What to Know About the Streamline Refinance VA Loan Program: The VA IRRRL

If you’re a military member or veteran who currently holds a VA mortgage on your home or on a home that you rent, you may have wondered if it would be possible to refinance your VA loan to save money.  In researching your options, you may have come across information about the VA Streamline Refinance Loan, which is known by the official name of VA Interest Rate Reduction Refinancing Loan (VA IRRRL).  

This refinancing option offered by the VA to active military members, veterans, disabled veterans, and surviving military spouses is a program that allows you a streamlined approach to refinancing your VA loan in order to save money or lower your overall loan interest rate.

What are the Benefits of Using a VA Interest Rate Reduction Refinancing Loan (IRRRL)?

 There are several benefits to using a VA IRRRL Loan to refinance your current VA mortgage loan.  Some of the key benefits include:

  • No appraisal needed.
  • Shorter time-frame to complete the loan processing.
  • Lowered fees.
  • Less paperwork.

In addition to these benefits, there are several ways to customize the VA IRRRL Loan to meet your overall financial goals.  

  • If your current VA mortgage loan is a fixed-rate loan, you can refinance to take advantage of a lower interest rate that will result in a lower monthly payment.
  • If your current VA mortgage loan is an adjustable-rate loan, you can refinance to lock-in a low, fixed-rate instead, thus avoiding the outcome of having your mortgage payment rise and fluctuate in the future with the adjustable-rate.
  • If your current VA mortgage is either a fixed-rate or an adjustable-rate 30-year loan, you can opt to a fixed-rate, shorter-term loan of 20 or 15 years, as long as you ensure that the new payment will still be affordable.  While this may result in a higher monthly payment, you will save money over the life of the loan due to paying less interest on a 15-year mortgage as compared to a 20-year or 30-year mortgage.
  • You can use a VA IRRRL Loan on a home that you own but are currently renting; the VA IRRRL Loan is not limited to your current domicile.

What are the Limits to Using a VA Interest Rate Reduction Refinancing Loan (IRRRL)?

 There are some limits to consider when using a VA IRRRL Loan.  You will need to work with a VA approved lender who can process the loan for you.  You will also need to adhere to the VA Loan Limits for lending amounts.  

  • For 2019, the VA Loan Limit is $484,350, with the exception of Honolulu County, New York County, and San Francisco County where, due to the higher cost of living in these counties, the loan limit is $726,525.
  • For 2020, the VA Loan Limit is removed, offering you the opportunity to refinance a higher-priced property as needed.

Your VA IRRRL Loan processor must also be able to show a definitive financial benefit to you as the result of the refinanced loan, whether it is a lower interest rate, a shorter-term loan, or a lower monthly payment.

You are also responsible for paying a 0.5% funding fee and any closing costs, but those can both be rolled into the VA IRRRL Loan or can be paid in cash at closing.

Can a VA Interest Rate Reduction Refinancing Loan (IRRRL) be a Cash-Out Refinance?

There is no option to use a VA IRRRL Loan as a cash-out refinance loan; you can, however, take up to $6000 out at closing solely for the purpose of energy improvements to your home.  Your lender may require an energy audit to prove that the energy improvements are both necessary and financially beneficial before approving the $6000 energy improvement cash-out.

It is important to note that you have several options to consider when looking at potential lenders for a VA Refinance IRRRL Loan.  You are not required to use your current VA lender as the originator for the new VA Refinance IRRRL Loan. Instead, you are free to shop around, research, and compare VA approved lenders who specialized in the VA IRRRL Loan program.

There are many lenders out there who claim to be specialists in the VA IRRRL Loan program but may only have limited knowledge and experience in processing these loans.  If you’re serious about pursuing a VA IRRRL Loan to save money on your home’s mortgage, contact Pacific Mortgage Group. 

At Pacific Mortgage Group, we specialize in VA IRRRL Loans and understand the complexities of the VA streamline refinance process.  Our goal is to serve our clients by understanding their goals, whether it is a rate reduction, moving from an adjustable-rate mortgage to a fixed-rate mortgage, or simply lowering your overall monthly loan payment.  

