How To Get Approved for a Home Loan as a First-Time Buyer

Home Loan

Owning a home for the first time is an exciting opportunity, but it is one you need to approach wisely. Because this is a significant financial decision, you’ll want to learn how to get approved for a home loan that’s affordable for you and your situation.

One survey shows that the median home price for first time homebuyers in the United States is $182,500. These buyers had a median down payment of 6 percent and were 32 years old, on average. With so much at stake, you want to be sure you’re buying the right home with the best loan available to you.

If you’re ready to start the home loan process, TwinCity Lending is available to help you. Contact us now for a free home loan quote.

Home Loan

Are You Financially Ready to Buy a Home?

At the heart of the process of getting approved for a home loan is understanding your overall financial health. Your lending specialist can help you with this process. But it’s best to have a clear picture of your finances already before you begin house hunting.

  • How much money can you commit to each month for a mortgage payment?
  • Are you prepared for increased costs for utilities and maintenance? 
  • Have you factored in mortgage and homeowners insurance?

It’s always wise to know your credit score, too. Work to improve your score by using debt wisely and keeping the amount low. All of this helps you to show lenders you’re a good credit risk. 

What Type of Loan Programs Can Help You Qualify?

There are ways for first-time buyers to get approved for a home loan. Several mortgage programs can help support those efforts. Take a look at some options that may fit your goals.

FHA Loans

One of the most commonly used home loans for first-time homebuyers is the FHA loan. Approved lenders, such as TwinCity Lending, can help you qualify for a home loan through this federally-backed program. There are a number of benefits:

  • Lower down payment requirements – You’ll typically need just 3.5 percent of the purchase price in a down payment to secure a loan.
  • Lower closing costs – These fees are less than in conventional loans, reducing how much cash you need to close.
  • Lower credit score requirements – FHA loans can result in approval for some people even with a score of just 580.

VA Loans

Home Loan

VA loans are much like FHA loans in the benefits they offer. The difference is the U.S. Department of Veterans Affairs backs these loans for current or former members of the U.S. Armed Forces. TwinCity Lending can also help you secure these loans. VA loans typically offer:

  • No down payment requirement for most borrowers
  • Low credit score requirements
  • Lower closing costs

If you believe you would qualify for these loans, be sure to speak to your lending specialist about the options. Many borrowers will find this is an excellent way to secure a mortgage as a first-time buyer.

Tips to Help You Secure a Home Loan as a First-Time Buyer

When you meet with a mortgage broker, he or she can provide you with step-by-step information about how to get approved for a home loan. Use these tips to make the process smoother by being prepared:

#1: Seek Pre-Approval Before Looking for a Home

Bring your proof of identity, income, and expenses with you to your loan consultation. This is an opportunity to gain pre-approval, telling you how much you are likely to qualify for a home loan. If you have any concerns about qualifying, be sure to speak to your mortgage specialist about this.

This step is essential in helping you determine a budget for your house hunt. Your broker will be able to give you a good picture of the full financial commitment. Having pre-approval also gives you much better odds of a seller accepting your offer. When a seller sees that a potential buyer already has lending pre-approval, they are much more likely to agree to your offer. This piece is especially critical in hot markets.

#2: Work with a Real Estate Agent to Find the Ideal Home

While your loan is in initial processing, it’s time to find a real estate agent to be on your team. With any home loan, the property will need to pass a full inspection. Your real estate agent will be able to help you find a house that is perfect for you.

If you hope to buy a home that’s a fixer-upper, be sure to talk to your loan specialist about this opportunity. There are options available, such as a 203(k) home loan, that may help with this approval process.

#3: Answer the Underwriter’s Questions

Home Loan

During this time, you will also need to provide proof of income or verify information about the debt you already carry. You may need to provide tax returns and references to your lender, too. The sooner you respond and submit the requested information, the better. If you drag your feet in providing information or signing documents, the home loan process will take a long time.

#4: Bid on Your Home and Close Your Loan

Once you find your desired home and enter into contract, you can then move forward with the loan closing process. Closing on your home means you sign the contract for your mortgage and finalize the purchase. Be prepared that you may need to provide additional information or verify data right up until closing time.

The good news is that your lending specialist will work with you to make the entire process of getting a loan as easy as possible. Your mortgage broker is an expert in all the details. 

