Your Guide To Reverse Mortgage Loans

Are you interested in increasing your income after you retire? Do you have a home with a fully or mostly paid off mortgage? If so then you might want to consider a reverse mortgage loan. You probably have heard about reverse mortgage loans before but you could be unclear of the details.

Here we’ll provide all the information including reverse mortgage loan requirements and how to make sure you select the reverse mortgage loan services that are right for you.

What Is A Reverse Mortgage Loan?

reverse mortgage

Reverse Mortgage – A & N Mortgage

“A reverse mortgage is a special type of loan that allows older homeowners to withdraw some of the equity in their homes and convert it into cash.”

It’s designed to help retirees meet pressing financial obligations without having to sell their houses or make additional mortgage payments.

With a reverse mortgage, you use a property to guarantee the loan just like with a standard mortgage. Instead of making payments to a lender, a homeowner receives payments from the lender. A reverse mortgage is paid off when you no longer live in the property. The loan will be paid when you die or move into long term care.

Although a homeowner does not have to make monthly payments with a reverse mortgage, you are still financially responsible for the general upkeep of the house. Your property must be kept in good condition and you need to cover everything from insurance to property tax.

You also need to be aware that whereas with a traditional mortgage the amount decreases, a reverse mortgage loan increases due to interest costs and fees. The costs are added each month and the equity in your home will also decrease.

Types of Reverse Mortgage Loans

There are three main types of reverse mortgages available to homeowners:

  • Single-purpose Reverse Mortgage
  • Home Equity Conversion Mortgage (HECM)
  • Proprietary Reverse Mortgage

Home Equity Conversion Mortgage or HECM is the most common type of reverse mortgage loans. The mortgage is backed by the Federal Housing Administration and provides various flexible choices for payments. A borrower’s payment options include:

  • A single, lump-sum
  • Fixed monthly payments over a specified period of time
  • Fixed monthly advances while you reside in your home
  • A line of credit

Alternatively, a single-purpose reverse mortgage allows the homeowner to borrow against their home equity for a lender-approved expense. These expenses typically include property taxes or repairs to a home. The loan is usually provided in a lump sum to cover the specific financial requirement you have.

The next option is a proprietary reverse mortgage. This type of loan is more suitable for those who have homes that are of a higher value because they give the homeowner access to larger monthly advances.

Reverse Mortgage Loan Procedure Explained

With one of these reverse mortgages, a certain level of equity in your home is converted into payments for you. Payments can be a lump sum or multiple payments over a set period. The payment schedule can be completely flexible to your needs.

You’ll need to think about how big of a loan you qualify for a reverse mortgage. The amount is determined by your age, the current rate on the mortgage, the value of your home and the age of a partner. Keep in mind that your partner also has to be a certain age to qualify for a reverse mortgage. Typically, the older you are, the more you will be able to borrow.

Using a reverse mortgage calculator, you can get a rough estimate of how much a reverse mortgage could offer. Be aware the amount may differ between providers. You then need to choose whether to opt for the single lump sum or multiple payments. A potential deciding factor here is that the lump sum provides fixed interest whereas with multiple payments the interest is variable.

Reverse Mortgage Requirements

There are several reverse mortgage requirements you should be aware of before you apply for the loan yourself. These include:

  • Age
  • Use of the home
  • Ownership
  • Level of debt
  • Income
  • Understanding

Age is one of the most important factors. You need to be at least 62 years old to qualify for a reverse mortgage loan. The homeowner must also be looking for a loan that will be backed by a primary residence. Vacation homes are not qualified properties for a reverse mortgage loan.

Reverse Mortgage Benefits

Reverse Mortgage Benefits

The property should also be one hundred percent owned by you or only have a small mortgage. If you are still paying off your mortgage when you decide to apply for a reverse mortgage loan, then you will need to pay off the existing mortgage first. For this reason, you should have at least 50% equity in your property before you apply for a reverse mortgage loan.

There are also issues with debt to consider. The homeowner cannot have any federal debt delinquencies including tax debts or student loans. Furthermore, your credit score can be a determining factor. There is no set credit standard but you will have a better chance of securing a reverse mortgage loan if your credit score is healthy. You can guarantee a great credit score by keeping debts paid and balances in check.

You do need to provide that you have a suitable level of income. Proof of a good income will show that you are able to pay for everything including insurance and other expenses linked to your home.

Finally, you will need to meet with a HUD-approved reverse mortgage expert. The counselor will provide you with all the information you need before you decide which reverse mortgage loan is right for you.

Pros And Cons Of  A Reverse Mortgage

Pros Of A Reverse Mortgage

Big benefits of a reverse mortgage loan include:

  • Flexibility
  • Tax-free loan
  • Freedom to leave money for relatives

One of the biggest advantages of reverse mortgage loans is that you will be able to choose a payment option that suits you best. The money that you get from a reverse mortgage is also not considered income. As such, while you will have to pay insurance, you won’t have to worry about paying taxes on a lump sum reverse mortgage payment. You also don’t have to worry about the loan limiting your medical or social security payments. Furthermore, you can continue living in your home which ensures that you have a place to live and you can eliminate monthly mortgage payments.

You might be worried that you will be leaving nothing for your heirs. However, with a reverse mortgage loan, descendants do gain access to the remaining home equity once the mortgage has been paid off. Descendants are also not responsible if the amount exceeds the home value. With a reverse mortgage loan, descendants will not be required to pay the remainder of the loan once you pass on.

Cons Of A Reverse Mortgage

There are a few issues with reverse mortgage loans to be aware of including:

  • Confusion over conditions
  • High fees
  • Impact on income

One of the issues with reverse mortgages is that many people do find them to be confusing. The confusion can lead to unexpected consequences after taking out the reverse mortgage. Lack of information surrounding the loan is also why you are required to sit down with a qualified counselor.

You should also be prepared for fees that are significantly higher than a traditional mortgage. High fees may take you by surprise and the value that you are leaving people behind may decrease over time. On the other hand, you will never leave descendants with debt to be paid out of their own pocket with a reverse mortgage loan.

While social security benefits will not be affected, government based payments like Medicaid could be adjusted after qualifying for a reverse mortgage. As such, this type of loan could still impact your income, albeit in minor ways.

Changes to regulations have also made borrowing more difficult while increasing the payments that you will be expected to pay upfront. That said, there are still good deals on the market for those interested in reverse mortgage loans.

How Can You Shop For A Reverse Mortgage?

benefits of Reverse Mortgage

Applying for a Reverse Mortgage

If you are interested in shopping for reverse mortgage loan services, make sure that you consider a wide range of companies. Make sure that you use their calculator or gain a quote from different providers to find out exactly what each company can offer you.

