Impact of Home Assessments on Mortgage Payments, Part 2

In part one of this two-part blog series, we went over some of the basics of a home assessment, including how it compares to home appraisal and what it’s used for. Home assessments are carried out by local government bodies to help adjust property taxes and insurance areas based on several factors, and homeowners have to be prepared for them and how they might impact mortgage payments years into the loan.

At Altius Mortgage and our partners at Mortgage Ogden, we’re happy to explain how a home assessment might impact any of our mortgage loans, whether you’re a first-time homebuyer or a seasoned real estate flipper. In today’s part two, we’ll look at the timing factors to keep in mind for home assessments, some additional factors that play a role in how property taxes change throughout homeownership, plus the end-of-year statement you’ll receive to help you keep all this straight.

Home Assessment Timing

When you apply for a mortgage, one of the steps your lender will take will be to set up the escrow portion of the loan using the current property tax numbers involved – these, as we’ve been over in part one, are based on several factors, including the value of the property itself.

In many cases, be aware that your first home assessment as a new resident may not come until a year or more into your mortgage. However, it’s possible for your property taxes to go up during this time even if you do not have a home assessment done – this is because property taxes are also based on a few other areas, which we’ll go into in our next section.

Other Factors in Property Taxes

While your home assessment will be a large factor in your property taxes when it’s completed, it’s important to realize that there are other determinants of these taxes as well. These include:

  • Schools
  • Local infrastructure
  • Public services such as trash collection or street cleaning
  • The economy (when it’s doing well, taxes tend to go up; when it’s doing badly, taxes may drop)
  • Home improvements and other areas that impact the assessment

End-of-Year Escrow Statement

So how do you keep track of property taxes and how they impact your mortgage? Simple: At the end of each fiscal year, your lender will send you a detailed loan summary that includes details on your escrow account and whether the funds in there were enough to cover property taxes and homeowners’ insurance. If so, you have nothing to worry about. If not, you’ll either have to pay a lump sum or have the larger payment incorporated into your monthly payments each month in the upcoming year.

For more on home assessments, property taxes and how these factors impact your mortgage payments, or to learn about any of our mortgage loan or refinancing services, speak to the staff at Altius Mortgage today.

Impact of Home Assessments on Mortgage Payments, Part 1

At Altius Mortgage and our partners at Mortgage Ogden, the primary goal for each client is to help you attain a great mortgage rate and loan to help you attain your long-term homeownership goals. We’ve helped numerous Utah buyers not only find the home of their dreams, but qualify for a robust mortgage to cover it in a way that lines up with their future finances.

When it comes to the long-term future of your mortgage, one factor to be aware of is what’s called a home assessment. These are regularly carried out by the town or city you live in, helping determine property values for the purposes of property taxes, homeowners’ insurance and other important fees. Home assessments could have a significant impact on a few areas of your long-term finances – this two-part blog series will go over everything you need to know about these assessments and why they matter.

Escrow Accounts and Mortgage Assessments

In virtually all mortgage loan situations, the mortgage will include an escrow account. This account is designed for money to be set aside as part of the mortgage for property taxes, homeowners’ insurance and other areas that are not directly involved in the principal purchase price of the home.

If and when your home is assessed by a representative of the local government, these are the areas that might be impacted. Even if you have a fixed-rate loan, your payments could change if the assessment of your home places its value far apart from what the previous assessment said. For this reason, it’s important to maintain the quality of various home areas and components even years after your purchase, as this could have a real impact on your mortgage.

Assessment is Different From Appraisal

Those familiar with the appraisal process during a mortgage application and home search may be wondering how assessment is different, and the primary answer lies in the purposes and methods used for each. While the overall theme is the same – evaluating major components of the home to determine its value – this is done very differently and for different reasons.

How Assessment and Appraisal Differ

During an appraisal, the appraiser involved will look at similar homes in the area that have sold recently to get an average selling price. From here, they’ll adjust this number based on the qualities of the home, the number of rooms and other factors. The goal is for the bank to be able to determine whether the amount you’re asking for on a mortgage lines up with the home’s value.

An assessment, on the other hand, involves an assessor looking at sales from recent years, not recent weeks or months. The assessor will also look at any improvements that have been made on the home, particularly those where permits were utilized. This assessment is purely for tax and insurance purposes – if the assessed value of your home goes up significantly, your loan payment will also go up to cover the money needed in your escrow account. It’s also possible, however, for this number to go down and lower your payment.