TwinCity Lending Is Your Premier Minneapolis Mortgage Broker

Work with our team at TwinCity Lending to learn how to get approved for your home loan. We typically can close on your home loan within two weeks of an accepted offer, as long as all documentation arrives promptly. Reach out today to get started on your first home purchase. 

To Lock or Not to Lock? Why Timing the Real Estate Market Doesn’t Work

Real Estate Market

Real Estate Market

Many people believe that there is a magic formula for timing the market when selling or buying a home. Of course, both buyers and sellers want the best possible price for their side of the transaction. And buyers definitely want the most competitive interest rate they can get.

Some homebuyers can get sucked into obsessively watching the market and interest rates. They may feel that with enough information, timing the market perfectly should be possible.

In actuality, attempting to time your leap into home buying is a lot like trying to catch a falling knife. That is, we don’t advise it. It’s nearly impossible to do and can cause more problems than it’s worth.

TwinCity Lending is your expert partner in home financing. See us when you’re ready to buy a home or want to review your mortgage. We have years of experience in the home loan market and can walk you through the purchasing or refinancing process. Your confidence is our priority throughout your home-buying experience.

Stop Chasing Unicorns

Stressing out about the timing of your home sale or purchase is common. But don’t do it. Trying to time the rise or fall of interest rates to lock in the “perfect” percentage is unrealistic. You will create a lot of work and anxiety for yourself with minimal results to show for it. 

It is much better to spend your time finding a highly-qualified broker to help you navigate the process. When planning your home purchase or sale, keep in mind that several factors  influence property prices:

  • Season – Spring and summer are busier times of the year than fall and winter in the real estate world. Most buyers and sellers want to make their moves in good weather and in between school years.
  • Home supply – When there are more properties for sale than there are buyers, home prices can drop significantly. This situation creates a buyer’s market. When the reverse is true, there are too many buyers for the inventory. Home prices go up as demand increases, creating a seller’s market.
  • The Fed – The cost of borrowing money can influence buyers’ ability to obtain home loan financing. The Federal Reserve sets the prime interest rate, and lenders reflect this in their rates. Many people get caught up in watching what the Fed is planning to do.
  • Exceptional circumstances – Situations like short sales or foreclosures can have drastic impacts on the asking price for a property. 
  • Location – The adage of location, location, location has not changed. Hot markets demand higher prices. They always have, and they always will. 

Strategy Without Stress

It’s possible to create and execute a home buying or selling strategy for an excellent experience. It’s wise to have a tentative plan but also recognize that flexibility makes everything work more smoothly.

Do your homework and make sure to work with a broker you trust to get the job done right. You’ll be better prepared to pull the trigger on locking in your mortgage interest rate when a great property crosses your path.

As you launch into your property search, consider the following tips:

Research the Area

Begin now to narrow down your target neighborhoods for home shopping. Check out the schools, parks, and retail areas nearby. Research criteria that are important to you, such as walkability and job availability. Read through the comps that your real estate agent pulls for you.

Consider the home prices in comparison to your budget to help you determine the size of home you can afford. 

Speaking of Budgets, Be Sure to Create One

Visit the TwinCity Lending tools page to find several calculators that will help you determine the monthly payment you can afford. These tools use your current income, down payment, and debt ratio to give you a rough idea of the mortgage you might be able to secure.

You also can enter a range of interest rates into our calculators to see how much house you can afford as the rate changes. Or you can look at how different repayment terms will impact a loan. 

Once you have your budget set, you can start focusing on finding a great home.

Real Estate Market

Consider Buying “Off-Season”

Just like your favorite clothes, homes sometimes go “on sale” seasonally. In cold climates like Minnesota’s, it’s typically harder to sell a home in the dead of winter. Fewer people want to make a move when the snow is blowing, and the roads are slick with ice.

You might be able to take advantage of a seasonal downturn in the market when most homebuyers would rather be sitting by the fire, drinking hot chocolate. Sellers could be motivated to negotiate a lower asking price, saving you money. 

Don’t spend too much time trying to pick the perfect moment to lock in an interest rate. You could miss out on some good seasonal deals on the market.

