You Can Take Control of Some of What Affects Your Home Loan Interest Rate

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Interest rates are at the top of everyone’s minds right now, especially if you are in the market for a home. But your interest rate isn’t set in stone. Several factors play into the interest rate on your loan, and you are in control of a lot of what affects it. Here are some of the things that can affect the interest rate on your home loan. Let us know if we can help you determine what your home loan may look like.

1. Credit scores
Borrowers with higher credit scores generally receive lower interest rates than borrowers with lower credit scores. Lenders use your credit scores to predict how reliable you’ll be in paying your loan. Credit scores are calculated based on the information in your credit report, which shows information about your credit history, including your loans, credit cards, and payment history. If you’re considering buying a home now or later, check your credit score and do what you can to get it as high as possible.

2. Home location
Your home loan’s interest rate may be impacted by the in which you are purchasing. Part of this could be due to the health of the housing market in your state or county. If the housing market is healthy, the lender is less likely to risk default on the loan, so the interest rate may be lower.

3. Down payment
The more money you put down on your home, the lower your interest rate will likely be. You don’t have to put down 20 percent to get a loan, but if you do, you may get a better interest rate.

If you cannot put down 20 percent or more, you will be required to purchase private mortgage insurance (PMI). PMI protects the lender in the event a borrower stops paying the loan. The cost of PMI is added to the overall cost of your monthly mortgage loan payment. You may be offered a slightly lower interest rate with a down payment just under 20 percent, compared with one of 20 percent or higher. Why? You’re paying mortgage insurance, which lowers the risk for your lender.

When determining your down payment and subsequent interest rate, keep in mind the overall picture of what you are borrowing. The larger the down payment, the lower the overall cost to borrow. Getting a lower interest rate can save you money over time. But even if you find you get a slightly lower interest rate with a down payment less than 20 percent, your total cost to borrow will likely be greater since you’ll need to make the additional monthly mortgage insurance payments.

Look at the overall loan and payments, not just the interest rate, when getting a home loan.

4. Loan term
The term of your loan is how long you have to repay it. In general, shorter term loans have lower interest rates and lower overall costs, but higher monthly payments.

5. Interest rate type: fixed or adjustable
There are two general types of interest rates: fixed and adjustable. Fixed interest rates do not change over time. Adjustable rates may have an initial fixed period, after which they go up or down each period based on the market.

Your initial interest rate may be lower with an adjustable-rate loan than with a fixed rate loan, but that rate might increase significantly at a later date.

6. Loan type
There are several broad types (categories) of mortgage loans, such as conventional, FHA, USDA, and VA loans, all of which have different eligibility requirements. Interest rates can be different depending on what loan type you choose. Your lender will discuss different options with you and will help you choose the right loan to keep you and your family financially secure.

7. Discount points
Points, or discount points, lower your interest rate in exchange for an upfront fee. By paying points, you pay more upfront, but you receive a lower interest rate and therefore pay less over time. Points may be a good option if you will keep the loan for a long time. There are also tax benefits for discount points for the purchase of your primary residence. Talk to your accountant or attorney about this.

Getting a home loan is about more than just the cost of the house or the interest rate. There’s a lot to understand, and it is our privilege to help you navigate the home buying process. Please contact us if we can answer any questions.

Tips for Helping to Make Moving Easier for Seniors

Collaboration: Grandfather and grandson assembling furniture

Where others may see “trash,” elderly family members and friends may see “treasures.” As America ages, more and more of us are trying to help family and friends move to smaller homes or into independent living communities. Talking to seniors about downsizing and releasing decades of treasures is not easy.

Here are a few tips to help seniors downsize.
Don’t pack away your patience. “Patience is a virtue.” When helping seniors make a move, you will most likely need a lot of patience. Remember, often they are leaving homes they have lived in for decades, are dealing with physical or mental ailments, and are moving out of necessity rather than desire. Helping anyone through a difficult life change takes patience and compassion.

Avoid tackling the whole house at one time. It may be more efficient for you to go full steam ahead, but elderly family members may be stressed emotionally and physically. Think in terms of months rather than days for helping elderly family members move. Tackle one room at a time to make this easier on you and them!

Ask yes-or-no questions rather than open-ended questions. Open-ended questions are more stressful. Rather than asking, “Which pots or pans do you want?” present a manageable question such as, “I have your best frying pan, a large pot and a small sauce pot. Does this work?” This makes it easier for seniors to make a decision faster.

Use the new space as a guide. Find out how much closet and cabinet space there will be in the new home and fill that space only. How big are the rooms? Mark that information off on a diagram to see exactly what space you have to fill and use. There’s no reason to bring too much stuff.