Consider the type of interest rates you will be expected to pay as well as any fees on top of the initial loan.

It’s important to speak to a mortgage advisor who can recommend the best loan option for your individual needs.

Conclusion

Remember you need to consider reverse mortgage loan requirements and check that you are eligible. If you are, we suggest you explore the reverse mortgage services offered at A&N Mortgage.

We offer highly competitive rates on any reverse mortgage loan provided and can be incredibly nimble as a mortgage banker and broker. Do you think a reverse mortgage loan could be the right choice for you?

 

A and N Mortgage Services Inc, provides you with high-quality home loan programs 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.

Posted in FAQs | Comments Off on Your Guide To Reverse Mortgage Loans

Low Down Payment Mortgages That Allow You To Buy A Home Much Sooner

If you’re like most first-time home buyers, when it comes to finding a home loan, one obstacle tends to get in your way more than most. We’re talking about down payments. High down payment requirements can serve as the first and biggest roadblock for those who might have trouble saving up enough to get a home loan.

home mortgageFHA and VA loans offer some low-to-no down payment loans but aren’t accessible to all. Here, we’re going to look at the latest option: conventional mortgages with down payments as low as 3%. We’re going to look at what you need to know about them and who they might work best for.

What Is A Conventional Home Loan?

Simply put, a conventional home loan is one that doesn’t have any kind of guarantee or insurance provided by the federal government. They aren’t backed by agencies like the Federal Housing Authority or Veteran Affairs. As such, conventional loans follow the requirements set out by the two larger mortgage loan buyers in the US; Fannie Mae and Freddie Mac.

Conventional loans account for 60% of all home loans issued throughout the country. Often, they come with higher credit score requirements, meaning they can be tougher to apply for, but they can result in lower interest rates than other types of home loans.   

Down Payments For A Conventional Home Loan

There are no set guidelines for what is considered a standard down payment when it comes to conventional home loans. However, they usually require down payments that are in the 5 to 20% range.

There are now some conventional loan programs that offer down payments as low as 3 percent of the overall value. Exceptions that fall into the lower down payment option include the Conventional 97 Loan and the HomeOne programs that offer 97% of the property’s total value, meaning that buyers have to pay only a 3% down payment. 

What Are Conventional 97 Loans And HomeOne Loans?

Here are a few key features and facts you need to know about both types of loans: 

Conventional 97 loan (offered by  Fannie Mae): Up to 97% financing on loans with a $484,350 maximum loan limit, eligible for those with a credit score of 620 and above who have a debt-to-income ratio of 43% or lower. It’s eligible for single family homes, PUD, condos, townhomes, and CO-OP, but to owner-occupied buyers only and not real estate investors. Lastly, at least one of the borrowers taking the loan must not have owned a house in the 36 months prior to applying.

HomeOne loan (offered by Freddie Mac):  Up to 97% financing on 30 year fixed rate loans for a primary residence. There are no income or geographic limits on where you can apply for a HomeOne loan. There are no mortgage reserves required, but at least one of the borrowers must be a first-time homebuyer, and all borrowers must occupy the property. However, borrowers can still own other properties.

Pros And Cons Of A Low Down Payment Conventional Loan

Like all loans, conventional loans with 3% down payments have their own unique advantages and disadvantages to consider:

Pros of Low Downpayment Conventional Loan:

  • 3% down payment makes it much easier to get a loan; that’s even lower than the 3.5% down payment requirement for an FHA loan
  •  Attractive for first-time homeowners
  • High maximum loan amount makes it easy to get the kind of home you want

Cons of Low Downpayment Conventional Loan :

  • Higher credit score requirements (about 620) than an FHA loan
  • Maximum loan amount cap might be restrictive for some who want to buy a more expensive home (jumbo loan amount)
  • Cannot be used for homes that include multiple units
  • Cannot be used for property investments or to buy rental income homes
  • Low down payment homes require private mortgage insurance

Comparison With Federal Housing Authority Loans

Federal Housing Authority (or FHA) loans were designed to help more Americans buy houses rather than rent them. As such, they have previously allowed buyers more flexibility than prior conventional loan standards. These loans are borrowed from traditional lenders, but insured by the FHA. You can read more about them on our in-depth look at FHA loans.

However, now that Conventional 97 loans and HomeOne loans have set standards for conventional home loans with down payments as lose as 3%, how do FHA loans compare? Here, we’re going to look at the unique advantages of both kinds of loans.

Let’s start by looking at the FHA loan advantages, particularly in comparison to the Conventional 97  loan:

  • Typically lower interest rates
  • Minimum credit score requirement of 580
  • Higher loan insurance premiums as it requires an upfront fee and permanent mortgage insurance
  • Flexible qualification criteria
  • Accessible for those with debt-to-income ratio as high as 51%
  • FHA loans are assumable
  • Student loans in deferment not counted in your debt-to-income ratio

In comparison, here are some of the advantages of Conventional 97 loans:

  • Private mortgage insurance is required initially but cancels as soon as the overall loan-to-value ratio reaches 78%, unlike FHA loans where the mortgage insurance payment (MIP) is permanent and can never be canceled.  (FHA borrowers must pay a one-time up-front mortgage insurance payment plus an ongoing monthly payment to compensate for the increased risk of the low down payment.)
  • House must be owner occupant for at least one year.
  • Minimum down payments of 3% are available, which is .50% lower than what FHA loans  require (3.5%)
  • Higher maximum loan amounts are available. (Up to $484,350 versus $314,827 on single-family properties in high-cost areas.)

While FHA loans are slightly more accessible, due to their more flexible credit and debt-to-income ratio requirements, conventional home loans with lower down payments can end up being the more cost-effective loan choice for new homeowners thanks to their lower down payments and the ability to cancel the mortgage insurance. They typically do have slightly higher interest rates, but at least buyers looking for low-interest rates have more than one option at their disposal now.

FAQs About 97% LTV Home Purchase Loans

If you’re interested in a conventional home loan with 3% down, then you might want to know exactly what that means moving forward. Here are the answers to some of the most frequently asked questions regarding 97% LTV home purchase loans.

