Why Hire A Mortgage Broker When Planning To Buy A New House

For many people, planning to buy a house can be really stressful and it requires time and effort to ensure that you make a smart investment. The last thing you want is to make a decision without fully understanding the responsibilities you need to honour and knowing the arrangements available to you that can make the responsibilities attached easier for you to manage.

And because of this, many experts advise people who are set on pursuing their dream home that it’s imperative to consider what a mortgage broker can do to help. Most financing specialists describe this professional as the middleman between a borrower and lender which is often a bank. His job is to do research on the available provisions on the market, and assist and support the borrower throughout the application and settlement process.

In a variety of ways, this person strives to make the undertaking so much easier for the borrower. Apart from such advantages, mortgage brokers can also be trusted to protect clients’ interests; this is another of their primary duties. With their industry knowledge, you, the client, can seek their advice before deciding which mortgage program is most compatible with your requirements and current financial capabilities.

Helping you determine what will work most effectively for you will ensure your convenience in meeting payments, and this is their objective. Likewise, mortgage brokers lend their researching skills and foresight so you can be prepared for new industry policies that can impact your mortgage program. This will allow you to make necessary changes so you can remain compliant despite the occurrence of new mortgage requirements.

Their services can save you money. You may not really notice it at first, but in the long run you will realize its advantage. Taking out a new mortgage usually has different kinds of fees such as application, appraisal, and origination fees. Your mortgage broker can lend you their influence during negotiations with a lender so these fees can be waived. Employing the services of a mortgage broker in financing your dream to own a house definitely will be a big help, especially during these economically unpredictable times. You may think a DIY approach will save you money, but think things over carefully. If you make mistakes in the process, your losses will likely amount to more than the service fee of a mortgage broker.

The Ins and Outs of the Fannie Mae Homestyle Renovation Mortgage

The Fannie Mae Homestyle® renovation mortgage allows a home buyer or homeowner to improve and or repair their property with just one loan. If you are purchasing a bank owned or short sale residential property, or your home is in need of repairs or improvements, the Homestyle® renovation mortgage may be your best option for financing. This mortgage type allows a single mortgage to encompass the sales price plus repairs and improvements into a single mortgage, based on the completed appraised value of the house. This option is extremely beneficial considering other more costly financing options, such as: obtaining secondary financing or financing home repairs with unsecured revolving credit. For new and current homeowners in need of funds for improvements or repairs, the Homestyle® Renovation Mortgage is a welcomed financing option.

Below are some of the benefits of the Homestyle® Renovation Mortgage:

• Various Terms Offered – Fixed rate 30 and 15 year terms and variable rates are offered under this program.

• Purchase or Refinance – This loan options is available to both current homeowners who want to repair or improve their current house as well as new home buyers who want to repair or improve their house right after they take ownership of the property.

• Eligible Properties- Principal 1 to 4 unit residential properties, second homes, and single-family investment properties are eligible. Condos, co-ops, and planned unit developments may also be eligible, if they meet certain requirements.

• Down Payment – Borrowers can finance up to 95% of the as complete value of the property. As little as a 5% down payment is needed. The required down payment is based on the borrower(s) middle credit score.

• Financeable Mortgage Payments – Up to six months of mortgage payments for owner-occupied properties can be rolled into the mortgage to cover non-occupancy costs during the renovation process.

• Second Mortgages Available – Borrowers can qualify for up to 105% of the as completed appraised value of the property, if they also qualify for a simultaneous community second mortgage.

Bold Hard Money Lender Predictions for California for 2016

Lao Tzu says that “Those who have knowledge, don’t predict. Those who predict, don’t have knowledge.” Maybe, maybe not, but as someone who’s been in the hard money lending business for 13 years as a lender, real estate agent and a real estate investor and knows the California housing market inside out, I’d like to have my turn.