Contact us today to learn more about the VA IRRRL Loan.


Things You Can do to Pay Down Your Credit Card Debt

Being in debt can cause a great deal of stress and may lead to feeling like you are losing control of your financial future.  We have all read advice that tells us to keep our monthly payments low by saving money on food, cutting living expenses, or stopping those frequent trips to Starbucks, which is merely common sense. Instead of these popular methods of paying off credit card debt, you need a solid plan which will not only help you lower your monthly payments, but also reduce the amount of interest you are repaying.

High Cost of Monthly Credit Card Payments

Credit card debt in the United States has reached very high levels. Recently, the Federal Reserve estimated more than $1.4 trillion in credit card debt is owed by American consumers. When considering average minimum credit card interest rates, even for those with great credit, is slightly over 15 percent, it is easy to see how credit card debt can quickly spiral out of control. Those consumers who pay only monthly minimum payments are likely paying $300 or more annually in interest if they are carrying a balance as low as $2,000, assuming a 15 percent interest rate. Additionally, your credit score will not increase because you are not changing the amount of credit you are utilizing.

Exploring Debt Repayment Options

Consumers who are facing high credit card debt have some basic options which they can explore, including paying off credit cards from their savings and using some of the methods typical debt writers suggest, including:

  • Avalanche Method – this method suggests you make minimum payments on all credit cards except those with the largest interest rate. The card with the highest interest rate should be paid as quickly as possible by making larger than minimum payments. Once the first card is paid off, you move onto the next highest interest rate card, etc.
  • Snowball Method – this debt repayment method may seem counter-intuitive. Using this method, a consumer pays off the credit card with the lowest payment first and then continues to put the funds they save towards the card with the next lowest balance until the cards are paid off.

These are not necessarily the best methods for paying off your debt, and they are certainly time consuming. One of the most commonly overlooked methods for paying off your credit card debt is to consider debt consolidation. This method helps you manage your money better, keep your credit card interest low, and helps you see immediate results.

Debt Consolidation Loans

There are a couple of debt consolidation methods. The first is to take a debt consolidation loan and simply pay off all your credit cards at the same time. The other option is to consider taking the equity in your home in cash and paying credit cards off using the cash. This method is especially effective for a couple of different reasons.

Consider this: Home loan interest rates are currently very low. This means you could be saving hundreds of dollars annually in interest by refinancing your home and paying off your credit cards. Additionally, many find they can deduct mortgage interest rates on their taxes, which is different than credit card interest which is not deductible.

This may be the perfect time for you to consider refinancing your mortgage, particularly if your home has increased in value since you obtained your mortgage. Remember, as you have made payments on your mortgage, you have built equity in your home. Additionally, if your home has increased in value, you may have more equity than you originally thought.

If you are concerned about your credit card debt, or you are paying only minimum monthly payments, contact Pacific Mortgage Group today and talk to a loan specialist about a home refinance loan. Pay off your credit card debt starting today and save hundreds of dollars in interest payments.


Enhanced Relief Refinance Mortgage

As a homeowner, there are several reasons why you would want to refinance your home: to lower your rate, to shorten or lengthen the term of your loan, or to pull out some of the equity in your home. If your loan-to-value (LTV) ratio ꟷ the comparison between the amount of your loan and the value of your home ꟷ is high, you will have a hard time getting a loan with the typical programs that lenders offer.

Fortunately, the Federal Home Loan Mortgage Corporation (Freddie Mac) created the Enhanced Relief Refinance Mortgage Program, which might help with your situation.

The Issue of High LTV Ratios

Lending institutions usually deal with other people’s money, and they have to calculate various risk factors before they close on a loan. One of their primary considerations is the value of the collateral for the loan, which, in this case, is your home. When a borrower defaults on their mortgage, banks rely on selling the house to recoup their funds; therefore, it is too risky for them to allow you to borrow more than, or even close to, what the home is worth.

