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Posts Tagged Mortgage loan

Which Lending Option is Right for You?

mortgage2Whether you’re looking to make a first-time purchase, refresh an existing home or simply leverage built-up equity for other reasons, it’s important to figure out which path is right for you and understand the lending options available.

First-time buyers must start with determining what is affordable. In addition to the mortgage payment, housing costs will include property taxes and homeowners insurance and fees, such as homeowner association dues. Altogether, costs should be no more than 28 percent of monthly gross income and should leave room to continue servicing other debt, such as student loans, credit cards or auto loans.

When preparing to buy a home, work through credit pre-approval to be ready with a strong offer when the opportunity arises. In addition to reviewing credit history, a loan originator will consider the amount of the down payment. A down payment typically ranges from 3-20 percent. A down payment that is less than 20 percent may require you to purchase mortgage insurance. A mortgage originator, however, can provide a variety of lending options to optimize your investment, from 15- and 30-year mortgages to fixed and variable terms.

If planning to make some improvements to a much-loved residence, consider financing the updates through a home equity line of credit (HELOC). Eligibility depends on how much equity has been built up in the home and the lender’s loan-to-value ratio. A HELOC works much like a credit card and offers flexibility. A minimum amount is paid monthly, and interest applies to the amount borrowed.

Before embarking on a remodeling project, do some homework. Start with the lender to determine the value of the home and the loan amount available. Then, establish a budget that leaves room for unexpected expenses. Work with a reputable professional to define the project and its requirements, and shop around for bids and recommendations to confidently select a contractor. Some lenders offer checklists to help get the most from the investment.

Another option for financing a project through a home’s equity is a home equity loan (HELOAN). As with a mortgage, this loan is granted as a lump sum and is paid back in installments over time, typically 10-15 years and at a fixed rate locked in at the time of securing the loan. A HELOAN works well for a one-time goal to improve the value of a home. Be mindful that either a HELOAN or a HELOC introduce some uncertainty, as monthly expenses will increase and must be maintained to avoid foreclosure risk.

Remember to consult a professional for advice applicable to your specific situation. Start with a lender who can help you identify financial options available to home buyers and owners today. With careful planning and budgeting, the financing you need may be well within reach.

Reprinted with permission from RISMedia. ©2015. All rights reserved.

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1.5 Million Homeowners Could Re-Enter Housing Market in Next 3 Years

According to a new study from TransUnion, more than 1.5 million homebuyers negatively impacted by the financial crisis could potentially re-enter the mortgage market in the next three years. This population of consumers negatively impacted by the financial crisis – commonly known as boomerang buyers – was defined by TransUnion as being 60+ days delinquent on a mortgage loan, having lost a mortgage through foreclosure, short sale or other non-satisfactory closure, or having a mortgage loan modification.

coupleTransUnion’s study found that approximately 700,000 boomerang buyers might be able to re-enter the housing market in 2015. Over the next five years, TransUnion anticipates 2.2 million boomerang buyers could re-enter the market.

The study analyzed the overall U.S. credit-active population at the end of 2006 (the end of the mortgage Bubble), the end of 2009 (the end of the Burst) and in 2014 to determine consumers’ ability to re-enter the mortgage market.

“Based on our study findings, the Burst had a significant and dramatic impact on many consumers’ ability to re-enter the mortgage market after suffering through the downturn,” says Joe Mellman, vice president and head of TransUnion’s mortgage group. “It’s been over seven years since the beginning of the mortgage crisis; this is significant because many derogatory items, such as foreclosures and short sales can prevent consumers from qualifying for a new mortgage for a period of time. As consumers responsibly manage their credit and pass these milestones, we anticipate a tide of newly mortgage-eligible consumers entering the market.”

TransUnion analyzed every consumer it could track between 2006 and 2014, which came to 180 million consumers. During the mortgage Bubble in 2006, 43 percent of that population, or 78 million consumers, had a mortgage. 42 percent of the recovered consumers currently have a mortgage, while 58 percent of the recovered consumers have not yet re-entered the mortgage market.