Encourage giving a gift now. Urge your parent not to wait for the next holiday, birthday, or other milestone to bestow; remind him that there’s no space for storage. Ask, “Why not enjoy the feeling of giving right now?” (And if you’re the recipient — just take it, and encourage your relatives to do the same. You can donate the item later, if you don’t want it, but the immediate need is to empty your parent’s house.)

Target recipients and charities for specialty items. It’s time-consuming to find willing recipients for everything, but it may be worth the effort for items that your parent would be relieved to see in a good home. Examples: Schools may welcome musical instruments, old costumes. Auto repair shops and community maintenance departments may take tools and yard tools.

Call on the professionals. A fast-growing specialty, senior move managers specialize in helping older adults and are skilled at both the emotional and practical dimensions of late-life transitions. These experts can defuse a parent-child emotional clash, while handling everything from sorting and packing through hiring movers and unpacking in the new place.

Encourage seniors to focus on their most used items and let the rest go. What seems useless to you may be the most comforting item a senior has. The newest item isn’t necessarily the most favored item. Learn the story behind something…find out why the old plastic tumblers are preferred over new, sparkling glasses.

Aging is a fact of life. Taking a few steps at a time can help make any move easier.

Help Seniors Stay Safely in Their Homes Longer

Grandmother and granddaughter cooking in the kitchen.

As seniors age, the risks of living at home grow. A few changes to their homes may make it possible for seniors to stay in their own homes longer, helping them to save valuable financial resources and live comfortably in the home they know. Here are 5 tips to get started.

Lighten and Brighten the Home. Ensure areas around entryways, hallways and stairs are well lit, and add brighter or extra lights if needed. You can also install glow-in-the-dark light switches or motion-sensor lighting throughout your home so seniors don’t struggle to find the light switch in the dark.

Make Doors Easy for Seniors with Arthritis to Open. Turning door knobs may be difficult, especially if a senior has arthritis. Lever-style door handle may be easier for them to use than a round one.

Make it Easy for Seniors to Move Around Safely. It’s important to make it easy for your senior loved one to move around the home. Remove tripping hazards like rugs, children’s toys, pet toys, etc. Make sure cords aren’t dragged across the floor. And watch for furniture that may be placed near hallways or doors. Seniors may be at risk of bumping into these.

Provide Safe Places to Sit. A chair or bench at the front door or whatever door they enter regularly is helpful. Seniors can sit down while taking off shoes or putting on shoes or boots. They can also place bags or other packages there when they come in from outside.

A tall counter stool is also a great addition to the kitchen. It can allow seniors to remain independent and cook while sitting down, which is great for seniors who can’t stand for long stretches of time.

Do a Double Check on the Bathroom. A walk-in shower is much easier for seniors so they don’t have to step into a tub. Adding hand rails and grab bars will help them with balance.

You can also purchase a stool that is made for showers or tubs so they can sit in the shower. And special shower heads can be installed with hoses so they don’t have to stand up and reach above them.

If room allows, consider putting stool or small chair in front of the mirror so they can sit when shaving or participating in on other grooming routines.

Make It Easy to Call for Help. Consider using a call-assist service or personal emergency response system that the senior can wear on their neck or wrist and push a button if they need help. If this isn’t an option make it easy for seniors to have their cell phone with them or near them at all times.

Seniors may need a little extra help and a little extra love as they age. But many can stay in their homes safely with a few changes around the house. 

The Tall Tales of Reverse Mortgages: Fact vs. Fiction

How does this thing work?

At Universal Lending, we know there are a lot of misconceptions about reverse mortgages. We remain committed to always putting our customers first. With that in mind, here are some common myths about reverse mortgages and the facts that are the foundation for this valuable financial and retirement tool.

Let’s begin with a reverse mortgage is: A reverse mortgage, also known as a Home Equity Conversion Mortgage (HECM) allows seniors age 62 and older to convert a portion of their home equity into cash. The loan requires no monthly payments and lets them retain ownership of the property. The equity built up can be paid to them. Unlike a traditional home equity loan or a second mortgage, they do not have to repay the loan until they no longer use the home as their principal residence or fail to meet the obligations of the mortgage.

How seniors use the money they receive from a reverse mortgage is up to them. The choices are limitless. So why are so many seniors hesitant to consider them? We believe it’s because seniors and their adult children simply don’t know how truly helpful these tools can be. Here are just a few of the myths surrounding reverse mortgages.

