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The Pros and Cons of Paying Your Mortgage off Biweekly Versus Monthly

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The Pros and Cons of Paying Your Mortgage off Biweekly Versus MonthlyIf you have a mortgage, you’re probably looking for the best option to pay it off. Monthly mortgage payments are an easy-to-manage way to pay for your house – in fact, they’re the most common form of mortgage payment  but now, many homeowners are discovering that biweekly payments offer them better results.

So is a biweekly payment the better option for you? Which payment strategy best fits your individual circumstances? Here’s what you need to know.

Biweekly Payments: Pay Off Your Mortgage Faster and Save on Interest

Biweekly payments are becoming increasingly popular for a variety of reasons. With a biweekly payment, you’ll pay less money in total interest payments over the course of the whole mortgage, and you’ll pay your mortgage off faster. Biweekly payments also make it easier to budget for your mortgage because they coincide with your paycheck, and the biweekly payment system forces you to make extra payments toward your principal.

That said, biweekly payments also have some disadvantages. If you’ve bought a home at the very top tier of what you can afford, you might not have the budget flexibility for extra payments. Your lender may also force you to pay a $300 setup fee or a processing fee for each payment.

Monthly Payments: Easier to Afford for Large Homes

Paying your mortgage off on a monthly basis has long been the standard, for a variety of reasons – for instance, most homeowners are typically more comfortable with monthly payments as they were the norm during the owner’s years as a renter. It may also be easier to manage monthly payments if you work as an independent contractor and don’t always get paid every two weeks.

Monthly mortgage payments are more affordable for owners of larger homes, which typically come with larger mortgages. A monthly payment schedule also means you make one less payment per year, and for those on a strict budget, this can help to make the daily necessities of life more affordable.

Monthly mortgage payments were once the expected norm, but now, a lot of homeowners are choosing to make biweekly payments in order to pay off their mortgages faster and better budget their money. Monthly payments still remain popular, though, for a variety of reasons.

So which one is better for you? A qualified mortgage advisor can help you determine your best course of action. Call your local mortgage professional to learn more about your mortgage payment options.

3 Reasons Why the Cost of Title Insurance is Worth the Investment

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3 Reasons Why the Cost of Title Insurance is Worth the InvestmentTitle insurance is one of the few types of protection policies available to homebuyers and one that is often overlooked because of its optional nature.

Because title insurance is purchased simultaneously with the home, it can be very easy to forego when looked at alongside all the additional fees that are associated with purchasing property.

This is typicaly not advisable, as title insurance is one of the smartest forms of protection a homeowner can buy. Here are just three reasons why every purchaser should get title insurance.

It’s The Best Protection Against Fraud

Title insurance protects the owner of a home from any claim made against their property, whether or not they are responsible. These include unpaid mortgage balances on the home, an improper foreclosure or any form of real estate fraud perpetrated by the seller.

Fraud is more prevalent now than ever before and has started to gain momentum in real estate as well. Forgeries are easier to create in the electronic age and criminals take advantage of today’s ‘do-it-yourself’ attitude to sell property they don’t actually own to unsuspecting victims.

The Insurer Performs An Exhaustive Title Search

Countless records are now made public online for low one-time payments to access them. But does anybody really know what they should be looking for? Title insurers are experts at finding anything suspicious with a home and researching exhaustively to make sure everything about the transaction is legitimate.

And if it’s not, the insurance still covers the buyer for any losses incurred if they are ordered out of their new home should a claim be made against it. Then they will research the claim to make sure it isn’t a fraudulent one.

Title Insurance Is A One-Time Fee

Although it is a large fee, title insurance only needs to be paid for once. Unlike other insurance policies that are either monthly or annually, title insurance is a one-time fee that is acquired at the time of closing. Most mortgage lenders require that their title insurance policy is paid for by the borrower anyway, so it’s not a giant leap to take out your own policy the same time.

Title insurance will also protect against mortgage fraud or any unpaid mortgages the home already has. Although title insurance is strongly recommended, it is a good idea to speak with a professional about it so that any questions you have may be answered.

Spouse with Bad Credit? 3 Reasons You’ll Want to Consider a Co-signer for Your Mortgage

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Spouse with Bad Credit? 3 Reasons You'll Want to Consider a Co-signer for Your MortgageObtaining a mortgage can be quite a complicated process even without the financial hurdles, but if your spouse’s credit has experienced a number of difficulties, acquiring a mortgage can be even more of a burden. If you’re concerned about what bad credit will mean for your mortgage and are weighing your options, here are some reasons why it might be important to use a co-signer for your application.

Increasing The Likelihood Of Approval

From getting an education to purchasing your first vehicle, it’s a common occurrence for people to take a loan out at some point in their life. However, getting a loan can be very difficult if you happen to be married to someone with a poor credit history. While having someone you know co-sign your application is not without its risks, it can be a means of securing mortgage financing so that you can move towards a less burdensome financial situation.

Improving A Bad Credit History

It adds stress to the process if you have a partner with a poor credit history, but the benefit of a co-signer is that it can be one of the few opportunities you’ll have to really improve a problematic rating. With a co-signer to vouch for you, you will be able to pay down your mortgage consistently and slowly build your spouse’s credit in a way that will give both of you a lot more financial opportunities in the future.

