Articles by gabriela-islas

Gabriela Islas

Gabriela is addicted to traveling, learning about new cultures and the color pink. Her hidden talent is that she burns everything when cooking- even water. If you ever want to find out what Ricky Ricardo said to Lucy when he was mad, she’s your girl. When she’s not laughing at things her kids says, Gabriela loves writing anything about personal finance, economics and international trends.
Avoid Pre Payment Penalties

Avoid Pre Payment Penalties

Pre-payment penalties can cost you tens of thousands of dollars, depending on your loan balance at the time of pre-payment. Be wary of mortgages that offer you a lower interest rate in exchange for a pre-payment penalty. Borrower Beware Lenders often entice borrowers to finance a home with a slightly lower interest rate in exchange for something called a mortgage pre-payment penalty. A pre-payment penalty on a mortgage note is a penalty for paying off your loan early. But what borrowers don’t fully understand when they agree to such terms is that although they may save a little on their monthly mortgage payment with a lower rate, pre-payment penalties could end up costing them tens of thousands of dollars. Lenders use pre-payment penalties to secure loans long enough to recover some or all of the expenses they incur from originating the loan. Lenders also know a mortgage pre-payment penalty discourages refinancing. If rates should fall, lenders are guaranteed a higher rate of return on the money they lent to you. Say interest rates drop and you want to refinance to that lower rate. You can’t! You end up paying your current rate while your lender likely pockets that extra money, unless you pay their fee. Even if the duration of the penalty matches the amount of time you plan to keep the loan, you can’t predict the future. What if your circumstances change and you have to move? Say your job is transferred to a different city or state. Selling…

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Homeowner Tax Deductions and Credits

Homeowner Tax Deductions and Credits

Homeownership comes with a lot of advantages, especially when it comes to tax time. Make sure you’re not missing out on important home-related tax deductions. As always, please consult your tax advisor to find out which deductions apply to you. Deducting Mortgage Interest The interest you pay on a home mortgage is usually tax-deductible. You are allowed to deduct interest on multiple mortgages, as long as they add up to less than $1 million. The one criteria being that the money was used for buying, building or improving a home. Every year, you should receive a “Form 1098” from your lender which details how much mortgage interest you paid. To claim this deduction, you need to fill out “Schedule A”, under “itemized deductions” to record your interest deduction. Home mortgage interest deductions can also include late payment charges and pre-payment penalties. The only requirement is that they were not for a specific service received in connection with your home loan. Deducting Real Estate Taxes Real estate taxes are also tax-deductible. Your interest statement should list the amount of real estate taxes you paid if your taxes and homeowners’ insurance were placed in an escrow account when you closed on your mortgage. If your real estate taxes aren’t included on the statement, review your canceled checks to figure out the total amount of real estate taxes paid. Deducting PMI (Private Mortgage Insurance) If you buy a house with less than 20% down payment, you will most likely have to pay private…

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Private Mortgage Insurance (PMI)

Private Mortgage Insurance (PMI)

What Is Private Mortgage Insurance (PMI)? Private Mortgage Insurance (also referred to as mortgage protection insurance on the West Coast) is a costly insurance premium that the borrower pays to protect the lender in case he defaults on the loan. As part of the loan qualifications set out by Fannie Mae and most secondary market investors, a borrower is required to pay private mortgage insurance (PMI) when they don’t put down at least 20% of the home’s purchase price as a down payment. But with the right loan, it doesn’t have to be an obstacle. In fact, your home lender may allow you to buy it down, just like points buy down a mortgage. Just How Costly Is Private Mortgage Insurance? Mortgage protection insurance increases your monthly payment and may be tax-deductible (please check with your tax advisor). The cost of private mortgage insurance varies, but generally it calculates to about one-half percent of the total loan amount. Let’s say you buy a home for $200,000 and put 5% down or $10,000. The annual cost of PMI on your $190,000 mortgage might run $950 a year, adding an extra $80 to your mortgage payment each month. However, this doesn’t necessarily mean your payment will be $80 cheaper if you can avoid PMI. How Can I Avoid Paying PMI? If your home lender doesn’t offer any options to avoid paying PMI, there are other ways to help you avoid it. You could buy a home that allows you to pay for…

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Closing Costs and Fees Explained

