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Preferred Properties of Texas

The Preferred way to buy & sell real estate for you

Cash Out Refinance or Home Equity Loan

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You may be able to get cash if you have substantial home equity.

A cash-out refinance or a home equity loan let you borrow against the equity in your home, with your home as collateral. A cash out refinance replaces your current mortgage with a new one. A home equity loans are additional loans that you take out over your mortgage. Consider the pros and cons of each option before deciding which home equity product is best for you.

Both a home equity loan or a cash-out refinance mortgage can be used to fund similar projects, such as home improvements and paying off high-interest debt. Both loans use your property as collateral. If you default on one of them, it could be foreclosed.

Although cash-out mortgage refinances serve the same purpose as home equity loans, there are important differences. Cash-out refinance refers to taking out a loan in order to pay off your remaining mortgage balance. This will effectively replace your mortgage with a new loan. A home equity loan, which is a second mortgage, comes with its own terms and interest rate.

A cash out refinance repays the principal balance of your first mortgage loan and provides a new loan to pay for it. The amount of the newly refinanced loan is the balance due on your first mortgage and the amount that you are “cashing out” with the equity.

The interest rate for cash-out refinancing might be higher than the current one. The loan term can generally last up to 30 year.

Certain lenders and federal programs might have lower requirements for cash-out refinancing . In the event of default, the refinancing lender will assume the first mortgage in a cash-out refi. Lenders might offer lower rates than what you would get with a home equity loan because they have easier access to your house as collateral.

Home equity loans are often used to finance large-ticket items, home improvements or consolidate high-interest debt.

This is a second mortgage against your house that has its own terms and interest rates. It’s separate from your original mortgage. Refinance using a home equity loan means you borrow against your home’s equity, which is the difference between your home’s market value and your mortgage debt. You can borrow up to 85 per cent of the equity in your home. Your income, credit history, and other financial factors will also affect your loan amount.

Home equity loan rates might be higher than other options for refinancing. However, the differences can vary from one bank to another and over time. The repayment term for home equity loans can be up to 30 year.

Lenders may not charge origination fees. This results in closing costs that are lower or even zero. In contrast to some cash-out refinance loans, home equity loans don’t require mortgage insurance.

This scenario is where refinancing with cash-out refinance loans can be cheaper, despite the higher loan amount and closing costs. Because the cash-out refinance rate is much lower than that of a home equity loan, this is why.

Home equity loans have a higher interest rate than cash-out refinancing. While home equity loans are generally cheaper than home equity loans due to lower closing costs, their interest rates can be more costly over time.

A home equity loan is a good option if you have excellent credit and can find a loan with low interest rates or waive closing costs. The cash-out refinance offers a significant advantage, with lower interest rates.

It’s ultimately a personal decision. This will depend on how much equity you have in the home and your credit rating. To determine which option you are most likely to be approved for, it is equally important to review the qualifications for each option.

If you have strong credit and want to draw out large amounts of equity, a home equity loan may be an option. If you are looking to lower your mortgage payments and withdraw funds from your equity, a cash out refinance might be a better option.

Cash-out refinances and home equity loans are two strategic options to access the equity in your home. To determine which approach is best for you, consider your financial situation and goals. To determine which option you are most likely to be approved for, it is equally important to review the qualifications for each option.

If you have good credit and want to draw out large amounts of equity, a home equity loan may be a viable option. A cash out refinance might be a better option if your goal is to lower your mortgage payment and withdraw funds from your equity with one loan product.

Compare offers from different lenders, regardless of the path you choose. You can also request an itemized list of the lending fees from your chosen lender to estimate how much the loan will cost.

 

Original Blog: https://www.bankrate.com/home-equity/refinance-vs-home-equity-loans/ 

DEBT-TO-INCOME RATIO- HOW TO CALCULATE YOURS

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The home-buying process is complex, especially for first-time buyers. The debt to-income ratio is one of the criteria mortgage lenders use when assessing your mortgage application. Your debt-to income ratio is a comparison between how much debt you have (your debt) and how much income you make (your earnings). This number is calculated using your gross income, which is the income before taxes.

