Ok we are a little over 2 months now since California shut down (March 16) so what is going on with interest rates? Interest rates are great let’s just start there. Interest rates are in the low 3’s and high 2’s currently. So what is driving interest rates, you would think the answer would be easy, however it is far from easy. There are many different factors that will determine what your interest rate will be and it will vary from person to person based on there credit scores, down payment or equity, cash back verse no cash back, loan size, loan program, fees waivers, and list goes on. If you hear an advertised interest rate that is really low it probably does not pertain to you or what you would want from your home loan. Interest Rates are also geographical meaning that depending where you live in the United States will determine your base interest rate. So how are rates calculated and how do they vary from lender to lender.
First lenders across the nation give California a little higher interest rate than the rest of the nation to begin with. This is due to the fact that California home loans tend to pay off faster than other parts of the nation. This affects interest rates in that the longer a borrower will hold on to their current mortgage the more interest a lender can accumulate over time. In California people tend to move more often that other parts of the country making the amount a lender can make on interest over time less so in order to compensate they raise the initial interest rate a bit. So if you are hearing, on the news, that interest rates across the nation have come down and they give you an average rate you can rest assured that California will be on the high side of the curve.
The next determining factor or factors that determine the interest rate you will get is your credit score(s). When a lender is pricing your loan, they have to use the low mid-score of a married couple and the mid credit score if you are single. When your Loan Officer (MAE Capital Mortgage) prices your loan with lenders across the country we will have to have your credit score and the amount you are putting down and other factors in order to get the rate that fits you specifically then we will shop for the best loan scenario. It also makes a difference if you are choosing a mortgage that will pay off bills in other words if you take cash out of the equity of your home on a refinance it will also increase the interest rate a bit. When you hear a lender advertising that they will pay off all your bills with a refinance know that is costing you a little bit more to do that. I would not discourage this just be aware of the increased costs even if you have 800+ credit scores the interest rate will be a bit higher.
If you are one of those who love to shop around to find the best interest rate you had better be prepared to give your exact credit score, down payment or equity position that is accurate as a bare minimum. Here at MAE Capital that is exactly what we do on every one of our loans as we are Mortgage Brokers that hold both a California Department of Real Estate License as well as the National Mortgage Licensing System (NMLS) license in order to be able to offer rates from lenders across the nation. Not all lenders are created equal so be aware that rates will vary from mortgage company to mortgage company and that has to do with their overhead requirements. The more people a lender has to employ the higher the cost for that lender to originate a home loan. A Mortgage Broker will have less overhead, in most cases, than a Mortgage Banker or a Bank who will underwrite and fund their own originated loans. The reason why a Mortgage Broker will have lower rates is the fact that they can shop the entire nation for lenders with the best rates and programs where Banks and Mortgage Bankers will only have their own set programs offered by there company. Mortgage Brokers also get what is called a wholesale rate verses a retail rate and that low rate is pushed to their/our customers.
The type of loan you choose will have a different rate than other loan types. A loan type is a FHA Loan, Conventional Loan, VA Loan, Jumbo Loan, Non-traditional loan, Private Money Loan, USDA Loan, CALHFA Loan, and more. All of these loans will have different rates associated with the risk they carry the higher risk loans, such as Private Money or Hard Money Loans carry the highest rates. Again, if you hear an advertisement for an interest rate or program know that what you hear is not what you will actually get, in most cases. For example; we have a lender that we sell loans to that has a program out now that has interest rates in the 2’s, but you have to have the perfect scenario in order to qualify for that program such as 750 mid credit score down payment or equity greater than 20% of the value or purchase price of that home, if you fit the parameters you win and get the rate. But if you are trying to take cash out of your home to pay bills off then suddenly you don’t and most people only hear what they want to and when they hear rates are in the 2’s they tend to pick up the phone and call around. Another factor that is currently changing the interest rates is the fact that many people have listened to the media and have stopped making their mortgage payment during the pandemic this not only hurts them but it hurts those with good credit and never being late on a mortgage. With people not making their payments during this pandemic it is hurting those that are, and are making higher interest rates. You see lenders have priced in the profit from collecting mortgage payments for the origination of a new loan before the pandemic and now they simply are not so we are experiencing higher rates because of this. One phone call to MAE Capital Mortgage Inc. and we will be able to run your credit while we have you on the phone and will be able to give you an accurate interest rate. I hope this blog helps people to navigate through all this and we are here to help. Give u a call to get your pricing today at 916-672-6130.