Keep an Eye on Loan Rates, But Don’t Panic

Being watchful of loan rates is a good idea. However, don’t let a slight rise in interest rate push you into a purchase that you aren’t ready to make. Even if you end up purchasing at a higher interest rate, you’ll likely be able to refinance later on if rates drop.

Assemble Your Finance Team for Quick Action

It pays to have all your financial ducks in a row. When you know that buying a home is in your future, it’s time to do the following:

  • Don’t obsess over timing the market. 
  • Start or continue saving for your down payment.
  • Meet with a mortgage specialist like the experts at TwinCity Lending to go over all of the available loan options.
  • Make sure the mortgage team you choose is trustworthy with a strong track record of client satisfaction.
  • Ask any questions you have as you begin to filter possible properties and consider making offers. 

Our team is here to assist you from loan pre-approval through closing. At TwinCity Lending, our priority is your home-buying confidence. We’ll make sure you have full knowledge of all the lending options available to you. 

We can make your home purchase a stress-free, dream-building accomplishment. Call us today and let’s get you into the home you love.

10 Top Steps to Getting Your Mortgage Approved

Family

Bob Hope once said, “A bank is a place that will lend you money if you can prove that you don’t need it.” At TwinCity Lending, we understand that you are going to need “it” to get the home of your dreams. That money usually comes in the form of a mortgage, and we are here to get you that stamp of approval in no time at all.

Contact us for all your mortgage and refinance needs. In the meantime, follow the 10 steps below to boost your approval odds when it’s time to apply for a home loan.

Business Credit Score

1. Check your credit history report and credit score.

Checking your credit score is first on the list because if there is a problem, it may not be a quick fix. Pull a current credit history report and correct any mistakes you find.

Many banks and credit cards are including a free credit score report with every statement. Some of their websites and apps have tools that will help you try out different scenarios to see how you can improve your score. However, check out the remaining steps before you get too carried away.

2.  Don’t open or close any new credit accounts.

The first thing you might be tempted to do is close old credit accounts to clean things up a bit. Closing credit card accounts is a bad move since it may raise your debt-to-credit ratio. If your next thought is, “Well then, maybe I should open a few more accounts to lower that ratio” – stop.

Opening new credit accounts can adversely affect your credit score. Hard inquiries on your credit report counteract improvements you’re trying to make. Opening accounts will do more damage to your approval odds in the short term. So hold off on that new car.

3.  Stay at your job.

Lenders usually require proof of income for two years and may not consider your income stable if you haven’t been in one position long enough.

Even if you stay within a company, don’t switch to a job that pays by commission, or lowers your salary. It doesn’t look good in the short term for a loan application. Lenders want to know that you are going to have the income moving forward to pay back the loan. 

4.  Don’t move money around.

Lenders will require at least two months of bank statements to verify all funds being used for the loan.

If you are moving money around for convenience, such as from savings to checking to pay bills, this can also be seen as a red flag. It may appear that you are depleting your down payment funds, and it creates a messy paper trail to document.

Save Money

5.  Save for your down payment. 

When you know how much cash you will be able to produce at closing, then your mortgage broker can find the right loan for you. There are programs to help with down payments for qualified borrowers. But the more you can put down, the more options you will have in obtaining a mortgage. Having a sizable down payment will go a long way to getting that stamp of approval.

6. Check your budget.

Just because a lender approves you for a certain amount, doesn’t mean that is what you genuinely can afford. When you consider a monthly mortgage payment, you need to take into account:

  • The amount of the loan
  • Private mortgage insurance (PMI), which is required until you have at least 20% equity
  • Homeowner’s insurance
  • Property taxes

When calculating what you can afford, don’t overlook the last two items which often roll into escrow accounts attached to the mortgage. Use one of the many calculators on our site to help you determine what’s feasible for you.

7. Know the different types of loans.

The home loan market has a wide variety of options. Your TwinCity expert can help you navigate any of the following:

  • Conventional
    • Fannie Mae
    • 80/10/10 Piggy Back
    • HomeReadyTM
    • Freddie Mac Home Possible
    • Conventional 97
  • FHA
  • VA
  • USDA

Don’t worry.You don’t need to become a mortgage expert. It is our job at TwinCity Lending to help you with your questions and find the best solution for you.