Lenders will be more impressed by a lower ratio of debt to income if you have a healthy mix of debt and income. A higher ratio of debt to income means that you have too much debt. This could lead to lenders deeming you a risky borrower. Although the DTI is not the only factor that determines how much you can borrow it is important to understand this before you start the home loan process.

A debt-to income ratio of 20% means that 20% is going towards debt payments. This includes cumulative debt payments. Think credit card payments and car payments.

A The Mortgage reports breakdown shows that a good ratio of debt to income is at least 43%. According to LendingTree, many lenders might want to see a DTI closer to 35%. Depending on which loan you are applying for, a ratio closer to 45% may be acceptable. However, a ratio of 50% or more can cause concern.

Simply put, too much debt relative the income of your household will make it more difficult to get a loan. Many common forms of debt, such as student loans and credit cards, can make it difficult to qualify for home loans.

Lenders want to ensure that borrowers aren’t taking on too much debt. Lenders may decline mortgage applications if you have a high DTI.

It is easy to calculate your DTI. Simply add up your monthly total debt payments and divide that by your gross monthly income.

Let’s suppose you have $1,000 monthly student loan payments, a car payment, and a credit card payment. Your gross monthly income is $5,000. Divide 1,000 (your total debt) by 5,000 (your income), and you get 0.2. This is 20%. In this example, your DTI would be 20%.

You can lower your DTI before you apply for a mortgage if you are concerned that it may stop you from getting the home loan you want. This usually means increasing your income or paying down debt.

A debt consolidation personal loans will help consolidate credit card debt from multiple cards. You can also use this loan to organize all your payments into one monthly payment with a lower interest rate. You can pay off the balance quicker by reducing interest. You might also consider a balance-transfer credit card to transfer your balance to a new card offering a 0% intro rate. You can get a longer period of time without being charged interest and pay off your principal faster.

You should consider all costs associated with buying a home when applying for a mortgage. This includes private mortgage Insurance (PMI) (if your down payment is less than 20%), property taxes, mortgage interest, inspections, appraisals and closing costs.

It’s expensive, no doubt. You can make it more affordable by finding a lender that helps you save.  This will help you save money on the initial process.

Lenders want to ensure that you don’t take on too much debt. To calculate how much of your income goes towards debt payments, they use a ratio called the debt-to-income ratio.

The DTI is not the only thing a lender will consider. Don’t be discouraged if your DTI exceeds what most lenders prefer. It is best to calculate your DTI sooner than you think. This will give you enough time to reduce your debt and increase your income, so that you can lower your DTI.

 

Original Blog: https://www.cnbc.com/select/how-to-calculate-debt-to-income-ratio-for-mortgage/

Change Is Good

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New Year. New Possibilities. New Start.

If your thinking of making a move this new year, it would be our pleasure to be your real estate resource.

We would love to connect with you and talk more about your options.

Call Preferred Properties of Texas today to schedule a walkthrough.

Holiday Real Estate For Buyers

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It’s believed that the holiday season is when the real estate market closes. This myth makes it a bad time to purchase a home. Did you see the “myth”?

You can get a great deal on a home by buying it over the holidays, while also minimizing competition. If you are looking to buy a home, here’s some information.

There will be many lights and inflatable Santas. You might find 20 years worth of holiday decorations in a home. Although these sellers were smart to keep holiday decor lightened and decluttered, you can see beyond that. How does the house’s bones look? What floorplan do you want? How big are the rooms? What kind of updating will you need to do? No matter what the sellers have done to their homes, it is important to ask your key questions while you tour.

It’s easy to get sucked into a low-priced home and become blinded by its affordability. This can lead to you overlooking a floorplan that doesn’t work for you, or a neighborhood that isn’t in your top tier. It can be helpful to have a list of “must-haves” before you start house hunting.

