Reverse Mortgage Basics

Don’t spend any more sleepless nights worrying about money. A safe, secure Reverse Mortgage may provide the peace of mind you need.What is a Reverse Mortgage?
A Reverse Mortgage is a safe secure and easy way for seniors to turn their home’s equity into the cash they need to meet any financial need.
Unlike traditional home equity loans, this product does not require repayment of any kind until the property is sold or the borrower permanently leaves their primary residence. The homeowner is responsible for taxes and home insurance, but there is no monthly mortgage payment obligation.

Who Qualifies?
Qualification is simple. Property owners must be at least 62 years old and occupy the property as their primary residence.

How Are the Loan Proceeds Paid?
A Reverse Mortgage borrower can select from the following choices.
• Lump Sum
• A monthly payment for life
• Payments for a specific period
• A Line of Credit
• A combination of these choices

How “Safe” is a Reverse Mortgage?
Reverse Mortgages are a very safe income option for senior homeowners.
Lenders are strictly regulated by the Federal Government, and must comply with the rigorous standards of industry associations.

Borrower Responsibilities
• Attend a Reverse Mortgage counseling session
• Maintain the property
• Continue to pay taxes and home insurance

Common Misconceptions
There are several misconceptions surrounding the Reverse Mortgage program.
“The lender can take my home”
Nothing can be further from the truth. A Reverse Mortgage borrower retains exclusive title to their home.
“I can be thrown out of my home”
This is untrue. A Reverse Mortgage borrower can stay in their home as long as they wish.
“What happens when I owe more than my home is worth?”
A reverse mortgage borrower is protected by federal mortgage insurance from owing more than the property is worth. This insurance will make up the difference to the lender when the property is sold.

How Can the Funds Be Used?
Reverse Mortgage borrowers may use the loan proceeds for whatever they wish/
• Payoff their current mortgage
• Payoff home equity loans
• Payoff credit cards
• Make home repairs or remodel
• Pay delinquent taxes
• Stop Foreclosure
• Downsize to a new home
• Travel
• Buy a new car

How Much Can I Borrow?
How much a borrower can benefit from a Reverse Mortgage depends upon the borrower’s age, interest rates and the current Value of their home. This is strictly regulated by the federal government to protect the borrower.

Eligible Property Types
• Single Family Owner-Occupied houses
• Condominiums
• Multi-Family Owner-Occupied Property
• Planned Unit Developments

The Process: Simple, Clear Cut
1. The first step is to dicuss your goals and needs with an experienced mortgage loan officer you can trust. You are encouraged to involve family members or professional advisors during the process.
2. When you and your loan officer decide that a Reverse Mortgage is right for you, the next step is an interview with a Federal Government approved Counseling Agency.
3. After the counseling is complete, the loan officer wil arrange for a property appraisal.
4. A brief application will be completed and submitted to the lender for approval.
5. Your loan will be processed and scheduled to close.
6. Sit back and enjoy the peace of mind a Reverse Mortgage will provide.

Testimonial
At first I was not sure about a Reverse Mortgage. Rick Cignoli and his team took the time to explain the program. Rick helped me identify how a Reverse Mortgage would help and how a Reverse Mortgage would help me live comfortably and financially secure in my own home. Robert R.

Reach out to Rick Cignoli @ 860.945.9284 to find out if a Reverse Mortgage is the right mortgage option for your family.

5 Homebuying Questions You Shouldn’t Feel Embarrassed to Ask!

Whether you’re a First-Time Homebuyer or it’s been many years since you last went through the mortgage process, there are bound to be questions that come up along the way. You should never feel embarrassed to ask your loan officer any question, no matter how simple you may think it is. However, if you want to start with some mortgage basics, here are the answers to Five Homebuying Questions You Shouldn’t Feel Embarrassed to Ask!