8. Look for down payment assistance.

If the numbers still aren’t working completely in your favor, you’re not alone. According to a US News article, “61.7 percent of millennials who want to buy a home said they can’t afford a down payment.” Millennial or not, if you need help, there are options available that don’t include asking Mom and Dad.

Many of the loan types listed above can be a starting point for down payment assistance loans.

State housing finance agencies and local housing authorities can be sources for down payment grants. These grants are not just for low-income borrowers. They are for qualified wage earners that don’t have enough saved yet.

9. Get pre-approved. 

In today’s housing market, you almost can’t make an offer on a home without completing this step. And pre-approval is a bit different from pre-qualification.

A letter of pre-qualification from a lender indicates that you have provided some basic information about your finances and have discussed possible loan options. It shows that the bank believes you can qualify for a loan up to a particular value, based on that information. 

Getting pre-approved, however, requires a more in-depth review of your income, assets, debts, and credit history. And all of that information has supporting documentation from you. 

This type of review carries more weight with sellers and indicates you are more serious. All the information is re-verified at closing.

Pro Tip: Continue with Steps 1-5 above up until the day of closing!

10.  Have your paperwork ready.

paperwork

Gather all the documentation you need before applying. Your mortgage broker can give you a precise list, but in general you need the following:

  • Pay stubs going back 30 days
  • W-2s going back two years
  • 1099 forms if you are self-employed
  • Proof of any bonus income
  • Documentation of any other income including dividends, stock earnings, spousal or child support, social security, or disability awards
  • Pension statements
  • Documentation of assets such as stocks, bonds, and life insurance
  • Bank statements going back 60 days
  • Tax returns going back two years
  • Proof of homeowner’s insurance

Having all this paperwork on hand will make you approval odds that much better.

Can you see that stamp of approval yet? 

Follow these steps, and you will be on your way to a home loan approval. What are you waiting for? Come see us at TwinCity Lending, and start looking for that dream home right now.

Teach Your Teens How to Get a Home Loan

How

Home Loan

Having a family discussion about how to get a home loan may not rank at the top of the to-do list as a parent. But it’s a component of one of the most important talks you’ll have with your teen. 

Financial management is critical for every teenager to learn. Instilling good knowledge and skills now may help them avoid problems later. Start by sticking to the basics, and then expand their knowledge to include other topics that may apply to them.

If you’re looking for help on how to get a home loan, our team at TwinCity Lending is just a call away. Give us a call today

Teach Your Kids About Credit First

An excellent place to start is with a solid understanding of credit. When your son or daughter reaches college and begins to use credit, you want them to make empowering decisions. Unfortunately, from 2004 through 2009, college students saw median credit card debt rise by 74 percent.

You can’t rely on schools to teach students this information, either. Only 17 states require high schools to include a course on personal finance.

Start the conversation with a definition of what credit is, why we should use it, and why we shouldn’t overuse it. Here are some points to talk about:

  • Credit is beneficial because using it wisely shows lenders that a person is a reasonable credit risk. That means they may qualify for loans in the future.
  • Talk about the burden that credit creates when we overuse it. Discuss the cost of using credit, including interest, and how that makes a simple purchase expensive.
  • Also talk about how to choose credit based on interest rates and fees, rather than the available limit.

Talk About How to Get a Home Loan and the Opportunities It Provides

Most consumers need to use a home loan to purchase a house. A great place to start this conversation is with an explanation of the down payment. Many lenders require a down payment, but a young person may have no idea what that is or how they could come up with so much cash. 

This is a great time to discuss savings vehicles that can help your children achieve this goal. You also can explain other aspects of home loans, such as insurance and interest.

What Is a Mortgage Anyway?

Be sure you also explain exactly what a mortgage is. Teach your kids that it is a lending tool for buying a home, also known as a home loan. The value of the house works as the collateral for the loan. That means if the borrower stops making payments, they can lose possession of the property. The lender owns the home until the borrower repays the loan

For older students, it can also be valuable to talk about different types of mortgages. This topic should include FHA loans and VA loans for veterans. Discuss the value of buying a home and why real estate tends to be a solid financial decision for many people. This conversation is also a great way to bring up the importance of buying versus renting a home.

