6 Things That Can Drive Up Your Mortgage Rate

When applying for a mortgage loan, every borrower hopes to receive the best rate possible. However, many may not be certain what factors actually determine the rate they receive.

Check out our list below of the top 5 things that could be driving your mortgage rates through the roof!

1) Credit Score

This is a given and many are aware that in order to receive the best rate possible, your credit score must meet your lender’s credit threshold.

If your score is under that threshold, you could end up paying more interest as opposed to someone whose credit score is higher.

Check out our blog post on the 5 steps you should take to get your credit, mortgage ready!

2) Occupancy

If you are mortgaging a property that isn’t your primary residence, you could pay significantly more in interest.

Because second homes are riskier investments, interest rates reflect those risks lenders must take into account for negative possibilities.

3) Loan Amount

If your loan amount is really high or really low, you could pay more in interest. Loans over or under the conforming loan limit could possibly see raised interest rates due to lenders having to make up costs.

4) Location

Depending on the state you live in, your interest rate could end up being higher or lower.

5) Down Payment

Generally speaking, putting down a higher down payment could make your interest rate lower. This is because the more stake you put into your future property, the less of a risk you become.

6) Type of Interest Rate

There are two types of interest rates: fixed and adjustable. A fixed interest rate stays the same whereas an adjustable rate changes based on the market.

You typically can get a lower adjustable rate; however, over time that rate could go up or down.

Finance 101: Cutting The Cord On Cable

Are you one of the many individuals who pay a $100+ cable bill every month and only watch a handful of the channels that you’re paying for? Well, if that’s the case, maybe it’s time to cut the cord on your cable and opt in for some less expensive options.

No, I’m not saying you have to throw out your television set, or purchase an outdated antenna to catch a fuzzy picture of your cities local channels. There’s actually a handful of alternative options available so that you can significantly cut down your monthly payments, and still catch many of your favorite shows!

The World of Streaming

Many things that sound too good to be true often are, but that’s not the case when it comes to streaming all of your favorite shows at a fraction of the cost for cable. Right now there are a number of streaming services available with high quality popular shows.

Sling Television ($20 per month)

If you’re a heavy TV watcher, then this is the streaming service for you. With their $20 basic package, you receive many of the popular channels you would get with your cable subscription. Sling TV offers real time streaming from ESPN, ESPN 2, AMC, Food Network, Disney Channel, TNT, Travel Channel, TBS, Adult Swim, CNN, Cartoon Network, ABC Family, and more. They also offer On Demand options for TV and videos.

Amazon Prime ($99 per year)

Having an Amazon Prime account offers you many perks for the full Amazon service such as free shipping on products. However, its movie offerings are top notch, and it also offers many popular network shows including HBO.

Hulu Plus ($7.99 per month)

This streaming service is for individuals who are more into watching TV than movie watching. With Hulu plus you can stream the latest shows that are currently running; whereas with Netflix or Amazon, there is usually an extended window of time before the network shows are available.

Netflix ($8.99 per month)

This may be the most well-known and familiar service to many streaming users. Netflix is the mecca for movie and TV streaming. Offering its own award winning content as well as popular titles, Netflix has the biggest library of any streaming service.

The Exodus From The Suburbs

Remember the days when getting married, finding a home in the suburbs with a white picket fence, and having 2.5 kids and a dog were the epitome of the American dream? Yeah, me neither.

It’s 2016 and people are staying single longer and trading suburbia for city dwelling.

As the social generation, millennials are constantly looking for ways to interact, whether virtually or face-to-face. Paying attention to their preferences and lifestyle choices will be especially important to developers looking to profit from the largest generation of consumers.

Major cities and metros appeal to the communal side of millennials, allowing them to be within walking distance to social interactions. Urban centers full of individuals with diverse backgrounds as well as countless shops and restaurants are seeing an increase in city dwellers at a rate higher than years past.

This doesn’t necessarily mean the suburbs will become deserted as years go by.  Offering millennials a more city-like feel may prove beneficial in luring individuals back to the burbs. Concepts such as New Urbanism are all about creating urban designs in suburban spaces. This is done by incorporating more mixed housing options and adding public spaces that are pedestrian friendly, like parks for community gatherings.

