Refinancing Your USDA Loan Just Got Easier

Refinancing Your USDA Loan Just Got Easier

If you live in a rural area, getting a mortgage through the U.S. Department of Agriculture could be a good way to save money on your home purchase. Qualifying buyers can get a USDA loan without having to put any money down. The Department of Agriculture is making these loans even more affordable for existing borrowers by lowering the cost of refinancing. If you bought your home through the USDA program, here’s what you need to know about its streamline refinance program.

Check out our refinance calculator.

Who Qualifies?

As of June 2, 2016, any homeowner with a direct USDA loan or a USDA loan guarantee could be eligible to take advantage of the USDA’s Streamline Refinance Program. Since 2012, the USDA has been testing out new refinancing rules on borrowers in certain states.

All USDA loans are subject to underwriting guidelines. But homeowners who have made at least 12 consecutive, on-time payments over the past year don’t have to undergo a credit check, secure an appraisal or be subject to a debt-to-income calculation (when refinancing for a 30-year term).

According to the Department of Agriculture’s estimates, the typical homeowner should expect to save approximately $150 a month once they refinance through the streamline program. Over the course of a year, that can add up to $1,800 in savings.

Related Article: What Is a Streamline Refinance?

Should You Refinance Your Mortgage?

Refinancing Your USDA Loan Just Got Easier

Just from looking at the numbers, you can see that homeowners can save money by refinancing. In the pilot program, some homeowners who refinanced were saving as much as $600 a month. That kind of reduction in your monthly mortgage payment could have a huge impact on your monthly budget.

But refinancing doesn’t make sense for everyone. If you’ve already paid down a substantial amount of interest on your home, refinancing may not affect your monthly payment that much. And keep in mind that not everyone can qualify for a refinance. You may run into issues if you’ve missed a payment in the past year, for example.

Try out our mortgage calculator.

Also, it’s important to remember that refinancing an existing loan into a new USDA loan doesn’t eliminate the private mortgage insurance premiums you’ll have to pay. USDA loans come with an upfront fee and a monthly premium, both of which are rolled into the loan. They’re added on to your monthly payment, so it’s a good idea to run the numbers to see how refinancing your loan might affect your payments.

The Bottom Line

Refinancing Your USDA Loan Just Got Easier

The USDA’s new refinance guidelines are designed to benefit lower- and middle-income homebuyers with high interest rates. While these changes might offer some homeowners the chance to save money, it’s best to consider the financial implications of refinancing before pulling the trigger.

Photo credit: Â©iStock.com/gradyreese, ©iStock.com/DragonImages, ©iStock.com/Izabela Habur

The post Refinancing Your USDA Loan Just Got Easier appeared first on SmartAsset Blog.

Source: smartasset.com

Wheeler County, Oregon VA Loan Information

Table of Contents

  • What is the VA Loan Limit?
  • How to Apply for a VA Home Loan?
  • What is the Median Home Price?
  • What are the VA Appraisal Fees?
  • Do I need Flood Insurance?
  • How do I learn about Property Taxes?
  • What is the Population?
  • What are the major cities?
  • About Wheeler County
  • Veteran Information
  • Apply for a VA Home Loan
  • VA Approved Condos

FAQ

What is the VA Loan Limit?

2020 VA Home Loan Limit in Wheeler County is $0 down payment up to $5,000,000* (subject to lender limits) /2 open VA loans at one time $548,250 (Call 877-432-5626 for details).

How to Apply for a VA Home Loan?

This is a quick look at how to apply for a VA home loan in Wheeler County. For a more detailed overview of the VA home loan process, check out our complete guide on how to apply for a VA home loan. Here, we’ll go over the general steps to getting a VA home loan and point out some things to pay attention to in Wheeler County. If you have any questions, you can call us at VA HLC and we’ll help you get started.

  1. Get your Certificate of Eligibility (COE)
    • Give us a call at (877) 432-5626 and we’ll get your COE for you.
  2. Are you applying for a refinance loan? Check out our complete guide to VA Refinancing.
  3. Get pre-approved, to get pre-approved for a loan, you’ll need:
    • Previous two years of W2s
    • Most recent 30 days paystubs or LES (active duty)
    • Most recent 60 days bank statements
    • Landlord and HR/Payroll Department contact info
  4. Find a home
    • We can help you check whether the home is in one of the Wheeler County flood zones
  5. Get the necessary inspections
    • Termite inspection: required
    • Well or septic inspections needed, if applicable
  6. Get the home appraised
    • We can help you find a VA-Certified appraiser in Wheeler County and schedule the process
    • Construction loan note: Construction permit/appraisal info
      1. Building permit
      2. Elevation certificate
  7. Lock-in your interest rates
    • Pro tip: Wait until the appraisal to lock-in your loan rates. If it turns out you need to make repairs, it can push your closing back. Then you can get stuck paying rate extension fees.
  8. Close the deal and get packing!
    • You’re ready to go.

What is the Median Home Price?

As of March 31st, 2020, the median home value for Wheeler County is $172,177. In addition, the median household income for residents of the county is $33,456.

How much are the VA Appraisal Fees?

  • Single-Family: $775.
  • Individual Condo: $825.
  • Manufactured Homes: $825.
  • 2-4 Unit Multi-Family: $950.
  • Appraisal Turnaround Times: 15 days.

Do I need Flood Insurance?

The VA requires properties are required to have flood insurance if they are in a Special Flood Hazard Area.

How do I learn about Property Taxes?

