5 Thing That- Can Drive Up Your Mortgage Rate

5 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) 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.

5) 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.

Getting The Most Out Of Your 401(K)

No matter your age, it’s always a good time to start, or continue, educating yourself about your retirement plan and how you can make the most of what’s offered to you.

Many individuals have heard of 401(k)s, but they may not be entirely aware of how they work, or how they can benefit from them.

A 401(k) is an investment retirement plan offered by most corporations to their employees. You specify the percentage of your paycheck you’d like to save and your company deposits that money into your account through a payroll deduction. Although they are sponsoring the plan, your company doesn’t actually invest the money, but instead hires a company to handle employee investments.

Company Matching Contribution

Every year maximum limits are determined by the IRS on how much an individual can contribute to their 401(k) depending on inflation. Currently, individuals under the age of 50 can contribute a max of $18,000. Many financial advisors encourage investing the maximum amount, if you have the means, in order to reap the benefits of valuable tax breaks.

If the maximum amount is out of reach for you, many employers offer a matching contribution that you must qualify for by contributing a specified percentage into your 401(k) plan. You should strive to contribute enough to meet the requirements of your company’s matching contribution so as not to miss out on virtually free money.

What am I investing in?

401(k)s are simple, in that all you must do is specify how much you want to invest, and then your company does it on your behalf. However, where you choose to invest your money is a decision you must make.

There are a number of investment or mutual fund options you can choose. Figuring out the investments that are best for you is something you should take time researching and receiving financial advice on. Stocks generally have the best return in long-term investments, such as retirement, because they typically produce yields that outpace inflation. There’s also the possibility of considerable gains with a diverse portfolio of investments.

How and when do I receive my funds?

At the golden age of 59½ individuals can begin withdrawing money from their 401(k)s without penalty. Withdraw at any age before that and you could get hit with an early withdrawal penalty tax. There are some exceptions to the rule, but for the most part, withdrawing early isn’t a great idea; In addition to the 10% penalty, you will lose out on the tax-deferred growth advantage and have to pay income tax on the full amount distributed.

If you don’t need, or want, to take money out at 59½, you can legally hold off on distributions of funds until age 70½. Then, you are required by law to make minimum withdrawals from your plan. Once of age, you are able to receive funds through the following distribution options: Cash out, rollover, income annuity and installments.

For more money saving tips, check out our post on Building your Emergency Fund

4 Tips for Paying Off Your Mortgage

4 Tips For Paying Off Your Mortgage

Many people have a goal of paying off their mortgage early, which is great, but not always feasible or the best decision for everyone. For instance, homeowners with low mortgage rates may decide putting their extra money toward a retirement plan is a more financially savvy move than paying down their mortgage quickly.

There are a number of valid factors that can come into play when deciding if it’s the best decision to pay off a mortgage early, however, there are many who make it a personal goal to get their mortgage paid off as soon as possible. If you fall into that category, these tips are for you!

1. Shorten your mortgage term

Refinancing your mortgage with a 15-year mortgage term can help you pay off your loan faster under certain conditions. It’s important to look at the whole picture when making this type of decision. How long do you have left on your current loan, will your new interest rate be higher or lower than your current interest rate, and do you have the funds to cover all of the closing costs associated with a refinance? Once you answer those questions you can decide your next move.

2. Put extra funds toward your mortgage

Let’s say you receive a bonus or a nice tax refund that allows you to pay a large sum towards your loan. Those additional payments on the principal can help cut the total interest on the loan.
With irregular additional payments, however, it will be difficult to predict your mortgage payoff date.

3. Make an extra payment every year

A great way to make one extra payment a year is to save 1/12 the amount of your monthly payment each month and after the 12th month make the extra payment.
This doesn’t tie up the extra money in case an emergency occurs and you need the saved funds.

4. Pay more each month

Instead of waiting until the end of the year to make an extra payment, you can pay more toward principal each month.
Consulting your financial advisor and loan provider is key when making these type of financial decisions and deciding to pay more aggressively.

To new grads

To New Grads: Now Is The Time To Start Thinking About Buying A New Home

I know what you’re thinking, you just received your diploma and may not even have your first job lined up prior to graduation yet, so isn’t thinking about buying a home a bit premature?

