Category: Mortgages

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Budgeting Interest Rates Mortgages Purchase Refinance

Bring Home the Bacon: The Ins & Outs of a Cash-Out Refinance

Picture This: You come home from a hard day’s work only to find the paint chipping from your walls and high-interest debt chipping away at your bank account. With a sigh, you throw yourself down in your favorite recliner and stare up at the ceiling in defeat—until it hits you. There is a reason a home is considered one of the best investments you can make in your lifetime, and using the roof over your head to put cash in your pocket might be just what you need to get your life back on track.

What Is a Cash-Out Refinance?

When refinancing a mortgage, you replace your existing loan with a new one for the same amount—usually at a lower interest rate to reduce mortgage payments. But with a cash-out refinance, you substitute your current home loan with a new mortgage that is higher than your outstanding loan balance. 

A cash-out refinance makes the most of the equity you have built over time by letting you pocket the difference between the two mortgages in cash. This lump sum opens the door for consolidating high-interest debt, making important purchases, or tackling large-scale home renovation projects.

The Equity of It All

Home equity is the backbone of a cash-out refinance, so let’s look at the numbers. 

Say you purchased a home at $250,000, and its value has risen to $300,000. Having lived in the home for five years, you have managed to pay your mortgage down to $215,000. 

The equity built in your home is simply the difference between your mortgage balance and your home’s value. Which, in this example, is $85,000.

*Though you might be itching to utilize the entire amount, lenders generally only allow you to withdraw a portion of it. Assuming you can only refinance 80% of the home’s value, you take out $17,000 in cash, while $68,000 remains in the home. 

Yays & Nays of a Cash-Out Refinance

Yays

The advantages of a cash-out refinance often outweigh those of other loan options. Here’s how a cash-out refinance can help your finances thrive:

  • Land a lower interest rate – Generally, a mortgage refinance is an opportunity to get a lower interest rate than you would if you opted for a HELOC (Home Equity Line of Credit) or a home equity loan. This benefit also applies to a cash-out refinance with the added perk of pocketing some cash you might need. 
  • Fund home improvement projects – One of the easiest ways to add value to your home and boost your overall homeowning experience is to start home improvement projects. Renovating your bathroom or giving your kitchen a facelift can increase your home’s appeal and future selling potential. 
  • Consolidate high-interest debts and pay them off – Are you drowning in debt? Using a cash-out refinance to pay off high-interest credit cards (and other debt) can bring you back above water and save you thousands in future interest payments.  
  •  Pay for other expenses – Have a child going off to college soon? You can use your home’s equity to pay for your child’s tuition in the event of student loan interest rates being higher than the rate of your refinanced mortgage. Just want the money to splurge? Have at it! You can use the lump sum you receive from a cash-out refinance to purchase virtually anything.
Nays

Though beneficial for many homeowners, a cash-out refinance isn’t always the best choice for every situation. Here’s why you might want to consider alternatives:

  • Higher interest rate than expected – Getting a cash-out refinance might seem like a no-brainer, but be sure it is working in your favor. Generally, you want to refinance if the outcome will be a lower interest rate. If a cash-out refinance ends in an interest-rate spike, it might not be the route you want to take. 
  • You can’t avoid closing costs  – Because a cash-out refinance is still a refinance, you have to pay closing costs. Typically, the closing costs are deducted from the cash you are receiving and not out of pocket. It is always a good idea to consider the overall financial benefit of a cash-out refinance. If your potential savings are less than the costs, a cash-out refinance might not make sense for your situation. 
  • Taking a chance with your home – Though a cash-out refinance is yours to use however you choose, always be aware of the risk that comes with using your home as collateral. Be sure to take out no more than the amount you need, and put it toward a project that is guaranteed to benefit you financially.
  • Enabling unhealthy financial habits – As tempting as it may be to use your home as a cash cow, tapping your home’s equity to finance every expense could cause a sense of false security and, ultimately, lead to a resurfacing of the debts you initially paid off.  

Do You Qualify?