Interest Rates on Home Loans

Home Loan

In your initial discussion about credit, you should be explaining how interest rates work. And it is critical to teach young people what they need to do to qualify for low interest rates later in life. They need to understand how to maintain a good credit score in the years leading up to buying a home. This conversation should include the fact that the actual amount you pay for a home is significantly higher than the sale price, due to interest amounts.

How Does Home Equity Work?

Home equity is an important topic to cover with your teens and young adults. It helps to open their eyes to how they can use credit in their favor. Home equity, which is the amount of the home’s value that is not under a mortgage, is a powerful asset. For example, some people pay off their student loans or other debts using the equity in their home. 

What makes equity so important is that it tends to build up over time. This growth builds funds that a homeowner can access for other needs. With lower interest rates and qualifications, equity can be helpful for the lifetime of owning the home. 

What Makes a Lender Offer a Home Loan to a Consumer?

Drill into your children the value and importance of good credit. Are you sensing a theme here? You can pick up an ad or browse through a real estate website with your child to see the value of various homes. That’s a big number for most teens. Why should a bank loan that enormous amount of money to a consumer to buy a home?

This conversation should include the idea of risk for the financial institution. Lenders offer loans to consumers who are a good risk. That is, they are willing to loan you the money if they feel confident you can pay it back. What makes a borrower a good risk?

  • Steady employment
  • A good credit score
  • A low debt-to-income ratio
  • Good references 
  • A larger down payment

How to Pay Off Student Loans – Making the Connection

As college tuition and fees escalate, your teen may be feeling anxious about being able to afford higher education. If your child is set up for success in owning a home, they will have options for paying off student loans with their home equity.

A student loan conversation gives you the chance to talk to your teen about how to pay off any loan. They should learn that it is vital to pay more than the monthly payment and always pay on time. Learning how expensive it can be to pay off debt can help your teen see the value in keeping it in check throughout their lifetime.

You’re Not in This Process on Your Own – Let Us Help You

Whether you’re teaching your child how to get a home loan, pay down debt, or use credit, one thing is for sure. It is all critical information. And for your own lending needs, put your trust in TwinCity Lending. Contact our dedicated team to learn more about how we support you and your growing children on your financial journey.

Call TwinCity Lending now for a free mortgage review at 651-303-4236 or learn more about our services

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.

Question Mark

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%.

Laptop

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.

Key

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

Certificate

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.

Pigibank

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.

Money

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

Buy Home

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.

Pause

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.

Buy House

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.

Use Your Home Equity to Pay Off Your High Interest Credit Cards

Card

Card

If you are motivated to pay off your high-interest credit cards or other debt, you’re not alone. Fortunately, there is a way to generate additional income to pay off your debt with something you already have–your home equity.

Because home equity loans are secured loans (credit cards are unsecured), they almost always offer much lower interest rates. This lower interest rate will lower your monthly minimum debt payments significantly.

Find out more about utilizing your home equity to pay off debt with TwinCity Lending here.

In this article, we will discuss three ways to use your home equity to free yourself from debt.

Option #1: Refinance Your Mortgage Loan

Refinancing a mortgage loan is an excellent way to drastically reduce your monthly debt payment while slashing the often high-interest rates credit cards charge.

In 2018, the average interest rate of new credit card offers was 16.73%. Contrast that with the average 30-year fixed mortgage refinance rate, which was 4.52%.

There are several other factors to consider, including the additional length of the mortgage loan. However, you stand to cut your monthly debt payments by a sizeable amount instantly with this option.

You likely will not know the precise terms of your refinancing loan until you start applying. You can, however, estimate the benefit of refinancing based on:

  • Approximate closing costs.
  • Your home’s value.
  • How your credit-worthiness will affect a change in the loan’s terms.

Many easily accessible mortgage refinance calculators will help you figure out when the savings will surpass the costs. This break-even point is one of the most important things to consider.

How it compares to how many years you plan on staying in your home is very important.

To calculate your break-even point, divide your total costs my month-over-month savings. The result equals the number of months required before the savings surpass your refinancing costs.

Option #2: Home Equity Loan

House Key

Ever since taking out your first credit card, you probably had dreams of owning your own home. Now that you do own your house, you can use its equity to pay off some of your high-interest cards, and other debt.

home equity loan has an advantageous interest rate for the duration of the loan. It is a fixed interest rate, and you will have the opportunity to free up extra cash to pay off debt every month.


