What Documents Do You Need to Get Approved for a Mortgage

What Documents Do You Need to Get Approved for a Mortgage?

Getting a mortgage home loan might seem like a tedious process, but if you do your part to look good on paper, you can increase your eligibility for the best mortgage rates.  Financial institutions primarily consider three main areas in determining who is eligible for a mortgage: employment history, credit history, debt to income ratio (which is the percentage of income that goes to expenses).  As proof of these, most financial institutions will ask for a selection of the following documents in considering your request for a mortgage loan.

Employment

• Last two years’ federal tax returns and/or W-2 statements
Financial institutions typically use your past tax returns as verification of your employment and earnings.

• Pay stubs
Most financial institutions will ask to see your most recent pay stubs, usually covering the past month.  Your pay stub must have your name, your social security number, your employer’s address, and your year-to-date earnings.  These help them to gauge whether you will be able to handle your monthly mortgage payments. Read more

Home Equity Loans with Frequent Flyer Programs

Use Your Home to Get Away: Home Equity Loans with Frequent Flyer Programs

Just because you’re paying off an unexpected expense by using a home equity loan or line of credit doesn’t necessarily mean that vacation needs be out of mind.  Many financial institutions partner up with airlines to offer customers a way to earn miles while conveniently using the wealth they’ve built through the equity in their homes to pay off emergency medical expenses or fund a remodeling project.

The rewards offered by these companies range from 1,000 to 5,000 miles upon taking out a home equity loan or line of credit.  While these won’t automatically get you flying first class to your destination of choice on your dream vacation, they will get you at least part way there.

However, before enrolling in a mileage program and applying for a home equity loan or line of credit, check out the lending organizations.  A few thousand miles are nice, but if there is a better deal somewhere else (or even better, somewhere else that offers miles as well), you will regret having not done your research first. Read more

Which Team is Your Mortgage Broker Playing For?

As the popular sports saying goes, “The best offense is a good defense.”  The same can be said for using a broker to get a mortgage.

Navigating the terrain of mortgages—including terminology, conditions, and the process as a whole—can be a challenge, to say the least.  Thus, to help alleviate some of the pain often associated with mortgages, many homebuyers seek the help of mortgage brokers to assist in making the process a little less daunting.

While most mortgage brokers do their work in the best interest of the homebuyer, here are a few tips to make sure you get the most out of your home financing experience.

• Acquire basic knowledge about mortgages and how they work.  Avoid meeting with a mortgage broker or loan officer without any knowledge of your own.  While brokers will take the time to explain the fine (and not-so-fine) print, having basic knowledge under your belt will help you better understand the terms to which you are committing.

• Research available rates online.  Brokers work with a number of lenders to offer you a wide assortment of financing options and competitive prices.  There are a number of resources available online and in print that you can reference for the most current and up-to-date rates.  By becoming familiar with the rates available, you will be able to better evaluate the rates  you are offered by your broker. Read more

Use Equity for College

Use Your Home to Send Your Child to Their Home Away from Home

We’ve all seen those stickers that proudly boast “University of Southern California Mom” or “Harvard Dad.”  What they should really say is “Pay to the Order of USC” or “Sending the Checks to Harvard University.”  If you’ve ever funded the college education of any loved one, then you know the feeling.  While you may not have much of a say as to where your money goes, you can choose where that money comes from, and one option to help fund a college education is a home equity line of credit.

With a home equity line of credit, you have a certain amount of funds available to you (depending on how much equity you have in your home), but you do not have to receive them all at once, which is the case with a home equity loan.  Instead, you can withdraw money whenever you need it and only pay interest on the amount you borrow.  Also, the interest that you pay on a home equity line of credit is usually tax-deductible.  Check with your tax advisor for more details.

If you are still a little uneasy with the thought of using your home equity to pay those hefty college bills, think of it as an investment.  Using home equity to fund home improvement projects to increase a home’s fair market value is not uncommon.  Similarly, funding your child’s education will theoretically help him or her in the job market, just as home improvements are intended to increase your property’s value in the real estate market. Read more

What a Fed Rate Cut Could Mean for You

Informa Research Services Says “Don’t Panic!”: What a Fed Rate Cut Could Mean for You

Rest assured, the world is not coming to an end because of a possible Federal Reserve discount rate cut.  On Tuesday, the Federal Open Market Committee will meet to discuss whether or not to lower the discount rate.  But despite the seemingly ambient anticipatory anxiety currently erupting from most business and economic media outlets, the sky is not falling.  Rather, this possible decrease is just a small acorn falling off a tree.  So take a deep breath, sit back, and relax.  Here are some pointers to help you make the most out of next week’s decision. Read more

3 Mistakes to Avoid Home Equity Loan

3 Mistakes to Avoid When Applying for a Home Equity Loan

A home equity loan can be a great resource to homeowners who need some extra money to do a renovation project, pay for college tuition, or even make a large purchase. However, there are three mistakes that you as a homeowner might make that, if avoided, can make the application process run smoothly and give you a better experience:

1. AVOID being unaware of the differences between a Home Equity Loan and a Home Equity Line of Credit. It is important that you understand the differences between the two types of home equity loans so you will know which one is better for your situation. A home equity loan is paid out in one lump sum and it usually has a fixed interest rate and term. A home equity line of credit, on the other hand, can be drawn on whenever you need money, interest is paid only on the amount you borrow, and it usually has a variable interest rate. Ascertaining how you will use the funds, what type of interest rates you would prefer, and how you can afford to repay the loan will force you to research these loans very carefully and will allow you to make the best decision. Read more

Make a Point to Lower Your Interest

Make a Point to Lower Your Interest

On a test, students want all the points they can get, and even adults will brighten up at the promise of some of those proverbial “brownie points.”  But in the mortgage world it is quite the opposite – people usually aren’t so thrilled about points. Mortgage points, also called discount points, are an up-front fee paid in cash to the lender at the time of closing.  Points can also be rolled into the loan, but this will partially defeat the purpose of paying points in the first place because of the resulting increase in the mortgage rate. However, paying points also means that you are paying extra money upfront to lower your interest rate. Therefore, the question is this: Will it save you more money in the long run to pay a lower interest rate or to pay no points?

What’s the Point?
Points are paid to lower the interest rate—the more points you pay, the lower the interest rate you get, and correspondingly, the less interest you pay overall. One point is equal to 1% of the loan amount, and depending on the individual’s loan scenario, each point lowers the interest rate by approximately .125% to .25%. Borrowers benefit from points because paying points typically results in having lower monthly payments. Read more

Is a Home Equity Loan Right for You

Is a Home Equity Loan Right for You?

One major asset that many homeowners tend to overlook when seeking a way out of a financial hardship is right under their noses… or perhaps more accurately, right over their heads: their home.  Your home is an investment and there’s no reason it can’t yield valuable returns for you. 

A home equity loan (HEL) is a loan that uses the equity built up in your home as collateral and it might be just what you need if your circumstances are right.  However, because home equity options are not created equal, here are a few tips to keep in mind before placing your property on the line: Read more