1. Am I considered a First-Time Homebuyer?
This may seem like an obvious question, but the answer may surprise you. In the mortgage industry, you are considered a first-time homebuyer if you have never purchased a home, if you have not owned or co-owned a home in the last three years, or if you’ve fulfilled the necessary waiting period after a foreclosure or short sale.
2. What is the difference between a home appraisal and an inspection?
A Home Appraisal provides information on the value of a home, decided by several factors including, but not limited to, the location of the home, proximity to schools and facilities, size of the lot, size and condition of the home itself, and recent sale prices of comparable properties. A certified appraiser formulates this value for the lender, and it is an essential part of the mortgage process.
A Home Inspection provides information to the buyer about the home’s current condition and will note any existing or potential future issues. An inspector will notify a buyer about any areas that are in need of repair. This can help the buyer to negotiate a better purchase offer or at the very least, be aware of the conditions in the home they wish to purchase.
3. What is an interest rate?
Like a credit card or auto loan, a mortgage will have an interest rate. Interest is simply defined as the cost to borrow money from your lender. The interest rate is expressed as a percentage of your total loan balance and is paid on a monthly basis, along with your principal payment, until your loan is paid off. Your interest rate is determined by several factors, including the current economy, your credit score, the loan amount, your down payment, and more.
4. What is DTI?
The debt-to-income (DTI) ratio is a personal finance measure that compares an individual’s monthly debt payment to his or her monthly gross income. Your mortgage loan officer will calculate your DTI, and let you know what amount you are qualified to borrow.
5. How long will this process take?
Everyone’s loan scenario is unique and with some many pieces to the puzzle, it is difficult to give an exact timeline.
If you are interested in closing in a timely manner, I encourage you to reach out to Rick Cignoli today to discuss the right mortgage option for your family and to take advantage of my FREE Jump Start Mortgage Pre-Approval Service.

Before Buying Your First Home…Read This!

Are you one of the many Millenial Americans dreaming of Buying Your First Home, but don’t quite feel ready? People delay homeownership for many reasons; some are unsure where to settle down, some have poor credit and fear they won’t get approved. As a Mortgage Loan Officer, I understand that every person has a different path to homeownership. If you foresee a home purchase in the next few years, now is the best time to start preparing, and I’m here to help!
Just as with any project, your preparation will set the stage for your success. Think of your First Home Buying experience as your largest personal project yet!

Step One: Identify Your Goal
*Phew*, that one was easy! You’ve already completed step one, your goal is to purchase a home.

Step Two: Research
Have you made a choice about where you’d like to live? Researching towns is an important part of the process. You will want to evaluate average home prices for the neighborhood, consider potential property taxes, crime rates, and school ratings, and, more personally, determine the proximity to amenities that are important to you.

Step Three: Set a Timeline
Just like registering for a race inspires a runner to kick start their training, establishing a home buying timeline can help a prospective homebuyer kick start their preparation! Most importantly, be sure to set a realistic and achievable goal. If your aim is to purchase a home within two years, think about what you will need to do over the next 24 months to make that a reality. Are you allowing enough time to improve your credit score? Is there enough time and money each month to save for an ideal down payment?

Step Four: Take Action
With a prospective closing date in mind, do your best to stay on track toward your goal:
•   If you haven’t yet, you should check your current credit score. It is wise to figure this out as soon as possible. Once you know, you will be able to see where you need to do work to improve it. Whether it is paying down credit cards, or enlisting the help of a credit repair service, your credit score is crucial to the mortgage application process. It is best to start preparing now!
•   It is wise to start saving what you can, even though there are loan products that offer little or no down payment options. Remember that there will be closing costs, moving expenses, as well as repairs and furnishings to include in your budget. For a goal of collecting $20,000 over the next two years, you would need to save $833 each month. If you can’t find room in your budget to set that aside every month, consider extending your timeline a bit longer. If someone in your life will be gifting you funds to assist in the home purchase, try to discuss what that amount will be, so you can adjust your own savings plan accordingly.
(If you plan to use gifted funds, you will need to have a gift letter documenting it; as your Mortgage Loan Officer I will be happy to assist you with preparing one.)

Step Five: Talk to your Mortgage Loan Officer
Following these preparatory steps, you will be in a good place when you are ready to start the official home buying process. When the time is right, reach out to Me to talk about your mortgage options and to take advantage of my FREE Jumpstart Mortgage Pre-Approval service.

Why Every Homebuyer Should Get Pre-Approved

What is the benefit of having a Mortgage Pre-Approval when looking for a new home?