  • Auralea Woods is the Wheeler county tax assessor. Her office can be reached at 701 Adams Street Ste. 203 Fossil, Oregon 97830. In addition, her office can also be reached by calling (541) 763-4266.
  • The state of Oregon offers businesses that invest and hire in enterprise zones the option to be exempt from property taxes for at least three years. In addition, the Oregon Investment Advantage program encourages new businesses that are starting as well as ones who are relocating to the state with various incentives. For example, the program offers income tax subtraction and elimination of state income liability for new businesses for many years.

What is the Population?

  • The county’s population of 1,332 is 86% White, 6% Hispanic, and 6% Mixed Race.
  • Most county residents are between 18 and 65 years old, with 14% under 18 years old and 36% older than 65.
  • In total, the county has about 661 households, at an average of two people per household.

What are the major cities?

There are currently three cities in the county Mitchell, Spray, and Fossil, the latter of which serves as the county seat.

About Wheeler County

Wheeler County, Oregon officially formed in 1899, the county was named after Henry H. Wheeler, a man who operated the first mail stage line from The Dalles to Canyon City. The county’s boundaries have not changed since it was created. In addition, when the county was created the county seat was set to be temporarily placed in the city of Fossil, which was named after a fossil that was discovered in the area in 1876. A year later an election was held to choose the county seats permanent place, and Fossil won.

Today, the county’s economy depends on its livestock and tourism industries. However, the biggest employment industries in the county are farming, educational services, and public administration. Therefore, the most common occupations in the county are management, farming, and educational instruction.

The Wheeler County Community & Economic Development team is encouraging the growth of its local economy by assisting potential new businesses by getting access to the necessary resources. In addition, free and confidential business advising is also offered to help build a stronger business within the county.

When it comes to education, the county is serviced by two school districts with Fossil School District and Spray School District #1. Both districts provide education for students K-12.

Finally, the county is also home to The Oregon Paleolands Institute headquarters, which provides educational tours, hikes, and workshops to teach more about the region’s geology and paleontology. In addition, the county is also host to annual events like the Wheeler County Fair and Rodeo, and the Wheeler County Bluegrass Festival.   

Veteran Information

The county is currently home to 154 veterans, and they all have access to:

  • County Veteran Assistance Information
    • Wheeler County Veteran Services Office – 401 Fourth Street, Fossil, OR 97830.

Apply for a VA Home Loan

  • For more information about VA Home Loans and how to apply, click here.
  • If you meet the VA’s eligibility requirements, you will be able to enjoy some of the best government guaranteed home loans available.  
  • VA loans can finance the construction of a property. However, the property must be owned and prepared for construction as the VA cannot ensure vacant land loans.

VA Approved Condos

There are currently no VA-approved condos in Wheeler County, Oregon. However, it is still possible to get a condo through the condo approved and we can help you through the condo approval process, just call us at (877) 432-5626.  

Oregon VA Loan Information: https://www.vahomeloancenters.org/oregon-va-home-loan-limits/

VA Loan Information by State: https://www.vahomeloancenters.org/va-loan-limit-maximum-va-loan-amount/

The post Wheeler County, Oregon VA Loan Information appeared first on VA Home Loan Centers.

Source: vahomeloancenters.org

Current Mortgage Rates Stay Lower on Monday

We saw mortgage rates dip a little lower on Friday after trouble in Turkey led financial market participants to seek out the perceived safety of long-term government bonds.

Mortgage rates are expected to stay close to current levels this week, but we could see some movement after a few key economic reports get released. Read on for more details.

Where are mortgage rates going?                                            

Rates hold lower to start the week

It’s a quiet start to the week as there are no significant economic reports scheduled for release. That’s keeping long-term government bond yields, which dropped due to an increased demand on Friday after trouble for Turkey’s lira, down near three week lows.

The yield on the 10-year Treasury note (the best market indicator of where mortgage rates are going) is currently at 2.88%. That’s basically flat on the day and about six basis points lower from where it was this time last week.

The expectation for this week is the same as it’s been for quite some time, and that’s for current mortgage rates to stay close to present levels. The fact that rates have remained in a tight range all summer (and most of spring) really isn’t the worst thing for borrowers, as many forecasters had expected rates to rise higher than they are now by this time.

The pressure isn’t off quite yet, though, as it is widely anticipated that the Federal Reserve will increase the nation’s benchmark interest rate, the federal funds rate, by at least a quarter-point by the time 2019 rolls around.

According to the CME Group’s Fed Funds futures, there is a 96.0% chance that the federal funds rate will go up a little over a month from now at the FOMC’s September meeting.

That would push the target range up a quarter-point to 2.00%-2.25%. There is still a lot of time between now and December, but at the moment the majority of analysts believe another rate hike will take place then, pushing the fed funds target range up to 2.50%-2.75%.

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Rate/Float Recommendation                                  

Lock now before move even higher     

With mortgage rates expected to rise in the coming months, we believe the prudent decision for most borrowers is to lock in a rate sooner rather than later. The longer you wait, the more likely it is that you’ll get a higher rate and pay more interest on your purchase or refinance.

Learn what you can do to get the best interest rate possible.  

Today’s economic data:           

  • Nothing out today.

Notable events this week:     

Monday:   

  • Nothing

Tuesday:   

  • NFIB Small Business Optimism Index
  • Import and Export Prices

Wednesday:         

  • Retail Sales
  • Empire State Mfg Survey
  • Productivity and Costs
  • Industrial Production

Thursday:     

  • Housing Starts
  • Jobless Claims
  • Philly Fed Business Outlook Survey

Friday:          

  • Consumer Sentiment

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*Terms and conditions apply.