  • How much home can I buy with a conventional home loan?: The maximum loan amount of these loans is $484,350, which means that with your 3% down payment added on top, you could buy a home for up to $436,216.
  • What’s the minimum credit score requirement: The minimum credit score requirement is 620, but most lenders will usually ask for a score that’s at least at 680 or higher.
  • What’s the maximum debt-to-income ratio requirement?: While this can change depending on your credit score, the highest DTI requirement for 3% down conventional home loans is 43%. 
  • Are FHA loans cheaper?: While you do pay a higher interest rate on 3% down conventional loans, they can save you money in the long-run as the insurance on the loan will cancel when you reach 78% loan-to-value ratio, which doesn’t happen with FHA loans. Overall, conventional home loans tend to be cheaper.
  • Can I use gifts as a down payment?: Yes, you can have up to 100% of your down payment funded by gifts received from family members and friends.
  • What kind of properties can I use this loan for?: 3% down home loans are only available for owner-occupied borrowers buying for single family homes, PUD, condos, townhomes, and CO-OP properties.
  • Do I have to be a first time home buyer?: Yes, but this doesn’t mean that you can’t have ever owned a home before. Conventional 97 loan program specifications state that a first time home buyer is someone who hasn’t owned a home in three years.
  • If I’ve owned a home, can I apply alongside someone who hasn’t?: Yes, only one of the borrowers has to be a first-time home buyer.
  • Can self-employed individuals apply for one?: Yes, so long as you can provide 2-years’ worth of federal tax returns, you can use a Conventional 97 home loan.

If you want to know how any of the other low down payment loans from A and N Mortgage work, such as the FHA loans we offer, we also provide FAQs on those to help you better understand the options available to you. We will help you understand which low down payment option works best for your circumstances. 

Our 3% Down Services And Other Low Down Payment Loans

At A and N Mortgage, we offer a variety of different low down payment loans, making it much more affordable to begin owning your first home. Whether you’re looking for conventional home loans, FHA or VA loans, we offer the best Chicago rates on mortgages as low as 3% down. Here are a few of the options we offer:

  • Conventional loans with 3% Down
  • Federal Housing Authority (FHA) loans with 3.5% Down
  • Veteran Affairs (VA) loans with 0% Down

All of the loans currently offered from A and N Mortgage are available in Chicago, Illinois, and we are licensed in 9 other states. We are a top mortgage lender in Chicago, Lincoln Park, Logan Square, Wicker Park, and Edgewater. 

A and N Mortgage Services Inc, 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.

Posted in homebuying, Tips and Tricks | Leave a comment

My FHA 203K Personal Renovation Mortgage

MASTER PENTHOUSE

I can’t think of any mortgage with a worse reputation than the FHA 203K renovation home loan. But because of this mortgage, I lived rent-free for as long as I wanted, and then made a profit of over $600,000. So now I’m making it my mission to tell everyone how great these mortgages can be!

It is a common belief that renovation loans are an absolute nightmare. These loans are thought to have unfathomable amounts of paperwork, hoops to jump through, and other aggravations. Consequently, 203K

Renovation loans are the most underutilized and underserved mortgage there is.

However, if utilized properly, a renovation loan is one of the most powerful financial vehicles there is. It is not without its challenges, but logistically it is just a regular mortgage with a few more moving parts.

The best thing about the 203k is that with a down payment of only 3.5%, the entire home, and all the improvements can be financed at a low interest, 30 year fixed, government-insured mortgage.
What I saw as the ultimate way to reap the maximum benefit out of this loan was to purchase a multi-unit property. So long as a property is 4 units or less and one intends to live in one of the units for 12 months, this loan can be done, and it is considered an owner-occupied property.

My plan was to find a 4-unit property in an area that I saw as safe to live in with upside to become even nicer. I wanted a property in need of a full rehab, preferably a gut right down to the studs. My goal was to have a large unit where my family could live and three rental units that would cover the cost of the monthly mortgage, taxes, and other expenses. Finding, or more accurately, creating, such a place would give me significant instant equity in the home, no mortgage payment since the rents would cover this in full, and the ability and likelihood for considerable and consistent appreciation.

ATTIC (VALUE ADD!!!….NEW BEDROOM AND DEN)


One thing to note when looking for any property is the potential for “value add”. Because this home had an unfinished basement and attic, both with high ceilings and good structure, this easily allowed for incredible upgrades to the property (Take a look at the before and after pictures)

I searched through many properties and finally found a Fannie Mae owned foreclosed property that had just been listed. I got in to see it and it was exactly what I was looking for. I put down a purchase contract on the spot and my offer was accepted!

The finance took under 30 days, which confirms that if everything is done proactively and with a seasoned mortgage banker, this is a practical and reasonable mortgage product.

The home was purchased for $465,000 with $5,000 in seller’s closing cost credits. We were going to put another $230,000 in improvements. Since this is a one-time close the overall mortgage was for $695,000 (purchase price plus improvements). We put $20,000 for a down payment, and we were ready to roll.

We were gutting the house right down to the studs and when we were finished the three rental units paid for the entire mortgage, taxes, insurance and operating expenses of the building in full.
The work took 6 months, and, in the mortgage, we financed 6 months of mortgage payments so there was no cost of carry during the renovation period.

Three years went by with all the housing expenses covered in full. The area where we bought had become extremely desirable, our place was showing a massive Return on Investment (ROI) and we decided to sell the home.

Before we even put the property on the market, we received an offer of $1,200,000. We took it and closed the following month.

BASEMENT (VALUE ADD!!!…AN ENTIRE NEW UNIT)


In 3 years, on top of living rent free, we made a profit of over $600,000!

This undertaking is something I am very proud of. It shows that with a good plan and the right guidance anyone can do something like this and wisely accumulate wealth through their biggest asset.

It is also very gratifying to create something that wasn’t there before – a beautiful home that makes the community a little nicer.

These renovation loans have become a great passion for me and I have thoroughly enjoyed learning every nuance of them. There is another great government backed renovation loan called a Fannie Mae Homestyle mortgage that my clients have been using to amazing success that is a wonderful option as well. This product allows for the financing of renovations for investment properties, luxury items, and many other incredibly useful things. On a side note, these renovation loans are not just for purchases either. If you currently own a home and are looking to do improvements both relatively minor, or totally massive, this is an avenue well worth checking out.

MASTER BATHROOM


 

 

 

 

 

 

 

 

If anyone has questions, thoughts, comments or would like to speak in person I am always available and love to talk about all types of mortgages for purchases or refinances, especially these renovation loans.