Why the Program was Created

Because lenders in the private sector shy away from high LTV loans, Freddie Mac, a government-backed agency, decided to introduce the Enhanced Relief Refinance Mortgage Program. The premise of the program is that providing you with more favorable loan terms will only increase the chances that you will continue to pay your mortgage on time. The fact that you’re having an issue with the value of your home shouldn’t hinder your ability to refinance and improve your financial situation.

How a Home Could be Worth Less than the Original Loan Amount

There are two types of homeowners who have LTV issues and could use such a program:

  1. People whose homes are in a declining real estate market. If you purchased a home for $200,000 and it is now worth $150,000, even if you originally paid a down payment of 20%, your house could be worth less than the loan amount.
  2. Some people buy a home with a negative amortization loan, so their monthly payments are not enough to cover the principal of the loan. In such cases, the loan amount increases with time, and they could end up owing more than the house is worth.

Enhanced Relief Refinance Mortgage: Requirements and Guidelines

While the Enhanced Relief Refinance Mortgage Program is designed to help people whose homes are in the red, it has very specific criteria. To be eligible:

  • Your home has to be a one to four-family primary residence or investment property, or a single-family second home.
  • Your current mortgage must be at least 15 months old.
  • Your existing loan has to be with Freddie Mac.
  • You can’t have been more than 30 days late on any of your mortgage payments in the past six months, or more than once in the past twelve months.
  • The LTV of your loan has to be higher than the maximum ratios for standard loans.
  • If you’re getting an adjustable-rate mortgage, the loan amount can’t exceed 105% of the value of your home (there is no maximum LTV for fixed-rate loans).
  • You can’t use the program to dip into the equity of your home and take out cash.

If you meet all of these criteria, you might be eligible for the Enhanced Relief Refinance Mortgage. For more information or to apply for a loan, feel free to call the Pacific Mortgage Group at (800) 691-1665, or contact us online. We have many years of experience and will be happy to guide you through the entire process.


Understanding Conventional Conforming Loan Limits

Conventional loans are those which are uninsured against loss by a government agency. These are the most common types of mortgage loans which may be used to purchase or refinance a home. There are both conforming and non-conforming conventional loans, both with different guidelines.

A conforming conventional loan is one in which the guidelines for qualification are set by Fannie Mae and Freddie Mac, the two non-governmental insurance agencies which are responsible for insuring most mortgage loans. A mortgage loan that is “non-conforming” does not follow these guidelines.

Where to Find Information on Loan Limits

Conventional loan limits are set on an annual basis by the Federal Housing Finance Agency (FHFA) in compliance with the Housing and Economic Recovery Act of 2008 which was signed into law by then-President George W. Bush. This legislation was specifically designed to address the housing crisis of 2008 which caused major disruption to millions of families across the United States.

The conventional loan limits are established based on the average home prices in a county. The limits range from $484,350 to $726,525 for single-family residences, depending on various factors. These numbers reflect the amount of a mortgage which is insured by one of the insurers.

Using Loan Limits to Make Decisions

Across California, loan limits vary depending on which county you intend to attempt to purchase a home. There are also different loan limits which are dependent on the type of property you intend to purchase. For example, those who are purchasing a single-family residence in Ventura can mortgage up to $713,000 and still have their mortgage insured. A four-family unit in Ventura can be insured for a mortgage of up to $1,371,150. However, a person who is intending to purchase a home in Fresno will not be able to secure an insured mortgage for any mortgage loan exceeding $484,350 for single-family residences, or $931,600 for a four-family residence.

Why Loan Limits Matter for Buyers

Typically, a lender will be more likely to lend money on a conforming mortgage because there is less risk for them. Having a mortgage which is insured by either Fannie Mae or Freddie Mac means that in the event the borrower should default, the lender is able to file a claim with the agency and will not lose money.

Another reason why loan limits matter is for the terms of the loan. Borrowers who can stay within the guidelines of a conforming loan will typically be able to get more favorable terms, including lower interest rates, fewer points, and better loan terms. Many conforming loans are offered with fixed interest rates and loan terms of 30 years. Conversely, a non-conforming loan may carry an adjustable interest rate and may be for a shorter time. The stability of a fixed-rate mortgage can be very helpful to borrowers since they know every month exactly how much their housing expenses will be in advance.

