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Is a 20% Down Payment on a Home Necessary?

Is a 20% Down Payment on a Home Necessary?

Buying a home is a big part of your life. It is likely the single largest investment you will make. It is also going to be something you are paying for over the course of many years of your life. So, before you even get started on your house hunting search, is it even necessary to put any money down? Can you just go in, take out a big loan and move in when you are ready? In short, no, some form of down payment is required, but the bigger you can go, the better.

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5 Great Reasons to Refinance Now

5 Great Reasons to Refinance Now

The housing market has been up and down for a while now. Many were fortunate enough to take advantage of a time period where it was a buyer’s market. Others may have made a purchase when it was a seller’s market. Either way, refinancing your investment in your home is a choice that is worth consideration for a number of reasons. And there is no time like the present to seriously consider those reasons.

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How to score the best mortgage rate in 2017

How to score the best mortgage rate in 2017

Despite the collapse of the housing bubble and subsequent Great Recession of 2008, mortgage rates have been on a significant downward trend over the course of the past thirty-five years, which is fantastic news for those looking to buy a home. Although rates have risen a little since their low point in 2012, the relative uncertainty of the market moving forward (pundits disagree about how much affect the Donald Trump presidency and the Fed raising rates again will have on rates) makes this a great time to lock in and take the plunge on a new mortgage. If you are considering taking out a home loan in 2017, here are four indispensable tips to help get you the lowest rate you are eligible for.

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Mortgage Amortization Explained

Mortgage Amortization Explained

Put simply, amortization is the process by which you pay back a debt through equal payments on a routine basis over a specific period of time, like 30 years. Every payment that you submit, usually on a monthly basis, is then divided up and put towards certain portions of your debt. In the case of most loan arrangements, part of your payment goes to the interest and the other part is applied to the principal.

At the start of your term, interest costs are high and a majority of your payment is going towards paying interest, while a smaller portion goes toward repayment of the principal balance. This is particularly true for any loan with a long term. While many mortgages can run as long as 30 years, you will most likely encounter this sort of arrangement.

But as time passes and you continue making your payments on time, a smaller portion of your payment is applied to the interest and a larger portion is applied to the principal.

So when your mortgage is amortized, it means that your payments are structured in such a way that by the full term of the loan your final payment is enough to pay of the remainder of your loan balance. For instance, if your mortgage has a 30 year term you will submit 360 equal monthly payments that will pay off the balance of your mortgage in full over the 30 year period.

 

How to Amortize your Mortgage

There are all kinds of online calculators and spreadsheets that you can find to help you determine the amortization on your mortgage. Go to www.milend.com and use our payment calculator.  It is quick and easy to use and will help guide you on what payment amount you can expect on any loan amount and term.

Just think of it this way, every payment is based upon three factors: the term of the loan, the interest rate, and the amount you borrowed. They work in conjunction to decide how much of your payment goes to interest and how much goes to principal. So let’s say you have a 30-year fixed mortgage for $100,000 and an interest rate of 6%.

Take your starting balance of $100,000. Your monthly principal and interest payment over 30 years at a 6.0% fixed interest rate will be $599.55 per month. At 6% interest, that breaks down to an interest charge for the first month of $500.00. Simple multiply your balance of $100,000. X .06 = $6,000, and divide that by 12 (for 12 months) and you get $500 as your 1st interest payment.  Subtract that from your payment of $599.55 and you’re left with $99.55, the amount applied to principle.  Subtract the $99.55 from you loan balance of $100,000 and your balance is now reduced to $99,900.45

To calculate the 2nd months do the same calculations using the new balance of $99,900.45. With that same $599.55 principal and interest payment, the amount that goes towards interest would be $499.50 and the remainder of $100.48 is applied to the principal. The loan balance after your second month is $99,800.40. You subtract the $100.48 from your starting balance of $99,900.45. If you continue to make these same calculations for the 360 payments or until the end of your term, you’ll notice that the interest charge gets a little smaller with each monthly payment and more of the payment is applied to the principal until the final payment pays off the remaining balance in full.

