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Things to contemplate before you refinance your mortgage

Mortgage refinancing is a very advantageous method if you want to avail the benefits of lower interest rates. It allows the homeowners to pay off the existing loan and replace it with a new one. The prevailing mortgage is replaced with a new one at a lower rate of interest. The closing cost of refinancing depends on the size of the loan. It is necessary to qualify for the refinancing process just how you qualified while opting for the new loan. Getting into mortgage refinancing will help you pay off your loan quicker and relieve you from the burden.

Once you have shaped your mind to tackle refinancing, you need to be very cautious while choosing interest rates. After having full access to your information, calculate the amount of saving and the payment you need to make. Also, take into account the estimated costs of refinancing your home. Make a correlation between the loan details of the various lenders and go for the best one. Keep an eye on the fees imposed by the diverse lenders and submit the application as soon as you qualify for the mortgage refinancing. So opting for mortgage refinancing is not as easy as it seems to be, and it can be an overwhelming task. Here are few points which must be kept in mind before you refinance your mortgage.

Determine your credit score: Credit score is the most critical determinant in qualifying for the lowest interest rates. The lenders have set specific standards, and you need to match those standards to refinance your mortgage. The greater your credit score, the lower will be the rate of interest. The lenders will look into your past records and decide if they want to work with you or not.

Your home equity: Some homeowners may realize that they have low equity, and the value of their homes is decreasing at a manifold rate. It isn’t smooth to qualify for mortgage refinancing. But in this case, we can always look for the various conventional lenders who can assist you and provide you a loan based on your credit score. Twenty percent equity is the minimum amount to get your application approved for mortgage refinancing.

The various costs to consider: The fees charged for the refinancing and original loan are almost the same as in the case of the original mortgage. The origination fees and the various taxes can also be rolled in the amount of your mortgage so that you can pay a higher amount every month. There is always room to negotiate in this process as the fees charged by the various lenders are highly dependent on them.

Get numerous quotes: This process is about inquiring into the various interest rates charged by the different sources. To make certain you are getting the best, you can get the quote for your current bank and then dive into the various online lender’s interest rates. Online lenders generally charge lesser rates and also have fewer formalities. So you can select the alternative that suits your needs.

How Mortgage Brokers Will Help You To Break Deal For Your New Home

The buying of property needs an expert’s assistance, and only professional mortgage broker can help us and give us advice on how to break the deal of our lifetime. Mortgage brokers are professionals with skills and experience in the field that we lack. The knowledge they have cannot be possessed by a layperson, and less knowledge may lead us to fall into a trap. With professional guidance, it becomes easy to carry out the process of buying a house along with managing our daily routine. When we work with a mortgage broker, they offer us a range of deals as they work with various mortgage lenders. We get the chance of selecting the best deal from the options they have to offer us. 

Following are the ways in which a mortgage broker will help you to break the final deal for your house:

They will give you options:

If you go to a moneylender, you will only have the offers that they will propose to you while mortgage brokers have more to offer. As they work with a number of a broker, we as their clients are not restricted to just one mortgage lender. We can ask them about all the money lenders they work with, and then we can decide which one will offer us the deal we are looking for without making an extra effort to visit every mortgage lender on our behalf. 

They will help you save time, money, and energy:

When we are looking to get a loan for buying a new house, we visit moneylenders, which involve transportation costs, rescheduling, and making an effort. Working with a mortgage broker will save us our time, money, and effort simultaneously, as it is their responsibility to find the lender you can work with. You will not have to reschedule every time you have to visit a mortgage lender in person or make different trips to see them. 

They will negotiate for you:

the best skill that a mortgage broker has is negotiating power. Yes, having negotiation skills is not less than any power. The only person who can break the deal with the second party by negotiation skills has to be a professional because they know very well about the housing industry than you do and know how to come to an amount that is favorable for both parties. You should not agree on the amount first proposed by the sellers as there is always a chance to make some changes in the price. 

They will handle all the formalities:

Buying property ncludes a lot of formalities and paperwork. Mortgage brokers will handle all the documents and paperwork that require legal attention. One can always rely on brokers for such things. A layperson is not aware of the rules and laws of the housing industry whereas, a professional broker keeps himself/herself well informed about all the changes happening. This gives them an upper hand in handling all the formalities. From getting the loan approved to getting the contract ready, they will handle everything.

No matter how much you trust the broker, do not forget to read the contract once it is ready. 

