What Is a Reverse Mortgage and Is It a Good Idea?

There are a lot of opinions on the wisdom of using a reverse mortgage. Some people believe it is the best thing to happen to an older person’s finances. Others stress the pitfalls and dangers of this type of home loan.

The reality is somewhere in the middle. A reverse mortgage can be an excellent option for many homeowners. But it does carry unique rules and risks that people need to pay attention to before signing on the dotted line.

At TwinCity Lending, we take care of seniors with the respect and dignity they deserve. We will not steer you toward a home loan package that isn’t the right fit for you. But if a reverse mortgage is appropriate, we can help.

What Is a Reverse Mortgage?

A reverse mortgage is a home loan that works the opposite way of a traditional forward mortgage. In this type of loan, the home serves as collateral, just as it does in a forward home loan. But most other components of the mortgage work in reverse.

With a reverse mortgage, the homeowner borrows against the property’s equity. The lender makes payments to the homeowner instead of the other way around in this scenario. In essence, the borrower can convert their home equity into a significant amount of cash.

Seniors who qualify and choose to take out a reverse mortgage often use the cash to supplement their retirement income. Depending on the type of loan package, there may be stipulations on how the borrower uses the funds.

What Happens to a Reverse Mortgage If the Homeowner Dies?

Many concerns about reverse mortgages center on what happens when the homeowner passes away, moves, or sells the home. But protections are in place for this situation.

Lenders cannot offer a loan for more than the value of the home. Additionally, if the home’s value drops, making the loan balance larger than the home value, the borrower is not responsible for the difference. The borrower’s estate also will not need to repay that difference.

The loan is due in full when any of these events take place:

The borrower passes away.
The borrower sells the house.
The borrower moves out of the home for more than a year. This situation can happen in cases where the homeowner needs to go into nursing care.

Typically, the heirs or the estate sell the home to repay the loan. In some instances, the estate or heirs may choose to pay back the loan and retain the property.

Three Types of Reverse Mortgages

For those considering taking out a reverse mortgage, it’s essential to understand the options.

Single-Purpose Reverse Mortgage: This option is generally the least expensive loan choice. But it also is the most restrictive one. Single-purpose reverse mortgages are available through particular government and non-profit agencies. The loan paperwork specifies what the funds are for, and that is the only way the homeowner can use the loan money.

Proprietary Reverse Mortgage: This loan option is a rarely-used reverse mortgage. It is only available to borrowers with much higher home values than what a typical reverse mortgage allows. Although you may be able to borrow more money, you are likely to have a higher interest rate, as well.

Home Equity Conversion Mortgage (HECM): The HECM is by far the most common form of a reverse mortgage. This version does not have income or medical requirements. HECM loans have backing from the U.S. Department of Housing and Urban Development. Because of this fact, borrowers must go through a mandatory counseling session before proceeding with the loan. The homeowner pays for the counseling appointment.

Who Qualifies for a Reverse Mortgage?

This type of home loan is not as widely available as a traditional mortgage. There are specific requirements for qualification, and several of them relate to the home, not the borrower.

You must be at least 62 years old and live in the home.
The home must have sufficient equity, as determined by the lender.
The property must be a single-family home. Two-, three-, and four-unit properties also may qualify if the borrower lives in one of the units.
You must have enough income to cover home maintenance and other costs, such as insurance, taxes, and HOA fees.
For HECM options, you will need to undergo the required HUD counseling session.

Is a Reverse Mortgage a Good Idea?

More than a million seniors have secured reverse mortgages since they became available in 1990. This loan option has allowed many homeowners to remain in their houses in spite of fixed retirement incomes. As with any home loan package, there are benefits and downsides to consider.

One of the greatest benefits to a reverse mortgage is the ability to remain in your home while freeing up money for expenses. Homeowners who have significant equity can supplement their income this way, allowing them to live a fuller life in retirement. Since there are no income or medical restrictions for obtaining an HECM, the reverse mortgage can be simple to get.