Other advantages include:

  • Fewer upfront fees compared to refinancing the mortgage loan
  • No paying extra to pay the loan off (no early pre-payment penalty)
  • Tax deductible

Remember, because it is a secured loan, a home equity loan will almost always offer a much lower interest rate.

Interest on a mortgage is tax deductible. In general, you can claim interest paid on your home equity loan in the same manner you do on your original mortgage. Compare this to other loans, which include no tax advantages.

Thus, the more your mortgage interest is, the more you may deduct from your taxes. Therefore, this type of loan can be very advantageous when used to pay off high-interest loans. A car loan would be one example of this.

So that they are competitive with other kinds of loans, home equity loans present many advantages. For example, a home equity loan typically carries a fixed interest rate and a set monthly payment. This monthly payment never changes.

You can often choose the length of the loan term, which will lower or raise your monthly payment accordingly.

In some cases, lenders offer adjustable-rate home equity loans. With these, interest rates may go up or down, fluctuating your monthly payment. The fluctuation is dependent on the national prime interest rate.

So if you are interested in paying off your debt, why choose an adjustable-rate home equity loan? These loans often start at a lower interest rate, thus freeing up more cash flow to address your debt at a lower interest rate.

However, keep in mind the interest rate can increase at any time, thus increasing your monthly payment.

Option #3: Home Equity Line Of Credit (HELOC)

Hello

Taking out a line of credit with your home equity is the most flexible option. You will be approved for the entire amount of equity, but you will only be charged interest on what you use.

Additionally, whatever you money you pack back will again become available for you to borrow from.

Just like a home equity loan, interest rates on a home equity line of credit are usually low.

This will free up liquid assets for you each month to pay off any outstanding debt you may have. Better yet, you can take out a line of credit of any amount up to your total home equity value.

The flexibility of a home equity line of credit (HELOC) makes it an appealing choice for paying off debt. Some more benefits:

  • They are 100% liquid, as good as cash in the bank.
  • They are often eligible as forms of down payment.
  • Relatively inexpensive compared to a home equity loan.

How Home Equity Loans Affect Your Credit Score

Another advantage of home equity loans is the positive impact it will have on your credit score. Your credit card accounts carrying balances will now have fully-available credit limits.

Because of this, your debt-to-income ratio is significantly lowered. Because this ratio represents a third of your credit, your credit score will rise quickly with this reduction in credit card debt.

The Importance Of Selecting The Right Mortgage Lender

Business Meeting

Taking out a home equity loan to pay off your debt can be a great strategy. However, not all mortgage lenders have your best interests at heart. It is important to discuss the decision with your family and pick a lender who is right for you.

Refinancing your mortgage offers many benefits, including reducing your interest rate and monthly payment. It also can allow you to extract cash from the equity you’ve generated on your home.

TwinCity Lending is Minnesota’s premier mortgage company and takes pride in offering the best home equity loan rates. Learn more and get a free mortgage review today.

Vital Home Maintenance: Protecting Your Investment

Tools

Tools

Your home is potentially the most important investment you’ll ever have. Keeping your investment in tip-top shape helps it to maintain or even increase its value over time.

If you’re like most homeowners, you might imagine that home maintenance equals thousands of dollars of expenses going into a new roof, water heater, or massive kitchen and bath renovations.

We’re here to let you know that maintaining your home is easier than you think. We’ve got several items for your maintenance checklist that you can mark off on your own. Read on for all the details.

From the best interest rates to professional and trustworthy customer service, TwinCity Lending is your go-to lender from pre-approval to closing. Call us today and speak with one of our lending specialists about your new home loan or refinance.

Start by Checking Your Home at the Top

Roof

We suggest you take a good look at your roof first. Every season, be sure to stay on top of curled shingles, missing shingles, old or worn-looking sections of your roof.

Clear away sticks or branches–they encourage pests to hop a ride onto your structure.

Some minor roof repairs are easy to manage on your own; others may involve calling in a professional. If you don’t know what’s up there, though, a small problem can become a catastrophe surprisingly fast.

Next, check the attic. Your insulation should be fluffy and functional, with a proper R-value (the rating that measures the efficiency of your insulation.)