Some common misconceptions about mortgages

Based on our desires, we may long for better education, a better standard of living, and the most significant one is owning a house. Buying a luxury house is a fantasy of millions in the world. Every one of us wants a place where there is no control from the outside, and you can live peacefully in that place. Buying a residence is a challenging process, and it requires your massive amount of financial resources and a great deal of understanding about the purchase process.

The very first step is to plan and review your financial position and make a raw budget. Buying a home is no big task if you have a decent job and have some extra earnings. Taking assistance from lending companies is necessary as it becomes tough to finance the whole amount. Taking a mortgage loan will serve you as you can have years to pay it back. A mortgage is a loan you get from a moneylender to finance your home, and you have to repay the money at an agreed rate of interest. There are tons of mortgages floating in the market. Each of them carries its own specifications with a special rate of interest. When thinking about taking a mortgage loan, there must be no room for error. So let us discuss the various mortgage misconceptions:

Downpayment is necessary: most people believe that if you don’t have twenty per cent money to make a down payment, you cant buy a home. This is just a myth as there are some conventional and government-backed loans where very little or no down payment is required.

You need an excellent credit score: Credit plays a significant role in buying a home. Yet another notion is that you need to have an excellent credit score to be approved for a mortgage. This is not the case as there are several mortgages solutions for people with a low credit score. The credit score standards can vary from lender to lender, but this is not a particular issue that cannot be resolved.

Mortgages carry a high-interest rate: People think that the lowest interest is the best option, but it is not the only element requiring attention. Your interest rate is the cost you will have to pay the lender for the loan, and it doesn’t include any other cost such as origination and documentation fees.

Downpayment is the only cost: While the down payment is a considerable cost and expense while buying a home, it does not include the other costs. There are other closing costs that your lender charges for finalizing the deal .so the closing costs are independent of the additional costs and are required to be paid to fix the value.

You can be in debt and still buy a mortgage: It is unnecessary to settle all the obligations such as student loan debt and car payments. It becomes very unrealistic when we start considering that anyone who goes to make a purchase is debt-free. The thing that matters is your income should be substantial to pay off all your debts.

Reasons To Hire Mortgage Broker Services For A First-Time Buyer

Buying a new home is a challenging task as we need to be sure that the place, we are buying is what we really want, and once we like a place to live in, it will be in our best interest if we purchase it at the best price. One does not have funds to pay for any asset in just one go, so people always prefer buying such expensive assets on loans provided by mortgage lenders or banks. 

 The first-timers who are thinking of buying houses on home loans are not aware of the deals available for them. The mortgage lender will give you the arrangements that are in their best interest. You won’t have many offers at your disposal, giving you limited offers to select from. So, every newbie does not have proper knowledge of this field, so they can be easily deceived into choosing any deal, which might not be in your best interest as there are other options that are more beneficial to you. Better to seek professional help than choosing the wrong offer. 

Here are the reasons why a newbie should consider hiring mortgage broker services:

Professional help:

As a new buyer, one is not equipped with the required knowledge to buy a house on loan. Purchasing an asset will become easy if we have professionals to help us out with a full-proved plan, and a layperson cannot make those plans as we do not possess the proper knowledge to carry out a plan. Getting the required understanding of the subject will not be reasonable as it will demand a lot of our time, money, and effort, and we already have our routine, which is our priority.

 Hiring professional services will help you save your time, effort, and funds. They will provide you with a plan in your best interest to buy a new house.

Various options:

Mortgage brokers will give you a lot of options to choose from, unlike mortgage lenders. Brokers have many contacts and know almost all the lenders that provide loans on the best deals. Brokers will consider your funds, analyze your requirements, and then offer you the best deals available with them.

 On the other hand, you will not get many options if you go to a mortgage lender, which means you will not have access to other alternatives that may be in your best interest. 

As everyone works to earn a profit, mortgage lenders will try to convince you to choose from the deals offered by them, while brokers will give you different options as you will pay them for doing their job. 

A detailed plan:

Buying a house includes following a process with many steps involved for which you need to have a full-proof plan. A detailed plan will help you save money as you will know where and how to spend. Without a plan, you might end up spending unnecessarily.

Mortgage broker services will help you to make a financial plan so that you can spend accordingly. They also know how to carry out every step in buying a home and will help you with the documentation and other requirements saving your time and effort. 

Things to keep in mind before applying for a Mortgage

Are you thinking of buying a new house? Prepare yourself for one of life’s most taxing experiences. Because applying for a mortgage is a tricky thing but what makes it even tougher is you knowing what to expect. Because it can help you to plan everything a step ahead and get a mortgage in your favor, this planning requires you to brush up on your mortgage knowledge by keeping the following guidelines in mind.