Many seniors like the idea of having additional income during their golden years. They appreciate controlling their money without having to rely on children or other family members for assistance. And as many people seek ways to age in place, the reverse mortgage is gaining popularity.

Those who qualify can receive their reverse mortgage funds in several ways:

Lump-Sum Payment: This distribution is the only one with a fixed interest rate and typically has a cap of 60% of your equity.
Equal Monthly Payments: These payments can last the life of the loan or for a set amount of time, depending on loan terms.
Line of Credit: Seniors can draw against their equity and are only responsible for repaying the amount they draw.

Let’s Talk

If you or a loved one are considering a reverse mortgage, reach out to the experts at TwinCity Lending. We will thoroughly explain the ups and downs of this type of home loan to be sure you are set up for success. There are many scams out there, and we want to be sure you have protection.

It is our honor to serve the seniors in our community who have already contributed so much. Give us a call today to see if a reverse mortgage is right for you.

November 11, 2019November 30, 2019

What Is a VA Home Loan Certificate of Eligibility?

When it comes to home loans, the VA program is one of the most popular programs on the market. And rightly so, in our opinion here at TwinCity Lending. But many veterans aren’t sure how to start the process of securing a VA mortgage. It may feel overwhelming to get started, but the first step is to obtain your VA home loan certificate of eligibility.

This vital document also called a COE, is where your VA lending process begins. The VA loan eligibility letter tells the lender that you can receive home loan funding through this unique program.

The team at TwinCity Lending is proud to serve our nation’s active and veteran military members. It is an honor to help you secure a home loan so that you can enjoy the many benefits of the American Dream.

What Is a VA Home Loan?

Before getting too far into your eligibility journey, let’s clarify what a VA home loan is and how it works. This program has been vital in the stability of our nation.

The United States Department of Veterans Affairs oversees the VA home loan program. Passed in 1944 as part of the Servicemen’s Readjustment Act, the VA home loan provides backing for mortgages for those who serve in the military.

The Department of Veterans Affairs does not extend the loan for a home purchase. Instead, it guarantees the loan so that a lender has less risk in making it. Many service people leave the military without a credit history. And obviously, someone who is actively serving or recently discharged doesn’t have a traditional job history either.

With traditional home loans, these two factors would be stumbling blocks. Lenders would see this sort of borrower as too big of a risk. The VA-backed loan, however, provides partial repayment of the mortgage if the borrower cannot pay. This minimizes the risk that a lender must take.

In addition to backing the loan, the VA program also offers:

Low or zero-down payment requirements
Lower credit score requirements
More lenient income requirements

Those who qualify can use the VA home loan option to purchase a condo, mobile home, or single-family dwelling for their primary residence. It also allows borrowers to secure a loan to build or refinance their primary residence. It is not available to use for second homes or investment properties.

A home loan through the VA provides an incredible opportunity for military members and their families. It is a well-earned benefit for their service.

How Do I Get a VA Home Loan Certificate of Eligibility?

To secure your crucial COE, you will have to verify that you are eligible for the loan. There are specific requirements based on when you served, whether it was during war or peace, and how long you served. The reason for your separation from the military is also a factor.

Once you know that you are eligible for the program, you need to obtain the VA loan eligibility letter. To secure your certificate of eligibility, you can apply online through the Department of Veterans Affairs website. You can also apply by mail, although this takes more time.

As soon as your document arrives, you are ready to work with a lender to secure a home loan. The COE will work for any lender who offers VA mortgage options. Take the time to choose a lender you trust and who will answer all your questions. Many veterans opt to work with a mortgage broker such as TwinCity Lending to receive the best service, selection, and interest rates.

What Is the Process for Getting a VA Home Loan?

When you have your COE in hand, obtaining your home loan will look much like it does for anyone else. Once you have chosen a lender or broker, the process is generally quite simple. It typically breaks down into five steps.

1. Get a Pre-approval Letter from Your Lender

Whoever you choose to work with for your VA home loan will generate a letter of pre-approval. This letter tells you and your real estate agent how much you can spend on a home. Once you are ready to make an offer on a property, this letter is crucial. It shows the seller that you are prepared to move forward right away. Buyers without this letter have a harder time entering into a contract.

