Warm greetings from all of us here at the Vermont Mortgage Company! We know we talk a lot about mortgages and their different types, but what exactly are the benefits of a mortgage? Amazingly enough, it’s more than just a way to pay for a house over a period. There are many other benefits to a mortgage that can help you, both immediately and over time. Here is a small list of how a mortgage can help you.
Naturally, one of the first and most obvious reasons is because it allows you to buy a house without having to save up hundreds of thousands of dollars in your bank account. This means homes that would be out of your reach normally are available to you! Also, this means you will have money available to you for life situations, good or bad, instead of spending it all on a home. Being prepared never hurts!
Secondly, there are many tax benefits that come with a mortgage. Your interest is deductible, which is incredibly helpful early on. Being able to save your money this way makes paying off your mortgage easier overall. It’s a marathon, not a sprint!
Third, having a mortgage can help you seem more trustworthy in the eyes of the banks. If you have a mortgage with consistent, on time payments, then you are trustworthy. Therefore, if you are ever thinking of getting a loan for a car or a business venture, the chances are higher that you will get one! Always be sure to be on time, however.
Lastly, there’s equity. As you own your home and make payments, your home will accumulate equity. If you buy a $500,000 home with a $100,000 down payment and a $400,000 loan, and the home appreciates 10 percent in one year, you have made a 50 percent profit on your investment. Obviously, this is not a common scenario, but it makes the math a little easier to breakdown. When you finally have your home paid off, you will have a very valuable asset in your possession. Maybe you can sell your home, or leave it to your family someday. After the mortgage, it is entirely up to you.
There are many other great aspects and rewards of owning your own home, if you’d like to know more give us a call. We are always here to support you. Call us802-863-2020, or visit our website.
Mortgage Redo – What Does Refinancing a Mortgage Mean?
Greetings from all of us here at your local loan office! With the transition of the seasons finally upon us, it seems like an appropriate time to talk about something else that would be good transition for finances before the holiday season reaches near. Let’s dive into a brief explanation of a rather tricky topic: Mortgage Refinance.
Most who have gotten a mortgage will be aware of this, but may not fully understand what a mortgage refinance is. Think of it as a sort of ‘Refresh Button’ for your current mortgage. This is done in almost the same manner as the original mortgage was obtained. Life changes and there is nothing wrong with wanting your mortgage to do the same. Your needs today may not be your needs 10 years down the road. The new mortgage can then take the form of whatever the buyer needs, be it a lower rate or monthly payments, cash from a home equity line, or to shorten the life of the mortgage to pay it off sooner. Lots to choose from! Typically, there are three kinds of refinance options available.
Rate and Term Refinance – A mortgage where the refinance only changes the interest rate or term of the original. This is the most common form of refinance, where little is changed, but can have a dramatic effect on the length of time. The owner may even be able to acquire some cash after closing, but not over a couple thousand.
Cash Out Refinance – Like the rate and term option, aspects of the mortgage are changed. However, the biggest difference is the amount of money borrowed. The money borrowed with the loan increases with this option by more than 5% than the original. This extra money is given to the borrower, but since they only owe the value of the original loan, this extra is paid at the closing.
Cash in Refinance – As one can imagine, this is the opposite of the former option. The borrower brings money to the closing to pay off the amount to the banks. This can result in a lower length of time for the mortgage, or a much lower rate. Maybe both! This is a great way to get lower rates for your mortgage, or to even cut out your PMI payments entirely.
This is only a very brief overview of the refinance options for loans. Naturally, this is just the beginning. We encourage anyone thinking of considering a refinance or the mortgage to contact us at 802-863-2020, to speak to one of our talented loan officers. We will be able to answer all questions, and even begin the process. We look forward to hearing from you!
Security Breach – How to Tell if You Were Affected by Equifax
Greetings from all of us at the Vermont Mortgage Company! As many of you have probably heard, Equifax was the target of hackers in the past few months. There are reports that sensitive information from over 143 million people were stolen by these cyber criminals. Within that list, around 200,000 credit card numbers were stolen. This is a huge breach in privacy, and could mean terrible consequences for the victims of the hackers. We hope none of our dear readers were included in these victims of cyber attack, but it is still best to know how to proceed when such a situation arises. We have a few tips for our readers to ensure they know exactly what to do if your security is compromised.
