Mortgages

Getting a Mortgage Loan is one of the most important financial milestones for us all. A home will likely be one of your most valuable assets and investments in life, so making sure you find the right lender for your situation is key!

 

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FAQ

Can you Refinance a Home Equity Loan Into a Mortgage?

Yes, you can refinance a home equity loan into a mortgage, but this can bring up a lot of issues, including significantly higher payments than the homeowner originally had. It’s possible to refinance both at the same time and make the home equity loan junior to the mortgage, which many find helpful.

Why Refinance a Home Mortgage?

Different people have different reasons for wanting to refinance their homes. Most popularly, people are looking to pay less in interest.

This can manifest in a couple of different forms, either by refinancing your long-term loan to have a lower interest rate or getting a shorter loan. Having a shorter-term loan means you pay less interest overall, but it increases your monthly payments while having a longer-term loan has lower payments but more interest for the entire loan. Learn more about how to start you home refinance today. Check out this year’s top refinance lenders.

How to Refinance a Manufactured Home Mortgage

Not every manufactured home is able to be refinanced, so the first step would be to do some research to ensure that your manufactured home is eligible for refinancing.

After that, you must contact a financial institution that works with manufactured home refinancing and find out their rates. Once you find a mortgage that works for you, all you have to do is sign the required paperwork.

How to Refinance Mortgage and Home Equity Loan

The first step of any refinance is to ensure that you’re eligible. After that, you’ll need to find a financial institution that offers a refinance that fits your needs. It’s typically a lot easier to get a refinance for both a mortgage and home equity loan if both were taken out with the same financial institution. Find the best refinance landers now!

How to Refinance Your Home Mortgage Loan

First off, you’ll want to determine what kind of refinance you want and what will work for your needs. If you need to lower your monthly payments, a longer-term loan with low-interest rates would be good. If you want to pay the loan off more quickly with less interest and don’t mind higher monthly payments, a short-term loan would work better. See more detailed steps to refinancing here

  1. Consider your options
  2. Choose a lender
  3. Start the process

Shop around to find the best rates for the type of refinance you want then sign any required paperwork.

How Much Does it Cost to Refinance Your Home Mortgage?

On average, a mortgage refinance will cost somewhere in the neighborhood of $5,000. This number can vary greatly depending on certain factors such as:

  • The amount of your loan
  •  Value of your property
  • Any prepayment penalty your current mortgage may have.

See our Best Picks for the top mortgage lenders today!

What is Needed to Refinance a Home Mortgage?

Typically, you’ll need your ID or driver’s license, proof of income, current home loan statement, records of living expenses and other liabilities, and records of other assets.

  • Proper ID
  • Proof of income
  • Good credit

You’ll also need adequate credit, and depending on the type of loan you have this can vary from 600-640 on average. Most companies will require that you have built up a good amount of equity before allowing you to refinance, as well. Learn more about different types of mortgage loans here.

Can You Refinance a Home With a Second Mortgage?

Yes, it is possible to refinance with a second mortgage. The easiest way to go about this would be with a resubordination, but this can be a little tricky at times. You can also pay off the second mortgage either with a cash-out refinance or out of pocket if you happen to have the resources to do so.

How to Refinance Your Home Mortgage With Bad Credit

Refinancing your mortgage with bad credit can be difficult. Most financial institutions require a credit score no lower than 620. If your score is lower than 620, finding a financial institution willing to work with you is unlikely. You have a few options that may be worth looking into, such as:

  • Speaking with your current mortgage company. Because you’re a current customer, they may be more willing to work with you.
  • Try to find a credit union that’s willing to work with you. Some credit unions are more willing to work with poor credit.
  • Worst case scenario, you may need to find a way to raise your credit up to 620. Many more refinance opportunities become available with a credit score of 620 or higher, and depending on your credit score it may not be too difficult to raise it to that point.

Take a look at some of our top ranked mortgage lenders who might be able to help you, even with poor-bad credit.

Should You Refinance Your Home Mortgage?

The decision to refinance your home mortgage is a big one. Typically, if you’re looking for lower monthly payments or paying off your loan quicker it is a good idea, assuming you can find a loan that works for you. It’s considered a bad time to refinance your mortgage if you plan on moving in the near future. Ask yourself these questions:

  • Will it lower my interest rate?
  • Will it lower my overall debt?
  • Will it be a benefit?

If you have good credit, a steady income, and can lower your overall debt it might be a good idea to refinance. See this year’s best mortgage lenders now.