2. Find Your Perfect Home

Work with an experienced realtor to find the right house for you and your family. Unless you have a critical time frame to work within, you don’t need to rush. Buying a home is one of the most significant investments you will make, so go ahead and take the time you need.

3. Enter into Contract on a Property

Your real estate agent will help you make an offer once you find the home you want. If the seller accepts, then you are under contract to buy the house. Congratulations! This step is when your VA home loan lender will kick into high gear. There will be an appraisal and inspection, and you will likely need to provide more documentation to the lender.

4. Close the Transaction

At TwinCity Lending, once we have all your documents, we typically can close on your home loan within two weeks. Assuming nothing significant shows up in the inspection and appraisal process, this is a relatively speedy part of buying a home. When you and the seller have signed everything, the paperwork will go into the county records. At that point, you will have the keys to your new home.

5. Move into Your New Home

Now it’s time to enjoy this well-deserved reward of homeownership. You served with bravery and honor, and now you can cherish a home of your own. Thank you for your service.

Connect with a Premier Mortgage Broker

TwinCity Lending offers personalized concierge service to all of our clients. And it is an honor to serve those who have served our nation.

Reach out today with any questions about the VA home loan process. Our expert team will help you on your road to buying your very own home.

October 28, 2019November 5, 2019

Can I Get an FHA Home Loan With Bad Credit?

Having bad credit doesn’t always have to stop you from buying a home. If you have a steady income that allows you to make a monthly mortgage payment, you may be able to get an FHA home loan even with bad credit.

There are several pieces of your financial health that a lender will look at, but there are options for those with credit challenges. Working with a mortgage broker is the best choice for finding a home loan package that will work for you.

At TwinCity Lending, you can learn how to get a home loan from our lending specialists. Contact us to learn more about the options we offer.

Will an FHA Home Loan Help You Buy a Home?

The Federal Housing Administration (FHA) provides financial backing to qualified consumers. The FHA is not the lender for your home loan. Instead, they insure the loan so that lenders are willing to extend credit to borrowers who don’t qualify for traditional mortgages.

This program offers potential buyers the chance to secure a home loan even if they do not have a high credit score or a large down payment.

A conventional mortgage typically requires a buyer to have up to a 20 percent down payment to purchase the property. It also generally demands credit scores of at least 700 to secure a home loan with the best interest rates. FHA loans are different.

The benefits of an FHA loan are numerous. They can include:

Lower interest rates on the home loan you secure
Reduced closing costs
Lower down payment requirements
Improved access to credit with lower application requirements
The ability to purchase a more expensive home due to the lower interest rate

Every situation is different. Even if you have bad credit, you may qualify for an FHA loan so that you can enjoy the benefits of homeownership.

What Are the Eligibility Requirements for an FHA Loan?

There are a few things you need to know about how to get an FHA home loan. Not everyone with bad credit will qualify. Those who wish to buy a house using this type of loan still need to provide proof of income to show they can make a consistent monthly payment.

To obtain an FHA loan, you must have a minimum credit score of 500. If your number is higher than this, you may qualify for additional savings opportunities. If you have a credit score of at least 500, you may be eligible to borrow up to 90 percent of the home’s sale price. This opportunity means you would need to provide only 10 percent as a down payment.

Some borrowers who have a score of at least 580 may benefit for additional financing opportunities. Your down payment requirement drops to just 3.5 percent at that point.

In addition to credit score expectations, other requirements exist. You will need to show:

Proof of consistent, adequate income
A debt-to-income ratio that is within the lender’s range
Proof that the property is in good enough shape to qualify

Your TwinCity broker will help you learn if you’re eligible to get a home loan using the FHA program. We can answer all of your questions about the requirements.

What If Your Credit Score Isn’t That High?

As noted, FHA does not provide home loans. Traditional lenders do. That means you still must meet the lender’s standards for borrowing money.

