Kiki Calumet Honored As A Market Leader in Forbes

Kiki Calumet honored as a market leader in ForbesImage Credit: Five Star Mortgage Awards

We are proud to announce that one of A and N Mortgage’s Executive Vice Presidents was honored as market leader by Forbes. Check out the February 2019 issue of Forbes to read the article.

Find out more about this award winner by going to kikicalumet.com.

 

A and N Mortgage Services Inc, a mortgage broker in Chicago, IL provides you with high-quality home loan programs, including FHA home loans, tailored to fit your unique situation with some of the most competitive rates in the nation. Whether you are a first-time homebuyer, relocating to a new job, or buying an investment property, our expert team will help you use your new mortgage as a smart financial tool.

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7 Dos And Don’ts During The Mortgage Process

Do's and Don'ts during mortgage process

If you’re ready to purchase a home then one of the first considerations you might have to deal with is a mortgage, often known as a home loan. You’ll find many mortgage bankers and mortgage brokers in Chicago that are willing to offer their services.

But before you decide to take the plunge and speak to one of these companies, it’s vital that you learn more about the process so that you get a better understanding of how the mortgage process works. You’ll learn what’s involved on closing day and if there are any potential pitfalls that you could avoid.

Preparation is the most important component of a successful home purchase.  There are numerous options available such as detailed articles on the mortgage process, online mortgage applications, and mortgage calculators  that will help you through the entire process.

It’s good to understand the options you have available and which ones are best suited for your personal circumstances. So without further ado, let’s take a look at the dos and don’ts of the mortgage process.

Do’s & Don’ts During The Mortgage Process

1. Pre-Qualification and Pre-Approval

Do perform an initial mortgage pre-qualification to get a rough estimate of how much you can afford. This is often done through an online mortgage application and you’ll need to provide documents that support your application.

This process is to ensure that once you find a home that you like, you can make a stronger application with a higher chance of success because your lender has already approved that you are able to afford a home in a certain price range. This will also help you figure out what type of home you can afford so that you know the correct price range to aim for.

Don’t start looking around for a home until you are pre-approved. The pre-approval process is vital for helping you set a budget, so the last thing you want is to look for a home that you think you can afford, but in reality, it’s completely out of your budget.

This is a mistake that many people make when looking to purchase a new home. On the bright side, it could reveal that you actually have a larger budget than you initially assumed.

2. Financial Decision Management 

Do prepare a savings plan to mitigate financial issues. Nobody likes unexpected costs so it’s important to have a savings plan in place so that you can pay for your deposit, your mortgage repayments and also larger purchases that you have planned for.

Keeping a budget and financial record of your expenses can help you create a savings plan that will ensure you have enough money to satisfy your lenders.

Don’t make large unplanned purchases that could drastically change your savings plan. It’s not every day that we decide to shell out a huge sum of money for something, but you should do your best to avoid making big purchases and accumulating more debts and applying for more loans.

Affecting your credit rating could have negative consequences for your mortgage application so make sure you avoid any large purchases especially if they’re on credit and not with the money in your bank account.

If you absolutely have to make a large purchase for something important, then make sure it’s a planned expense that is detailed in your savings plan so you know how to work around it.

3. Credit Score Rating

Do think smart about your current credit rating and continue to improve your credit rating when possible. The last thing you want to do is ruin your credit rating with more loans or by ignoring inaccuracies within your credit report. Make sure you request a copy of your credit report and focus on resolving any issues that may be outstanding or incorrect to ensure that lenders see an up-to-date and corrected version of your current credit rating.

Don’t do anything that could compromise your current credit rating score. This involves taking out new lines of credit, making large purchases before submitting your online mortgage application or making late payments for utilities, rent, and other purchases.

This could potentially lower your credit rating score and it will cause your mortgage broker to think twice about accepting an agreement with you.

4. Questions

Do remember that you can ask questions to your mortgage banker or mortgage broker. Questions are appreciated by mortgage lenders  because it shows that you’re willing to go the extra mile in understanding how the mortgage process works.

If you’re working with a mortgage banker or mortgage broker in Chicago, then it’s important to ask as many questions as you need to feel comfortable during the loan process. It may seem like a difficult task but what’s important to your mortgage representative is that you feel confident and knowledgeable in your decisions all the way till closing day.

Don’t overwhelm yourself by trying to understand everything on your own. There are plenty of resources available on the internet that will teach you about the mortgage process, but it’s always better to speak to someone in the industry such as your mortgage advisor.

It can feel overwhelming trying to understand all of the complex technical terms involved and it will only make things more difficult in the long run.

5. Financial Stability

Do ensure that you have a stable job and sources of income before purchasing your home. Stability is one of the key factors in the loan process because if you can’t show that you have a stable income, you’re less likely going to have your new loan approved.

It may take longer to process your online mortgage application and you may even be rejected if your income isn’t stable enough.

Don’t try to make drastic changes to your lifestyle or employment status. This means quitting your job or changing your career path shortly before purchasing a home. This raises red flags and can cause some major setbacks and slowdowns during the whole mortgage process.

However, the exception to this rule would be if you have a positive employment change, such as being promoted to a higher position or starting up a new business or stream of income. In this situation, your mortgage application won’t be affected negatively.

6. Changes in Income or Lifestyle

Do keep documentation regarding any income or lifestyle changes. This extra step will ensure that you can prove any changes in your life such as marital status and changes in your household size or income.

In most cases, this should include payments, statements, money deposits and also other documentation that your lender might request from you. These documents are important on the closing day because it will allow your lender to finalize their offer.

Don’t make large changes to your income, lifestyle or bank without having a record of it. Mortgage lenders don’t like it when they are sudden and difficult-to-explain changes made to your accounts or lifestyle.

