- February 29, 2016
3 Ways to Put Your Refund to Good Use on Your Mortgage
Your tax refund can be easily spent on a new electronic toy, a vacation, or an update to your wardrobe. Although there is nothing wrong with a little splurge, you could find the most bang for your buck when it’s put towards your mortgage. If you are considering buying a house or you are already a homeowner, the following are three fantastic uses for your tax refund this spring.
- Refinance your Mortgage
It is predicted the current Low Mortgage Rates won’t last forever. Many experts predict that mortgage rates will rise in 2016, so if you have not refinanced your mortgage and taken advantage of cheaper interest rates, now’s the time to make your move. Refinancing your mortgage can improve your financial picture, especially if you’re stressed to keep up with high monthly payments. Dependent on your credit score, you may qualify for a lower interest rate, which is the ticket to getting a lower monthly payment. Also, based on the amount of equity you have in your home, you may have the option for a cash-out refinance. A cash-out Refinance allows you to borrow from your equity. You can use the money to consolidate credit card debt at a lower interest rate, or use the money for home renovation projects that may raise the value of your home.
- Buy a new Home
Becoming a homeowner is a dream for many—and thankfully, you don’t need a 20% down payment to buy a home. However, if you live paycheck-to-paycheck and discover that it’s too hard to save money, it can take longer than you want to save up enough cash for a home purchase. Your tax refund can facilitate you getting the keys to a new house faster.
Given that many mortgage lenders offer low down payment options, the sum you receive on your tax refund could be precisely what you need to purchase a home. For example, if you are buying a $150,000 house with an FHA mortgage and need a 3.5% down payment, or approximately $5,250, then a $3,000 tax refund brings you much closer to your goal. Depending on your price range and the amount you need for a down payment, you could accumulate your tax refunds for the next 2 or 3 years for a bigger down payment. The benefit to that is the more you put down, the lower your interest rate and the less you will have to finance.
- Use it for a principle Mortgage Payment
Although you could probably think of many fun things to spend your tax refund on, but if you also have an aspiration of being debt-free as soon as possible, making an extra principle payment on your mortgage with your refund can eliminate your debt sooner, possibly by years. Many borrowers do not realize then when make one extra principal payment a year; this can decrease your mortgage term by up to six or seven years. Additionally, an added payment can aid you in building home equity quicker and get rid of private mortgage insurance faster. PMI is required if you purchase a home with less than 20% down. This insurance increases your mortgage payment, however the lender will waive PMI once the home has 22% equity.
To learn more- speak with your mortgage lender at Meadowbrook. Our licensed loan officers are available 7 days a week for a free consultation.
- January 29, 2016
Millennial Home Buyer Trends on Long Island
Millennial Home Buyer Trends on Long Island
January 29, 2016
The Millennial generation, those in the 18-34 age range, are now the nation’s largest living generation according to the US Census Bureau and are sure to impact the housing market simply due to thier sheer numbers. Millennial’s have been slow to enter the home buying market. Sidelined by high unemployment, student loan debts, tight credit, and high rental costs; have have made it tough to save for a down-payment and encouraged putting over marriage till after 30. Census figures show that the share of 18-34 year-olds who are married is 30 percent, down from 47 percent in 1983. Millennials therefore, have a different outlook on home ownership and long-term investment than previous generations. Many Millennials, focused on their career instead of family are purchasing homes with investment goals to buy and flip, and are purchasing close to work generally in the cities and urban areas. Also known as the Tech Generation, before house shopping Millennials tend to get a lot of homework done online and use search sites as a way of removing potential properties. They are prepared to consult with a mortgage broker and have done some of this home in advance as well. Another Millennial trend that is predicted to boost the housing market is the increasing availability of low-downpayment mortgage loans.
New York Realtors have found that Millennials shopping for a home on Long Island are interested in these 3 factors:
- Homes in the suburbs close to work & play.
Millennials are buying in the suburbs where there is affordable housing, job growth, good schools, and urban-like amenities and space.
- Small buy high-quality homes.
Millennial’s will trade off size for a patio-style yard that is smaller yet easier to maintain and energy efficient homes that yield lower costs.
- Homes to create experiences.
Millennial’s are more interested than previous generations in open floor layouts, and flexible space to entertain family and friends.
- January 5, 2016
5 Tips for Buying a Home in 2016
With mortgage rates set to go up to 4.5% by the end of the year, according to National Association of Realtors, now is the time to get a jump start on your home buying process.
1.) Get Your Credit Mortgage-Ready
The first step is to find out your credit score. Next, work to pay your bills on time and try to pay down your balances. Many lenders will tell you it helps to have debt-to-income ratio of 36% or less. If you need help with improving or repairing your credit there are professionals who can achieve this for you.
2.) How Much Home Can You Afford? Find out with a Mortgage Pre-Approval
Getting pre-approved for a mortgage is your first step before house hunting. This process is used to help determine how much money you’re qualified to borrow for a home purchase. Once you’re preapproved, you’ll have a more realistic anticipation of which for-sale homes are within your budget. You may be eligible for a loan that is approximately three times your gross annual income. Get a free Mortgage Pre-Approval at Meadowbrook Financial Mortgage Bankers Corp. at www.mfmbankers.com .