The FHA backing offers protection to the lender since it is riskier to provide a loan to someone with poor credit. Should you default on the loan, the FHA will pay the lender for their losses. Thanks to that financial protection, the lender is willing to extend you a mortgage at a reasonable interest rate.

If your credit score is lower than 500, the FHA may not be willing to approve your loan application. That means lenders would face a significant risk. This risk will likely mean they will not offer you a home loan. If you have a sub-500 credit number, consider following these tips for improving your credit score before you try to secure a mortgage.

Pay Down Your Debts

Instead of using credit, make purchases with a debit card or cash. Focus on paying down or eliminating consumer debt to lower your debt-to-income ratio. This ratio is a significant piece of the lending picture. If you have too much debt compared to your income, a lender will not risk extending you a loan.

Check Your Credit Report

You can get a free copy of your credit report every year from each of the three credit bureaus. Take advantage of this service and check that everything on your credit report is up-to-date and accurate. Errors will lower your credit score, so address them quickly.

Make On-Time Payments

One of the most significant impacts on your credit score is your ability to make payments on time. Use auto-pay features with your utilities and credit card companies to make sure the payments are never late.

Avoid Opening New Lines of Credit

When you are preparing to seek an FHA home loan, or any mortgage option, don’t open new lines of credit, such as new credit cards. Even if a new credit card has a zero balance, it raises a red flag to lenders. It is potential debt, and it gives them pause.

Consider Debt Consolidation

There are no legitimate companies that can repair your credit for you. Instead, ask your lender if there are options for consolidating your debt to pay it down faster. You might want to seek help from consumer credit bureaus as well. And once you do secure an FHA home loan, the TwinCity experts can explain how to use your home equity for debt consolidation when the time is right.

Ready to Apply for an FHA Loan?

As you work with a lender to determine if you qualify for an FHA home loan, continue to make all the right financial moves:

Build up your down payment.
Create a budget and stick to it.
Pay down your debt.
Consider adding new income, if possible, to help boost your ability to qualify.

If you want to learn how to get an FHA loan or to learn about applying for any home loan, contact TwinCity Lending. Our team can help you to find a mortgage package that will work for you, even if you have less-than-perfect credit. Reach out today to schedule a no-obligation consultation with our team.

October 14, 2019November 5, 2019

Your Guide to the Mortgage Interest Deduction: It’s Not Gone!

As 2019 is coming to a close, most of us turn our attention to end-of-the-year festivities. Along with great food and joyous time with friends and family, the end of the year also means taxes. Because nothing says “party” like talking tax law and mortgage interest deductions.

So as you embark on the holiday season, you are probably eagerly anticipating tax time right around the corner. No? Just us?

Regardless, if you are a homeowner or are considering buying a house, it’s essential to have accurate information about the tax benefits. It is especially crucial to understand how your mortgage interest factors into taxes.

Every year it is important to get your ducks in a row to make sure you are prepared for the annual rite of taxation. Part of that preparation includes becoming knowledgeable about what you can deduct and what you cannot.

And to add a little spice to the meatball this year, the Tax Cuts and Jobs Act (TCJA) kicks in. This tax reform bill arrived on the scene in 2018, but it did not kick in to affect tax returns until this year.

The TwinCity Lending team is here and ready to help you become a homeowner so that you can take advantage of the associated tax perks. Reach out today to ask questions or start a loan application. You’ll be in the home of your dreams in no time.

Tax Reform Misconception

In addition to changes in tax brackets, tax rates, family benefits, and standard deductions, there is a change in the mortgage interest deduction. Unfortunately, many homeowners mistakenly think that this tax break disappeared with the new law.

There has been a lot of uproar over this supposed elimination of the deduction. But it didn’t go anywhere. It just changed. If you are a homeowner, it is likely you still qualify for this deduction. But first, let’s review and clarify what your mortgage interest is.

What Is Mortgage Interest?

Mortgage interest is the amount of money you pay for the privilege of borrowing the money needed to buy a home. When you fill out a loan application and seek preapproval for a home loan, the lender will tell you what interest rate you will pay to borrow the money. This rate works just like the interest on any other credit card, student loan, or car loan. But mortgage interest rates are generally much lower than others. This amount will be part of your mortgage payment each month.