What is a Cash Out Refinance?

A cash out refinance is a loan taken out on a home that is already owned where the loan amount is higher than the cost of the transaction and any associated fees. People commonly get cash out refinances to cover things like home improvement expenses. See more types of mortgage loans here.

How Does a Cash Out Refinance Work?

Cash out refinances work by taking back some of the money that you’ve paid into your mortgage already. Doing a cash out refinance increases the principal of your mortgage, and could be thought as a cross between a refinance and a home equity line of mortgage.

How Much Can I Get With a Cash Out Refinance?

When getting a cash out refinance, most lenders will allow you to get up to 80% of the home’s value, but this can vary based on several factors.

  • Equity
  • Home value
  • Loan type

Equity, the homeowner’s credit score, and the type of loan all can affect how much you can get using a cash out refinance.

Is a Cash Out Refinance Taxable?

Cash out refinances are not considered income, so they are not taxable. A cash out refinance is a type of loan so it will put you in debt, and you have to pay it back over time. So there are no taxes paid on a cash out refinance, and you do not have to include your refinance on tax forms.

How Long Does a Cash Out Refinance Take?

How long a cash out refinance takes from signing the paperwork to you having money in your pocket can vary depending on the lender. The average timeframe is somewhere between 45 and 60 days from the day you apply.

Is a Cash Out Refinance a Good Idea?

Whether or not you should get a cash out refinance depends on your situation. Any kind of refinancing of your home uses your home as collateral, so if you don’t think you’ll be able to make the payments on time it should be avoided. However, if you’re in a good position to take on the payments it can be a good idea. Some of the advantages of a cash out refinance can be:

  • Lower interest rates
  • Better loan length
  • Lower overall debt

See more cash out refinance options with loanDepot. They are known for these types of loans.

Can You Get a Cash Out Refinance With Bad Credit?

Typically it’s difficult to get a cash out refinance with bad credit. Most financial institutions require a credit score of 620 or higher. This can vary on the type of loan and lender, but the most common types of cash out refinances won’t accept any lower than 620.

Do I Qualify for a Cash Out Refinance?

The qualifications for any refinance can vary from lender to lender. In most cases, you’ll need a credit score of 620 or higher and some equity on your home. In most cases, the lender will allow you to take out up to 80% of your loans, but this depends highly on the loan type and your credit. Learn more about cash out refinance options with loanDepot

How Soon Can I Get a Cash Out Refinance?

The amount of time it takes for your cash out refinance to close can vary from lender to lender. Most lenders, on average, take between 45 and 60 days from the day you apply for the refinance to close.

What is a Limited Cash Out Refinance?

A limited cash out refinance is a refinance where the new loan amount is larger than the old one. This is because the fees for the refinance are added to the loan amount instead of coming out of pocket. The money can be used for:

  • Paying off debt
  • Home repairs
  • Upgrades

This loan type has no upfront closing costs because you’re adding them to the loan amount, and the amount of cash that you can get from this is either 2% of the difference between the old loan and the new loan or $2,000 whichever is less.

Can You Get a Reverse Mortgage on a Mobile Home?

You cannot get a reverse mortgage on a mobile home, as mobile homes are defined as manufactured homes built before June 15th, 1976. On the other hand, some manufactured homes are eligible for reverse mortgages so long as they meet the requirements. The most common type of reverse mortgage of a manufactured home is an FHA home equity conversion mortgage.

Can You Lose Your Home in a Reverse Mortgage?

In short, yes, you can lose your home while in a reverse mortgage. Fortunately, there are only specific criteria that would allow this to happen. For instance:

  • You stop paying your property taxes or homeowners insurance.
  • You’re away from the home for 6 out of 12 months for reasons other than medical reasons.
  • You pass away and your spouse is not listed on the loan as a co-borrower or non-borrowing spouse
  • You’re away from the residence for 12 or more consecutive months
  • You stop maintaining your home up to FHA standards.

We suggest that you speak with an expert on reverse mortgages like AAG in order to learn more.

Can You Use a Reverse Mortgage to Purchase a Home?

Yes, you can use a reverse mortgage to purchase a new home. There is a Home Equity Conversion Mortgage, or HECM for short, for purchase that allows people 62 and over to purchase a new residence with the proceeds of the loan.

What is a Reverse Mortgage on a Home?

A reverse mortgage is a loan most often taken on residential buildings that allows the borrower to access the unencumbered value of the property. In the vast majority of cases, reverse mortgages are promoted for older people and do not require monthly payments.