To reap the benefits of a cash-out refinance, you need to qualify. Much like getting a mortgage for a new home, if you are considering a cash-out refinance, your qualification for the loan will be based on your credit score, finances, and property. 

While requirements for a cash-out refinance differ between lenders and the type of loan, these are the general criteria: 

  • More than 20% equity in your home 
  • Verification of the home’s value with a new appraisal
  • A minimum credit score of 620
  • Debt-to-income ratio (including the new loan) of 43% or less
  • Employment and income verification

The Big Picture: Is a Cash-Out Refinance Your Best Option?

Whether you want to revamp your basement or knockdown debt, a cash-out refinance can be an attractive option when it comes to meeting your financial goals. Are you still on the fence about a refinance? Reach out to MortgageRight, and we’ll help you down. 

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Credit Down Payment Government Loans Homebuying Homebuying Tips Interest Rates Loans Mortgages Purchase Refinance

Appreciating Our Veterans One VA Loan at a Time

What does it mean to be a Veteran? Being a veteran means fighting for the freedoms of those you have never met. It means having a willingness to give up everything while expecting nothing in return. Being a veteran means volunteering to leave the home you’ve always known, so others won’t have to. It means that you not only understand the concept of courage, but you embody it.

Most of all, being a veteran means taking off the uniform and rebuilding a civilian life when your service is complete. Here at MortgageRight, we understand how difficult it can be to make the transition from protector to private citizen. To show our appreciation for your sacrifice, we provide easy access to a mortgage made just for you—the VA home loan.  

What Is a VA Loan?

Homeownership can become a hassle if you’re not equipped with the financing option that is right for you. For the vast majority of military borrowers, the VA loan program is the most beneficial. These versatile, $0-down payment mortgages have made it possible for more than 24 million service members to achieve their dream of homeownership. 

Despite the program being designed to create a seamless homebuying experience for service members, much of our military population is left in the dark about the program’s unique benefits, and this leads them to choose less favorable loan options.

Who Qualifies? 

To be eligible for a VA loan, you must be a veteran or active service member who has satisfied at least one of these service requirements:

  • Served for 90 consecutive days during wartime 
  • Served for 181 days during peacetime 
  • Served in the National Guard or the Reserves for 6 years

Surviving spouses of service members may also qualify if the service member’s life was lost in the line of duty or if they sustained a service-related disability.

Before you can obtain a VA loan, you will need to present your lender with a copy of your Certificate of Eligibility, which is a document provided by The Department of Veteran’s Affairs as proof of your qualification. To prove previous military service, you must provide a Report of Separation (DD Form 214). If you are on active duty, you will need to provide a Statement of Service instead.

Though The Department of Veteran Affairs does not require a minimum credit score to qualify, it is best to maintain a credit score of 620 or higher to ensure third-party lender requirements are met. 

Backed by Benefits

  • Zero Down Payment

Other loan programs usually require at least a 3% down payment when purchasing a home. However, if you’re looking to buy a home with a VA loan, one of its most advantageous aspects is that the down payment requirement is no longer a burden. 

  • 90% Equity Cash Out

For homeowning service members and veterans, refinancing with a VA loan opens the door for a 90% equity cash out. This option replaces your existing mortgage with a new loan for more than you owe on your current mortgage and allows you to pocket the difference if your home has risen in value. This is especially beneficial if you are looking to save for higher education or retirement, pay off higher-interest debt, or make needed home improvements.

  • Say No to Mortgage Insurance Costs

Unlike other home loans on the market that require mortgage insurance premiums when the borrower has less than 20% equity in their home, VA loans do not come with any mortgage insurance premiums or private mortgage insurance costs—which helps borrowers save even more each month. 

 

Though a VA loan offers savings opportunities at every corner, it does require a VA Funding Fee (that is 2.3% of the amount borrowed with a VA loan, which increases to 3.6% if you are a previous VA loan borrower).

  • The IRRRL Deal

If you have an existing VA-backed home loan, the IRRRL (Interest rate reduction refinance loan) is another added perk. This program is perfect if you want to reduce your current monthly mortgage payments or increase payment stability. 