Closing Costs and Fees Explained

Mortgage closing costs are fees charged for services that must be performed to process and close your loan. At the time you apply for a loan, lenders are required by law to disclose to you, in writing, what the estimated mortgage closing costs will be. This is known as the Good Faith Estimate. Closing Costs and Fees Associated with Your Home Purchase Closing costs can vary by mortgage option and amount, so the costs on a 30-year fixed or a 15-year fixed may not be exactly the same as a 5-year ARM mortgage. And some loans, such as an FHA loan or a VA loan actually allow a seller to cover all or some of the closing costs. But what exactly are the closing costs, regardless of whether you or the seller pays them? The most common closing cost is the down payment. In addition to making your down payment, there are other costs and fees associated with your home purchase. Average closing costs generally range from $2,500 to $5,000 or about 6% of your loan – a sizable amount of money when you consider this is paid upfront at closing. But where exactly does it all go? A common misconception about mortgage closing costs is that they all go to the lender, when in reality, many of the costs are related to services performed by others. Mortgage closing costs cover expenses associated with getting a home loan, from inspections and appraisals to title insurance, taxes and more. It is…

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Jumbo Loans for Larger Home Loans

Jumbo Loans for Larger Home Loans

In some real estate markets, a house in the $400,000 range is little more than a starter home. So why is it that a home loan in the mid $400s is considered a Jumbo Mortgage Loan? Good question. While the rest of us may see the term “jumbo” as relative, Fannie Mae and Freddie Mac, two government sponsored mortgage entities, have definite opinions. Each year, a new “conforming loan limit” is published by these organizations. What is the Conforming Loan Limit? The conforming loan limit is the maximum loan size eligible for purchase by either Fannie Mae or Freddie Mac, who purchase the underlying securities from mortgage originators. Those funds are then reinvested in new mortgages, and the flow-of-funds cycle continues. The conforming loan limit, or “Jumbo Loan amount” is set every January. This year, the limit for single-family homes and condominiums is $417,000. Quicken Loans conforming loan limit has also been raised to $417,000. When a Loan Becomes a Jumbo When a loan amount is higher than the conforming limit, it becomes a Jumbo Loan – or non-conforming loan – with slightly higher interest rates. Jumbo Loans, compared with historically low mortgage rates, can bring greater flexibility for some home buyers to purchase the house they want and make the payment they want. What Jumbo Loans are available? With Jumbo Loans, you do have options. Jumbo loans can be 30-year fixed, adjustable rate mortgages, or FHA loans with up to 97% financing and new higher loan limits. Talk with…

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FHA Loans for Home Buying

FHA Loans for Home Buying

What exactly is an FHA loan? Good question. An FHA loan isn’t really a loan, it’s a program that insures home loans. The FHA (Federal Housing Administration) doesn’t actually fund your home loan in any way. The FHA simply provides mortgage insurance to help consumers become homeowners. In other words, the FHA insures lenders from losses associated with homeowner default. This helps mortgage lenders prepare mortgages for people who might not otherwise qualify for a loan. That’s pretty much it. To keep things simple, we (and most other mortgage lenders) call any loans insured by the FHA, “FHA Loans.” Should I get an FHA loan? Do you want to buy a house with a small down payment? Are you a first-time home buyer? Do you have lower credit (credit as low as 580 may qualify)? Are you concerned that you don’t make enough money to qualify for a home loan and cover all expenses? If any of these are true, an FHA loan may be a great solution for you. Even if you have good credit and a down payment, the increased options of FHA home loans make them attractive choices for your mortgage. Buy a home with a very small down payment A great point about FHA loans is that you can buy a house with a tiny down payment – only 3.5%. That’s one of the lowest down payments for any mortgage loan offered in today’s economy. Lower credit? Don’t worry! With the FHA loan, credit may not…

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Mortgages with Low or No Down Payments

Mortgages with Low or No Down Payments

It could be due to the economy or the fact that most people stay in their home an average of only 5-7 years, but the truth is that home buyers are not putting as large down payments as our parents and grandparents did. The average down payment for a house 20 years ago was 20%. Today, it’s common for people to put as little as 3% down on their new home. No Down Payment Mortgage Simply put, a no down payment mortgage is a mortgage for which you don’t put any money down on the purchase of your house. In today’s market, finding a no down payment mortgage may be extremely difficult unless you are a veteran and eligible for the Quicken Loans VA loan – which almost never requires a down payment. VA loans are a great option for veterans who want to buy a home because not only can a Veteran put zero down, but these types of loans get also approved faster than other types of loans. Most Veterans are not aware of the benefits of VA home loans, so if you know someone who has served in the military let them know! Low Down Payment Mortgage If you haven’t served in the military, there are still other options. A popular choice for home buyers is the “low down payment mortgage.” The FHA loan is a mortgage that only requires a 3.5% down payment. “FHA loans:/home-loans/fha-loan are backed by the government and also have more flexible guidelines,…

