Learning the Benefits of No Cost Mortgages

key in front of house

At Altius Mortgage and our partners at Mortgage Ogden, it’s our mission to get you the best mortgage option for your situation. Our mortgage brokers are trained to spot the details that might make a certain type of mortgage or refinance more prudent for you and your family, and to guide you through every step of the process.

One of the mortgage types that often fits for many people is a no cost mortgage. This is a type of mortgage or refinance option where closing cost and fees are waived and instead rolled into monthly payments, allowing you to get out the door for much less in upfront costs. These are often great for people planning to move or flip a home within five years, and they hold several specific benefits. Let’s take a look.

Less Up Front

The absence of upfront closing costs and various fees means you need to bring less cash to the table. This is great for people who may have a high monthly income and enough funds to afford a solid payment, but not much liquid cash on hand for both a down payment and closing costs. Closing costs can run into the thousands for most mortgage situations, so this is a major benefit for many people.

Larger Homes

One of the primary benefits of this extra money is potential space in the home. No closing costs means you have more money available for the down payment and future monthly payments, which allows many people to get into a larger home than they had anticipated. It’s not uncommon for this lump sum to make the difference between a great home and a dream home.

Extra Necessities

No cost mortgages can often be perfect for many first-time homebuyers – people who often don’t have furniture or other accessories in the quantities truly needed for home ownership. Things like refrigerators, washers, dryers and dishwashers don’t come cheap, and if these are expenses you’re considering along with a mortgage, a no closing costs option could keep your finances in the proper order.

To learn more about no cost mortgages and when they might be right for you, or to find out about any of our other mortgage services, the brokers at Altius Mortgage and Mortgage Ogden are standing by.

Avoid Going Underwater

If you’re a first-time homebuyer, then your head may be swimming due to the complexities of the mortgage process. While it’s easy to understand your unfamiliarity having never had to go through ay of this before, it is at the same time vital that you educate yourself to the details of buying and owning a home before you make such a huge financial commitment. After all, “swimming” is something that should be avoided when it comes to mortgages, due to the potentially frightening associations that it has to homeownership.

What Does it Mean to Be “Underwater”?

You’ve likely heard of people being “underwater” with their homes, yet may not fully understand what that actually means. If a homeowner is underwater, it means that he or she owes more on the home that what it is actually worth. If you end up in this scenario, you could end up having to deal with a number of problems. For example, if you’d like to refinance, your options could be extremely limited. That’s because few lenders may be willing to offer you great rates given the current market value of your home.  Plus, if you need to move due to a work relocation or a loss of income, you could end up still owing money on your home even after its sale.

How You Can Avoid It

Yet going underwater with your mortgage isn’t unavoidable. Listed below are  few things you can do to ensure this doesn’t happen to you:

  • Save up for a large down payment: The less you owe on your home the better. Even if it means renting for longer than you’d like, the added equity will be worth it.
  • Don’t overpay for your home: Don’t get caught in a bidding war that forces you to pay more, no matter how much you may love the property.
  • Make extra payments when possible: By paying even as little as one extra mortgage payment per year, you build up more equity while also saving on interest.

While learning as much as you can about homeownership is important, no one expects you to become a mortgage expert overnight. Fortunately, you don’t have to be. With the assistance of a well-qualified mortgage broker like the Altius Mortgage Group that offers easy access to both services and advice, you’ll have the resources needed to ensure that you’re well-informed before making any major decisions.

 

Discover Mortgage Products That Can Help You

Mortgages are valuable loan opportunities that can help you get into the home you have always wanted. In fact, virtually everyone who owns a home achieves this goal with the help of a mortgage. This means that the process of applying for a mortgage is just as important as the process of buying a home; just as much care and deliberation should be taken when making both decisions. Altius Mortgage has helped clients discover the mortgage solutions that fit their goals and financial lifestyles perfectly. Here are a few things to keep in mind when determining which mortgage services are right for you.

What Distinguishes the Right Mortgage?

