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Housing For The Holidays

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With Thanksgiving, Black Friday, and Cyber Monday under our belts, the holiday season is officially in full swing and we couldn’t be happier about it! 2016 has been a whirlwind of a year, and on behalf of everyone at Alpha Mortgage, we are glad that we were able to make so many dream home ambitions a reality. So what’s going on in the housing world? We’re here to update you on what’s happening now, what to expect, and the best gifts to give your home the extra love it deserves this holiday season.

What’s happening- A Recap

As many of you know, mortgage rates have stayed relatively low for the past few years, and the market has favored sellers. Why? Recently, the housing market has been in high demand with very tight supply across the nation, which led to a new peak in home prices nationally in September 2016, according to CNBC. You know the deal- sellers can list as-is, and usually, drive up the price of the sale due to multiple offers because demand is so high.

Here’s the update- in early November 2016, mortgage rates raised for the first time since January from about 3.94 to close to 4.10. Why? A little thing called the United States of America’s Presidential Election. Don’t panic, the rates were the same at the beginning of 2016.

The FHFA also raised their conforming loan limits from $417,000 (which has been in place since 20016), to $424,100 which will be effective January 1st, 2017, and that means that house prices are going up enough to qualifies you to borrow more money starting in the new year.

Oh, and tiny homes are still a thing.

What to Expect

A holiday housing freeze- it is normal for sales and prices of homes to drop in the Winter months, following in suit of dropping temperatures, as well as increased spending on other things (hello holiday shopping). Longtime Realtor Kim McElroy explains to Realtor.com that “Typically, sales do slow down somewhat in the winter just because the focus is on the holidays and a lot of people do take their houses off the market,” says longtime Montgomery, AL-based Realtor Kim McElroy of Keller Williams Realty. “But I see a spike of interest and calls right after the holidays.”

Longforecast predicts that the 30-year mortgage rate for December 2016 will increase by 1.41% averaging a rate of 4.33, and also predict that January 2017’s average rate will be 4.28 or a -1.15% from December.

Expect the housing market to swing in the favor of buyers in the next 2-3 years due to increased supply from builders taking advantage of the lack of homes available.

Top 5 gifts under $250 to make your house a home

  1. Satechi iPhone Charging Stand – $25- Amazon- This is a great stocking stuffer for anyone who Facetimes, Cooks and uses their phone for recipes, or multitasks in general! It comes in 4 different finishes that match each phone color.

81ls-p3a3ul_sl1500_2. Ring Video Doorbell Pro– $249 – Amazon- See, hear, and speak to anyone at your door from your smartphone, tablet, or PC and get instant alerts when visitors press the doorbell.

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  1. Nest – Learning Home Thermostat– $249 – Amazon – Nest automatically adapts to your life, as well as when the seasons change. All you have to do is use it for a week, and it programs itself!61kyuqogkl-_sl1000_
  2. August Smart Lock– $229 – Amazon- Use your smartphone to lock, unlock, and monitor traffic on your doors.

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  1. Kohler Moxie Showerhead and Wireless Speaker– $92.50 – Amazon -Stream music playlists, news, and other audio in the shower.

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TRID – A Year Later

On October 3rd 2015, history was made in the mortgage industry when the TRID Rule, or the “Know Before You Owe” Rule was implemented in the United States. TRID was created in order to bridge the gap of transparency between borrowers, regulators, and lenders through more consumer-friendly documents and additional time restraints in the lending process with the hope of creating a more informed, and therefore better protected consumer. In the two years leading up to the implementation of TRID, those in the lending industry feared that additional paperwork and time would deter potential buyers. Once TRID was implemented, there were a few hiccups in the road, but the mortgage industry has been changed forever.

With a year of the implementation of TRID officially under America’s belt, we want to take a look back on the up’s, down’s, and still-to-come’s.

THE TRID TRAIN, A TIMELINE:

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November 2013: TRID unveiled to the lending industry with the proposed roll-out date to take place August 1st 2015. Cue industry-wide panic attacks due to the copious amounts of work they will have to do in order to adhere to the new rule (think technology and work process overhauls).