Building Up Trust

It goes without saying that having a co-signer can be a significant financial risk for the person who chooses to sign for you, but – if approached responsibly – this can be a means of building trust with your family members or friends. While co-signing may be a necessity for your situation, it’s important to be aware that it’s a huge commitment for the person who agrees to it and their support should be seen for the good faith it is.

As co-signing is a considerable responsibility for the person who offers it, it’s important to ensure that purchasing a home is the right financial choice for you before asking someone to vouch for your application. If you’re currently in the process of looking for a new home, contact your trusted mortgage professional for more information.

Understanding the Jumbo Mortgage and Why Refinancing These Mortgages is Different

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Understanding the Jumbo Mortgage and Why Refinancing These Mortgages is DifferentIt seems like everything is getting jumbo sized these days. Jumbo sized soft drinks. Jumbo sized fast food meals. Jumbo sized smartphones. But one thing that nobody thought would get jumbo sized? Is mortgages.

So what exactly is a jumbo mortgage? How is it different from a standard mortgage, and what does that mean for your refinancing options? Here’s what you need to know.

Jumbo Mortgages: Larger Sums For Enterprises And Wealthy Buyers

As the name implies, the main factor that sets jumbo mortgages apart from standard mortgages is the loan limit. Fannie Mae and Freddie Mac impose mortgage limits all around the country, limits that vary depending on the cost of living in each individual state. But in situations involving highly valuable real estate – like luxury properties and commercial real estate – standard mortgages simply don’t give buyers the freedom they need.

Jumbo mortgages are also common in areas with high costs of living, where real estate frequently surpasses the standard loan limit in high-cost areas.

How Do You Qualify For A Jumbo Mortgage?

As would be expected when higher sums of money are involved, the eligibility requirements for a jumbo mortgage are much stricter than for a traditional mortgage. Jumbo mortgages aren’t subject to private insurance, which typically means a down payment on a jumbo mortgage will be significantly larger compared to a standard mortgage. That also means people applying for jumbo mortgages must demonstrate to lenders that they have the income and wealth to pay the debt.

Jumbo mortgages also require a higher credit score. While most buyers can get a mortgage with a decent interest rate if their credit score is 660 or higher, buyers applying for a jumbo mortgage need a credit score of at least 700 to even be considered by most lenders.

Jumbo mortgage lenders can require borrowers to have at least 6 months worth of payments set aside in a bank account at the time of closing, while the requirement is typically two months for most mortgages. If you want to qualify for a jumbo mortgage, you’ll also need to prove to your lender that your debt-to-income ratio is below 45 percent.

Larger Sums Make Refinancing More Complicated

When trying to refinance a jumbo mortgage, you’ll face tighter restrictions compared to a standard mortgage. You’ll need to have a significant amount of equity in your home before you’ll be considered for refinancing. And if you’re planning to roll your HELOC debt into the refinancing plan, you’ll have to ensure that you haven’t made any deductions against your home equity for the past 12 months.

Some lenders may also have other special requirements when refinancing a jumbo mortgage. For instance, if you’ve owned your home for less than a year, you might have to opt for a Freddie Mac or Fannie Mae loan – and regardless of what fair market value is for your property at the time you file for the mortgage, it will usualy be assessed at its original purchase price if you’ve owned it for less than a year.

Jumbo mortgages can be a great way to buy a luxury home or commercial investment property. But in order to be issued a jumbo mortgage, you’ll need to meet a strict set of requirements.

If you’re considering a jumbo mortgage, a professional advisor can help you understand your options. Contact your trusted mortgage professional to learn more about refinancing options and how you can qualify for a jumbo mortgage.

4 Things You Absolutely Should Not Do After You Apply for a Mortgage

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4 Things You Absolutely Should Not Do After You Apply for a MortgageIf you have a good credit history and are prepared to invest in a home, you may be feeling pretty confident about the mortgage process. However, it’s important to be aware that there are things that can have a negative impact on your application. Whether you’ve just submitted your documents or are getting close to it, here are some things you may want to avoid.

Acquiring New Credit

It may seem silly that something as minor as a new credit card can be a mark against your credit, but applying for new ones can be a bad sign to lenders. The problem is that this can be signal an unmanageable debt load, so you may be considered a high risk for not being able to make your payments.

Forget To Pay Your Bills

It’s easy enough to get lulled into the feeling that your mortgage application will be approved, but this doesn’t mean that you should forget your financial responsibilities. If you’ve had poor credit in the past and neglected paying your bills on time, now is not the time to do this. Instead, ensure that you’re paying all bills and any applicable minimum payments in advance of the due date so your credit score is not impacted.

Close Old Credit Cards

Many people think that closing out old credit cards can be a positive financial step forward and a good way to streamline their finances, but this can cause damage to your credit score. Because closing a credit card will change your available balance and bump up your debt load, it may mean that your debt percentage will increase. Instead of risking this, leave them active until you’ve received approval.

Quit Your Job

Few people will have the ability to quit their job when they’re applying for a mortgage, but doing this or incurring other fluctuations in your monthly income can cause problems with your application. If you are self-employed, there may be peaks and valleys in your finances, but a huge shift in what you bring home can show lenders that you’re not a solid bet.

There can be a lot of stress that comes along with the mortgage application process, but by paying your bills on time and staying on top of your payments, you can avoid negatively impacting your approval. If you’re currently on the market for a mortgage, contact one of our mortgage professionals for more information.