The general guideline for determining how much home you can afford is to take your annual income and multiply it by two or three. This gives you a basic idea of the price range you can reasonably afford. However, do not begin selecting mortgages just based on this amount. There are other things that can affect your borrowing power, such as:

  • Current debts and savings
  • Your personal employment history
  • Your credit history

Making a down payment is a very good idea and it can make fulfilling the terms of your mortgage considerably simpler. While down payments are not necessarily a required part of getting a mortgage, this is a sound way to begin life as a home owner.

Based on these and other criteria, some mortgage services may be more or less well-suited to your particular needs. That will help you eliminate some options from consideration.

Help for Prospective Home Owners

Upon learning what criteria borrowers must meet to qualify for good mortgages, some prospective home buyers might think that home ownership is entirely out of reach. There are actually several programs that can help people achieve this dream. You may be more qualified than you realize. The best way to learn if these programs could help you is to talk with an associate at Altius Mortgage.

A More Affordable Way to Borrow

Prospective home buyers are usually aware that mortgage loans are one of the best ways to achieve their dream of property ownership. These valuable lending services have the potential to address many of the financial concerns affecting people shopping in the current housing market. As advantageous as a mortgage clearly is, some homeowners are concerned about the various fees and costs associated with this loan. Typically, escrow fees and other costs have to be addressed. Some mortgages allow borrowers to apply the fee total to amount borrowed and pay it off that way. Altius Mortgage offers no-fee mortgage loans to simplify borrowing even further. This is a great way to refinance without spending a lot of extra money while doing so.

You Can Refinance Without Paying More

Not everyone has the money to pay for all the fees associated with getting approved for a conventional mortgage loan. This leads some people to assume that they have no lending opportunities available to them at all. In reality, there is actually a diversity of mortgage program services currently offered and some of them involve minimal fees or none at all.

Is This the Right Option for Me?

There are a few indications that a no-fee mortgage might be right for you. These include:

  • If you will not be staying in your current home for more than another five years or so
  • If you wish to refinance a current home or purchase a new one
  • If there are no other mortgage solutions that suit your needs

Speaking with an experienced mortgage lender can help you clarify whether or not a no-fee mortgage is good for you. They can explain what distinguishes these loans and tell you more about what circumstances can be best addressed. There may be other lending opportunities that are better-suited to your particular financial circumstances and housing needs. Call Altius Mortgage today to speak with a representative.

Loan Tips for First-Time Homebuyers

If you have been dreaming about buying your very own home, there has really never been a better time than right now. Home prices are relatively stable, and interest rates have been at record lows for quite a while. Plus the months between March and July are usually the best times of year to find inventory on the market. Before you dive into your home buying experience, though, there are a few things you should know as a first-time homebuyer to ensure that you get the best loan and the best rates.

1: Know and Understand Your Credit Score

Your credit score is perhaps the most important number in your life when it comes to getting a mortgage loan. Even small changes in your credit score can have a significant impact on your interest rate, so before you start shopping for a home, check your credit score.

Credit scores are expressed as a number between 300 and 850; higher scores mean that lenders are more confident in your ability to repay a loan. Generally a score of 720 or above is considered excellent credit, 650 to 720 is good, between 500 and 650 is fair or poor, and below 500 is considered bad credit, although each lender might have its own ranges that differ slightly from the ones above.

2: Have the Best Credit Possible When Going for a Loan

If your credit score is lower than you would like, it might be a good idea to wait a little while before applying for a loan. Take these steps to improve your credit score:

  • Pay all your bills on time
  • Review your credit report for mistakes and fixing any problems
  • Pay down high balances on your existing credit accounts
  • Don’t take out any big new loans (student loans, car loans, etc.) in the months prior to getting a mortgage loan

Fixing a lower-than-desirable credit score can take some time, so you should start this process about 6 to 12 months before you plan to get your loan.

