10 Questions to Ask Your Lending Company

Mortgage Approved

Most people think of a lot of critical questions before choosing a lending company. They will want to know how to apply for a home loan, which type of home loan they can use, and what amount they will receive.

If you’re looking for a lender, you probably have a lot of questions as well. And that’s a good thing. Coming to a lender with a list of hard questions is the perfect way to prepare for the process.

TwinCity Lending can help you answer the essential questions below. Reach out with all of your questions. We’ll give you honest answers based on your unique home buying requirements.

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1. What are discount points?

Discount points are kind of like prepaid interest when arranging for a mortgage. This up-front payment is beneficial to you because it can reduce the rate on your mortgage, resulting in a lower monthly payment.

While they lower your interest rate, discount points also give you tax benefits and save on costs when buying a new home.

It’s imperative to ask your lender if the points are right for you. They are not appropriate for every situation. Also, be sure to find out how long it will take you to pay any other additional upfront costs.

2. What guidelines should someone follow to qualify for a loan?

Applying for a home loan is a process that requires an understanding of each part of the application process. Different lending companies have unique requirements in regards to each mortgage.

At a minimum, most lenders consider the following things:

Credit score: Every lender will require your credit score when you apply for a home loan. A higher credit score will result in a better chance of getting your loan approved quickly.

Qualifying income: Most companies will require you to have a consistent and sufficient income to be eligible for a loan.

Down payment: Some loan products require a 20% down payment. Some might not need a down payment at all. FHP loans include a 3.5% down payment, while VA loans often don’t require any down payment.

3. How long is the application process?

The mortgage application process begins when you present the required documents to the lending company. They will then determine your loan eligibility and let you know what else they need to move forward with a lending package.

They will consider many pieces of your finances in determining which loans you can qualify to use. Because of the research involved, the loan application process takes time. The more prepared you are with documents, the quicker it can move forward. Ask the lending company about their typical turn-around time before making your decision to use them.

At TwinCity Lending, we make sure you know exactly which documents you need, such as W2s and pay stubs. When you have those ready to go, we can close in two weeks.

4. What are the total closing costs?

This question is critical so that you have no surprises when it is time to sign all the papers. These are costs that are part of the loan application process and include things like title searches and recording fees. The charges can be between 2% to 5% of the total loan amount.

Ask your lender right away what the total closing costs will be. They can help you determine whether it would be better for you to pay the costs up front, or finance them as part of your loan.

5. What’s the down payment requirement?

Your home loan down payment is a percentage of the property’s purchase price. It gives you some immediate equity in the home and affects the amount of the loan you receive.

Most down payments fall between 5% and 20%. The amount you put down on the property affects the interest rate charged on your home loan. A higher down payment leads to a lower interest rate and vice versa.

Ask your lender if you’ll have to obtain private mortgage insurance (PMI). Generally, you need to carry PMI if your down payment is less than 20%.

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6. What could delay the closing?

Lenders need enormous amounts of information to proceed to closing day. Anything that slows down their ability to process the data could delay the funding of the loan.

To keep the process moving quickly, be sure to do the following three things:

1. Sign all documents from the lender and real estate agent as soon as possible.
2. Be flexible in your schedule to ensure inspections and appraisals happen promptly.
3. Gather and forward requested documents to the lender right away.

7. What’s the interest rate?

Home mortgage rates are based on the rate set by the Federal Reserve. But your down payment and credit score also will impact the final rate a lender can offer you.

8. What types of loans are available?

Talk with your lender to determine which loan package is right for you.

VA Loans: Are you or have you been a member of the military? If so, you may be eligible for a VA home loan with no down payment.

Fixed vs. Adjustable-Rate Loans: Fixed-rate mortgages have an interest rate that does not change during the life of the loan. Interest rates on adjustable-rate loans will fluctuate.

Conventional Loans: These home loans, classified as either conforming or non-conforming, are not subject to tax by the federal government.

There may be even more loan packages that would work for your situation. Check in with your lender to make sure you choose the best option.

9. How much house can I buy?

During the pre-approval part of the process, your lending company will give you an estimate of how much you can borrow based on your credit score, available down payment, and the loan-to-value ratio.

10. Do you do a hard credit check?

A hard credit check is when a creditor or lending company thoroughly dissects your profile and credit history. Unlike a soft pull of your credit, this can impact your credit score if it happens too frequently in a short time.

A hard credit check answers all kinds of interesting questions about your credit history, so it’s a good idea to prepare for a thorough examination. If possible, get your credit report ahead of time so that you can clean up any mistakes or problems on there before applying for your home loan.