For instance, if you suddenly deposit a large sum of money then your mortgage broker may find that it’s a strange or questionable sum of money. As long as you have a paper trail that explains the lump sum (such as a paycheck) then it will help in the long run.

Don’t be surprised if your mortgage broker asks for additional records that they didn’t mention previously. You should be prepared enough that you always have documents available to prove any changes that you’ve made in your life or related to your financial situation.

7. Take Help from Experts

Do hire assistance and work with professionals when purchasing a home. This is to ensure that you get all of the legal help required and it ensures that you don’t miss anything in the documents provided to you during the mortgage process and on closing day.

There are plenty of mortgage bankers and mortgage brokers in Chicago that you can hire for assistance and there are plenty of online resources to assist you in the process of purchasing your first home.

Don’t try and do everything yourself. There are plenty of people that make the mistake of trying to save money by refusing to hire any kind of professionals to assist them, but this can end up being a poor choice because they might miss crucial documents, they might take too long responding to certain requests by the seller and it could be more costly in the long run.

Conclusion

Hopefully, this article has shown you some useful information on how you can better prepare for the mortgage process. The takeaways from this are that you should always have records for anything related to your finances including career changes, pay raises and changes in your household.

You should also not be afraid to contact people for assistance because the mortgage process can be rather difficult to understand without a trained professional helping you. We’ve also included a downloadable flyer that will explain 10 things that you should avoid doing before closing your mortgage loan. It’s a convenient flyer that will serve as a checklist of things to avoid before the closing day so that you don’t run into any unexpected roadblocks.

For more impartial advice on the mortgage process, then don’t hesitate to check out our own mortgage resources page for more information.

 

 

A and N Mortgage Services Inc, a mortgage broker in Chicago, IL provides you with high-quality home loan programs, including FHA home loans, tailored to fit your unique situation with some of the most competitive rates in the nation. Whether you are a first-time homebuyer, relocating to a new job, or buying an investment property, our expert team will help you use your new mortgage as a smart financial tool.

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What Are The Main Documents Signed At Closing?

For many people, purchasing a home will likely be the most expensive thing they ever do. Because it is such a complicated process it can involve many outside things such as mortgage companies, lenders and even legal representation from lawyers.

With so many different people involved in a potentially complex process, it’s important that you pick out the essentials to ensure that you understand it.

One process that is important to understand is how a deal is officially closed. There are several different types of documentation involved and when they’re signed by both parties, it finalizes the sale and completes the deal. But what kind of documents are actually involved? Let’s talk about it.

What To Expect On Closing Day

When purchasing a home from someone else, the seller will typically sign a deed which transfers their rights to the buyer. The deed is one of the most important documents that closes a property sale and it’s often referred to as a closing document due to its role in the sale and purchase of a property. However, there are also closing documents involved on the buyer’s side as well.

For instance, purchasing a home is an expensive consideration that often involves a loan that has to be repaid under certain conditions. A loan used to purchase a home is referred to as a mortgage and the one offering the money is known as a lender. This involves yet another closing document that ensures the loan will be paid back.

When working with a Chicago mortgage banker or any lender throughout the country, you can expect to sign the following documents when finalizing the sale.

The Note

Often known as “the note”, this is essentially a document that shows what you promise to pay your lender when taking out a mortgage. It shows the interest rate, details of the property and also the amount of money you’re loaning. It will also describe how to plan to pay back the money and makes you responsible for all of the payments towards your home. The note can be transferred to another party by an allonge.

Mortgage Document

The mortgage document is used to secure the lender’s rights to a property. It’s an agreement between the borrower and lender that lists foreclosure rights should the borrower fail to make the right payments back to the lender. This isn’t the loan itself that you will receive from the lender despite it often being called a mortgage.

This mortgage document is a security agreement that makes your home collateral for the loan should you be unable to repay it. This document is similar to your note but contains more information regarding the property.

The Deed

The deed is a public record of the ownership of the property. This is recorded with the county so that there’s a permanent record of it that cannot easily be lost or destroyed. Deeds must be in writing but are often completed with printed forms.

It often includes a description of the property and signed by both parties. Deeds are the most important documents in your closing package because they contain the statement that the seller transfers all rights and stakes in the property to the buyer.

Your Closing Package

The closing process is the final hurdle before the ownership of a home is officially transferred to you. To accommodate the process, you’ll be given a closing package of important documents that includes the note, the mortgage document, and the deed.

In addition, you’ll often find other documents such as a Right to Rescission document which gives you a time frame to change your mind about the transaction, and a Real Estate Settlement Procedures Act document that informs you about your closing documents and your obligations to your mortgage.

However, the note, mortgage document, and the deed are the three main documents that will be included in your closing package. It’s vital that you read through each document and attempt to fully understand their significance before you sign them.

Due to their weight in the homebuying process, it’s common to seek advice from a trustworthy and reliable source to help you through your mortgage application and the closing process.

Conclusion

Having someone that can offer advice and walk you through the entire process step by step will make the process of purchasing a home a lot easier. If you’d like to learn more about the mortgage process, do check out our mortgage resources page for more information.

 

A and N Mortgage Services Inc, a mortgage broker in Chicago, IL provides you with high-quality home loan programs, including FHA home loans, tailored to fit your unique situation with some of the most competitive rates in the nation. Whether you are a first-time homebuyer, relocating to a new job, or buying an investment property, our expert team will help you use your new mortgage as a smart financial tool.

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Your Credit Score – How Does It Actually Work?

You may have heard of the term credit score before now, but maybe you’re not entirely sure what it means. Did you know that 45% of college students have no idea what their credit score is?

It can be quite confusing. So if you aren’t sure what it is or how it is calculated, you might not fully understand the number that pops up.

