18
May
By First Rate Financial Group
Home Mortgage Tips

What Fees Are Involved With a Reverse Mortgage? Let’s Take a Look

What Fees Are Involved With a Reverse Mortgage? Let's Take a LookInvesting in a home may be one of the most significant purchases you’ll make in your lifetime, but many people forget that there are a number of other costs associated with buying a home. If you’re considering a reverse mortgage and want to be clear on all of the fees involved, here are a few things you can expect to come across.

Initial Home Appraisal Fee

In order to ensure that you qualify for a reverse mortgage, you’ll need to spend a lump sum up front to determine the market cost of your home. While the amount of this fee will depend on the size and age of your home, it generally runs from a couple hundred dollars to less than a thousand and will be paid to the appraisal company that you’re dealing with.

Mortgage Insurance Premiums

At the time that you close on your mortgage, you’ll be required to pay a mortgage insurance premium (MIP) in order to secure your loan. This amount will vary from lender to lender and will be calculated based on the lesser-appraised value of your home. In addition to this, annual mortgage insurance premiums will be charged throughout the entire period of the loan and will be a percentage of the outstanding balance of your mortgage.

Loan Origination Fee

In order to process and underwrite your loan, you will also be required to pay a loan origination fee, which covers the administrative costs. While this amount has come down in recent years, it is a sizeable lump sum that hovers around 2% of your home’s value up to $200,000. If the home’s value exceeds this amount, it will go down to 1% after the initial amount is charged.

Other Third Party Fees

Like any mortgage loan, there are a number of one times fees that you’ll need to pay in order to secure your mortgage. In addition to a monthly servicing fee, there will also be fees like surveying, title fees and credit checks that will be added on to the total cost of your mortgage product. It’s important before choosing this option to ensure that you know what costs you’ll be dealing with.

A reverse mortgage may be the right mortgage product for you, but it’s important to be educated of all of the costs before choosing this option. If you’re currently considering other mortgage products, you may want to contact one of our mortgage professionals for more information.

13
May
By First Rate Financial Group
Home Mortgage Tips

Wondering How Much Mortgage You Can Afford? Here’s How to Calculate It

Wondering How Much Mortgage You Can Afford? Here's How to Calculate ItMany people are aware of the financial commitment that is involved when investing in a home, but what that amounts to is different for every person. From what you can afford to what a lender will allow, there are plenty of details involved in determining the right home for you. If you’re not quite sure what the right price is, here’s how to approach home ownership and determine your debt-to-income.

Calculating Your Debt-To-Income Ratio

You may not know what your DTI ratio is, but it has a lot to with how much home you can afford. In order to calculate this amount, add together all the debts you owe each month and divide them by your monthly pre-tax income. For example, if your credit card is $150 and your rent is $900, your debt amount would be $1050. Divide this amount by your income, say $2500, to get 0.42. This means your DTI ratio is 0.42 or 42%.

What Your DTI Means

While a DTI in the high 20s or low 30s is good, anything that hovers above 43 percent may serve as a red flag to the lender. The lower your DTI ratio is, the more likely it is that a lender will approve your mortgage application since you’ll have the disposable income to deal with financial hurdles. If your dream home has you hovering close to this amount, it may be a sign that it’s a bit out of reach.

How Do You Want To Live?

It’s quite common to be taken over when you find your dream home and decide to commit. However, buying a home is a huge financial commitment, and if you’re buying more than you can afford it may drain your well-being over time. Instead of diving in, determine other expenses that are likely to come up in the next few years, whether it’s travel, a child or a new car. It’s important to have the home you want and budget when buying it, but you’ll still need to financial wiggle room in case something comes up.

There are a lot of factors involved in determining how much house you can afford, but by calculating your DTI ratio and being aware of your spending plans, you’ll be well on your way to an ideal price range. If you’re currently on the market for a home, contact one of our mortgage professionals for more information.

06
May
By First Rate Financial Group
Home Mortgage Tips

Honesty Is the Best Policy: Why You Need to Be Truthful on Your Mortgage Application

Honesty Is the Best Policy: Why You Need to Be Truthful on Your Mortgage ApplicationThere are few things better than finding your dream home and being able to afford it, but simply because you’ve found the perfect place doesn’t mean you should stretch the truth. It might seem tempting to polish your mortgage application a little in the hopes of making a better impression, but here are a few reasons why you should stick to the truth when signing off on your home.

Your Credit History Tells All

It can be tempting to bump up your salary or make some hefty deposits into your savings account. However, lenders will be taking a look at your financial history by way of your bank statements, credit report and paystubs so they’re likely to discover any erroneous details. If you’re not honest about your financial situation, the lender may suspect that you’re not a reliable buyer. Not only that, making false statements about your finances may give you more home than you can really afford, which can cause setbacks down the road.

Mortgage Fraud Is Still Fraud

A little white lie on your mortgage application might not seem like such a big deal, but because you are painting a picture of yourself that is not true, this can actually be considered mortgage fraud. While there are mistakes that can be made on any mortgage application given all the details required, it’s very important not to mislead the lender or home seller on purpose. It may not be common, but mortgage fraud can be punished with hefty fines or even prison time.

A Bad Way To Begin

There’s nothing like the feeling of moving into your newly-purchased home and feeling enthusiasm for all the things it entails, but being dishonest about your financial situation can sully that. A lie may just be a small detail, but mortgage lenders look at a variety of factors to ensure you’re a good fit for a loan that will stay manageable month after month. While a minor mistruth may seem insignificant, it disables lenders from being able to assess if your financial situation is right for the home you want to purchase.

It may be enticing to fudge a few details on your mortgage application, but there can be serious implications involved in not being honest about the information on your application. If you’re currently in the market for a home, contact one of our mortgage professionals for more information.