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Ask the Experts

Are you ready to get into your dream home? TwinCity Lending is here to help you acquire the perfect mortgage package for your needs. We will walk with you each step of the way.

Contact us today to get started.

Use Your Home to Pay Off School Loans

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Student Loan

Do you have undergraduate or grad school loans looming over you, creating a nerve-wracking task of repayment? Consider using a home equity loan to pay them off. People’s home equity can be a powerful tool. However, to ensure you get it right, it’s essential to understand the process.

TwinCity Lending has home equity loan packages that may make it easier for you to pay off your school loans. Your property can be a powerful ally for you as you work to get out from under the burden of student debt. Here’s what you need to know.

Options for Leveraging Home Equity

If you are a homeowner in need of financing to help you achieve your goals, you may want to leverage the following home equity financial tools:

Home Equity Loans (HELOANS)

These loans require a borrower to use their home equity as security and to repay the loan over a fixed period. This type of loan is similar to a mortgage. To determine your home equity loan limit, lenders check your income and credit history, and the loan-to-value ratio. You receive the money in a lump sum, usually at a fixed interest rate. You make payments each month until you pay the loan in full.

Home Equity Line of Credit (HELOC)

A HELOC is similar to a home equity loan in that it relies on the equity in your home to secure the financing. Unlike home equity loans, HELOCs are more like a credit card. You have a sum of money you can access as needed.

You repay based on the amount you have used from the line of credit. These types of financing generally have variable interest rates. As with any home loan, lenders consider your property value, debt, and income before issuing credit.

Which Option Is Better to Pay Off School Loans?

While both choices rely on the equity built up in your home, there are three key differences to consider.

1. Interest rate: In a home equity loan, the interest rate is fixed. You’re expected to pay the same amount each month until you repay the loan. This type of loan is basically like having a second mortgage on the property. HELOC interest rates are variable and depend on the prime rate set by the Federal Reserve.2. Distribution method: A HELOC allows you to take the amount that you need from the available equity. You do not have to draw the full amount at once. Generally, a HELOC stays open for about ten years, although some lenders set different time frames. Home equity loans, on the other hand, come to you in one lump sum.

3. Best use: HELOCs generally work best for ongoing or recurring needs such as tuition or for home improvement projects where you aren’t sure of the exact cost. A home equity loan tends to be the right choice for big-ticket items and needs that are a fixed cost, such as consolidating debt or paying off student loans.

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How Much Home Equity Can You Borrow?

Apart from your credit score, lenders calculate the amount of home equity loan you can take based on your loan-to-value ratio. This combination also determines the interest rate on the loan.

An LTV ratio is an assessment of risk your lenders check before approving your loan request. If your home’s value is at $500,000 with a mortgage of $200,000, then your home equity is $300,000. This formula gives you an LTV of 40%. That is, 40% of your home’s value is held in a loan with the remaining 60% representing your equity.

The acceptable loan-to-value ratio often depends on the lender but can be up to 90% based on your credit score. TwinCity Lending can help you determine the amount of loan you may be eligible to secure.

Paying off Student Loans Is Simple as 1 – 2 – 3

Follow these steps to use your home equity to be free of your student loans:

1. Secure your home equity product. Reach out to TwinCity Lending today to discuss the best option for your needs. Our expert team will guide you through the application process to make sure everything moves smoothly to help you reach your goals.

2. Request your student loan payoff amount. Check-in with your lender to find out the exact balance due to pay off your student loan. Be sure to keep payments current while waiting for your home equity product to fund.

3. Submit your payment and become student loan-free. Once you have the cash available from your home equity loan or line of credit, send your final payment to the lender. After the payment clears, request a statement or letter showing that there is no balance remaining. Keep this with your records.

Benefits of Using Home Equity to Pay Off School Loans

May have a lower interest rate – Many borrowers find that they can secure a better interest rate with a home equity product than they receive with a student loan. Lower rates mean you can enjoy a lower monthly amount or repay the amount more quickly.

You access large sums of money – Depending on the equity you have in your home, you could do more than pay off student debt. You may receive enough to pay off your undergrad or grad school loans and still have money left over for other needs.

Use the power of your home – Historically, real estate is a solid investment that grows in value. Using the equity in your house for big-ticket items is a great way to utilize your wealth as you continue building more equity.

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TwinCity Lending Can Get You There

Repaying your school loans can feel overwhelming and discouraging. However, if you own a home, you likely have the power to erase your student debt. By securing a home equity loan or line of credit, you can use your home’s value to give you peace of mind and keep you on the path toward building wealth.