Most forecasters say that 2016 will see sales and home prices rise by 3% to 5% in California. A few plucky individuals buck the statistics by a percentage or two, but the consensus opinion largely follows that of the last few years. (It rarely diverges). If you want to know what to expect the coming year here’s one thing that may help you –

It’s all about interest rates

The state of the housing market in 2016 is going to pivot on mortgage rates. Affordability is going to be the major issue. Houses in California are already miserably unaffordable. As of the beginning of December 2015, all reports show that the Federal Reserve is planning to raise its rates. Higher rates are hardly going to mean lower prices. On the contrary, if prices do drop, the inventory will dry up (since there will be fewer sellers), sales volumes will drop, and prices will be forced up by competition among the few active buyers.

On the other hand, the good news is that the Fed only intends to raise its rates to an extent that will keep mortgage rates below 4.5%. This means that sales will remain low while prices drift slowly upwards but the housing inventory will retain air.

Other Predictions

In 2016, demand for housing in California is going to grow. At the same time, houses will continue to be built for professionals who can afford it and for wealthy foreigners. Housing prices will continue shoot. many loan modifications will re-default. Many individual lenders such as hard money lenders who lend loans based on property – called home equity line of credit (i.e. HELOCs) – will also see their loans can-kicked. Some hard money lenders have become stricter about who they lend to. More tend to scrutinize credit history as well as value of collateral, but since many (particularly newer agents) focus emphatically on collateral, lenders may let a few penurious borrowers slide past and experience bad loans. Forecasters predict that this may happen a lot, but assure that it won’t get out of control. The most optimistic forecasters insist that the market is relatively affordable despite high prices. They persist that California is not, and will not, experience a housing bubble, and that housing prices will remain somewhat affordable (whatever that means) for those who have the means to afford Trump-bombasted housing. (Small solace for the rest of us… )

Real estate predictions for 2016 for the nation as a whole

Redfin, a residential real estate company that provides web-based real estate database and brokerage services, sees a fairly uneventful housing market next year. Here are Redfin’s five housing market predictions for 2016:

1. Prices and sales will grow half as fast

According to a recent report from RealtyTrac for more than a third of the nation’s major metro areas, home prices have reached all-time highs in 2015. California is one of these places.

The coming year promises an increase. Sales will grow about half as fast as they did this year and prices will rise at a more normal 3.5% to 4.5%, down from almost 6% this year. Of course, some states (such as California) will see higher prices than ever, whilst other states (such as Detroit) will experience slouching prices. Declining markets may slump further. Others may boost themselves.

2. Easier Credit

Americans, for whom mortgage has been out of reach in the past, may have a better shot at getting a house in 2016. Conventional and unconventional lenders will fiddle around with new ways of measuring credit. True, conventional lending institutions will be as recalcitrant as ever, but the trend is already in play where credit reflects households rather than personal history. For example, lenders will evaluate credit scores by reviewing a person’s rental history and utility bill payments. More loans will allow buyers to include income from room rentals, live-in parents and extended-family members.

More significantly, a historic bill was recently introduced in the House of Representatives that would allow Fannie Mae and Freddie Mac to consider credit-scoring models in addition to or other than the FICO credit score that traditional lending institutions currently use when determining what loans to purchase. The times are a-changing.

3. More (and older) first-time buyers

Redfin expects a new and ready market of first-time millennials who have been saving up and will give the market a shot this coming year. Reasons are simple: More credit options and slowing of price growth. Prices are high, but that should be no problem for this year’s impending crop of millennials who have saved for their investment. In the Mortgage Bankers Association’s housing report that looks at the future decade, Lynn Fisher, MBA’s vice president of Research and Economics, said, “Improving employment markets will build on major demographic trends – including maturing of Baby Boomers, Hispanics and Millennials – to create strong growth in both owner and rental housing markets over the next decade.”

4. Slower market, slowing closings

Redfin is optimistic about the future. It expects the market to slow in 2016 as government-backed loans become more common. There will be low inventory but a lower ceiling on price escalation as 2016 buyers won’t be willing or able to go as high as buyers have in recent years.

5. Continuing inventory shortage

2016 will see less homes for sale than in 2015 particularly in the affordable sector. This is a growing pattern. Redfin found that the number of homes for sale shrank from 2014 to 2015 in 45 of the 60 metro and that inventory across all 60 metros is down 4 percent from a year ago.