Individual Owners and Investors Treated Differently

One issue to be aware of is there are still significant differences in conforming loans for those who are purchasing a single-family home for their primary residence versus an investor who is purchasing the same home. Generally, investors will pay slightly higher rates, they may be required to put down a larger down payment, and their loan terms may not be as favorable.  There are also some loan insurance programs, such as Federal Housing Administration (FHA) for which investors are ineligible.

Whether you are an individual buyer or an investor, Pacific Mortgage Group can help you identify a loan that is right for your needs. We have extensive experience helping individual buyers and investors across California find the right mortgage loans, whether you are purchasing a new home or refinancing an existing mortgage. Contact us today at 1-800-691-1665 or fill out our pre-qualification application online today.


HomeReady Mortgage Program

Looking to own a home but not sure you can afford or even qualify for a mortgage?  You might be surprised by the terms of the HomeReady mortgage program, which is specifically designed for creditworthy low- to moderate-income borrowers, offering expanded eligibility for financing.  Note that a credit score of at least 620 is recommended to qualify and further benefits are accessible with a credit score of at least 680.  If that sounds like you, here are several ways in which you can benefit from a HomeReady Mortgage.

Low Down Payment

You’re able to finance up to 95-97% loan-to-value (LTV) for the purchase of a single-unit principal residence, which means that if you’re having trouble coming up with a sizable down payment, you’ll be able to get a mortgage with as little as 3 – 5% of the purchase price of a home, plus fees.  Additionally, gifts, grants, Community Seconds program funds, and cash-on-hand are all permitted as sources of funds for the down payment and closing costs.  And this is not limited to first-time buyers, so you’re still eligible if you’ve purchased a home in the past.

Flexibility

HomeReady Mortgages support HomeStyle Energy, manufactured housing and HomeStyle Renovation type homes.  They also support expanded access to credit responsibility through underwriting with rental unit and boarder income and non-occupant borrowers such as a parent.  There is also no minimum contribution required from the borrower’s own funds.

Unlike standard requirements for other mortgages, HomeReady offers lower mortgage insurance coverage requirements for loans with LTVs greater than 90%.  Insurance is cancellable after the loan balance drops below 80% of the LTV, i.e., after home equity reaches 20% of the purchase value of the home.  Both of these features can lower your monthly payment when qualifications are met.  For those with a credit score greater than or equal to 680, there are risk-based pricing waivers which offer yet another route to better pricing.   

Qualifying Income

HomeReady can be used to purchase or refinance any single-family home, given a few requirements.  First, the borrower’s income must meet the eligibility limit.  Properties in low-income neighborhoods have no income limit while all other properties require that the borrower make 100% of the area’s median income.  Keep in mind, as mentioned previously, that income requirements can include flexible underwriting options such as a parent or other family member.

Education Requirement

Additionally, there is an education requirement which consists of an online Framework course which must be completed by at least one borrower on the HomeReady purchase transaction.  This isn’t just a requirement, however, it’s also a benefit to the borrower.  It provides an understanding of the full spectrum of home ownership so that borrowers may make a confident, informed purchase with peace of mind knowing what’s ahead in terms of responsibilities and costs.  Additionally, working one-on-one with an available counselor can help a borrower pick the right timing, the right house, and the best mortgage for his or her financial situation.  If a Community Seconds down payment is involved, borrowers may instead complete their education course or required counseling so long as it is provided by a HUD-approved agency and is completed prior to closing. See this link for more details. 

Those with a disability, lack of internet access, or other issues may utilize other available delivery methods of the education requirement by calling Framework’s toll-free customer service line (855-659-2267).  This education requirement benefits the borrower by helping ensure sustainable homeownership and a stable financial future with informed decision-making and responsible risk awareness.

Ready to take your first steps toward home ownership or looking to refinance your existing home mortgage?  Contact us so that we can help you put your dream of home ownership within reach.


