American Mortgage Resource, Inc.

Providing the Best Financial Resources for Boston and Massachusetts

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Is It A Good Idea To Use Your 401(K) To Buy A House?

401(k) Rules

A 401(k) account is usually used to save up for retirement and that’s why investors get tax breaks for holding it. Due to its benefits, the government strictly regulates and limits access to these funds. If you are not of the required age to withdraw funds, you will be charged a 10% early withdrawal penalty on the amount taken. Also, there will be an additional regular income tax on the amount withdrawn. So if you decide to use the funds to purchase a home, you can either borrow from your 401(k) or withdraw from it.

401(k) Loans

Most people who take money out of their 401(k) account prefer to borrow from it because it does not have an early withdrawal fee or income tax. However, you have to pay it back with interest.  The repayment plan is administrated by the plan provider and the max loan term is up to five years. 

However, these repayments are not treated the same as ordinary contributions. There are no tax breaks, employer matches, and reduction of taxable income. Also, you can only take out 50,000 dollars or less.

401(k) Withdrawal

Not every plan offers 401(k) loans and if that is the case, then you have to withdraw from your account. This is called a hardship withdrawal, which results in a 10% penalty. It’s best to withdraw what you need so that you won’t have to pay it back.

Disadvantages of 401(k)s

Whatever you choose, taking out your 401(k) affects your retirement savings. You lose potential growth and won’t have as much money in the future. Diminishing your savings will mess up the amount of money that you saved up.

Conclusion

Trying to find a way to get money to buy a house can be difficult. Some people take out their 401(k) savings to purchase a home, but there are other options too. If you don’t want to make money from your retirement funds, it would be beneficial to take out a mortgage loan. At American Mortgage Resource, Inc., we offer many different mortgage loans for home buyers. Check out our website for more information.

The Massachusetts Housing Market in 2021

This year as Massachusetts slowly transitioned from winter to spring its housing market also experienced a noteworthy shift. Within the first quarter of 2021 the real estate market in The Bay State has made countless headlines, most deeming it as ‘white hot.’ Follow along this month as we provide unique insight about the market’s current climate, when to buy or sell, how to win a bidding war and where to go for financial help.

Supply vs Demand

At the moment Massachusetts is experiencing an unprecedented demand for homes in a market with what presently seems like has little to no supply to offer. These circumstances are making it increasingly difficult for bids from potential home buyers to be accepted. There are even reports of some homes being bought for as much as $100,000 over asking, and others that have received nearly a dozen offers within days of hitting the market.

Should You Buy or Sell?

The incredible demand for homes across the state have left many residents wondering whether or not it’s a good time to make their real estate move. While rising property values are tempting many homeowners to sell, the likelihood that their home will be bought swiftly is a very real possibility to consider. On the other hand, those hoping to purchase a home should to be prepared to act quickly, face hefty competition, and have a strategy for being successful in the likely event of a bidding war.

How to Win a Bidding War

In today’s climate home buyers need to be ahead of the competition to ensure their bid will be accepted first. The following tips and tricks will immensely help increase your chances of closing on the home of your dreams:

  • Provide a preapproval letter from a mortgage lender
  • Write a personal letter to the home owner
  • Skip the inspection
  • Drop any contingencies
  • Offer all cash

Final Thoughts

Stay ahead of the red hot housing market in Massachusetts this year will professional financial help from a local broker. For more than a decade the loan experts at American Mortgage Resource, Inc. have helped thousands of local residents acquire the loans they need to renovate, refinance, and purchase their dream homes. Contact our team Monday- Saturday at 617-972-8588 or anytime via email at info@visitamr.com.

Five Mortgage Terms to Know

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

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!

The Time to Buy a Home This Holiday Season is Now

In the United States as the winter months bring festive holidays like Thanksgiving and Christmas, many families are so busy and preoccupied that home sales will dip slightly. This makes now a good time to snag a great deal on a home this winter. Below are some factors to consider before biting the bullet on home ownership or moving to another home.

Less Competition as a Buyer

During this time of year it tends to get colder in many parts of the country. Not many people enjoy picking up their family and belongings and moving during these colder winter months, which creates less demand in the market for sellers. This increases the chances of getting a great deal as a buyer as less people are competing in the real estate market at this time.

Interest Rates Are at Record Lows

As the Coronavirus closed many businesses for extended periods of time, this year interest rates have seen record lows to spur the economy during this downturn. What that means for homes buyers is that borrowing money is nearly free thanks to these record low interest rates on mortgages. This is likely the lowest we will see rates for years to come and locking in a fixed rate mortgage is sure to save you thousands of dollars in interest in the future.

Buyers Want to Sell Quickly

Buyers in the market during this time are usually more likely to turn their property over as quickly as possible due to the time of year and other obligations this time of year brings. This means that you may have sellers that are more motivated to make a deal with you and help you secure your next home.

Final Thoughts

Though this year has brought many ups and downs, as we head into 2021 home buyers have unique opportunities to purchase and refinance homes at rates that are incredibly rare. Let American Mortgage Resource, Inc. be your one stop shop for all your mortgage and refinancing needs in the Waltham, MA community.

What Questions Can a Mortgage Calculator Answer for Me?

When you are in the market to buy a new home or decide you want to refinance, it is best to prepared and informed before making any big decisions. Your funds are going to be an important part of the buying process, so by using a financial tool such as a mortgage calculator, you can plan ahead. Similarly, managing your monthly payments for the mortgage can also be accurately shown on a calculator. Learn more about how a mortgage calculator answer your financial questions!

How Long Until I Pay Off My Loan?

