If you’re like two-thirds of American homeowners, you got a mortgage loan to finance the purchase of your home. For many, it’s a 30-year commitment. Wouldn’t you love to reduce that to 20 years – or even 15 years?

If there’s any extra money in your budget, there are some simple ways to do just that.

First, remember that every dollar you pay on the principal reduces the amount of interest you pay. That’s why with each payment you make, the amount going to pay down the principal rises slightly while the amount paid in interest decreases slightly. In the early years of a mortgage loan, twice as much will go to interest as to principal. That means making extra payments in the early years will greatly reduce both the interest you pay and the number of years you pay.

Pay a little more now to pay far less later

• Make one extra payment per quarter to pay off your loan in 19 years.
• Make 1/12 of an extra payment per month or pay bi-weekly rather than monthly to add one extra payment per year, and shave four years off your mortgage.
• Look at your statement and see how much of your last payment went to pay down the principal. Can you add that amount to your monthly payment? If so, you’ll effectively be making two payments per month.
• Round up each payment so you’re paying even a few dollars extra per month – it all adds up.
• Make an extra payment or increase your payment any time you get a raise or a bonus.
• Pretend you’ve refinanced. If you’ve got a low interest rate on a 30-year mortgage, ask your mortgage lender to calculate the payment as if you had a 15-year mortgage. Then pay that amount each month.

If you have a $200,000 30-year mortgage at 4%, your principal and interest payments are $954.83. If you decided to pay it off in 15 years instead, the payment would be $1,479.38. If you have the discipline to do it, this is a better option than an actual refinance, because you won’t pay any loan fees – and if you have an emergency that cuts into your finances, you won’t be obligated to make the higher payment.

If you now have a 15-year mortgage, find out what you’d need to pay monthly to cut it down to 10 years.

One caution: Check with your mortgage company to make sure they will accept extra payments – and that they won’t impose a prepayment penalty. Make sure any extra funds you send will be applied to the current principal and not to the next month’s payment.

If your interest rate is a bit high, a refinance is a good idea.

But do check the facts and do the calculations. A refinance does come with loan fees, so if you plan to sell the house in the next 2 or 3 years, it may be of no benefit to you. Check with your lender to learn the costs, along with the new interest rate and payment.

Once you’ve refinanced, keep paying the same payment you’re making now. Depending upon the interest rates involved, it can cut years off your loan.

If you really, really don’t want to make house payments…

Consider downsizing. Sell your larger home and use the profits to buy a smaller, less expensive home. You may be able to pay all cash, or take out a small loan and pay it off quickly by continuing to make the payments you’ve been making on your more expensive home.

Whether you’d like to refinance or just want to know how a larger payment would affect the number of years you’ll be paying for your home, give us a call. We at Homewood Mortgage, the Mike Clover Group, will be happy to help.

Call us at 1-800-223-7409.

Mortgage Banker

Yes, you should consider building a custom home

Nearly every day a would-be homeowner calls with the same complaint: They’re being out-bid on homes already on the ground, display homes for sale aren’t of interest to them and the home builders in the big planned communities charge way too much. And, even with the high prices, they only give buyers a choice between their stock home designs.

These callers want to know if the Mike Clover Group can help them put together a loan that would allow them to work with new home builders in Geelong Victoria. You can also get loans for bad credit this way you can still build the home you want. They’d like to use a small builder so that the floor plan and home design, the finishes, the fixtures, and even the heating and cooling options are to their specifications.

The answer is yes! We’re providing custom home loans to borrowers all over.

Because custom home loans are so popular today, we have the entire process streamlined within our office – and we have a dedicated loan officer to guide you through each step.

To begin the process, I ask 5 questions whose answers let me know whether it makes sense for you to build a custom home:

• Do you already own your land?
• Do you already have a builder in mind?
• Do you know what your custom home will cost to build?
• What is the estimated value of your land and the home together?
• How much money do you have put aside for this project?

Once we have the answers to those questions and know where you plan to build, we can look at the options available to you. (Some loan programs depend on your location.)