3.) Start Saving for your Down Payment
Expect to put down at least 3%, the FHA requires 3.5%. Remember to put aside money for your closing costs. If you’re hoping to build sizeable equity start saving today. Another helpful tip is to start bulking up your savings account, try to save 3 to 6 months’ worth of living expenses. This will help deter you from using credit cards, loans and accruing more debt.
4.) Speak with a Mortgage Professional to Determine the Best Loan Type for You
An adjustable-rate mortgage isn’t right for every homebuyer, nor is a fixed-rate mortgage. If you plan to raise a family in your new home, you might consider a 30-year loan. However, if you’re moving in ten years or less, an adjustable-rate mortgage, or ARM, may better fit your needs. Interest rates on ARMs tend to be fixed for the first several years of the loan and regularly begin lower than rates on 30-year fixed loans. A VA Loan, 203K Rehab Loan or a Purchase with a Reverse Mortgage might suit you and your family. Another option are jumbo loans, which are usually for purchasing luxury homes. The homebuying process is a challenging one, speak with a mortgage professional at Meadowbrook Financial Mortgage Bankers for guidance and advice to make the best decision for you and your family.
5.) Consider Starting a Budget
As a homeowner, your monthly mortgage payment will not be your only expense. There are also homeowners insurance, property taxes, maintenance costs, and possibly homeowners’ association fees, which is why it’s necessary to stick to a budget. Starting with a budget now will make for a smooth transition into homeownership.
You are now ready to start house-hunting! Best of luck in 2016 to fulfill your dreams of homeownership.
- December 9, 2015
Mortgage Rates Are Down, Time to Refinance?
Rates are Low, may not be for long…
December 9, 2015
According to Freddie Mac, Mortgage Rates are down, below 4%, for third consecutive week as of December 3, 2015. With the drop of the 30-year fixed rate mortgage, home buyers are offered a chance to lock in lower mortgage rates ahead of the Federal Reserve’s chiefly predicted move to raise federal funds rate later this month.
Many homeowners currently are taking advantage of the FHA Streamline Refinance, which is a special mortgage product, reserved for homeowners with existing FHA mortgages. FHA Streamline Refinances are the fastest, simplest way for FHA-insured homeowners to refinance their respective mortgages into today’s mortgage rates. The defining trait of the FHA Streamline Refinance program is that it does not require a home appraisal. Instead, the FHA will allow you to use your original purchase price as your home’s current value, apart from of what your home is actually worth today. In this way, the FHA Streamline Refinance program is perfect for homeowners who are underwater on your mortgage. Learn more about Refinancing today.
Source: Freddie Mac, FHA.
- November 24, 2015
It’s Time to Give Reverse Mortgages a Second Look
November 24, 2015
Time to Give Reverse Mortgages a Second Look
Although I have a few years to go, the thought of how to retire is beginning to dominate my thoughts.
Like many of us, I have no pension or trust fund to fall back on. How much money will I need? What will the tax rates be? How will a capital gain on the sale of my house affect me if I downsize? How will inflation affect my savings and Social Security payments? When you begin to look at life expectancy, medical costs and other variables, it becomes daunting to contemplate retirement.
Over the last several years I’ve responded to many inquiries regarding these concerns and have offered advice on the available options. Regarding how to consolidate debt, conventional mortgages and home equity lines of credit are often not a good option because they become quick fixes and won’t eliminate the monthly outlays.
Like most people, I wasn’t a big fan of reverse mortgages, partly because I didn’t fully understand how they work. I thought it meant, in essence, signing over your house; nothing could be farther from the truth. Reverse mortgages, under the right conditions, can be a valuable tool to bridge shortfalls or free up needed cash flow. As you would with any financial strategy, carefully weigh the pros and cons, and carefully consider alternatives.
Today’s reverse mortgages, including Home Equity Conversion Mortgages, are very different from the lump-sum loans of years past. The interest compounds only on the amount drawn; the borrower can simply take money as needed. The balance remains available interest-free, making it similar to a home equity loan.
The advantages of a reverse mortgage over a home equity loan are many.
• Reverses currently have a lower interest rate
• Repayment is optional, not mandatory
• The unused portion continues to grow as you age,
• The unused money can never be frozen
• The liability can never exceed 95% of the home’s value.
The important piece to understand: At today’s interest rates of under 3%, a $100,000 balance will take 24 years to double. If rates jump to 4%, that balance will take 18 years to double. If a home appreciates at the same pace, a $500,000 home will be worth $1 million.
There are many people whose pension, savings and Social Security payments have been outpaced by real estate taxes and inflation. Many have accumulated high-interest credit card debt or have home equity lines of credit coming due. If downsizing and moving is not an option, a reverse mortgage may be a viable solution.
I’ve sat with close to one hundred families, exploring alternatives to ease retirement. The application for a reverse mortgage requires a slow and carefully thought-out process. If this is something you’ve considered or are considering, I’d be happy to spend some time helping you decide if it’s right for you. I will have interest rate calculators available on our website for your use. I’m always available to meet by phone, in my office or in your home.
Jim Flaherty is VP of Business Development at Meadowbrook Financial Mortgage Bankers. He can be reached at 516.360.2650 or firstname.lastname@example.org.
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