FICTION: The lender takes the title of your home.
FACT: As the borrower, your name remains on the title and you own the home, like any other mortgage. You must pay real estate taxes and homeowner’s insurance, as well as provide basic maintenance on your home. Once you no longer live in the home, the loan balance, including interest and fees, must be repaid.*

FICTION: A reverse mortgage should only be used as a last resort.
FACT: Many homeowners age 62 and older use a reverse mortgage strategically as part of a sound financial plan. For example, a reverse mortgage line of credit can serve as a cash reserve that you can tap into as needed. And unlike a traditional home equity line of credit, the unused reverse mortgage credit line actually grows over time.
Or, monthly advances can help you supplement other retirement income, so you can avoid withdrawing from savings or liquidating invested assets.  In any case, no monthly mortgage payments are required,* which can improve your cash flow and help you live more comfortably.

We are here to work with you and your financial advisor as partners to develop a solution that’s right for you.

FICTION: There are restrictions on how I can use the money from a reverse mortgage.
FACT: Reverse mortgage proceeds can be used in many ways. Among the most common uses are paying off an existing mortgage or other debt, in order to have no monthly mortgage or debt payments; creating a cash reserve; supplementing monthly income; paying for home improvements; or covering medical bills or long-term care Seniors can use the money from a reverse mortgage to:
• Build an emergency fund
• Purchase long-term care insurance
• Buy a safe and reliable car
• Keep savings in a retirement fund for longer-term growth
• Stay in their own home, in their neighborhood, with their friends
• Live debt-free
• Build a cabin on a lake
• Remodel a kitchen or bathroom
• Take a well-deserved vacation
• Earn a college degree
• Have in-home healthcare so you can stay in your home.

FICTION: I could owe more than my home is worth and leave my heirs with debt.
FACT: Reverse mortgages are insured by the Federal Housing Administration. This insurance feature guarantees that you will never owe more than the value of your home when the loan becomes due. No debt will be left to your heirs. And if there is a loan balance is less than the market value of the home, the additional equity is retained by the homeowners/heirs (if the home is sold).

FICTION: Reverse mortgages are for seniors with poor credit or low income.
FACT: Reverse mortgages are based on your home’s equity and your age. Income and credit are not factors.

FICTION: Reverse mortgages are for low-income seniors. 
FACT: Seniors from all different income levels decide a reverse mortgage is right for them. For some seniors it is a way to eliminate their monthly mortgage payment and have more financial freedom. For others it is a way to have a financial cushion. Some seniors are able to live out their retirement more comfortably and not worry about how they will make ends meet. A reverse mortgage is not designed for one particular person; it’s for any seniors looking to make the most out of their retirement.

FICTION: Reverse mortgages are too complicated.
FACT: With most financial products, there are many factors to consider before you can choose what’s best for you. With Universal Lending, you can rely on your loan officer to be a trusted resource for clear information and responsible guidance. We want you to make the best decision for you. In addition, before you can apply for a reverse mortgage, you are required to receive reverse mortgage counseling from a third-party counselor approved by the U.S. Department of Housing and Urban Development (HUD). These counselors are not affiliated with Universal Lending. Their only job is to ensure you understand every aspect of your reverse mortgage.

If we can help you separate fact from fiction regarding reverse mortgages or any mortgage financing options, we would be honored to meet with you.

*The borrower must meet all loan obligations, including living in the property as the principal residence and paying property charges, including property taxes, hazard insurance. The borrower must maintain the home. If the homeowner does not meet these loan obligations then the loan will need to be repaid.

Why Working with a Local Lender Beats Working with a Big Bank

Searching for real estate property, house or new home

Anyone who has gotten a home loan will tell you it’s not always an easy process. But if you ask a borrower who shopped for a home loan at a big bank and a borrower who shopped for a loan at a local lender, you’ll hear distinctly different stories. And the ending is almost always the same:

Working with a local lender is a more positive experience for homebuyers.

We focus on customer service.
Reputation is the cornerstone of a thriving business, and we rely on referrals rather than flashy advertisement. Unlike many big banks, we do not have other sources of revenue, like credit cards, personal loans, auto loans, etc.

Issues that arise can be more easily resolved because we have streamlined our operations. We hire only the best and most professional loan support team, and our operations are centrally located. With our support staff in one place and not spread across time zones, it’s easy to contact someone whenever you have a question or concern, and decision making is quicker and more thoughtful.

We have faster turn times for loans.
Because our systems and teams are centrally located, our borrowers often see faster loan processing, faster underwriting, and ultimately, faster closings.

We do one thing – mortgage loans – so we must do them well.

You have a main point of contact who’s accountable for your experience and your transaction.
At Universal Lending, each loan and each borrower is personal to us. We answer your calls, even outside of normal business hours, and get answers right away. Big banks often don’t take this personally, and most don’t answer their phones after 5 p.m. or on weekends.