Source: totalmortgage.com

I Dropped Out of College: My Student Loan Repayment Options

No one intends to drop out of college. If you show up to campus for your freshman year, chances are you plan to graduate in four years and use your degree to land a job. Maybe you even have the whole thing mapped out, step-by-step.

But then life happens. Whether it’s a family emergency, deteriorating health, stress burnout, or just the realization that college isn’t the right choice, plenty of people choose to drop out of their university every year. The problem is, your student loans don’t go away just because you never ended up with a degree.

So how should someone in this position approach student loan repayment? Are there any unique considerations to take into account? Here’s what you need to know.

Choose an Income-Based Repayment Plan

If you have federal student loans, you’re eligible for the same repayment options available to borrowers with a degree.

You may currently be on the standard 10-year repayment plan, which will have the highest monthly payments and the lowest total interest. You have the option of switching to a less expensive option if you’re struggling with those payments. Use the official repayment calculator to see which plan lets you pay the least.

When you choose an extended, income-based, or graduated repayment plan, you’ll pay more interest overall than if you stuck with the standard plan. If you’re not working toward a specific forgiveness program, then it’s best to switch back to the standard plan as soon as you can afford it to minimize the interest.

Refinance Private Loans

Private student loans have fewer income-based repayment options than federal loans, and they rarely offer deferment or forbearance options. But you can refinance private loans for a lower interest rate, even if you dropped out.

There are a few lenders that service borrowers with uncompleted degrees.

These may include:

  • MEF
  • RISLA Student Loan Refinance
  • EDvestinU
  • PNC
  • Wells Fargo
  • Purefy
  • Discover Bank
  • Advance Education Loan
  • Citizens Bank

To be a good candidate for a student loan refinance, you must have a high credit score and no recent bankruptcies or defaults on your credit report. You also need a low debt-to-income ratio, and some lenders may have income requirements.

Financial aid expert Mark Kantrowitz of SavingforCollege.com said borrowers are unlikely to be good refinance candidates immediately after college because lenders usually require a minimum amount of full-time employment.

If you dropped out recently, you may want to wait a year before trying to refinance private loans. During that time, check your credit score through Mint, pay all your bills on time, avoid opening new loans or lines of credit, and pay your credit card bill in full every month.

Explore Deferment and Forbearance

Once you leave school, you’re eligible for a six-month grace period where federal student loan payments are put on hold. You won’t accrue interest during this time if you have subsidized loans, but you will if you have unsubsidized loans.

If you still need more time after the grace period has expired, you can apply for deferment or forbearance. Borrowers have to apply for deferment and forbearance manually and wait to be approved.

Deferment and forbearance are both federal programs that let borrowers avoid paying their student loans while still remaining current. The main difference between the two options is that interest will not accrue on your loan balance during deferment, but it will accrue during forbearance. For that reason, it’s harder to qualify for deferment.

Be careful about putting your loans in deferment or forbearance for a long time. The interest that accrues will capitalize, meaning it will be added to your loan’s principal. This will increase your total monthly payments and could delay your debt payoff timeline.

Apply for Public Service Loan Forgiveness

Public Service Loan Forgiveness (PSLF) is a program that encourages borrowers to choose a non-profit or government job. In exchange, your remaining loan balance will be forgiven after 10 year’s worth of payments, which do not have to be consecutive. It’s even available to borrowers who dropped out and never finished a degree.

“PSLF is always an option because it’s employer-dependent,” said student loan lawyer Joshua R. I. Cohen.

PSLF is only available for federal loans, and only those loans that are part of the Direct Loan Program. If you have FFEL or Perkins loans, you’ll have to consolidate them as part of the Direct Consolidation Program. This process will render them eligible for PSLF.

Be sure not to consolidate loans that are already part of the Direct Loan Program. If you’ve already been making payments, consolidating loans will restart the clock on PSLF, and you could lose credit for eligible payments you’ve already made.

The employer you work for must also be an eligible non-profit or government entity. Only full-time employees qualify for PSLF, which excludes part-time workers and independent contractors.

To be eligible for PSLF, you should fill out the employment certification form every year. This form asks for your employer’s contact information, your employment status, and more.

Once you submit the form, you should receive a notice verifying your employer and how many eligible payments you’ve made. Doing this every year will make it easier when you apply for forgiveness after your 120 payments have been made.

“It also gives borrowers an opportunity to dispute any errors or undercounts well before they reach eligibility for loan forgiveness, giving them plenty of time to address disputes,” said student loan lawyer Adam S. Minsky.

Borrowers can save money while working toward PSLF by choosing an income-based repayment plan instead of the standard 10-year plan. They also won’t owe taxes on the forgiven amount, so it’s best to choose the least expensive monthly option.

Try to Discharge Your Loans

If you couldn’t complete college because the department you were studying in closed, or your school committed fraud, you may be a good candidate for discharging your student loans completely. If this happened to you, contact a student loan lawyer who can help you file a case.

 

The post I Dropped Out of College: My Student Loan Repayment Options appeared first on MintLife Blog.

Source: mint.intuit.com

Expert Home Security Tips and Tricks

Expert Home Security Tips and Tricks

Purchasing, updating, and decorating your home was a big investment. It is your family’s refuge and holds both treasured memories and valued possessions: in short, all things that you want to protect. We talked with several security experts to discover and share their top tips for home protection.

Their advice was varied, but they all agreed that using a smart combination of the right tools, techniques, and safety measures is the key to protecting your home and family. And you might even save a bit of money in the long run!

First Line of Defense: Securing Your Home Exterior

The first step in improving your household safety is to evaluate the exterior of your home. If burglars or other criminals can’t get into your home, they can’t do much damage. This is why taking a look at access points like your doors and windows is essential.