Let Us Appreciate You

As a Veteran owned and operated lender, MortgageRight always rises to the challenge of helping active and veteran service members navigate the VA-loan landscape and secure the mortgage that meets their unique homebuying needs.

Unsure if the VA loan is right for you? We can help! Get a quote or pre-approval letter or email us at contact@mortgageright.com for any questions.

Happy Military Appreciation Month & Thank You for Your Service!

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Homebuying Homebuying Tips Loans Mortgages Pre-approval Purchase

How Pre-Approvals Can Help You Get Your Offer on a Home Accepted

Pre-approvals for a mortgage loan are like getting verified on Twitter. It’s a sign that you’re the real deal. 

Getting pre-approved before you start shopping for a new home isn’t a requirement, but it definitely gives you a leg up. We want to help you get your dream home, and a pre-approval letter gets you one step closer. 

So, what is a pre-approval? How do you get one? Is it worth it? Let’s take a look. 

What Is Pre-Approval?

A pre-approval determines how much money you can borrow to purchase your home. Lenders analyze your income, assets, and credit score to determine three homebuying factors:

  • The type of loan you can get approved for
  • How much you can borrow
  • What the interest rate will be

The lender will then provide you with an official pre-approval letter that details this information.  

It’s important to note that pre-approval and pre-qualification are NOT the same. Pre-qualifications can be beneficial in providing insight into your loan opportunities, but are less in-depth and therefore less accurate.  

How Do You Get Pre-Approved?

The pre-approval process is essentially a mortgage application. Your lender will want to evaluate your finances, which includes reviewing documentation in the following areas:

  • Proof of income
  • Employment verification (bank statements) 
  • Proof of assets (retirement or investment account statements)
  • List of any liabilities
  • Credit history (rent history, credit report)
  • Identification
  • Debt-to-income ratio (DTI)

How Does a Pre-Approval Help You Buy Your Dream Home?

Your pre-approval letter essentially says, “you can buy a house worth X amount of money,” because you are highly likely to get a loan for the amount stated by your lender. 

Your real estate agent will typically want to see your pre-approval letter before showing you houses to ensure you both aren’t wasting time looking at homes outside your budget.

It will also be valuable when making an offer on “the one,” because it shows the seller you won’t have problems getting financed for the amount you’re offering. That’s all the more important if it’s a hot property and others are making offers. With pre-approval, you may already be one step ahead of those other potential buyers. 

And because a pre-approval is “essentially a mortgage application,” the rest of your home buying process will go a lot smoother. By doing some of the work upfront, you can shift your focus on the fun stuff, like your living room color scheme or building a backyard entertainment space. 

Start Now!

If you’re considering a move or looking into buying your first home, it’s a great time to start the pre-approval process! And we can help! Click the blue button in the top right corner of our home page to get started. If you have questions, reach out to us! We’d love to help you take the next step on your homebuying journey.

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Budgeting Homebuying Homebuying Tips Interest Rates Loans Mortgages Purchase Refinance

Take Advantage of Unheard-Of Interest Rates

2020 is shaping up to be an interesting year for the US housing markets. The combination of a global pandemic and an election year has led to historically low-interest rates. Now is a great time to assess your financial situation and develop a plan to take advantage of this unprecedented time in the housing market. And these low-interest rates are no secret; applications to refinance have gone up by 80% to the highest level since the financial crisis of 2009. Even though this may be a stressful time in the stock market with uncertainty about the future, taking advantage of these low-interest rates is a concrete step you can take towards financial security in insecure times. Don’t get anxious, get proactive! We don’t know how long rates will stay this low, so now is the time to act!

 According to the Federal Reserve, the rate for a 30-year fixed mortgage has been about 3.75% in early 2020, and recent events have taken it even lower. That means if your rate is above 4%, you could benefit from refinancing! If you currently have a VA, FHA, or USDA loan, we have even more good news. You don’t have to have an appraisal to refinance to a lower rate.  

