Category Archives: Finance

Here’s Why You Should Pay More Than 20% Down Payment on Your Ogden Home

A couple looking at their new homeNext to Salt Lake City, Ogden, Utah is one of the best places to set up a business or start a career. The historic city is also a transport hub, and with many universities around, it is teeming with new and young talent. Most of all, the cost of living is affordable, according to Sperling’s Best Places.

When it comes to housing, property prices are competitive with a median price of $180,000. Note, though, that appreciation has been strong over the past few years and that it may increase up to 4% by 2018. There’s no better time to buy a property there than today, but then how much should be your down payment?

Utah is no different from other states. It can vary from zero to 20%, and it depends on the lender. Some may allow you to pay as low as 3.5%. But if you want to save money, you should aim for something higher than 20%.

Avoid Private Mortgage Insurance

One of the reasons to increase your down payment is to avoid paying private mortgage insurance. Also known as PMI, it is a type of insurance policy that allows the lender to make a claim in case you default on your home loan. In other words, it protects the lenders, not you.

While PMI allows you to buy a house with a very small down payment, it also means additional costs. Although you can cancel it, you can do so only when your loan-to-value ratio is at least 78%. So you may end up paying this for months or a few years.

How to Avoid PMI

If you want to stop paying PMI, then you need to reduce your credit risks. There are two ways to do that. One, you can add improvements into your home to increase its value or equity. The second, and the easiest as what Wasatch Peaks Credit Union mentioned, is to ask for down payment assistance in Ogden. A credit union can provide you with the money you need not only to pay off the down payment but cover over 20% of the home loan.

Your life in Ogden doesn’t have to begin with a huge mortgage. You can make it more affordable by avoiding PMI and getting the assistance you need.

5 Money Matters to Consider When Buying a Franchise

Man stacking coins in increments as a concept of investment growingIf you are planning to invest in your own franchise, one of the vital steps you need to take is a thorough due diligence exam to make sure that you’re on the right path prior to signing an agreement. You’re probably confused and inundated with millions of questions, but the following are vital money matters you need answers to before taking the leap.

1. The Initial Investment

In general, initial franchise fees differ from several thousand dollars to a couple of million dollars. You will need to get a clear understanding of fees and how much you’ll need to get the franchise off the ground and earning.

2. The Liquid Capital

Apart from the startup costs, you’ll need sufficient operating capital for a couple of months until you break even. Knowing this magic number will help you prepare financially and determine when you’ll start reaping profits.

3. The Franchise Company’s Financial Capability

Knowing how financially strong the franchise company is could lend you an idea of how successful your franchise could be. Consider asking how they experienced consistent growth and their plans expansion plans if any. You will likewise want to find out if where they get the significant portion of their income, whether from selling franchises or royalties, or perhaps because they assign a sufficient amount of funding to their operations.

4. Your Potential Profit

While the franchisor can’t possibly forecast how successful your franchise will be, they must have an accurate idea of how much their franchisees make. Make certain to ask beyond the gross sales since this doesn’t operate expenses such as rent, labor, etc.

5. The Ongoing Fees, Marketing Fees and Royalties

You need to take a step back and understand how much you’re expected to pay the franchisor with regards to miscellaneous fees like royalties, marketing, etc. You need to determine how much this would cost, so you could set the right budget and accounting for royalties.

Before you invest in a franchise and sign on the dotted line, get clear answers to these crucial money matters. Once you do and you’re satisfied with the franchisor’s answers, you’ll feel more confident about investing in and running your very own franchise.

Refinance Basics: FHA Streamline or Conventional Loan?

Jar full of coins

Jar full of coinsIf you are concerned about refinance rates increasing, but have an FHA loan and are still considering refinancing, you could reflect on transitioning to a conventional mortgage. However, this move comes with its own advantages and disadvantages, so you need to determine if it is the best move for you.

Conventional Loans vs. FHA Loans

Plenty of first-time homebuyers typically lean towards FHA loans simply because of the less stringent requirements for down payment. However, the FHA typically requires homebuyers to put down a one-time MIP or mortgage insurance premium upfront that is usually 1.75% of the value of the loan.

You would likewise need to pay for a yearly premium already built in into your loan repayments. And when you refinance your FHA mortgage to a conventional loan, you will not need to pay for mortgage insurance, but only if your home equity is more than 20%, says refinance specialists in Tempe.

Save on Costs

Finance expert VIP Mortgage notes that this would result in bigger savings and reduced monthly payments. You could then use the money for repaying your other debts, putting some for your retirement fund, or for building your emergency fund.