“As boomerang buyers who experienced foreclosures or other negative impacts become eligible to re-enter the mortgage market, they may not immediately do so if they are not aware they are eligible again, or feel daunted by their prior experience,” Mellman says. “Lenders can help consumers ease this transition with credit education programs addressing consumer eligibility, and help them better understand their borrowing options.”


Credit Score Impact

The study also looked at how big of an impact the mortgage crisis had on consumer credit scores. Between the Bubble and the Burst, 39 million consumers dropped at least one credit score tier. As of 2014, 16 million of these consumers had recovered sufficiently to reach at least the risk tier they were in before the Burst.

Despite the significant impact on consumer credit scores, a marked improvement in scores has also been observed for certain credit score risk tiers. The study found that 7 million more consumers have moved into prime or better risk categories (VantageScore® 3.0 credit score of 661 and above) between the Burst in 2009 and the close of 2014. Additionally, 8 million consumers left the subprime risk tier (VantageScore® 3.0 credit score of 600 or below) to enter higher risk tiers during the same timeframe.

“An important question lenders face is when to re-engage with consumers who have been challenged managing credit in the past. Despite the negative impact of the mortgage crisis on many consumers, we’re seeing promising recovery as consumers shift to lower risk tiers,” says Ezra Becker, vice president of research and consulting in TransUnion’s financial services business unit. While some lenders may be hesitant to offer loans to these impacted consumers, our data show these consumers are becoming better credit risks. Our study puts a framework around the re-engagement question relative to the mortgage crisis, and that’s good news for both lenders and consumers alike.”

 

For more information about the study, visit www.transunioninsights.com/boomerang.

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5 Signs You’re Ready to List Your Home

By Courtney Soinski

Do you ever find your thoughts going back and forth about whether or not to sell your home? ­As you contemplate your decision, there are many factors to consider, including the current state of the real estate market as well as your lifestyle and financial situation.

After years of housing recovery, we are continuing to experience a shortage of inventory among homes for sale in today’s real estate market. Fortunately for you, it’s a total seller’s market right now. According to the National Association of REALTORS®, there was a recent 6.1 percent increase of existing-home sales. This is the highest annual rate since September of 2013. Here are 5 signs it’s time to sell your home.

1. You’re running out of living space.

If you’re getting frustrated because you are feeling overcrowded in your home, or if you don’t have enough space for guests to sleep, then you may be ready to sell. Maybe your kids are outgrowing their rooms (literally) or you’re thinking about adding to your family. These are also signs that it’s about that time.

2. You’re not emotionally attached to your home anymore.

As you start going through the selling process, things will be a lot more difficult for you and your REALTOR® if you still have some sort of emotional attachment to your home. Being this connected decreases the likelihood that you’ll even want to listen to the real estate agent’s advice. In order to sell, you need to be able to view your house as a product.

3. You can afford it.

This is one of most significant factors when it comes to selling your home and moving somewhere else. Are you financially ready to make the leap? Review all costs and expenses related to selling, including moving costs, as well as the down payment and closing costs on your new home. Most importantly, have a game plan.

4. Your equity is a force to be reckoned with.

Ever since the housing market crashed, homeowners now have a tendency to be skeptical about putting their home on the market to sell. Thankfully, real estate has come back in full force. Increasing numbers of homeowners are getting their positive equity back and negative equity rates are at their lowest since 2012. Now is the perfect time to see where your equity stands. Do some research and have your home reappraised.

5. You are ready to make your decision.

Making the decision to sell your home can be difficult, but you don’t have to do it alone. By partnering with a trustworthy real estate professional, you’ll get the honesty and expert advice that will make the selling process a breeze. By considering all factors and working closely with a pro, you’ll be able to decide what is best for you and your family.

So, the choice is yours. Are you ready to list your home?

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