Here are some ideas for ways to take advantage of low-interest rates:

  • Refinance your mortgage – lower your payments by thousands of dollars or cut your term in half!
  • Refinance other loans such as student loans 
  • Make large, one-time payments on other debt.
  • Consolidate and pay off your debt – pay off high-interest credit cards to save money.
  • Purchase a new or second home – whether you’ve been looking for a vacation house, an investment property, or an upgrade for your family, now is the time! 
  • Start a business – use your savings as a nest egg to finance your dream company.

Call (205) 776-8401 to speak to any of our Mortgage Loan Experts to discuss your financial goals and find out how we can help you save thousands with a refinance. Or, head on over to our website and click the Apply Now button for an online application. 

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Homebuying Tips Loans Mortgages Refinance

How to Utilize Home Equity to Your Benefit

Building equity is one of the primary benefits of buying a home. Home equity can enable you to finance a renovation, pay off debt, or even launch a small business. When you factor in today’s low interest rates, the possibilities are even more interesting. 

While home equity is a readily available resource for many families, some are afraid to use it because they don’t understand the benefits and consequences.  If you’re unfamiliar with the ins and outs of home equity, don’t worry! In this article, we’ll explain everything you need to know to make an informed decision. 

What Is Home Equity?

Equity is the difference between the remaining balance on your mortgage and your home’s current value. If you purchase a home for $300,000 with a 20% downpayment, you start with $60,000 in home equity. 

How Do You Get Home Equity?

You build home equity over time in two ways. First, your equity increases as you pay down your mortgage principal. For example, if you purchased that $300,000 home five years ago with a 20% down payment and a 5% interest rate, over your first 60 months, you paid about $20,000 toward the principal and $57,000 in interest, leaving a balance of $220,000 on your mortgage. If your home’s value had not changed, you would now have $80,000 in equity. 

But home values do change. This is the second way you build home equity over time. Home values tend to rise based on market demand and other economic factors. Home values may not change a lot each year, but even small changes are significant over time. For example, if your $300,000 home increased in value by just 3% each year, it would be worth more than $347,000 after five years! If you paid your mortgage as described in our first example, you would now have $127,000 in equity!

What Else Can I Do To Increase Home Equity?

The most obvious way to establish more equity in your home is with a large down payment when you purchase, but this isn’t always an option. 

Another strategy for building equity is paying a little more than your minimum mortgage payment each month. By paying just $100 extra per month on the $240,000 example in this post, you would pay off the 30-year mortgage in just 25 years and 7 months. After only 60 months, you would have paid an additional $6,000 on your mortgage, but you would have increased your home equity by $6,800. Why is this number higher than the amount of your additional payments? You are paying down the balance owed, and this means a larger portion of every payment goes to principal rather than interest. 

You can also build equity by renovating. Adding extra space and other improvements can increase your home’s value and curb appeal. This can be complicated if you refinance or take out a second mortgage to pay for the renovations, so let’s take a closer look at options for tapping into your home’s equity. 

How Do You Tap Into Home Equity?

Borrowing money against your home equity can be beneficial, because the interest rates are lower than typical rates on personal loans or credit cards. You earn this lower rate by using your house to secure the loan. 

There are three common options for borrowing against your home’s equity:

  • A home equity loan
  • A home equity line of credit
  • Cash-out refinance 

Home Equity Loans are also known as second mortgages. You can secure a loan for about 85% of the value of your equity in your home. Just like a primary mortgage loan, it is paid back in monthly installments. 

Home Equity Lines of Credit (also known as a HELOCs) are similar to credit cards, but your credit limit is determined by your equity in your home. You make regular payments on the amount you borrow, even if it’s less than the amount you qualify for. 

Cash-Out Refinances involve a new loan with an updated interest rate and loan term. If you take out a new mortgage for more than you owe on your current loan, taxes, and insurance, you can receive a lump sum payment for the difference, and you are free to do anything you like with these funds. This can be especially beneficial during times when interest rates are very low.