3: Have Your Documentation Ready

In order to get a loan you will need to have documentation of your income and taxes. Typically lenders like to see at least two paystubs, and two years’ worth of W-2s and tax returns, as well as bank statements from the last couple of months. If you are self-employed or you are paid on commission, be prepared to provide even more documentation of your income to qualify for a loan.

4: Set Your Budget

Ideally you should already have an idea of how much you want to spend on your monthly house payment, which will give you an idea of how much you can afford to borrow, but it’s always a good idea to track your spending for a few months to be sure. Keep in mind that most mortgage payments also include homeowners insurance, property taxes, and mortgage insurance (if you are not putting 20 percent down), so your calculations need to take that into account. Most lenders prefer that homeowners spend less than 28 percent of their income before taxes on a house payment, and less than 36 percent of take-home pay on a mortgage.

When you’re ready to get started, the next step is meeting with a knowledgeable mortgage lender in Utah to find out what loan options are going to work best for you and getting pre-qualified so you can start looking for the home of your dreams.

5 Financing Options for Your Next Home Loan

When people talk about getting a home loan it might sound pretty straightforward, but the truth is that there is more than one type of loan that you can get. Getting the right one can ensure that you are able to afford your monthly payments, your interest rates are as low as possible, and you can get the most home for your money based on the down payment you have available. Here are five options to talk to your mortgage lender about when you’re ready to get a loan.

Fixed-Rate Mortgage

The fixed-rate mortgage, which may also be called a “traditional” mortgage, is designed for homeowners with great credit, at least 10 percent to put as a down payment, and who plan to stay in their home for an extended period of time. This loan will have a fixed rate and fixed monthly payments for the life of the loan, and will generally range from 10 to 30 years. It’s a great option if you have excellent credit and interest rates are low.

Adjustable-Rate Mortgage

An ARM, or adjustable-rate mortgage, will have a low introductory rate for a fixed number of years, then the rate will fluctuate based on the market rates at the time. These type of loans are not necessarily bad, but are not the best option in every situation. For homeowners that plan to only be in the house for a short period of time (usually less than 5 years), getting the lower rate up front can keep payments low and allow you to sell before your rates change. It’s also a potential option if you believe that rates will go down in the future—in which case your payments will go down.

Interest-Only Loans

Most loan payments are structured with a portion going toward interest and another portion toward the principal balance. Interest-only loans have lower monthly payments because the homeowner is only responsible to pay the interest, with nothing paid toward principal. These are certainly not as common as they were a decade ago, but might still be an option for a short-term loan. Since you’re not paying down the balance of your original loan it’s not a feasible long-term option, and buyers will eventually have to refinance, pay off the balance with a lump sum, or increase their payments to begin paying down principal.

Reverse Mortgages

The reverse mortgage is only available for homeowners over 62 who want to turn the equity in their home into income. They have their own risks and obligations, and should be carefully considered and fully understood before any homeowner decides to get one. A mortgage lender can help explain the process and provide you with all the details.

Buydown Mortgage

As you pay down the total principal of your loan, your total interest paid over the life of the loan will go down. These mortgages allow you to pay a lump sum or a fee that buys down the amount of interest you will pay on the loan.

To learn about all the options available and figure out which is best for you, talk to a mortgage lender in Utah today.

3 Ways to Pay Off Your Mortgage Sooner

For most people, a home loan is the largest debt they have, and the longer it takes to pay off your mortgage, the more you will pay in interest over the life of the loan and the longer you will have a monthly payment to budget into your monthly expenses.

While the idea of eliminating your mortgage sounds like a great idea, it doesn’t make financial sense for everyone. In some cases it can improve your financial situation, but in others it would make more sense to invest that money somewhere else or pay off other loans or revolving credit with higher interest rates. If you do decide to pay it off early, here are three proven strategies.