If you’re ready to tackle your student loans, we have your back. TwinCity Lending is your go-to mortgage company for all your home lending needs. Contact us today.

Are You Watching the Housing Market Too Intensely? 4 Reasons Why You May Want to Stop

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Homes

More than ten years after the housing market crash of 2008, many still harbor worries about owning real estate again. Some experts say that the housing market has reached its post-bubble peak. It’s understandable that many people are watching housing market trends intensely.

At TwinCity Lending , we know that the decision to buy or sell property can be nerve-wracking. You can rely on us to make this process work for you. We are your expert mortgage team, and we have you covered even in a turbulent market. Give us a call to discuss your lending needs.

Housing Market Basics

Although the actual workings of the real estate market are complex, the core system is quite simple. The housing market is what came about after the time of lords and ladies, during the industrial revolution, as people began buying and selling property. Just as with all commerce, housing relies on someone wanting to sell and someone wanting to buy.

Buyer’s Market

A buyer’s market comes about when there are more properties for sale than there are buyers ready to purchase. This market gives the buyer a lot of choice and time to consider many options. It also puts them in an excellent position to negotiate a lower sale price. In essence, sellers are competing against each other to woo a willing buyer. Homes may go unsold for more extended periods during a buyer’s market.

Seller’s Market

Surprising no one, a seller’s market is the exact opposite. There are more buyers than there are houses available for purchase. In this case, the seller has the upper hand in a transaction. They can ask a higher price and may even benefit from a bidding war among prospective buyers. Days on the market often are minimal in this situation.

Balanced Market

When the housing industry experiences a balanced market, there is about three to six months’ worth of inventory listed. This situation is ideal and often happens in the time between the buyer’s and seller’s markets. A balanced period of sales often is relatively short compared to the other two.

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Is It Time to Give Your Market Watch a Break?

For a lot of people, it can be helpful and exciting to keep close tabs on the housing market news. They enjoy the daily updates on trends, interest rates, and other data. Some watch the market only out of curiosity. But most watch the market to help them determine a good time to buy or sell.

But is it possible to pay attention too closely? Probably. Here are four reasons you may want to take a break for a while.

1. You may be ignoring historical data.

As market watchers focus on every nuance of the rise and fall of property values, they can lose sight of historical trends. Daily looks at the housing market news only provide snapshots of the market.

To make the most informed decisions possible, you also need a long-term view. What has the market done historically over the past five years? The past decade? Even longer? Overall, owning real estate has proven to be a consistent, successful way to build wealth. Getting bogged down in the daily ups and downs can paralyze you from making a decision.

2. You may be relying too much on the fed’s movement.

Interest rates matter. Yes. No one can deny that. But basing all of your property buying and selling decisions on the movement of the Federal Reserve isn’t necessarily the best plan of attack.

Small rises in the interest rate do not add a significant amount to the total repayment amount of the mortgage. The difference is more evident in the monthly payment, and this is what can give some people a reason to pause.

But it still is a good idea to take a broad, long-term view as much as possible. Motivated buyers will be ready to purchase even when they see slight interest rate changes.

So don’t let the fed’s movement dictate all of your real estate decisions. Reach out to the experts at TwinCity Lending to see how rate fluctuations will impact your potential property purchase.

3. You may be looking too closely at national data rather than local trends.

Real estate is a highly localized commodity. Most housing market news focuses on national trends, but this does not give you the information you need to make decisions in your market. How hot or cool the market is in San Francisco doesn’t help you if you need to buy or sell in San Antonio.

And even within one city, there can be drastic differences in the market. Changes in urban growth boundaries, the influx of new industry, and school rankings all can impact the hyper-local real estate trends. If you want to be a market watcher, try to keep it local.

4. You may experience decision paralysis

Let’s face it. You could spend every day of your life poring over real estate and housing market trends. You could learn every nuance of how the fed makes its rate decisions.

You could have notifications alerting you to any change, up or down, in the market. You can watch housing prices around town and around the country and wonder if it’s the right time to make a move or to jump into the world of real estate ownership.

But at some point, focusing solely on the data could paralyze your decision-making abilities. With so much information coming at you, you run the risk of never getting to the point where you feel confident choosing to buy or sell.

If you don’t ever allow yourself to go for it, then what is the use in spending all that effort paying attention to trends? Eventually, it’s ok to jump on in.

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TwinCity Is On Your Side

Whether you are a watcher or are ready to take the leap into buying, the concierge lending team at TwinCity Lending is here to help. We are your go-to experts for home loans, VA loans, refinances, and reverse mortgages. We have the knowledge and compassion to make your lending experience perfect.

Reach out to our team today so you can start your real estate adventure.