Check out the before and after listings on Redfin:

Purchased September 2014:
https://www.redfin.com/IL/Chicago/1355-W-Walton-St-60642/home/14108710/mred-08636320

Sold September 2017:
https://www.redfin.com/IL/Chicago/1355-W-Walton-St-60642/home/14108710

Scott Steinlauf
773-350-6989
scotts@anmtg.com
NMLS #: 213442

Posted in How To, Scott's Blog | Leave a comment

Why You Should Consider Refinancing Your Mortgage This Summer

Summer refinance tips

If you haven’t thought about it yet (or done so), this summer may be the perfect time to refinance your mortgage. Mortgage interest rates are still very low and have just recently dropped again. If you’re a homeowner with good credit and sufficient equity in your home, odds are the lower refinance rates are within your reach.

By refinancing your mortgage, you can cut your mortgage payment and possibly shorten the term of the loan. Paying your loan off in a shorter time period is not only a surefire way to save money over the life of your loan, but it is also a way to obtain a more attractive rate on your mortgage.

If you don’t think you can handle higher monthly payments with a shorter-term loan, go with the longer term and make additional principal payments as circumstances allow.

Though you may not get the best rate currently available, you’ll avoid getting stuck with a high contractual monthly payment that could be a stretch for your monthly finances. You can still save money in the long term by paying less in interest on the newly refinanced mortgage.

Although the potential savings with refinancing can be significant, there are a number of factors to take into consideration.  In this article, we’ll provide insights and tips to help you better understand if this is an opportune time or not.

Rates Are Still Low

One of the first reasons you should consider refinancing now is because mortgage rates are at an 18 month low. The refinance boom, however, may be short-lived.

During the first part of 2019,  it was expected that the Federal Reserve would continue with its policy of raising interest rates.  U.S. economic growth was strong and the gross domestic product (GDP) rose by over 3%. After the first quarter, however, things started to change primarily because of uncertainty due to unresolved trade issues with China, Mexico, and other international partners.  The markets reacted accordingly and mortgage rates dropped.

Mortgage rates can rise and fall all the time for a number of different reasons.  When you’re thinking about refinancing your mortgage, doing it when rates are low lets you grab the opportunity while it’s there. If you wait too long, mortgage rates could rise again, and you will have to wait until another dip if you want to make the most of your savings.

Mortgage Refinance Tips

If you think that you might be ready to refinance your mortgage, there are many things to take into account to ensure you get the best deal. Taking a look at your current circumstances and using a mortgage refinancing calculator can help you to work out what approach you should take when you do decide to refinance. Below are a few of our best tips to help you along the way.

Make Sure It’s The Right Time To Refinance

External factors are important, such as low mortgage rates, but it also needs to be the right time for you to refinance.  A general rule of thumb is that you should have at least 20% equity in your home. If your equity is less than 20 percent, and you have a good credit rating, you may be able to refinance anyway.

Refinancing makes sense for a lot of people, but it’s not the right choice for everyone. If you’re going to refinance your mortgage, you should think about the long-term and not just the immediate financial effect. You need to plan to stay in your home long enough that you will be able to get back the three to five percent of your home value that you will spend on closing costs.

Think About Your Refinance Goals

It’s important to think about why you want to refinance your mortgage and what your goals are for doing so. Maybe you want to pay off your mortgage as quickly as possible. Or maybe you want to pay less interest overall. You decide what’s right for you.

If you simply want to pay off the loan as quickly as possible, you will want to look for the shortest term that offers monthly payments that you can afford. If your aim is to pay less interest, you will want a low-interest rate over a shorter term, while if you want to lower your monthly payments, you need a low-interest rate over a longer term.

Refinancing to a mortgage with a shorter term will usually be the best option unless your priority is lowering your monthly payments. A shorter loan term saves you money long-term, rather than offering short-term savings. You save money with a lower interest rate, plus save money over the life of the loan by paying less interest.

You could save tens of thousands of dollars with a shorter loan term and lower interest rate, even if your monthly payments increase. However, it’s important to keep in mind that these savings can alter if your interest rate changes.

Consider A Cash-Out Refinance

When housing prices are rising, you can take advantage of it. If you’re thinking about refinancing your mortgage, a cash-out refinance might be a good option for you. It helps you to release the equity in your home so you can benefit from the cash that you have put into it.

With a cash-out refinance mortgage, you might not be saving on your payments, but you do benefit from unlocking your equity instead. It’s also good to note that some lenders set a limit on how much cash you’re allowed to take out, so you should be aware of this when refinancing your mortgage.

Balance The Costs Of Refinancing

Refinancing your mortgage can save you money through your monthly payments or across the term of the loan. However, it will also cost you to refinance, with fees to pay that are important to take into account.

Before refinancing, you need to think about when you will recover the costs of refinancing. It should be easy to work this out if you know how much you’re going to save each month. With this information in hand, you can then decide whether it’s the right time to refinance. If you’re planning to sell soon, for example, it might not make sense to refinance your home.

Use A Mortgage Refinancing Calculator

Having a clear budget is essential when refinancing your home. General examples can be helpful, but they don’t apply to your specific situation. By using a refinance calculator, you can plug in the numbers that are relevant to you and get helpful numbers. Find out how much you could save with a quick calculation.

Get A Free Analysis

If you’re not sure whether refinancing is right for you or how to get the best deal, a refinance analysis can help. When you use an experienced mortgage banker or broker like A and N Mortgage, you can get free advice on whether it’s the right move and what your next steps should be.

Save By Paying Points

The option to pay points before you close the refinance deal can help lower the interest rate on your mortgage even further. This involves paying money upfront so that you can permanently buy down the interest you pay. If the point system makes financial sense for your specific situation, it could be worth the upfront cost to do it this way.

Pay Close Attention To Your Credit Score

Another thing you want to consider when you refinance is your credit score. Many lenders have strict rules. A credit score of 760 or higher is usually required to get the best rates.

However, if your credit score isn’t ideal, you can improve it fairly quickly. Start by checking for and addressing any errors on your credit report. You should also make sure to pay your bills on time and avoid getting too close to your credit limit. Also, you can work on paying down your credit card debt.

Key Takeaways

 

  • Remember that interest rates are at a new low and may not stay here for long so don’t miss out on this opportunity

 

  • Consider different factors affecting refinancing costs, including terms, rates, and points, to see if refinancing will help you save money

 

  • Check that you have adequate home equity of at least 20% before refinancing your mortgage as it will make it easier to qualify for a loan

 

  • Have a good credit score before applying for refinancing, and make sure your debt-to-income ratio is 36% or less

 

  • Calculate your break-even point and check how refinancing will affect your taxes

 

  • Talk to a mortgage professional who can easily help you with each of these steps

Refinancing your mortgage this summer could be a good move for you, but you should do some research before making a decision. The easiest way to do this is to talk to a knowledgeable representative from a mortgage company who can help you determine if this the right financial move for you.