A home that is on the market during the holidays may not have been staged and updated to your liking. It’s possible that there is a reason why the home is being sold at this time of the year. Maybe there was a job change or transfer. You might find a great deal if you are willing to overlook the small things.

Fortune Builders stated that “if there is one undisputed truth about holidays, it is that real estate inventory tends to be lower during holiday months.” “There is simply less realty activity during holidays — less people selling homes. This is compounded by the fact that there are fewer realtors, mortgage lenders, and inspectors than usual. This can be a great advantage for home buyers in the holiday season, as there is less competition. You’ll find less buyers if you are able to find the property you want. This will increase your chances of getting a fair price, which can help you save even more.

However, there are limitations to what low you can go. Your agent can help you make sure that your offer is strong. It’s not a good idea to offend the seller or lose the house.

You don’t have to wait if there’s less competition during the holidays. There are many smart buyers out there who are looking for homes right now, so if you’re smart enough to do that, others will be doing the same. Don’t let the house go if you don’t love it.

According to The Mortgage Reports, only a few real estate agents can sell most houses in many areas. They often work at the largest agencies and communicate with each other about the latest market trends. This is crucial because fewer properties are available between Halloween and New Year’s Day. A connected, successful agent can help you gain early access to as many houses possible.

Today’s real estate agents won’t take clients to view homes if they don’t know what their budget is. Perhaps a family member or friend who is an agent might let it slide for the sake seeing what’s available. You don’t want to fall in love and then lose the home because you had to talk to a loan officer when another buyer was ready, prequalified and ready to make an offering.

You should ensure that your house is in good condition if you are selling it at the same time as you buy a new one. Your purchase could be delayed or stalled if your house isn’t available for sale when you make an offer.

 

Original Blog: https://realtytimes.com/archives/item/1034640-holiday-real-estate-a-buyer-s-guide?rtmpage=

Holiday Real Estate For Sellers

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Are you looking to sell your house during the holiday season? Perhaps you have had to move quickly or your job has changed. You can do it. These are some tips that will make it easy to sell.

This time of year there are fewer buyers, so an overcrowded open house or panic that leads to multiple offers is unlikely. Although no agent can predict when or how much a property will sell, they are able to provide market information. You should be able to anticipate what you can expect from an agent who has done extensive research. You will be able to set realistic expectations.

While the listing price is important in any season, there is more flexibility during spring and summer. A reduced buyer pool means that pricing your home for sale is more important than ever. This could mean that the home might sell for less than you expected. Your agent will know more about the market than you do, regardless of how you feel about it or how much you have invested in it. Listen to them. They are only interested in selling your house so that you can move on.

To appeal to buyers, you don’t need to spend a lot of money or make a huge home. The best staging tips don’t have to cost anything. Depersonalizing and decluttering are at the top of this list. These activities will allow buyers to see themselves in their home, rather than get caught up in all the stuff.

It is important to focus your efforts only on the most important spaces. Moving.com stated that not all rooms can be considered equal in home staging. com. The living room, master bedroom and kitchen are the most important rooms for buyers. You don’t need to worry about rooms with less importance, like guest bedrooms, bedrooms for children, and bathrooms.

This time of year, it might be harder to sell to families because many are already settled and the kids are in school. However, you do not need a lot of buyers. You only need one. It’s possible to relocate, so it’s not uncommon.

If you live in a family-oriented neighborhood, and are trying to appeal to families with children, it’s a good idea to highlight the family aspects of the area. Perhaps you could create a flyer that can be left behind with information about the school district, local parks and even babysitters in your neighborhood.

It’s not the right time to allow leaves to accumulate on your lawn. It can be difficult to keep your front yard tidy in fall and winter. However, it is a must-do for selling. You should be prepared for unexpected showings. Make it a habit of looking at your home from the street every day so that you can see the inside and help buyers clean up any clutter.