Maintain an Accurate Proportion of your Income and Existing Debts

You must know beforehand how much loan you can actually afford. It is important both for you and the lender. Lenders always keep in mind if you are borrowing too much. So if you want your application to be accepted the first time, you need to understand the debt-to-income ratio (DTI). It is the ratio of your income that you’re spending each month to pay your debts, among other things. For instance, if your monthly pay is Rs 10,000, your mortgage will cost Rs 2,000 monthly, and all other debts add up to Rs 1,500, your debt-to-income ratio is Rs 3,500/Rs 10,000 or 35%. This percentage is important because lenders want you to have this ratio lesser than 43%. Each lender has a different offset but is always lesser than this. Also, it’s favorable if you don’t spend more than 28% of your income on your mortgage payment.

These are the tips you need to keep in mind before filing a mortgage application. Though you can always contact your lender to know more about any pre-qualification requirements beforehand to make the entire process smoother.’

Consider all relevant Mortgage Options

Before you start applying for a mortgage, it’s always a good idea to know your all mortgage options because there is a variety of them out there, and in order to pick the best, you need to see what each one of them is offering and what suits your needs the best. Also, since your mortgage may be the biggest debt you owe, you need to choose wisely. To make this decision, there are so many things you need to get yourself familiar with first, like the type of fee, the difference between fixed and adjustable rates, loan terms, and of course, the company’s reputation.

Improve Credit Score

Having good credit is very important. It says a lot about you to a lender because he can know if you are able to pay off your mortgage debt in the future, so better monitor, or rather improve your score before applying for the loan. Not only does the decision of loan approval depends on it but also it is the deciding factor in determining the interest rate, which is so important, given the amount of loan we are talking about here. It can, for sure, make a tremendous impact on the total cost of your mortgage over time. So there are few general ways that can help you improve your credit score.

  • If you have high account balances relative to your credit limits, paying down your balances will help improve your credit score.
  • If any inaccuracy, such as an incorrect listing of payment as late or missed, exists, report to your bank as soon as you can and get it corrected.
  • Avoid opening new accounts and closing old ones.

Start saving

Saving more will allow you to deposit a considerable amount of down-payment, which will save you from paying less in the long run. If you succeed in paying 20% of the mortgage loan amount as down-payment, you will not need to pay private mortgage insurance either, thus reducing your monthly payments. Thus it’s improbable for you to end up owing more than your home is worth. Even after owning a house, you need to have funds saved to handle any unexpected repair costs.

Get Paperwork done on time.

After you have ensured everything related to interest rates and your budget, it’s wise to gather all the important documents prior to your appointment because there’s a lot of it, and you don’t want to mess up near the end. Even a single missing document can delay your application. The important documents include proof of income, bank statements, proof of assets, tax returns, income statements, etc. You should get a complete list from your lender way ahead of the actual application filing day.

So to conclude, try to avoid making any such move that can jeopardize your application approval. There is no guarantee; after all, it’s just your advanced preparations that can increase your chances of a smooth loan application.

Hire a Skillful Mortgage Broker

Are you planning to buy a house? Aiming to hire or consult a broker first? If the answer to any or both of these questions is yes, then this article is perfect for you. When and if you plan to shop for a house or have already started looking for one, it is sensible to consult a mortgage broker first, as a broker might make your goal of a dream home come effortlessly true.

A mortgage broker is the one who will help you compare rates and find a suitable finance source to get your dream to come true. This broker will function as a bridge between the lender and you. These people are trained and do all the legal work in order to get the best loan option for you. They will also assist you in completing all the necessary paperwork required for getting the loan approved. They are the ideal solution to all your real estate needs.

The brokers essentially perform the following functions:

  1. Lender research
  2. Number crunching
  3. Support you throughout loan application and settlement

It is crucial to find out the right person for the job. Below mentioned are a few characteristics of an ideal broker that could help you decide which broker is right for your situation:

  1. Responsive – Your broker needs to have established his presence in your mind that he responds timely, and these prompt responses will deliver a sense of professionalism to the people looking to hire that broker. It then enables you to be confident that your dream house will soon be yours.
  2. Knowledgeable – One of a mortgage broker’s roles is to connect you to various lenders; it is also his job to give you advice as to which is the most suitable loan product for your desires. It will be wise to get the broker to answer all of your curiosities to prevent you from regretting your decision later.
  3. Honest – You and the broker need to be honest and frank with each other. Furthermore, never hesitate in asking the broker about his fees and why he charges what he does, and how they get paid for their services. This will help you in gaining information about their hidden fees. The majority of the brokers do not charge fees from the borrower as they get the fees from the lender. These are some of the reasons why you should always hire a high-quality broker for your real estate project.
  4. Amicable – The broker must be pleasant but professional for smooth communication as this ensures you that the broker is, after all, concerned for you and your family’s future. If this is not the case, and the broker is merely rude and insensitive, it might make you feel like he is trying to get through the day and is not really passionate about helping you.
  5. Cordial – It is equally essential that the broker understands how much you know and helps you gain the knowledge you do not have about real estate. It is his job to let you know the documents you are supposed to submit, the mortgage options, which forms will have to be filled, and what you get in the end.