In short…

Housing across the nation will experience growing priciness. Costs will be curbed by slight increase in interest rates. This, in turn, will stultify the market. On the other hand, more millennials are going to become first-time homebuyers largely because there may be more credit options for them to sample.

As an experienced hard money lender, my predictions for California the coming year are that it will experience the same situation on a micro-scale and 2015 will crawl into 2016 with little changes. Situations that are particular to California are that housing demand will grow and property in both commercial and residential areas will continue to be constructed. Relatively few people of average means, however, will be able to afford most (if any) of these houses. The Fed’s slight increase in interest rates may curb prices slightly but only – if so – by a meagre percentage or two. Private money lenders may have to tighten restrictions since the amount of bad loans is predicted to increase. On the whole, experts insist that – gloomy predictions aside – California is in no housing bubble and that buyers may still be able to locate affordable homes.

The Key to a Successful Refinance: The House Appraisal

When you are refinancing your mortgage the appraisal is the most important part of the process. You want the value of your home to come back as high as possible in order to make the loan to value ratio as low as possible. If your appraisal value puts your home equity at less than 20%, the higher the amount of equity in your property (the difference between the home’s value and your mortgage balance) the more competitive the interest rate you are likely to get since lenders consider borrowers with more equity to be less risky. If you are refinancing your mortgage you need to understand the home appraisal’s essential role in the process.

What Is a Home Appraisal?

An appraisal is an opinion of a home’s value provided by a third party who is qualified to provide this opinion. The appraiser gets paid for providing the service of valuing your home. In a refinance transaction, the appraisal protects the mortgage lender by ensuring that it doesn’t provide a loan of more than the property is worth. If the property later goes into foreclosure or power of sale for any reason, the lender wants to be able to resell the property and get its money back.

The appraiser will contact you to schedule the appointment and often their visit to your home will be between 30 and 45 minutes to tour through the whole house and take pictures and notes on the finishes and condition, measure its dimensions, and evaluate its overall condition both inside and out. The appraiser will then go back to his or her office and conduct research on your property, the legal description, the lot dimensions, sales history, etc. and then he will search for adequate comparables. Ideally the appraiser will be able to find comparable sales that took place in your immediate neighbourhood in the past 3 months. Based on the home visit and these records, the appraiser arrives at a professional opinion of how much your property would sell for if you put it on the market. The mortgage lender then uses this value, along with your income, assets and credit history – to determine how much it will lend you and at what rate.

How Home Appraisals Work in Today’s Market

The lender or mortgage broker often will order the appraisal through a third party called an appraisal management company (AMC) or contact the appraisal company directly. Many lenders have direct referral relationships with a small panel of appraisers and don’t use an AMC. Or the lender may have an in-house independent appraisal department. The appraiser should have local knowledge of the area (called market competence). Appraisers are expected to follow the Uniform Standards of Professional Appraisal Practice issued by their Appraisal Foundation.

Home Appraisal Fees

Residential home appraisal fees vary based on the size of the home and other factors, but typically you should expect to pay $250 to $400 for an appraisal of a standard single-family home. More complex properties are more expensive because the inspection takes more time.

You may be required to pay the fee up front at the time of the appraisal or in other cases it will be paid for from the proceeds of the mortgage refinance, regardless of whether your loan closes, the appraiser still did the work and needs to be paid. While the fee may seem worthwhile if it enables you to get the refinance terms you want, it can seem like a waste of money if a low appraisal means you can’t refinance.

An option is to ask a real estate agent to do a comparative market analysis and provide you with printouts of recent comparable sales from the Multiple Listing Service, taking this step could potentially save you hundreds of dollars by saving you from wasting your money paying for an appraisal if the value is too low to refinance.

Improving Your Chances of a High Appraisal

The value the appraiser gives your home largely depends on the recent sales prices of comparable properties, but there are definitely steps you can take to help secure a higher value.

The biggest thing is making sure your property is neat and clean, uncluttered and easy to inspect. Any pets should be contained and smells masked. Ensure your appraiser feels comfortable in the home and can focus on taking in all the features of your home. Having a dirty or unkempt home definitely will give the appraiser a bad first impression and will make the home appear in poorer condition than it actually is.