Roman Zrazhevskiy is the Co-Founder and CEO of Ready to Go Survival, a company that creates custom survival kits. As a former EMT and lifelong outdoorsman, Zrazhevskiy understands the connection between facility security and your personal safety. He says the best place to start updating your home security is with the exterior doors to your home. Here are his key points:

  • First, replace all the doors with solid wood or steel doors, and install high-quality deadbolt locks.
  • Ensure the door frames are made of steel or have steel supports for the door, and that all door hardware is a minimum of three inches long. You can also install a steel bar on the inside that can be closed if needed.
  • A great product that helps secure your doors is called the Door Sentinel. It comes with all the hardware to reinforce your exterior door so it will be much more difficult to break into.

Identity theft expert, author, and speaker Robert Siciliano covers all aspects of security as they relate to violence and fraud prevention in both the physical and virtual worlds. Here are his top home security tips for way that you can use your doors, windows, and even your landscaping to keep you and your family safe.

  • Make sure nobody can see inside your windows at night, and be choosy about which drapes to leave open during the day, especially if you have expensive items that can be viewed through windows.
  • Keep your shrubs and trees manicured so that burglars can’t hide near them.
  • Do a door and lock inventory to make sure they all work—the only time a door should be unlocked is when someone is using it.
  • The only time a window should be unlocked is when it’s open while you’re home, and even then, be extremely judicious about this, including for second-story windows that can be climbed up to.

Quick and Easy Home Security Tips

There are also many quick, simple, and inexpensive ways that you can keep your home safe that won’t break the bank, including a few tips for home security while on vacation. Siciliano further suggests these three inexpensive, easy, and creative ideas.

  • When traveling for long stretches, arrange to have someone mow your lawn and park their car in your driveway.
  • Get a beware of dog sign even if you don’t have a dog. Get a big dog food bowl. Place it near your front door.
  • Go to an Army/Navy store and get a pair of men’s boots, put them near your front or back door.

Justin Lavelle is the Chief Communications Officer for BeenVerified, a leading source of online background checks and contact information. Lavelle encourages you to make a few easy, little or no cost changes to your home (and your habits) that can protect you and your family.

The lived-in look is a great deterrent. Many hardware stores sell timers that can run lights in your house. These can be lamps or hardwired fixtures. These timers are easily installed as a do-it-yourself project. It is recommended that you have outdoor lights timed as well. You can set lights inside and out to come on at different times during the evening and morning, giving your home an occupied look even if you are gone. Keep a car in the driveway if possible and keep the radio on. Be sure you remove your mail and any newspapers dropped off on a daily basis.

A big billboard that says you are not home is unattended packages. If you are gone all day at work, consider sending your packages to a trusted neighbor you know will be home during the day. You can also have packages shipped to a P.O. Box and pick them up at your post office. Another option is to have items shipped to the nearest brick and mortar location and pick them up there in the evening or [on the] weekend.

Smart Tech to Keep Your Home Safe

Now that you have considered the physical and structural aspects of home security, it’s time to think about ways that digital and virtual tools can help you. Rob Caiello, Vice President of Marketing at Allconnect, helps movers with the purchase and setup of home utilities and services, including finding the right home security system and service. As a security system expert, he encourages all homeowners to take a look at the new technologies available.

Home security systems aren’t what they used to be. With the explosion of home technology, home security systems have gotten much smarter. With smart home security systems, you can receive real time alerts to your smartphone if an emergency takes place in your home. Plus, you can also receive texts or email notifications about potential security threats, like a window or door left open for too long.

These systems often require an initial up-front investment, but the benefits of peace of mind are priceless. Plus, adding monitored safety and security devices can often help homeowners dramatically lower their home insurance premiums. As a final security and technology tip, don’t post your vacation plans on social media: You don’t want the world to know your home will be left unwatched.

New technology has made everything from public data collection to home security quicker, simpler, and more affordable. If your finances are tight, you might consider a cash-out refinance to obtain the funds for security upgrades. Lavelle also encourages homeowners to look into both traditional security system, as well as new tools like web-based digital intercom systems.

It used to be expensive to have a security system installed, but today many DIY kits are available that work with your home’s internet wifi for connectivity. Some will provide monitoring services and some will allow you to be notified on your smartphone if there is an intrusion detected. Google the many options that are available to find a system that fits your needs and budget. If nothing else, install a camera prop above your front door and other entrance areas. It will deter most burglars.

Unfortunately we live in a world where opening your front door may be dangerous for you and your family. Camera intercom systems used to be cost prohibitive for many residential applications, but today with internet wifi, smartphones, and small digital cameras, having the ability to answer your door without actually opening it is a reality. There are even systems that allow you to appear to be home and answer the door when you are halfway around the world.

Don’t Let Your Castle Be Compromised

Whether you are in town or away on vacation, the world is an unpredictable place so it’s important to take precautions to safeguard your home—your castle. From digital solutions to simple DIY steps, there are many means to bolster protection for every house on any budget. Contact a PennyMac Loan Officer to explore the refinancing options to fund security upgrades for your home.

The views, information, or opinions expressed in this blog do not necessarily represent those of PennyMac Loan Services, LLC and its employees.

Source: pennymacusa.com

Mortgage rates remain at record-low levels

After falling to the lowest rate in Freddie Mac’s Primary Mortgage Market Survey’s near 50-year-history last week, the average U.S. mortgage rate for a 30-year fixed loan remained at a survey-low 2.67% this week.