 

A and N Mortgage Services Inc, a mortgage banker 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.

Posted in 'A & N Mortgage', 'financial tips', Chicago, conventional mortgage, refinance | Leave a comment

What To Expect on Closing Day

Closing on a property can often seem like a process that takes forever. There are many steps to purchasing a home from making an offer and negotiating on the property you want to buy, finding a mortgage professional to help you along the way, and getting proper financing in place.  All of your efforts become a reality when you’re finally the legal owner of your new home.

So when you’re approaching the closing on a house, you want to be sure that you have all your ducks in a row. It’s important to be aware of what you need to have lined up so that the mortgage closing runs smoothly. Today we’re going to help you do just that.

 

 

How To Prepare For Closing Day

First and foremost, you want to ensure that all of the paperwork is complete and processed properly beforehand. Your loan officer can help you with all kinds of paperwork, from gathering the proper documents to reporting gift funds that you are using to purchase a home. Having everything finished at least three to seven days before the day arrives will help prevent you from being held up or running into any roadblocks at closing.

Below is a brief overview of your closing day checklist.

PREPARE FOR THE CLOSING DAY

Be Ready With Your Down Payment

Having your down payment ready is one of the most important financial aspects of closing on the purchase of a home.  It helps to make sure the money isn’t tied up somewhere else. Your down payment will be comprised of an earnest money deposit (good faith deposit) that is used to open escrow and must be delivered within 3 days of the signed contract and the balance of your down payment that is due right before the closing.

Verify Your Escrow Account Details

If you have an escrow account to hold your money until it’s time to close, it’s important to verify that everything is in place. You’ll want to go back and double check that all of the money that is required is in the account.

Cash For Closing

When you complete the purchase, you may need cash to close the deal. For this transaction, it is more likely that you will use a cashier’s check, certified check, or wire transfer to cover anything you need to pay for your purchase price and closing costs.

Proof Of Insurance/Insurance Binder

You’ll also need to have your homeowners’ insurance in place before you can take ownership of the property. Make sure that you have proof of your insurance so that you can show it on closing day as part of the other documents that you have.

Good Faith Estimate Document

A Good Faith Estimate of Closing Costs is required by law from your lender or mortgage broker and must be provided within three days of you applying for a mortgage. Have this with you on closing day so that you know the closing costs that are involved.

Copy Of Sales Agreement Contract

A copy of your sales agreement contract is also important to have when closing day arrives. It’s always important to have your own copy of a contract so that you know what’s in it, and you can double check to make sure nothing has been changed in the seller’s copy.

Inspection Reports

Carrying out a home inspection before buying a home is essential. After you have completed the home inspection, make sure that you have the report with you when closing day arrives. It’s also useful to have it with you when you do a final walkthrough, especially if the current owner has agreed to fix anything.

Any Other Documents

Be sure to have any documents that you supplied your mortgage company to get approval for your loan. With copies of these documents, you will be able to present any necessary evidence while you’re signing paperwork.

Keep in mind, the actual cash and documentation you need to bring along to closing can vary. For instance, your down payment may already be held in an escrow account, so you would just need to sign that over to the seller during the closing. Your mortgage broker will inform you what you need to bring and what they will bring with them to the closing.

As well as bringing necessary paperwork and cash to close for closing day, make sure that you have a photo ID with you.

 

Schedule Your Closing Day

In order for closing day to take place, you need to make sure that you have a date set. Your mortgage banker or broker will be able to help you to schedule the closing so that everything will run smoothly.

When you choose a date, it’s highly recommended to avoid the last day of the month. This is because if there are any delays in the closing and it runs into the next calendar month, it could increase the closing costs such as prepaid interest and prepaid property taxes. And, when you do set a date, you should plan to be available for the day or for at least half the day. Try to take the time off work so that you have plenty of time to get all of the paperwork and other things in order when you arrive for closing.

Arrange A Final Walkthrough

After you have scheduled your closing day, the next thing you’ll want to do is to arrange a final walkthrough of the property in order to check its condition. You should schedule this at least one day before closing so that you have time to make any observations and take action if you notice anything out of the ordinary.

During your walkthrough, you should check for alterations, changes or damage to the property that might have occurred since the accepted your sales offer and you signed the purchase agreement. If there are any discrepancies, you will want to resolve them before closing or by requesting an addendum to the sales contract. The addendum should also contain details about what recourse you have should the seller fail to live up to their end of the agreement.

Who Is Present At the Closing?

There may be several people at the closing, including the buyer and the seller. Other people who might be there include:

  • Seller’s agent
  • Title company agent
  • Closing agent
  • Real estate lawyers for buyer and seller
  • Buyer’s real estate agent

What Happens During the Closing?

The closing day involves a lot of paperwork, so be prepared to go through it all. But what actually happens during the closing?

  1. You will pay any costs that you have yet to pay
  2. The seller will sign documents that transfer property ownership to you
  3. You will sign a settlement statement, a mortgage note as a promise to repay the loan, and a mortgage or deed of trust to secure the mortgage note
  4. The title company will register the new deed in your name

All of these documents are important to sign. It might get a bit boring, but you need to have all of the paperwork in order if you want everything to be official. You might think that you can simply sign everything in a few minutes, but you can’t rush everything.

Potential Problems On Closing Day

There are some potential problems that you should watch out for that could lead to the closing falling through. Though these problems don’t occur often, it’s important to be aware of them. For example, the seller might have been asked to make repairs but failed to do so. They could also change their mind about selling or fail to have the cash required to close.

There’s not much you can do about problems on the seller’s side, but you can prevent problems from your side. These issues may include a change in your financial situation, failing to conduct a final walkthrough, and not having the right amount of cash required to close. If you are well prepared for the closing day these issues are easily avoidable.

The Importance Of Working With An Experienced And Helpful Mortgage Company

If you want a closing day on your property to be successful, be sure to find an experienced mortgage company to work with you every step of the way.  They can assist you with all your paperwork to help ensure that you are prepared for the big day.

Helpful Mortgage Company

If you have any questions about the closing process or want to apply for a home loan, please feel free to contact A and N Mortgage at (773) 305-LOAN (773-305-5626) to speak with one of our mortgage specialists today.  We’re an established, respected Chicago mortgage company and have been listed as one of the top 100 mortgage companies two years in a row.  We also have an A+ credit rating with the BBB for ten years running.