A credit score is simply a number that has been measured based on your credit file. It determines how well you are able to obtain assets and manage your finances.

But, how do we come up with this number? Well, that’s a good question. Let’s talk about it. In this article, we are going to discuss how your credit score is weighed and some of the determining factors that can impact it.

So, by the time you have finished reading this, you should know how your credit score is calculated as well as the factors that are taken into consideration.

This infographic will help you better understand your credit score:

breaking down credit score - inforgraphic

How Is Your Credit Score Calculated?

There are various factors that contribute to making up a credit score. The exact algorithm that is used to measure it is still kept private. However, we do know most of the criteria credit bureaus consider when determining your score. Each factor carries a certain amount of weight with it, with some being more important than others.

But, what are these factors? We’re glad you asked.

Below we’ve listed them below with an explanation of what each means to help you understand what makes up your credit score.

Factors Impacting Your Credit Score

Your Payment History

First up on the list is your payment history. This is one of the most important areas credit bureaus look at when determining your credit score. Your payment history takes up a massive 35% of your score.

If you have something like a mobile phone bill, car payments or anything like this, you want to be making your payments on time.

If you don’t, this could severely reduce your credit score, and make it so that getting loans or contracts a lot harder. However, you do need to realize that a late payment of a few days is not going to count against you, and this will be the case until the payment is over 30 days late.

It is still best to make your payments when they are due, but if for some reason you need a few extra days, this is not going to impact your credit score as long as you communicate with the account holder (e.g., the person or place you need to make the payment to).

Making your payments on time is going to be the difference between an average (or fair) credit score and an impeccable credit score. Which will ultimately make the difference between getting what you want at a good rate or not getting what you want at all.

The higher your score is, the more likely you are to be accepted for further credit in the future. This is one of the reasons it is so important to make sure that you can make your payments when you accept a line of credit.

If you have any issues with making your payment, you should contact your credit provider and see if you can change your payments. This way, you will still be able to make your payments, and your credit score is not going to suffer.

The Amount Of Debt Owed

The next thing creditors take into consideration is the amount of debt you owe. This is another highly examined criteria that is carefully considered, taking up about 30% of your score. These percentages might not seem like big numbers, but they add up very quickly.

If you think about it, the amount you owe and your payment history added together make a total of 65%, so you need to be careful.

In order to maintain a good credit score, you want to keep your loan or credit utilization as low as possible. A helpful guideline many people follow is keeping your utilization ratio at about 30% of your credit limit.

For example, if you have $3,000 of available credit, you only want to only borrow $900. Keep this in mind when you are working out what you need to borrow on credit and make sure that you can make the payments on what you have borrowed.

It is always going to be better to owe a little across multiple credit lines, than a lot on one. The total amount of debt that you owe is going to be one of the most important factors to consider for your credit score, and it can have a massive impact on the number that is calculated.

Lowering your amount of debt can be the key to getting a better credit score, and you want to be borrowing less to do this.

The Length Of Your Credit History

Another thing that loan officers take into account is the length of your credit history. Though it weighs in significantly lower than the other two factors we have mentioned, this does not make it unimportant.

Roughly 15% of your credit score is going to be made up based on the length of your credit history. This means that a history of responsible borrowing and paying back is going to work in your favor here.

The longer history you have had with proving that you can be trusted to pay back what you owe is going to be a great way to get yourself a high credit score.

People who have a credit score of 700 or over are generally considered to have a good credit score. However, those who manage to earn themselves a credit score of over 800 are viewed as having excellent credit.

You will find that most of the people who have this high score typically have less than three credit cards, all of which have been open for over six years.

Credit Inquiries

If you are thinking of opening a new credit line, you need to think carefully about this choice. 10% of your credit score is calculated based on your new credit lines, and if you are opening multiple in a short period, this is going to lower your credit score.

In some cases, when you apply for a mortgage, all of the inquiries that you make within 30 days are going to be grouped as one inquiry, meaning that this will not have a significant impact on your credit score.

When you are looking for a new line of credit, you want to make your inquiries rather close together. Some mortgage companies will allow your inquiries to be grouped together as one inquiry and you will not have your score impacted by much.

This is going to be useful for people who need new credit, but like to look around for what is the best offer to them.

Type Of Credit

The last factor that loan officers will consider when looking at your credit score is the type of credit that you have. This will make up 10% of your final score. You might have more than one credit line at the moment, and this is fine, meaning you have nothing to worry about.

For example, you might have a car that you are making payments on, a credit card, a mortgage, etc. Having this experience with multiple credit lines might actually be able to help your credit score, as it proves that you are reliable and lenders can trust you to pay back what you borrow.

So keep in mind that there are different types of credit that you can acquire. An installment loan such as for a car is different from a loan that utilizes a revolving credit system, and so on.

Credit Building Tips

A few things you can do to rebuild your credit and increase your score are:

  • Make a few extra small payments to help you pay off any debt that you owe
  • Make all of your payments on time
  • Only spend money that you have and keep a low balance on any line of credit that you have
  • Allow some of the inquiries and hard pulls to fall off your credit report before applying for more

 

Conclusion

As many as 52% of Americans haven’t viewed their score in the past year. Having a good credit score is the key to having everything you want. If you’re trying to repair or rebuild your credit, the first thing you need to do is take a look at it. See where it’s at and then break down your score into sections you can work on one at a time.

You may also want to consider seeking advice from a mortgage company such as A and N Mortgage.

When it comes to opening a line of credit as they are one of the top companies in this field. They will be able to help you better understand your credit score, and what it can mean for your loan options.