The biggest thing an appraiser takes into account is:

exterior and interior condition
total room count
functionality, including interior room design and layout, and functional obsolescence
improvements to kitchens and baths, windows, the roof and the home’s systems (heating, electrical and plumbing) over the previous 15 years that make the home more up-to-date, functional and livable by today’s standards
condition and age of the home’s systems
exterior amenities such as garages, decks and porches
unappealing features, such as an exterior appearance that’s inconsistent with the rest of the neighborhood

It’s a good idea to create a list of your property’s features to provide to the appraiser when he or she arrives.

Getting a Second Opinion on a Low Appraisal

A lot of homeowners are not realistic about their home’s value, there is definitely an emotional factor that can lead to the homeowner thinking their home is worth more than reality, however there are definitely cases where the appraiser may have determined a final value that is on the conservative side and this may sink your refinance.

Keep in mind an appraisal is just one person’s opinion, the appraiser should be well trained and educated, however as with all professions, there are good and bad practitioners.

If the homeowner does not like the value of the appraisal, they can write a letter of appeal to the lender or AMC, but the chance of an appraiser changing his or her opinion is very slim, unless the homeowner has overwhelming evidence that the value is off.

You may be able to make a case by pointing out that the comparables used were in an inferior school district or an inferior subdivision, or that they have other adverse influences affecting value, such as being on a busy street.

The Bottom Line

Understanding how the appraisal process works will give you the best chance of getting an appraiser to assign the highest possible value to your property. Appraisals don’t always come in at the values borrowers hope for, and they are a human process with room for subjectivity and mistakes. You can appeal a low appraisal, but you’ll only succeed with strong data to back you up.

The Many Reasons To Refinance Your Mortgage

There seems to be a lot of talk about refinancing today, and I wanted to take some time to go over some of the many reasons of why someone would refinance their current mortgage. I understand that change can be scary and it’s easier to just not do anything at all. However you will see below that you may actually be hurting your financial situation if you will not consider refinancing.


This is for most people the main reason they look at refinancing; reducing their monthly mortgage payment. Today, interest rates are still near historic lows, and a reduction in mortgage rate will lower the monthly payment. Thankfully, there are many programs that allow for a homeowner to access these low rates. HARP, FHA Streamline, VA IRRL are a few programs that allow a homeowner to refinance regardless of what they currently owe and without an appraisal. There are many other options that a licensed loan officer could discuss with you and go over your options.


With rates still being near historic lows, many homeowners have taken the opportunity to reduce their mortgage terms by refinancing from a 30 year term to a 20 or 15 year term. With the reduction in rates, many of done so without increasing their monthly payments and in some cases even reducing their monthly payment. Reducing your mortgage term, saves thousands of dollars and is a something to consider if the numbers make sense.


For those who have been in their homes for awhile, in most cases they have gained equity that is now available for them to access. There are many programs today that allow homeowners to access the equity in their homes for a numbers of reasons: paying off credit card and loan debt, college expenses, home improvements, and the list goes on. Some homeowners save hundreds of dollars every month by consolidating their debts through a refinance. A licensed loan officer can go over what options you have and see if a cash out refinance could help you.

These are just a few of the many reasons a homeowner would refinance. With interest rates still low, and many programs being available for all credit types, now is a great time to look into your options. I encourage you to reach out to a licensed loan officer who can discuss all your options with you and see if refinancing makes sense for your situation.

Free Government Grants For Mortgage Refinance Assistance

Those seeking to obtain a new mortgage or refinance their existing home loan have the option to consider government mortgage grants to help come up with the financing they need. These funds are available through various state and local agencies, and can provide up to $20,000 in cash grants that never have to be paid back.

As long as you use the money for the intended purpose, the mortgage grant is yours for your personal use. And while there is over $870 million available, it is said that less than half of these funds are every applied for simply because most people don’t know that they exist.

Qualifying to receive a home mortgage grant does not require good credit, a down payment or any kind of collateral. Since these programs are not loans, the application process has other conditions in mind. Those specific conditions vary from grant program to grant program, but mortgage grant money can be obtained regardless of income or current residential status.