However, you need to be prepared for associated costs when you refinance your FHA loan to a conventional mortgage. The most substantial upfront cost would come from paying closing costs that could cost between 2% and 5% of the value of your mortgage.

Insufficient equity

However, if you do not have sufficient home equity, you might get stuck paying for PMI or private mortgage insurance when refinancing. These combined costs could offset the savings you get from the lower interest if you cannot secure a significant discount on your interest rate.

Do note however that you will still need to make yearly payments for mortgage insurance premiums, which is a tradeoff if you decide to go with an FHA refinance.

Getting the Deal that Makes the Most Sense

If you are not entirely certain that a traditional refinance or FHA refinance is the ideal option for you, it is best that you look around and see what other options are available to you.

You need to estimate all associated refi costs including closing costs so that you could determine which option would give you the biggest savings.

Fixed-Rate, Adjustable-Rate, or Hybrid Mortgages: Which Should You Choose?

Man Holding Mortgage Loan Contract And PenFor many first-time homebuyers, choosing the right mortgage can be complicated. There are different types, as well as variations and terms for those loans. The good news is, you don’t need to be an expert to choose the right one. It is best to start with basics of the three types of mortgages.

Fixed-rate mortgage. As its name suggests, this has a locked-in interest rate throughout your term (10, 15, o3 30 years). Unless you refinance or pay it off, the interest rate remains the same for as long as you have the loan. If you ask a mortgage company in Portland, they will tell you that this option is ideal if you plan to keep the house for five years or more, or if the interest rates are going up.

Adjustable-rate mortgage (ARM). Unlike fixed-rate, an ARM has interest rates that adjust after the introductory period. There are different variations of ARMs so it best to read the fine print carefully before committing. The adjustments in interest will cause your monthly payment to adjust too. It is a good option if the rates are dropping or if you plan to sell the house.

Hybrid mortgage. This combines the features of two loans mentioned. It begins like a fixed-rate loan and then converts to an ARM. This means that the rate will change throughout the life of the loan. Hybrid mortgages have two numbers separated by a slash (/). A 5/1 loan, for instance, has a fixed-rate for five years, but will then become adjustable for a period of one year.

Buying a Loan

Before committing to a certain mortgage type, make sure to talk with different lenders. Compare their terms and interest rates to get the best deal. You may also want to talk about monthly payments that should coincide with your financial plan. Note a good lender can give you advice on how to improve your score and then help you explore loan options.

Do your homework before choosing a loan. Note that other factors such as down payment, credit score, and the debt-to-income ratio can affect your eligibility for a certain type of mortgage.

Important Facts to Know About FHA Loans

Woman handing over a paper labeled loan and pen for signing inMortgage loans offered by the FHA are popular among lower and middle-income borrowers. The standards for these loans are far lower than what is required by banks, and the loans are available for lower down payments. The FHA insures these loans so that lenders don’t have to worry about defaults. The interest rates on these loans are more affordable, making them attractive to consumers.

Here are the criteria to meet if you are planning to apply for an FHA loan:

Credit Rating

The minimum credit rating to qualify for a loan in the FHA program depends on the type of loan one needs. To be able to get a loan with a down payment of just over 3%, scores have to be 580 and above. Those with lower scores can get a loan but need a higher down payment.

Down Payment

A down payment of 3.5% is attractive and affordable for many. Many borrowers are able to tap into their savings or get gifts from family or in the form of a grant to meet the requirements.

Closing Costs

The FHA makes it easier for sellers, lenders, and builders help a borrower with closing costs. Expenses paid toward appraisals, title transfer, and credit report can add up. Any help in this area enables borrowers to get the home of their dreams.

FHA Lender List

The FHA just insures the mortgage; it doesn’t lend directly. Borrowers must approach one of the FHA-approved lenders to get their money.

Insurance

Borrowers have to pay two insurance premiums on their mortgage – 1.75% upfront on the loan amount and the annual premium. These need to be paid on a monthly basis and will vary based on the loan period. Check with the lender about the amount that you need to pay.

Cash for Repairs

As part of the FHA loan program, the FHA has a special facility for those borrowers in need of extra cash to make necessary repairs. Also known as the 203(K), the loan amount is calculated on the project value of a home after the repairs are completed. The maximum amount for which a borrower is eligible is $35,000.

Financial Hardship Relief

FHA listed lenders usually work with borrowers who are struggling to make payments because of financial issues. Borrowers get temporary relief or even modifications on their loans so that they can keep their homes.