November 2013- June 2015: Everyone freaks out about the implementation of TRID, concurrent with an “administrative error” prompting the CFPB to change the start date to October 1st, 2015.

June 24th 2015-  A proposed amendment to TRID is released where the official start date of the “Know Before You Owe” rule will be October 3, 2015.

October 3, 2015- TRID goes into effect, and companies are mandated to comply. Many express concern and complaints that the CFPB is vague in some sections of TRID and the lack of guidance offered in the following months.

January 2016- Ellie Mae’s Origination Insight Report shows that total time to close has reached a high of 51 days, an indicator that the 6 days added in the process were being added to the total time instead of integrated in. Lending companies continue to complain about vagueness and lack of education from the CFPB regarding TRID.

July, 2016- The CFPB responds to concerns by lending companies and other businesses impacted by TRID and put some new changes into place regarding the secondary market to better help and inform lenders. The proposed changes include: tolerances for the total of payments, expanding the number of housing assistance loans that would qualify for exemptions, including cooperatives in the rule, and clarifying how a creditor could provide separate disclosure forms to the consumer and the seller.

August 2016- NAR surveyed 2,500 REALTORS to get their perspective of how the TRID rule was working which revealed that the majority saw no changes through the implementation of the rule.

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TRID IN 2017

While there were a few up’s, down’s, and hiccups in the past year for the lending industry (as expected with any major industry overhaul), it is apparent that TRID has been a mostly beneficial and much needed industry update for the consumer. As Pete Mills from the Mortgage Bankers Association stated, “TRID was a massive undertaking from a systems and business processes standpoint,” Although many anticipated the rule would significantly disrupt the closing process for consumers, the impact of TRID on consumers was mitigated because lenders and other participants in the closing process dutifully prepared for the final rule.”

Many lending companies are still making adjustments in their strategy with the implementation of the new rules, but with a year of adhering to TRID under their belt, lending companies are now analyzing ways to better streamline processes and resources to better serve their clients and integrate the additional 6 days in the process instead of adding them. Ready to own the house of your dreams? We’re here to help you from the beginning steps of your planning period all the way until you step through the doors of your new home. Contact us today at Alpha Mortgage!

 

Reverse Mortgages

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It’s no surprise to anyone when we say that the aging process is a difficult thing to handle financially. There are a growing number of seniors planning to retire soon that are struggling to figure out how they will continue to pay their mortgage, maintain their standard of living, and pay medical bills, make home improvements, etc. for many reasons. For many seniors, their home is their largest and most lucrative cash asset- and could be the golden answer in helping to solve their financial worries post-retirement. Enter reverse mortgages. With the Federal Reserve keeping interest rates at an all-time low, reverse mortgages are presenting themselves to be extremely appealing for home-owners aged 62 and older that are looking to tap into their home equity. This is why on March 1st, 2016, Alpha Mortgage started offering North Carolinian’s and Virginian’s reverse mortgages within their scope of services.

So what is a Reverse Mortgage?

According to the HUD, “A reverse mortgage is a special type of home loan for homeowners 62-years or older that lets you convert a portion of the equity in your home into cash. Unlike a traditional home equity loan or second mortgage, HECM borrowers do not have to repay the HECM loan until the borrowers no longer use the home as their principal residence or fail to meet the obligations of the mortgage.” Borrowers are still responsible for property taxes, homeowner’s insurance, and property maintenance, but a reverse mortgage requires no monthly mortgage payments, and borrowers do not have to pay back their loan balance until they die, sell, or move.