Can You Get a Reverse Mortgage on a Mobile Home?

You cannot get a reverse mortgage on a mobile home. Mobile homes are defined as manufactured homes made before June of 1976, and the reason why you cannot get a reverse mortgage on manufactured homes made before then is because of the Manufactured Home Construction and Safety Standards act, which came into practice that month. If your manufactured home was created after this date, then it is possible to get a reverse mortgage, so long as you qualify.

Can You Get a Reverse Mortgage on a Second Home?

You are able to get a reverse mortgage on a second home, or even use a reverse mortgage from your first home to get another residence. The only drawback is that you cannot be away from a home with a second mortgage for more than 6 months a year except for medical reasons or the bank could take your home.

How to Calculate Home Mortgage

Calculating your home mortgage is relatively easy. If you need to find your monthly payments, the equation is rather simple.

  1.  Take your yearly interest rate and divide it by 12.
  2.  Divide the total loan by the number of years you have left then by 12.
  3. Multiply the monthly interest rate by the monthly payment.
  4. Add the monthly interest to the monthly payment.

What Are Home Mortgage Rates Today?

Home mortgage rates can change day by day, lender to lender, state to state, city to city, or even by loan type. Doing your research on what financial institutions that work in your area are offering is the best way to find out what the best rates are at the moment.

How Much is a Down Payment on a House?

A down payment requirement on a house can vary based on certain criteria like your credit score and financial stability but the historic “norm” for a down payment was 20% of the total home cost. These days though, special programs are available where buyers can pay as little as 3% down for a new home. Learn more about how much a down payment costs here.

What is the Current Home Mortgage Rate?

Home mortgage rates can vary based on a lot of factors. Some of these factors include:

Rates can change day to day, and the best way to make sure that you’re getting the best deal is to do research on what each financial institution is offering at the moment. Check out the best mortgage lenders of the year!

How Long is a Home Mortgage Borrowed For?

The length of a home mortgage can vary. Most often people will sign up for a 30 year mortgage, but it’s not unheard of for people to sign up for 15 or 20 year mortgages. It all depends on if you’d rather have lower monthly payments or higher monthly payments that pay off the loan faster.

What is the Current Home Mortgage Interest Rate?

Home mortgage interest rates change constantly, and are impacted by lots of different factors. Doing lots of research on the financial institutions that work in your area is a good way to ensure that you’re getting the best interest rates that are available at the moment. Check Bankrate for daily mortgage rates.

What Are Home Mortgage Rates?

Home mortgage rates are the interest rates that you can expect to pay on your mortgage. In most cases, they will be given to you in a yearly percentage that is automatically added to your monthly payment. Bankrate can help you monitor mortgage rates.

Is a Home Equity Loan a Mortgage?

A home equity loan is, in fact, a type of mortgage. This type of loan borrows from the amount of equity you have on your home and is paid back in installments. They are often considered second mortgages because they are borrowed against your home.

Can You Deduct Mortgage Interest on a Second Home?

Mortgage interest is deductible for a second home so long as the home is not rented out during the tax year. Other than that, the mortgage must meet the same deductible requirements as the primary residence.

Is a Home Equity Loan a Second Mortgage?

In many cases, yes a home equity loan is considered a second mortgage or a junior-lien. A home equity loan borrows against your home’s equity, and uses your home as collateral for the loan.

How to Apply for a Mortgage as a First Time Home Buyer

Buying a home for the first time is an exciting thing, and it can seem like a complicated process. Luckily, first time home buyers can get an FHA loan which makes your first loan a lot simpler. It is a federally backed loan specifically made for first time home buyers. In order to qualify for this type of loan the buyer has to:

  • Have proper identification
  • Have a decent credit score
  • Be gainfully employed
  • Have enough cash for a small down payment

See some of the nation’s top ranked mortgage lenders here.

Is Mortgage Interest on a Second Home Deductible?

As long as the home is not rented out during the tax year it is deductible for the most part. The second home must meet all of the same requirements for the first home’s mortgage interest  to be  tax deductible.

How to Sell a Mobile Home With a Mortgage

Selling a mobile home with a mortgage is very similar to selling a traditional home with a mortgage, just put it on the market or hire a real estate agent.

  • Fix it up
  • Take good photos
  • Put it on the market

Just like with a traditional home, you have to make sure that all mortgages, loans, or liens associated with your mobile home are paid off before the title is transferred to the next owner.