For more on home assessments, or to learn about any of our mortgage loan services or rates, speak to the staff at Altius Mortgage today.

Process for Disputing Errors on Credit Reports

There are a few important factors that dictate whether you qualify for a given mortgage and the mortgage rates you can receive, and one of the top such factors is your credit. Your credit score and credit report are areas every lender will look at when evaluating you as a potential borrower, speaking to your financial and credit history.

At Altius Mortgage and our partners at Mortgage Ogden, we’re here to help with all credit-related elements of a mortgage, helping you obtain the best mortgage rates for your credit range whether you’re a first-time homebuyer or a seasoned veteran. And while the agencies in charge of credit scores and credit reports are generally accurate and detailed, it’s possible for errors to occur somewhere during this process – here are some basics on this realm, plus what to do if you believe an error on your report is damaging your ability to take out a loan.

How Credit Score Works

Your credit score is a single number that represents your credit rating and quality as assessed by three major credit bureaus: Experian, TransUnion and Equifax. Things like on-time payments, greater-than-minimum payments and general responsibility with your credit cards, loans and lines of credit will raise your credit score, while behaviors on the flip side of this coin will lower it.

This number is not the only factor in applying for a loan, but it’s generally a big one. It helps lenders quickly determine how creditworthy you are based on your history and current finances.

Credit Report and Inquiries

So how do you learn your credit score? One way is through obtaining a credit report, which will show both “soft” and “hard” inquiry information. These are defined as follows:

  • Soft inquiry: Times you request your own credit report, or when a lender checks your report to see if you can be pre-approved.
  • Hard inquiry: Only take place when you apply for credit – such applications will remain on your report for two years and can impact your score.

Disputing Credit Report Errors

When applying for a mortgage loan or any other major loan type, you should check all three of the bureaus listed above for errors. Here are some basics on what to do if you find errors with any of them:

  • Equifax: If you find an error, first contact Equifax by phone or mail to file a dispute claim. If the dispute is legitimate and provable, your score may be raised immediately. In other cases, a longer investigation will take place.
  • Experian: Experian has online forms to fill out for a disputed claim, plus trackers that allow you to follow your claim through the system.
  • TransUnion: TransUnion also uses online dispute forms, first requiring you to create an account.

For more on disputing an error on your credit report, or to learn about any of our home loan services, speak to the staff at Altius Mortgage today.

How Your Tax Returns Impact Your Mortgage Application

For a number of reasons, from legal compliance to a proper financial picture, it’s important to be accurate and detailed on your tax returns each year. Did you realize, though, that this theme can actually play a big role in a future mortgage application and approval through a lender?

At Altius Mortgage and our partners at Mortgage Ogden, we’ll help you understand the application requirements for any of our home mortgage loans, including the role your tax returns play. Tax returns are a top verification tool used by lenders to confirm that you make enough money to handle the mortgage payments you’re applying for – let’s go over some important areas to consider, plus the elements your lender will be looking to obtain during your application.

Basic Income and Interests

For those who work basic hourly or salaries job positions with no other income, tax returns are generally a breeze. You report your yearly income on your W-2, then adjust basics like withholding tax and others to determine whether you get a refund based on the taxes you paid during the year. You should also track allowed deductions, which may lower your taxable income.

In addition, include the amount of interest you’ve earned on any savings, stocks or certificates of deposit. These gains count as basic income on a tax return.

Stock Shares

In some employment situations, employees earn a portion of their income through stocks as part of a profit-sharing agreement. In these cases, this information must also be included on your return, as many lenders will count it as part of your income.

Rental Income

If you own other properties where you are acting as the landlord and collecting rental income, you will need to fill out a Schedule E form for your tax return. The rental payment you receive will go toward the mortgage, property taxes, insurance and other costs, so you’ll be able to list the amount that’s actually making its way to you as income.

Self-Employment

Finally, if you’re self-employed, you have to pay close attention to expenses, deductions, appreciation, accounts payable and several other potential factors to determine your final income figure. Some lenders will ask for a profit and loss statement if tracking your income in traditional manners proves too difficult.