Learn more about how and when you should refinance your home on our blog! 

Get the Support You Need

At MortgageRight, we help home buyers and current homeowners like you find the mortgage loan that’s both a perfect fit for your individual needs AND at terrifically low interest rates! You can get the best deal to start building your home equity today, getting you steps closer to the big purchase you’ve been saving for! 

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Budgeting Credit Homebuying Tips Interest Rates Loans Mortgages

How Do Interest Rates Work?

Although we may not like it, loans come with interest, and that includes mortgages. While this is unavoidable when securing a mortgage loan, understanding how interest rates work can help you determine the type of loan that is best for your situation. 

Banks and lenders offer two primary types of loans: fixed-rate and adjustable-rate. Let’s explore the differences between the two. 

Fixed-Rate Mortgages

In a fixed-rate mortgage, the interest rate does not change. Therefore, the monthly payments will be the same over the entire life of the loan. Most loans have a 30-year repayment period, although shorter loan periods are available. Shorter loan terms come with higher monthly payments, but the interest rate and the total amount of your payments will be lower. 

Your annual loan interest rate will be divided by 12 to get your monthly interest payment. If your annual interest rate is 4%, your monthly interest rate is 0.3%. Take this example:

Loan Amount: $180,000

Loan Period: 30 years

Monthly Payment before Interest: $500 

Annual Interest: 4%

Monthly Interest: 0.3%

Monthly Mortgage Payment: $650

Part of your monthly payment goes toward paying off the principal, or mortgage balance, but a significant portion goes toward interest on the loan. With each passing month, the principal gets a little smaller, meaning the percentage of your payment that goes to interest gets smaller. 

Adjustable-Rate Mortgages

With an adjustable-rate mortgage, the interest rate can fluctuate, allowing the monthly payment to change over time. While this inconsistency can cause hesitation, most adjustable-rate mortgages limit how high the interest rate can go and how often it can change. Your monthly payment will recalculate every time the rate goes up or down. 

These rates usually start significantly lower than rates on fixed-rate mortgages, and they are guaranteed to last for the first few years. This benefits individuals who do not plan to live in the home longer than the rate is guaranteed. 

What Affects Mortgage Interest Rates?

Several factors affect mortgage interest rates, including inflation and monetary policy. Inflation is an estimate of the change in the value of the dollar. $1 buys more today than it will ten years from now, so lenders charge interest to cover the cost of inflation while earning a profit. The Federal Reserve’s monetary policies also have effects throughout the economy, including interest rates. Mortgage lenders monitor these factors and adjust rates accordingly. 

Another factor that affects interest rates is supply and demand. Downward pressure on interest rates increases when demand for homes decreases as more people opt to rent. 

Those outside environmental factors affect the market rates, but your financial history and credit score significantly affect the individualized interest rate you will receive. 

The good news is that mortgage rates are some of the lowest they have ever been, although they won’t stay that way forever. 

How Will Interest Rates Affect My Mortgage Payment?

To get an idea of how much your payment will be each month, try our free mortgage calculator! While many factors affect your monthly payment, this tool will give you the insight you need to get started.

If you’re ready for a quote or preapproval, visit our homepage for thee resources, or email us at contact@MortgageRight.com to lock in a low mortgage rate today! 

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Loans Mortgages Refinance

Is There a Perfect Time to Refinance?

While historically low interest rates are undoubtedly enticing, refinancing might not have been on your radar. If low interest rates caught your eye, how can you know that this is a perfect time? What if rates drop further? When will they start to rise? 

Many people miss an opportunity to save as they wait on the market to hit the absolute bottom. The truth is, no one can predict what interest rates will be tomorrow, much less than one month from now. 

Why pay your higher rate day after day, gambling on a future dip in rates that may not occur?

When Should You Refinance?

We understand that securing the absolute lowest rates could give you something to brag about when you play tennis or golf with your friends, but that’s not the best way to save money. Every situation is unique, but in general, if your rate is 0.5% to 1% higher than the current market rates, it’s worth your time to investigate your options.  

