Paying Your Home With a HELOC

person giving keys on man

Photo by rawpixel.com on Pexels.com

I hate to pay more than you have to on your mortgage?  Your monthly mortgage payments will include two components: principal and interest. The principal balance is the loan amount, which decreases over the repayment period of a traditional mortgage.  However, the interest portion comprises the majority of the payment at the beginning of the loan and decreases during the term of a traditional mortgage.  While the majority of the payment is principal at the end of the term.

cropped-cropped-cropped-img_3917_thumb.jpgIf you have equity in your home, you could use a home equity line of credit (HELOC) instead of a traditional mortgage to pay off your house.  HELOC stands for “home equity line.” It is a loan set up as a line of credit for some maximum draw, rather than for a fixed dollar amount.  This differs from a home equity loan, which you receive the money you are borrowing in a lump sum payment and you usually have a fixed interest rate. Both a traditional mortgage and a HELOC are secured by your home.  Some advantages of HELOCs are as follows:

  • Unlike the traditional mortgage, a HELOC Mortgage-debt_thumb.jpgoffers flexibility because you can access it right away. It essentially becomes a credit card.
  • HELOCs often have lower interest rates than a traditional mortgage.
  • Some HELOCs offer the option of paying interest only.

Some of the disadvantages of a HELOC are as follows:

  • There might be a term limit (draw period) with the balance of any remaining debt required to be refinanced.
  • There might be a limit on the draw periods (typically 5 to 25 years). Repayment is of the amount drawn plus interest.
  • The variable interest rate might increase then than a fixed interest rate offered with a traditional mortgage.
  • Might be too complicated for most people to keep control of the process.

An Example

moneyhands_217w_gifSay you have a $200,000 mortgage, and your net paycheck is $5,000 per month. One month, you apply your whole paycheck to the mortgage. This immediately lowers the mortgage balance to $195,000. That month, you pay your non-housing living expenses, say $2,000, using your credit card.

Then, you pay your mortgage payment, say $1,000, using your HELOC. You also pay your credit card balance with your HELOC.  At the end of the month, you owe $3,000 on the HELOC and $195,000 on the mortgage, but your credit card has a zero balance.

The next month, your $5,000 paycheck goes to paying $1,000 for the mortgage payment and $2,000 for living expenses. The remaining $2,000 reducing the HELOC to $1,000.

In the third month, your $5,000 paycheck goes to paying $1,000 for the mortgage payment, $2,000 for living expenses, and $1,000 to zero-out the HELOC.

That leaves you with an extra $1,000, which you carry over to the fourth month. And in the fourth month, you repeat the original cycle of paying your entire $5,000 paycheck toward the mortgage, lowering it to $190,000.

If you are successful in managing this strategy, you should be able to manage four $5,000 payments toward your mortgage each year, above and beyond your regular monthly mortgage payments. That means paying an extra $20,000 of mortgage principal each year.

At that rate, your mortgage will be paid in full after substantially less than 10 years (remembering that the regular mortgage payments that you are continuing to make will also reduce the mortgage balance in increasing increments).

SOURCE: DoughRoller

In the Real Estate Market?

KW1784102f20KW.jpgYou should consider using a realtor.  I could save you money especially with new home builders and it does not cost you anything.  So why not? Let me save you money!!!  If you are interested in buying real estate (new home, existing home, or commercial property), please contact me (Alan Lane with Signature Realty Associates at 2234 Lithia Center Lane, Valrico, Florida).  

As a life long resident of Central Florida, I can help you find the right property for you whether it is in Orlando or as far south as Sarasota.  My email address is alanlane66@gmail.com, or call me at 813.205.9280.  If you are just starting your search, you can search the MLS for real estate opportunities on my website at this link.

