Read my blog
Discover Your Home Equity Options
One of the pluses of property ownership is the opportunity to build equity. If there's ever a time that you need a considerable amount of cash (such as for paying off debt or a home remodel), you'll have access to it by borrowing against your home equity. That's essentially the purpose of a home equity loan.
In this article, we'll review what a home equity loan is as well as alternatives that also give you access to lump sums.
What is "Home Equity"?
Equity is based on the difference between what's owed on the mortgage and the home's current worth. For example, if your mortgage is $150,000, but your home appraises at $200,000, your equity is $50,000. The amount you're approved for in a home equity loan is based on this difference.
Advantages Of Home Equity Loans
Home equity loans have fixed interest rates that are lower than personal loans or credit cards. So if you are looking to borrow a large sum, you're often better off with a home equity loan rather than a personal loan or charging it all to your card.
Disadvantages Of Home Equity Loans
The biggest downside of a home equity loan is the requirement of using your home as collateral. So if you can't pay back the loan, you may lose your home to foreclosure.
Alternatives To A Home Equity Loan
Home Equity Line Of Credit
A home equity line of credit (HELOC) acts similar to a credit card in that it has a credit limit, and you only pay back what you use. The credit limit is based on the amount of equity.
For example, if you get a HELOC of $45,000 but only use $15,000, you'll make payments just on the $15,000 (plus interest) not the full amount that you were approved for.
This option requires you to refinance into a new, higher-balanced loan where you then receive the additional funds in one lump sum.
For example, let's say your current loan is $145,000. You then refinance it into a new mortgage that now has a balance of $165,000. The $20,000 difference is what you'd receive in a lump sum, to use however you want.
Whichever option you choose, they all begin the same way --with an application. We've made it easy for you by offering a secure, online method of applying for a second mortgage. We're also available by phone and email to assist and answer any questions you may have about your loan options, qualifications, or the process. We aim to make this process as breezy and affordable as possible.
Start the process today and discover how easy it is to tap into your home equity to get the funding you need.
Who Qualifies For A Reverse Mortgage?
A reverse mortgage is a loan for homeowners over 62 years of age who have substantial equity in their homes. With this loan, they can borrow against their equity and get access to cash to pay for any cost-of-living expenses they may have. Rates typically start at less than 3.5% per year, and the loan lasts until the borrower dies or moves from the property, after which they (or their heirs) repay the loan or sell the property to repay the lender.
Most reverse mortgages are government-insured programs that have stringent lending standards. Private or proprietary reverse mortgages are also available, but those are less regulated. Use caution with unregulated loans from private, non-bank lenders as there is an increased risk of scams with this option.
How Does A Reverse Mortgage Work?
It starts with a borrower who already owns a property with considerable equity --usually at least 50% of its value. Once the borrower picks a loan program with help from their loan advisor, they can apply for a loan. After a credit check, reviewing the borrower's property, its title, and appraised value, the lender can either approve or decline the application.
If the loan is approved, the lender funds it as either a lump sum, a line of credit, or periodic payments (monthly, for example), depending on the borrower's choice.
Some reverse mortgages limit how the funds are used, such as for home improvements or renovations. Others are unrestricted and can be used for any variety of life's expenses.
Reverse Mortgage Eligibility
To qualify for a government-sponsored reverse mortgage, the applicant must be 62 years old or more. Also, they can only borrow against a primary residence and must have at least 50% equity or own the property outright. There also can't be a second mortgage on the property. The following are reverse mortgage-eligible properties:
- Single-family home
- Multi-unit properties -up to four units
- Manufactured home built after June 1976
- Condo or townhome
Private reverse mortgages have qualification requirements that vary by lender.
Reverse Mortgage Costs
The two primary costs for government-backed reverse mortgages are:
- Interest rates: Possibly fixed for lump-sum payouts with rates comparable to a conventional mortgage. Variable rates are based on LIBOR, with a margin added for the lender.
- Mortgage insurance premium: Government-backed reverse mortgages have a 2% upfront insurance premium with an annual premium of 0.5%.
Mortgage insurance protects lenders in case of default. So while reverse mortgages can't default in the same way as a conventional mortgage (such as missing a payment), the loan can still default if the owner fails to pay property taxes or the insurance.
There are also origination fees, and the amount varies by lender but typically ranges from 1% to 2% of the loan amount. Lenders may also have fees for other closing costs, such as credit checks and property appraisals.
However, these are usually rolled into the loan, so you won't need to pay it upfront.
Are you a homeowner over 62 years of age? A reverse mortgage may be just the thing to have more liquid cash flow! Contact us today to learn more about your loan options.
The Top 4 Reasons to Buy a Multi-Unit Property
Multi-unit investing involves buying properties like apartment complexes, duplexes, condo buildings, or other properties that offer multiple spaces for renting to tenants. They offer great opportunities for building your personal wealth without the day-to-day demands of running a business.
If you’ve been curious about multi-unit property investing, this article is for you! In it, we’ll share the best reasons why you should get in the game along with the pitfalls you need to avoid.
The Advantages of Multi-Unit Real Estate Investing
Here are the top 4 advantages of investing in multi-unit complexes:
1. Easier to Finance
You may be thinking that it would be harder to secure a loan for a million-dollar complex but this is not the case. Many lenders are more likely to approve a hefty investment loan on a multi-unit property than a single-family home because multi-unit real estate is more likely to generate steady cash flow --helping you to avoid possible foreclosure.