What is a Home Equity Conversion Mortgage?

A Home Equity Conversion Mortgage, or HECM for short, is the only reverse mortgage ensured by the Federal Housing Administration. This program allows you to withdraw a portion of your home’s equity and usually requires the homeowner to be at least 62 years of age.

What is a Home Mortgage?

A home mortgage is a type of loan that is taken out with a bank, mortgage company, or other financial institution to help you purchase a home. The lender holds the title of the property until the loan is paid off, and mortgages usually range anywhere from 15 to 30 year terms. Some different types of mortgages are:

  • Conventional mortgages
  • Government-insured mortgages
  • Fixed rate mortgages
  • Adjustable rate mortgages
  • FHA mortgages

Depending on your credit score, available cash, and personal needs any of these could be an option. Learn more about different types of mortgage loans here. 

Is Home Insurance Included in a Mortgage?

Yes and no, your bank or financial institution will usually require you to have an escrow account with your mortgage, and is a separate account. You pay escrow along with your mortgage, but the escrow is where homeowners insurance payments would be taken from. Some lenders also use an escrow account to cover property taxes, but not all lenders have this practice.

What Are Home Mortgage Rates Right Now?

Home mortgage interest rates can change day by day, and from lender to lender. The best way to find out the current mortgage rates would be to shop around and contact all of the lenders in your area so you can ensure that you’re getting the best deal available.

How Much Home Mortgage Can I Afford?

Most financial experts would agree that your mortgage should be no more than 28% of your pre-tax monthly income. To find out what that would mean for your budget, all you have to do is grab a calculator, multiply your pre-tax monthly income by 28 then divide it by 100. After you run the numbers, you should have a good idea how much you have to work with. Learn more by comparing quotes from a few of the best mortgage lenders in the country.

What is the Home Mortgage Interest Rate Today?

Mortgage interest rates are changing all the time. The best way to find out if it’s a good time to buy is to check with your local lenders to confirm their rates, and do some research to find out if the rates have been trending up or down.

What is the Home Mortgage Interest Rate?

A home mortgage interest rate is the amount of interest you can expect to pay on your mortgage per year. Different lenders offer different interest rates, and these rates and rise or fall depending on real world factors.

Is There Anything I Shouldn’t Do Before I Get Pre-qualified for a Home Mortgage?

  • Don’t start shopping for a new home until you’ve been pre-qualified.
  • Don’t pack or ship any important documents, such as tax returns, bank statements, pay stubs, and W-2s.

Buying a house doesn’t have to be hard. Keeping all copies of your paystubs, bank statements, tax returns, and W-2s can make a speedy pre-qualification even speedier. To further grease the wheels and keep your home loan process running smoothly, take care to make all your bill payments on time. We also suggest keeping a paper trail of any large deposits you make, as well as notifying your loan officer directly if you plan to use a down payment gift from your family.

Pre-qualifying for your home loan before you begin shopping for a house can save you hours of unneeded stress and heartache. When you know how much house you can afford in advance, you can meet with your realtor, well-informed and ready to make an educated buy. In eyes of a seller, a prequalified homebuyer also appears more motivated.

Is There Anything I Shouldn’t Do While I’m Getting Pre-qualified for a Home Mortgage?

  • Don’t suddenly pay off all your debts.
  • Don’t apply for new credit cards.

Pre-qualification can be easy, but it’s after you get pre-approved and the loan process progresses that your lender is required to pull a refreshed credit report before closing to check for any new debt. So, any major changes in your finances could delay your loan closing, or even result in a denial despite an earlier approval.

How can you keep your credit clear while your new home loan is in the works? Please, don’t do any of these things:

  • Apply for a new credit card, auto loan, or other types of credit.
  • Co-sign a loan with someone.
  • Change jobs, become self-employed, or quit your job.
  • Skip payments on existing credit accounts, utility bills, or loans.
  • Charge up your existing credit on big-ticket items, like furnishings for a new house.

If you think any of these absolutely necessary, talk to your lender before you take action. Your loan officer can help you figure out what to do so that your mortgage loan is the least negatively affected.

What are Income and Debt Ratios?

Income ratio: Your total monthly housing expense divided by your pre-tax monthly income.

Debt ratio: Your total monthly housing expense plus any recurring debts, i.e., car payments, monthly minimum credit card payments, and other loan payments, divided by your monthly income.