For most people, purchasing a home is the single largest investment they will ever make. And while many are well-versed in paying a down payment, mortgage and insurance, a lot of homeowners are caught by surprise when faced with another expensive part of owning a home: major repairs. Owning a home comes with the inevitability of things wearing down over time or breaking suddenly, and rather than simply calling the landlord, the homeowner is responsible for paying the costs. If you own a home or are thinking about buying one, these tips can help you to prepare for the major home repairs that will come your way:
Saving Up
No matter who you are, paying for home repairs ideally will not land you up to your ears in debt. You may be tempted to pull out the credit card or delay paying other hefty bills (e.g., mortgage, student loans, etc.), but this can get you into a lot of financial trouble. The best way to handle major home repairs is to be prepared when they happen. Start an emergency fund that is dedicated solely to covering the costs of such repairs. This can either be done through a savings account with your bank or by keeping an old-school cash envelope at home.
Many experts suggest setting aside at least 1 percent of your home’s value each year for repairs and maintenance. For instance, if your home is worth $660,000, you would put $6,600 in your emergency fund every year. Such savings can quickly add up, leaving you in a better position to cover the cost of that roof replacement or plumbing disaster.
Refinancing Your Home
Another option for paying for a major repair is refinancing your home, which allows you to take advantage of your home’s equity. With cash out refinancing you can get a new loan for your home that has a higher balance. Then, you receive the difference between the two loans in cash. Thus, you can then use the cash to cover the cost of the repair. It’s also worth noting that the new loan could end up coming with more favorable terms than the previous one, making it a win-win situation. Here at MAE Capital we can walk you through this process.
Taking Out a Personal Loan
If you don’t have an emergency fund built up or refinancing isn’t an option, you could explore various types of personal loans out there. These days, it’s easy to apply online for a personal loan. Moreover, some loans even start at under 4 percent interest, and that’s much lower than using a credit card.
Selecting a Contractor
The contractor you use for each home repair can make a big difference in the time and money you spend. For example, if you choose a contractor simply because they offer their services for the lowest price, you could end up with shoddy work; this means you would then have to go through a lengthy legal process to get your money back or pay a different contractor to come and fix the bad repair.
To avoid a situation like this, be sure to ask around for referrals and interview several candidates. Check the licensing and insurance of each candidate, look into their job history, and get estimates for the work needed. Then, you will be ready to compare bids and qualifications to determine which contractor is best for the project. Furthermore, you will want to be sure to get a detailed contract in writing before any work has begun.
Homeownership comes with the costs of major home repairs, and it will save you a lot of stress and financial trouble if you have a plan when the day comes. Start contributing to an emergency fund today. Look into cash-out refinancing and personal loans to see if those options will work best for your situation. Finally, be diligent when choosing a contractor for each project.
Article by: Natalie Jones
Photo Credit: Pexels
Have you been thinking about refinancing your home and not sure if you want to go through the hassle? Not sure what to expect or afraid you won’t qualify or just don’t know where to start? These questions are the typical questions Homeowners have today. But if you think about it, how long will it take out of your day to make that simple phone call or complete a refinance questionnaire? The answer is about 10 minutes, that’s shorter than a Geico phone call and could save you far more money. We know you don’t this everyday so we try our best to make it as smooth as possible for you and answer all the questions you have. So let’s to answer some of your questions in this post.
Let’s start by seeing what your existing interest rate is on your property. Then let’s take a look at what your home is worth in today’s marketplace, we can run that evaluation in about a minute. We will also want to know what type of loan you currently have on your property such as a Conventional loan, FHA loan, VA loan or some alternate type of loan to evaluate if you are paying mortgage insurance or not. The government has lowered the FHA monthly mortgage insurance rates by .5% in 2015 so you might get a double savings. So a typical FHA loan that was taken out in 2014 with an interest rate of 4 % with a loan balance of $250,000 would be a saving of $140 just on the mortgage insurance savings a month and all you would have to provide is a current mortgage statement, your home owner’s insurance policy, and a copy of your Note. That is all you would need, no income verification, no bank account verification, no appraisal. This is called an FHA Streamline Refinance by clicking on it will take you to the detail page. The FHA Streamline loan only works when you have an existing FHA loan. If you are a veteran, and have a VA loan on your home, the VA has a similar program called an Interest Rate Reduction Refinance Loan or IRRRL. If you have a FNMA or FHLMC loan (a conventional 30 year fixed) the similar type of program would be the HARP program. The HARP program or the Home Affordable Refinance Program is really designed for those home owners that owe more than their home is worth and wish to lower their monthly payments. If you have equity in your home with a conventional loan on it, you would need to fully qualify again for a new loan.
Once we determine that a refinance is the right avenue for you we will continue by completing a simple refinance form online or we will talk and get some basic information and formulate the best possible scenarios for you. We will tell you if it is worth your time to do a refinance before you have to gather anything. The information you send us, either online or over the phone, is secure and will not be used for spam or any other kind of mass marketing. Refinancing can save you thousands of dollars a year so don’t take this lightly as we don’t and we do our very best to formulate the very best loan scenario for your financial situation that will save you the most over the long run.