Last week’s announcement of a 2.67% rate broke the previous record set on Dec. 3, and was the first time the survey reported rates below 2.7%.

The average fixed rate for a 15-year mortgage also fell this week to 2.17% from 2.19%. One year ago, 15-year average fixed rates were reported at 3.16%.

“All eyes have been on mortgage rates this year, especially the 30-year fixed-rate, which has dropped more than one percentage point over the last twelve months, driving housing market activity in 2020,” said Sam Khater, Freddie Mac’s chief economist. “Heading into 2021 we expect rates to remain flat, potentially rising modestly off their record low, but solid purchase demand and tight inventory will continue to put pressure on housing markets as well as house price growth.”

Freddie Mac has reported survey-low rates 16 times in 2020, proving beneficial to borrowers looking to buy or refinance a home amid economic turmoil outside of the industry.

Mortgage spreads continue to compress, per Freddie Mac officials, with the 10-year Treasury yield remaining at or above 90 basis points through the beginning of December.

This week’s 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 2.71%, down from last week when it averaged 2.79%. That’s another sharp drop-off from this time last year, when the 5-year ARM averaged 3.46%.

The Federal Open Market Committee revealed earlier this month that the Federal Reserve plans to keep interest rates low until labor market conditions and inflation meet the committee’s standards. Overall, Fed purchases have helped to drive mortgage rates and other loan interest rates to the lowest level on record by boosting competition for bonds.

Higher rates may be around the corner, as the calendar flips to 2021 and the promise of a second COVID-19 stimulus check along with a vaccine reaches consumers. The Mortgage Bankers Association has forecasted rates for 30-year fixed-rate loans rising to an average of 3.2% by the end of 2021.

But if the virus is not controlled in the new year, investors may remain cautious and consumer confidence could wane – keeping rates low, according to the MBA.

The post Mortgage rates remain at record-low levels appeared first on HousingWire.

Source: housingwire.com

2021 means new challenges for mortgage lending

For many of us, the start of a new year is usually synonymous with a renewed sense of professional self, focusing on new goals, new prospects for the year and, of course, the excitement for the upcoming spring real estate market. As we think about coming out of this first month of the year, we’ve quickly realized this year is going to be anything but planned or what we in the mortgage lending industry are used to.

While the mortgage lending industry has always been an ever-changing profession, we as loan originators have entered a very unprecedented market, with a new landscape paved by uncertainty and a level of anxiety that could easily cripple the most seasoned originator.

With the current global pandemic, we have found ourselves in an increasingly volatile financial system and quickly having to learn how to adapt to the changing environment from one day to the next. The current financial state of our country has caused us to now rely heavily on the opening exchanges and the market forecast to determine how our rates will be impacted, thus giving way to a new line of thinking – Where and how can we effectively close loans?

For some, the refinance “boom” has been their bread and butter over the past year and a way to build up their pipelines. But for others, low mortgage rates gave way to pre-approved borrowers struggling in a very competitive seller’s market. It is even more important then ever to stay in front of your borrowers and referral partners so that they understand the changes that ultimately affect us all.

The way we as mortgage lending originators conduct our business has quickly taken on a new form during these times of uncertainty. 2020 proved that we all need to work to find new ways to generate business. While working double time to save the business we had, it was very easy to find ourselves thrown into a game of what to do next? The country was paralyzed amid the current health crisis and many borrowers and sellers alike are frightened to enter purchase contracts and move forward with transactions already in progress.

We found ourselves acting as an empathetic ear to those who are on the verge of potential economic hardship and constantly reassuring those in process that we are all in this together.

Fast forward to 2021 and expanding our mortgage lending business has taken on a new form as the inventory in many markets have taken a sharp downturn during the pandemic, pushing it into some of the lowest availability in history. Buyers are being outbid, above asking price has become the normal in many areas and the trajectory of the market seems to be moving in a much different direction than many are used to.

Even some of the most seasoned real estate agents have had to slow down in their current business model. By acting in accord with our referral partners, we too as originators have had to find new ways to prospect for new business and remain relevant in a challenging environment. Marketing material has quickly evolved from our traditional “Why Rent When You Can Own” to educating on the effect of the Federal Reserve’s action of cutting interest rates and how this has impacted inventory.

This is now more than ever a time of understanding, patience and resilience.

The face of mortgage lending has changed from the recognition of the big-name banks to the individual brand that we have all built for ourselves. Many have established a presence within their markets by hosting local happy hours, attending networking events, and attending their closings. Face-to-face coffee meetings are a staple to beginning new relationships among referral partners, causing many loan originators to halt business dealings and struggle to stay relevant during this crazy time.

Zoom meetings have spiked across the country and even the most seasoned sales professionals have been taking advantage of the short face-to-face time to ensure their partners and clients keep them top of mind.

Business as usual has certainly taken on a new meaning as many of us try to keep up on borrower demands and field questions during the day while juggling working from home, which sometimes involves the occasional screaming child in the background.

It is a great time to revamp our CRMs, organize our past and current clients, and more importantly, try to find ways to slow down and reconnect with family and friends. The mortgage lending business has never been for the faint of heart, but I believe this will certainly separate the lions from the cubs. Buckle up lending community — this may be only getting started!

This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.

To contact the author of this story:
Tracy Chongling at tracy.chongling@rate.com

To contact the editor responsible for this story:
Sarah Wheeler at swheeler@housingwire.com

The post 2021 means new challenges for mortgage lending appeared first on HousingWire.