Reverse mortgages are extremely complicated, but are great for seniors that are cash broke/ property rich, or cash rich/ property rich. The interest and fees on the reverse mortgage are added to your loan balance each month. Over time, your home equity will decrease as your loan balance grows. It’s the reverse of a traditional mortgage. The rising loan balance can eventually grow to exceed the value of the home, however, as the borrower (or the borrower’s estate) you do not have to repay any additional loan balance over the value of your home. Wade Pfau of The American College and McLean Asset Management, highlights what consumers need to know about repaying a reverse mortgage with tips such as “Prior to death, selling, or moiving, repayments can be made voluntarily at any point to help reduce future interest due and to allow for a larger line of credit to grow for subsequent use. There is no penalty for early repayment.” Read more of his tips here.

 Why would I get a reverse mortgage?

Reverse mortgages can be used strategically for many reasons. One of the biggest reasons that people take out a reverse mortgage is to stay in their current home without having to worry about their current mortgage payment.

Many people also open a line of credit with access to the cash over time to supplement social security, 401k, unexpected costs, or unexpected medical costs. People also use reverse mortgages to pay off existing mortgages, purchase a new home that better suits their needs with age, or as retirement income plans.

Sounds Great- Am I eligible?

To be eligible to receive a reverse mortgage, you must be at least 62 years of age or older, the property must be either 1-4 unit primary residences, condominiums, or manufactured homes that meet FHA’s requirements, homeowners must own the property as their primary residence and should have substantial equity in the home, borrowers must not owe any back debt to the government, borrowers are required to maintain the property in good condition to protect the value of the home, pay their taxes annually, and pay for their home owner’s insurance in accordance to HUD guidelines.

So there you have it! Reverse mortgages are great options for seniors who are interested in tapping into their home’s equity. As we mentioned earlier, reverse mortgages are excellent solutions for seniors, but can also be complicated, and aren’t for everyone. To educate yourself further about reverse mortgages, please visit our website devoted entirely to reverse mortgages here. If you’re ready to take out a reverse mortgage today, contact us, and let Alpha Mortgage ease in your retirement process.

2016 Housing Market Predictions

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New Year, New Housing Market? Not so much. According to many housing predictions, 2016 will bring a whole lot of the same to the table. But is this a bad thing? Absolutely not. While 2015 was known as the best year for housing since 2007 due to many factors such as increased employment rates, implementation of TRID, and more, 2016 will also continue the housing market’s upswing- just not as exponentially.  We’ll start to secure a ‘normal’ in 2016. Remember that word?!

Here are our 2016 Housing Predictions:

  1. Increased Interest Rates– The Federal Reserve is expected to continue to raise interest rates in the short term between now and 2016’s end, & homeowners who have adjustable-rate mortgages or home equity loans will most likely see their interest rate rise as a result.  Housing wire goes as far to say that Fixed-rate mortgages will also rise, perhaps up one-half of a percentage point between now and the end of 2016, reaching 4.5% for 30-year loans. Despite this increase in interest rates, mortgage rates will remain historically low. If the rates do start to rise in 2016, as gradually as they may, we could see slightly lower home-buying numbers next year. But these changes will be minimal due to the continued increase in economic expansion and employment numbers- meaning more people are becoming able to afford houses.
  2. Evolving Mortgage Process – Mortgages may be in reach for more Americans in 2016 due to legislation that would allow Fannie Mae and Freddie Mac to take into account new ways to measure creditworthiness like evaluating rental history and utility bill payments instead of just the FICO credit score. More loans may also allow buyers to include income from room rentals, etc. More lenders are continuing to ease credit standards, and don’t see that changing in the future.  This is good news for potential homebuyers!
  3. Increased Housing PricesReverse Mortgage Daily reports that appreciation in national home price indexes will likely continue at a faster pace than inflation, but grow more moderately than last year. The CoreLogic Home Price Index was up about 6% over the last 12 months, and CoreLogic anticipates a rise of 4-5% during 2016. This increase in home sales and prices can be attributed to the improved economy, which has brightened the financial outlook for many families and enhanced their overall financial security. Prices may be higher, but they will still be affordable to most.
  4. More first time buyers– We expect first-timers to make up a bigger portion of the market than they did this year. The reason is simple: The market will be more welcoming to them thanks to the aforementioned slowing price growth and easier access to loans. It is important to note that Millennials & Young Gen X’ers are expected make up the largest demographic of home buyers in 2016 because they have recovered from the financial crisis, are entering their prime professional years, as well as their prime family raising years.
  5. Rental Homes & Millennials– According to a recent analysis by the Federal Reserve, outstanding student loan debt now totals more than $1 trillion. Student loan debt can create additional hurdles for mortgage shoppers. It increases the borrower’s total debt-to-income ratio, which can cause problems during the underwriting and approval process, and excessive debt can lower a person’s credit score. All of this makes it harder for Millennials to qualify for home loans.  This is why we predict rental homes will continue to increase in popularity- Millennials simply can’t afford homes. Rental vacancy rates for both apartments and houses are at, or near, their lowest levels in 30 years, and rents are rising quicker than inflation.
  6. Smart Homes/ Housing Tech – Smart homes and houses with more technological features available at time of sale will continue to become more popular. Features like beacon technology, security tech, VR and more will make homes more appealing. Smart home features will start to be expected by consumers in 2016.