 

A and N Mortgage Services Inc, a mortgage broker in Chicago, IL provides you with high-quality home loan programs, including FHA home loans, tailored to fit your unique situation with some of the most competitive rates in the nation. Whether you are a first-time homebuyer, relocating to a new job, or buying an investment property, our expert team will help you use your new mortgage as a smart financial tool.

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2019 Best Mortgage Companies to Work For

Rated #1 for companies with less than 99 employees and #4 overall.

A & N Mortgage Services Inc. has been named one of 2019’s Best Mortgage Companies to Work for. This program was created by National Mortgage News and Best Companies Group.

This annual survey and awards program was designed to identify, recognize, and honor the best employers in the U.S. mortgage industry. The inaugural list is made up of 37 companies.

“Securing and retaining top talent is one of the biggest challenges faced by every employer,” said Austin Kilgore, editor in chief of National Mortgage News. “We launched this annual ranking to recognize companies committed to investing in their employees’ growth and development and to inform executives looking for insight on how to boost job satisfaction among their own teams.”

Companies from across the United States entered a two-part survey process to determine the National Mortgage News’ Best Mortgage Companies to Work for. The first part consisted of evaluating each nominated company’s workplace policies, practices, philosophy, systems, and demographics. The second part consisted of an employee survey to measure the employee experience. The combined scores determined the top companies and the final ranking. Best Companies Group managed the overall registration and survey process, analyzed the data, and determined the final rankings.

To be considered for participation, companies had to be a for-profit, not-for-profit business or government entity operating a facility with at least 15 employees working in the United States for at least one year. Additional conditions applied; for more information on eligibility and other aspects of the program, please visit www.bestmortgagecompaniestoworkfor.com.

National Mortgage News honored all the winners and revealed the final rankings in a special report published in January, 2019.

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Should You Refinance Or Get A Home Equity Line Of Credit?

Refinance Or Get A Home Equity Line Of Credit

 

If you are looking to make some improvements to your home, but you don’t want to dip into your personal savings, there are some options for you to consider. You might want to consider refinancing your mortgage or taking out a home equity line of credit (HELOC).

If you don’t know what either of these options are, don’t worry, that’s where we come in. In this article, we are going to talk about the difference between the two, and what considerations you need to think about when deciding which of these options you want to go for.

What Does It Mean To Refinance Your Home?

When you replace the mortgage that you have with a different type of loan, this is known as home refinance. Many people will refinance if they want to lower their monthly payments for their mortgage, or if they are trying to reduce the interest rate. Another reason people do this is to change their loan program. So, they may currently have an adjustable rate mortgage, but they want to switch to a fixed rate mortgage.

You can get what is called a cash-out refinance, in which the loan amount on the owned property is beyond the cost of the transaction.

What Is A Home Equity Line Of Credit (HELOC)?

A home equity line of credit (HELOC), is a loan that is set up as a line of credit. It’s like a credit card with a maximum amount to be loaned over a period of time instead of as a lump sum. Where a home equity loan is usually a lump sum paid to the borrower with a fixed payment term.

The borrower can borrow up to the maximum amount within the draw period which will be set by the lender, and then the amount paid back will be whatever has been drawn, plus interest. The same as with a credit card, the borrower might have a minimum repayment due each month, but they can pay any amount they like as long as it is over the minimum that has been set.

Factors You Should Consider While Choosing Between Refinance and HELOC

refinance or heloc

Time Frame of Loan

One of the most important factors that you should be looking at when it comes to considering your options on refinancing versus a HELOC is time. You need to be thinking about the amount of time that you are going to be keeping your home before you can even consider looking into interest rates, cost etc. This is because depending on how long you will have your home, this will be how long you need to pay back the amount of money that you will have borrowed.

Both of these loan options will provide you with the same thing, the money that you need to make the home improvements of your dreams. However, each loan type does have a distinct purpose so you need to make sure that you have considered all of the factors before you choose one. For example, a home equity line of credit involves adjustable rates that they can change on a monthly basis, whereas the cash option for refinancing is going to be better long-term.

A HELOC only has interest based on a per month basis, and this might sound enticing, which is why so many people opt for this. However, what most people forget is that because this is the case, the interest rate can rise from month to month. So, a payment you could afford today, may change (and may not be the case) by tomorrow. This won’t happen with a cash-out refinance loan and is an important reason why you need to consider the amount of time you need the loan for.

Interest Rates

As a borrower, one of the first things to take into consideration when you refinance is the mortgage interest rate. People like to feel as though they have managed to get the lowest interest rate possible, and this is what makes them feel good about accepting the new loan. The thing that you need to remember here is that if you are going to be completing home improvements, the mortgage interest rate is likely not going to be as important as the level of risk that you accept when you swap over your loan.

If you have a fixed amount of interest right now, such as 6%, it isn’t going to make much difference if the HELOC interest rate is higher than this at something like 10% if you only need the money for a short period of time. This is because most of the money that you owe for your mortgage debt is still going to sit at 6%.

However, if you need the money for a longer period, then passing up a 7.5% blended interest rate is not going to make much financial sense. This is why you need to look closely at the two options and look at the interest rates immediately after you have decided how long you need the loan for.

Closing Costs

Closing costs are going to be an important consideration and it’s one that many people often forget about. If you look at it objectively, the HELOC will typically be less expensive than a total refinance, meaning that if this is going to be an issue for you, you want to be considering a HELOC.

You do however need to keep in mind the risk that you take with the adjustable interest rate with a HELOC, and when you are considering this, make sure you include the overall cost in your calculations. What we mean by this is that you need to compare the short-term closing costs total with the long-term cost of all the repayments added together.

Both of these loans are going to have some sort of cost attached to them, and it is important to do thorough research into what each option means for you. If you need something that is fixed term, a HELOC is not going to be good for you.