In order to strategize your payment plan, you need to look closely at the loan term. With a short term, there are typically higher payments in a shorter amount of time. However, you won’t be paying as high of an interest. On the other side, a long term allows you to have lower payments, but you will be paying more interest over time. Finding a balance of affordability and less interest can help you make the most of your payments towards a home loan.

Can I Afford This House?

One of the main questions to ask yourself is “Am I able to afford this house?” Before settling on that beautiful house you’ve been dreaming of, first determine how much you can afford. A mortgage calculator can give you an accurate estimate of the amount you will need for monthly payments, as well as a down payment. The goal is not to overspend on your house and set realistic goals while considering your financial situation.

How Much Should I Put On The Down Payment?

The higher the down payment, the lower your monthly payments will be. However, you should only put in what you can manage to pay for. Do not put all of your savings and emergency funds into your down payment. Instead, you can use a calculator to figure out a practical down payment. First-time buyers can especially benefit from a calculation, as they will not have extra funds from a previous property.

Conclusion

If you need to calculate your mortgage payments, American Mortgage Resource, Inc. has a free calculator online. You can navigate our website and click on “calculator” to enter your information. For help with the loan process or other mortgage services, contact our team today!

How Reverse Mortgages Benefit Seniors

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!

3 General Refinance Loans

Are you planning to refinance your mortgage? Do you want to take advantage of lower interest rates or perhaps lower your monthly payments? When you start to shop around for the best offers, it’s important to understand which loans you can get approved for. There are some refinance loans that may be better suited for your financial needs. Follow along in our blog to learn more about the general refinance loans you can apply for.

Rate-and-Term Refinance Loan

If you’re looking to save money on monthly payments or switch your loan from an adjustable rate to a fixed rate, then this loan can help with that financial goal. It can change the interest rate, loan term, or even both, without changing the actual amount of the loan. Experian comments that “if your original mortgage has an adjustable rate, moving to a loan with a fixed rate can help you avoid market fluctuations.”

Cash-Out Refinance Loan

Need quick cash for a home improvement project? Then a cash-out refinance loan may be right for you. When you apply for this type of loan, you are essentially taking out a portion of your home’s equity in order to get a large amount of cash. However, be cautious that this will most likely increase your loan amount, as well as result in higher monthly payments.

Cash-In Refinance Loan

While not as common as other loan alternatives, cash-in refinance loans are still an option for homeowners. Instead of taking out cash, you’re putting money into the loan to reduce the new mortgage balance. Consider this loan if you’re interested in qualifying for a lower interest rates, underwater on your mortgage or want to get rid of private mortgage insurance

Conclusion

Have any questions about the loan process? Get in contact with a representative from American Mortgage Resource, Inc. We can help guide you to make the right financial decision. Call or visit our website for more information. We look forward to speaking with you soon!

Loan Application Terms You Should Know

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When you’re starting to apply for home loans, you’ll come across some financial terms during your research. While you might be familiar with a few words and phrases, there could also be a couple of confusing ones too. Loan jargon isn’t a part of everyone’s vocabulary, which is why we have written down terms that might be helpful on your loan application journey!

Prequalification

A quick way for lenders to tell you what kind of loan, if any, you may qualify for. It’s important not to confuse prequalification with preapproval, which is a more formal commitment from a lender and often requires additional documentation.

Net Income

Your take-home pay after taxes and other deductions, such as health insurance. Simply, this is the amount you see on your paycheck. Note: your net income is different from your gross income, which is your wages without any deductions.

Cosigner

A cosigner is someone who signs for your loan with you. If your credit score isn’t high enough, a cosigner, which is essentially someone who is legally obligated to repay your loan if you’re unable to, may be a way to get the money you need.

APR

This stands for annual percentage rate. An APR includes your interest rate, but also wraps in things like one-time charges and annual fees. You can use an online loan calculator to determine how APR can affect your monthly payments.

Debt Consolidation

If a lender mentions debt consolidation, this means a combination of debts into a single loan. Anything from credit cards to house bills is included.

Conclusion

At American Mortgage Resource, Inc., we make the loan application process simple. If you have any questions about our programs or lending options, visit our website for more information. You can also contact our team by calling 617-972-8588. Get approved today!

When Should You Refinance?

Refinancing can seem enticing; however it is important to know when the most optimal time to refinance your mortgage is. If you’re ever wondering when the right time is, continue reading along with this month’s blog!

First

The only way you will be able to refinance your mortgage is if you are approved for the loan. If you aren’t approved, you will not be able to reap the benefits of refinancing. However, this is usually the last step in your process. When it comes to refinancing, you should always anticipate that you would be approved. If you know for a fact that you are going to qualify, this is the first step in deciding! Knowing that you will qualify and be approved will save you time in the long run. 

Second

When considering the option to refinance your mortgage, you should anticipate living in your home for at least five more years. If you’re already considering a move or wondering how soon you can leave, refinancing might not be the best option for you. However, if you’re interested in investing time in your home, refinancing is perfectly acceptable!

Lastly

Last but certainly not least; you should only consider refinancing your mortgage if the current interest rates are lower than your existing rate. We suggest ensuring that the interest rate is at the very least 1% lower. Otherwise, there is no true reason for refinancing your mortgage as you are already reaping as many benefits as possible. If you are still interested in eventually refinancing, continue to check with the current rates. When you finally see a drop that is satisfying, then you can jump on board with starting to refinance your mortgage. 

Conclusion

If you are interested in refinancing your existing mortgage, be sure to check that now is the right time. If you are confident and ready to get stared, be sure to check out American Mortgage Resource, Inc. to learn more!

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