Counter debates would say, and history has shown, as millennials grow older and expand their families, they will return to the suburbs they left behind in their youth. But, if major cities continue to focus on bettering their public school systems and decreasing crime rates, the very things that cause individuals to move away from city life, we may begin to see a more permanent shift in where families are opting to raise their children.

Check Out These 5 Steps To Get Your Credit Mortgage Ready!

If you’re considering buying a new home, then you’re probably aware of the criteria that factors into obtaining a mortgage loan. However, one of the many standards that concern most individuals is the shape of their credit.

Your credit does affect your loan eligibility and rate, that’s why it’s important to take steps in order to improve your report/score before submitting an application.

Check out these 5 steps so that you can have confidence when applying for your next home loan!

1.  Check your credit report

Okay, first things first, check your credit report. You’ve probably heard this advice many time, but there is a reason it is the first step you should take. Credit reports may have mistakes; in fact, according to a report by the Federal Trade Commission, 1 in 5 Americans have an error on their credit report. Those aren’t the best odds. Spending time once a year reviewing your report to confirm there are no errors can increase your score and ultimately save you money; better scores typically equal better rates.

2.  Pay down your debt

You’ve probably heard of this little thing called debt-to-income ratio, and if you haven’t, get acquainted with this term. Basically, your debt-to-income ratio is the total of your monthly debt payments divided by your monthly gross income. The higher your ratio, the bigger risk you are to a mortgage lender because you’re less likely to be able to pay your monthly mortgage bill. Paying down debt and paying off collections will also be good for you in the long run because it’s less monthly payments you have to make on top of your mortgage.

3.  Don’t over utilize your credit

No matter how high the limit is on your credit cards, utilizing a high percentage can have a negative impact on your credit. A good rule of thumb is to keep your utilization under 30%, so if you had a credit card with $1500 limit, you wouldn’t want to spend more than $450 at any given time. Also, if you can afford to pay off your credit cards in whole every month, that can help boost your score.

4.  Diversify your credit lines

This may seem counterintuitive, but with responsible managing, having several forms of credit lines can improve your credit. A good mix of credit cards and loans that you make regular, on-time payments with low utilization shows lenders that you are responsible with your debt.

5.  Get some credit

For many, the world of credit cards and personal loans seems daunting and scary, so they opt out of dealing with any form of credit at all. However, building a credit history is important if you plan on purchasing a home with a mortgage. The older your credit history the better, so start building soon. Secured cards and small loans are good starting places. If you’re still unsure, ask a financial professional for help.

If you already follow these steps, then you’re on the right track and may be ready to venture into home ownership. Check out our rate calculators and get your no obligation quote today!

Renters Can Actually Afford To Buy Homes… Why Aren’t They?

When it comes to homeownership, many viable candidates take themselves out of the running before they even verify if they are actually eligible for receiving a mortgage. In many instances, these potential contenders can qualify to buy a home! So what’s holding them back?

False information

One common contributor to the lack of homeownership is inaccurate information. Individuals believe they can’t afford a mortgage or that they aren’t financially stable enough to get approved. Also, many may still believe that renting is the more affordable option like in years before; however, that may not be the case in many situations. Higher demand for apartments have caused soaring rent rates, driving the monthly payments to well above those of mortgage payments so it may actually be cheaper to own a home than to rent one. As reported by National Mortgage Professional, according to a survey done by Zillow, 14% of renters can afford to buy homes.

Fear

The millennial generation, which is now the largest consumer generation, grew up during the bursting of the housing bubble and the downturn of the economy. Many of them saw family members suffer major losses in their home investments. It isn’t shocking that this would have a negative impact on the outlook of home ownership.

Debt/Creditworthiness

More than 40% of Americans carry a student loan balance, with the most recent graduating class averaging a little more than $35,000. With that type of financial burden looming over their heads, it’s understandable why individuals are putting off homeownership. In fact, paying off debt before applying for a mortgage loan could save money in the long run by decreasing your debt-to-income ratio affording you better rates. However, with student loan repayment plans having 30-year loan terms, waiting until all of your loans are payed before buying a home may not be the best option for you and your family.

Lack of desire

For individuals who elect to rent, finances may not be a major concern or reason behind why they choose not to own. With renting comes flexibility, and for individuals who love to travel and don’t want to settle down in one place for too long, renting is the best option. They are able to enjoy the community an apartment may provide through amenities or living in a major city.  Not to mention, with homeownership comes a whole other set of responsibilities such as maintenance and repairs, yard upkeep, and fronting all of the costs.