Posted in FAQs, Home Page Blog | Leave a comment

How The Housing Market In Chicago Is Starting To Favor Buyers In 2019

horizon architecture Chicago The housing market in Chicago is growing increasingly intriguing in 2019. There are a number of real estate trends that are shaping the market today.

The prices of houses in Chicago have gone up only slightly in the past year and recent expert predictions indicate that there could be a small increase in the next year.  

All of this comes together to create a housing market that might just favor buyers in 2019 and 2020. In this article, we’ll provide an overview of the housing market in Chicago, the factors that are causing a shift in favor of buyers, and why this may be a good time to buy.

Chicago Sees A Rise In Real Estate Construction

The metro area in Chicago is one of the biggest across the country. There’s a very dense population here and plenty of housing up for sale. In the past year alone, Chicago has seen some of the largest growth in new home construction compared to other major cities.

Altogether there’s been around a 60% increase in new real estate development between February 2018 and February 2019. With a vast amount of new properties under development, there is now a strong inventory of existing homes for sale.

The increase in construction and the availability of houses for sale means that Chicago has a ready supply of real estate inventory. With inventory to supply, it naturally puts the ball more into the buyer’s court. There are many options available for potential buyers which provides you with more choices than ever before.

Lack Of Population Growth in Chicago

One of the reasons that a lot of housing markets tend to drift in favor of sellers is because of the increase in population. As the population rises, the demand for homes goes up. Therefore, you have a simple case of supply and demand. If the demand is high the prices can be set higher in favor of the seller.

The population in Chicago has remained relatively flat with the most recent survey stating that in April 2010 to April 2017 we saw a growth of just 0.8%. To put this figure into context, the country’s population went up by 5.5% in the same time. But, of course, not all areas of the country are growing and the population can wax and wane. Big cities such as New York and Los Angeles have also experienced a drop in population too.   

When you combine the lack of population growth with the new construction and the existing supply of housing, you have the perfect recipe for a buyer’s market. There’s plenty of inventory to supply and it’s increasing.

Favorable Mortgage Rates

Chicago mortgage rates are considered to be some of the most competitive in the United States. Not only that, but national mortgage rates are at the lowest they’ve been in years. And to add to this, the Federal Reserve announced in January that it has no plans to raise the interest rates this year.

The reasoning behind this decision is mainly down to concerns over the potential slowing of the economy so this actually works in your favor. If the interest rates are lower, you can finance your home with at a desirable rate. And if you choose a fixed rate mortgage, you can keep that low rate for the life of the loan.

As a leading Chicago mortgage company, we’ve seen a rise in mortgage applications throughout 2019. It’s no coincidence that this comes when the average rate for a 30-year fixed mortgage is hovering around 4.25%.

Naturally, favorable mortgage rates help create a buyer-friendly housing market. You can now get a more affordable mortgage and buy the home of your dreams.

Why Do Some Homes Take A Long Time To Sell?

When there are a growing population and a high demand for property, homes tend to sell very quickly. But, what do you think happens when the population isn’t rising? You end up with a lot of homes that are on the market for months before they’re sold. When this happens sellers become more desperate the longer a house takes to sell. As a result, the power is in your hands as a buyer.

On the contrary, when a house sells quickly, it’s a seller’s market. As the buyer, you’re desperate to find a home but all the good ones are selling before you get a chance to make a bid. In this case, the prices go up as sellers see the demand so you’re more likely to bid higher than usual to keep away the competition.

Now May Be The Perfect Time To Buy A Home In Chicago

Are you actively looking to buy a home in Chicago? Now may be the perfect time to do so. The local housing market is in favor of the buyer because:

  • Chicago mortgage rates are favorable
  • There’s plenty of real estate options available
  • The population is stagnant, meaning the house prices aren’t rising
  • The market is slow, so you have the upper hand

If you are planning on buying a house, then you’ll need to spend a lot of time searching for a mortgage lender. You’ll want to find Chicago mortgage company that offers exceptionally competitive rates. So as a result, you’ll have a more affordable mortgage.

With the mortgage rates in Chicago being so low, it’s a great time to invest. There is no shortage of housing options and there’s not as much competition compared to other cities. Plus, with a  solid business environment and new housing developments, more people will be enticed to move here.

By buying when the market is slow and house prices are favorable, you have the opportunity to earn a significant return on your investment when you sell your home in the future. This makes it an even better reason to buy.

Conclusion

Overall we want you to understand that the housing market in Chicago is starting to favor buyers and now is a great time to purchase a home. So if you are thinking about buying a house in Chicago then consider talking with one of our mortgage specialists today.  This way you can buy the home of your dreams before the market starts getting more competitive and shifts back in favor of sellers.

A and N Mortgage Services Inc, a mortgage banker 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.

Posted in How To | Comments Off on How The Housing Market In Chicago Is Starting To Favor Buyers In 2019

Why You Don’t Need 20% Down To Buy A Home

I am frequently surprised by how much incorrect information about home financing is out there amongst the public. I often speak to clients of mine who are intelligent and educated yet have absolutely no idea what their mortgage options are, or worse yet, are operating under a false narrative that 20% down is the one and only way to buy a home.

This translates into someone who could be a homeowner but is instead renting in perpetuity.
Which means they are losing out on having both the pleasure of owning their own home and accumulating and appreciating an asset for wealth building.

The largest misconception with the purchasing of a home is that a 20% down payment of the purchase price is required without exception.

THIS STATEMENT IS TOTALLY FALSE.

It has been for decades. And it is the main reason there are many people out there renting when they are fully qualified and would benefit greatly from homeownership.

There are several good mortgage products which can work well for buyers depending on their situation, some with 3%  down of the purchase price, some with no money down even.

Mortgage Programs That Offer Low Down Payments

Here is a breakdown of some of the low down payment mortgage programs out there that we offer at A and N Mortgage:

3% Down Payment Conventional Mortgage: This is fundamentally no different than a 20% down mortgage, it is secured through the same conventional agencies (Fannie Mae and Freddie Mac).  

Federal Housing Authority (FHA) Loan: These loans require 3.5% down and are more relaxed on income and credit. One great thing about these is that multi-units (2-4 units) are allowed with the same rates and the same 3.5% small down payment. On a personal note, I purchased a 4-unit building with an FHA loan a few years back because the Chicago mortgage rates on the FHA were better than a conventional mortgage.

USDA Loan: This loan offers 100% financing for those living outside of urban areas. No down payment is required. Over 100 million people are eligible for this program.

Veteran (VA) Home Loan: For those that have military benefits, the VA loan is a fantastic option.  100% financing is offered, so no down payment is required, and no backend private mortgage insurance is required.