Your monthly payment will generally cover the following obligations:

Principal loan amount
Interest charges
Mortgage insurance, if required
Homeowner’s insurance, if not paid separately
Property taxes, if not paid separately

Historically, those who own homes have been able to include the amount they pay in mortgage interest in their itemized deductions on tax returns. This tax benefit lowers the person’s taxable income, potentially saving them money.

Did the Mortgage Interest Deduction Disappear?

No, it did not go away. It’s still there, and most homeowners can take advantage of it.

Under the old law, homeowners could deduct the mortgage interest on a principal loan amount of up to $1 million. They also could deduct interest on home equity loans of up to $100,000. These deductions applied to primary residences or second homes.

So what changed? Taxpayers who are married and filing jointly now may deduct the mortgage interest on loan amounts of up to $750,000. The number is $350,000 for individuals. So although it is different now, the mortgage interest deduction is still around. And many people can benefit from it.

There is even more good news. If you acquired your mortgage before December 16, 2017, the old limits apply to you. So it is not all gloom and doom, as you may have heard. Securing a home loan and buying real estate is still a worthwhile financial goal.

Can I Still Deduct the Interest on Home Equity Debt?

This question doesn’t have as clear-cut of an answer. The tax bill removed the home equity interest deduction in some circumstances.

Specifically, to deduct this interest now, a homeowner must use the loan to buy, build, or make large-scale improvements to their primary or secondary residences.

The new tax law changes keep valuable tax deductions within reach of most homeowners. The majority of home loans qualify the taxpayer to claim the mortgage interest deduction.

And a home equity loan or line of credit remains a great option to pay for big-ticket items. It can make it possible to get a new roof, a kitchen remodel, or an awesome second home.

And even if you need to use home equity for other needs, such as debt consolidation, it can still be a smart idea to do so. The interest rate for HELOC options typically is much lower than the rate on credit cards and other consumer debt. So it can be a worthwhile plan, even if you can’t deduct the interest. TwinCity Lending can help you get this started.

Is Homeownership Still the Right Choice?

Buying real estate is absolutely the right move when it comes to building long-term wealth. Even with the tax reform changes, most homeowners will be able to deduct their mortgage interest.

Any time there are sweeping changes to tax laws, misconceptions and myths can make the rounds. But the new bill does not eliminate the mortgage interest benefit as some do believe. This long-standing deduction has helped homeowners for decades, and that isn’t changing.

TwinCity Lending Is On Your Side

Regardless of how the new tax rules affect you, the experts at TwinCity Lending are here to help you through the home loan process. We are a concierge mortgage broker team, and our experience and training have us ready to answer all of your home loan questions.

Whether you are just getting started as a home buyer or want to add to your existing real estate portfolio, we have you covered. We offer competitive mortgage interest rates and can help you with programs for veterans, first-time buyers, and more.

Reach out today and let our experienced staff make your dreams of homeownership a reality.

October 7, 2019November 5, 2019

Top Six Reasons for Buying a Home During the Holidays

The holidays are just around the corner. Chestnuts are roasting, and lords are leaping. It’s a busy time for most people as the events and gatherings fill up their days and evenings. In spite of how busy this time of year is, buying a home during the holidays is one commitment you may want to add to your calendar.

The holidays can be an excellent time to purchase a house. Seriously. That may come as a surprise, but buying a home at Christmas can be one of the best decisions you will make. With all the hustle and bustle of the season, it may feel like the worst time to attempt something as big as buying a home. But the savvy house hunter finds that crucial factors work in their favor over the holiday season.

If you are considering buying a home, don’t let the season stop you. The experts at TwinCity Lending have all the tools you need to get a home loan no matter the time of year. It is essential to understand the home buying process in general and make sure you set yourself up for success when buying a home during the holidays.

Home buying during this time of year creates some challenges. But it also offers fantastic benefits. You may be surprised by these six perks to house hunting in the offseason.