What Are The Factors That Influence Mortgage Rates?

Mortgage interest rates have a lasting effect on the finances of the person buying the property, since it is not something that can be paid off in only a few years. Mortgage borrowers always look for the lowest interest rates, while mortgage lenders will try to cover the risks by the interest amount, for the money they lend. Only those lenders who have established reputations charge very low interest rates.

Many economic factors as well as changing government policies can affect the mortgage interest rates. Interest rates can change and fluctuate every year, or every six months, and this is mostly out of anyone’s control. However, knowing what these factors are can help you before you make a decision regarding your mortgage. Some of these are:

  1. The price of the house and the initial loan amount.

When you search for homes to move into, you need to have a basic idea about the prices of the type of home you are looking for. Real estate agents and websites can also help you determine the right price for the kind of home you are looking for in a particular locality. The amount you would need to borrow would be equal to the price of your home and the closing costs only; this will not include the down payment. Mortgage insurance can be added to the loan as well.

  • The down payment.

As a rule of thumb, a larger rate of down payment means a lower rate of interest. This is because when you have a greater stake in the property, the lenders will have to cover less risk factors. In case your down payment is not enough, you may have t purchase mortgage insurance, since it would protect the lender even if you were to stop paying the loan amount back.

  • The term of the loan.

This is another factor that can determine the mortgage interest rate. Usually, short term loans have lower interests and lower overall costs. The monthly payments in this case are quite high. If you are looking for a long term loan, the interest amount can be quite high, but the monthly payments will be very affordable. This is why most homeowners choose the second option, even though it means they have to pay a greater rate of interest for a longer period.

  • The location of your home.

A lot of people do not consider this as a factor, but this does play a role in determining the rate of interest. This depends mainly on the different tax charges levied on home loans in different states.

  • Your credit score.

Undeniably, this is the most important factor which will affect your mortgage interest. If you have a higher credit score, you will be given a lower interest rate, and vice-versa. Your credit scores establish your credibility and reliability to the lenders, and help them consider their risks. It is a good idea to revise your credit scores before you set out to secure a mortgage loan, because lenders will most definitely make a judgment based on your payment history.

What Are The Factors That Can Affect Home Loan Eligibility?

A lot of people consider the possibility of taking a home loan as extremely daunting. While home loans are serious business, they are also quite easy to understand. If you have always wanted to have your own place and you are doing well financially, it might not be a bad idea to take out a home loan against your available assets and get the house of your dreams. Banks and other financial institutions have made it very easy for people to take out home loans. However, there are certain factors that can affect your eligibility for a home loan, since banks and other financial institutions need sufficient proof of your legitimacy before they hand over their money to you.

If you are thinking about taking out a home loan, you have come to the right place. Read on to know more about the factors that can affect your eligibility for a home loan.

  1. Your age.

This is the first factor that is taken into account by banks and other financial institutions, since it is an important factor in loan approval. If you are young and have a stable source of income, you are more likely to be sanctioned for a home loan than if you are much older and nearing retirement. This is because banks may doubt your potency to repay the loan in full.

  • Your job and income.

This is second on the list of considerations. Of course, unless you have a stable job with a steady income flow, you will simply not be sanctioned for a loan at all. Unconventional or risky jobs which do not always promise a stable future can hamper your plans to get a home loan. If you have a history of frequently changing your workplace, it might also affect your eligibility.

  • Your credit score.

This is the most important consideration when it comes to sanctioning home loans, since your credit score is basically a history of all your monetary transactions. It displays your repayment history, existing/outstanding loans, credit card dues and debt history. This is a measure of your financial credibility which the bank or lender will take into account while debating whether you are a good candidate for advancing a loan, since it will determine whether you will be able to pay the amount in due time.

  • Your property details.

A loan is always advanced against some sort of asset, and for home loans, this is usually the property that you are taking out the loan for. Your property is the security against your home loan. If you property is worth a lot, your home loan amount will automatically be more.