Our most popular program allows you to borrow 80% of the value of the entire project, while allowing you to get a builder hold back in place for up to 15% of the appraised value. This allows the builder to put a mechanics lien against the property so he can be assured of being paid off in full when the home is completed. With an 80% loan and a 15% builder hold back, you could have very little money out of pocket, depending upon the cost to value.

Another option, available only to those in the DFW area, Austin, and San Antonio, is for borrowers who already own their land. In this scenario, you can borrow up to 90% of the value of the total project.

More good news is that small custom home builders usually charge less per square foot than do planned community home builders. This isn’t to say that there aren’t some great builders doing planned communities – but those “cookie-cutter” homes aren’t for everyone. When you hire a small custom home builder, you can get exactly the design and features you want – without paying for those you don’t want or need.

Best of all, we’ve found that the final appraisal typically comes in much higher than the appraisal done prior to construction. This gives you plenty of equity even before you move into your new home.

So yes, having a custom home with solar tubes and sun tunnels built requires a few steps that you don’t have to take when you purchase a pre-built home, but our experienced staff makes it easy for you, and the payoff is worth it.

Did you know that foundation problems affect resale value? So when you start a construction, make sure your contractor does his best to make everything in the best way possible.

Call the Mike Clover Group today at 469.621.8484. We’ll be glad to discuss your plans and explain the programs available to you.

Have you been thinking about refinancing your mortgage, but putting it off because you thought your home’s value might be too low or you thought you probably wouldn’t qualify for a new loan?

Maybe you’ve just been procrastinating, thinking rates might go even lower. That isn’t likely to happen, so it’s time to take another look at the situation.

If you’re paying more than 1% above the rate you could get today, you’re paying too much. Locking in a low rate now will save you thousands of dollars in the coming years.

Consider these points:

Interest rates are rising. We’re not likely to see 3.55% again, but we’re still barely above 4% – at least for a while. Economists think rates will reach 4.5% some time this year, and be back up at 6% by 2019.

Home values are increasing. In fact, in many communities, homes are back to their “pre-crash” prices. That means your house is probably worth more than it was a year or two ago, giving you some added benefits in a refinance.

• You now have equity – or more equity. Provided your credit scores are good, that means you’ll probably qualify for the lowest rates available.
• If you have 20% or more equity, you can get a new loan minus the mortgage insurance. Since mortgage insurance is typically 1% of your loan balance each year, this alone will put hundreds or even thousands of dollars back in your own pocket each year.
• If you have enough equity you could get cash out in a refinance – perhaps enough to do some remodeling or pay off other bills.

Depending upon the location, home values rose about 5% in 2016. They’re expected to rise another 2%-3% in 2017.

Since interest rates and home prices are increasing side-by-side, it doesn’t make sense to wait – either for a refinance or a home purchase.

Credit is now easier to get. Lenders are loosening up a bit and taking on more risk. According to December’s Mortgage Credit Availability Index, credit is now 7% more accessible than it was in December 2015.

You may be a better borrower now than you were last year. The U.S. labor Department reports that wages are rising at a good rate, so you may be earning more money. That positively impacts your debt to income ratios while it allows you to pay off debts, raising your credit scores.

If you’re not sure whether your credit rating will allow you to refinance and save money, get in touch with us at Homewood Mortgage – the Mike Clover Group. We’ll be glad to answer your questions and  do a pre-qualification and let you know exactly where you stand.

Call the Mike Clover Group at 1-800-223-7409.

Mortgage Banker

If your house is destroyed by fire, wind, water, or some kind of disaster, do you still have to pay your mortgage? Yes, of course. The possibility of such loss is the reason why banks insist that you carry insurance.

Under the terms of your mortgage, you’re required to give both your insurer and your lender immediate notice of your loss. If the mortgage is backed by Fannie Mae or Freddie Mac, you’re also required to repair or restore the property, although in some circumstances, the borrower and lender may come to some other agreement.

Don’t panic. In most cases, your lender will have programs and procedures in place to help you cope and get back to normal as soon as possible. They may even suspend your mortgage installments or waive late fees for a few months, especially if the house is in an area subject to a federal disaster declaration.

In addition to money for repairing/rebuilding the home, most homeowners’ insurance policies include a provision for living expenses if the home is uninhabitable, and a dollar amount to replace personal possessions.

