Regardless of what a lender quotes on mortgage rates, the actual rate a borrower pays is based on a number of variables. Lenders determine whether to loan money and at what rate based on the risk involved with the transaction.
Factors that increase the risk that the loan will be repaid will proportionately increase the interest rate charged to the borrower. If the risk becomes too high, the loan will not be approved.
- Loan amounts – conventional mortgages above conforming limits as set by Fannie Mae and Freddie Mac are considered jumbo loans and generally have a higher interest rate.
- FICO score – the lowest interest rate is reserved for the highest score; the lower the score, the higher the rate the borrower will pay.
- Occupancy – borrowers occupying a home as their principal residence are considered a better loan risk than second homes and investment properties.
- Loan purpose – purchase transactions generally have the lowest interest rate with refinancing for better rates and terms being priced slightly higher. An even higher rate might be charged for refinancing and taking cash out of the property.
- Debt-to-Income Ratio – a borrower’s monthly liabilities divided by their gross monthly income develops a ratio that helps lenders to assess the borrower’s ability to repay the mortgage.
- Property Type – some types of property are considered higher risk than others which could adversely affect the rate.
- Loan-to-value – the lower the percentage of the loan to the appraised value of the property will generally lower the interest rate.
Any combination of these factors could limit a borrower’s ability to secure a mortgage at the rate initially quoted. Pre-approval by a trusted mortgage professional can be the best way to know what rate you can expect to pay. Please call for a recommendation of a trusted mortgage professional.
Buyer’s mortgage pre-approval is good for everyone in the transaction. It saves time, money and removes the uncertainty of knowing whether the buyer will be qualified after negotiating a contract. The direct benefits include:
- Looking at “Right” homes – price, size, amenities, location
- Find the best loan – rate, term, type
- Uncover credit issues early – time to cure possible problems
- Negotiating power – price, terms, & timing
- Close quicker – verifications have been made
There is a significant difference in having a trusted mortgage professional take a loan application and run all the necessary verifications compared to going through calculators on a lender’s website. Beside the peace of mind, the cost of being pre-approved is a bargain and generally, limited to the cost of the credit report.
Even if a person has been pre-approved, a second opinion from a different lender may be a good option. It can verify there is a good deal or you’ll discover that you can improve it. Either way, it works to your advantage. Contact me if you’d like a recommendation of a trusted mortgage officer.
Country Charm and Great style is what you will love about this 4 bed / 2 bath home with 1.08 acres located minutes from Baton Rouge and Hammond. This home features a newly renovated kitchen with slab granite, new appliances, new cabinets, paint, windows, and flooring, as well as Living room and master bed /bath and other baths/bedrooms all renovated. Outside there is a detached double carport and a 24 x 25 garage/storage, and a fenced in dog yard. Top rated schools, near shopping, doctors, and convenient to 1-12. You will fall in love with this spacious and stylish home, so make sure to check it out before its gone.
One of the “big” three credit bureaus recently announced that a massive hack has exposed the personal information of up to 143 million people. To add perspective to that statement, that is about two-thirds of American credit card holders or close to half the population of the United States. Part of protecting your credit is being vigilant and making it difficult for thieves to steal your identity.
If you suspect you are a victim of identity theft, an initial step is to place a fraud alert on your account. Contact one credit reporting company (Equifax, Experian or TransUnion), tell them you are an identity theft victim and ask the company to put a fraud alert on your credit file. Confirm that the company will contact the other two companies.
The initial fraud alert will make it harder for an identity thief to open accounts in your name. The alert lasts for 90-days and it can be renewed.
A more severe precaution called a credit freeze restricts access to your credit report. A credit freeze makes it more difficult for thieves to use your identity to apply for loans or credit cards in your name.
By contacting each of the three credit reporting agencies separately, you can request a temporary freeze. This would prevent them from providing credit information without both your explicit permission and a PIN that temporarily lifts the freeze.
Unlike the fraud alerts, the agencies may charge you a fee for instituting the freeze in addition to another fee to lift the freeze each time.
A credit freeze will not affect your credit score. If you are in the process of buying a home, contact your loan officer and discuss the decision you are considering. If you will be making a mortgage application in the near future, you can temporarily lift the freeze for the lender you are using.
A trusted mortgage professional is a key team member in purchasing a home. Making an appointment with them is one of the first steps along with determining your real estate professional. Contact us to get a recommendation of a trusted mortgage professional.
To request a credit freeze, you can do it online or by phone:
Equifax – 800-349-9960 | Experian – 888-397-3742 | Trans Union – 888-909-8872
For more information, see Credit Freeze FAQs at the Federal Trade Commission.
It is important to personally monitor your credit reports through annual credit report.com to discover any unusual activity.
The grass tends to look greener on the other side of the fence. Maybe that’s why some people invest in things they don’t understand. It has been said that the grass is just as hard to mow on the other side of the fence so stay with what your most familiar.
Single-family homes used for rental property give a person a chance to invest in something they understand: a home. They also have distinct advantages over other types of investments.