Are You Ready? 5 Tips to Prepare for Mortgage Approval

Buying your first home is an adventure that can be as scary as it is exciting. In the end, it’s a destination well worth the journey. Buying a house, especially compared to renting, isn’t just a permanent home for your family. It’s a long-term investment in one of the most stable economic markets in the world.

Congratulations on starting this adventure.

Here are a few things you can do to get ready for mortgage approval: 

Estimate How Much House You Can Afford

There are multiple online calculators available to help you pinpoint exactly how much you can afford to pay per month in mortgage, but as a general rule, aim for no more than 2.5 times your gross annual income. If you make $58,000 a year (the average household income in America), a $145,000 home should feel very comfortable, financially speaking. How much that comes out to per month in mortgage payments, however, depends on a few different factors.

Know Your Credit Score

In general terms, the higher your credit score, the better the interest rate you’ll get, but not always. The housing market, the Fed, and the overall strength (or weakness) of the economy also contribute to interest rates. Just know that it’s not entirely personal, and unless you can make a bigger down payment, your interest rate isn’t going to be easily malleable.

For a $145,000 home with a 20% down payment, your monthly payment will be about $550 per month in principle and interest at a 4% interest rate. As a reference point, your payment increases to $620 a month at 5% interest. Note that this doesn’t include tax.

Maximize Your Down Payment

A higher down payment results in a lower mortgage payment. Period. For a $145,000 home, a 3% down payment will cost you about $755 a month in principle and interest, including PMI (see below). A $30,000 down payment cuts your total loan so much that you can expect to pay $150 less, about $620 per month. When you get into the $200,00 or $300,000 house range, the difference between a 5% down payment and a 20% down payment is the difference between a Ford Focus and a Cadillac CT6. 

Knowing your comfort level is important. It’s easy to forget that a mortgage is just a loan. You’re borrowing money. Being realistic about your employment status, future earnings, and borrowing limits is key to smart home ownership.

Saving for as large a down payment as possible is not just a matter of lowering your monthly payment. It can also be the difference between buying a house with 3% equity compared to 30% equity. Just because you can afford a $190,000 home with $10,000 down doesn’t mean that’s the right financial decision, especially when a $150,000 house with a $30,000 down payment may be the safer choice.

Weigh the Pros & Cons of PMI

If you don’t put down at least 20% of the home value, expect to pay PMI, or “Private Mortgage Insurance.” This is literally an insurance policy for lenders loaning money to someone with limited savings. Those who cannot put down at least 20% are seen as higher risk, so PMI is used to protect lenders against the threat of loan default.

PMI ranges from 0.3% to 1.2% of the total amount of the loan. Assuming a minimum 3% down payment, expect to pay an extra $420 per year ($35 per month) to $1,600 ($140) in PMI on a $145,000 house.

The downside of PMI is that it’s non-refundable. If you can avoid paying it–if you can afford a 20% down payment–do. The extra hundred dollars a month can be invested in far better ways, offering far better rates of return.

The benefit of PMI is that many people wouldn’t be able to get into a house without it. If a 1% tax makes the difference between renting–literally paying for your landlord’s mortgage–and paying down your own mortgage, there’s no reason to hesitate. In the two to five years it takes to pay down your mortgage to an 80% loan-to-value ratio (the equivalent of 20% in equity), the 4% average return on the housing market has no comparison to paying rent for five years with no assets and no equity. 

Don’t Forget Taxes

Taxes and fees vary by state, city, and ZIP code. Ask your realtor for a realistic analysis of projected taxes for the area you’re looking to buy.

How much you can afford to pay in mortgage per month depends on your annual income, down payment, credit score, and the cost of the house you want to buy. Use Zillow’s mortgage calculator for a general idea of what size house you can comfortably afford, or contact us today to see how we can help get you into a house that’s right for your family, your future, and your budget.