We can’t wait to help you own your dream home in 2016! On behalf of all of us from Alpha Mortgage, we wish you a very happy New Year!

 

How Much Does It Cost To Refinance My Mortgage

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You’ve done your research on the best time to refinance your mortgage,and you are ready to start the process before the Federal Reserve decides to start raising interest rates again. It seems like everything else is in place: you plan on staying in your home for a long time, lending conditions have eased, and current mortgage rates are extremely low. Refinancing or “resetting” a mortgage is a great option for homebuyers that want to take advantage of market conditions like lower interest rates over time, take the opportunity to reduce the term of their original mortgage, or acquire cash from the home’s equity value to use on other purchases through cash-out refinance transactions. Homeowners can also benefit from refinancing by reaping the rewards of an improved credit standing in most situations.

But how much does refinancing your mortgage actually cost? One thing that most homeowners forget to consider when considering a refinance is that there are fees associated with the process. These fees vary based on location and company, which is why it is essential to shop around before you refinance your mortgage. Below are some fees to keep in mind and to discuss with your lender before making a refinance decision:

  • Administrative Fees: Just like when applying for your original mortgage, there are administrative fees that cover generating the information and data necessary to obtain refinancing contracts. Administrative fees to expect include paperwork fees, appraisal fees, application fees, loan origination fees, points fee, inspection fee, survey fee, title search/insurance fee, and others similar.
  • Closing Fees: Once you have been approved for your refinance, closing fees come into effect under names like paperwork fees, attorney review/closing fees, or closing costs. These can get pricey, so it is important to take them into consideration before applying.
  • Other Fees: It is crucial to understand the terms and conditions of your refinance like the back of your hand. Discuss with your loan officer things like prepayment penalties (fees that can cost anywhere from 1-6 month’s interest payments) that charge you for paying off your existing mortgage early, and other penalty fees that could impact you financially.

Most mortgage-related fees are paid upfront at closing, however some lenders offer “no-cost” refinancing, which includes these fees in your loan balance or interest price during the term of your refinance. Once you take into consideration all of the fees that will be associated with your refinance, calculate the break-even point of your new mortgage through online resources. If the refinance still makes sense financially, sign the papers! If you’re feeling overwhelmed, don’t fret. The Home Ownership and Equity Protection Act (HOEPA) protects those who refinance from high fees and interest rates.

Alpha Mortgage is proud to serve North and South Carolina with the best mortgage rates and informed loan officers. Need more information about refinancing your mortgage? Contact us today.

Should I choose a 15-Year Mortgage or a 30-Year Mortgage

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So you’ve found your dream house, and have decided to start the lending process so that you can own the keys and start making it a home. Congratulations! Once you’re sure that you can afford the home, and have found an informed and transparent loan officer, the next thing as a buyer that you need to consider is whether you should choose to secure 15 year fixed mortgage, or a 30 year fixed mortgage. When determining which loan option is best for you, it is important to weigh out the differences in affordability, your degree of job security, as well as your saving habits.