Important Lender Information

Some of the primary tax return elements your mortgage lender will ask for during the application process include:

  • At least one year, and usually two, of recent tax returns
  • Multiple years of recent W-2 or 1099 forms
  • Multiple years of business tax returns if you own at least 25% of any business

For more on the role tax returns play in your mortgage application, or to learn about any of our mortgage loan services, speak to the staff at Altius Mortgage today.

Tax Benefits and Basics of Mortgage Credit Certificates

One big area many people think about during a mortgage application and homebuying situation is the tax implications, and with good reason. Mortgages often come with notable tax-related areas, whether we’re talking about future write-offs or other potential benefits.

At Altius Mortgage and our partners at Mortgage Ogden, we’re happy to explain any tax ramifications to you for any of our loan programs or mortgage refinance options. One possible item that may be available through certain special housing assistance programs is known as a mortgage credit certificate – what is this, how can you qualify for one, and what tax benefits might you be able to glean from it? Let’s take a look.

Mortgage Credit Certificate Basics and Qualifications

As we noted, mortgage credit certificates are sold through special mortgage programs. They offer potential tax breaks and exemptions, which we’ll go over in just a moment.

While the requirements to qualify for a mortgage credit certificate vary between states, most states have a basic set of standards here:

  • Maximum mortgage amounts (houses worth over a certain threshold will not qualify)
  • Limitations on total household income
  • No previous homeownership within the last three years before applying

Benefits of Mortgage Credit Certificates

The primary benefit of a mortgage credit certificate is a direct tax break that can be applied at the end of each fiscal year during the mortgage. If you qualify, you can claim deductions based on the taxes for your income – and you can do this every year during the mortgage, not just the year the mortgage closes during. Many people use this theme to build up savings and put that money toward the loan principal, lowering the balance and total interest paid over the course of the loan.

In addition, some states also include special exemptions with mortgage credit certificates. They may allow you to take up to 25 percent of your mortgage interest away in one shot, rather than using this as a credit deduction.

Requirement Waiving Circumstances

In some rare cases, the IRS and state governments can combine to waive some of the requirements we listed above, including income limits, housing values and others. This is generally only done during major periods of financial crisis, however, or when the housing market is slow and needs a new infusion. As those who have their ear to the ground in terms of real estate will be aware, this means that it’s currently tough to get an exception here – home values are high and the market is doing very well, meaning this sort of waiving is unlikely.

For more on mortgage credit certificates, or to learn about any of our other mortgage loan programs, speak to the staff at Altius Mortgage today.

Primary Benefits of Homeownership Compared to Renting

At Altius Mortgage and our partners at Mortgage Ogden, we know the jump to homeownership for those who have previously rented for their living situation can be a big one. This is true in several areas, from the financial commitment you’re making to the responsibilities you’re taking on by owning your own home.

For first-time buyers considering this leap, however, it’s important to take stock of the numerous benefits potentially associated with homeownership – a few of which are greater than you might have thought. Let’s look at several factors, both financial and otherwise, that make owning a home an attractive option compared to continuing to rent.

Viable Investment

For starters, those looking to begin investing in their future have few options better than owning a home. Real estate is considered one of the single safest investments out there – home values virtually always go up over a period of years into the future.

If you’ve been renting in the same area for several years, one you know you’re comfortable in, it pays to investigate purchasing a home in this area instead. Rather than paying into someone else’s mortgage and building their investment, you can get started on your own and begin benefitting yourself in the long-term.

Credit Boost

Provided you take on the right mortgage, one you can pay back properly and within the required timelines, owning a home also serves as a great way to build your credit. Every time you make successful mortgage payments, it reflects that much more positively on your overall credit profile.

After enough time, your mortgage will provide a big boost in an area known as length of credit history, which is a huge factor in calculating credit score. These years of successful payments will provide proof to future lenders that you’re trustworthy.

Personal Ownership

Owning a home isn’t just beneficial for financial reasons – it’s also a big positive for many personal areas as well, namely making the space and property your own. When renting, there are several limitations on your ability to design and improve as you see fit; you generally can’t make major structural changes or even change paint and color schemes.

When you own a home, however, these kinds of areas are fully up to you. You can prioritize the elements of your lifestyle you care most about while keeping yourself and your family happy.

Community

Finally, renters tend to have a more difficult time establishing a community and long-term relationships with their neighbors. Many rental homes are near other such homes, meaning residents in this area will commonly come and go, often not staying longer than a year or two. When you own a home, however, you can begin to form lasting connections with other homeowners in your area, connections that often end up valuable in the long run.