Homeowner 101: Five Hacks for Easy Home Repairs

When you get the keys to your new house, are you prepared to fix common little problems like a clogged drain, or change out the air vents, or shut off the water? The one downside to owning your home is that you’re responsible for the maintenance, and you’re on the hook for the bill if you have to call in professional help. Since houses don’t come with owner’s manuals, these are the five most common home repairs or fixes you’ll face as a homeowner.

Clogged Drains

Clogged drains are some of the most common home repairs you’ll encounter. The first thing you need to know is that not all drain clogs are created equal. An assortment of unspeakable things go down the various drains in your house, and each one has a different fix.

Shower/Sink

Try a commercial drain cleaner, and if that doesn’t work, try a plunger–a plumber’s friend–to break up the clog.

Kitchen Sink

Try plunging the sink drain with a plumber’s friend first. If that doesn’t work, put a bucket under the sink and remove the sink trap–that’s where most sinks back up. If the clog is further down the line, you’ll need to go to a home improvement store and get an auger, or a plumber’s snake, to completely clear things out. The auger drops down the drain and you crank the wire until it hits the clog; keep cranking and it should break through.

Toilet

Again, try plunging first, then use the auger to try to break through the clog. If there’s already overflow, it might be time to abandon DIY and call the plumber.

For any drain clog, if you can’t get the clog to break up without a lot of work, call a plumber–the pipes are more delicate than you might think and a plumber charges a lot less to unclog a drain than to replace pipes.

Find Wall Studs

You could go to a home improvement store and buy a stud finder, but it’s easy to do if you know a bit about construction. Wall studs have to be at least 16 inches apart, and electrical outlets are usually placed at a stud so that the wires have a support. The baseboards are also nailed to studs, so look for nails under the outlets. Rap on the wall at that spot with your knuckle, you should hear a thunk. Rap three inches over and you should hear a hollow sound–the thunk is the stud. Measure 16 inches over, and you should find another one. The studs are a couple of inches wide, so you’ll have to play around to find the middle.

Replace An Air Filter

Air filters trap all the dust, dirt,and pet dander that are in your house, and your should replace or clean them monthly. If you have a permanent filter, it still needs to be washed out every month. First, remove the furnace cover and see what size filter you need. You can order them in bulk, or get them at any big box store. Once you have the right size, pull out the old one and slide the new one in; replace the cover. Repeat in thirty days.

Shut Off Water

If something is leaking and it’s not the roof, you’ll need to turn off the main water valve. That’s usually in your basement, or on an outside wall near the utility area of the house. If you don’t know where it is, go find it now–better now than when you’re standing in three inches of water. Turn the valve clockwise and the water to the entire house is turned off.

Finding the Squeaks

If your house creaks and squeaks, there’s not necessarily a ghost in residence–it could be a number of things.

Furnace Whistles

Cold ducts whistle when warm air comes through. Pad the ducts against wood framing so they don’t rattle, and make sure there’s nothing blocking the return.

Loose Hinges

When a hinge gets a little loose, it gets a little noisy. Take the hinge pin out and coat it with naval or petroleum jelly, and put it back. Slide it up and down to grease the channel until it quits squeaking. Squeaky hinges make for satisfying home repairs!

Hardwood Floors

Hardwoods shrink around the nails after awhile, causing squeaks when you walk across the room. You can fix it by going under the house and drilling a screw through the subfloor into the wood. Just make sure it doesn’t poke through on the other side. There are also nail systems that go through the right side of the floor and the nailhead pops off so it’s invisible.

Pacific Mortgage is here to help you through not only the mortgage process, but we’re around after you move in, too–so when you’re ready to buy a house, give us a call–we’re you’re lifelong mortgage partner.


3 Ways to Prepare for Mortgage Approval

You have been wanting to move into your own home for quite some time, but are not sure where to begin. In order to work towards mortgage approval, here are three things you need to do to really invest in the future you want. Remember, if you are not able to move into your dream home right away, you can always move later. The point is to get started!