The main difference between a 15 and 30-year loan is that fifteen-year loans typically have higher monthly payments with less interest, and thirty-year loans usually have lower monthly payments in which you end up spending more interest over time. The first step in determining which term to choose is using a mortgage calculator and crunching the numbers to figure out your specific individual options and the difference in monthly payments and total amount spent. Then, ask yourself what you can honestly afford. If you can comfortably make the 15-year fixed mortgage rates, do so. If not, the 30-year option is probably best for you. Remember that making extra payments when possible is always an option (although according to the FDIC, 97.3% of people do not consistently pay extra on their mortgages).

It is also essential to evaluate your job security and emergency funds when determining which loan to choose. Are you in a position/job with a paycheck steady enough to make those payments every month? It is important to remember that once you sign the loan, you will be required to make the same payment each month, and if you choose to go with a higher monthly payment (15-year loan) it is a good idea to have an emergency fund in place just in case something happens. If you don’t have adequate savings in place, or lack an emergency fund, it is a safe bet to go with a 30-year option.

Financial saving habits are also important to consider when determining whether to go with a 15-year or 30-year loan. Before choosing which term you want to have your loan on, evaluate your spending habits. According to USA Today, many people may lack the discipline needed to save long-term, especially in amounts that would offset what they would save by switching (from a 30-year) to a 15-year mortgage. A lot of times people need that extra money for something else, so they choose to keep their money in a 30-year mortgage with lower individual monthly payments. It is important to realize that you can always pay more of your mortgage off monthly, however, many people lack the discipline to send in the extra money every month when it isn’t required by the bank. If you are confident in your financial personal discipline, and do not tap into your savings (or will need to in order to afford a shorter term), a 15-year loan might be a good option to consider.

Be sure to consider your age and professional plan for the next 15-30 years when deciding whether you want to choose a 15 or 30 year loan. Are you planning on retiring? Do you plan on having children? What about other expenses that you will have (car, student loans, etc.)? Once again, it is important to answer these questions as honestly as possible, and to go over your options with your loan officer, who will be able to give his/her honest opinion based on individual circumstances and plans and which term will be best in your scenario.

Remember – in the end, your individual financial situation, goals, and comfort levels will determine which mortgage term you should choose, and what may be right for someone else doesn’t necessarily mean it will be right for you. However, a good rule of thumb remains: if you’re comfortable making higher payments (and have an adequate emergency fund), can meet other important financial milestones such as retirement and large expenses like cars and student loans, and have strong personal discipline when it comes to finances, a 15-year mortgage is a great option to own your home in half the time you would otherwise. If any of these conditions make you uncomfortable, it is better to go with the 30-year fixed loan and add in extra payments if you can. Let Alpha Mortgage help you make the right decision when it comes to choosing your loan term.

How to Apply for a VA Loan in North Carolina

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A VA loan, formally known as a Veteran Affairs loan, is a mortgage loan in the United States guaranteed by the US Department of Veteran Affairs that is designed to offer long-term financing to eligible American Veterans in order to help secure housing. VA loans are available for the primary residences of Veterans, active duty members, certain surviving spouses, certain Reservists, and National Guard members, and provide excellent benefits for those who are approved. Benefits of getting a VA loan include equal opportunity, little to no down payment, no monthly PMI, home appraisal and reasonable value calculated, negotiable interest rate, reasonable closing costs, assistance to borrowers, and the ability to finance the VA funding fee.

The US Department of Veteran Affairs doesn’t directly fund the loans through the program, but instead backs them from private lenders such as banks and mortgage companies,  which is why Alpha Mortgage can provide VA Loans to those who qualify in North Carolina with more favorable loan terms than they may normally receive.