Advantages & Disadvantages Of HELOC

advantages - disadvantages of HELOC

Advantages of HELOC

One of the main advantages of getting a HELOC over a home refinance is that it is better for short-term situations. Where refinancing a home would be more practical and cost-effective in the long term, a HELOC is going to be the best solution for those people who are going to be in the position to pay back the money sooner rather than later. As the money is not given in a lump sum, the borrower does not have to use all the money on the credit line and therefore may find themselves owing less.

On the other hand, if you are looking for something over a longer period, you need to consider a refinance loan as it will give you a better amount of savings over the years that you borrow. This is going to be the case even if the interest rates go up and down throughout the loan period.

Home equity loans also provide tax benefits. Unlike a typical loan that you could be using, the interest rate of a HELOC can be partially tax deductible. Always consult with your tax advisor for additional information before making decisions in this regard.

Another big benefit is that you don’t have to worry about needing a super credit score. Your credit score typically doesn’t have a significant impact on whether you get approval for a HELOC. Although, you may still need to deal with higher interest rates and greater fees if your score is poor.

Finally, HELOCs are completely accessible. So, whenever the borrower requires money, they can simply make a withdrawal. This is completed through a check or a credit card.

Disadvantages of HELOC

There are several notable disadvantages with using a HELOC that must be considered before you fully commit to obtaining one. The first is the possibility of foreclosure. If you are granted a home equity line of credit through a lender, the borrower’s home is then used as collateral. Defaulting on a HELOC then puts you at risk of losing your home. As such, it becomes crucial that you do manage to keep your payments on time.

Furthermore, HELOCs come with a certain level of uncertainty. Your credit line could be reduced or the HELOC frozen due to changes in home value or your credit situation. As well as this, HELOCs use variable rates. This means that you will need to be cautious of spikes in ratings. This makes it incredibly difficult to know what your bill will look like on a month to month basis.

You could also be at risk of developing more debt by using a HELOC. It’s quite common for HELOCs to be used to cancel out bills due on high-interest credit cards. This does make sense because they often have lower interest rates. However, it is possible and indeed common to accumulate more debt when attempting this.

Conclusion

As you can see there are several determining factors for you to take into consideration when deciding whether or not you should refinance or get a HELOC. Both loan types have their advantages and disadvantages and work differently according to different scenarios. For more information on these options, speak with a loan representative at a mortgage company in Chicago or elsewhere. They can help you decide which one is the best fit for you.

 

A and N Mortgage Services Inc, a mortgage broker in Chicago, IL provides you with high-quality home loan programs, including FHA home loans, tailored to fit your unique situation with some of the most competitive rates in the nation. Whether you are a first-time homebuyer, relocating to a new job, or buying an investment property, our expert team will help you use your new mortgage as a smart financial tool.

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Conforming Loan Limits For Mortgages Will Increase In 2019

This is the third year running that the Federal Housing Finance Agency has elected to increase the maximum conforming loan limit on mortgages. The maximum conforming loan limits on mortgages acquired by Fannie Mae and Freddie Mac did not previously increase for a startling ten years.

The Facts

The Federal Housing Finance Agency announced on November 27, 2018, that conforming loan limits are set to ride from this year’s total of $453,100 to $484,350 for the year 2019. This significant 6.9% increase shows a notable difference between this year’s loan and the next.

Between the years 2006 and 2016, there were no increases whatsoever when it came to the conforming loan limits. This increase is excellent news for homeowners as a higher conforming loan means it’s easier to get on the property ladder.

Prospective home buyers should now find the process much smoother when it comes to purchasing their first or second house.

The Housing and Economic Recovery Act of 2008 regulates the conforming loan limits for Fannie and Freddie, which set the baseline loan limit traditionally at $417,000.

Every year the Federal Housing Finance Agency deliberates the limits so that the average home prices across the country are reflected.

Due to the increase in home prices this year, this has caused the conforming loan limits in 2019 to increase. Every type of loan has a maxim lending limit, which is put into place by its corresponding agency. There are variations, depending on the time of loan you’re looking at.

For example, FHA loans have county loan limits that work out to be slightly lower than conforming loans. The FHA tend to set their own loan limits and have yet to mention any upcoming changes.

Jumbo loans take the lead where conforming loans finish. Of course, multifamily properties and more expensive countries will also be much higher than the starting conforming limit of $484,350 in 2019 next year.

The Loans

Although every county has their own conforming loan limit, there are high-cost areas in the U.S. and neighboring regions. So if you are living in a more affluent area, the house prices are inevitably going to be much higher.

Agencies such as Fannie and Freddie do provide expanded loan limits to take these higher prices into account. These increased loan levels are labeled as high balance conforming loans.

This gives the buyer a huge advantage to borrow a lot more at conforming rates when purchasing a home in one of the more expensive counties.

It could be said that conforming lending terms and conditions are much more flexible than jumbo loans. The guidelines associated with jumbo lending are more rigorous but with sensible reasoning behind it.

The lenders are exposed to higher risk; as more money is being loaned, the borrowers are required to put down a higher down payment and have a solid track record on their credit score.

In order to explain the idea of jumbo loans, you have to first consider the conforming threshold. If it is even exceeded by a mere $1, it ventures into the territory of jumbo loans, which are also known as nonconforming loans.

All in all, jumbo loans don’t normally provide options such as renovation loans, 3% down or 50% debt ratios, but they will finance primary and secondary properties at traditionally competitive rates.

Comparing & Contrasting Jumbo VS. Conforming Loans

Rates

Conforming loan rates tend to be more competitive than jumbo rates.  Both fixed rate and adjustable rates are available for both conforming and jumbo mortgages.  Adjustable rate mortgages are more popular in the jumbo realm and although fixed rates are an option, the rates can be notably higher than those associated with conforming loans.