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No Doc Home Loans

No Doc Home Loans

No doc and low doc loans are very difficult to qualify for in today’s mortgage and financial markets. Because of this, most mortgage companies (including Quicken Loans) don’t offer them at this time. For more information, talk to a Quicken Loans home loan expert. We’ll show you how to obtain the necessary documentation so you can qualify for a full doc loan. Call us today at (800) 654-0068. The more documentation you provide your mortgage lender (employment, income and credit history) the lower your interest rate may be. Many home buyers choose not to offer documentation for personal privacy reasons, and willingly opt for a higher interest rate. Yet, many of these home buyers have a healthy income, or savings, and a credit history. A no doc (documentation) or low doc loan provides increased ease and privacy when getting a mortgage in exchange for a slightly higher rate. Buyers that opt for a low doc home loan are typically those who prefer not to have their entire life and financial history presented to the lender. For instance, they might be using an inheritance to secure a loan or have fluctuating income from owning their own business. Ease is a big factor as well. With a no doc or low doc loan, the borrower provides their name and social security number, along with information regarding the property being purchased. The rest is up to the lender. The Three Main Types of No Doc & Low Doc Loans No Doc Loans No…

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40 Year Mortgages with Lower Payments

40 Year Mortgages with Lower Payments

In the last few years, the 40-year mortgage has been increasing in popularity for home buyers in high-cost housing markets as an alternative to adjustable-rate mortgages. Although Quicken Loans doesn’t offer a 40-year mortage currently, we do have options to keep your payment low. Call us at (800) 654-0068 to find out how to qualify for your absolute lowest mortgage payment. How a 40-Year Mortgage Loan Works A 40-year mortgage gives a lower payment than a 30-year fixed term by stretching out the amortization schedule over a longer period of time. With the 40-year mortgage, your mortgage term is actually only 30 years, but the loan is amortized over 40 years. This means that after 30 years, you must either pay, in full, the remaining balance on the loan or refinance the loan. Similar to an interest-only loan or an ARM, a 40-year mortgage potentially increases the amount of home you can afford and the amount of extra cash you have on a monthly basis. The more cash you have in hand, the more you can put toward your savings or invest in your 401k or retirement fund. For example, if you had a $200,000 30-year mortgage and spread it out over an additional 10 years, your payment might drop by $100 per month. Imagine what that extra $100 could do for your retirement fund! Who Is a Good Candidate for a 40-Year Mortgage? A 40-year mortgage is popular for people in high-cost housing markets such as the Northeast or…

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Mortgage Pre-Approval is Better than Pre-Qualified

Mortgage Pre-Approval is Better than Pre-Qualified

Get the mortgage advice you need. Your biggest investment is your home, and our exclusive Quicken Loans Pre-Approval give you the edge you need to make the most of it. You could have a lower mortgage payment, lower interest rates, flexible payment options, low down payment, no closing costs ultimately giving you a lot more home buying power. We offer a number of different types of mortgage options to fit your individual financial situation. Strong Negotiating Muscle With any Quicken Loans Pre-Approval home loan, you’re approved for your mortgage* before you shop for a home, giving you extra muscle at the bargaining table. It’s the closest thing you can be to a cash buyer. You have a clear advantage over other home buyers because the seller knows that your offer is serious. Expert Online Mortgage Advice Your home purchase is the biggest investment you’ll ever make, and you should maximize your investment. The home loan experts at Quicken Loans help you do that. You’ll not only get expert mortgage advice on which home loan makes sense for your situation and gives you more buying power, but you’ll get the Home Advantage newsletter published exclusively for our clients. You’ll learn how to manage your mortgage as you would manage your stocks and bonds, IRAs and 401k. Knowing how to maximize your home investment can benefit you greatly. Get More Home Buying Power The Quicken Loans Pre-Approval give you options and flexibility. For instance, we’ve got home loans that allow you to…

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