There is a difference between a Mortgage Pre-Qualification and Mortgage Pre-Approval.
A Pre-Qualification is based on the information you verbally give to qualify for a mortgage. It’s an informal snapshot of your creditworthiness just to get an idea of how much you can afford to spend on a home.
A Pre-Approval is a formal commitment by your lender that they will lend you a specified amount of money when you find the right home. To become Pre-Approved you will be asked to submit documentation of your creditworthiness. An underwriter will review and verify these documents to confirm in writing how much you can afford to borrow.
If you are looking to buy a house, a Mortgage Pre-Approval is the smartest way to get you into your dream home.

Knowledge is Key:  A Mortgage Pre-Approval gives you a good idea of how much house you can afford. This amount is based on a formula that compares your income to your total outstanding debts plus the proposed new monthly housing expense ( mortgage payment, taxes insurance and PMI) This will keep you focused on the big picture and help to prevent being disappointed if you fall in love with a house that is too expensive.

Improve Your Negotiating Position:  When a seller is comparing two offers and one of the buyers has Mortgage Pre-Approval, there is a high confidence level that that deal will go through and close sooner. This may help you to win in a competitive bidding situation.

Confidence in Your Offer: Know that the key information in obtaining a mortgage has been reviewed by an underwriter will give you, and the seller, confidence that your offer is bona fide.

Keep Your Spending on Track:  Having detailed information on your interest rate, closing costs, term and down payment will help you stay within in your monthly budget.

Time is Valuable:  Knowing what you can and cannot afford will save time and frustration in the house hunting process. This will also help your find the perfect house in your price range.

Move in Quicker: With Mortgage Pre-Approval, once you have found the right house, all you have to do is get it appraised for final approval. The faster you close, the quicker you can move into your dream home.

Reach out to Me at 860.945.9284 to discuss the right mortgage option for your family and to take advantage of my FREE Jump Start Mortgage Pre-Approval service and be ready to make an offer on your dream home

Top Ten Home Buying Playlist

Here’s a post I saw on FreddieMac’s Facebook page that I thought might be valuable to  followers here on my blog

Like making the perfect music playlist for your road trip that thrills all passengers, buying a home requires that you build a “Top Ten Homebuying Playlist” of sorts – one that makes your journey less stressful and more successful.

As you build your Homebuying Playlist, it’s important that you do your homework and focus on the key components of the buying journey, from getting Pre-Approved for your mortgage to the costs involved.

Keep in mind what you are making the playlist for, what your goals are, and how each element is vital for the overall experience. Playlists have an order.

Some must-have components for a successful Top Ten Homebuying Playlist:
1.  Down Payment – That portion of the purchase price of a home that you pay up front, usually between 3-20%. It’s your equity in the property
2.  Credit Score – Your credit score is a single number, ranging from 350 to 850, that represents and summarizes information from your credit report, indicating your likeliness to repay your debt. Generally, your credit score plays a significant role in getting approved for a loan and the interest rate you are charged — the higher your score the better.
3.  Pre-Approval Letter – It’s highly recommended that you work with your lender to get pre-approved before you begin house hunting. A Pre-Approval letter will tell you how much home you can afford and can help you move faster and with greater confidence.
4.  Private Mortgage Insurance (PMI)– PMI is a monthly premium required by your lender if your down payment is less than 20%, protecting the lender if you are unable to pay your mortgage.  Get the low down on PM
5.  Closing Costs – These are fees charged by the people representing your purchase, including your lender, real estate agent, and other third parties involved in the transaction. Closing costs are typically between 2 and 5% of your purchase price.
6.  Points – Sometimes called discount points, these are up-front payments typically used to reduce your mortgage interest rate on the loan to obtain a lower monthly payment. A point is 1% of your loan amount, or $1,000 on a $100,000 loan.
7.  Appraisal – Once you make an offer on your home, your lender will order an appraisal to get a professional opinion on the value of the home. This is usually performed by a qualified appraisal professional who estimates the value of a property by taking current market values of similar homes and the quality of the home into account.
8.  Annual Percentage Rate (APR) – The annual rate it costs you to borrow over the term of the loan, including the interest rate, points, fees and certain other charges you are required to pay.  The APR is the bottom-line number you can use to shop and compare rates among lenders.
9.  Fixed-Rate Mortgages (FRM) – A fixed-rate mortgage has an interest rate that does not change during the entire term of your loan.  This is the most common type of mortgage, giving you certainty and stability over the life of the loan.
10.  Adjustable-Rate Mortgage (ARM) – A type of mortgage with an interest rate that adjusts after an initial period of time — typically 3, 5, or 7 years — and resets periodically. ARMs usually give you lower monthly payments at the onset, but over time your payments will change with interest rates.