Tastefully decorated homes will be noticed for all the right reasons. Your home shouldn’t be remembered just for its Christmas decorations. The Balance advised that you should reduce the number of decorations. Too many decorations can become overwhelming and distracting. Do not assume buyers will see past it. Agents often say that the eye buys.

Selling your home during the holidays can be difficult because you have to be available to show it to potential buyers. This means you will have to limit holiday gatherings at your home and make sure that the house is spotless and clean. It is even more difficult when the kids are not in school. Flexibility is important because you never know when you might get a call asking for a showing. Ask your agent to schedule a virtual open house.

 

Original Blog: https://realtytimes.com/archives/item/1034639-holiday-real-estate-a-seller-s-guide?rtmpage=

Loan Estimate

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After applying for a mortgage, you will receive a loan estimate. Lenders must give you a loan estimate within three days of receiving your application.

The loan estimate provides details about the loan that you are requesting. This form was created in 2015.

The information you get with a loan estimate may include the following: Monthly payments, estimated interest rates and total closing costs.

Information about insurance and taxes will be provided. You can also find out how interest rates and payments could change at any given time. You will also be informed about the special features of your loan through this form. It will inform you if your loan has a prepayment penalty. If applicable, the loan estimate will also include negative amortization. Even if your payments are on time, negative amortization can increase your mortgage loan balance.

The description of your loan product will include the negative amortization option.

As the title suggests, this document contains preliminary information that is not final. Although it is an estimate, it can help determine the loan you should apply for and make a commitment to.

Buyers will be provided with a loan estimate that includes prepaid interest, third-party fees and closing costs. The buyer will also receive a detailed estimate payment to get a full picture of the transaction’s costs. It is easy to compare and see the costs of different lenders as all will use the same document.

Lenders cannot hide fees with loan estimates, which can also be a useful comparison tool.

Lenders are required to give you a loan estimate within three business days after you submit your mortgage application. Before they can provide you with a loan estimate, lenders will need some information, such as your legal name, social security number and proof of income. They also require proof of desired property address, price, and loan amount.

You’ll find the following information in the first page and section of a loan estimate:

  • * The term of your loan is usually 30 years. However, other terms may be possible.
    * Product refers to the type of mortgage that you are applying for such as a fixed-rate mortgage or an adjustable-rate mortgage.
    * What loan type is it? For example, is it a conventional or VA loan? It could be an FHA loan or VA loan.
    * A rate lock is when your lender locks down the interest rate on your mortgage and the expiration date.

Information is provided in the second section.

  • * How much you can borrow and how it can be increased
    * The interest rate is a percentage and can be increased.
    * Monthly principal and interest is the monthly mortgage payment, excluding homeowners’ insurance and property taxes.
    * A prepayment penalty is a fee you may have to pay if your loan was not repaid by the due date or you made an additional payment.
    * If there is a balloon payment. This is a lump sum that you must pay at the end your loan term

Information is included in the third and fourth sections.

  • * Payment calculation: Breaking down your monthly mortgage payment, principal and interest, private Mortgage Insurance Premiums, if applicable, as well as escrow amounts
    * Monthly estimated payment
    * Estimated taxes and insurance.
    * Mortgage closing costs estimates
    * Cash to close is the estimated cash amount, which includes closing costs and any other charges you may have upfront

The second page of a loan estimation includes three major elements: loan costs, other charges, and cash to close.

The second page should focus on the origination fees and any fees that you will be charged for items you cannot shop for. These charges vary from one lender to the next, so it is important to compare them. Other charges are not subject to much variation between lenders. You can search for the services needed to close a mortgage. This includes how much they cost. You can’t shop services such as an appraisal or credit check.

The name of the loan officer or lender will be included on page three. This information is useful for comparing loan estimates. The first will show you how much of your loan principal your loan will pay off over the first five year. It’ll also show your annual percentage rate (APR), and total interest percentage.

It’s a great time to review your loan estimate and ask any questions that you may have.

 

Original Blog: https://realtytimes.com/archives/item/1045883-what-is-a-loan-estimate?rtmpage=

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