Category Archives: Refinance

Now that Gay Marriage is Legal, What Does it Mean for the Mortgage Market?

On June 26, 2015, the U.S. Supreme Court handed down its ruling on the case of Obergefell v. Hodges.  This ruling gave gays and lesbians the right to marry in all states and struck down all current gay marriage bans.  While we may not realize exactly how this ruling affected the country for a few years, experts are already anticipating changes in a number of industries.  Those in the real estate industry have a few predictions for how same-sex marriage will affect the mortgage market.

CoupleMore Same-Sex Couples will be House Hunting

Gay and lesbian real estate agents have been helping LGBT couples find and purchase their dream homes for years.  Now that same-sex marriage is legal, many expect the number of gay and lesbian couples searching for a home to increase.  Newlyweds may want to jettison everything from their single lives, including their individual homes, now that they can legally create a life together.  This means that more houses are going to sell, and the number of mortgages is going to increase.

More Couples May Qualify for Mortgages

Some experts are going back and forth on this, but overall, most agree that married same-sex couples are likely to have a better chance at qualifying for a mortgage, which means lenders will be making more mortgages.  This is because when married couples apply for a mortgage, they’re considered as one unit.  The low income or bad credit of one can be counterbalanced by the higher income or better credit of the other.  When two people apply for a mortgage jointly as individuals, this isn’t always the case.  Of course, bad credit can still hurt a married couple, but it’s not necessarily going to deny them the mortgage.

More Refinancing

The mortgage market can also expect to see a surge in refinancing soon.  There are a couple of reasons that many predict this will happen.  First, now that they’re married, many couples will want to jointly own their property and share the responsibility.  This means putting both spouses on the mortgage, and that requires refinancing.  Second, as mentioned above, as a married couple, they may have a chance of getting better mortgage terms than they would have or did have when applying jointly as individuals.  Savvy newlyweds may be able to take advantage of lower interest rates and other savings by refinancing their home.  What better way to start their married life together than by lowering their house payment?

Buying a Home When One Partner Has Bad Credit

Because both of your credit scores will be used by the lender when you apply for a mortgage together, one partner with bad credit could result in denial of your loan application or an offer to lend with a higher interest rate. Following are some tips for dealing with bad credit when buying a home with your partner.

download1. Under the Federal Fair Credit Reporting Act, FCRA, nationwide credit reporting agencies must provide individuals with a free copy of their credit report once every 12 months. Those agencies include Equifax, Experian and Transunion. Both of you should obtain copies of your reports and review them to ensure that they are complete, accurate and up to date before you apply for a mortgage.

According to the FCRA, both the agencies and the entity providing the information are    responsible for correcting incomplete and inaccurate information on your report. If you find inaccurate or missing information, you should let the reporting agency know what information is inaccurate. The agency will then conduct an investigation by notifying the information provider that will, in turn, complete an investigation and report back to the reporting agency. You will receive a written copy of the results of the investigation and, if it results in changes to your credit report, a free copy of your credit report. That report does not count against your once every 12 months free report.

2. If your partner’s credit report is accurate and complete, you should explain the reason for the bad report to your potential lender. For example, reduced income as a result of unemployment, illness or other unexpected events that occurred. This may make them more willing to work with you.

3. Lenders may feel more comfortable giving you a mortgage loan if you pay a larger amount of money for your down payment, generally more than 20 percent. This may make the lender more comfortable about getting the house back if there is a need to foreclose.

4. Consider delaying the purchase of a home until the partner with bad credit has improved his credit. According to the New York Times, correcting any credit report errors, paying all bills on time for at least a year and paying down credit card balances is a good way to raise your credit score.

Mortgage lenders look at your credit report, your income, your debt to income ratio as well as the condition of the home and its current market value when making a decision to approve your loan. It is possible that, once all factors are considered, the lender would be willing to finance your home for you.

The first step in purchasing a new home is to speak with a local LGBT real estate agent at www.GayRealEstate.com. He/she will have the knowledge to assist you through the process, including referring you to the appropriate lenders.

Why you need to refinance your mortgage immediately

For years, the mortgage industry has been living off refinancings, which have often accounted for more than 70% of mortgage applications. Now the refi rage is fading, as rising rates make it harder to save money by replacing an old loan with a new one.

RefinanceBut homeowners should not give up too quickly. Saving a little isn’t as good as saving a lot, but better than saving nothing. Those who can still refinance to trim their monthly payments would be wise to start hunting for a deal now, as the remaining opportunities will slip away if rates keep going up.

“The refinance share of mortgage activity decreased to 64% of total applications, the lowest level since May 2011, from 67% the previous week,” the Mortgage Bankers Association reported last week.

“Mortgage rates reached their highest point in two years,” said the MBA’s vice president of research and economics, Mike Fratantoni. “At these rates, many fewer homeowners have an incentive to refinance, and refinance application volume declined more than 15%. With this decline in volume, the refinance share dropped to its lowest level in more than two years.”

The average 30-year fixed-rate mortgage now charges about 4.5%, according to the BankingMyWay.com survey. The rate was 3.6% in early May.

Few experts think the rate will fall significantly in the months ahead, as markets anticipate the rising interest rates that typically accompany strengthening economies. So there’s little reason to postpone a refinancing. After all, today’s rates are still low by historical standards. The 30-year fixed loan often goes for 6% or 7%, or more.

To make a refinancing pay, the homeowner must keep the new loan long enough for its lower monthly payment to offset the refinancing fees. That obviously means that a small reduction in mortgage rate takes longer to pay off than a large one, one reason the recent jump in rates has reduced the number of refinancing applications.

But a number of lenders offer mortgages with very low fees or none at all, according to HSH Associates, the mortgage-data firm. That can make a refinancing pay off fairly fast even if the rate reduction is small.

But borrowers should assess these deals carefully, as the great fee deal may be offset by a higher loan rate. Use the Refinance Breakeven Calculator to figure which loan would provide the largest savings over the period you expect to have the mortgage.

Some lenders have eased their standards for approving applicants, HSH adds. If you worried that a less-than-perfect credit history would keep you from getting a new loan, your chances may now be better than you think.

Another factor making loans easier to get is the recent rise in home values. In recent years, most lenders have required borrowers to have at least 20%, allowing them to borrow only 80% of the home’s value. When home values were falling, many who had started with plenty of equity found they no longer met this minimum. Now many of them do.

And some lenders will accept applicants with only 10% equity or less, if they have good credit histories and enough dependable income.

So if you are paying 5%,6% or 7% — typical rates in the latter years of the past decade — it could pay to look into a refinancing today. It’s not likely the deals will get much better.

The author of this article is: Jeff Brown

See the original post at: http://homes.yahoo.com/news/why-you-need-to-refinance-your-mortgage-immediately-194527154.html

Posted on July 26, 2013 in Refinance