Here’s how: if you have a single-family rental home that becomes vacant, you lose 100% of your rental income.
On the other hand, if you have a 10-unit apartment, one vacancy means that you lose only 10% of your rental income.
Because of this phenomenon on multi-unit properties, you can expect competitive interest rates and a higher chance of approval.
2. Easier to Grow Your Portfolio
For the serious investor, multi-unit property investing is a great way to expand your real estate portfolio. There are many real estate investment pros who have built their careers and wealth on investing and operating multi-unit rental properties.
If you wish to build a large portfolio of rental units, buying one 5-unit complex is the simpler route to accomplish this goal rather than buying 5 single-family homes.
3. Generate Additional Income
A mu-unit deal will help generate added income right away unlike investing in the stock market where you need to wait for your stock price to increase to make a profit.
Not only can the rental income add immediately to your revenue, but over time, your property will appreciate and earn you significant profits should you decide to sell the property in the future.
4. Lower Risk
Investing in multi-unit properties is generally considered a “safe” investment compared to other real estate types because people will always need a place to live no matter the economic climate.
Even during a recession where some may have to sell their homes, rental properties will often remain unaffected.
Condo buildings, duplexes, apartments, and other types of multi-family properties also accrue added appreciation which means you can earn a decent profit if you decide to sell.
Ready to Invest in Your Multi-Unit Property?
If you are looking for a tried and tested real estate investment strategy, multi-unit family investing is one of your best bets. Get in touch with one of our loan officers to learn more and to qualify today!
Did you know that your mortgage payments include more than just the amount you pay on the loan every month? If you have an Escrow account, there are actually four (sometimes five) elements that make up your mortgage payment. Call to learn more about your future mortgage!
The difference between us and big banks? We work with several lenders and can offer hundreds of mortgage products, not just two or three. As a result, your clients get:
Plus, we’re licensed, know the market, and follow the trends.
Too many people put off buying a home because they think they need a big down payment. We can help. Our FHA loans are perfect for homebuyers with limited savings and easier to qualify for than you might think.
Just 3.5% down. For less than a few months’ rent, your clients could be building equity in a home of their own.
Easy qualification. Our FHA loans are more forgiving when it comes to past credit.
Fast and worry-free. We close most loans in 30 days or less. Your clients may even be able to include their closing costs in the mortgage.
Gift funds accepted. Your client's family members are welcome to help out with the down payment.
Or ask about our zero down program.
Looking for a mortgage expert that does FHA loans the right way?
Let's talk today.
Take advantage of our elite USDA rates starting at 640 FICO
Special low rates for qualified borrowers – $125,000 minimum loan amount
100% financing – no down payment required
Potentially roll closing fees into the monthly payment
Smooth and easy process helps deliver a fast closing
Available on multi-wide manufactured homes
Licensed by the California Department of Real Estate, 01137630, 250609.The principal, interest and MI payment on a $151,515 30-year USDA Fixed-Rate Loan at 2.625% and 100% loan-to-value (LTV) is $658.91. The Annual Percentage Rate (APR) is 3.276% with estimated finance charges of $5,600. Payment includes a one-time guarantee fee at 1.00% of the base loan amount and a monthly mortgage insurance payment calculated at 0.35% of the base loan amount. The 0.35% monthly mortgage insurance is required for the life of the loan regardless of your down payment or equity in your home. The principal, mortgage insurance and interest payment does not include property taxes and home insurance premiums, which will result in a higher actual monthly payment. Rates current as of 9/29/2021. Subject to borrower approval.
The VA loan was designed to offer long-term financing to eligible American Veterans or their surviving spouses (provided they do not remarry). The basic intention of the VA direct home loan program is to supply home financing to eligible veterans in areas where private financing is not generally available and to help veterans purchase properties with no down payment. As the economy improves, so do the mortgage choices available to today's home buyers and refinancing households. For those meeting eligibility requirements, a VA loan is the preferred financing option.
- VA loans allow 100% financing - ZERO down!
- No mortgage insurance.
- Flexible underwriting guidelines.
- Up to 95% Cash Out.
- Credit score as low as 580.
- Rates are often the lowest compared to other loan programs.
- ASSET UTILIZATION to 90% LTV - COMBINE INCOME with QUALIFIED ASSETS DIV. by 36 /QUALIFIED ASSETS DIVIDED by 60
- 1099's IN LIEU of BANK STATEMENTS or TAX RETURNS to QUALIFY to 90% LTV
- 12 or 24 MONTHS BANK STATEMENTS to 90% LTV
- P&L ONLY PROGRAM to 80% LTV
- FOREIGN LOANS AVAILABLE UP TO 75%LTV
- DSCR - JUST USE RENTAL TO QUALIFY
If you are 62 or older and need to review your personalized investment and retirement plan, are you prepared to....
- Eliminate your mortgage payments?
- Stretch retirement savings?
- Preserve investment portfolio?
- Delay taking social security for greater benefit?
- Secure a lifelong growing safety net?
- Purchase using reverse and not make a mortgage payment?
See how it may work for you and/or your clients. Request for a proposal today!
Contact Me Today
Let's find you the right home at the right price.