Income

You could be earning any type of income in order to qualify for a conforming loan or a jumbo loan. Your personal income will be taken into consideration, but your mortgage advisor will be able to tell you more about your options and rights. In this sense, both types of loan are very similar.

Credit

Every lender will have a different requirement when it comes to the borrower’s credit score. On average conforming loans need you to have a credit score of 620, whereas jumbo loans require a slightly higher minimum score of 700 in order to qualify.

Assets

In order to obtain a conforming loan, the lender will ideally need to see almost three months’ worth of savings in your bank account. One full month’s mortgage payment will be considered as one month of savings in the lender’s eyes.

In contrast, a jumbo loan lender will not only require a downpayment and closing cost but also at least a year’s worth of savings.

Property Evaluation

For a conforming loan, you only require one property appraisal, but you might be asked to pay for two evaluations if you are opting for a jumbo loan.

Debt

In order to qualify for a conforming loan, the lenders will adopt a debt to income ratio for each individual borrower. The guidelines are quite flexible, but your gross income is used to calculate whether you will qualify or not.

Similarly, jumbo loans also use debt to income ratios, but the terms aren’t quite as flexible. This depends mostly on the lender’s individual tendencies, so make sure you explore all of your options.

How This Helps You Buy a Home

Down payments are arguably the biggest hurdle that most prospective buyers face when looking to invest in a new home. With today’s conforming loans, buying a home is actually made much simpler, with just a 3% down payment being required.  A higher conforming loan limit makes it easier for more buyers to invest in a property.

With more borrowers now becoming eligible to purchase a home, you could say that a conforming loan limit is the friendliest one on the market. With lower down payments, lower interest rates and more flexible qualifying requirements, the advantages are abundantly clear.

The Prices Of Homes In Chicago

It is predicted that there will be a 6.1% growth in prices for the Chicago area next year. At the moment home prices average at $232,000 but are estimated to reach $250,000 by October 2019.

Up until this moment, it could be suggested that the Chicago housing market has underperformed, however with employment growing the prices are being pushed upward.

The higher conforming loan limit is a hugely positive thing for someone looking to buy a home in Chicago. As home prices continue to rise, the mortgage loan limits are increasing in tandem, making it much easier for home buyers to obtain the loan they need.

This long term projection of house prices portrays hugely strong optimism about the growth of the Chicago housing market.

If you want to find out more about the maximum loan limits by county, click here for a detailed online tool. Please see the chart below for more information on how the loan limits have changed and how the average price of houses in Chicago have altered over the years.  

A and N Mortgage Company

Buying a new home is one of the biggest investments you will ever make in your life, whether you’re a first-time buyer or a multi-homeowner. You always want to seek out the best possible mortgage for your individual situation, which most people find incredibly overwhelming. A and N Mortgage Services will be there to support you through the entire process.

As a well-respected and established Chicago mortgage company, A and N Mortgage banking company will help you apply for a home loan and find an arrangement that works best for you. Here your individual circumstances will be taken into account.

You can also make use of our free mortgage calculators as a resource to help you understand your options. If you have any questions about the latest announcement with regards to the conforming loan limit on mortgages, please do not hesitate to contact us.

Conclusion

Getting ready to complete your loan application? Make sure you find a reputable mortgage company to work with. If the Illinois loan limit is relevant to you and your family, then contact a mortgage company in Chicago for more information.

 

A and N Mortgage Services Inc, a mortgage broker in Chicago, IL provides you with high-quality home loan programs, including FHA home loans, tailored to fit your unique situation with some of the most competitive rates in the nation. Whether you are a first-time homebuyer, relocating to a new job, or buying an investment property, our expert team will help you use your new mortgage as a smart financial tool.

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2019 Housing Market Report: An Insight

housing market report 2019

The US economy seems in good shape right now. A variety of indicators from manufacturing output to consumer confidence indicates that, despite being more than nine years old, the current expansion is expected to continue, at least until 2020.

What this means for the housing market going into 2019 is becoming increasingly clear: interest rates are going to rise. The New York Federal Reserve has already raised rates several times since 2015, thanks to impressively low unemployment figures and the perceived risk of inflation, and 2019 looks like it will be a continuation of that policy.

At the start of 2015, rates stood at just 0.25 percent but rose successively throughout 2016 all the way up to 1.5 percent by the end of 2017. This year, Fed Chair Jerome Powell presided over four rate rises from 1.75 to 2.0 to 2.25 to 2.50 percent.

There’s no doubt that interest in the housing market is heating up. 2019 will be an exciting year for those interested in real estate. Will it shape up to be a bumper year for homeowners and real estate investors? Or will cracks in the economic story emerge, and spoil the party?

Unsteady Stock Market

Earlier this year, investors were shocked to find that the S&P and Dow Jones industrial average had taken a significant plunge and that billions of dollars had been swept away in its wake!

After a positive and tranquil 2017, where the stock markets rose in double digits with the minimal pullback, the February correction was a rude awakening to many investors who clearly expected the good times to continue.

Unfortunately for investors, the volatility is back, and with a vengeance. There were numerous “corrections” in 2018 as jittery investors look at inflated P/E ratios and say to themselves, “do I really want to be in stocks that seem so overpriced?”

The volatility in the stock market, however, could be good news for the price of other assets, including real estate. If investors begin to believe that the shaky stock market is too much of a threat to their wealth, they may increasingly fancy their chances in the housing market, perceiving it as lower risk.

While it’s true that the housing market experienced terrible problems in 2008 and 2009, a systemic collapse of the banking system no longer seems to be on the cards (although this cannot be ruled that out completely). Housing, therefore, might be seen as a kind of haven if the stock market is going to continue to misbehave.