For more on why owning a home holds several distinct benefits over renting, or to learn about any of our home loan services, speak to the staff at Altius Mortgage today.

Common Reasons and Tips for Mortgage Refinancing, Part 2

In part one of this two-part blog, we defined some of the basics of mortgage refinancing and why many homebuyers choose this option at some point during their home loan. Whether to capitalize on equity, change loan term or even alter interest rates, refinancing can have several distinct benefits for buyers in a few different situations.

At Altius Mortgage and our partners at Mortgage Ogden, our mortgage refinancing solutions are second to none. In today’s part two of our series, we’re going to take a look at several tips and themes you should be strongly considering if you’re thinking of mortgage refinancing.

Financial Goals

Refinancing a mortgage loan isn’t something that should be done on a whim – it should be carried out with a specific financial goal in mind, and within circumstances that allow for this goal to be met. The primary goal for most people refinancing is to lower monthly interest rates or overall payment amounts, so don’t simply jump at a refinancing option that doesn’t accomplish at least one of these goals for you.

If your goal is to capitalize on equity, on the other hand, be sure you’ve done the proper calculations and will receive the windfall you’re expecting in a way that won’t damage your future finances.

Lender Quality

One of the primary financial areas to consider during a refinancing process are any fees or costs that come along with refinancing, and the lender you choose plays a big role here. Ask about a few important factors, such as whether these fees and costs will be rolled into your mortgage or be required up front. You should also ensure that interest rates are expressed clearly – certain unscrupulous lenders may try to offer “no-closing-cost-loans” that, while they do indeed hold off on these costs, will actually raise your interest rate or add to your principal balance in the process.

Disclosing Assets and Liabilities

No matter which lender you choose, transparency with your assets and liabilities is a must. Collect any related documents or important pieces and ensure they’re organized as well as possible.

Credit Score and History

Credit score and credit history aren’t just important during an initial mortgage application – they’re also a big part of refinancing. Ahead of any refinancing attempt, ensure your score is in an adequate range and take some steps to improve it if not.

Appraisals

Finally, while appraisals are not always required for a mortgage refinance, they’re valuable tools to utilize. A third-party appraisal helps you figure out the current value of the home, and can also help determine how much money will be awarded to you during a cash-out refinance.

For more on some basic tips for refinancing your home, or to learn about any of our mortgage services, speak to the staff at Altius Mortgage today.

Common Reasons and Tips for Mortgage Refinancing, Part 1

For many buyers in a few different situations, refinancing a mortgage is a prudent move. The refinancing process, which involves replacing your existing mortgage with a new home loan, assists many with lowering their payments and interest rates or even changing their loan program – and can even help you build equity in your home in many cases.

At Altius Mortgage and our partners at Mortgage Ogden, we’re happy to offer several home refinance options for those in need. What are some of the options out there in this realm, and why might you be in a position to consider them? This two-part blog will dig into these areas, plus look at a few basic advice areas we can provide you when it comes to making the right decisions and using the refinancing process properly.

Refinancing Options

As we noted above, mortgage refinancing is the process of replacing your existing mortgage loan with a new one, typically with more favorable terms in at least one area. You do not have to work with the same lender during a refinancing situation, and the process is generally quite a bit simpler to go through than the initial home mortgage application and assessment.

During mortgage refinancing, your old loan will be completely cleared from the books as you begin to make payments toward the new one. There are two broad categories of refinancing to consider:

  • Rate-and-term refinancing: During this type, you do not change the principal balance of the loan in any way. Rather, areas like interest rate and repayment timeline can be amended to make the loan more beneficial.
  • Cash-out refinancing: During these situations, your new principal balance will be higher than the old one – with you receiving the difference in the form of a lump sum cash payment. This cash can be used for a number of purposes, whether it’s paying down debt, remodeling the home or others.

Why Refinance?

Here are some of the primary reasons why many people choose to refinance their homes:

  • Lowering costs: Refinancing can help lower either monthly payments, interest rates, or both.
  • Term reduction: Refinancing can allow you to reduce your loan term through paying off the loan earlier.
  • Equity: Through a cash-out refinance, you can capitalize on some of the equity you’ve built in your home and put that additional cash to good use.
  • Rate change: Some homeowners want to switch from a more volatile adjustable rate to a fixed-rate mortgage, which refinancing allows. Fixed-rate mortgages are often the better option for those attempting several areas of long-term financial planning, as they allow for a firmer idea of what future housing expenses will look like.