These concerns may be the reasons individuals are holding back for now, but as history shows, there has always been a rising and falling in the housing market and although homeownership is currently at an all-time low, the probability of it staying this way is very unlikely.

Are You Smarter Than Your House? The Rise Of Smart Homes

Smart houses have been in development and on the market since the early millennium. As time passes and technology becomes even more advanced, incorporating augmented realities and hi-grade security for average consumers, the rise of smart houses or smart house features in homes across the country has risen.

So what are smart homes and how do they work?

The term smart home has become somewhat of a buzzword, and many may not even realize what the capabilities of such a home entails.

Our minds can quickly return to our Saturday morning cartoon days where the Jetsons’ abode consisted of a two car garage to park their flying vehicles while levitating somewhere in space. However, not everything about the Jetson’s futuristic lifestyle is too off base for 2016; robots that vacuum, video chatting capabilities, and computers we can wear are commonplace.   What these types of houses intend to do is manage all of the technology associated with your home using a single medium such as a remote, tablet or smartphone.

Connecting all of the devices and appliances in your home so that you have 24/7 access to every feature from your coffee maker to your security system further proves that we live in a country obsessed with convenience and instant gratification.

This type of technology allows you to have control over any device that has electricity, through voice commands or the click of a button, and since you can access these functions using your personal computer or phone, smart homes are no longer exclusive to the extremely wealthy.

As smart technology continues to change the way we live and interact with our homes on a daily basis, we may begin to see smart homes as not only a new norm, but as a standard and expectation in home building.

Buying a Home with Student Loan Debt

Managing Your Student Loan Debt

It’s 2016 and student loan debt in the U.S. is sitting at a staggering $1.3 trillion. That total is comprised of about 43.3 million borrowers. With that many Americans holding a student loan balance, one might assume that borrowers are educated about all things student loans so that they don’t make critical mistakes with their finances. Unfortunately, that is not the case.

On average, over 40% of borrowers aren’t making their student loan payments, and about 3.6 million people have defaulted on their loans; that’s a total of $56 billion in student loan debt.

As many are aware, defaulted loans have significant effects on your credit, making it extremely difficult to receive a loan, purchase a car or obtain a mortgage. The negative impact is not only financially crippling, but extremely stressful. Constantly worrying about ruined credit or garnished wages can be quite depressing.

If you carry a student loan balance check out this list of dos and don’ts so you don’t end up making a life altering mistake.

Deferment vs. Default

These are two terms you don’t want to mistake. A default is a failure to fulfill your financial obligation to an institution, but a deferment is something totally different.

Deferring your student loans, or getting permission to avoid payments for a specific set of circumstances, can give you some breathing room if you’re struggling with unemployment or other types of economic hardships. A forbearance is a similar type of loan relief only unlike deferments in which interest only accrues on unsubsidized loans, with a forbearance interest accrues on all loans.

Getting a deferment or forbearance will not cause damage to your credit score, although they will be noted on your credit report. A default, however, will cause your score to take a major hit.

Strategize

There are many types of repayment strategies and plans offered for federal student loans that can help you with making your student loan payments. Income-based and pay as you earn plans are particularly popular and can help you avoid high monthly payments.

The act of making a plan to pay off your debt alone increases your odds of not defaulting and paying off your loans. There’s something to be said about the sage advice “those who fail to plan, plan to fail.”  If you haven’t already, sit down and strategize a 3-to 5-year plan detailing how you can pay off your debt.

Don’t Be Duped 

If it seems too good to be true, it probably is. Debt elimination, advanced fee and even some consolidation programs aren’t always what they claim to be. Scammers use student’s vulnerability against them in order to make a profit. Any forgiveness or consolidation programs should be well researched to ensure that they are reputable.

Check out our post “Growing debt for new grads”

There is no hard and fast rule on what the best course of action is to take when managing your student loans. The best things you can do are stay educated, look at all of your options, and make the best decisions that work best for you and your financial being.

Tiny Homes: The New Trend People Are Obsessing Over

Go big or go home. To your tiny home that is. There is a new social movement gaining popularity across the U.S.