Various Grant Programs: As a mortgage banker and broker, A and N offer several proprietary and public sponsored grant programs where as little as $1,000 is needed towards a down payment.

Mortgage Programs That Offer Low Down Payments

Get Pre-Approved

The Bottom Line

The bottom line is that there is an incredible amount of mortgage options available that people don’t know about because they have been so ingrained with the 20% down misnomer.

The soundest way to accumulate wealth is through real estate and those that aren’t taking advantage of that because they haven’t been educated properly are doing themselves a huge disservice.

There is certainly nothing wrong with putting 20% down or more on a mortgage if your financial situation allows it. But no matter what program you choose you should make sure to be fiscally responsible with the housing payments you’re taking on.

With that said, here’s the reality: If someone can qualify for a mortgage responsibly, it will beat renting by leaps and bounds every time. If you have any questions, contact me today or speak with one of our A and N Mortgage specialists to discuss your options.

 

A and N Mortgage Services Inc, a mortgage banker 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.

Posted in Scott's Blog, Tips and Tricks | Comments Off on Why You Don’t Need 20% Down To Buy A Home

Everything You Need To Know About Closing Cost Credits

closing creditsSo you’re in the process of buying a new home and the inspection has just been completed. You’re looking forward to getting settled in as soon as possible, but you notice there are some areas of the home that aren’t quite up to par.

Maybe you notice that there are cracks forming on the walls or there is noticeable mildew growing on the bathroom tiles. No matter what it is, you know that you’re going to have to spend some money before you move in for good.

If the property you are buying has been put on the market in an “As-Is” manner, you might struggle to get any credits for closing costs. This is because the home has been advertised as it is and the seller won’t be making any changes before it is sold.

If the home is not listed “As-Is” then you may be able to ask for a closing cost credit. If the seller accepts the credit, you will be able to repair the damages without having to endure extra costs after the closing period.

What Is A Closing Cost Credit?

Closing cost credits are given to a buyer from a seller to credit home repairs. In other words, the seller of the property will give you, the buyer, credit towards potential repairs at closing. This means that you will ultimately pay less at closing time.

Sometimes the seller will offer these credits as an incentive for buyers to make a purchase. If the buyer is on the fence about making the purchase when it comes close to the end, the credits make the house more appealing.

Closing cost credits are also known as a seller concession. The credits are negotiable and need to be agreed upon in writing by both the buyer and the seller. This is something that should be done before the amount is credited to the buyer’s final amount at closing.

How Do Closing Cost Credits Work?

It is very important to understand how these credits work because they will affect the entire buying process of your home. Closing cost credits are typically initiated by the buyer in order to gain credit for repairs and damages.

Once the buyer asks for the credits, they work with the seller to negotiate an amount that works for both of them. The seller has the choice of accepting, rejecting or initiating a counter-offer to the buyer’s request.

If the seller accepts the offer or the two agree on an amount, the seller agrees to pay the amount of the credits so that the buyer doesn’t have to. This amount is usually taken out of the final sale of the property with no upfront costs to the seller.

Benefits Of Closing Cost Credits For Buyers

Closing credits are designed to give buyers a little bit of breathing room right after purchasing a house. For that reason and more, there are a number of benefits for buyers.

The truth is, closing on a house is expensive. There are a lot of different things you will need to take care of after you actually become a homeowner. So these credits give you a little bit of leeway in that sense. They help you save money, time, and energy.

Benefits Of Closing Cost Credits For Sellers

Believe it or not, closing credits are also beneficial to sellers too. Although it might seem as though they are paying out money to the buyer, what they’re actually doing is giving the buyer the opportunity to make a purchase.

If the seller has a house that needs a lot of upgrades then the advantages are even more apparent. In order to get the home up to date and pass inspection, the buyer will want an incentive. Offering them credits at closing is a great way to achieve this.

Closing Cost Credits Are A Win-Win For Both Parties

If the bathroom tiles are worn, tattered or outdated, they probably need to be updated or replaced. Since it generally costs thousands of dollars for a new bathroom having some money taken off the final sale of the house is a huge win.

When the offer for closing credits is there, you are more inclined to make the purchase as you will have the funds to do everything you need to do to the new house. This makes it a huge win for the seller to have a quick sale.

It is important to note that some mortgage companies will need the buyer to use all of the money to pay towards closing costs such as taxes. Closing cost credits might not always cover the closing costs, but they will help considerably.

So when you look at the bigger picture here, the credits are actually a win-win for both the buyer and the seller.

Do Closing Cost Credits Come Out Of The Seller’s Pocket?

We mentioned this point briefly, but another thing to note is that the seller is not really paying for the closing costs credits out of pocket. The actual money being paid to the seller is seen once the closing cost credit has all been accounted for.

In other words, the credit comes out of the final sale. Think of a closing cost credit as giving the buyer a discount on the house in order to get them to purchase it. When you look at it this way, the seller isn’t losing any out of pocket money.

Tax Implications of Closing Cost Credits

Now you might be wondering what the tax implications are when it comes to these closing cost credits. During a real estate transaction, the closing costs represent the fees that make the actual sale possible.

They usually end up being thousands of dollars from the buyer to settle with lender companies and escrow. Though each transaction is completely unique, buyers can actually benefit when paying taxes for the credits.  To deduct seller-paid closing costs, the buyer must use the itemization method for taxes.

There are a few definitions to take note of when it comes to tax implications so below is a brief summary of each.  You should always consult with a tax advisor for specific information regarding your individual situation.

Seller Credits

This is the dollar amount of closing costs that the seller agreed to pay. With seller credit at closing for repairs, buyers can make an offer with the caveat of a seller credit and the seller might counter back with a reduced amount or another type of credit.

Borrower Points

Sellers might agree to pay for borrower points. Borrower points are percentage points of the mortgage amount. The more points that are paid, the lower the rate. Even though the seller pays them, you as the buyer can still deduct points on a tax return as they count as mortgage interest.

Seller Deductions

Such a seller payment is regarded as a reduction in the net gain of the home. The lower the net gain, the lower the gain will be for taxes that the seller will have to pay.

 

Conclusion

For many people, the process of obtaining a residential mortgage is intimidating and complex. Whether you need help with understanding closing cost credits or have other questions regarding your mortgage, A and N Mortgage is here to help. We are an experienced and well established Chicago mortgage company that offers a team of professionals who will work with you every step of the way.  Contact us today to speak with a mortgage specialist and discuss your options.

 

A and N Mortgage Services Inc, a mortgage banker 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.