A good playlist can take you far, even saving you significant time and money on your journey. Take your time to plan it out well and you’ll enjoy smooth sailing (and maybe dancing too!).

Reach out to Me to discuss the right mortgage option for your family and to take advantage of my FREE Jump Start Mortgage Pre-Approval service.

Tuesday Tips – Your Monthly Mortgage Payment

When looking at a potential home purchase, don’t forget to factor property taxes into your budget. Be sure to consider homeowner’s insurance and, if necessary, your monthly PMI premium too. All will be included in your monthly mortgage payment obligation.

Purchase or Refinance. Call Me @ 860.945.9284 to discuss the right mortgage option for your family and to take advantage of my FREE “Jump Start” Mortgage Pre-Approval service.

Consider These FAQ Before Purchasing a New Home

How do you know if owning a home is right for you? Buying a home is a big step. Here are some FAQs to consider before purchasing a home.
How would a buyer know if they are ready to buy a house?
A home is a lifestyle & commitment change, which may include many factors when deciding to purchase a home. Growing a family, relocating, an extended family living together, or low interest rates are all examples that can be the deciding factor when a new buyer is ready to purchase a home. Buying a home is a good investment in your future.
What are some ways to ensure a buyer’s finances are in order before they buy a house?
The first discussion that the agent will have with the buyer is if the buyer is Pre-Approved for a mortgage. They should always be Pre-Approved by a mortgage loan officer at a local lender whom they trust. Some of the factors that are taken into consideration to be Pre-Approved are to always maintain a good credit score, income and asset verification and employment status.
It is imperative that the buyer is educated on what they should or shouldn’t do while the mortgage is in the process. Also, the buyer should never over extend themselves with a mortgage payment. A little hand holding goes a long way!
If a buyer has found a house that fits their needs, what can they do to get more information about the neighborhood?
Before a buyer signs on the dotted line they should always educate themselves on the neighborhood. They should visit during the day, night, and weekends, check out local online forums, talk with neighbors, review crime stats, and the amenities that the town offers. Location, location, location is the most important factor when purchasing a home!
How can buyers better prepare themselves for the home buying process?
The home buying process should not be stressful or problematic. It should be a great and happy experience, but unfortunately not every buyer will agree. It is a team effort… the agent, the mortgage officer and the buyer.
The agent and the loan officer should never pass any stress onto the buyer. The agent’s responsibility is to find the buyers a home. The agent should be knowledgeable in explaining the following steps to the buyer: contract, home inspection, mortgage commitment, and closing.
The loan officer’s job is to put all the pieces of the puzzle together. He is responsible for educating and guiding the buyer through the complicated mortgage process, He must understand the details of the transaction and the buyer’s needs. He assembles all relevant documents to support the mortgage application and submits them to his underwriter for approval.
The buyer’s job is to keep the agent and loan officer informed and comply immediately with any questions or concerns they may have. When the agent and the loan officer prepares the buyer, their buying experience should be pleasant and happy. The only thing that the buyer should be worried about is packing.
What are some important things that buyers should consider when buying a home?
It is the agent’s responsibility to keep an open dialogue with their buyers and explain to them what will sell and what may not sell in the future. Location is the number one factor when buying a home, try not to purchase a home that has less than 3 bedrooms, don’t purchase near or under a highway. These are some examples buyers should think about when purchasing a home. Don’t be afraid to ask your agent and loan officer the hard questions

Then reach out to Me at 860.945.9284 to discuss the right mortgage option for your family and to take advantage of my FREE Jump Start Mortgage Pre-Approval service and be ready to make an offer on your dream home.