What do you need? If we are not doing a FHA Streamline you will need to gather your Federal income taxes for the last 2 years and W2s, your current mortgage statement, your home owners insurance declaration page, bank statements for the last 2 months, and your last 30 days of pay statements. Will do the rest for you, like open escrow, order an appraisal and process the paperwork. It does not matter who your existing lender is, we are completely refinancing that old loan and you will have new mortgage company that you will make your payments to. You might ask if it would be better to go to your existing lender to refinance your home, and in most cases it is no better and in some cases, I have seen the existing lender charge more and you end up with a slightly higher interest rate. It is always good to get a few quotes, but make sure you talk with someone who can actually give you an accurate quote. The interest rate on your new loan is based on several variables such as equity, credit score, loan program, and whether you are taking cash out to pay off a second mortgage or other debt. So it is always best to have the rate calculated for you based on your situation. Lenders and Brokers all have to go to the same places to get the rates for you, so rates should not vary that much from lender to lender, but the fees charged can.
So what happens when once you decided to start the process? Once you have supplied the paperwork we have requested, we are tasked with providing you with disclosures that spell out all the charges and the payment on the new loan. We will go to an Escrow or Title Company and order a preliminary title report to make sure there are no liens on the property that you did not know of. We will order the appraisal (if necessary). We will do all the necessary verifications of your employment, credit, and assets (if necessary). Once we have everything back we submit the file to underwriting. When the loan is approved we draw the loan documents and send them to the Escrow or Title Company and have you sign them. Most of the time we can arrange that you sign in our offices, if that is more convenient, or we can have a notary come to your home, or you can go to the Escrow or Title Company to sign them. Once you sign the documents, they are set back to the lender to be reviewed. Then the new loan is funded and the old loan is paid off through the Escrow. You new first payment will be the following month.
What will this cost me? In most cases we make the new loan where you have no out-of pocket expenses. This is done either within the interest rate you decide to take or included in the loan amount or both. This is done upfront before you make a decision to refinance and is part of the analysis we do to make sure it will be a good investment to refinance. A general rule I like to follow is to find out how long you plan on being in the home and fit the loan that plan. An example would be if it costs $5,000 to refinance, either included in the loan or paid in cash, and you save $250 a month in your payment, it will take 20 months to recoup that amount to make it worth the refinance. But if you plan on selling your home in that time frame it is not worth it. On a FHA Streamline the loan amount can’t be raised so the analysis is easy, if you save money it is worth it to do.
So how do you get started? Well that is easy simply give us a call, it is free, and could save your thousands of dollars. Our phone number is (916) 672-6130 or Click Here and fill in the simple questions and we will contact you. We can only refinance California properties as that is where we are licensed to do business.
Have you been thinking about refinancing your home and not sure if you want to go through the hassle? Not sure what to expect or afraid you won’t qualify? These questions are the typical questions facing home owners today and I am sure the major reasons they decide to procrastinate. But if you think about it, how long will it take out of your day to make that simple phone call or complete a refinance questionnaire? The answer is about 10 minutes, that’s shorter than a Geico phone call and could save you far more money. We know you don’t this everyday so we try our best to make it as smooth as possible for you and answer all the questions you have. So let’s to answer some of your questions in this post.
2015 has started with interest rates back in to the historic low levels with rates in the mid 3’s for 30 year fixed rate loans. If that is not enough the government has lowered the FHA monthly mortgage insurance rates by .5%. So a typical FHA loan that was taken out this time last year with an interest rate of 4 % with a loan balance of $250,000 would be a saving of $140 a month and all you would have to provide is a current mortgage statement, your home owner’s insurance policy, and a copy of your Note. That is all you would need, no income verification, no bank account verification, no appraisal. This is called a FHA Streamline Refinance by clicking on it will take you to the detail page. The FHA Streamline loan only works when you have an existing FHA loan. If you are a veteran, and have a VA loan on your home, the VA has a similar program called an Interest Rate Reduction Refinance Loan or IRRRL. If you have a FNMA or FHLMC loan (a conventional 30 year fixed) the similar type of program would be the HARP program. The HARP program or the Home Affordable Refinance Program is really designed for those home owners that owe more than their home is worth and wish to lower their monthly payments. If you have equity in your home with a conventional loan on it, you would need to fully qualify again for a new loan.
So what do you need worry about? Nothing, the initial consultation with a MAE Capital Mortgage’s loan officer is free. Over the phone or by completing a simple refinance form online we will get some basic information and formulate the best possible scenarios for you. We will tell you if it is worth your time to do a refinance before you have to gather anything. The information you send us, either online or over the phone, is secure and will not be used for spam or any other kind of mass marketing. People have become wary of filling out anything online for fear they end up on some spam list that they can’t get rid of, that is simply not the way we want our clients treated.