1: Pay Extra Toward Principal

Your monthly payment is divided into paying the interest and paying down the principal balance. If you pay more toward the principal, you can get the entire loan paid off sooner and reduce the amount you will pay in interest over the life of your loan. You can accomplish this in several ways, including:

  • Adding to each monthly payment
  • Making payments every two weeks or every week instead of every month
  • Make an extra payment when you get extra money
  • Make one extra payment each year

2: Refinance to a Lower Rate

If your current loan has a higher interest rate, refinancing into a lower-interest-rate loan can reduce your total monthly payment. The key, though, is to continue paying your higher payment even after you refinance because the extra amount will go toward your principal balance. Refinancing could reduce your payments by hundreds of dollars every year, but if you keep paying the higher payment all that money is now going toward principal.

3: Refinance to a Shorter Loan Term

Shorter-term loans, such as 10 or 15 years, will have higher monthly payments, but will also reduce the total amount of interest that you pay over time, so if you can afford the higher payments, not only is your loan repayment term shorter, you will save quite a bit of money by not paying so much interest.

Paying off your mortgage earlier will require planning and may mean you need to be more disciplined about your personal finances. It can pay off in the long run by allowing you to live mortgage-free and giving you more expendable income to travel, contribute to retirement accounts, or pursue your other hobbies and dreams.

3 Myths About Your Mortgage Loan

A mortgage is the largest single loan that most people will ever obtain in their lifetime, and with so much financial pressure it’s essential that you understand the process of obtaining a loan, repayment, and other critical factors that can impact your mortgage over time. Unfortunately there are some myths out there about mortgages that might cause some confusion, or cause you to miss out on the benefits that a mortgage can offer. We’re going to set the record straight on three common myths we hear.

Myth #1: You must have 20% to put down before you can buy a home

While it’s nice to put money down on a home, and we would encourage you to do so if you have that money available, it’s not actually a requirement. The benefit of putting money down is that it can provide immediate equity and lower your monthly payments and your overall mortgage loan, but if you are unable to come up with 20 percent there are other loan products for which you can qualify besides a conventional fixed-rate mortgage.

Even in cases where you do have 20 percent to put down, if that would wipe out your entire savings it may be more financially prudent to only put some of it down—for example, 10 percent—and save the rest in your “rainy day” fund.

Myth #2: There’s nothing I can do about the interest rate on my loan

Interest rates are perhaps the most critical factor in a mortgage loan, because lower interest means you will have a lower monthly payment and over the life of a 30-year loan you will pay less in interest. The best way to get a good rate is by having good credit, so if you are planning to purchase a home in the future, start checking your credit report now. The easiest actions you can take to improve credit are making all your payments on time for things like credit cards, student loans, and car payments, and paying down the existing debt you have.

If you are still unable to qualify for the lowest rate there are options to pay for “points”, which involves paying up front to lower your interest rate over the duration of your loan. Since there is cost at your mortgage closing, it will generally be more beneficial for homeowners who plan to remain in their house for a long period of time. If you’re thinking you might move in a few years, paying an up-front fee to lower the amount you’ll owe over the life of the loan might not be as good a deal. Talk to your mortgage professional to find out if it seems like a good option for your loan.

Myth #3: Fixed rates are always best

There are two main types of loans: fixed rates and adjustable rates. Fixed rates have a set rate that is locked in for the duration of the loan, while adjustable rates can change based on the market. The former is good if you can qualify for a low rate; the latter might be more beneficial if you think that rates will go down over the next few years. There are also hybrid options that can fix your interest at a low rate for a period of time, usually between 3 to 10 years, after which point it will adjust to market rates. This situation can work great for homeowners who only plan to stay in a house for a short period of time, because you can take advantage of lower locked-in rates now and sell the house before the rates start to adjust.

Talk to a mortgage professional to clear up any confusion and questions you might have about buying a home. It’s important to be clear about all your options and avoid the myths so you get the best possible loan.

Tips for Getting a Mortgage When You’re Self-Employed

One of the primary factors that lenders look at when they decide whether or not to approve a mortgage loan is your employment history and income—a factor that is typically validated by a paystub. But what happens when you are the boss? As a self-employed person who doesn’t get a typical paycheck, it can be hard to prove your income and creditworthiness to a potential lender. It’s not impossible to do, but it does require some extra effort.