  • Your dependents.

The number of people who depend on you is taken into consideration before advancing a loan. This is because the more dependents you have, the more people you need to take care of and thus your ability to pay off the loan in time may get affected, as your disposable income will be lower. This can also affect your home loan eligibility.

Six Smart Tips to Qualify for a Home Loan

There was a time when buying a home was considered to be a challenging achievement. But, as real estate and financing markets underwent progression, house purchase became quite wide-spread. Average-income individuals could afford a reasonable shelter on their head and call it their own without having to pay the full price.

However, no compromise has been ever made on the formalities that a homebuyer is required to fulfil in these years.  A few components like age, income, credit score, location of the property, repayment capacity still remain the crucial parameters to evaluate your ability to apply for the loan and affect your application status.

Therefore, it is highly recommended to gain a complete understanding of them and always be considerate of these expert tips –

  1. Maintain Your Credit Score

Your credit score is the first thing that lending institutions evaluate before providing any loan to you. So, if you look forward to getting a go-ahead for your mortgage from lending institutions, you better maintain a clean history of credit bills and timely repayments of existing loans.

  • Pay Higher Down Payment

Your home loan lenders can finance anywhere between 70 to 90% of your property’s price, and the rest has to be contributed by you. However, instead of paying the bare minimum value, it is wise to make arrangements as high as you can from your pocket. That will immediately boost your eligibility status.

  • Have Clarity on Your Job and Career

Every lending institution you are ever going to contact will always be concerned about your job status and income. The loan sanction officers will consider your net salary, monthly expenses and any other EMIs on the run to assess your repayment capacity. A surplus of 50 to 60% is what they require.

  • Show Multiple Sources of Income

To get your home loan application clearance in one go, try to include an additional source of income if possible. That can be from a rented property, any part-time job or a side business. With this step, your financial health can improve, and your lenders have a surety of loan recovery on time.

  • Add a Co-Applicant

Including the name of family members, spouse or siblings that have a stable source of income and good credit can be extremely beneficial in the case of joint home loan. You can club their earnings with yours and make them a co-applicant to get your loan sanctioned quickly and at affordable interest rates.

  • Keep Your Calm

There is no benefit in hurrying over a home loan. A good amount of research and effort is required for the process, and terms and conditions have to be finalized. All the necessary documents have to be arranged and a full assessment has to be done. So, take your time and go with the flow.

Four Crucial Loan Tips for First-Time Home Buyers

Home buying is exciting and fun, especially for the first-timers. There are long-term dreams that are on the verge to get fulfilled, hence a great impatience to sign off the deal and take over the ownership. However, amidst that eagerness, one can commit mistakes that can lead to severe disappointments or financial setbacks.

One must understand that a real estate investment is an expensive one. Also, the mortgage liability that comes along is complicated and critical. So, to get most out of it and ride through as smoothly as possible, you have to do some research and be considerate enough of the following things –

  1. Assess your Loan Affordability

You might be eyeing a 5 BHK villa on popular streets of Montreal, but have to forego 70 to 80% of your monthly salary. Therefore, you better be realistic with your pocket limits and filter out the extravagant choices in the first step. Use a mortgage calculator to know what price of the home you can afford. That way, you will not have to waste time in looking over properties that are outside your budget or trying to get pre-approval for loans with high EMIs. Choose the programs where mortgage rates are within 50% of your disposable income.

  • Make Arrangements for Down Payment

Generally, banks and other lending institutions fund up to 90% of your property value; which means if you are buying a property worth $500K, you might get a loan up to $450K. But, that does depend on your lender and the type of loan you choose. So, be ready with at least 10% of the purchase price as the down payment of the home. If a large down payment is not your cup of tea, then look into FHA loans. Also, discuss with your mortgage broker for the other suitable options.

  • Maintain Good Credibility

Every mortgage lender first evaluates your credit report before loan approval. Hence, if you wish to get the best deal on your home loan shortly, you have to start improving your credit status from now on and fix the flawed records as well because a low credit score decreases your chances of getting loan approvals. You just keep up with the habit of clearing off the bills and not apply for any new credit if you aren’t sure of it. After all, you don’t want to mess up your credibility during the loan process in case the lenders pull out your credit report for the second time.

  • Compare Rates

All loan programs are not equal. Even the mortgage programs offering the same interest rate can differ from each other and its benefits can vary from lender to lender. If you find yourself in a similar situation, just be thoughtful of the components that go into determining its overall price. Then, make a sensible comparison between various banks and lenders. Make sure you watch over the seasonal offers and subsidized rates too.