Stay up to date: Always ensure you receive notifications from your bank, or any other company you have given personal information to. If there has been a breach, even a potential one, you should receive a notice from the company. If that’s the case, one should take the necessary precautions. Many companies will have a registry for you to input your information and check to see if you were affected. Even if it’s just a warning, always change your email/password combination, just in case. However, if you are a potential victim…
Freeze Everything: Contact your bank and ensure to freeze your accounts. This will prevent anybody with your information from making purchases with your account, and prevent other forms of identity fraud. Be warned, however, that this will prevent you from doing anything either. If you’re looking to open a new line of credit or get a loan, then plan ahead. Freezing your accounts will prevent this.
Get the Report: Request a credit report from your bank. After a few months, request another one, and compare the 2. Ensure there is nothing fishy going on, and contact the bank if you see something amiss. Also, keep an eye on any transactions on your bank statements.
Fishy Mail: If you begin receiving strange mail/E-Mail, you may be the victim of identity fraud. Again, ensure your information is protected, and contact the necessary companies to begin protecting yourself before you are harmed more.
We don’t want our readers to be victims of any kind of cyber crime. If you’re unsure of how protected you are, contact your banks and see if there’s an account monitoring program you can enroll in for extra security. Always be vigilant with your privacy! We will ensure your mortgage needs stay safe and secure. If you are worried about such privacy concerns, or would like to begin your mortgage journey, feel free to contact us! 802-863-2020 is our number, and our ever-present website is always up.
Why Lenders Care About Large Deposits
Greetings from the Vermont Mortgage Company! Today, we are going to dive into something that can be both good and bad – Sufficient funds for buying a house. Specifically, where said money has come from. As important as it is to have the appropriate funds you also need to be prepared to show where the money is coming from. Large sums of money coming out of nowhere can seem suspicious. If this occurs, it could slow down your mortgage process and potentially bring it to a halt.
First, some background: About 10 years ago it was rather easy to get a loan. Having enough money and making large deposits was a quick fix. However, ever since the housing crash, many safeguards have been set up, to ensure such a thing doesn’t happen again. This means that several Anti-Money Laundering Laws have been put into place. We won’t go into large detail on what these laws are, but we can give you the info you need to make your loan process easier.
Not all deposits are created equal. Making sure your bank accounts are in order is a good first step to beginning a home buying journey. Remember, as we said in a previous blog: make sure your bank accounts and deposits are collected and filed properly. Having access to several months of bank statements and deposits are essential for a loan. But what we are looking at is the deposits unrelated to your job. Perhaps you sold your car online? Maybe your sister paid you back that $1000 she needed last year? Or you just decided to deposit all that money you kept under your mattress for a rainy day. Whatever the case, this is what can put you in a sticky situation when getting approved for your loan.
The Anti-Money Laundering Laws are there to ensure, among other things, the validity of the money and where it came from. Therefore, if you suddenly come into a substantial amount of money, it can be seen as suspicious. Even a few hundred can set off red flags. To avoid this, make sure you have any documentation necessary to show where it came from. Bill of sales, checks, even something as simple as a letter from a friend or relative stating where the money came from and why, anything that can show the money has a source. Yes, it does seem like an inconvenience, but it is there for a reason. The next time you need to make large deposits, ensure it is properly documented.
If you would like to learn more about the Anti-Money Laundering laws, feel free to check out FINRA website. There you can learn more and ensure you are prepared for anything.
On our end, we will be working hard for you to ensure you get the mortgage you need. Be sure to call us at 802-863-2020, or check out our website to begin the process! We look forward to hearing from you. Until then, we hope you have a lovely week!
Lawyer Up – What a Lawyer can do and Why you Need One
It’s that time once again folks! The Vermont Mortgage Company hopes everyone’s week has been stellar. In previous blogs we have talked about who should be on your team when going through the mortgage process, such as mortgage brokers and realtors. Today, we will explore another person you want in your corner: a good lawyer. The lawyers can provide specific services that others may not, and can save you much hassle when it comes to law or administrative related tasks. So what can they do for you?