The Income Conundrum

One of the benefits of being self-employed is the ability to write off business expenses to reduce your total taxable income. The problem is that lenders use tax returns to verify income when determining whether or not they think you could pay back a loan. A self-employed person can take advantage of many legal tax deductions related to running their own business, but then the income you report to the IRS each year is lower, and that is what a lender will see. The problem is that you don’t want to report any more income than you are legally required to according to IRS rules (because you will owe more in taxes), but your tax returns might not reflect your actual take-home pay that could qualify you for a bigger home loan, or qualify you for a loan at all.

Talk to a Mortgage Lender

Anyone who is self-employed should plan ahead when they are considering a home loan—often much longer than another borrower might have to plan. You might consider writing off fewer expenses in the two years leading up to your home purchase so you can show a higher total income to the lender.

It’s also very important that you review your finances to make sure personal and business expenses are clearly divided. Pay for all business expenses (especially large purchases) on business credit accounts instead of personal ones so lenders can clearly see the difference.

Show Income Increases

If your business is running successfully, make sure that you show that when you are ready to apply for a home loan by showing year-over-year increases. Most lenders will average out seasonal ups and downs by looking at total income over the past two years, but if your returns show that your income went down from two years ago to last year that could be a red flag.

Consider Other Options

If you are unable to qualify for the home loan you were considering because of self-employment, consider taking out a smaller loan on a condo or townhome first. You can also find someone who is willing to co-sign if that is an option for you.

It’s not impossible to get a loan when you are self-employed, but there are additional requirements and preparations you must take in order to ensure the highest chance of success. Talk to a mortgage lender in Utah today to find out more.

How Your Credit Score Affects Your Mortgage Payment

Do you know your credit score? The answer to this question for many people is no, but if you are planning to make a big purchase, such as a home or a vehicle, in the near future, you need to know what your score is.

What Do Credit Scores Mean?

Your credit score is a number between 300 and 850 that tells potential lenders about your creditworthiness as a borrower; in other words, how likely it is that you will be able to pay back a loan. It can be a significant factor in determining whether or not you are even approved for a loan, and also determining what your interest rate will be. The algorithm that calculates your score takes into account:

  • Your history of payments on previous loans or credit accounts
  • How much you currently owe on all credit/loan accounts
  • How long your credit history goes back
  • How much new credit you have taken out recently
  • The types of credit that you use

Generally your payment history and the amounts owed are the factors that weigh most heavily on your score, accounting for about two-thirds of your total score for FICO credit calculations (the most commonly used). The other three do impact your score, though not as much overall.

The Impact on Your Mortgage

A mortgage is likely the biggest loan you will ever get, so having a good interest rate could save you tens of thousands of dollars over the course of a 30-year loan, and a higher credit score is the way to get that better interest rate. Even a drop of 50 points in your credit score from 750 to 700 could raise your interest rates by 1 percent or more. It might not sounds like that big of a difference, but that will increase your payment by about $120 a month on a $200,000 loan, and it will translate to over $42,500 in additional interest paid over the course of a 30-year loan.

Getting Your Loan

Your credit score also impacts your ability to get approved for a loan. Most lenders will not typically provide home mortgages for people with FICO scores below 620, and if you do manage to get approved, you will likely have an interest rate much higher than you would if your score were even 100 points higher.

Improving Your Credit Score

It’s best to check your credit score well before you are planning to purchase a home—that way you will have time to improve your score if needed, or correct any errors you find on your credit report that are bringing your score down. One free credit report is available each year from Equifax, Experian, and TransUnion, so download those and go through them carefully to inspect all accounts. If all the information is correct, start paying down your balances, make sure you’re making payments on time on all your accounts and loans (including vehicles, student loans, and revolving credit), don’t open any unnecessary new credit lines, and your score should improve over time.