Advertisements

Saving on Your Mortgage

loan_application_clip_art_24699Why pay more than you have to on your mortgage?  Your monthly mortgage payments will include two components: principal and interest. The principal balance is the loan amount, which decreases over the repayment period of your mortgage.  Paying your mortgage off early is as easy as paying an additionally 10% in your payment.  Not only will this reduce the term of your mortgage, but it will also give you control of the process with the amount of .  You can make extra payments either higher or lower, depending upon your financial situation at the time.  In this example, you pay off your mortgage in about 23 years instead of 30 years.  I will prove it to you with the following spreadsheet:

Early Mortgage Payment

 

Definitions

Loan Amount – Original or expected balance for your mortgage.
Annual Interest Rate – Annual interest rate for this mortgage.
Term in Years – The number of years over which you will repay this loan.
Monthly Payment – Monthly principal and interest payment (PI). The monthly payment is calculated using a 30 year term.
Total Payments – Total of all monthly payments over the term of the balloon mortgage. This total payment amount assumes that there are no prepayments of principal.
Total Interest – Total of all interest paid over the term of the balloon mortgage. This total interest amount assumes that there are no prepayments of principal.
Payment Type – The frequency of payment. The options are none, monthly, yearly and one-time payment.
Payment Amount – Amount that will be paid on your mortgage. This amount will be applied to the mortgage principal balance, based on the prepayment type.
Start With Payment – This is the payment number that your payments will begin with. For a one-time payment, this is the payment number that the single payment will be included in. All prepayments of principal are assumed to be received by your lender in time to be included in the following month’s interest calculation.
Savings – Total amount of interest you will save by paying your mortgage.
Credit Score – The following article from Investopedia demonstrates how your credit score helps determine your interest rate and your loan amount. A higher credit score indicates that you use credit responsibly, generally pay your bills on time, and aren’t using all of your available credit. It also means you’re more likely to repay your debts than someone who consistently struggles to pay bills on time or maxes out their credit lines.
Here’s a look at how your loan pricing and monthly payments can fluctuate based on your FICO score range. FICO is the credit scoring model that most lenders use to evaluate borrowers.

The below calculation is a national average based on a $300,000 loan amount for a 30-year fixed loan as of March 12, 2018.

FICO Score APR Monthly Payment Total Interest Paid
760-850 4.117 % $1,453 $236,937
700-759 4.339 % $1,491 $236,937
680-699 4.516 % $1,523 $248,247
660-679 4.73 % $1,561 $262,078
640-659 5.16 % $1,640 $290,374
620-639 5.706 % $1,742 $327,243

Source: myfico

As you can see, the lower a borrower’s credit score, the higher the APR, increasing both the monthly payment and the amount of interest paid over the life of the loan.

In the Real Estate Market?

KW1784102f20KW.jpgYou should consider using a realtor.  I could save you money especially with new home builders and it does not cost you anything.  So why not? Let me save you money!!!  If you are interested in buying real estate (new home, existing home, or commercial property), please contact me (Alan Lane with Signature Realty Associates at 2234 Lithia Center Lane, Valrico, Florida).  

As a life long resident of Central Florida, I can help you find the right property for you whether it is in Orlando or as far south as Sarasota.  My email address is alanlane66@gmail.com, or call me at 813.205.9280.  If you are just starting your search, you can search the MLS for real estate opportunities on my website at this link.

Current Home Buyer and Seller Statistics

cropped-image1.pngHome Buyer Statistics

  • First-Time vs. Repeat Buyers:
    • First-time buyers: 34%
    • Median age of first-time buyers: 32
    • Median age of repeat buyers: 54
    • Median household income of first-time buyers: $75,000
    • Median household income of repeat buyers: $97,000
  • The typical home purchased was 1,870 square feet in size, was built in 1991, and had three bedrooms and two bathrooms.
  • Among those who financed their home purchase, buyers typically financed 90% of the home price.
  • 87% of buyers purchased their home through a real estate agent or broker—a share that has steadily increased from 69 percent in 2001.
  • Buyers who would use their agent again or recommend their agent to others: 89%
  • Where buyers found the home they purchased:
    • Internet: 51%
    • Real estate agent: 30%
    • Yard sign/open house sign: 7%
    • Friend, relative or neighbor: 6%
    • Home builder or their agent: 5%
    • Directly from sellers/Knew the sellers: 2%
    • Print newspaper advertisement: Less than 1%

Source: 2017 National Association of REALTORS® Profile of Home Buyers and Sellers

  • 78% of home buyers surveyed in NAR’s 2013 Community Preference Survey responded that neighborhood quality is more important than the size of the home.  57% would forego a home with a larger yard in favor of a shorter commute.
  • NAR’s 2013 Profile of Buyers’ Home Feature Preferences found that the feature that had the highest dollar value buyers were willing to pay more for was a waterfront property.  53% of home buyers undertook a home improvement project within 3 months of buying, typically spending $4,550 in improvement projects.