If you don’t want to rebuild, can you just let the insurance company pay off the bank and walk away?

No, not really. Years ago it was not uncommon for people to “sell the house to the insurance company” by hiring an arsonist. That’s probably why today most insurance policies will only pay 70% of the home’s replacement value if the homeowner chooses not to rebuild.

Should he or she walk away, the homeowner would still be liable to the bank for the balance not covered by the 70%. And of course, if deliberate arson is suspected, there’s the law to deal with. They don’t look kindly on either arson or insurance fraud.

So what happens next?

In most cases, insurance proceeds are held in escrow by the lender or loan servicer. They’re then disbursed according to a schedule as the home is rebuilt – just as they are when a person is borrowing the money to have any new home built.

There can, of course, be disputes. Sometimes the insurance company disputes the amount of the loss. Sometimes the bank doesn’t agree with the borrower’s and contractor’s disbursement schedule.  When this occurs, an independent adjuster or an attorney can help keep things on track.

To avoid disbursement conflicts, homeowners with jumbo loans, low mortgage balances, and substantial cash available can opt to pay off the mortgage and deal only with the insurer. If the loan has been paid in full, the bank will release the insurance proceeds to the borrower. The insurance company, of course, will want to see that the home has been repaired or replaced before releasing 100% of the funds.

Losing a home and your possessions to fire or any other kind of disaster is emotionally devastating. To prevent it from becoming financially devastating as well, do your best to cooperate with your lender and your insurance company. And don’t hesitate to call in an independent adjustor and/or an attorney if you run into problems.

Mortgage Banker

Homewood Mortgage,LLC

O: 469.621.8484

C: 469.438.5587

F: 972.767.4370

18170 Dallas Parkway

Ste. 304

Dallas, TX 75287

NMLS# 234770

The differences between loan programs are based on two things: the borrower’s down payment and qualifications, and the property.

VA loans are zero down, but are only available to veterans or active duty military personnel and their families. Do note that zero down doesn’t mean there’s nothing to pay. Either the veteran or the seller must pay closing costs.

Note that the sellers are not required to pay any of the buyer’s loan costs. This is an item for negotiation. Direct loan costs would include appraisal and title fees, credit reporting fees, etc. In addition to these, the borrower will have “non-loan” fees such as prepaid insurance and taxes, recording fees, HOA fees, and daily interest charges. Regulations allow the seller to pay up to 4% of the purchase price to assist with these fees. Again, there’s no obligation for the seller to do so – this is an item for negotiation before the purchase offer is accepted.

Another zero down loan is the USDA Mortgage Loan. This is available to borrowers in rural areas, and covers the purchase of most types of single family homes and some condominiums. Eligibility requires a minimum 620 credit score and closing costs may be paid by the applicant or rolled into the loan.

HUD Homes require a $100 down payment. They also require a $1,000 earnest money payment. These are loans on homes owned by HUD due to foreclosure on a FHA mortgage.

To be eligible, the buyer must pay the full listed price and must pay any closing costs not covered by HUD. Currently, HUD will pay up to 3% of the loan amount in buyer closing costs.

FHA loans require 3.5% down and are typically a loan for those with middle of the road credit. They’re also for middle of the road homes, as FHA does set limits on loan amounts. This limit varies from one community to another, so give us a call and we’ll check the limit in your city.

In addition to seller’s closing costs, the seller may contribute up to six percent for actual buyer costs related to closing, interest rate buy downs, discount points or other concessions.

FHA loans are subject to Mortgage Insurance for the life of the loan if your loan is for 15 years or more and if your down payment is less than 20%.

For more information visit: https://www.fha.com/fha_article?id=234

Conventional loans require a minimum of 5% down and are typically for borrowers who have good credit.

Borrowers with less than 20% down will be required to pay Private Mortgage Insurance. This rate is based on the borrower’s credit, combined with the amount of their down payment. Typically, they must keep the PMI for at least two years, then it can be eliminated after the borrower has at least 25% equity in the home.

The condition of the property:

Both VA and FHA have strict requirements regarding the condition of the property to be mortgaged.