1. Not As Many Buyers Competing With You

Probably the most significant advantage of buying a home during the holidays is that most people don’t do it. Typically, the housing market is much brisker in the spring and summer months than it is November through January.

There are many reasons for the downturn in buyers during the winter:

inclement weather
hectic schedules
travel plans
mid-year school changes

Whatever the reason, fewer people shop for homes during the holiday season. This slow down is great news for you if you are buying a home at Christmas. So as others busy themselves with silver bells and sleigh rides, you can take advantage of the lack of competition. You will have an excellent chance of getting into the home you want during the holidays.

2. Sellers Are Highly Motivated to Sell

With fewer buyers in the market, sellers are looking to please you and woo you. Many people who put their homes up for sale during the holidays are eager for the process to happen quickly. They may want to be in a new home of their own before Christmas, making them quick to negotiate in your favor.

You are likely to get a more favorable deal on a property during the fall and winter. You would probably have to pay more if you were to buy the same home in May or June. Since these months are notoriously difficult for sellers, it may mean that they need to sell and move quickly for some reason.

While it may not be good timing for them, it could be excellent timing for you. Be sure you get preapproved for your home loan to help things move even more quickly. Your TwinCity team can help you prepare.

3. A Need for Speed

For various reasons, many people involved in real estate transactions like to finish everything before the new year begins. Sellers may need cash quickly or want to move before Christmas arrives. Buyers may want additional tax deductions for the calendar year. Real estate agents might be looking to meet a personal year-end goal.

This desire for speediness could mean a faster closing process for you. Sellers may not quibble over repairs and the sale price so that everything will move faster.

When you work with TwinCity Lending, we can usually close within two weeks once we have your loan application and all of your documents in hand. The holiday season is a motivating time. Everyone is eager to get things done so they can move on to the festivities and family gatherings.

4. Lower prices

Isn’t everyone looking for good deals over the holidays? Black Friday, anyone? Winter months historically have the lowest property prices, so buying a home during the holidays is great for bargain hunters. And when you add motivated sellers to low home prices, you get a perfect market for eager buyers.

In addition to lower home prices, you may find that related services are cheaper too. The holiday season is a slow time of year for painters, handymen, and movers. You may be able to find an amazing deal from someone who wants to fill their work calendar.

5. Eager Real Estate Agents

Realtors are just as eager to earn a living at Christmas as any other time of the year. Since it is a slower season for them, your agent may not have as many clients to juggle as they usually do. They will be able to give you a lot of time and attention. And they can move quickly to get you under contract on the home of your dreams.

6. Year-End Deals

Furniture, flooring, and so much more tend to go on sale at the end of the year. Stores need to clean out inventory, and they want to make you a deal. Buying a home during the holidays can mean that you can find end-of-the-year sales on everything you need for your new house.

TwinCity Is Your Lender for Buying a Home During the Holidays

Clearly, there are plenty of reasons for buying a home at Christmas. It is not always a simple decision, but the benefits of holiday home shopping are fantastic. You will have less competition and save money. It’s a great time to be a buyer.

So if your schedule allows and you don’t mind some winter weather, consider trying out the holiday real estate market. Buying a home this time of year could turn out to be one of the smartest decisions you will make.

Your TwinCity Lending team is here to get you home for the holidays. From filling out your loan application to closing on your new house, we make sure the process is smooth and painless. Reach out today to get started.

September 22, 2019November 5, 2019

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

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.

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

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

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.

September 21, 2019November 5, 2019

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

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.

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.

September 14, 2019November 5, 2019

10 Top Steps to Getting Your Mortgage Approved

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.

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.

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.

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.

September 14, 2019November 5, 2019

Brokers Do it Better: Why You Should Work with a Local Broker

When homebuyers set out to look for a mortgage, many of them turn to hire local mortgage brokers. This choice makes perfect sense. Everyone wants that dream home, yet most don’t know how to go about finding it.

That’s why using a professional at TwinCity Lending is always in your best interest. You will find many advantages when working with a local mortgage broker. Once you start this process, you’ll learn that trying to do it yourself isn’t always as easy as you think.