 

Refinancing With MiLEND

For over two decades, the home loan experts at MiLEND have made it our #1 priority to serve clients like you with the utmost in professionalism, integrity, and customer service. Our licensed staff of qualified and experienced loan officers will help you navigate the waters of refinancing your mortgage to save you as much money as possible to maximize your financial opportunities. At MiLEND, refinancing is our specialty and we’re proud to offer not only a wide variety of loan options, but the ability to negotiate more favorable rates due to our high volume of processed loans, when compared to other lenders.

 

Contact MiLEND today to discuss if refinancing is right for you and your personal financial goals.

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How the Fed Rate Hike Impacts Mortgages, Credit Cards, and Auto Loans

How the Fed Rate Hike Impacts Mortgages, Credit Cards, and Auto Loans

The recent announcement that the Federal Reserve Board was going to raise the rate by one quarter point has a lot of people wondering what that means for their wallet. This incremental increase might sound small but it could have some bigger impacts on your money over the long term in some areas. So if you are among the many who are confused about the effect it could have on your financial situation, let’s have a look at the numbers.

Mortgages

Fixed rates on thirty-year mortgages have already risen nearly a full point since October from 3.47% to 4.13%, which equals an extra $75 on a $200,00 mortgage. This increase is due in large part to 10-year Treasury bond yields moving nearly the same percentage up back in September. But for most short and long term rates, the quarter point increase has already been factored in since the announcement from the Fed had already been expected. However, if there are another two rate hikes of a quarter point, that could bring mortgage rates up to the tune of an extra $30 a month coming out of your pocket on a $200,000 mortgage.

Adjustable rate mortgages stand to feel a bigger effect from the increase. While these are usually modified on a year-to-year basis, you could find yourself paying more with a rise of half a percentage point over the next year. That would be very possible with the inclusion of the recently announced raise of a quarter point. What does it all mean in dollars and cents? You would be shelling out another $60 a month on that same $200,000 mortgage.

Auto Loans

This is one area that won’t feel as much of an impact than some others since the quarter point represents a small amount of additional money in relation to how much one might borrow on an auto loan. So if you have plans to purchase a new car in the coming months, many of the current components will remain the same in determining how much your payments would be.

For example, if you borrowed $25,000 to buy a car, the Fed rate hike really translates to little more than $3 extra per month. Over the course of a year it’s $36, hardly a make or break situation for someone eager to get behind the wheel of a new automobile. So when you’re ready to talk numbers, you still want to make sure you meet credit requirements and shop around for the best price, as you would whether the rate went up or not.

Credit Cards

The rate hike is also going to have a small but definite impact on your credit card. The majority of the cards on the market come with variable rates, so the Fed does have power to make some dramatic changes to your debt. With a hike of a quarter point, that breaks down to an additional $25 a year for each $1,000 you have in credit card debt.

Contact a MiLEND mortgage expert today to discuss the available options that will allow you to begin enjoying a lower monthly mortgage rate or term.

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Could a Reverse Mortgage Save Your Retirement?

Could a Reverse Mortgage Save Your Retirement?

As baby boomers retire at the rate of 10,000 per day, many of them are woefully underfunded for their future retirement needs. While reverse mortgages have gotten a bad rap over the last decade, the product has changed and become more regulated. Reverse mortgages are now gaining a lot of attention as a viable option for retirement income.

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The Lowdown on Pre-Qualification and Pre-Approval

The Lowdown on Pre-Qualification and Pre-Approval

Buying a home, especially your first home, is one of life’s greatest milestones. It is also one of life’s largest financial investments, and as such, a fair amount of preparation is required before any final decisions can be made. One of the most important factors to consider, especially should you need to borrow money, is the value and type of loan that you are eligible to receive, which will then determine what your mortgage payment is going to be each month. To do this you will first need to know the difference between pre-qualification and pre-approval because, rest assured, they are not one in the same.