While this is touted as a safeguard for the borrowers, in reality it is a safeguard for the bank. The house is their collateral for the loan, and when the down payment is low, they want to know that the house will be fit for resale should the borrower default.

For eligibility the house must provide safety and security, and must be structurally sound. It can have no broken glass, tripping hazards such as cracked cement or torn flooring, defective wiring, missing handrails, plumbing leaks, or inoperable doors.

Related: How the Whitton Plumbing difference from other plumbers.

Homes must have the basic requirements of kitchen, bath, and bedrooms. Mold remediation specialists in Ottawa say homes should defintely have a steady and safe water supply.

These are just examples, as conditions are extensive. For a complete list of requirements, visit http://www.military.com/money/va-loans/easy-to-understand-va-minimum-property-requirements.html and http://www.investopedia.com/articles/mortgages-real-estate/11/fha-minimum-property-standards.asp

When a home does not meet the minimum standards, buyers can negotiate with the seller for repairs or move on to choose a different home.

USDA homes don’t have to be perfect, and the cost of repairs may be rolled into the loan balance.

Conventional loans do not have minimum property standards, but are accepted based on the appraised value. However if the appraiser states on the appraisal any type of property issues, those issues must be resolved. This is a Fannie Mae rule.

Call us to see which loans you qualify for based on your credit scores and down payment.

Do always realize that the better your credit scores, the less interest you’ll pay. If your scores are marginal, we’ll be happy to provide you with instructions for bringing them up before you begin shopping for a home.

R.M.L.O

Homewood Mortgage,LLC

NMLS#234770

O: 469.621.8484

C: 469.438.5587

F: 972.767.4370

18170 Dallas Parkway

Ste. 304

Dallas, TX 75287

Making a mortgage payment can’t be classified as fun, and filing your income taxes is something many of us dread. But if you’re making mortgage payments, filing those taxes might not be quite such a burden.

Way back when the original tax code was written in 1874, it included a deduction for interest paid. While many in government have attempted to eliminate this deduction, and in fact have eliminated it for non-business costs such as interest paid on credit cards or personal vehicle loans, the deduction for mortgage interest remains.

Many recognize the deduction it as an incentive for homeownership – and home ownership is good for both individuals and communities. People who put down roots make for stronger communities, marked by pride of ownership.

The mortgage interest deduction allows you to subtract all the interest paid on your home mortgage from the income you report on your Federal taxes. For those with a high-balance mortgage, it results in a lower tax bill.

To take advantage of the deduction, taxpayers must itemize on Form 1040 A, sometimes it is better to hire a tax accountant to fill it our for you. This form includes deductions for medical expenses that exceed 10% of your income, real estate and personal property taxes, gifts to charity, un-reimbursed employee expenses, and miscellaneous fees such as tax preparation expenses. At present, it also includes mortgage insurance premiums.

For many, especially in the early years of a mortgage, when the payment goes more toward interest than principal, mortgage interest payments raise the total on this page beyond the standard deduction (currently $6,300 for singles and $12,600 for married couples) and results in a significant tax savings.

Let’s assume that your tax bracket is 28% – you and your spouse earn between $151,201 and $230,450 per year. If you purchase a home with a $300,000, 30-year mortgage at an interest rate of 4%, you’ll pay approximately $11,904 in interest the first year. Combined with property taxes, mortgage insurance, charitable giving, and other deductible items, you can expect to qualify for a deduction well over the standard $12,600.

As time goes by and your mortgage payments are weighed more heavily toward principal reduction than interest, the savings will be less, but it still pays to do the calculations and see where you stand each year.

Most of us agree that we can spend our own money more wisely than does the government, so all tax savings are welcome.

Naturally, your savings will depend upon your income and the interest you’re paying on your mortgage – in addition to the other deductions to which you are entitled.

Studies suggest that only about 54% of taxpayers with mortgages will receive a tax benefit. You could be one of them, so don’t fail to do the calculations and see if you qualify.

If so, be sure to take all the relevant information to your tax preparer!