Firstly, lawyers are able to help you when it comes to negotiating. While price may be at the forefront of your mind, there are many other items that ought to be considered. Lawyers are able to ensure that items in the contract are all in order, covering many of your bases. This can range from terms of payment to contingency clauses. Many of these things can slip the mind of a buyer who is trying to juggle many things at once. Delegating responsibility can save a lot of time, as well as the peace of mind that it will be done the first time around.
Not only can a lawyer help with the legal aspects of the process, they can also offer advice on how to proceed when certain situations arise. Should an inspection or survey be required, a lawyer can help you find someone reputable to perform them. They can also advise you on how to move ahead, should anything arise during such inspections.
Important documents also fall under the expertise of the lawyer. The Purchasing Contract, arguably the most important document in the process, will be reviewed by the lawyer before you become legally bound. Titles of the houses in question will also be inspected, ensuring there are no problems there. Should anything be found, the problems will be remedied instantly. This would be preferable than having a snag arise, slowing the process down by weeks, or any kind of ugly legal battle that could ensue after the fact.
Finally, when the time comes for the house it be sold, they will be there to represent you. They can notify you of what should be brought to the closing, and can ensure the process goes smoothly. The last thing we would want is for a problem to come up right before the closing!
Nothing is foolproof, so covering your bases during a long process is your best bet. There are many things that can go wrong, so having an expert in the room can make the difference between getting your dream house today, or having to wait because one document had an error. At the Vermont Mortgage Company, we have many lawyers we can personally vouch for! When you choose to start the process, we will be able to point you in the right direction of who could help you best. If you have any questions, or would like help finding the best lawyer for the job, we are here for you! Call us at 802-863-2020, or visit us online.
The Keys to Closing a Mortgage Quickly – What you Will Need
Greetings from all of us here at the Vermont Mortgage Company! We hope the week has been a pleasant one so far. Recently, our very own Nick Parent, owner of Vermont Mortgage Company, got himself a mortgage. As he went through the process, he was reminded of how much paperwork is required to get one! Therefore, this weeks blog is about all the paper needed for a mortgage, no matter who it may be. Let’s dive in…
When you start the loan process, you are asked a series of questions. This is to give us some background information so that we may start your loan. After you are pre-qualified, there is much that needs to be done by you so that the metaphorical ball can begin rolling. Paperwork and documentation is an essential part of this process, and knowing what you need and when makes things move quickly. To start, the bank needs to know that you will have the money to pay back the loan. W-2’s from the past 2 years, Pay Stubs, and the contact info for your employers is needed to verify your income. We need to contact them and verify your employment, so making sure these are turned in quickly is always for the best.
However, if you aren’t a W-2 employee, some other form of income verification would be required. Freelancers and self employed people must have income documentation going back at least 2 years as well. Any other forms of income like alimony or child support is also required to be documented.
Bank statements going back two months are also needed. Either have your bank print them out, or print clear copies yourself. This is to enforce anti money laundering laws.
While ensuring what money and income you have is important, documentation of money you owe is equally important. Student loans, credit card bills, and car payments are all things needed for loan processing. Your Debt to Income ratio shouldn’t be too high, or you won’t qualify for the mortgage.
Lastly, we just gotta know who you are. Bring a drivers license, or some similar form of identification. This is the most typical list of documentation needed, but you may need to bring more as the process moves forward. The best thing to do is make sure you at least have all of these ready, at your disposal. Also, making sure they are clear and legible, since we need to be able to read them!
It is a lot to handle, but unfortunately this is all necessary for getting a mortgage. Even if you own a mortgage company, the process is the same. No exceptions! So ensuring everything is on hand and complete will make the process to closing quickly for both you and us! If you have questions on what is needed, or anything else mortgage related, we’re here for you. Call now at 802.863.2020 to get the process started!
Overcoming the Hurdle – Getting the Mortgage is now Easier
Good news from your local Vermont mortgage specialists! Thanks to a change in policy, it will now be easier to get a mortgage. This is especially good news for those who have been struggling to get one recently, or ones who are looking to get back into the mortgage market.