Tuesday Home Buyer Tips

Mortgage Pre-Qualification ≠ Mortgage Pre-Approval

Mortgage Pre-Qualification is an estimate based on the verbal information you supply your loan officer of how much a lender will be willing to lend you. It is a simple process that provides an informal snapshot of your creditworthiness just to get an idea of how much you can afford to spend on a new home.
Pre-qualification is not binding, and there is no guarantee that you will, in fact, get a loan for that amount

Mortgage Pre-Approval is a formal commitment that can only be issued by an underwriter. It requires formal application and a thorough examination of your financial situation by the underwriter and confirms in writing how big a house you can afford to buy and how much money you can borrow to buy it.
By going through the formal process of obtaining Mortgage Pre-Approval, before you start house hunting, you’ll show sellers that you are qualified and serious about buying their home.

Reach out to Me to discuss the right mortgage option for your family and to take advantage of my FREE Jump Start Mortgage Pre-Approval service.

https://mortgagemarketdigest.wordpress.com/2018/06/18/mortgage-pre-qualification-vs-pre-approval-they-are-not-the-same/

https://mortgagemarketdigest.wordpress.com/2013/03/12/whats-the-difference-between-mortgage-pre-qualification-and-mortgage-pre-approval/

 

 

 

 

Co-Borrower vs Co-Signer: What’s the Difference?

When applying for a mortgage, it is important to understand the difference between a Co-Borrower and a Co-Signer.Many borrowers choose to buy their home with another person. Whether it is a spouse, parent, sibling or some other person you trust, it is important to know what to look for in a “purchasing partner,” including the Difference between a Co-Borrower and a Co-Signer.  

If you’ve saved for a down payment but need a higher credit score to complete the deal, this is a perfect example of a team effort that could secure a home loan for you together when you might not have been able to do it on your own.

CO-BORROWER   A co-borrower will be a co-owner of the property with their name on the title of the home after closing. Their level of involvement also means that the co-borrower’s assets, credit history, employment history, and debts are assessed because they are applying for the home loan right along with you.
Typically, all the qualifying information for both applicants is thrown into one pot. Income is combined income is used to determine the ability to pay; everyone’s combined debt payments are used to determine the single Debt:Income ratio; and the best credit score is used to qualify for the appropriate product and terms.
Both borrowers do not have to live in the subject property. For example, a parent may agree to apply for the mortgage with their child. The parent would continue to live in their primary residence and the child would live in the new home. Both parties would be obligated for repayment of the loan and both would be on the title. There are certain loan programs that do allow for a “Non-Occupant Co-Borrower.”

CO-SIGNER   A co-signer applies for the loan with you (remember they’ll have their credit pulled to assess their ability to qualify for the loan), but their name will not be on the title of the home. They are connected to the loan and are financially responsible, along with you, for paying back the mortgage, but do not have ownership rights to the property.
This scenario would be quite rare in the mortgage world. Most lenders today require all borrowers to have a vested interest in the collateral securing the mortgage. A co-signer is usually required when the primary borrower does not have the credit history to make a satisfactory determination of their intent to repay the debt; perhaps their first credit card or first car loan. 

WHAT’S THE DIFFERENCE    The main distinction between the two roles mainly pertains to the ownership of the property. A Co-Borrower has the advantage of co-owning the property with their name on the title of the home. If, for some reason, you are unable to make payments, the co-borrower can assume ownership of the property. A Co-Signer is not on the title and would not have the same rights.
The most important factor to remember is to choose someone you trust and who is financially responsible. A co-borrower or co-signer can assist you with qualifying for a better interest rate because of debt-to-income ratios or various other factors, but you both carry the responsibility for making sure payments are made on time. If unforeseen circumstances mean your co-borrower or co-signer can’t make their agreed-upon part of the monthly payment, you are still responsible, and the same goes for them.
If your purchasing partner has a higher credit score and you’ve saved for a down payment, this is a perfect example of a team effort that will secure a home loan for you together when you might not have been able to do it on your own.

Make sure you take some time to think through who might be a solid, trustworthy co-borrower or co-signer for you. When you are ready, reach out to Me at 860.945.9284 to determine if it is the right fit and to discuss the right mortgage option for your family and to take advantage of my FREE  Jump Start Mortgage Pre-Approval service and be ready to make an offer on your dream home

Mortgage Glossary : Your Guide to Understanding Basic Mortgage Jargon

The  Mortgage Process can be confusing. Here’s a Mortgage Glossary to help you understand some basic mortgage jargon

PRE-APPROVAL LETTER:  A Pre-Approval Letter is a commitment from your lender that will tell you how much of a home you can afford and the maximum amount of money you are qualified to borrow.
To become Pre-Approved you will need to provide all the documentation of your creditworthiness. An Underwriter will review and verify all your paperwork to determine how much the lender thinks you can afford to borrow,
Having a Pre-Approval Letter in hand before shopping for homes can help you move faster. And with greater confidence in a competitive market.