Did you spend too much money in 2016? If so, you were not alone. Americans DO spend more than we need to, in ways both large and small. Here are 14 examples:

1. Coffee. Once upon a time we brewed coffee at home. Some of us took it with us, either in a thermos or in insulated “go-cup.” Now, millions of Americans stop by a Starbucks or an independent coffee stand on their way to and from work each day. At anywhere from $3 to $6 per cup, that daily indulgence adds up to well over $60 per month – or $780 annually.
2. Eating out. Yes, it’s nice to have someone else do the cooking, but your bank account and your health will thank you if you consider it a treat rather than an everyday occurrence. How much do you spend in restaurants, cafes, delis and fast-food places each week?
3. Gym memberships. If you actually go to the gym at least a few times per week, work out, and keep your body in top condition, your membership is worth the price. If not, at an average of $58 per month, it’s a huge waste.
4. Smartphone apps. What fun! Today you can get apps for your phone that let you play games all day, learn a new language, monitor nearly every aspect of your health, plan a trip, find your way home, translate from another language, get your favorite music, and more, and more, and more. If Americans used all the apps they purchase, they wouldn’t have time to work, eat, sleep, or talk with family and friends. According to Apple, Americans spent over $20 Billion on apps in 2015 – and likely spent even more in 2016. Do you really need (or use) all those apps?
5. Car payments. According to CNBC,the average car payment is $503 per month, or $6,036 per year. The average term is 68 months, so this goes on for more than 5 2/3 years! While many people do need a car, most do not need a new That’s just for fun, or prestige. Consider selling that budget-buster and buying a used car for cash – or if necessary, getting a loan with a much lower payment for far fewer years. Put that other money aside and pay cash when you decide you really do need a new car.
6. Car leases. Yes, the average monthly payment is approximately $100 less, but when you get to the end of the term, you still don’t own the car. For most, the residual is about 50% to 65% of the original value, so if you want to keep the car, you’ll be starting over with payments – this time on a used car. Just as renting a house doesn’t lead to ownership, neither does leasing a car.
7. Car wash upgrades. You really don’t need the foam wax, the clear coat sealant, the rust inhibitor, or any of the other fancy add-ons offered at the drive-through car wash. If you’ve been driving on chemical or salt treated roadways, however, the undercarriage flush might be a good idea.
8. Overnight shipping. How often do you actually need something immediately? Put birthdays and other events in your planning calendar 2 or 3 weeks ahead of the date, so you’re not in a rush when you place your gift orders – and plan ahead for your own “must-have” items.
9. Satellite and cable TV services. Do you really watch all those channels? Most of us don’t. While the best thing would be to skip it entirely and spend more time with family, getting ahead of household chores, working on a side income, or reading a book, why not at least pare that service down to the channels you watch regularly? Even a $20 per month savings comes to $240 per year.
10. Lottery tickets. You know that the odds are against ever winning. In fact, we’ve read that only one in 259 million people who play ever win the big jackpot. If you put the same money into a good retirement plan, you’re SURE to come out the winner.
11. Book clubs, newsletters, and magazine subscriptions. If you’re really reading those materials, fine – they might be worth the price. If they’re gathering dust in a stack, opt out.
12. “Something” of the month clubs. Today you can join clubs to receive monthly selections (and invoices) for everything from shoes, to cosmetics, to sweaters, to product samples, to beer, to a variety of foods – and on and on. Of course it’s fun to receive monthly packages, but do you need them? Opt out and buy what you actually need, when you need it.
13. Timeshares. Those who sell them are very persuasive, while those who own them are often sorry. On average, they cost $16,000 for the right to use one unit for one week per year. Meanwhile, you’ll pay maintenance fees even if you never go near the place – and they’re extremely difficult to sell. Save your money and pay for a nice hotel room when you go on vacation.
14. Student loans. The Wall Street Journal reported that on average, 2016 graduates will owe more than $35,000 in student loans. That’s a heavy burden to carry while holding an entry-level position, even in a high-paying industry. If you will be starting (or continuing) college this year, consider the pay-as-you-go plan. Choose a school you can afford, apply for every possible scholarship, and work while going to school. No, it isn’t easy to graduate debt-free, but you’ll find out that it’s worth it.