The countries biggest source of mortgage money, Fannie Mae, has recently announced it will be lifting its Debt to Income ratio ceiling for mortgages, from 45% to 50%. With this, the guidelines for a mortgage will now be looser. So how exactly does it make it easier?
When applying for a mortgage, there are many criteria that the applicant must fulfill to be approved. Commonly known ones are things like a good credit score and money for the down payment. These criteria are put in place to protect the banks from losing money. Good scores mean you are less of a risk to give a mortgage, making you more attractive as a customer.
The Debt to Income (DTI) ratio is also very important as a criteria. The bank will take your monthly income, and compare that to your debts and monthly payments. This could be car payments, credit card debt, or student loans. Once that is all added up, they then take the percentage of how much of your monthly income will be taken out. Naturally, the less your DTI ratio is, the more money you will have to pay the mortgage. The bank will be more confident you will not be late or unable to make your monthly mortgage payments. So if you had $10,000 a month coming in, and $4,000 worth of expenses per month, your DTI would be 40%. Not bad!
So with these looser requirements, it is now easier to get a mortgage. The number one killer of mortgage applications is the DTI ratio, so more people will now be able to get through the application process. This is especially good for younger folks, since student debt has always been a looming problem. The American dream of owning a home seemed out of reach for younger generations and the like, but now it is more likely than ever!
However, just because Fannie Mae has risen the ceiling of DTI, does not mean mortgages are automatically easier. You will still have to fulfill all of the other criteria to get the mortgage you’re looking for, so make sure your credit is high. If you are worried about your eligibility, or have any questions, feel free to contact us! We are always here to help at 802-863-2020, or online.
The Seller's Tax Prebate – What it is and how it Affects you
Continuing our quest to simplify some of the Mortgage World’s most difficult subjects, this week we are tackling the beast of Tax Prebates. While these are very helpful for those who require assistance to pay taxes, it throws in a whole different curveball when you are selling your house. If you are buying a home, you may be required to bring more money to the closing. Don’t let this catch you off guard! Let this thorough and painstakingly researched guide help you through it.
So, to start with, what is a Tax Prebate? If you reside in your primary residence, (in Vermont, naturally), and you meet certain income restrictions, you may be eligible for the Tax Prebate. If you are accepted, then your taxes for the next tax year from July to June will be reduced by the prebate amount. This has to be done before April 15th, when you file your taxes.
Now, when one decides to sell their house, things get a bit tricky. Here’s why:
The property taxes affected by the Prebate are not based on the property, they are based on the sellers income. When a house is sold, and the seller has a prebate, the new buyer steps into their shoes. This means they enjoy the lower tax for that year, until the following July.
Therefore, the buyers have to reimburse the sellers for the prorated amount of the state payment for the remainder of the year. This can be due at closing, or can be negotiated between both parties.
There is a catch, however: The taxes are due mid April, but the prebate doesn’t take affect until the beginning of July. What happens if the selling of the house happens in between these dates?
Not only will the current tax year have to be prorated, but the upcoming year will have to be prorated as well. Depending on your state and the taxes due, you may need to bring a fair amount of cash to the closing. But the good news is that your taxes will be lower. Think of it as paying up front, instead of monthly increments!
One thing to remember is that legally, both parties can agree to not do the reimbursement, and can instead negotiate something else. Make sure that you and the other party are on the same page, so that there are no nasty surprises.
We hope this provided some clarity. Definitely keep in touch with your mortgage specialist and attorneys so you aren’t smacked with a large closing cost. If you need any assistance or questions answered, give us a call at 802-863-2020! Our website is always open as well!
**Many thanks to our friends at Stark Law, PLLC for helping us with this weeks blog!
The Seller’s Tax Prebate – What it is and how it Affects you
Continuing our quest to simplify some of the Mortgage World’s most difficult subjects, this week we are tackling the beast of Tax Prebates. While these are very helpful for those who require assistance to pay taxes, it throws in a whole different curveball when you are selling your house. If you are buying a home, you may be required to bring more money to the closing. Don’t let this catch you off guard! Let this thorough and painstakingly researched guide help you through it.