We are not beholden to shareholders.
We keep our focus on our customers at all times, because we don’t have to answer to anyone else.

You are trusting your savings and your financial future to the loan officer with whom you work.
Our lenders are subject to strict licensing standards. Loan Officers at many big banks are not required to meet the same high standards. You want to work with someone you can put your faith in to handle your home loan intelligently and ethically.

You are helping to support a community business and jobs in your area.
Dollars spent in your community help to support the community – keeping other businesses and local nonprofits strong.

These are just a few of the reasons local is better. Stop by or give us a call. We are confident that you’ll see for yourself why working with a local lender makes sense, and you’ll be glad you worked with Universal Lending.

 

 

Seniors Can Find Power and Peace of Mind with a Reverse Mortgage

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Retiring, planning for retirement, and actually living out your golden years can be among the most exciting times in your life. They can also be among the most daunting. The choices can feel overwhelming and might make some seniors feel unsure of themselves. Some seniors may even feel like they have lost their power.

A reverse mortgage can help seniors make choices based on possibility not fear.

A reverse mortgage, also known as a Home Equity Conversion Mortgage (HECM), allows seniors age 62 and older to convert a portion of their home equity into cash. The loan requires no monthly payments and lets them retain ownership of the property. The equity built up can be paid to them. Unlike a traditional home equity loan or a second mortgage, they do not have to repay the loan until they no longer use the home as their principal residence or fail to meet the obligations of the mortgage.

Seniors can use the money from a reverse mortgage to:
• Build an emergency fund
• Purchase long-term care insurance
• Buy a safe and reliable car
• Keep savings in a retirement fund for longer-term growth
• Stay in their own home, in their neighborhood, with their friends
• Live debt-free
• Build a cabin on a lake
• Remodel a kitchen or bathroom
• Take a well-deserved vacation
• Earn a college degree
• Support a favorite charity

How seniors use the money they receive from a reverse mortgage is up to them. The choices are limitless.

To learn more about how you or a senior you love can take back their power, contact us today, or click here to have more of your questions answered. Remember, there’s power in knowledge!

Understanding the Nuts and Bolts of Reverse Mortgages

Seniors Dancing At Home
Your home represents many things: safety, independence, and memories to name a few. Now, with a reverse mortgage, it can also be a source of income. A reverse mortgage can meet financial needs and ensure that you can stay in your home as long as you choose.

What is a reverse mortgage?
It is a loan against your home that does not have to repaid as long as live in your home. Learn more here about what a reverse mortgage is and how you can use the funds.

What is so unique about the program?
The borrower is NEVER required to make a monthly payment. It is a loan in “reverse.” Instead of making payments, you can receive them.

Will this loan affect my Social Security or Medicare?
No, absolutely not.

Will I have to pay income tax on the money I receive?
No. The money is considered proceeds of a loan and not taxable.

How much do I qualify for?
It depends on your age(s) and the value of your home as well as the interest rate at the time of closing. The older you are the more money you get.

Will I have to pay an up-front application/appraisal fee?
At Universal Lending you will not have to pay these fees out of pocket; they are included in your loan.

What are my responsibilities?
You and/or your spouse must live in the home, keep the property in good condition and make sure your taxes and insurance are paid on a yearly basis.

Do I have to own my home free and clear?
No, even if you have an existing loan, reverse mortgage proceeds can be used to pay the loan in full and you would never have another house payment.

When is the loan due?
The loan is due when you and your spouse no longer live in the home as your primary residence.

Is this a safe loan?
Yes. It is an FHA-Insured loan administered by the federal government.

Are reverse mortgages expensive?
Because of recent program changes, some reverse mortgages are less expensive than in years past.

Will I still own my home?
Yes. You DO NOT give up title to your property and you can sell and move at any time.

Can my wife and I get a reverse mortgage if I am over 62 but she is not?
Yes, only one borrower has to be 62 or older.

What questions should I ask a potential lender?
Ask if they process and underwrite their loans in state; you want your paperwork done locally. Make sure your lender has years of experience and ask how long they have been providing reverse mortgages. Ask if their loan officer will meet you face to face to explain the paperwork.

How can I be sure it is right for me?
A meeting with a HUD-approved housing agency is required. They will sit down with you (and your family if you like), to explain this program so you can make an informed decision.

Can I purchase a new home with a reverse mortgage?
Yes, the program is called Reverse for Purchase. It’s a great option for customers who want to downsize, move closer to their kids or buy a home with no outside maintenance and have no house payments.

Don’t try to learn all there is to  know about reverse mortgages online. Universal Lending is honored to work with one of the nation’s foremost experts on these loans. Contact us today to learn more.