Falling Existing Home Sales

It took until about midway through 2013 for the housing market to start working correctly again after the financial crisis. Existing home sales took more than four years to bounce back from their recession lows because of the lack of bank liquidity.

Once home sales returned to the historical norm, (between 450,000 and 500,000 per quarter), sales remained stable, oscillating around the long-term trend with remarkable tenacity.

 

falling of existing home sales since 2009

However, towards the end of 2018, things changed, and new home sales had begun to fall quite significantly for the first time in a long while.

Why this would happen in the context of a fully-liquid banking system and a volatile stock market is difficult to understand, although it could be the first signs that rate increases (or the threat of thereof) are beginning to bite.

 

home sales since 2016

 

Although the economy is doing well and wages are, at last, rising, these countervailing factors may not be enough to offset the increases in the rising costs of taking out a mortgage going into 2019.

Even small increases in the interest rate can have a profound impact on monthly mortgage repayments, especially for those right at the start of the repayment window.

Falling New Home Sales

New home sales, according to CNBC, were down by more than 8.9 percent for November. As a result, whether some of the predicted house price rises will materialize, remains to be seen.

The median house price for a home in the US came down by 3.1 percent compared to a year ago, to just $309,700, suggesting that even with lower prices, builders can’t get rid of their inventory of new homes.

 

new home sales since 2009

Unsold homes are now at their highest level since 2009. Builders are now sitting on top of more than seven months of inventory. There is an oversupply at the current prices, with not enough people able or willing to fill the demand.

So what could happen in 2019 if the current new home sales situation continues? The obvious answer is that builders will accept a lower price to shift their stock and try and make good on their costs.

But 2019 could also see a shift into real estate if investors perceive regular financial instruments as too risky.

 

new home sales since 2016Higher interest rates could also add to the problems of falling home sales as people start to avoid buying altogether, preferring to rent instead.

A and N Mortgage Chicago recommends that people move sooner rather than later and take out a mortgage now before rates rise further.

Some Cities Will Still See Big Rises

Zillow forecasts that house prices in US cities will continue to rise in 2019. No, we’re not going to see double-digit gains, but if you own a home in one of these select towns, it’s more likely than not that you’ll see an improvement in your equity situation.

A Chicago housing market report suggests that America’s third largest metropolitan area will see a price of 5.2 percent in house prices this year, taking the average value of a dwelling from $225,000 to more than $237,000. Some of the best mortgage lenders in Chicago are looking for ways to open up the housing market and make it more accessible to those on lower incomes to support the continued rise.

Other cities are expected to benefit from rising prices too, particularly Los Angeles, where the average home price is expected to grow from $674,000 in 2018 to more than $726,000 by the end of next year. Despite already eye-watering prices, the value of the average home in San Francisco will go from $1.33 million to $1.42 million, a 6.2 percent increase.

Low-End & High-End Property Values

The vast majority of America’s wealth is in the hands of a small percentage of people. Because of this, their actions can have an outsized effect on the housing market, especially the top-tier.

Although the wealthy are benefiting from the current policy environment of the Trump administration, they appear to have, as a group, become more interested in putting their wealth into stocks over the last couple of years.

Company profitability is high and with tax changes kicking in, it is expected to remain so. The demand for luxury real estate is not what it could be if all that wealth were sloshing about seeking alpha, but right now it’s tied up.

The low end of the market, however, is a different story, thanks to the buoying effect of wages. So long as the Federal Reserve doesn’t announce any more large increases in the funds rate in 2019, there’s a chance that gains in 2019 could offset some of the sluggishness in the overall market.

A New Housing Bubble? 

According to Robert Shiller, a famed macroeconomist, “…house price growth cannot outpace the growth of wages over the long term. Since 2000, the rise in house prices has outstripped both inflation and wage growth significantly, meaning… a risk that housing could eventually become just as unaffordable as it was in 2005-7.

House price growth is above the rate of increase in rent for many of the quarters since 2010, which could mean that we will either see a jump in rents in 2019 or a pullback in house prices.

 

rent growth since 2012Although inflation-adjusted home prices are not showing any visible signs of peaking in 2019, there is an ever-present risk that “things will change.”

According to a recent NAR study of consumers, sellers are more willing to sell and buyers less ready to buy, for fear of what 2019 may do to prices.

The central issue is interest rates. Should interest rates rise to their historical norm for a roaring economy in 2019 – between 3 and 5 percent -we’re likely to see the bottom fall out of the housing market and a round of foreclosures. If rates stay below 3 percent, then homeowners are likely safe – at least for now.

Conclusion Of Housing Market Report

2019 is shaping up to be an exciting year. On the one hand, the economy is continuing along, creating new wealth, and putting more money into regular people’s pockets to spend on housing.

But on the other, the Federal Reserve has raised interest rates several times so far this year and is likely to continue to do so throughout 2019. Although rate rises are not forecast to lead to the financial Armageddon we saw in 2007-9, the relationship between the money supply and the housing price index is robust – when rates rise, house prices fall.

So far innovative mortgage products and affordability have conspired to keep prices high, but how much longer will it last? Will you buy property next year?

 

A and N Mortgage Services Inc, a mortgage broker in Chicago, IL provides you with high-quality home loan programs, including FHA home loans, tailored to fit your unique situation with some of the most competitive rates in the nation. Whether you are a first-time homebuyer, relocating to a new job, or buying an investment property, our expert team will help you use your new mortgage as a smart financial tool.

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Buying a Home? Holiday Savings Tips from Your Chicago Mortgage Broker

If you’re saving up for that big down payment on your first home, you know how tough it Buying a Home - Holiday Savings Tips from Your Chicago Mortgage Brokercan be to trim your expenses and stick to your budget. While scrimping and saving are rough-going all year round, it’s particularly difficult during the holiday season. Between the obligatory gifts and the compulsory parties, it seems as if the season of giving was designed explicitly to rob you of all your hard-saved money.