Know What You Can Afford

Do you have a household budget? If not, please sit down with pen and paper or spreadsheet and create one. You will amazed how much disposable income you actually have at the end of the month. Look at everything, including your Starbucks habit. Work hard to account for every penny. It seems like a daunting task, but it really isn’t. It’s the first step in your mortgage approval process. Here is a short list to get you started:

  • Begin with your paycheck. What is your monthly take home pay? If you have a partner, you need to include their information, too.
  • Deduct all fixed, monthly payment amounts, such as: rent, car payments, student loans, charge cards, utilities, child support, and anything else you may have.
  • Deduct all non-fixed monthly expenses. This part is more difficult. How much do you spend on gas, clothes, and dining out (even if you charge it), coffee, etc. The list may be long, but this is also something you have control of and can curtail if necessary. This is your disposable income. If it is higher than you thought, congratulations! Although, you may still want to tweak it, and you will see why in a minute. If it is lower than you thought, or perhaps you had no idea what it might be, you really need to take some drastic changes. These are not tweaks, these changes may include pleasure points you will have to limit yourself to. Did you ever think about how much you give Starbucks in a week? The cost of a White Chocolate Mocha is $4.75 without taxes. If you have one each day on your way to work, you are spending $23.75 weekly, $95.00 monthly. Let it be a weekly treat to yourself and you are still saving $76.00 a month. A 48 ounce serving container of Folgers, bought at Walmart averages $9.98, and that’s without a coupon, see the difference? Put your money back into your pocket.

Review Your Credit Report

Have you actually looked at your credit report? Do you know your credit score? This is taken very seriously by mortgage providers and significantly affects your chances for mortgage approval. Why, you ask? Because this determines how much money lenders feel comfortable lending you, and how high your interest rates will be. The lower the number the higher the rate, and of course the opposite is true: higher score, lower interest rate. Know your numbers, and if they are low, take steps to improve them. One sure way to improve them is to pay down or off your credit card debt. If you have any judgments, find out what they are for, and how you can get them removed; these bring down your score, fast. It may take a while to get this resolved, but in the meantime, you are taking other positive steps in procuring your home.

Save For a Down Payment

Now we go back to budget. You must make a down payment or in many instances, at least be able to pay closing costs. The positive steps you take in amending your budget will help you get to house shopping sooner than you realize. Earmark that money for a single purpose. Sometimes it is easier if you open a separate designated bank account, and immediately transfer it each pay period. Do not touch it; watch it grow. Were you able to find $100.00 a month? That’s $1200.00 a year. Good job! You are now much closer to buying your home.

Pacific Mortgage Group is here to help you get moved in to your home ASAP! Licensed in six states so far, and working with over 100 lenders, we are more than happy to assist in getting financing for your home loan. Contact us to see if you qualify for $0 closing costs. Let’s make you a homeowner.


Get Yourself a Cash-Out Debt Consolidation Loan for the Holidays

As you plan for the year ahead, have you thought about refinancing your home to get out from under high-interest credit card and personal debt?

If that seems to be throwing good money after bad, and risking your hard-earned equity, consider the benefits of a cash-out refinance to consolidate your debt.

The Real Estate Boom Benefits Your Home Value

The real estate market has recovered from the recession, and housing prices have been steadily rising for several years. Even if your home value dipped during the worst of it, chances are good that it’s not only bounced back, but that you’ve seen an increase of 5-10 percent each year. In simple math, if your home was worth $250,000 in 2008, it may well be worth over $330,000 today. And assuming your mortgage balance was $225,000 back then, by now it should have amortized down to $220,000, to be conservative. In this example, your equity has ballooned from $30,000 to around $110,000. So if your cards and other loans add to up $40,000, you’ve still got a solid equity cushion in the house, and there’s no need to fear you’re at risk with a cash-out debt consolidation loan.

The Math Is Better With A Cash-Out Debt Consolidation Loan

Interest rates on mortgages are still at what are considered historic lows–under 5%. Now go look at your credit card statements, and try not to cry. If you’re paying under 20% in interest, you’re one of the lucky ones–many cards carry interest rates of 24% or higher–whatever the limit is in your state. If you’ve got personal loan debt, that’s well over 10% as well–so if your balance for all your high-interest debt is over $25,000, you’re paying over $5,000 each year in interest payments–and if all you pay is the minimum, you’ll never pay those cards off.