As a rule of thumb, you should not be able to see the joists beneath the padding. This rating typically equates to about 10-14 inches of material.

If you’re running a little low, you can add new loose insulation (the kind you blow in) over the old material, as long as there is no plastic barrier of any kind between the two different elements.

If you determine you need more insulation, it may be best to call a professional to do the job safely.

Also, having a good look around the attic will give you a chance to check for pests like bats, squirrels, or bug damage to your wood beams.

If you notice the signs of critters, call a pest removal service to help you determine where the access points are, and to remove any unwanted guests.

Spotlight on the Exterior

House

Now, carefully inspect the outside of your home. Are there siding cracks or missing panels? Are your gutters in good shape? What about the seals around your door and window frames?

If you’re noticing a few trouble spots, you might consider getting an Energy Audit from your local power company. There are also many independent vendors that perform this service for their would-be customers.

You can schedule an energy audit in most regions for low to no cost, depending on the provider. Try a Google search for “energy audit near me,” and you’ll have a straightforward list of resources at your fingertips.

Basements are Always Interesting

Fungus

Basements have the potential to be maintenance “hot spots,” depending on the age of your home, your region, and your weather patterns.

In the basement, keep an eye out for the following:

  • Small patches of moisture, especially around the seams in the foundation
  • Bugs of any kind, like spiders in large numbers, silverfish, roly-poly worms, or centipedes.
  • Drainage problems
  • Sump pump function–test and inspect often
  • Water heater corrosion on the bottom panel
  • Washing machine hose connections and drainage
  • Water softener age and function
  • Water pressure gauges (extensively high water pressure puts extra wear and tear on your appliances and pipes, not to mention wasting water and adding to your bill. Check your water pressure periodically with water faucet pressure gauge to be sure you’re staying in the “safe” zone.)
  • Water heater temperature. A setting of 120 degrees is the most energy efficient.
  • Age and efficiency of furnace and whole-home air conditioning systems
  • Dirty air filters in the HVAC. Change them every couple of months.
  • Adequate pipe insulation, especially in crawl-spaces, to prevent pipes freezing and cracking.

Some basement issues, like high water pressure, air filter replacement, and rock salt for your water softener, are easily monitored or repaired on your own.

When you notice small issues becoming bigger, get a repair estimate right away from two or three service providers. It’s vital to have someone you can trust for preventative solutions as well as emergency repairs on speed dial.

Strategize Larger Repairs and Updates

Remodeling Home

When you know you have a substantial repair project or a cosmetic update you want to add to your home, plan for it in advance.

Roofs, kitchens, and bathrooms are typically among the higher-cost projects in the general homeowner maintenance plan. However, appliances and exterior work can also tend to “break the bank,” especially when emergencies happen.

When your spot-fixes are no longer enough to solve the issue, begin planning and saving for replacement or renovation. Tackling one large project per year is a place to start your strategy.

Are your bathroom grout, household flooring choice, and seam caulking getting on your last nerve already? Begin now to craft your repair or renovation budget with estimates and materials planning.

You’ll want a clear picture of how your strategic plan can help you save on future maintenance. It pays to spend a little more upfront on higher quality appliances and materials if it saves you time, money, and trouble later on.

Save up the money you’ll need over several months, and then pull the trigger on your project without plunging into debt, or worse yet, getting caught in a nasty surprise when the shower breaks or the floor joists are rotten with moisture.

When you stay on top of your small home maintenance repairs, they are less likely to become huge, expensive, disasters.

At TwinCity Lending, we’re here to help you keep your investment in prime condition for as long as you own your home or rental property. Call us today for more information on our new home loanshome refinance, and home equity products. Let’s build your wealth and keep it valuable together.

Need a Safe Place to Park? Try a 10-Year Bond

Bond

Money

Bear market. Bull market. Trade tariffs, a tumultuous real estate market, buyer panic, buyer confidence. How does a novice investor make smart choices for growing money in the economic times we are all currently facing?

When you’ve made a little money (well done you, you hard worker) and you want to see it grow, making sound investment decisions today for a financially secure future can be confusing at best and confounding at worst.