In order to apply for a VA loan in NC, there are a few preliminary steps one must take in order to reach the application process. The first thing you will need is a Certificate of Eligibility that one obtains from the VA. A Certificate of Eligibility (COE), provides lenders with the evidence that they need to determine if one is qualified to receive a VA loan. As stated on the official website, “The evidence you need depends on the nature of your eligibility.” They provide a table to reference during this process here.  It is important to make sure that all of the qualifications

After you figure out what specific evidence you need, and that evidence  has been collected, there are multiple ways to go about actually applying for the loan- including online, through your lender, or through mail. Once the loan is approved through the U.S. Department of Veterans Affairs, the rest of the process can be taken care of through your lender.

Whether you have been approved for a VA loan already, or need assistance in the process, remember that Alpha Mortgage is here to help with all of your VA loan needs! Contact us today!

Can I Afford A House?

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When it comes to purchasing a new home, there are always many questions and factors to consider before putting down an offer. “Why is the owner selling? Do I like the location and surrounding area? Does the home have all of the amenities I am looking for?” The first, however, should be “Can I afford this home?” What would seem to many to be a simple ‘yes or no’ is actually one of the more complex questions when it comes to home-buying-101.

The question, ‘Can I afford this home,’ seems for the most part straightforward. You either can or you can’t. But what goes into determining the answer is where the complexity sets in. Below we have compiled a list of 5 important things to keep in mind when determining if you can afford a home or mortgage that you are interested in purchasing.

  1. Income Factors
    • Income before taxes is one of the most important factors in determining if you can afford a home and mortgage payment. But “income” doesn’t only refer how much you make per year before taxes. Income should also be evaluated by job security (the probability that you will keep your job), opportunity for raises and bonuses, confidence in keeping steady commission if your job operates off of this, chances that salary will stay the same or increase, and other considerations such as if you are planning on having kids soon.
  2. Monthly Spending
    • Monthly spending or your typical monthly budget is another factor that should be evaluated when determining if you can afford a house. Living expenses such as bills/utilities, transportation, health, fitness, home, kids, travel, personal care, pets, shopping, taxes and other expenses should be calculated, multiplied by 12, and then subtracted out of your income to get a clear picture of how much money you have left to work with. It is extremely important to be honest with yourself when calculating your monthly budget.
  3. Down Payment & Closing Costs
    • Monthly mortgage payments are not the only thing that you have to worry about paying when you plan to purchase a home. Once you decide on a home and have calculated your monthly spending and compared it to your yearly income, the next things that should be considered are down payments and closing cost. According to Mortgage 101, ‘Traditionally mortgage down payments range from 10 to 25 percent of the total purchase price of the property.” However, there are now more options that can potentially lower your down payment that our loan officers can help you decipher and apply for. Just as a rule of thumb, it is best to prepare to pay within that percentage for a down payment. Along with a down payment, closing costs should also be considered when determining if you can afford a home. Closing costs vary individually based on location and property values, but typically will include the costs to transfer property deeds, titles, land transfers, legal fees, loan fees, etc. On top of this remember that typically the closing itself will usually cost you 2-3% of the home price.
  4. Taxes/ Insurance
    • Once you purchase a home, taxes and insurance must be paid in order to protect both you and the lender. The main tax that a homeowner will pay is a yearly “Property Tax.” What a property tax does is quantifies the value of your property and home and gives the tax money you pay to the government. Normally, people set up Escrow Accounts that take money from your accounts monthly to go towards your end-of-year property taxes and insurance bills, and then accumulates that money until it is due (so you don’t have to come up with the lump sum all at once, which can be overwhelming). If you own your property outright, some people do choose to pay their yearly property tax at outright without an Escrow Account.
    • Homeowners insurance varies based on many factors including location, and risk factors, but is also something that you are required to pay. This can also be deposited monthly into an Escrow account. The main thing to remember with homeowners insurance is the more risk your property has, the more money you will pay on a policy. Basic homeowner policies usually include (but are not limited to) Dwelling Protection, Personal Property Protection, Natural Disasters, Other Structure Protection and Injury Liability. Another insurance you will likely have to pay is a mortgage insurance to ensure you will pay your monthly dues. Sometimes Private Mortgage Insurance (PMI) is required if you as a buyer are putting less than 20% down on a house and better protects the lender.
  5. Monthly Mortgage Payment
    • Monthly mortgage payments will be what you pay every month that goes towards the principal (money you borrowed) and interest on that money. They also sometimes include some of the home’s insurance and taxes. Mortgage payments vary depending on the home, location, money put down on the property and individual’s credit score. To see an estimated monthly mortgage payment you can click here, but until you meet with a lender, this will just be a projection.