The FHA program has made it easier for people to own a home and build equity in it. Look for a financing company that offers this type of loan so you can get started immediately.

The Reverse Mortgage Program: Is a Home Equity Conversion Mortgage (HECM) the Right One for You?

A Reverse Mortgage Form

A Reverse Mortgage FormThe HECM or the Home Equity Conversion Mortgage-backed by the U.S. Department of Housing and Urban Development is among the most popular mortgage options under FHA/HUD’s reverse mortgage program. It’s targeted to homeowners 62 years old and older who are looking to convert the excess equity in their home.

How the Home Equity Conversion Mortgage Works

Your mortgage lender who makes the reverse mortgage program would have the first lien on your home, but won’t get payments like in a standard home loan, nor are you responsible for value deficiencies once your lender gets your home upon your death or when you move out. Primary Residential Mortgage, Inc. added that the greatest benefit of the HECM is that your lender gives you cash, with the exact amount being based on your home equity’s amount and other factors, including your age and the loan’s interest rate. As your property becomes your collateral for the HECM, your lender gets your home when you pass away or move. With this in mind, you or your heirs could repay the mortgage at any time should you wish to keep your home.

Here’s a basic example to illustrate how an HECM works. Let’s say your lender makes a $150,000 mortgage lien on your property that’s currently valued at $300,000. Let’s also say that you have a $100,000 from a previous mortgage. Using the $150,000 of your new mortgage, you could pay off your outstanding loan balance of $100,000. This leaves you with $50,000 extra cash. If you didn’t have an outstanding mortgage balance of $100,000, the cash you’ll receive would be $150,000. You could choose how you receive the extra proceeds: in lump sum payments, line of credit, monthly payments, or a blend or line of credit and payments.

Should You Consider a Home Equity Conversion Mortgage?

As you’re not required to pay off any interest or principal payments on an HECM, this characteristic, along with cash payments (which are non-taxable and won’t impact your Medicare or Social Security benefits), could benefit older adults who need money. If your parents or you are 62 years or older, an HECM could a helpful tool you could use for achieving financial security.

HECM isn’t ideal for everyone, so make sure to examine all the rights and responsibilities attached to it before signing anything.

Advance Healthcare Directive: Is It Possible to Change It Whenever I Want to?

Person with a Serious IllnessChoices concerning your “end of life” are crucial for all people, especially for older individuals and those who have chronic or terminal health conditions. Aside from making certain that your wishes would be granted upon your passing, an advance healthcare directive would likewise relieve your dear loved ones and friends of having to make life or death decisions on your behalf.

What If I Suddenly Change My Mind?

Think of your advance healthcare directive as sort of like a work-in-progress. Your circumstances could suddenly change, so could your opinion and values regarding how your future healthcare requirements should be addressed. With this in mind, you’re free to replace or cancel your power of attorney or living will for healthcare. The exact ways you could go about this could be found on all the forms you were required to fill when you appointed your healthcare power of attorney or living will.

According to a funeral director from McDougal Funeral Homes in West Valley City, you should consider reassessing your funeral arrangements at this time as well to ensure that all your end of life plans are updated and stored together in one place. Additionally, you could likewise change your treatment options considering that you’re fully capable of making such critical decisions. Otherwise, your doctor and surrogate could make the decision for you.

Consider reevaluating your advance healthcare directive every several years or whenever:

  • One of your loved ones passes away.
  • You start a new decade in your life.
  • You experience a substantial deterioration or decline of an existing illness, most specifically when it reduces your capacity to live an independent life, or are diagnosed with a severe health issue.
  • You experience a major change in the family such as a divorce.

Key Takeaways

You could replace, amend, or revoke your advance healthcare directive any time you wish provided that you’re able to make your decisions. Review and reassess your documents every couple of years or following critical life changes to make sure that they would continue to reflect your wishes and situation as accurately as possible. If you end up amending your advance healthcare directive, it’s vital that you notify all relevant people of all the changes.

Are You Familiar with Fees Related to Reverse Mortgages?

Agent and woman talking about mortageReverse mortgage programs differ greatly from typical housing loans, as the involved expenses warrant a larger budget for applicants.

Senior citizens that are 62 years old and above are the only ones that may apply for these loans, provided that they have already settled most — if not all — of their mortgage payments. If you or someone you know fit these criteria, a home equity conversion mortgage (HECM) may be the best option.

That’s because the Federal Housing Administration insures the HECMS, as they comprise almost all reverse mortgage program loans in the U.S. By knowing that they have federal support, your rights as a borrower are not compromised at all.