If your rate is more than 1% higher than the current rate, it is almost certainly time to refinance. If you are 0.5% to 1% higher than the current rate, you might want to contact a mortgage specialist to discuss how long you plan to live in your current house and other factors that affect your decision. 

Factors To Consider When Refinancing

Refinancing a home can be an attractive option, but there are many factors to consider. Here are a few key questions you should ask yourself as you consider this opportunity. 

  • How much could you lower your interest rate?
  • Would you prefer to pay off your mortgage more quickly or lower your monthly payment?
  • Do you have enough equity in your home to secure a loan that doesn’t require mortgage insurance? 
  • Do you need to convert an adjustable-rate mortgage (ARM) to a fixed-rate mortgage while rates are low?
  • Do you want to access some of your home equity with a cash-out refinance to pay for a large purchase or consolidate debt? 

If the answer to any of these questions is “yes,” then refinancing is something you may want to consider. 

The Bottom Line

Refinancing your home is well worth your consideration if it could decrease your mortgage payment, loan term, or help build equity faster. Right now, mortgage rates are at one of their lowest points in history. They can’t get much lower, and it’s only a matter of time before they climb back up! 
If you want to take the next step in refinancing your home, MortgageRight will help you find the right loan for your needs. Give us a call at 205-776-8401 or email us at contact@mortgageright.com.

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Budgeting Credit Down Payment First-time Homebuyer Home Inspections Homebuying Homebuying Tips Interest Rates Loans Mortgages Purchase

Mortgages 101: Everything You Need to Know About This Home Buying Process

Purchasing a home is an exciting process. However, it can be intimidating when you consider all the decisions and details leading up to closing day. 

We want to help make the process just a little easier. To do so, we put together some of the most frequently asked questions about mortgages and the mortgage process – a Mortgage 101, if you will. By the end of this blog, you’ll be even closer to getting your dream home!

  1. How do I start the mortgage process?

Before submitting your mortgage application, you’ll need to have an idea of the type of mortgage loan you want, ensure your credit report is error-free, choose your lender, get pre-approved, and assemble your loan paperwork. 

If that sounds like a lot — just hold tight. We are going to break each of these down further in the following questions. 

  1. How do I know which type of mortgage loan is right for me?

There are many types of mortgages available to choose from based on requirements, interest rates, and availability. Some of the most common are conventional mortgages, government-insured mortgages, fixed-rate, adjustable-rate, and jumbo mortgages. 

To help you get an idea of the mortgage that’s right for you, we wrote a blog on each of these types (and more!) and broke them down into their characteristics and benefits. Read about them here!

  1. Can I get a mortgage loan without a credit score?

It is more challenging to get a mortgage loan without a credit score, but it’s not impossible. As we mentioned in the previous question, you can get an FHA loan with low or no credit. However, this can incur greater costs in the long run with fees and insurance. 

If you don’t have a credit score — the best process for you is finding a lender who does manual underwriting. Manual underwriting is a hands-on process that reviews your proof of income, rental history, and other documents to evaluate your ability to pay debts. In addition to documentation, you’ll need to have a sizable downpayment (20% if possible), allowing you to get a mortgage loan — suggest going for the 15-year conventional. 

  1. How should I choose a mortgage lender?

First and foremost, do your research. What are your options? Should you check out a credit union, mortgage banker, or smaller financial institution?

Come with the right questions. The more you know beforehand, the more you are positioned to ask the relevant questions to help you make your decisions. This guide can help! Start by figuring out what type of loan(s) you are interested in and what you can afford. 

  1. What is pre-approval? How do I get pre-approved?

A pre-approval determines how much money you can borrow to purchase your home. Lenders will analyze your income, assets, and credit score to determine the type of loan you can get approved for, how much you can borrow, and what the interest rate will be. 

Pre-approval is a practical step in the mortgage process, as you can show sellers that a lender is willing to loan you the money. It makes the searching process more straightforward and can make your offer on a home stronger. 