Along with income factors, monthly spending, down payments and closing costs, taxes and insurance, and monthly mortgage payments, there will usually always be random “other” costs included when purchasing a home including homeowners dues, home maintenance, home inspection, etc. When predicting if you are going to be able to afford a house, it is always best to over-price your projected spendings. Don’t forget that according to CNN, Total debt payments (credit cards, student loans, car payments, etc.) should be less than 36% of gross income because that has been shown to be a level of debt that most borrowers can pay back comfortably.

Buying a house is a difficult process, but here at Alpha Mortgage, we are ready to assist you in any way possible. Contact us today!

Best Time to Refinance Your Mortgage

 

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In order to best understand the most opportune time to refinance your mortgage, it is essential to understand how the process works. Refinancing is the process of trading in your old mortgage for a new one that features a new interest rate and term. When you refinance your mortgage, the loan officer who grants you the new mortgage basically pays off the remainder of your old mortgage and provides you with a new mortgage- by refinancing the remaining amount. Another way you can think about refinancing is that you are “resetting your mortgage” – not getting rid of existing debt.”

When you’re considering refinancing, it is important to do your research and crunch out the numbers to make sure that the deal is better over time as opposed to being beneficial short-term. Interest is the silent killer when it comes to refinancing homes; so planning into the future and weighing out scenarios is essential when you’re considering refinancing. This being said, there are major benefits to refinancing with the top three being lower interest rates over time and the opportunity to reduce the term of your original mortgage through standard refinancing, and to acquiring cash from the home’s equity value to use on other purchases through cash-out refinance transactions.

So once you figure out that refinancing is for you, when exactly is the best time to refinance your Mortgage?

  • You plan on staying in your home for a long time– Most of the time, when one refinances their mortgage, they end up extending the term of the loan. This means that you will be paying smaller amounts for a longer time. It is important to look at the savings compared to cost as well as how long you want to stay on your property. If you plan on staying for a while, and the numbers are right, refinancing is a good option to save money.
  • You want to shorten your Mortgage term– Refinancing your mortgage presents the opportunity for borrowers to reduce their mortgage term under reduced interest rates. As long as you’re able to pay the increased monthly payments (which vary from a little to a lot depending on the cost of the mortgage) this is a great option for people looking to pay off their loan sooner rather than later under ideal circumstances.
  • Current interest rates are at least 2% below your existing mortgage interest rate-The University of Minnesota reports that “Most lenders agree that the greatest gain in refinancing your home occurs when the current interest rate stands at least two percentage points below your existing mortgage loan interest rate and refinancing costs are affordable. If those two conditions exist, you should look into refinancing, which offers potential benefits, depending on your situation.”
  • Refinancing costs are reasonable– Most people don’t take into account that there are costs associated with refinancing mortgages. Usually one will have to pay closing costs (in the thousands), taxes, insurance, and prepaid items. Factor these costs into your refinancing decision. If the costs are reasonable and you are still saving money, go for it!
  • It will save you money in the long run– The ultimate goal of refinancing is to save money. By calculating monthly payments and long-term interest costs, borrowers can get a better picture and see if refinancing is a good option. If the conditions are right and you’re saving more money than you would on your existing mortgage, refinancing is a great option to save cash.

Remember: refinancing is a great option for homeowners under the right conditions. A tip to keep in mind if you’re considering refinancing your mortgage is to do it only once to keep incurring home equity (since refinancing resets your mortgage clock). If you are interested in refinancing your mortgage, our expert loan officers can help. Contact Alpha Mortgage today!