The tiny house movement has picked up traction, even gaining media attention through HGTV television shows such as Tiny House Hunters, Tiny House Builders and Tiny House, Big living.

So, what’s up with tiny houses and why is everyone talking about them?

Imagine moving you and your family from your average sized 2,600 square foot home, and downsizing to a house no bigger than 400 square feet! Sound crazy? Well people are taking the leap and living compact lives as a means to save money.

These costs savers may seem like an appealing option, and for some may be a great alternative depending on their circumstances, but tiny houses have some very distinct drawbacks as well.

Ok, tiny homes are absolutely adorable, we can all agree on that, but they’re not exactly the easiest investment to undertake. For instance, while buying or building a tiny home may be relatively cheap, without land to park your new abode, you’ll run into some legal trouble. Purchasing land isn’t the cheapest when you add in sewage and water management.

Another practical drawback of living tiny is, unless you’re single, you have to be in close proximity to whomever you live with… all the time. Even the best friend and familial relationships can use a little space and alone time.

Lastly, unless you have $23,000 at your disposal, you must figure out how you intend on financing your small dwelling space. Mortgage lenders require a minimum amount in order to lend money, and tiny house values are often too small. Not to mention, the home regulation requirements your house must meet need to be up to code. Personal, secured or unsecured loans may be an option but they can be costly.

All in all, the Tiny Home popularity has increased and they may create great possibilities for those who aren’t quite ready for homeownership, but as with most things, there are pros and cons.

summers hottest markets

Summer’s Top 5 Hottest Housing Markets

The summer days are hot and so is the housing market. This year, Florida dominated the list with 4 of its cities ranking in the top 5 markets and Washington taking the 5th spot according to data reported by Ten X, an online real estate marketplace.

The markets are ranked based on strong demand, home price appreciation and economics and demographic growth.

Check out the list below:

5. Seattle, Washington

Home sale growth increase from last year: 10.8%

4. Fort Lauderdale, Florida

Home sale growth increase from last year: 3.9%

3. Tampa, Florida

Home sale growth increase from last year: 4.5%

2. Orlando, Florida

Home sale growth increase from last year: 5.1%

1. Palm Beach County, Florida

Home sale growth increase from last year: 4.3%

Are Your Expensive Habits Costing You Hundreds?

A habit, as defined by Merriam-Webster, is a usual way of behaving: something that a person does often in a regular and repeated way.

Life’s little luxuries are nice to indulge in every now and again, but when splurges become habitual practices, your savings can seriously suffer.

Try cutting out some of these habits and finally make waves on that 6-month emergency fund you’ve been meaning to build up.

1. Wasting groceries

Picking up food after work on the drive home or ordering takeout is a habit that could cost you quite a bit of money and wasted food. Yes, it’s convenient, but if you’ve already done your grocery shopping for the week, or month, you are throwing money down the drain. Make a grocery and takeout budget for the month and stick to it.

2. Paying your bills late

With charges of $25 and up, late and overdraft fees can really set you back. Setting up automatic payments and making sure you have enough funds to cover your costs will save you money and keep you from having to pay a hefty bill.

3. Fancy lattes every morning

Starbucks is great, most of us can agree on that, but it can also get expensive. Especially if your coffee drink of choice is a $6 venti caramel macchiato (those things are addicting). I’m not telling you not to splurge on your favorite coffee drinks, just don’t make it a habit. Treat yourself to a specialty drink every now and then but opt for a simple, less expensive, cup of joe with cream and sugar, or even better make your coffee at home!

Read our blog about how to reward yourself for avoiding splurging.

 4. Designer shopping

I love my MK bag; in fact, I may even be obsessed with it, but updating to a new handbag or shoe every time Michael Kors or Coco Channel decides a style they released last week is outdated can dry up your entire paycheck. Splurging on expensive items is something you should do sparingly. Try taking a page out of Facebook CEO Mark Zuckerberg’s book and just wear the same thing every day. It seems to work for him!

 

5. Paying for a gym membership… you don’t use

Ok, sure you had great intentions of working out every day when you originally bought that $50 a month gym membership, but intentions don’t save you money, and in this case, they lose you money. Time to be realistic and ask yourself “is it really worth it to pay for something I haven’t used since January 2nd?”