Taking charge of your spending and plugging the leaks can put your thousands of dollars ahead at the end of 2017, so stop and take look at your own spending habits. Twenty dollars here and there seems trivial, but when you’re throwing away twenty (or forty, or sixty, or a hundred) in a variety of different places every month, it adds up to serious money.

Any time you’re about to make a big decision in life – like getting married, changing jobs, moving to another city, or buying a house, friends and family will step up to give you advice. Unfortunately, while the advice may be well-meaning, it isn’t always good.

Here’s a round-up of some of the worst advice we’ve heard:

“Don’t buy now, prices are about to crash.”

While there were some strong indications that a crash was on the way ten years ago, there are no such indications now. Today you’d need a crystal ball to make that prediction, and unfortunately they don’t exist.

If you plan to stay in the community for the foreseeable future; if you’re tired of being a tenant; if you can find a home you love that fits comfortably in your budget, it really doesn’t matter whether prices are going up or down in the short term. Like great-grandmother’s antique Cameo, your house isn’t going to be for sale next month.

“Buy out in the suburbs; the prices will be cheaper.”

If your work is out in the suburbs, that’s great advice. However, if it means an hour commute morning and night, it’s bad advice. Transportation will be expensive and your time with loved ones will be severely curtailed.

“You don’t need a real estate agent representing you.”

Yes, you do, for several reasons. First, having your own agent will save you time and money. Your agent knows the territory and knows the values in each neighborhood. Armed with your needs and wants lists, your agent can narrow the field so you only take time to view homes that will suit you. He or she also knows about homes that are available but not yet listed.

In addition, your agent knows the paperwork and knows what inspections and contingencies to include for your protection. He or she will save you from signing agreements that are not in your best interests.

And then there’s the money: The listing agent’s legal duty is to get the highest price and the best terms for the seller.  With no agent on your side, you won’t have the benefit of knowing whether the price is right. With no agent on your side you won’t have anyone to advise you about contingencies, nor to help you evaluate the inspection results. In fact, you might be convinced not to have an inspection, although it is quite important as it can spot some issues from broken lock to roof leakage. All you need to do if the lock is broken, go to Kingstone Locksmith website for details how to have that feeling of safety back.

“You don’t need an inspection; just look the house over carefully.”

Yes, an inspection does cost money, but it can save you from making a really costly mistake. The inspector will check and test everything from the basement to the attic, and will let you know if something needs expensive attention – like a furnace replacement, or re-wiring, or changing locks as described at http://www.kwikeylocksmithservices.com/commercial/.

As a buyer, you aren’t going to test every electrical outlet, examine the panel box, or crawl through the attic or crawl space looking for signs of mold or termites. The inspector will do all that and more.

“Never pay the listing price.”

That depends upon the market. When you’re in a definite buyer’s market, that might work. In a seller’s market, where homeowners are receiving multiple offers, you may need to pay more than the listing price if you want the house.

“Make a lowball offer and see what happens.”

What just might happen is that the seller will disregard your offer entirely – and be unwilling to negotiate with you. If you want the house, consult with your agent and submit a reasonable price.

“If you’re in competition for a house, remove your contingencies.”

While you should not make your offer contingent on something frivolous, such as approval from a 3^rd party, the normal contingencies are there to prevent you from making a big mistake. You do need an inspection; you do need to know that there are no liens attached to the house; you do need to know that no one else has a right to use of cross through the property at will; you do need to know that the house wasn’t built on a toxic waste site.

“Find the house you want before you meet with a lender.”

Nope – your first step should be to choose a lender and get pre-approved for your home mortgage loan. This will save you from looking at homes you can’t buy, and when you make an offer it will give the sellers the assurance that you can perform on your offer. In fact, many sellers today won’t consider an offer from any buyer who does not have a written pre-approval from a reputable lender.

Are you ready to shop? Then we’re ready to help.

Here at Homewood Mortgage, the Mike Clover Group, we enjoy getting future homeowners pre-approved, guiding them through the loan process, and seeing them fulfill their dreams of home ownership. In fact, it’s our life’s work.

So give us a call. You can reach us at 800-223-7409.
Also get the info from Access Locksmiths.