These funds are not just for low-income families. Mortgage grants are provided as a way to help expand development of neighborhoods, provide assistance for those facing financial hardship, to avoid foreclosure, and even to help people remodel their existing home.

Once you search the grant database you’ll be able to quickly find and apply for the grant funds that are currently being made available. The money can come and go quickly, so be certain that your grant listing is up-to-date and includes current grant funds that are still available for your to receive.

Understanding Who Qualifies to Refinance a VA Loan

The U.S. Veterans Affairs Administration has helped provide home loans for veterans since 1944. The program allows both veterans and active duty service members to get affordable mortgages that the VA guarantees to be repaid to lenders. The program has been expanded to include refinancing these loans, and certain qualifications apply.

Use of VA Loan Eligibility

In order to qualify for a refinance loan through the VA, you must have used your eligibility for the initial home. In other words, it must be a VA loan to VA refinance. A new Certificate of Eligibility is not required. Your previous Certificate of Eligibility serves as proof of the use of your entitlement.

Loan Limits

VA refinance loans are subject to certain loan limits as defined by the program. These limits cap the amount of liability for repayment required by the program. Each county determines the amount of loan limit. Generally, lenders will approve up to four times the basic entitlement amount of $36,000 for a home loan, without a down payment.

Funding Fee

A funding fee is required for all those who apply for loans through the VA Guaranteed Loan Program. Payment of the fee is required at closing on the loan. You can either pay the funding fee in cash or roll it into the financing of the property. Funding fees can range from 0.5 percent to 3.3 percent. Funding fees for the second use of your eligibility are generally higher than the first use. Certain veterans with disabilities and surviving spouses are not required to pay a funding fee.

Interest Rate Reduction Refinance Loan

The program allows refinancing up to 100 percent of the home’s value. Although credit checks and new appraisals are not required under the program, lenders may impose these requirements under their own rules. Unlike a VA Purchase Loan, you do not have to certify that you will occupy the home. You must only certify that you have previously occupied it. The IRRRL program cannot be used to pay off a second mortgage. Generally, the second mortgage must be approved. Your current mortgage payments must be up to date, with no more than one 30-day late payment within the past year.

Cash-Out Refinance Loan

If you wish to take cash out of your home for medical costs, children’s college or home improvement costs, the VA offers a Cash-Out Refinancing Program that allows you to use your equity to finance these major expenses. The above qualifications apply similarly for these loans. You may also refinance as much as 100 percent of the value of the property. Unlike the IRRL loan, a credit report, income verification and property appraisal are required. You must also certify that you will occupy the home being refinanced.

Certain costs associated with refinancing can increase the cost of the loan to a greater amount than the fair market value of the property. These costs can include state and local taxes, discount points and other closing costs. Applicants for refinancing should always take these additional costs into account when determining if refinancing their VA loan is a favorable idea.

Do You Need to Refinance Your Home Loan?

The number of people refinancing their home loans has steadily increased over the past few decades. With interest rates at an all time low and with better competitive deals on offer, more customers are looking to refinance their home loan to secure:

>> A lower interest rate

>> Saving money by reducing your loan repayments

>> A more flexible home loan product which offers redraw facilities and an offset account

>> A reduction in the time of their home loan

>> Access to the equity in their home loan to enable them to renovate their home, buy a new car or even build a swimming pool

Change in Circumstances

Change is inevitable and you may now find your situation has changed to the extent you are now looking at refinancing, as a result of any of the following circumstances:

>> You may want to invest in another property

>> You have a new baby, or another baby is due

>> You may want to consolidate your credit card and personal loan debts, or

>> Your current interest rate is locked-in above the market value

Performing an Annual “Financial Health Check” of your Finances is Important!

Regardless of your situation, it is always advisable to perform an annual “Financial Health Check” on your home loan and personal finances. As you would ask yourself some questions when you are feeling unwell, you should look at your finances in the same way and ask yourself the following questions to ascertain if your finances are in order:

>> Is your existing lender/credit provider meeting your needs?

>> Should you fix your home loan to create certainty around your monthly repayments?

