Monday, January 27, 2020 / by Nicole Merwin
If you have a mortgage on your home, your total house payment may include 1/12 the cost of the annual taxes and insurance. Those amounts are held in an escrow account so the lender can pay them when they become due.
The most common reason an escrow account shortage occurs is that taxes and insurance premiums increase, and the amount being collected isn't enough to pay them when they become due.
As an example, let's say the taxes increased and there was a $600 shortage. The lender will probably give the borrower the option to pay the $600 in cash or adjust the payment to cover the shortage. If the borrower chooses the increased payment, it will be increased not only $50 to cover the shortage from last year but another $50 a month to pay the increased amount for the coming year.
Regardless of which option the borrower takes, their payment will increase. If they pay the shortage in cash, the payment still must go up to cover the i ...
Thursday, January 23, 2020 / by Nicole Merwin
Now that the standard deduction is increased to $12,200 for single taxpayers and $24,400 for married ones, many homeowners are better off with the standard deduction than itemizing their deductions to write off their mortgage interest and property taxes. There was some speculation that without the tax advantages, homeownership is not the investment it once was.
By looking at the other benefits, you can see that homeownership is still one of the best investments people can make.
A $275,000 home financed with a 4.5%, 30-year FHA loan would have an approximate total payment of $2,075. The difference in the value of the home and the amount owed on the mortgage is called equity. Two things cause equity to increase: the home appreciating in value and the principal loan balance being reduced with each payment made on an amortizing loan.
In this example, if the home were appreciating at 2% annually, the value would increase by $5,500 the first year which would be $458.33 p ...
Wednesday, January 22, 2020 / by Nicole Merwin
Monday, January 20, 2020 / by Nicole Merwin
Most homebuyers probably know that their FICO mortgage score can determine whether they qualify for a loan, but they may not be aware that it can determine what interest rate they'll pay.
The same $300,000, 30-year, fixed-rate mortgage can have a principal and interest payment that ranges from as low as $1,340 or as high as $1,619 based on this recent picture in time. The variable is the FICO score of the borrower. Use this calculator to see current rates and your loan amount.
While you can get a conventional mortgage with as low as a 620 FICO score assuming the rest of your qualifications are strong, a higher FICO score will lower the rate you'll have to pay which results in lower payments and ten of thousands of dollars less in interest over the life of the mortgage.
It can be a smart idea to counsel with a trusted mortgage professional about your current FICO mortgage score and find out what you need to do to raise it. Call   ...
Thursday, January 16, 2020 / by Nicole Merwin
A mortgage lock-in is a lender's agreement to hold a specific interest rate for a stated period for a loan at the prevailing market interest rate. This provides the borrower some protection against the interest rates going up during the lock period.
If you think the rates are going down, the advantage would be to "float" and take advantage of the lower rate. If you think the rates are going up, you could lock when you apply or when the application is approved. Some buyers are marginally qualified at the current rate and if the rates go up, it could keep them from buying the price home they want or must make a larger down payment.
The lender will require the borrower to pay a fee for the lock-in. It could be a flat dollar amount or a percentage of the loan to be made. Usually, the longer the rate lock period, the higher the fee will be.
The agreement should include the terms you've locked in such as the mortgage rate, point ...