Today, we’re going to talk about investing in bonds that can help you modestly grow your money while you gain more confidence in your market knowledge. As you learn more about all your choices for investment, you can begin to make sense of all the ways your nest egg can increase as well as the level of risk or commitment present in each investment choice you make.

At Twin Cities Lending, we’re here to help you with all your home financing needs. Call our team for a free mortgage review today.

What are government bonds?

A bond is a way for our government to fund itself from investment from both domestic and foreign investors. Bonds are a low-risk investment, which means that you are very likely to get back what you paid in, and sometimes extra in the form of interest.

There are several different types of government bonds that are selling today. They are:

  • Treasury Bonds: A long-term investment bond, with maturity, dates at 30 years from the date of purchase, this means that you get the full amount of your investment back, plus some interest 30 years after you purchase the bond. Payments on your bond from the government are issues twice per year until the bond maturity date.
  • Treasury Bills (T-bills): These are short-term investment bonds, with a maturity date of up to a year from the date of purchase. The securities get sold at discounts to their face value (similar to seasonal sales at a retail store) T-bills mature between four and fifty-two weeks and pay you the face value of the bond.
  • Treasury Notes (T-notes): T-notes are mid-term securities that mature in two, three, five, seven, or 10 years. The government makes “payments” on these T-notes twice per year, which includes a bit of interest over the life of the note. Interestingly, T-note rates of return are used in the financial world as a benchmark for other markers like mortgage interest rates as well.

In Short Term Investments, Flexibility is Essential

Gears

When looking for a “parking spot” for your money while you make more significant decisions, it’s paramount to have as much flexibility as you can leverage. Ten-year T-notes are a flexible investment option that allows you a lot of choice about when and how to move your money around, should you choose to do so.

Once you purchase a T-note, you could hold onto it for the entire term of the bond, in this example, that’s ten years. If you decide you need the cash or want to change your investing strategy, you can sell the T-notes early on the secondary market before the maturity date.

The Tax Man Cometh, but Not as Much for T-notes

Whenever you decide to invest, you must be familiar with the tax implications of every financial move you make to place yourself in the best position for the growth of your capital.

Ten year Treasury Notes are a great purchase in part because local or state governments do not tax the interest earned from T-notes. That means the money you invest in T-notes can grow without the shadow of taxation down the road as the treasury yield curve on this type of bond builds.

(Check in with your accountant for information on how T-note interest income may be taxed federally, though.)

T-Notes are Easy to Buy

Bond

Many hard-working Americans think they have to have thousands or even millions of dollars to be an active investor and build wealth, but this is not true with T-bills. You can purchase them online at the U.S. Treasury website, or directly through a broker or a bank with a minimum investment of $100. Start with buying a bunch of bonds or just a few in $100 increments.

You could begin to build your money a little at a time by setting aside $100 each month to purchase T-notes if you so desired, which incidentally, could be a great way to build up a sizeable down-payment on your first, or next, home purchase.

Putting money aside into a short-term, low-risk investment like T-notes can help you feel you are progressing toward greater wealth. The money you put away is still very accessible, but also just enough removed from you that you are not tempted to spend your pile of cash before you get to your goal.

Every investment has Risk; be a Smart Shopper

While government bonds held to maturity are guaranteed to collect interest and a full return of initial investment, bond purchasers could experience a loss when selling a T-note before it’s maturity date.

Though bond investment has historically been considered a very safe investment option, interest rates are still subject to market fluctuations. Selling a bond early at a lower yield than when you purchased it means that your capital could reduce a bit.

Talk to your broker or a fiduciary financial advisor (“fiduciary” means the person you work with must advise you based on your best interests, not theirs) to make the best decision for your current financial goals.

If you plan to make a larger purchase relatively quickly (like a home) with the money you’ve placed in T-notes, a shorter term bond may make more sense for you than a longer-term note.

Finally, when it comes to saving money and growing your financial power, you are the best judge of what is right. Take time to evaluate your investment options, consult experts you trust, and make the decisions that fit for your future savings goals as well as your immediate larger purchase desires.

At TwinCity Lending, we are here to help you secure the mortgage product that is a fit for your best future financial outcome. We are proud to offer ethical and friendly service to all our local customers and to provide timely education on financial matters, so you feel confident in the “money” driver’s seat.  Come see us today and let us help you land the home of your dreams!