The good news is that the holidays don’t have to ruin your plans to get first-time home buyer pre-approval. If you follow a few simple tips, you can keep those holiday expenses in check and stay on track to owning your first home.

Think Personal

Giving a personal gift instead of an expensive gift may be easier said than done, but it’s well worth it if you want to save money while still showing that you care. In the end, thinking more in terms of sentiment than cents may pay rich dividends in stronger relationships. After all, many people appreciate a gift that has heart behind it, even if it comes with a low price tag.

What to Do: Perhaps you can’t afford to buy your friends a lavish gift, but maybe you have some spare time to bake some homemade treats. Maybe your budget rules out buying your parents that new knife set they always wanted, but you can always give them a coupon for a home-cooked meal or a thorough housecleaning. Get creative, use your talents, and select something meaningful.

Budget Your Gift List

If you’re in the habit of saving, then you’re probably used to creating budgets. While yearly and monthly budgets are great for keeping the big picture in mind, there’s nothing that says you shouldn’t create budgets for smaller goings-on, like holiday gift giving.

What to Do: If you know exactly how much you’re going to spend on presents (many experts recommend spending no more than 1-1.5 percent of your total annual income on holiday gifts), then you can afford to be generous without breaking the bank. If you want to be really thorough, make a list of all the people you plan to give gifts to, and then decide how much you plan to spend on each person, making sure the total gift amount doesn’t exceed your limit.

Downsize the Holidaymaking

The holidays are synonymous with good cheer. ‘Tis the season of huge office parties, Downsize the Holidaymakingmassive gatherings, and expensive getaways. While we would all love to throw a big bash every year or take that week-long vacation to Aspen, it’s probably not a good idea if you’re walking a financial tightrope.

What to Do: Instead of the usual get-together that includes anyone you ever knew (and many you never laid eyes on), consider throwing a small party for close friends and family. Not only will you have fewer mouths to feed, but those closest to you will probably be more forgiving when you replace those expensive appetizers with homemade dips and breads. If you’re in the habit of visiting faraway relatives or taking a major trip, try staying close to home for one year. After all, you can always entertain big when you get the keys to your very own home.

While cutting down on gifts or parties may seem like a drop in the bucket when it comes to stashing money for a down payment on a home, wise savers know that every penny counts, and sound holiday saving strategies can put you one step closer to achieving your goal of owning a brand-new home. If you want more tips and tricks for becoming a homeowner, visit your trusty Chicago mortgage brokers at A and N Mortgage for expert advice.

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14 Mortgage Blunders Home Buyers Make

Mortgages are complicated financial products, especially for folks with little experience in 14 Mortgage Blunders Home Buyers Makeborrowing or dealing with banks. As a result, home buyers often make big mistakes that end up costing them big money over the life of their mortgage.

To avoid making a financial mistake that can plague you for decades, be aware of these common mortgage mistakes before you apply for a home loan:

  • Opting for an adjustable rate mortgage – While interest rates have inched up, they remain at historic lows. Getting an adjustable rate mortgage is a terrible idea because rates are only going to go up in the years ahead.
  • Not considering home ownership costs – Your mortgage isn’t the only cost associated with your home. You’ll also need to pay taxes and insurance and cover repairs. Stretching your finances to the limit to pay the mortgage on a new home can be a huge mistake.
  • Not monitoring your credit – A bad credit report can result in you getting bad deals on loans. Check your credit report and make sure that it is accurate.
  • Allowing banks to tell you what you can afford – You’re the best judge of what you can afford. Banks qualify you based on your gross income. They don’t take your monthly bills into consideration.
  • Not fixing your credit – Before taking out a mortgage, pay off debt and get Mortgage Application Documentationcurrent with your payments. It can make a huge difference to your credit rating.
  • Spoiling the closing – Don’t make any financial moves until after the closing is final. Taking on new debt or quitting your job before a closing can ruin the deal.
  • Not understanding the APR – Some lenders advertise low rates but tack on fees that drive up the true cost of the loan. Your best tool for understanding the true cost of a loan is the annual percentage rate, which will include points the origination fee and closing costs.
  • Putting little money down – The less money you put down, the more money you’ll end up paying in interest. Low-money-down mortgages are also often subject to private mortgage insurance.
  • Trying to carry two mortgages – Don’t buy a new home until you’ve sold your old one. Buyers who try to carry two mortgages at once often face incredible financial pressure. It often causes them to sell their old house at a loss.
  • Taking a liar loan – These loans aren’t as easy to find as they were before the subprime meltdown. Liar loans required little documentation, and borrowers who were a little exuberant about their income and finances often found themselves in trouble once they had to start making payments.
  • Longer amortization – Some loans run beyond the traditional 30-year limit. These loans carry higher interest rates and borrowers often end up with less equity in their homes.
  • Crazy mortgage products – If it sounds too good to be true, it probably is. Avoid products like balloon payments and interest-only loans, as well as name-your-payment loans. There’s always a catch with these products.
  • No down payment loans – These loans typically carry high-interest rates and costs.
  • Not planning for the future – Make sure you have a good financial plan before buying a house. Know what your career prospects are and where you plan to be in the future. Also take into consideration costs such as child-rearing, vehicle and education needs, and elder care.

By avoiding these classic mortgage blunders, new home buyers, and even experienced home buyers, can avoid getting into a financial quagmire when purchasing a home.

A and N Mortgage helps home buyers find the best mortgage deals for their individual financial situations. Dedicated to assisting its clients, A and N Mortgage offers around-the-clock access to Chicago mortgage brokers, and the best technological tools for finding great home and loan options.

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