Pre-qualification is when the buyer provides to the lender certain information such as, the buyer’s income, credit, assets, and debt collectively and then the lender assesses that information and will provide an idea of the amount and kind of loan that a buyer can expect to receive. The lender does run a credit report but does not verify any of the information provided by the buyer. The lender bases their decision on what the buyer tells the lender. This speeds up the process and provides a quick assessment of the borrowing power of the buyer. Should buyers feel so inclined, they are able to request a pre-qualification letter that summarizes this information for their own personal use since it provides them with a realistic snapshot of their lending potential. This is only an initial quote assessment, however, and has the ability to change significantly upon pre-approval.

Pre-approval is when a lender actually verifies the information provided by the buyer, such as the buyer’s income, job, and assets. This is done through a formal loan application process and the loan file information and credit report are actually reviewed by an Underwriter. This gives a much more comprehensive look into the buyer’s actual borrowing capacity. A pre-approval letter, unlike the pre-qualification letter, carries more weight and legitimacy since the lender has actually verified the buyer’s application information and the lender’s Underwriter has reviewed the loan file. Pre-approval letters are viewed by real estate professionals as the first official step in the home-buying process. A pre-approval is to a loan as a learner’s permit is to a driver’s license.

The reason why many people choose to get pre-qualified at all is to receive a quick assessment and have a framework with which to move forward in their house hunting process. It helps to manage expectations and potentially eliminate properties or neighborhoods that are far outside of buyers’ price range. Why seriously consider homes that you will not be able to afford? It also may shed light on certain financial issues that need to be addressed before crossing the finish line of purchasing a home. Pre-qualification is an important tool for the buyer but ultimately the pre-approval letter is more important to a real estate agent or a seller. Should buyers want to skip pre-qualification altogether then they are able to jump straight into pre-approval.

When buying a home, it is essential to cross all of your t’s and dot all of your i’s. Knowing how much money that you are able to receive in the form of a loan is arguably one of the most important steps. Should you just want a general idea of the dollar figure to help guide your decision-making then pre-qualification is an easy option. However, if you are eager to get the ball rolling on securing the loan that will enable you to buy a home, then skip straight to pre-approval.

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Popular Home Buying Advice to Avoid

Popular Home Buying Advice to Avoid

When you decide you’re ready to purchase a home, chances are you’re going to receive a lot of unsolicited advice from well-intentioned family and friends. While it’s always a good idea to listen to those who have experience you lack, it’s not a bad idea to take opinions with a grain of salt instead of treating them as gospel. In fact, there are several common pieces of advice you should probably avoid.

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5 Tips to Help You Save for Your First Down Payment

5 Tips to Help You Save for Your First Down Payment

Most prospective home buyers know that having a 20% down payment on hand when negotiating a real estate purchase is ideal. Not only can this help you get preapproved for a mortgage loan, but it allows you to avoid paying extra for mortgage insurance.

Even so, you may be eager to start building equity rather than paying rent. While you don’t necessarily have to have 20% down to secure a home loan, you will need at least a modicum of savings for your down payment if you want a lender to pony up the rest. Here are just a few tips to help you get on track for saving the funds needed for a down payment on your first home.

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Refinancing Your Mortgage When You Have Bad Credit

Refinancing Your Mortgage When You Have Bad Credit

If you have bad credit, it can be difficult to secure a home refi. However, refinancing to lock in a lower interest rate and reduce monthly payments could free up the money you need in your budget to pay down other debts and improve your credit. It’s a bit of a catch-22.

That said, it is not impossible to find a way to refinance your mortgage, even if you have bad credit. You can find lenders willing to work with you, especially if you know what to look for or you set yourself up for success in certain ways. If you want to take advantage of low interest rates before they start to rise with the recovering economy, here are a few things you can do to improve your chances of securing a favorable mortgage refi.

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