Source: housingwire.com

VA Cash-Out Refinance: Is It a Good Idea? | Rates & Guidelines 2021

The VA cash-out refinance program enables veterans and active-duty service members to tap into their home’s equity and, depending on current refinance interest rates, lower their interest rate at the same time.

The idea of getting cash out of your home is appealing, but is it a good idea for you? Below, we’ll dive into some of the situations when a VA cash-out refinance might be a good fit — and when it might not.

Check your eligibility for a VA cash-out refinance loan today.

Reasons veterans get a VA cash-out refinance

Veterans use the VA cash-out refinance for plenty of reasons — the biggest being that they want to get cash. The cash comes from home equity. So, if you have a mortgage for $200,000 and you’ve paid off $50,000, you can get up to $50,000 back in cash, while also potentially lowering your mortgage rate.

Veterans aren’t required to take out the full amount possible, though. A homeowner in the same situation could take out $10,000 to fund a small kitchen remodel, to buy a new car, or pay for a vacation, for example.

The most common reasons to get cash from a cash-out refinance is to fund remodels, renovations, and repairs to your home — or to use the cash to pay off other debts. (It may be financially responsible to use a cash-out refinance to pay off credit card debt if the rate on the other debt is significantly higher than the new rate you’ll get from a cash-out refinance.)

But, there are other potential benefits to a VA cash-out refinance. You may be able to lower your interest rate and monthly mortgage payment. And, if you have an FHA or conventional loan with mortgage insurance, you could remove that extra monthly cost by refinancing into a VA loan.

Reasons to avoid a cash-out refinance

While it’s a good decision for many homeowners, refinancing isn’t the best option for everyone. You should only refinance if you can gain something from the new loan. When determining whether you’re benefitting from a cash-out refinance, it’s important to consider your whole financial situation and your goals.

It could increase your mortgage rate.

When veterans apply for a VA cash-out refinance, they’ll need to supply their credit score. If your credit score is lower than it was when you first applied for your mortgage, then there’s a good chance that the refinance could increase your mortgage rate.

The clock restarts on your mortgage.

It’s also important to remember that a cash-out refinance restarts the clock on your mortgage — you’re opening up a new loan with new terms, likely 30-years. This means additional interest costs. Because of this, it’s best to use a VA cash-out refinance for things that will improve your financial situation, and, in turn, improve your ability to repay the loan.

Riskier than other loan types.

VA cash-out finances are often used for home improvements that increase the overall value of the investment, education expenses to increase earning potential, new business ventures, or debt consolidation. Still, all of these options can represent a financial risk. Before proceeding with a cash-out refinance, it’s worth investigating other funding options such as personal loans, specialized loans (like student loans or small business loans) or second mortgages.

Finally, if you’re using cash from a VA cash-out refinance to pay off credit card debt, it’s important to remember that you’re paying off unsecured debt with secured debt — in other words, you risk foreclosure on your home if you are unable to make your mortgage payments for any reason.

VA cash-out refinance rates

VA cash-out refinance rates are currently low. According to Ellie Mae’s Ocober 2020 Origination Report, interest rates for VA loans hovered at an average of 2.75% — 0.26% lower than interest rates for 30-year, fixed-rate conventional loans.

Read more: Current VA Refinance Rates

With rates projected to remain low, Veterans who purchased a home within the last few years should check to see if a refinance could reduce their interest rate and monthly mortgage payment. Your potential savings are dependent on your unique situation — remember to comparison shop with multiple lenders to see who can offer you the best deal.

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When a VA streamline refinance is right instead

If you don’t need cash, there’s no reason to get a cash-out refinance. In these situations, a VA streamline refinance (also known as an interest rate reduction refinance loan or IRRRL) makes more sense. The rates associated with the IRRRL tend to be lower, so you could save more money with that type of refinance.

If you’re looking to take out cash for energy-efficiency improvements to your home, the IRRRL allows homeowners to finance up to $6,000 in improvements that will save money over time, including programmable thermostats, insulation, solar heating, and caulking/weather stripping.

VA streamline refinance vs. VA cash-out refinance

If you’re looking to lower your interest rate and monthly payment, don’t need cash out and already have a VA loan, an IRRRL is the easier, quicker, and just plain better option. In fact, streamline refinances require that Veterans lower their mortgage rate to qualify for the loan (also called a net tangible benefit). That’s not a requirement with the cash-out refinance.

If you are looking to get cash for an expense like a remodel or debt consolidation, then a VA cash-out loan is likely the better option. It’s also a good option for Veterans with a non-VA loan requiring mortgage insurance. VA loans don’t require mortgage insurance, so refinancing into one, could remove that monthly expense.

How to apply for a VA cash-out refinance

The application and approval process for a VA cash-out refinance is very similar to the loan application process for a home purchase, including:

  • You’ll likely need a VA appraisal, especially if your existing loan is a non-VA loan. This establishes the current value of your home and helps determine the amount of cash you can take out.
  • You’ll need a credit check and income verification to verify that you’re able to make the new VA loan payments.
  • You’ll need to establish eligibility with minimum service requirements, especially if you currently have a non-VA loan.

Also, shop around with multiple lenders to compare rates and terms. This can save you lots of money over the life of the loan and allow you to negotiate better terms.

Check your eligibility for a VA cash-out refinance loan today.

Source: militaryvaloan.com

What Happens to Mortgage Rates When the Fed Cuts Rates?

Just about everybody with a wallet is impacted by the Federal Reserve. That means you—homeowners and prospective buyers. Whether you’re already nestled in to the house of your dreams or still looking to find it, you’ll probably want to track what happens to mortgage rates when the Fed cuts rates. When the Fed (as it’s commonly referred to) cuts its federal funds rate—the rate banks charge each other to lend funds overnight—the move could impact your mortgage costs.