Home Seller Statistics

  • The typical home seller in 2016 was 55 years of age, had a median household income of $103,300, and lived in their home for 10 years.
  • 89% of sellers were assisted by a real estate agent when selling their home.
  • Recent sellers typically sold their homes for 99% of the listing price, and 22% reported reducing the asking price at least once.
  • The typical home sold was on the market for 3 weeks.
  • 41% of sellers who used a real estate agent found their agents through a referral by friends or family, and 23% used the agent they previously worked with to buy or sell a home.
  • Sellers who definitely would use same agent again: 67%

Source: 2017 National Association of REALTORS® Profile of Home Buyers and Sellers 

In the Real Estate Market?

KW1784102f20KW.jpgYou should consider using a realtor.  I could save you money especially with new home builders and it does not cost you anything.  So why not? Let me save you money!!!  If you are interested in buying real estate (new home, existing home, or commercial property), please contact me (Alan Lane with Signature Realty Associates at 2234 Lithia Center Lane, Valrico, Florida).  As a life long resident of Central Florida, I can help you find the right property for you whether it is in Orlando or as far south as Sarasota.  My email address is alanlane66@gmail.com, or call me at 813.205.9280.  If you are just starting your search, you can search the MLS for real estate opportunities on my website at this link.

Envoy’s Jumbo EXPANDED Program

Here is a new program from one of my preferred lenders:

LOOKING FOR A NON-QM JUMBO PRODUCT?

Take a look at Envoy’s Jumbo EXPANDED Program – 24 Months Banks Statement Program

24 Months Bank Statement Program:

  • Self-employed borrowers only
  • All borrowers listed on account must be borrowers on the loan
  • 24 months consecutive bank statements
  • Minimum FICO 700
  • 80% LTV up to $750,000
  • 75% LTV up to $1,000,000
  • DTI up to 50% with compensating factors (ask for details)

Please contact Bobby Lipfird with Envoy Mortgage for more information.  You can email him at blipfird@envoymortgage.com, or call him at 813.732.7755.

In the Real Estate Market?

KW1784102f20KW.jpgYou should consider using a realtor.  I could save you money especially with new home builders and it does not cost you anything.  So why not? Let me save you money!!!  If you are interested in buying real estate (new home, existing home, or commercial property), please contact me (Alan Lane with Signature Realty Associates at 2234 Lithia Center Lane, Valrico, Florida).  As a life long resident of Central Florida, I can help you find the right property for you whether it is in Orlando or as far south as Sarasota.  My email address is alanlane66@gmail.com, or call me at 813.205.9280.  If you are just starting your search, you can search the MLS for real estate opportunities on my website at this link

Is a VA Loan a good option for you?

water ocean boat usa

Photo by Pixabay on Pexels.com

For the vast majority of military borrowers, VA loans represent the most powerful lending program on the market and one of the best benefits provided for their service to our country. These flexible, no-down payment loans have helped more than 20 million service members become homeowners since its inception. The VA loan is a $0 down payment mortgage option available to Veterans, Service Members and select military spouses. VA loans are issued by private lenders and guaranteed by the U.S. Department of Veterans Affairs (VA). They don’t have mortgage insurance. Mortgage insurance is a monthly fee you pay with other programs when you’re not putting at least 20 percent down. The VA’s guaranty eliminates the need for any mortgage insurance or mortgage insurance premium, helping borrowers save even more money each month.

A VA loan offers Veterans benefits that other loan products do not.

  • No down payment is required
  • No private mortgage is required
  • Easier qualifications

Some things that you should know about the limits and exception of the intent of VA loans: 

  • They’re only for certain types of homes. If you’re planning to buy a  fixer-upper, the VA loan may not be for you. It’s mainly designed for properties in “move-in ready” condition, including single-family homes, condos, modular housing, some multi-unit properties and more.
  • They’re for primary residences only. Don’t bother trying to use your VA loan benefits to buy an investment property or a vacation home . VA loans are for primary residences, although you can use this benefit to buy a duplex or another multiunit property, provided you live in one of the units. The VA does offer exceptions, though lenders also have their own standards that might affect occupancy requirements

VA loans allow Veterans to use their benefits to gain the financial stability that home ownership provides. Let’s work together to make more Veterans homeowners.

In the Real Estate Market?

