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Key Differences between Fixed-Rate and Adjustable Rate Mortgages

Posted on January 16, 2018 by Scott Li

Though most everyone understands the basics of what a mortgage is, there are some factors and variables that tend to get confused. If you’re shopping for a mortgage, you might hear the terms “variable rate” and “fixed rate” from time to time. Understanding the differences between the two can help you make better personal decisions when it comes to taking out home loans.

What is a Fixed-Rate Mortgage?

To put it as simply as possible, when you take out a fixed-rate mortgage, the amount of interest you’re charged for that mortgage never changes throughout the entire lifetime of the loan. If you take out a 3.8% fixed-rate loan, you will pay 3.8% interest for the entire duration of that loan. Your monthly mortgage payment is the same each and every month, but your lender will adjust the amount of that payment that goes to the principal balance (the amount you borrowed) and the interest (the fee you are charged for borrowing) automatically. For example, if your monthly mortgage payment is $1000, then with your first payment, you might be paying only $300 toward the principal balance and the other $700 in interest. As time goes by, you pay more on the principal and less on the interest with each monthly payment. read more

Things to Consider when Getting a Mortgage in 2018

Posted on January 15, 2018 by Scott Li

Though the stock market seems to be the hotspot for investors going into 2018, real estate still remains a lucrative and fruitful investment opportunity, as well. If you’re considering a mortgage in 2018, whether you’re simply making an investment or buying your first family home, there are three very important factors you should consider.

#1 – Tax Changes on Large Mortgages

A million-dollar home isn’t in everyone’s budget, but even for those who have the credit scores and who can afford the monthly payments, things might change this year. If you’re considering a high-dollar home, be sure to consider the notion that the provision allowing you to itemize mortgage interest on loans up to $1 million in value may no longer exist. In fact, there are lawmakers working to halve that amount, which can take a significant chunk out of your wallet come tax time. read more

How Fannie Mae is Changing the Mortgage Industry with Tech

Posted on November 29, 2017 by Scott Li

Since the housing crisis of 2008, Fannie Mae has faced significant challenges. The cost of mortgage origination has more than doubled, leaving Fannie Mae looking at ways to slash expenses. At the same time, more stringent requirements have left lenders with more hoops to jump through before approving a mortgage. New technical investments could solve both of these issues-here are the latest developments.

Day One Certainty Initiative

During the 2017 Mortgage Bankers Association Convention and Expo held in Denver, Colorado, Fannie Mae unveiled its new “Day One Certainty” initiative. Designed to streamline the loan approval process, Day One Certainty makes it possible for lenders to quickly validate an applicant’s income and employment information. read more

What it Takes These Days to Get a Mortgage

Posted on November 3, 2017 by Scott Li

It used to be relatively easy to get approved for a mortgage. Prior to 2008, when the bottom fell out of the housing industry, lenders were distributing loans to people who they knew couldn’t even pay them back. Hoards of people defaulted and left a mess in the housing industry that has plagued the home buying process for almost a decade.

Nowadays, if you want to qualify for a mortgage, be prepared to have your act together and be able to prove that you can handle the mortgage. It’s not just about having an excellent credit score; it’s about your financial situation as a whole. read more

Is a Lifetime Mortgage a Possibility?

Posted on September 28, 2017 by Scott Li

At one time, a 30-year fixed rate mortgage was standard. This meant that buyers who purchased at a young age would one day become mortgage free. That scenario is far from the norm these days, leaving many people essentially paying on a home loan for life. What is driving the trend, and will a lifetime mortgage one day become the new normal? Here’s what you need to know.

Trend Toward Older Home Buyers

Those nearing retirement age are not necessarily finished with home buying. Many in their 50s, 60s, and even 70s are taking out a mortgage these days. A good number are even first-time homebuyers with no existing equity to use toward their down payment. read more

How Hurricanes Hurt the Mortgage Industry

Posted on September 27, 2017 by Scott Li

You already know how much damage a hurricane can cause. What you may not realize is that the damage is not just limited to physical structures, as the economy and even the mortgage industry can be affected. Here are a few ways in which recent hurricanes might negatively affect mortgages.

Increase in Delinquencies

Black Knight Financial Services claim that as many as 300,000 Texas families could become delinquent on their mortgages due to Hurricane Harvey. They have not yet assessed the impact of Hurricane Irma, but expect thousands of delinquencies in Florida as well. read more

Why Using one of the Online All Digital Mortgage Methods Rather than a Professional Banker is Not a Good Idea

Posted on August 30, 2017 by Scott Li

More and more financial services are being offered online these days. One that has recently seen a surge in popularity is digital mortgages. Although online home loans are convenient, there is an inherent risk involved. Here are just a few reasons why an Internet broker (or E-Broker) might not be best.

Not Really Applying

Many people believe that by filling out a mortgage application online, they are actually applying for a loan. That’s not necessarily the case, as you could be entering your information into a database instead. From there, your data might be disseminated to an unlimited number of companies, who would then begin flooding you with offers that may or may not be legitimate. read more

Want to Buy a Home? It’s Important to Stay Calm During the Loan Process

Posted on August 28, 2017 by Scott Li

New homeowners cannot wait to take possession of their new property. Even so, it is easy to lose sight of your goal when you are bogged down with getting a mortgage. The loan process can be frustrating, but it is important to stay calm regardless-here’s why.

#1. The Unexpected Can (and Usually Does) Happen

No matter how carefully you plan, situations can arise at any point from the initial application to the closing. A good number of them are out of your control, such as when you discover that your home appraises for less than what you have offered. If you become stressed, you will not be able to focus on finding a workaround for your problem. read more

How Philadelphia’s Mortgage Lending is Being Impacted

Posted on August 17, 2017 by Scott Li

Under the Community Reinvestment Act (CRA), Federal Reserve banks can earn credits for home loans made in low and middle-income neighborhoods. A 2014 change to this law is now affecting many communities in Philadelphia. Here are just a few effects that have been noticed thus far.

Drawing New Boundary Lines

Changes to the CRA generally come as a result of Census Bureau information. In 2014, the Office of Management and Budget (OMB) used 2010 census data to divide Montgomery, Bucks, and Chester counties from Philadelphia and Delaware counties. read more

Lenders are Easing up on Getting a Mortgage

Posted on July 27, 2017 by Scott Li

Mortgage lenders have tightened their criteria in recent years, leaving many people unable to qualify for a loan. Faced with a decreasing pool of applicants, lenders are now loosening some criteria to make it easier for people to become approved. The three major credit bureaus are getting in on the action as well, revising some of their information to make it more favorable to the consumer. If you have previously been unable to obtain a mortgage, now might be the time to reconsider-here are just a few reasons why. read more

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