Interest Rates – Mel Foster Co Blog

Is a Reverse Mortgage Right for You?

Posted on January 15, 2016

Reverse mortgages are a great way for senior homeowners to generate a steady flow of income, or receive an immediate lump sum for expenses, if you qualify and determine this is the right option for you.

A reverse mortgage works exactly how it sounds. The bank pays you an upfront lump sum, monthly distributions, a credit line or a combination of all three. The upside is you don’t have to pay back the interest accumulated on the loan during your lifetime, unless you move out of the house.

To qualify, you must be at least 62 years old and own, or nearly own, a house. You also have to make sure your house is in good condition and have no other outstanding loans. If you meet these criteria, a reverse mortgage might work for you.

Be sure to consider the entirety of costs involved in getting into the agreement. Interest is accumulated over the course of the agreement, and when you move or pass away, interest is owed to the bank. The interest is deducted from your estate.

If you’re planning on leaving a substantial amount of money from your estate to friends or relatives, consider how much is going to be deducted due to the reverse mortgage interest payment.

Ask a preferred mortgage lender at University of Iowa Community Credit Union (UICCU) about a reverse mortgage, or contact the trusted lender of your choice.

Tips For Refinancing Your Mortgage.

Posted on December 29, 2015

Refinancing your mortgage creates a great opportunity to lower your interest rate, but don’t forget these other tips when refinancing.

Change your mortgage length

If you’ve recently come into a different financial situation, consider switching the length of your mortgage. If you started with a 30-year mortgage and have a stable financial situation, a 15-year mortgage will save you more money in the long run. You won’t be paying as much in interest, and you’ll build equity faster.

Switch to a Fixed Rate

Adjustable rates are tempting due to their lower introductory rates, but changing to a fixed rate may be better in the long term. Fixed rates offer stability, allowing you to manage your budget more accurately.

Consider a Cash-Out Refinance

Want a potentially lower interest rates plus extra cash? A cash-out mortgage refinance might be right for you. If you owe $80,000 on your $150,000 home, you can refinance the loan for $100,000 and receive a check for $20,000. Use this money for wise investments like home improvements, education, healthcare or investing. Otherwise, you might end up just taking on more debt.

Consolidate Two Mortgages

When refinancing mortgages, find out if it’s possible to consolidate any previous mortgages you have. When interest rates are low, it’s often possible to pay less under one mortgage than you were before. One mortgage rate is easier to manage than two, and you’ll be saving yourself money.

Talk to a lender at University of Iowa Community Credit Union (UICCU) or a qualified lender of your choice to review your refinancing options.

Use the Rent vs. Buy Calculator

Posted on September 16, 2015

The question of should I rent or buy a home has been around forever. With rent prices rising, now is the perfect time to reconsider your housing options and figure out if owning is cheaper than renting.

The first thing you need to decide is how long you’re planning on living somewhere. If you only intend to stay for a year, renting is usually the better option. Renting has upfront costs that are lower than a down payment to buy a house and you often receive this money back when you’re finished renting. Buying a home requires a down payment, which is a certain percentage of the sale price or home’s value.

Also be sure to consider the benefit of stable monthly costs with a mortgage vs renting. Keep in mind with a mortgage, you can have the monthly cost fixed and it will be consistent until you have paid off the amount due. Often landlords will raise rents at the beginning of each year. This may be a small percentage raise, to hundreds of dollars added to what you initially thought you were going to pay.

If you are still wondering whether you should rent or buy, check out Mel Foster Co.’s rent vs. buy calculator. You can enter the price of the home with your expected interest rate and find out what your monthly payment will be. You can compare this to your monthly rent payment, and determine if buying a home would be a better solution for you.

Get Your Finances In Order.

Posted on November 19, 2014

One of the smartest things you can do before buying a home is getting yourself pre-qualified. By getting pre-qualified, you’ll get an idea of what your mortgage might cost, ahead of time. This can help you prepare your budget, set your expectations and strengthen your confidence to negotiate when you’re ready to make an offer.

What is pre-qualification?

Pre-qualification gives you an estimate of what you could potentially borrow. It is based on information you give on your income, assets and credit. Many times a pre-qualification can be done online and is offered by many lenders at little to no cost. It is however just an estimation, and not a guarantee of any type of loan.

Why get pre-qualified?

Once you know how much of a monthly payment you are able to afford, and you’ve figured out a budget for yourself, a pre-qualification will allow you to estimate a loan option to fit your needs. You’ll also have a better idea of which homes you can afford during your search.

What documentation do I need in order to get pre-qualified?

You will need proof of income, this could include recent pay stubs, or W-2 statements from the past two years. You should also bring a copy of your tax return for the past two years, as well as proof of any alimony or additional income. You’ll also want to bring proof of your assets, including bank account statements to show you have the money for a potential down payment. Don’t forget your driver’s license and social security card, as the lender will need these to access your credit report.

Pre-qualification can help you be fully prepared to purchase that home you’ve been eyeing. You can get a head start by using the mortgage calculators to determine your monthly payment, figure out how much home you can afford and make a decision about renting versus buying.

Which Loan Is Right For Me?

Posted on October 3, 2014

It’s important to select the right type of mortgage for your financial situation, but understanding your options can be difficult. Your Mel Foster Co. agent <link to find an agent> is your resource for proving information so you are able to make a knowledgeable decision regarding a mortgage. This quick list explains the top three most popular loan types.

1. Fixed-interest Mortgage

A fixed-interest mortgage is a type of loan that has a set interest rate. Most fixed mortgages are usually 10, 15, 20, or 30 years. The most common length of time is 30 years, as it provides the lowest monthly payment for homeowners. Keep in mind that most of the first few years of the payment are heavily focused on the interest that will be paid off, and very little actually goes towards the principal. You can determine your monthly payment for a fixed-interest mortgage with the Mel Foster Co. monthly payment calculator.

2. Adjustable-rate Mortgage

An adjustable-rate mortgage or ARM is a loan with a variable interest rate. The interest rate will change after a designated period of time, determined by the lender. As a borrower, you may benefit if the interest rate is lowered, but you will also be exposed to potentially higher interest rates. The interest rate will remain steady for an agreed upon time, and won’t change until the next adjustment period. These types of mortgages are easier to obtain in situations when a fixed-interest mortgage isn’t an option.

3. Interest-only Loan

An interest-only loan focuses on paying only the interest first. An example would be a 5-year fixed-30 mortgage. This means that for the first five years, you are only paying the interest, and not contributing any money towards the principal. The interest rate is fixed, but may change after five years. Once the five years is up, you begin to pay interest along with the principal cost. This will increase your payments significantly, even if the interest rate doesn’t change. This option is meant for someone who believes that they will earn more money in the future, or currently has their money tied up somewhere else. Just always remember to save your money for after the initial five years.