Standard loan underwriting guidelines suggest a max 28 percent income ratio and 36 percent debt ratio, which may vary based on personal finances, loan program, and down payment.

While not taking on any debt and paying for everything with cash seems like a logical choice if you feel you can’t afford your lifestyle, no credit also means bad credit in the eyes of a lender. There’s bound to be a time when you can’t buy something with cash, like buying a house (in most cases). So, we recommend opening at least three credit card accounts and making occasional purchases with each card.

To manage your debt and maintain healthy credit, keep credit card balances to less than 30 percent of your credit limit. Also, don’t close long-term credit lines, even if they’re not being used. Your longest standing credit card account might be a huge factor in your credit score health and the mortgage rate you qualify for.

What is Mortgage Insurance?

This insurance helps protect the lender if a borrower forecloses on their property. Borrowers pay for the mortgage insurance, allowing lenders to grant loans they might not have otherwise. Mortgage insurance may be required on some loans when a down payment is less than 20 percent.

Mortgage interest, insurance paid, and property taxes are tax-deductible for your principal residence.  Buying a house is a big investment, but the tax deductions on the purchase may be large enough to lower your tax bill substantially. Interest/insurance payments on a residential mortgage (as well as mortgage interest/insurance on a second home) may be fully deductible, in most cases.

What is an APR?

Annual Percentage Rate: The cost of your total loan credit calculated into an annual interest rate, also called APR. The APR includes loan points and other prepaid finance charges to reflect the true yield on the loan, which is why the APR is normally higher than a loan interest rate. To check that you’re getting the most competitive loan, you can compare “apples to apples,” or APR to APR, on different loan programs.

After you’ve applied for a home loan, you can expect to receive a Loan Estimate from your lender. If you applied for more than one type of loan, a loan estimate will be broken down for each loan type. The APR for a loan will be listed on page 3 of the loan estimate, in the comparison section. Most of the time, you’ll notice the difference between your APR and your loan interest rate right away. An APR is often higher than an interest rate because of added fees. An APR is essentially a comparison tool. Interest rates, loan fees, and points may be all over the map, but the APR can always be used to accurately compare multiple loan products. And in cases where an interest rate looks a little too attractive, the APR can tell you the real story.

You can use this handy trick to separate the good from the bad when choosing a mortgage: Compare a loan’s APR to its advertised interest rate. An APR that’s noticeably higher than the interest rate may be a red flag that added costs are attached to the loan. Your loan officer can also help you compare and better understand loan fees.

What is a Mortgage Refinance?

As the name implies, refinancing simply means obtaining new financing for something you already own (or partially own, like real estate). It’s kind of like a balance transfer where you move your loan from one lender to another to get better terms, except it’s a mortgage payoff.

If you currently have a rate of 6% on your mortgage, but see that refinance rates are now 4%, a refinance could make sense and save you a lot of money. You’d essentially have one lender pay off your existing loan with a brand new loan at the lower interest rate.

There is also the cashout refinance, which allows you to tap into your home equity while also changing the rate and term of your existing mortgage. So if you currently owe $200,000, but your home is worth $500,000, you could potentially take out $100k cash and your new loan amount would be $300,000.

When is the First Mortgage Payment Due?

This depends on when you close your home loan and if you pay prepaid interest at closing.

For example, if you close late in the month, chances are your first mortgage payment will be due in just over 30 days. Conversely, if you close early in the month, you might not make your first payment for nearly 60 days. That can be nice if you’ve got moving expenses and renovation costs to worry about, or if your checking account is a little light.

How Large of a Mortgage Can I Afford?

Here you’ll need to consider home values, how much you make, what your other monthly liabilities are, what you’ve got in your savings account, and what your down payment will be in order to come up with your loan amount. From there, you can calculate your debt-to-income ratio, which is very important in terms of qualifying for a mortgage.

This is a fairly involved process, so it’s tough to just estimate what you can afford, or provide some quick calculation. There’s also your comfort level to consider. How much home are you comfortable financing? And don’t forget the property taxes and insurance, which can make your housing payment much more expensive.

Do I Need to Get Pre-Qualified for a Mortgage?

That brings up a good point about getting pre-qualified. It’s an important first step to ensure you can actually get a mortgage, while also determining how much you can afford. Two birds, one stone.

A more involved process is a mortgage pre-approval, where you actually provide real financial documents to a bank or mortgage broker for review, and they run your credit.

Real estate agents typically require that you be pre-approved if you want to make a qualified offer.