KW1784102f20KW.jpgYou should consider using a realtor.  I could save you money especially with new home builders and it does not cost you anything.  So why not? Let me save you money!!!  If you are interested in buying real estate (new home, existing home, or commercial property), please contact me (Alan Lane with Signature Realty Associates at 2234 Lithia Center Lane, Valrico, Florida).  As a life long resident of Central Florida, I can help you find the right property for you whether it is in Orlando or as far south as Sarasota.  My email address is alanlane66@gmail.com, or call me at 813.205.9280.  If you are just starting your search, you can search the MLS for real estate opportunities on my website at this link

 

US Housing Market Predictions for 2019

Interest Rates

According to Freddie Mac, the monthly average commitment rate And points On 30-Year Fixed-Rate Mortgages started January 2018 at 4.03 with 0.5 points.  As of October 2018, the monthly average commitment rate And points On 30-Year Fixed-Rate Mortgages is at 4.83 with 0.5 points.  Thus, the interest rates continue to increase.

Employment

In September, the U.S. economy added 134,000 jobs and the unemployment rate declined to a 49-year low of 3.7 percent. Jobless claims remained at record-level lows. The four-week moving average for continuing jobless claims fell to the lowest point in 45 years during September. Payroll growth was weak in September, increasing just 0.3 percent, which is inconsistent with the current strong labor conditions. I do not see any decellines in these trends with the exception of the mid term election.

New Construction

The US real estate market has witnessed strong demand and short inventory of homes this year, making it a seller’s market. In 2019, experts believe that new housing construction will start to rise.

Millennials

millennials are defined as a person born in the 1980s or 1990s, especially in the U.S.; a member of Generation Y.  Millennials are a big demographic group and as they’re getting older and settling down, they’re getting into their home buying years. There’s a popular myth that millennials are a generation of renters. However, the real estate market trends throughout this year actually show that millennials are interested in homeownership and are buying more homes than you think!

Residential Market Predictions

Given the current (imbalanced) supply and demand situation, it appears that this ongoing trend of rising home prices will continue in most US cities throughout 2019. In a forecast issued in July, Zillow predicted that prices will rise by 6.5% in the upcoming 12 months. According to Zillow, the median home price in the US rose by 8.1% over the past year.

In the Real Estate Market?

KW1784102f20KW.jpgYou should consider using a realtor.  I could save you money especially with new home builders and it does not cost you anything.  So why not? Let me save you money!!!  If you are interested in buying real estate (new home, existing home, or commercial property), please contact me (Alan Lane with Signature Realty Associates at 2234 Lithia Center Lane, Valrico, Florida).  As a life long resident of Central Florida, I can help you find the right property for you whether it is in Orlando or as far south as Sarasota.  My email address is alanlane66@gmail.com, or call me at 813.205.9280.  If you are just starting your search, you can search the MLS for real estate opportunities on my website at this link

FHA loans are not just for people with low income

Here is an interesting article written by one of my preferred lenders:

The FHA myth: FHA loans are only for people with low income.

The FHA truth: FHA loans are also for people who don’t want to put down the traditional 20% on a conventional loan.

Low down payments are what normally drive borrowers to a FHA loan.  While FHA loans were originally developed to help borrowers with less than perfect credit history or those with few financing options, they are for any financially qualified borrower. There is no maximum income limit for FHA loans. So, while those with lower incomes may qualify for a FHA loan, those with higher incomes are not turned away due to their income resources.

To find out if your client could qualify for a FHA loan or simply for more information about FHA loans contact me today. I’m always available to help.

Bobby Lipfird
Envoy Mortgage
Loan Originator, NMLS # 386779
C: 813.732.7755
envoymortgage.com
blipfird@envoymortgage.com
10150 Highland Manor Drive, Suite 200
Tampa, FL 33610

In the Real Estate Market?

KW1784102f20KW.jpgYou should consider using a realtor.  I could save you money especially with new home builders and it does not cost you anything.  So why not? Let me save you money!!!  If you are interested in buying real estate (new home, existing home, or commercial property), please contact me (Alan Lane with Signature Realty Associates at 2234 Lithia Center Lane, Valrico, Florida).  As a life long resident of Central Florida, I can help you find the right property for you whether it is in Orlando or as far south as Sarasota.  My email address is alanlane66@gmail.com, or call me at 813.205.9280.  If you are just starting your search, you can search the MLS for real estate opportunities on my website at this link