My answer to that question is a big resounding NO.

Now is the best time to start investing into your future; the sooner the better. I don’t mean today is the best time to go out and purchase your first home, but what I am saying is that you should be thinking about the cost of a home and mortgage and begin prepping financially.

Buying a new home takes money so it’s best to be proactive.

Before we talk about saving for a house, we must first mention the dreaded topic many new graduates have pushed towards the back of their mind. Debt. 66% of new graduates from public institutions are graduating with some amount of student loan debt. That’s reality. Carrying student loan debt doesn’t automatically disqualify you from homeownership, but you will need to create a loan payment schedule in order to reduce your debt to income ratio.

Next on your financial prep checklist is building your credit history. Responsible use of credit will be important when applying for a mortgage loan. If you’ve had credit before and made some errors or have never had credit, now is the time to start cleaning up and building. Pay off credit debts and use a card or small auto loan to make regular payments that show you know how to handle money and make wise decisions.

Eventually in your near or far future you may want to put down roots and purchase your first home, and the steps you take now while you’re young will set you up for the best possible scenario in your mortgage and home options.

Building Your Emergency Fund

Unfortunately, humans don’t have the capacity (as of yet) to predict the future, so until that time comes, we must prepare for the unexpected.

Making sure to put aside money for an emergency fund is one of the wisest financial decisions one could make. Natural disasters, car accidents, medical emergencies and job losses are just a few scenarios that can set your funds back by a considerable amount.

Related: Are your expensive habits costings your hundreds?

Don’t let surprise circumstances leave you in financial ruin. Check out our tips below on how to grow your emergency fund.

1. Set a Goal

Without a goal in mind, you decrease the likelihood of actually building a fund. The general rule of thumb is to set aside 6 months’ worth of living expenses. Depending on your income and bill obligations, this may take a while to build up, but  even starting with a small amount will help you get on the right track of hitting your target goal.

2. Get a separate account

Separating your funds helps you stay focused as well as diminishes confusion between what’s emergency savings and what’s not. It helps to set up an account separate from your regular checking to reduce temptations of dipping into the fund for non-emergency spending.

3. Set up a recurring transfer

Treating your savings like another bill is one of the best ways to make sure you’re stashing away money every month. When you set up your monthly budget, plan how much you want to take out for your savings and set up an automatic transfer into your savings account on the same day every month like any other bill payment. You may even decide to setup a direct deposit from your paycheck so that you never see the money that’s being taken out.

4. Determine rules for spending

Depending on circumstances, you may find yourself contemplating what exactly qualifies as an emergency and dipping into your savings for things you justify as such. This is why it’s wise to set up restrictions beforehand. Ask yourself, what types of things constitute an unexpected emergency, and what kinds of things don’t; lay the ground rules and then stick to them!

5. Start somewhere

One of the hardest parts of any goal is getting started. Building a 6-month emergency fund won’t happen overnight; it takes time. Start small and over time as more money frees up increase the amount you save. For instance, if you were making a $45 credit card payment every month and you paid off the balance, add that $45 payment to your monthly savings transfer.

If you have a meager savings that you’d like to grow, or you have no savings whatsoever, there’s no better time than the present to start actively preparing for the unexpected. Your bank account will thank you later.

For tips on easy ways to save money, check out our blog How to Save Money Without Doing Anything!

Why It’s Important To Get Pre-Approved

Beginning the process of looking for a new home can be a daunting task and for many first time home buyers, knowing where to start can be confusing. You may be asking yourself “how do I go about paying for a house?” or “how much home can I afford?” Well, both of those questions can be answered after getting a pre-approval.

What’s a pre-approval?

It can be difficult for the average person to pay for their home with cash. So, how do many people buy a home? Well, the answer is quite simple and many individuals go this route every day; apply for a home mortgage loan.

At AmeriSave Mortgage Corporation, we’ve made this process simple, offering online services that allow you to go through the loan process from the comfort of your living room.

Obtaining a pre- approval is one of the first steps you should take in your home hunting process. A pre- approval can assist in your house hunt because you learn just how much of a loan you qualify for and that makes home shopping easier. Not to mention, sellers will view you as a serious buyer and this could put you in good standing in their eyes when you begin to make bids on a home, especially if there are multiple offers.