 

Posted in Tips and Tricks | Comments Off on Everything You Need To Know About Closing Cost Credits

What Are Prepaid Items On My Loan Estimate?

Pre-Paid Items On Loan Estimate

 

Are you in the process of preparing to buy a home? Or thinking about refinancing your current mortgage agreement? If so, there are many factors that should be considered before committing to a new homeowner loan.

In this article, we are going to discuss the prepaid items on your loan estimate and how they differ from closing costs. With help from an experienced mortgage professional, be it a mortgage banker in Chicago or elsewhere, you will have everything you need to know about the prepaid items in your mortgage agreement and how they will impact the overall repayment terms.

Understanding Your Loan Estimate

The first thing that any loan applicant needs to understand is the Loan Estimate itself. The Loan Estimate is a three-page form that provides valuable information related to the estimated costs associated with your loan.

A loan estimate covers the interest rate, monthly payment, total closing costs for the loan, costs of taxes, and insurance. In addition to these estimates, the document includes details on how the figures could change in the future – due largely to wider economic changes.

The loan estimate does not confirm acceptance of the mortgage but instead provides you with an estimated idea of the expected costs should you choose to move forward in the process of buying the home.

What Are Prepaid Items On Your Mortgage?

Prepaid items, otherwise known as prepaid, are a collection of charges that the lender requires you to pay a partial payment on your mortgage agreement. Though the costs aren’t directly linked to the process of borrowing they are associated with the concept of home ownership. Prepaid items are due ahead of getting your loan and are used to fund what is known as an ‘escrow’ account.

Essentially, the lender takes the payment from you in advance and then pays the associated fees on your behalf. These costs include insurance premiums and taxes. They are added to the monthly repayments, making it easier for you to manage every aspect of the mortgage in one fell swoop. These fees additionally provide financial security to reduce the risks for lender and borrower alike.

From a different perspective, prepaid items in mortgage agreements are often seen as a crucial part of the overall process. And, they are just as beneficial for you as it they are for the lender. Given that they will impact the overall monthly repayment premiums, it’s important that they are factored into your budgeting and financial forecasts.

Are Prepaid Items The Same As Closing Costs?

Many prospective new homeowners wrongly assume that prepaid items are the same as closing costs. Although the two are similar, they are not the same thing.

Closing costs are the costs associated with arranging and agreeing on a loan. These are generally one-time fees that are due for services required during the process of actually buying a home and getting a mortgage. These fees include payments to title companies, attorney fees, governmental title recording fees, and lender loan setup fees.

Each item should be listed clearly on your document and can be quite costly. Then again, it is to be expected that when you make a purchase as big as buying a property, it will include fees of this nature as well. Teaming up with a reputable mortgage representative will help you gain the best outcome in all areas of the agreement while also providing the level of transparency you deserve.

It is worth noting that property inspections do not usually fall under the category of closing costs. This may seem a little strange given the process involved, but they are usually completed before confirming the agreement while you can use the findings as a bartering tool too. The exception is when the inspection fee isn’t paid in a prompt manner. In this case, it may be incorporated into the closing costs.

Different Types Of Prepaid Items Explained

When you are presented with your Loan Estimate, you will notice that several items are included on the list of prepaid items. Understanding them on an individual basis will allow you to gain far greater insight into them as a whole, which should help you through the challenge of analyzing different mortgage offers. Especially as many of the fees will fluctuate from one lender to the next.

Homeowner’s Insurance

Every homeowner is obligated to take out homeowner’s insurance. The monthly premium offers financial protection against damages caused by natural disasters, for example, and covers the cost of repairs. You may be required to pay the first few months in advance via the escrow account before modifying this payment to be on a rolling basis through the use of the monthly payments. While factoring in this extra cost can be frustrating, it’s better to be safe than sorry.

Property Taxes

Property taxes are an ongoing charge associated with owning property and are the most difficult to comprehend. The tax proration of your property will be stated in the purchase contract but could be changed by the attorney review so it is an issue you need to look out for on all letters sent by attorneys.

The tax value of the property is based on the previous year’s tax bill, which is why this charge can change from one year to the next due to a host of different factors. The date of closing, the value of your home and the amount of the loan will impact the charges applied. As for the prepaid cost, you will be required to pay an amount equal to the first few months worth of taxes into the escrow account before the lender takes care of the repayments themselves.

On a related note, you will be due to pay your first month’s private mortgage insurance (PMI) premium in advance if your down payment is under 20% of the property value.

Per Diem (Daily Interest)

Per Diem, otherwise known as daily interest, relates to the amount of money that needs to be paid in advance from the closure day to the end of the month. However, it’s worth noting that the first payment isn’t due until the following month.

For example, if you closed June 15th, you would pay daily interest through the end of June and your first payment would be due August 1st. The August payment will be the money that is due for the month of July.

Why It’s Important To Work With An Experienced Mortgage Professional?

There are many different ways to handle your property purchase and loan agreement. Given the importance of purchasing a house and the amount of money involved in relation to prepaid items, it’s important that you take the right pathway.

With so many documents and prepaid costs to consider, it’s very easy to get swallowed up by the sheer volume of information. This can lead to overlooking important factors such as changes to interest rates or other costs. If you fail to recognize the full picture, the chances of taking on an agreement that isn’t right for you are greatly increased. Meanwhile, it’s almost impossible to weigh up different loan offers when you don’t understand the finer details of the Loan Estimate.

Using a knowledgeable mortgage banker or broker allows you to bypass those problems to receive clear and transparent information and advice. This can save you time and money in addition to gaining the best outcome. If nothing else, taking this approach will provide peace of mind as you will avoid any potential setbacks and problems.

Hire A Market Leader With A & N Mortgage

If you want to work with an experienced and trusted mortgage banker, then consider A and N Mortgage. With A & N, you are guaranteed a level of service that is guaranteed to help you find the best mortgage offers, understand the full terms of the loan estimate, and secure a fast and transparent process so that you can get into your brand new home ASAP.

At A & N our leadership has been recognized nationally with our EVP Kiki Calumet being named as a market leader by Forbes magazine.

Conclusion

After reading this article you should be able to understand the basics of pre-paid items on your loan estimate. If you need more help understanding these items, contact one of our mortgage professionals today.

 

A and N Mortgage Services Inc, a mortgage banker 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.

Posted in Tips and Tricks | Comments Off on What Are Prepaid Items On My Loan Estimate?

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.

Posted in FAQs | Comments Off on Kiki Calumet Honored As A Market Leader in Forbes