those won’t exactly fly with lenders as necessary repairs.

You CAN use the money towards improvements like remodeling, say, the kitchen or bathroom, or building a deck for your backyard.  You can also certainly use it for smaller scale projects, too, such as new roofing, water heater/air conditioner repair, or even for new appliances.

Is there a catch?

You can put down just 3.5% on a purchase with a 203(k) loan, the same as other FHA mortgages.  The catch is, you’ll also have to pay an insurance premium of 1.75% upfront (or roll it into the loan amount), and a monthly premium of 1.35% for a 30-year mortgage if you did put down less than 5%.

This can make the loan a bit more costly than usual, but it’s still a great deal if you’re looking for a home to improve.

Ever bought a fixer-upper of your own?  Or tried your hand at home improvement?  Let us know how it went!

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When to Do a Cash Out Refinance

Whenever the subject of San Diego home loan refinancing is brought up, one of the most common questions asked is “what is a cash out refinance?” or “when should I do a cash out refinance?”

cash-out-refinance

Generally, if you’re asking about cash out refis, chances are pretty good that you’ve already got a pretty good amount of equity invested into your home and are interested in turning some of that into cash money.  If that sounds like something you’re interested in pursuing, read on.

So just what is a cash out refi?

A cash out refinance involves taking out a whole new home loan that’s even higher than what you actually owe on your current home loan and receiving the difference in cash.  So, say you have a home worth $400,000 that you currently owe $300,000 on.  If you decide to go with a cash out refi, you could receive a portion of the $100,000 in home equity that you have in actual cash.  If you wanted to take out $20,000 in cash, that would then be added onto the principal of your new loan, so keep that in mind when deciding how much to take out.

When should I use a cash out refi?

Cash out refis are good for a number of situations, including:

  • When you need the money for a large purchase or investment but are unable to acquire it through any other means
  • Debt consolidation and lowering your total monthly interest payments
  • If other financing options are too expensive than the rate offered by cash out refinancing

What can I use that cash money for?

Anything you want; it’s your money, after all.  Most people take the opportunity to pay off any high-interest credit card debts they may have.  This can be great for wiping out any large, outstanding debts they may have, freeing up their finances just a little bit more.

You can also use the extra cash as an investment or towards a major purchase.  Many people have used their equity monies for things like school loans, paying off emergency expenses, home improvement projects or even vacation time.

Interested in learning more about cash out refis?  We’ve got a team of people ready to answer any and all your questions!

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Home Loan Down Payment Options When Low on Cash

Coming up with a down payment for a San Diego home loan can be quite a feat for potential homebuyers seeking to take advantage of low prices and mortgage rates while they still can. If you’re having that problem, there are several options you might not have considered that can help you meet the down payment requirement for a mortgage loan.  And we’re gonna list the top 5 here, in no particular order:

home-loan-down-payment-options

On asking the family for help

Many of us, when we’re just starting out on our own for the first time, receive some financial support from our parents when we buy a home.  And that’s fine to lenders — so long as you let them know the money you’re receiving is a gift and not a loan.  If you’re lucky enough to have parents that can support you THAT well financially, you’ll want to make sure and request a gift letter to present to lenders, stating who the money came from and its purpose.

Tap into those retirement funds

Yeah, no one really wants to tap into their retirement funds until they actually HAVE to, but when you need a place of your own to hang your hat every night, some sacrifices have to be made.  You can borrow money from your 401k, assuming your employer allows it.  You don’t have to worry about any penalties for early withdrawal of funds, but you do have to pay the loan back in 5 years, plus interest.  But since that money’s going back into your 401k anyway, it’s not too bad a trade-off.

Look into a VA or FHA mortgage loan

Most people already know that if you’re a veteran or active member of the military, you can get your hands on a nice, shiny VA loan.  These are great because not only are they backed by the government, they also rarely require a down payment of any form whatsoever.

And if you don’t qualify for a VA mortgage, don’t worry — you could also consider a government-backed FHA loan, which only require a 3.5% down payment, meaning you could buy a $200,000 home if you can pull around $7,000 together (with closing costs generally rolled into the loan).  With no income limitations to consider either, this isn’t a bad option for those looking.

And wouldn’t you know, we have a team full of people who can do just that!

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Is Now the Perfect Time for a Home Loan Refinance?

Is now the perfect time for a home loan refinance? Take it from the top San Diego home loan company, you might have a better shot at mortgage refinancing now than you’ve had before.  While it’s true that refi rates have risen over the last few months, those higher prices could be seen as the perfect opportunity for the savvy home buyer.

when-to-refinanceHow so?  Well, because the demand is falling lenders are now scrambling to find as  much business as they can during this dry spell.  That means that if you were turned down for a refi as little as a few months ago, you might try again now — lenders could be much more willing to take another look at your profile this time around.

There might be an overlay before we reach our destination

Now, we’re not saying that everything’s coming up roses for borrowers — mortgage standards are still pretty tight compared to where they were before the real estate market crash.  And the Fannie Mae and Freddie Mac official mortgage guidelines haven’t gotten any more lax, either.  There is one area where borrowers might catch a break, though: overlays, or the guidelines that each individual lender has in place, in addition to Fannie and Freddie’s rules.

Now, while refi applications are becoming more scarce, some lenders are rethinking their own overlay requirements; many going so far as to give less qualified borrowers — who they might’ve turned away a few months ago — another, more serious consideration.

Hope your credit’s (now) up to par

Another reason you may have been turned down for a home refi in the past could have to do with your credit profile.  Give it another look now and, assuming you’ve taken steps to repair your report like paying your bills on time and such, you could be looking at a much rosier score.

Remember that your credit profile changes on a weekly (sometimes daily) basis, so if your lower credit score was a reason lenders turned your away, spending those intervening months working to repair it could be the boost you needed.

Wanna see if you’re ready for your own home refi?  We’ve got a whole team ready to work for you!

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