The Fed’s overall goal when it cuts the federal funds rate is to stimulate the economy by spurring consumers to spend and borrow. This is good news if you are carrying debt because borrowing tends to become less expensive following a Fed rate cut (think: lower credit card APRs). But in the case of homeownership, what happens to mortgage rates when the Fed cuts rates can be a double-edged sword.

What happens to mortgage rates when the Fed cuts rates depends on many factors.

The connection between a Fed rate cut and mortgage rates isn’t so crystal clear because the federal funds rate doesn’t directly influence the rate on every type of home loan.

“Mortgage rates are formed by global market forces, and the Federal Reserve participates in those market forces but isn’t always the most important factor,” says Holden Lewis, who’s been covering the mortgage industry for nearly 20 years and is also a regular contributor to NerdWallet.

To understand which side of the sword you’re on, you’ll need an answer to the question, “How does a Fed rate cut affect mortgage rates?” Read on to find out if you stand to potentially gain on your mortgage in a low-rate environment:

How a fixed-rate mortgage moves—or doesn’t

A fixed-rate mortgage has an interest rate that remains the same for the entire length of the loan. If the Fed cuts rates, what happens to mortgage rates if you are an existing homeowner with a fixed-rate mortgage? Nothing should happen to your monthly payments following a Fed rate cut because your rate has already been locked in.

“For current homeowners with a fixed-rate mortgage set at a previous higher level, the existing mortgage rate stays put,” Lewis says.

If you’re a prospective homebuyer shopping around for a fixed-rate mortgage, the news of what happens to mortgage rates when the Fed cuts rates may be different.

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For prospective homebuyers: If the Fed cuts its interest rate and the 10-year Treasury yield is similarly tracking, the rates on fixed-rate mortgages could drop, “and you could lock in interest at a lower fixed rate than before.”

– Holden Lewis, mortgage expert and NerdWallet contributor

The federal funds rate does not directly impact the rates on this type of home loan, so a Fed rate cut doesn’t guarantee that lenders will start offering lower mortgage rates. However, the 10-year Treasury yield does tend to influence fixed-rate mortgages, and this yield often moves in the same direction as the federal funds rate.

If the Fed cuts its interest rate and the 10-year Treasury yield is similarly tracking, the rates on fixed-rate mortgages could drop, “and you could lock in interest at a lower fixed rate than before,” Lewis says. It’s also possible that rates on fixed mortgages will not fall following a Fed rate cut.

How an adjustable-rate mortgage follows the Fed

An adjustable-rate mortgage (commonly referred to as an ARM) is a home loan with an interest rate that can fluctuate periodically—also known as variable rate. There is often a fixed period of time during which the initial rate stays the same, and then it adjusts on a regular interval. (For instance, with a 5/1 ARM, the initial rate stays locked in for five years and then adjusts each year thereafter.)

So back to the burning question: If the Fed cuts rates, what happens to mortgage rates? The rates on an ARM typically track with the index that the loan uses, e.g., the prime rate, which is in turn influenced by the federal funds rate.

If the Fed cuts rates, what happens to mortgage rates? If you have an adjustable-rate mortgage, you may see your rate change.

“If the Fed drops its rate during the adjustment period, you could see your interest rate go down and, in turn, see lower monthly payments,” says Emily Stroud, financial advisor and founder of Stroud Financial Management.

Since ARMs are often adjusted annually after the fixed period, you may not feel the impact of the Fed rate cut until your ARM’s next annual loan adjustment. For instance, if there is one (or more) rate cuts during the course of a year, the savings from the rate reduction(s) would hit all at once at the time of your reset.

If the Fed cuts rates, what happens to mortgage rates for prospective homebuyers considering an ARM? An even lower rate could be in your future—at least for a specific period of time.

“If you’re looking for a shorter-term mortgage, say a 5/1 ARM, you could save considerably on interest,” Stroud says. That’s because the introductory rate of an ARM is usually lower than the rate of a fixed-rate mortgage, Stroud explains. Add that benefit to lower rates fueled by a Fed rate cut and an ARM could be enticing if it supports your financial goals and plans.

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“If the Fed drops its rate during the adjustment period, you could see your interest rate go down and, in turn, see lower monthly payments.” 

– Emily Stroud, financial advisor and founder of Stroud Financial Management

Benefits of other variable-rate loans following a rate cut

If you have a Fed rate cut and mortgage rates on your mind and are a borrower with other types of variable-rate loans, you could be impacted following a Fed rate cut. Borrowers with variable-rate home equity lines of credit (HELOCs) and adjustable-rate Federal Housing Administration loans (FHA ARMs), for example, may end up ahead of the curve when the Fed cuts its rate, according to Lewis:

  • A HELOC is typically a “second mortgage” that provides you access to cash for goals like debt consolidation or home improvement and is a revolving line of credit, using your home as collateral. A Fed rate cut could result in lower rates for variable-rate HELOCs that track with the prime rate. If you are an existing homeowner with a HELOC, you could see your monthly payments drop following a Fed rate cut.
  • An FHA ARM is an ARM insured by the federal government. If you’re wondering about a Fed rate cut and mortgage rates, know that this type of mortgage behaves much like a conventional variable-rate loan when the Fed cuts it rate, Lewis says. Existing homeowners with an FHA ARM could see a rate drop, and prospective homebuyers could also benefit from lower rates following a Fed rate cut.

When it comes to a Fed rate cut and mortgage rates, refinancing to a lower rate could be an option for existing homeowners.