For more on mortgage refinancing, or to learn about any of our mortgage loans or services, speak to the staff at Altius Mortgage today.

Possible Benefits of Home Purchases During Summer, Part 2

benefits home purchases summer

In part one of this two-part blog, we went over some of the reasons why many homebuyers look to the summer period as the optimal one for their purchase and move. This season might not be perfect for everyone, of course, but for those in a few particular situations, it’s often the best choice.

At Altius Mortgage and our partners with Mortgage Ogden, we’re happy to offer a wide variety of mortgage loans no matter what your timing needs are. Let’s take a look at a few more circumstances where summer purchasing might be your best bet, plus how to approach things during this time period.

Longer Days for Home Hunting

One of the beneficial characteristics of the summer compared to other seasons? There’s more natural light, with the sun often staying out until 9 or even close to 10 PM some nights. For those who are in the process of searching for their home still, particularly those who work long hours or do not have time during the rest of the day, this is a great opportunity to search for homes while there’s still enough light to get the full picture of their exterior.

This feature is valuable if you’ve already closed on the home and are looking to move during summer, as well. A few extra hours of daylight can make the difference between a partially-completed move and a fully-completed one, plus improve your safety quality.

Home Prep Time

Moving during the summer also makes home preparations far easier – both for the new house you’re moving into, or for your current home if you’re preparing to show it or conduct an open house. Once again, this is mostly due to weather concerns. It’s simply easier to clean up and organize numerous areas, particularly those outside the home that play a big role in curb appeal, when there’s no snow or ice on the ground.

Turning it Into a Holiday

Especially if you’re moving from one state to another, or even if you’re making a significant jump in location within your state, you can use this summer time period to turn parts of your homebuying experience into something of a vacation. Many families combine leisure and home searching during this process, taking part of a given day for search duties and then enjoying areas the city has to offer during other parts of the day. This kind of approach can significantly limit the stress often associated with homebuying for many people, allowing you to take a relaxed, careful approach where you’re never rushed.

For more on why the summer might be the perfect time of year for you to consider a move, or to learn about any of our mortgage loans or refinancing services speak to the staff at Altius Mortgage today.

Possible Benefits of Home Purchases During Summer, Part 1

benefits home purchases summer

For mortgage brokers across the country, one of the single most common questions received is regarding the best timing practices for obtaining a mortgage. Potential homebuyers want to know which season, time of year or even month is best for applying for a mortgage or closing on a home, hoping to find the best deals and mortgage rates possible.

At Altius Mortgage and our partners at Mortgage Ogden, we’ll assist you with a wide range of timing-related questions when considering a mortgage loan, especially for your first time. But in reality, the answer often depends on you and your individual circumstances – with the summer in full swing, this two-part blog will examine several conditions that might make this season the optimal one for you to purchase a home and begin the moving process.

Rising Market

At the top of our list is a consideration that relates specifically to this summer, and tracks back to continuously rising market prices in the homebuying world. Believe it or not, the housing economy is still technically recovering from the 2008 economic disaster, and predicting home values to continue to rise – as they have by around 6.5 percent over the last year – is a virtually certain bet at this point.

Along with this trend, interest rates are expected to continue rising as well. If you’re unsure of whether to pull the trigger now or later, doing so now, before prices rise further, can save you thousands on your eventual mortgage, both on the principal home price and your interest payments.

No School for Kids

For those potential buyers who have school-aged children, the summer offers a great window for a home purchase and move due to the fact that school is out. This is generally a chief complicating factor for moves during the school year – moving takes some significant commitment, especially for a full family, and even more so if you’re moving a major distance.

In addition to making moving simpler, this format also makes things easier on your kids themselves. If they have to change schools, it allows them time to settle in and get involved in fall school-related activities and meet new friends.

Great Moving Weather

Finally, another big convenience item is how much easier it is to move during the summer than other seasons. Utah residents know full well how quickly a storm can spring up during winter, and there’s nothing worse than trying to manually move large furniture and other home items during a blizzard. Especially if your move involves significant driving and manual lifting and carrying, the summer is usually the best time to get it done.

For more on reasons why you should consider a summer move, or to learn about any of our mortgage loan or refinancing services, speak to the staff at Altius Mortgage today.