CREDIT SCORE:   A number ranging from 350 – 800 that is based on an analysis of your credit files. Your credit score plays a significant role when applying for a mortgage. The score helps lenders determine the likelihood that you’ll repay future debt payments. The higher your score, the lower the risk of default, the more mortgage program options available to you, including a lower interest rate and lower payments.

MORTGAGE RATE:   The interest rate you pay to borrow the money to buy your new home. It’s the cost of the money you pay to borrow the money over a time period. The lower the credit score, the lower the rate, the lower the mortgage payments.

APR:   The Annual Percentage Rate is broader measure of your total cost for borrowing the money to buy your new home. The APR includes the not only the total interest rate cost, it also includes points, lender processing fees, and certain other credit charges a borrower is required to pay in order to get the loan Since costs are added to the total interest rate cost, the APR is usually higher than the interest rate.

APPRAISAL:   After you make an offer on a home, your lender will order an appraisal of the property to get a professional, unbiased opinion on the value of the house. This is a necessary step in getting your mortgage secured as it validates the worth of house both to you and your lender. The appraised amount is a key factor in determining your mortgage’s Loan-To-Value and confirming to you that you are paying a fair price for the property.

CLOSING COSTS:   The costs to complete the real estate transaction. These costs are in addition to the purchase price of the home and are paid at the closing of the transaction. They include points, appraisal cost, taxes legal fees, homeowners insurance, financing fees, and items that must be prepaid or escrowed. Closing costs are generally 2 to 5% of your home purchase price.

DISCOUNT POINTS:   A point equals 1% of your loan amount (1 point on a $200,000 loan = $2,000). A point is essentially prepaid interest. You pay an upfront interest payment to lock in a lower interest rate for the term of the loan.

DOWN PAYMENT:   The down payment is your equity in the property. It is that portion of the cost of your new home that you pay upfront to secure the purchase of the property. The larger the down payment the greater your share of ownership in the house and the lower the perceived risk by the lender. The lower the risk, the lower the interest rate on your mortgage. The reverse is true too. The smaller the down payment, the greater the risk of default and the higher the interest rate. Down payments are typically 3 to 20% of the purchase price of the home.

ESCROW (After Home Purchase):   In Connecticut, borrowers can consider escrow to be a savings account set up by the lender to pay for future taxes and the annual home owners insurance premium.
After the home is purchased, the buyer uses an escrow account to pay property taxes and home insurance charges incurred as a homeowner. The mortgage loan servicer makes these payments for you, and has direct access to the escrow account. Mortgage lenders prefer escrow accounts especially for property tax payments, as they don’t want the property, backed by their mortgage loan, to fall behind in taxes and risk a tax lien on the property. The same thinking applies to homeowner’s insurance, where the lender can’t afford the homeowner to miss payments, and thus risk losing insurance coverage on the property.
For homeowners dealing with an escrow account, a good rule of thumb is to expect to pay two months’ worth of taxes and insurance into the escrow account at closing. Typically, once per year your mortgage lender will review your escrow account to make sure you have sufficient funds in your escrow account to cover property tax and home insurance payments.

PRIVATE MORTGAGE INSURANCE (PMI):   Private mortgage insurance, also called PMI, is a type of mortgage insurance you are required to pay for if you are financing more than 80% of the home’s appraised value. Like other kinds of mortgage insurance, PMI protects the lender—not you—if you stop making payments on your loan. PMI is the term commonly used for conventional mortgage. With FHA loans, it is known as the annual Mortgage Insurance Premium (MIP). There is no PMI on VA Loans.

Confused? Let Me help put the pieces of your puzzle together. Call Me @ 860.945.9284 to discuss the right mortgage option for your family and to take advantage of my FREE Mortgage “Jump Start” Pre-Approval service.