An investor can borrow up to 80% of the value at fixed interest rates 30 years. The financing creates leverage so that the investor can benefit from the increase in value of the home not just the down payment.
It is reasonable to expect that the home will appreciate while providing tax advantages and practical control that are not available with many other investments. Low housing inventory in many markets has caused rents to increase and low new home growth will make it difficult to keep up with demand.
Consider a $150,000 home purchased for cash that would rent for $1,500 per month. With $18,000 income and allowing for property taxes, insurance and maintenance, it is still reasonable to expect $10,000 net income. There would be an 8% return on investment without considering tax savings or future appreciation compared with 5-year CDs paying less than 2.35% and a 10-year Treasury yield at 2.13%.
An added bonus is the amortization that occurs on the loan as the principal is reduced with each payment. It becomes a forced savings account that increases the equity and isn’t taxable until the property is sold.
The reasonable control has a lot of appeal to many investors who find the volatility of the stock market unacceptable and don’t want the risk associated with alternative investments. Please contact me if you’d like to know more about available opportunities.
The purpose of insurance is to shift the risk of loss to a company in exchange for a premium. Most policies have a deductible which reduces the amount of the claim that is paid by having the insured share in the first part of the loss.
In the process of managing insurance premiums, policy holders often consider higher deductibles to lower the premium. Lower deductibles mean less money out of pocket if a loss occurs but also results in higher premiums. Higher deductibles result in lower premiums but require that the insured bear a larger part of the loss.
A small fire in a $300,000 home that resulted in $2,500 of damage might not be covered if the policy holder has a 1% deductible. If the homeowner can afford to handle the cost of repairs in exchange for cheaper premiums, it might be worth it. On the other hand, if that loss would be difficult for the homeowner, a change in the deductible could be considered.
Homes in high-risk flood areas with mortgages from federally regulated or insured lenders require additional flood insurance. However, each homeowner needs to assess the risk of being able to financially sustain a flood loss on their home when flood insurance is not required. The recent events in south Texas and Louisiana are evidence that the unexpected can happen.
It is important to review your deductible and discuss risks with your property insurance agent so that you’re familiar with the amount and make any changes that would be appropriate before a claim is made. The FEMA website has information and frequently asked questions about flood insurance.
That is one of the most common questions I get from clients who are looking to build a new construction home here in Baton Rouge and the surrounding areas. Contact me to find out who the best builder in town will be,for you, and where they are currently building?
Team Sisters had the privilege to visit The Church Academy in Livingston and bring everyone a quick preview of what the new Montessori School will be offering the community and our local pre-school children ! Check out our visit and make sure to check on enrollment because they are filling up fast.
Team Sisters visited our local State Farm agent, Barbara Smith and her team today to highlight their service to our community for the last three decades. Check our our interview and pictures below of her and her five team members.
1. Barbara tell us about how you got started and a little about your business
This office started in 1984 after I had been introduced to the industry by a family member. It was tough going because this was built from the ground up. At the time there were no State Farm offices in the area, so I started from scratch making calls and introducing myself. I grew up in Franklinton and new and loved everything about small towns and the people that lived there. The town of Livingston was growing and it was the perfect location to launch my new career.
2. What would your customers say that they love most about your office?
Our business is relationship driven and we love to get to know the customer and their families. We care about their needs and they know that they can trust in our product and honesty. One of the things I love are the hugs we get from our clients when they come in to the office. It is truly a family atmosphere were they can feel taken care of.
3. What is something that the general public may not know about your business?
Barbara told us about the best kept SECRET around. If you were not aware we offer loans.. Auto, Boats, RV’s, and Motorcycle loans. It is a very easy process and we have strong competitive rates. In addition there is FREE pay off protection added to every loan. It is similar to Gap insurance but does not cost the borrower a dime.
4. Can you tell us about any new plans for the future of the business?
Something new for clients is in the works at State Farm and we are hoping to offer it here at our location, in Livingston, in the future. Be on the lookout for the announcment down the road.
5. Are there any other features that you can share with us?
For those that are needing Life, Disability, or Supplemental Insurance we have polices to cover all family members . In addition, we also have Checking, Savings, Health Saving Accounts, IRA’s and CD accounts available for our clients.
6. What are some area activities that State Farm has participated in over the last year?
After the terrible flood of August 2016 State Farm took food to local schools in Livingston and Denham Springs. We also showed up at the Honey Baked Ham store in Baton Rouge and paid for peoples orders for a couple of hours. It was not announced just a random act of giving back. We also participate annually in the Cancer Relay for Life in Denham Springs.
Barbara and her team are located at 29839 S Magnolia in Livingston, La. and can be reached at 225.626.7496 or fax to 225.626.7206. The web address is http://www.barbarasmith.com and on facebook at barbarasmithstatefarm.
Team Sisters with Remax First had a great time visiting with Barbara and her team today. If you or your business would like our team to stop by for an interview visit, just give us a call. We would love to meet with you and hear all about what you are offering our home town folks. Your Realtors for Life! Janice 225.933.7062 Carol 225.445.4911