>> Would you prefer a “combination” of both fixed and variable interest rates?

>> Does your current home loan product have all the features you need such as, redraw facilities and an offset account?

>> Will you save money by refinancing?

>> What will be the impact of any costs involved to refinancing your home loan?

>> Will you now better manage your personal and household budget by refinancing?

So, even if you don’t have any specific reasons in mind, it is always worth weighing up your options from time to time. Consider performing a “Financial Health Check” of your personal finances and household budget. The “Financial Health Check” will at least enable you to determine if you have a legitimate reason for refinancing and, if the long-term savings outweigh the short-term costs.

Refinancing can be very beneficial to you if done properly and if done for the right reasons. Remember to work out if you will be better off by switching to another lender/credit provider and if you will save money by switching.

Once you have determined that refinancing is right for your circumstances, you should seek expert advice from a professionally qualified finance broker. The finance broker should have access to interest rate comparisons and should be able to show you the long-term savings and confirm to you if these savings outweigh the short-term costs.

Refinance Your Mortgage Loan With Bad Credit

Often when you hear about mortgage refinancing with bad credit it is to reduce the interest rate that you’re paying and save you some money. There are many situations in which refinancing in the middle of the mortgage loan term will make sense, perhaps it is to get a better rate, consolidate high rate debt, or take some of the equity out of the home to complete renovations or other life expenses.

There are other situations in which Refinancing a Mortgage Loan with Bad Credit becomes necessary, such as if you are facing a foreclosure or power of sale situation or perhaps you have been laid off, or your spouse has had an illness and has not been able to work. Maybe you’re going through a divorce and are really struggling to make the payments on your own, but you haven’t found a buyer at the right price.

Refinancing your mortgage could potentially save you from losing your house as well as keep your credit rating from being damaged. In this case, you can set up your mortgage refinance with a new mortgage lender to payout your current mortgage, consolidate your debts, and take out some extra money from the equity to cover mortgage payments for a period of time.

How would this work? First your mortgage broker should try to get you approved with an institutional lender which will be your best option to get the most competitive rate, if you don’t qualify for an institutional mortgage loan then you may want to consider refinancing with a private mortgage lender. Private mortgage lending companies and individuals specialize in funding mortgages that represent a higher degree of risk than people with good credit scores. Private Mortgage Lenders recognize that there are some cases in which the borrower still represents a fairly low degree of risk – after all, people will usually default on everything else before their mortgage – and they want to profit from the real estate market at a rate higher than what the banks get.

If you happen to find yourself facing foreclosure, you can eliminate much of the stress of your situation by arranging a second mortgage loan that pays off your mortgage. In many cases, these private lenders only ask you to pay the interest portion of the loan during the term, which varies between a few months and as long as two years. The idea is to provide you with the funds you need to catch up on your bills without increasing your monthly expenses by taking on another loan and get your financial affairs back in order so that you can go back to paying interest and principal. At the end of the loan, you can either renew the loan with the private lender (if the lender is open to it), find another private loan or go back to the bank, but the most ideal situation is to repair your credit over the period of the second mortgage term and at the end refinance with the bank.

How does the mortgage approval process work with a private lender? If your credit is okay, your own bank might refinance your mortgage loan to get you out of this situation. But, you may have already explored refinancing with your own bank and other lenders, only to get turned down because of your credit score.

With bad credit mortgage refinance lenders such as private mortgage lenders, the quality of the property is the main element that the lender uses to approve or deny the loan, as well as the amount of equity that you already have in it. In most of the major cities, private lenders will provide up to 80-85% percent of the value of the house in a loan, in smaller city centers and towns the most is usually 75% of the property value. Here’s how this works. If you bought a house for $300,000 and still owe $200,000 on it, you have a significant amount of equity in the home and your loan to value ratio is approx 67%, therefor nearly private lenders will work with you but the property must not have any major defects. As mentioned previously in major urban areas you can have loans on the property up to 80% of the home’s value, this means the homeowner would have $40,000 of equity that they could access either through a second mortgage or full refinance and use this money to consolidate debt with or almost any reason you can come up with that you need the money for.