You certainly can search for properties and approach lenders on your own, but it will take a lot of time and effort. You may even find someone who offers you a seemingly low price that you think is a great deal.

However, when you dig deeper, is it a competitive interest rate? A professional will be able to find an excellent deal for you and your circumstances and is the best choice during the home loan process.

Why Should I Choose a Local Mortgage Broker?

As you navigate the home loan options out there, here are some essential things to keep in mind about a professional broker.

They Can Do Much of The Busy Work For You

One of the most significant benefits of hiring a local mortgage broker is that they handle all the hard stuff. It’s unlikely you want to make a full-time job out of tracking down the best home loan package. Making phone calls, sending emails, and following up on all of it takes a great deal of time and energy on your part.

Luckily, a professional broker wants to do precisely that. You get to concentrate on all the other important things, while they focus on getting you the best offer.

They Don’t Settle for the First Choice

Many homeowners make the mistake of jumping at the first loan that they find. Professionals can help you discover several options that will serve you well and save you money.

A local professional broker knows the mortgage market inside and out, and they know how to find that perfect deal. Having a mortgage broker in charge of your home loan takes a tremendous amount of stress out of the home-buying process.

They Have a Reliable Network

Professional local mortgage brokers know just who to contact for each step of the home loan process. They have built a trusted network of experts to be sure that you receive the best possible service.

Because of these relationships, brokers can get answers and responses quickly. This promptness ensures that your loan process moves forward smoothly so you can close on time.

They Give You Personalized Assistance

When you use the services of a local mortgage broker, the person that you select will be by your side throughout the entire process, protecting your interests. You can rely on them to be ready to answer all of your questions.

Because they specialize in home loans, mortgage brokers tend to have more in-depth knowledge of the market than banks do. They are aware of upcoming trends in the home loan financing industry that can benefit you in many significant ways.

Bank Lenders Don’t Offer The Best Options

When you deal with bank lenders for a home loan, you limit your opportunities. Banks want you to use their products only. They will not show you other choices.

Professional brokers, on the other hand, always have a wide array of products available for their clients. More options mean better deals for you.

Local brokers have the expertise to keep the home loan process flowing swiftly so that you can close as planned. Their knowledge helps you avoid unpleasant surprises.

How Are Mortgage Brokers Paid For Their Work?

Some homebuyers worry that a broker will only steer them to expensive loan products. This is not the case. Yes, mortgage brokers get paid for their work, just like anyone else. But they have an ethical and legal obligation to offer you the best possible option for your situation.

Unlike a loan officer who works directly for one lender, a broker typically does not receive a salary. While loan officers get paid whether they close your loan correctly or not, brokers get paid when they have finished the job for you. They have a vested interest in keeping the process running well. At TwinCity, we usually can get to closing in two weeks.

Typically brokers receive their compensation from the lender, and it is dependent on the amount of the loan. There are legal limits placed on how much a broker can receive from each mortgage package they write.

When you approach a professional broker, you know you will work with someone who has access to dozens of mortgage products. This accessibility means that they are the right choice to find the home loan option that best suits your situation.

Finding The Right Local Broker For You

One of the best ways to choose the perfect local mortgage broker is to get recommendations from others. Ask your friends, real estate agent, work colleagues, or neighbors who they used.

When interviewing brokers, ask what their compensation rate is so that you can make accurate comparisons. Find out what their typical turnaround time is for closing. Hint: If they normally need more than two weeks from the time they have all your paperwork, you might want to look elsewhere. Although occasional glitches do arise, a professional broker should be able to have the loan close quickly once you have all your ducks in a row.

Work with the Best

Choosing a home loan package is not like choosing a hat. One size does not fit all. That is why it is so important to choose a local mortgage broker rather than going through a specific lending institution.

You deserve to see all the sizes, all the options, and all the different possibilities. Buying a property is likely the most significant investment you will ever make. Make sure you have TwinCity Lending on your side from start to finish. Reach out today to see how our concierge experience is perfect for you.

September 7, 2019November 5, 2019

Teach Your Teens How to Get a 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

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.