Calculating Costs

The West Coast currently leads the country in terms of the highest gains in HECM originations between 2015 and 2016. Homeowners in Washington state experienced the biggest equity gain with an average of $31,000 from the final quarter of 2015 up to the same period in 2016.

However, experts say that applicants should consider the fees associated with HECM first before being lured with the promise of clinching attractive gains. Appraisal fees, third-party closing costs, and loan origination fees are just some of the upfront costs for an HECM.

For ongoing expenses, homeowners must take note of annual mortgage insurance premiums and long-term property costs and loan servicing fees.

Changing Times

Gone are the days when reverse mortgages have only been considered to be the last funding option. Now, lending companies and banks offer several ways on how you can use your home equity without the need to move out for the succeeding years.

These types of loans can be beneficial as long as homeowners are fully informed about their obligations to the borrowed amount.

A reverse mortgage will only be a good choice if you have enough funds, aside from knowing a trusted lender that has a thorough understanding of the product.

Construction Loan: Credit and Credit History Requirements

Construction Loan

A construction loan is different from other loans since lenders would be taking a huge gamble in providing funds for something that’s yet to be built. That being said, the credit requirements for construction loans are much more stringent than other loans.

What are the Basic Credit Requirements?

As with any loan type, lenders have their own credit requirement regarding credit scores. Conventional loans, such as VA loans and FHA loans, with a loan-to-value (LTV) ratio of 80% or higher are backed with mortgage insurance to guarantee lenders that they’ll be compensated should a borrower defaults on the loan.

With construction loans, there’s no guarantee. Lenders are taking the risk of not getting paid in case borrowers default on their loans. Likewise, lenders keep construction loans in their portfolio because there’s no demand for them. This means that you must have an outstanding credit score to qualify for a construction loan, explains American Loans and other loan officers in Utah.

Outstanding credit usually means a 750 score or higher, which is true if the amount of the loan exceeds the $417,000 conforming loan limit for the majority of loans. If the loan is lower, however, some lenders might consider credit scores between 680 and 700, which are subject to compensating factors. These factors include a stable and long income or employment history, financial reserves, and low debt-to-income or DTI ratio.

What About Credit History?

In general, you should demonstrate your ability to repay your debts on time, every time, and your responsible use of credit available to you. Your credit history shouldn’t have missed or late payments spanning the past two years, with minor exceptions subject to certain conditions. Likewise, it must be free of bankruptcies, foreclosures, or other credit issues, or if there are, they should be four years or more behind you. Additionally, your history shouldn’t have any unresolved federal debts, judgments, and collections.

Lastly, take note that lenders would also factor in your credit utilization rate. This means that you’ll be considered a bad credit risk if you use your entire available credit. That said, when you apply for a construction loan, make certain that you have less than 20% of your outstanding available credit.

Thinking of applying for a construction loan? Know if you’re qualified based on the above-mentioned info.

A Loan with Only a Signature as Collateral

Personal Loans in ProvoWhat do you need money for here in Provo? Do you plan to have a home improvement project? Are you preparing for the launch of a business or startup? Perhaps you are going on vacation, or you may have suddenly needed medical assistance. Of course, you can use your savings to pay for such things, but what will you do if you do not have enough savings? You can still follow through with planned or unexpected expenses through the use of signature loans.

Signature Sign-Off

Signature loans are personal loans that only need your signature and your promise of payment. Of course, signature loans have other qualifications. Lenders look at your credit history and income to establish your creditworthiness.

Harder Process

Now, signature loans do not have collateral compared to, for example, a title loan that may take an asset as collateral. This lack of collateral may make signature loans harder to obtain. As long as you pass all the qualifications in a borrower, you can acquire a signature loan.

Understand the Loan

Before you close the loan, however, you can review the terms and conditions of the loan. When you do not understand some terms and conditions of the loan, you can ask the lender to clarify for you. You can also ask for all the information about the loan in writing.

Funds for Many Purposes

You can use a signature loan for many different purposes. As already mentioned, you can finance a home improvement project with a signature loan. You can launch a business, pay for a vacation, pay for medical expenses, pay for an expensive purchase, or pay off credit card debt.

Consolidate Debt

To illustrate, if you have credit card balances with high interest rates, and you have a lower signature loan rate, you can pay your credit card debt. You need only pay for your signature loan now, and you get to save money too.

Do you have a high credit score and a stable income source? You can obtain a signature loan and pay for things you need or want.