  1. Are pre-qualification and pre-approval the same?

While they ultimately aim to reach the same goal, a pre-qualification is not as accurate as a pre-approval because it is less in-depth. A prequalification is more of an estimate because you do not have to provide as much information, such as your credit report. However, both are beneficial in giving insight into your loan opportunities. 

  1. What information should I have available when applying for a loan?

You’re getting closer and closer to locking down that mortgage loan! First, you’ll need to submit the official mortgage application through your lender. You’ll also need your ID, proof of income, tax returns, bank statements, retirement or investment account statements, rent history, credit report, and possibly a few others if specified by your lender. You may even have most of these nearby if you have gone through the pre-approval process! 

  1. Do I need to do a home appraisal and inspection? Why?

Yes! Lenders require a home appraisal before issuing a mortgage. Although it’s a worst-case scenario, they want to make sure the home is valued high enough to recover the cost of the loan if the buyer defaults on the mortgage. 

Inspections, however, are optional — but highly beneficial. It can often be the deciding factor in finding the home right for you. Here are 10 things buyers should know about home inspections!

  1. What homes can I afford, and what will my mortgage payments cost?

One of the most important factors to consider before beginning the search for a new home is your budget. You have to consider the down payment necessary for your new home and the monthly cost of the mortgage. Your mortgage payment is affected by a few factors, including your credit, DTI (debt-to-income ratio), and current assets. It also depends on how many years you want to spread the payment over. 

Once you have an idea of how much your home will cost, try our mortgage calculator! It will provide a helpful estimate of what your mortgage payment will be each month. 

  1. What does a lender look for when approving my mortgage loan?

As we have mentioned, your mortgage loan approval is affected significantly by your credit history, debt-to-income ratio, and current assets. When checking your credit history, lenders will look for:

  • Few to no recent credit applications
  • Positive payment history
  • Credit utilization (only using around 30% of your credit limit at once)
  • Being an authorized user on another account (their activity can reflect your credit)
  • Bankruptcies or other negative marks (delinquent account, charge-offs, etc.)

In addition to making sure you have a stable income, your lender will also assess how much of your current income goes to pay off debts. If this is a significant amount, the lender may determine that you are not well-suited to take on more debt, or your interest rate may be higher. 

Lastly, lenders will often want to see any bank statements or investments, as high-value assets will reflect positively on your ability to make a sizable down payment or pay your mortgage on time each month. 

Bonus Question: Can I Start Now?

Absolutely! At MortgageRight, we help people like you find the mortgage that’s right for you by securing your pre-approval letter and low rates. To start your home buying journey today, head over to our home page and click the quote or pre-approval button in the top right-hand corner. Just a few clicks will get you that much closer to the long-awaited move-in day! Do you have a question that’s not on this list? Feel free to email us at contact@mortgageright.com or give us a call at (205) 776-8401, and we will be happy to answer it for you!

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First-time Homebuyer Homebuying Homebuying Tips Loans Mortgages Purchase

Which Type of Mortgage Loan Is Right For Me?

Getting a mortgage loan can be a daunting task. However, the greater understanding you have about these loans as you begin your home buying journey, the easier it will be. 

There are many types of mortgages available to choose from. They differ based on requirements, interest rates, and availability. In this blog, we list the most common types of mortgage loans, and for which type each homebuyer is best suited. 

Conventional Mortgages 

Conventional mortgages are home loans not insured by the federal government. This type is best suited for borrowers who have a strong credit score, stable employment history, and can make a down payment of at least 3% of the home’s cost. 

Read more about conventional mortgage loans here!

Government-Insured Mortgages

Although not a mortgage lender itself, three government agencies back mortgages: the Federal Housing Administration (FHA loans), the U.S. Department of Agriculture (USDA loans), and the U.S. Department of Veterans Affairs (VA loans). 

  • FHA Loans are for borrowers who don’t have a large down payment saved up and do not have the highest credit. 
  • USDA Loans are for moderate and low-income borrowers. Borrowers must purchase a home in a USDA-eligible area but often are not required to make a down payment.
  • VA Loans are flexible, low-interest loans for those serving in the military, both active duty and veterans. These do not require a down payment. 