Refinancing: A silver lining for fixed rates

When it comes to a Fed rate cut and mortgage rates, refinancing to a lower rate could be an option if you have an existing fixed-rate loan. The process of refinancing replaces an existing loan with a new one that pays off your old loan’s debt. You then make payments on your new loan, so the goal is to refinance at a time when you can get better terms.

“If someone buys a home one year and a Fed rate cut results in a mortgage rate reduction, for example, it presents a real refinance opportunity for homeowners,” Lewis says. “Just a small percentage point reduction could possibly trim a few hundred bucks from your monthly payments.”

Before a refinancing decision is made based on a Fed rate cut and mortgage rates, you should consider any upfront costs and fees associated with refinancing to ensure they don’t offset any potential savings.

Managing your finances as a homeowner

You might be expecting some savings in your future now that you’re armed with information on what happens to mortgage rates when the Fed cuts rates. Whether you’re a homebuyer and financing your new home is going to cost you less with a lower interest rate, or you’re an existing homeowner with an ARM that may come with lower monthly payments, Stroud suggests to use any uncovered savings wisely.

“Invest that cash back into your property, pay down your home equity debt or borrow with it,” she says.

Understanding the connection between the Fed rate cut and mortgage rates can help you better manage your finances as a homeowner.

While news of a Fed rate cut may entice you to analyze how your mortgage will be impacted, remember there are many factors that help to determine your mortgage rate, including your credit score, home price, loan amount and down payment. The Fed’s actions are only one piece of a larger equation.

Even though the Fed’s rate decisions may dominate headlines immediately following a rate cut, your home is a long-term investment and one you’ll likely maintain for years. To best prepare for what happens to mortgage rates when the Fed cuts rates is to always manage your home finances responsibly and be sure to make choices that will lead you down the right path based on your financial goals.

*This should not be considered tax or investment advice. Please consult a financial planner or tax advisor if you have questions.

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The post What Happens to Mortgage Rates When the Fed Cuts Rates? appeared first on Discover Bank – Banking Topics Blog.

Source: discover.com

New Student Loan Models Attract Borrowers & Investors

New Student Loan Models Attract Borrowers & Investors

It was bound to happen.

So-called alternative financing sources for student loans have been popping up all over the place. Some take a peer-to-peer (P2P) approach, where individuals with a few bucks to spare and hopes of a better-than-market return lend to others who are looking for a good deal on a loan.

P2P companies serve as matchmakers of sorts. The firms pair pre-screened applicants with investors who set the credit and pricing ground rules for the loans they’re eager to make. The fees that the P2Ps earn may come from arranging the match and babysitting (servicing) the offspring (loans) over time.

The more traditional alternative lenders are somewhat less paternalistic.

A number of high-powered professional investment companies—including private equity and hedge fund firms—are backing a string of nonbank lending operations that are busy staking out market positions in a variety of business sectors.

Higher education is one of these.

The reason for the interest is obvious: More than $1 trillion worth of student loans, a portion of which will make its way into the private market at some point. For example, some borrowers may require additional financing after maxing out the amount they can get from federal programs. Others may need to combine and refinance their government and private student loan debt later on.

What’s less obvious is the lenders’ control over the selection process, and the fact that even if a bad deal were to slip through anyway, all student loans—government and private alike—continue to be virtually impossible to discharge in bankruptcy.

The selection process is attracting a bit of attention these days. Some lenders are seeking to improve upon their already good repayment odds by exclusively marketing to those students who are pursuing historically high-paying areas of study at premier colleges and universities. As for the rest, their rates are typically higher and their loans may need to be co-signed by deep-pocketed parents or other close relatives.

To paraphrase Orwell, all students are equal, but some are more equal than others.

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Meantime, there’s news that the first of these alternatively-originated loans are ending up in securitizations.

Fundamentally speaking, this form of structured finance serves two key purposes: It broadens lending capacity by recycling previously originated loans, thereby freeing up the lenders to grant new credit. It also locks in the originating lender’s profit, which is typically expressed in terms of the difference between the interest rates that borrowers are charged and those that are paid to investors to whom the loans are ultimately sold through one of these complex transactions.

The integrity of the investors’ rate of return depends on three things: an originally agreed-to payment stream that will not change, a loan value that can be expected to amortize as it was intended and a repayment term that will also remain intact.

Reduce the payment amount, forgive a portion of the loan value or extend the duration and the investor’s rate of return could get hammered—which explains the strong reluctance on the part of their agents (loan servicers) to meaningfully restructure or permanently modify securitized loans for distressed borrowers, whether for home mortgages or education debt.

So, as securitizations and other forms of structured-finance transactions begin to crank up in the education-loan sector, what should be done differently this time around?

As long as Congress continues to do nothing about the free pass in bankruptcy court that education lenders and investors enjoy today (including the feds), lawmakers should, at the very least, mandate two things.

First, that the governing documentation for all after-the-fact financing transactions (securitizations, in particular) makes it clear to all concerned that troubled debts will be promptly restructured or modified in a manner that is consistent with the student-loan relief programs the government has in place at the time.

Second, that everyone that’s involved in this financial conga-line — lenders, investors and loan servicers alike — will be held equally accountable for that as well.

More on Student Loans:

  • How Student Loans Can Impact Your Credit
  • Can You Get Your Student Loans Forgiven?
  • A Credit Guide for College Graduates

This story is an Op/Ed contribution to Credit.com and does not necessarily represent the views of the company or its affiliates.

Image: Robert Churchill

The post New Student Loan Models Attract Borrowers & Investors appeared first on Credit.com.

Source: credit.com