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Tag: loan process

Five Mortgage Terms to Know

February 26, 2021 / / 0 Comments

Are you in the process of buying a new home? When you’re talking to real estate agents and lenders, they are probably using terms in conversation that you have never heard before. You may hear terms such as “closing costs” and “escrow”, which is why it’s important to know some basic mortgage vocabulary so you don’t have to ask too many questions. In addition, purchasing a home is a big commitment, so you want to understand exactly what’s going on. In this blog, we discuss five mortgage terms you should know!

AMORTIZATION

When you are making equal payments towards the principal and interest, this is called amortization. You are essentially paying towards the interest in the beginning of your payments, but as the loan gets smaller, less interest is charged. It’s a gradual reduction of paying your debt over time.

CLOSING COSTS 

The money you need to close the mortgage deal is called closing costs. These costs include everything from title insurance and escrow fees to lender charges and transfer taxes. FYI: All closing costs will be listed on the loan estimate that the mortgage lender gives you within three business days of your application.

EQUITY

Equity is the difference between what you owe on your home and the current market value. As you pay your mortgage, the equity grows. You can tap into this value over time. For example, you can apply for a home equity loan, a home equity line of credit or a reverse mortgage.

ESCROW

“Escrow is a legal arrangement in which a third party temporarily holds large sums money or property until a particular condition has been met.” In real estate, escrow is used to protect the buyer’s deposit so the money goes to the right party according to the conditions of the sale. It also holds a homeowner’s funds for taxes and insurance.

TITLE INSURANCE

Title insurance guards against any disputes about the title, such as contractor liens or tax. It is a way for lenders and owners to protect themselves from financial loss and other related legal expenses.

Conclusion

At American Mortgage Resource, Inc., we are here to guide you through important financial decisions when it comes to buying a home. Let us help you with the home mortgage process and contact our team of professionals. Call us at 1-617-972-8588 or send us a message online!

Reasons Why Your Mortgage Application Could Get Declined

January 29, 2021 / / 0 Comments

When you are trying to apply for a mortgage, you want to do everything by the book to be approved. However, there are instances where a mortgage lender will deny an application. From bad credit to an insufficient down payment, you don’t want to fall short with certain requirements by the lender. Learn more about why your mortgage application could get declined.

Low Credit Score

The higher your credit score, the better chance of securing the mortgage you want. On the other hand, if you have a lower credit score, you may not be approved. The minimum credit score depends on the lender and type of mortgage, so be aware this can range anywhere from 500 to upper 600’s. Yes, you can be approved with a low credit score, but the lender might ask you to make a bigger down payment.

High Debt-To-Income Ratio

How much of your monthly income goes to monthly debts? The lender will review the percentage of this ratio and determine if you are able to make loan payments too. Experian comments, “It may be harder to secure a loan if your housing payment is 28% or more of your gross monthly income (31% or more if you’re applying for an FHA loan).”

Small Down Payment

Applying for a mortgage loan is a big commitment, as you and the lender already know. That’s why putting more money down for the loan indicates that you are serious. It will also improve your chances of being approved. Tip by NerdWallet: “Putting at least 20% down on a home will increase your chances of getting approved for a mortgage at a decent rate, and will allow you to avoid mortgage insurance.”

Missing Application Information

It’s key to look over the information on your application before submitting it. If you are missing important details, then you can be denied approval. Review your application carefully by yourself or with another person you trust to ensure you have everything ready to go.

Final Thoughts

There can be a lot involved when applying for a mortgage loan. Luckily for you, American Mortgage Resource, Inc. does the heavy lifting for you. We have simplified the application process so you can fill out information online, at your own pace. If you have any questions about your app, please contact us today!

How Reverse Mortgages Benefit Seniors

August 28, 2020 / / 0 Comments

If you are 62 and older and own a home, you may be able to opt for a reverse mortgage. When you use a reverse mortgage, home equity is withdrawn as cash to pay for expenses like home improvements or debt consolidation.  You do not have to pay taxes on the proceeds or make monthly mortgage payments. Of course, there are requirements you have to meet in order to qualify. Read more about the benefits of a reverse mortgage.

Pros

After you retire, there are still monthly expenses to be paid. These expenses can begin to add up, leading you to find more options to supplement your income. Luckily, a reverse mortgage can help. Bankrate states, “A reverse mortgage can be a solution for consumers ages 62 and older who own their homes outright — or at least have a considerable amount of equity to draw from.” Some seniors use this loan to pay for living expenses, repaying debt, covering healthcare expenses, and more. It is also a way for seniors to enjoy retirement, giving them the freedom to purchase a vacation home or another property.

Cons

There aren’t too many drawbacks for a reverse mortgage, but you must keep some things in mind. According to Bankrate, “the borrower must maintain the house and pay property taxes and homeowners insurance.” Furthermore, you have to be living in your home as a primary residence, as well as keep your property in good condition. It is also good to note that closing costs can be expensive too.  

Conclusion

If you are interested in a reverse mortgage, contact the team at American Mortgage Resource Inc. We have a variety of loan options available and can help you make the right decision. For more information on our reverse mortgage services, call us at (617)-972-8588. We look forward to talking with you!

Why Your Credit Score is Important for the Loan Process

June 23, 2020 / / 0 Comments

In order to get the best deals and rates on a home loan, you need to have a good credit score. Mortgage lenders are going to look to see if you are a responsible borrower and making your payments on time. Additionally, your credit score can provide the information a lender needs to determine your eligibility, including which rates they are going to offer and what type of loan you qualify for. Continue reading to understand how your credit score is important for the loan process!

Are You Credit Worthy?

Before you begin shopping for loans, have your credit score ready to go. Check online with an accredited website for the most accurate results. It’s important to mention that most lenders are going off of a FICO credit score, which ranges from 300-850. If your credit score falls under the category of “fair” or better, you’re in the average range for an American borrower.

Is Your Credit Enough for a Home Loan?

According to Meridian Banker, “the credit score needed to buy a house greatly depends on the type of home loan you apply for.” Some of the most common loans you are going to come across are conventional loans, FHA loans, and VA loans. These loans start at a minimum of 500-620 or higher. FHA loans are beneficial for borrowers with low credit scores, while conventional and VA loans are better if you’re in the “good” or “very good” range.

What about Rates?

The higher your credit score, the lower your rates are going to be. The amount you’re paying back on the loan is greatly affected by the rate at which it’s set. Essentially, a lower rate is going to save you more money over time. This is why having a good credit score can expand your loan options, while also giving you better rates in the long run.

Conclusion

For more information about the loan process and what it involves, the professionals at American Mortgage Resource, Inc. are here to answer your questions. We want you to be confident in your financial decisions, so call us at (617)-972-8588 or visit our website to send a message. We look forward to hearing from you!

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