Monday, September 18, 2017

Turning the Value of Your Home into Borrowing Potential

Find out what it means to have equity on your home, and how you can build it for use down the road.

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Today we’re going to be discussing the question, “What is equity in your home?”

What is equity? It’s the difference between what your home is worth, and the amount of money that you owe.

Equity is the difference between what your home is worth, and the amount of money that you owe on it.

A quick example: Say my house is worth $200,000, but I only owe $100,000. That means my equity is $100,000.

You may also have heard the term “negative equity.” This means that you owe more money on a property than what it’s worth.

Many people want to know how they can build the equity on their home. To do that, there are two methods available:

  1. Appreciation of value. By taking care of the home, maintaining it, and making sure you have good features, you can increase the value of your house. The more value your house has, the more equity you have.
  2. Reduce the amount of debt that you have on your house. Most people don’t know, for example, if you have 30-year mortgage and make just one extra payment per year, you can pay off that mortgage about nine years faster, and that builds up equity a lot more.

Now the question is: “I’ve got equity in my house, so what can I do with it?

There are three things you can do with the equity in your home:

  1. You can sell your house. As you pay off your house, you get that money back when you sell it.
  2. You can use the equity to purchase your next house. A lot of second- or third-time buyers take advantage of this—you can take the equity of the house you’re selling and use it as a large down payment on your next house. This will actually make your next house more affordable because now you won’t have mortgage insurance, your payments are a lot lower, and, in the long run, you can use that money to upgrade your house.
  3. If you’re not ready to buy or sell a house, you can borrow money from your equity to pay off debt. Contact a lender and determine your equity—If your home has $100,000 in equity and you want to borrow $50,000 to pay off any debts, car notes, college expenses, etc., you can put your equity towards those purposes.

Thanks again for watching my blog, and I hope this content was useful to you. If you ever have any questions or concerns, feel free to reach out to me at anytime via text, email, or phone. We look forward to hearing from you!

Friday, August 25, 2017

8 Common Myths About Veteran Financing

Today I’m busting eight common myths about the VA loan.

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There are a few myths about VA loans out there that simply aren’t true. I’ll debunk eight of them today.

1. I can only get one VA loan; I can’t use it again after the first time. You can use your VA loan multiple times so long as you have a good payment history and don’t default on a loan. You can also have two VA loans at the same time.

2. VA loans can only be used to buy a house. If you bought your house with a conventional loan, you can refinance with a VA loan.

3. VA loans are only for starter homes. You can get a regular VA loan up to $425,000. There are VA jumbo loans available up to $1.5 million. If you have the option to use your VA loan, you should do it. It is the best loan product out there.

The VA loan is the best product out there, so use it if you can.

4. VA loans take a long time to process. VA loans take about 30 to 35 days to process, just like a regular loan. If it takes longer than that, then your lender made some mistakes. A strong lender will know how to process the loan quickly.

5. You have to be discharged or no longer in the military to use the VA loan. You can be actively serving and get the VA loan so long as you’ve served the proper amount of time.

6. I have to be at home already to use the VA loan. If you are serving overseas, you can still use the VA loan as long as one of your family members will be living in the property.

7. If I was in the reserves or National Guard, I won’t qualify. You can qualify for a VA loan if you are in any kind of U.S. military so long as you meet the terms for those branches of the military.

8. I need perfect credit to get a VA loan. We can help veterans with a credit score as low as 600. We also look at your debt-to-income ratio. You don’t need perfect credit to get a VA loan.

If you have any other questions about qualifying for a VA loan, just give me a call or send me an email. I would be happy to help you!

Wednesday, August 2, 2017

What's Included in Your Monthly Mortgage Payment?

Today I wanted to break down what really goes into your monthly mortgage payment.

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There are a few different things involved in a monthly mortgage payment. I often am approached by people who tell me things like that they’ve seen a billboard advertising a $300,000 listing with payments of only $1,200 a month.

However, this isn’t something you want to get caught up in. This is a trap.

The first part of your payment is the principal and interest. To calculate these, take the loan amount times the loan term times your interest rate. This number is only what you pay the bank, and is not the full number. So, when you see that a payment is a number that seems too low to be true, they aren’t talking about the full payment.

The full payment is referred to in the industry as PITI—principal, interest, taxes, and insurance. Principal and interest will be reduced each month as you continue to pay the bank. But of course, there are other factors to remember.

The full payment includes principal, interest, taxes, and insurance.

People tend to forget taxes and insurance. A general rule of thumb in our Houston area is that taxes run about 2.5% of the sales price of a home. Insurance, in most cases, runs about 1% to 1.1% of the area.

Your payment, without these, will be completely wrong.

Unless you’re putting down 20% on your mortgage loan, you will need mortgage insurance. This insurance varies from loan to loan. Unless you have a VA loan, you will have to have it.

Mortgage insurance is different from homeowners insurance, however. It protects against foreclosure. Imagine you’re living in the house for a while but then suddenly lose your job. Imagine also, that within that time you’ve done damage to the house causing a decrease in its value.

Ultimately, if this is the case, the bank is protected by your mortgage insurance.They will go to the insurance company and file a claim to get a portion of their losses.

If you have any other questions or would like more information, feel free to give me a call or send me an email. I look forward to hearing from you soon.