So, to start with, what is a Tax Prebate? If you reside in your primary residence, (in Vermont, naturally), and you meet certain income restrictions, you may be eligible for the Tax Prebate. If you are accepted, then your taxes for the next tax year from July to June will be reduced by the prebate amount. This has to be done before April 15th, when you file your taxes.
Now, when one decides to sell their house, things get a bit tricky. Here’s why:
The property taxes affected by the Prebate are not based on the property, they are based on the sellers income. When a house is sold, and the seller has a prebate, the new buyer steps into their shoes. This means they enjoy the lower tax for that year, until the following July.
Therefore, the buyers have to reimburse the sellers for the prorated amount of the state payment for the remainder of the year. This can be due at closing, or can be negotiated between both parties.
There is a catch, however: The taxes are due mid April, but the prebate doesn’t take affect until the beginning of July. What happens if the selling of the house happens in between these dates?
Not only will the current tax year have to be prorated, but the upcoming year will have to be prorated as well. Depending on your state and the taxes due, you may need to bring a fair amount of cash to the closing. But the good news is that your taxes will be lower. Think of it as paying up front, instead of monthly increments!
One thing to remember is that legally, both parties can agree to not do the reimbursement, and can instead negotiate something else. Make sure that you and the other party are on the same page, so that there are no nasty surprises.
We hope this provided some clarity. Definitely keep in touch with your mortgage specialist and attorneys so you aren’t smacked with a large closing cost. If you need any assistance or questions answered, give us a call at 802-863-2020! Our website is always open as well!
**Many thanks to our friends at Stark Law, PLLC for helping us with this weeks blog!
Unraveling the Mystery – Mortgage Escrow Accounts
Oh boy, this ones a biggy. This week we’ve decided to tackle the beast known as Escrow – what is commonly known as one of the more murky things to grasp in the bright world of mortgage. After hours of research, we have composed a guide to hopefully make Escrow simple.
So, to begin, what is Escrow?
Think of it like a separate little account, like a sort of piggy bank or change jar. Every month you put a little money from your mortgage payment into it, and it slowly grows. Simple! But why do you need this piggy bank in the first place?
The Escrow account helps with simplifying paying for taxes and insurance. When things like property taxes become due, these will be paid for with your escrow account. So you don’t have to worry about due dates and sending off money! All you need to make sure is that the account always has twice the monthly amount in is as a minimum. This provides a safety cushion. So if you need to pay $250 a month, your minimum will be $500.
The point of an Escrow account is pretty straight forward. But there are other aspects that start to get confusing. Take a deep breath, and lets dive in.
The amount that you pay into your account will be determined by a yearly analysis. This analysis will gauge your insurance and taxes, your escrow balance, and whatever payments have been recently made with it. The amount you will owe is predicted, and is then divided into 12 monthly payments. You will receive a letter from your lender showing you the analysis and your monthly amount.
Now, this is subject to change every year, especially after the first year of owning the house. When this does change, you will either get a surplus or a shortage.
A surplus means you will have to pay less every month, as the costs have fallen. Nice!
A shortage means you’re expected to owe more, meaning you have to pay more monthly. Not as nice!
But do not worry – these aren’t any reflection of you, and won’t affect your credit. These are only done to ensure your escrow account doesn’t fall below the minimum, maintaining that safety cushion. If you have a shortage, just expect to be paying a little more every month. If you have a surplus, however, you could get a check in the mail! All of this is done by the wizards at your lender, so you never have to worry about figuring it out.
So, to recap: An escrow account is a sort of mortgage piggy bank that you pay into regularly, and is used to pay taxes and insurance. The amount is determined by an annual analysis, and can increase or decrease.
Not so tricky now, eh? We hope this simplified escrow accounts for you. You shouldn’t need a degree in finance to understand escrow. We are your local mortgage experts, so if anything perplexes you, we are here to help! Visit our website or give us a call at 802-863-2020. We’ll be able to answer any and all questions you may have!
**Also, Escrow comes from the French word escroue, meaning a scrap of paper or parchment. I was curious too.