Fixed-Rate Mortgages 

As per the name, these mortgages keep the same interest rate over the life of your loan. They also provide a consistent monthly payment on your mortgage and come in 15-year, 20-year, or 30-year loans. 

Adjustable-Rate Mortgages

Adjustable-rate mortgages have flexible interest rates that change with market conditions. These come with a certain level of risk but are beneficial if the home is temporary. 

Jumbo Mortgages 

Jumbo mortgages are for when the home price exceeds the federal loan limits. These are best suited for affluent buyers with good credit, a high income, and who can offer a substantial down payment. 

Read more about jumbo mortgage loans here!

Making Mortgages Easy

If you have more questions about mortgages, don’t worry! We put together this helpful guide featuring frequently asked questions and their answers. Check out the blog here! 

We are in the business of ‘lending as it should be’! Check out our home page to get a quote or pre-approval letter, or email us at contact@mortgageright.com for any questions. 

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Budgeting Homebuying Tips Loans Mortgages

What Is Your Next Big Investment? These Budgeting Tips Will Help Make It Happen.

Budgeting seems such a daunting task. We start with our monthly income, then start carving it up into smaller and smaller pieces as we subtract expenses. Take another look, and you just might realize the process is really an empowering experience.  

That’s because budgeting gives us something akin to superpowers in helping us reach our goals. That said, we offer the following ideas on how to set up a budget, as well as a few tips on how to tackle debt, pay bills on time, and boost your credit score.  

What Is Your Budget?

In its most basic sense, a budget is your income after taxes, minus all your monthly expenses. Some of the costs you want to be sure to account for are:

  • Mortgage (or rent, if you’ve yet to purchase your first home)
  • Utilities
  • Insurance (health, life, car, etc.)
  • Groceries
  • Phone bill
  • School/Childcare
  • Subscription services (lawn care, cable, gym memberships, etc.)
  • Vehicle (payments, maintenance, and gas)
  • In addition to making automobile payments, consider adding line items to pay down other debt (see below).
  • Lastly, if at all possible, add a line item for savings. This could be for unforeseen expenses, as well as for things like gifts, a child’s college fund, and retirement.

Write out your budget, and most importantly, track it. Your budget will probably change slightly from month to month, but it will still provide a good overview of your expenditures. Tracking allows you to analyze and make changes if needed in the future. 

Minimize Your Debt

Prioritize paying off any outstanding debt by including it in your budget as a “necessary” expense. While you can still buy a house if you have outstanding debt, eliminating or reducing it will allow you to do any number of things, not the least of which is raise your credit score and help you in the home loan approval process. 

Set Up Automatic Bill Pay

Late fees are the worst — especially when they’re the result of an unfortunate mix up about a due date or just plain old, ordinary forgetfulness. Automatic bill pay can help eliminate such mistakes by paying your bills on a schedule that you set up. 

One suggestion, however – before your start auto-pay, make sure your budgeting work doesn’t need adjustments by tracking it for a few months. A simple error in math or a forgotten bill could result in those very late fees you’re trying to avoid. For extra assurance, you might also set reminders for due dates, even with auto-pay, to remember how much money will come out of your account and when. 

Keep Yourself Accountable

It can be easy to lose sight of your budget goal if you’re the only one responsible for it. Share your expectations with a spouse, friend, or family member who is willing to check-in and make sure you’re on track. Let them know where you plan to cut back and ask them to help hold you to it. 

Set benchmarks for each month! Determine how much you want to save and celebrate each success along the way to your goal. You’ll soon realize your new home, special occasion/holiday gift, or home improvement project is within reach … 

Reach Your Goal With MortgageRight!

Whether you’re looking to purchase a new home or refinance your current home, MortgageRight is lending as it should be. We can help you apply your budget to a low-rate mortgage that is right for you. 

To learn more about how we can help you plan for tomorrow – including that all-important step of getting pre-approved — give us a call at 205-776-8401!