Now, let’s say you’ve consolidated your debts into a cash-out debt consolidation loan, and your new loan-to-value (LTV) on your house is 88%. With reasonably good credit, your new interest rate is around 5%. Suppose your house payment on a $225,000 loan is $1300 monthly. A cash-out refinance loan, with a new balance of $280,000 and a rate of 4.85%, carries a monthly principal and interest payment of $1131, with an estimated $350 for taxes and insurance. That totals $1481 for all your monthly debt, since you’ve eliminated the five hundred or so dollars you’ve been paying in high-interest debt.

Getting Started With The Refinance Process

When you refinance your house, it’s very much like the process you had when you bought your home, only there’s no realtor involved. You’ll complete an application and get pre-qualified–our loan officers will then present you with your loan options, and you’ll work together to figure out which one is best for you. You’ll upload any documentation, and we’ll order an appraisal, title search, and payoff from your current lender. Your loan officer will also get the payoffs on those cards and other loans for you, so all you have to do is take out your scissors and cut up the cards.

Special Loans And Cash Out Refinancing

Most mortgages are conventional loans, but if yours is an FHA or VA mortgage, don’t worry–you can get a cash-out debt consolidation loan under those programs, too.

A VA refinance is pretty straightforward; provide your Certificate of Eligibility and meet the lender guidelines, and you can tap into up to 100% of your equity. You are subject to VA loan limits, however, and they vary by area.

If your current mortgage is FHA and you want to stay with that loan program, you can get a cash out FHA refinance. If your credit score is on the lower side and you don’t qualify for conventional financing, you can borrow up to 85% LTV with an FHA loan. As with VA, FHA loan limits are based on your location.

Start the new year off debt-free, with a cash out debt consolidation refinance.


Avoid These Six Home Improvement Mistakes

One of the best ways to add value to your house is through a home improvement project. However, there are plenty of pitfalls when it comes to remodeling.

Here are six critical mistakes to avoid:

  1. Not talking to your real estate agent ahead of time. Before you decide on any renovations or remodeling projects, it’s imperative that you sit down and discuss your plans with your real estate agent first. Their knowledge of which home improvements projects are beneficial—as well as their knowledge of current remodeling trends—is very important. Also, they’ll be able to provide you with references for trusted contractors.
  2. Focusing only on cosmetic areas and not on structural issues. Too many homeowners spend their remodeling dollars solely on more superficial areas rather than on structural areas. Having a new master bathroom may be your dream, but you should also concentrate on your home’s wiring, plumbing, walls, roof, and foundation. Ignoring these areas could cause major problems—along with major expenses—down the road.
  3. Making improvements that aren’t equal to your home and neighborhood. Overdoing it with your remodeling project can be a problem as well. For example, an upscale kitchen remodel—complete with state-of-the-art appliances and high-end countertops—may not be right for your home and may be a turn-off to potential buyers when it comes time to sell. Your agent can help you decide if your project is appropriate for your home.
  4. Not vetting your contractor. To avoid getting burned by shady workmanship, make sure you interview several contractors and vet them thoroughly. Along with your real estate agent’s referrals, you should also consider referrals from business associations, your local government and personal or professional contacts. Also, make sure your contractor is licensed and insured and can provide you with a written estimate for all work.
  5. Attempting a DIY project—when it’s not a DIY project. Even if you fancy yourself as being pretty handy around the house, you should know your limitations. Tackling a project that’s too much for you can be expensive if a contractor has to come in and fix what you’ve done incorrectly. Saving money by doing a project yourself is certainly nice, but don’t bite off more than you can chew.
  6. Not getting the proper permits and ignoring regulations. Whether you’re doing the work yourself or having a professional do it, make sure you get the proper permits and stick to all regulations and codes. Bypassing the permit process or completing a project that’s not up to code can cause big headaches when you sell your home, not to mention the fact that it could be very dangerous for you, your family and your contractor. ∆

 

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