Refinancing allows borrowers to reduce their monthly mortgage rates and payments, shorten loan terms and convert home equity to cash. But refinancing can be complicated — even responsible borrowers with relatively high credit scores and a history of timely payments can be denied.

What are the most common reasons why a refinance application may be rejected? Let’s explore four factors that play a large role in determining whether your application may be accepted.

1) Employment History

If your application shows less than two years of steady employment (preferably in the same field and/or position), your application is more likely to be denied. Lenders need to know that your income can support your monthly mortgage payments long-term. Constant career changes and long stretches of unemployment can suggest that you’re at a higher risk for default.

2) Low Home Appraisal

A home appraisal is used to determine the current market value of your property. This value is crucial, as your home serves as collateral on the loan. If the value isn’t high enough to justify the loan amount, the application will likely be denied. Several factors can contribute to a low appraisal, including poor property conditions, unfavorable comparables and a soft or declining market.

3) Insufficient Assets

Assets, particularly cash reserves, help demonstrate your ability to afford the mortgage. Most lenders prefer a borrower to have three to six months of cash reserves in case of emergency. Proceeds from personal loans and credit card cash advances aren’t typically considered, as they may jeopardize your ability to repay the loan long-term.

4) Questionable Credit

Most traditional lenders require a minimum credit score of 620 for refi approval. Other items of interest include past bankruptcies, collections accounts, too many accounts, high credit utilization and a high debt-to-income (DTI) ratio. Most lenders prefer a DTI ratio of 36% or less; 43% is the federal upper limit for approval.

If you’d like to explore your financing opportunities, reach out today for expert guidance.

As you may know, saving for a competitive down payment was one of the primary obstacles homebuyers faced in 2023. With high prices and rising mortgage rates, many buyers have turned to down payment assistance (DPA) for relief. But while DPA can reduce upfront costs and make homeownership more accessible, it’s not necessarily for everyone. Let’s weigh the pros and cons of DPA so you can make an informed decision. Types of Down Payment Assistance DPA comes in a variety of forms, including: Grants, which require no repayment. Forgivable loans that require no repayment provided certain terms are met (e.g., residency restrictions). Deferred payment loans to put off repayment until you refinance, sell or pay off the home. Low-interest loans that provide funding at a reduced rate but add to overall debt and monthly expenses. Lender-specific programs, which provide assistance if the borrower meets certain criteria (e.g., a first-time buyer signing a 30-year fixed-rate loan). Pros of DPA DPA programs can reduce the financial burden of the down payment, allowing you to start the home search and purchase process earlier. DPA also reduces lender risk, making financing (and lower rates) more accessible. Plus, many DPA programs require no repayment whatsoever. Cons of DPA There are eligibility requirements. Most DPA programs are geared towards first-time buyers and low- to middle-income borrowers who are purchasing a primary residence. Additionally, payback requirements mean that if you don’t stay in the home for a designated number of years, you may be required to pay back the assistance in full. And, finally, DPA can delay the closing process, putting you at a disadvantage in a competitive market. If you have questions about home financing, reach out today for expert assistance. Refer a Friend Free Consultation Loan Calculator Write a Review

Traditionally, wintertime is a downtime for the real estate market. The weather is colder, wetter and often messy, which can be a little off-putting for potential homebuyers and sellers.

But despite these seasonal challenges, winter can actually be advantageous for anyone interested in buying or selling a home.

In fact, winter can offer buyers and sellers many benefits that other seasons cannot.

For Buyers

• There’s less competition. Holiday gatherings and inclement weather tend to narrow the field. As a result, bitter bidding wars and last-minute losses to all-cash investors become far less likely.
• Sellers are more amenable to negotiations. Available properties tend to be new listings that need to sell fast or old listings that have lingered too long. Either way, sellers are ready to make a deal.
• Home efficiency is on display. Buyers can see first-hand how the heating, roofing, gutters, windows and insulation perform. Buyers may also have an opportunity to gauge property accessibility in harsher conditions.

For Sellers

• Winter is ideal for home staging. Think roaring fireplaces, cozy, seasonal decor and eye-catching holiday lights. Plus, fewer homes on the market mean available properties have more opportunity to shine.
• Buyers tend to be more serious. Many have more purchasing power due to year-end bonuses. Most are motivated to close quickly.

For Buyers and Sellers

• Service is better. With fewer clients to juggle, agents can provide more attention and value to each buyer and seller. Fewer clients also mean fewer commissions, which can motivate agents to work harder and faster.
• Closings tend to be quicker. With fewer transactions taking place, wait times for mortgage lenders and title and escrow companies are shorter. The result is a more streamlined process.

Any questions? Reach out today for more expert advice.

Unlocking the Value of Your Home: The Power of a Home Equity Line of Credit

Introduction: Picture this: John and Sarah, a young couple in their mid-30s, recently realized that their home could be more than just a place to live—it could be a key to financial flexibility. Like many homeowners today, they were exploring ways to optimize their finances without disrupting their low mortgage rates. This is where their journey with a Home Equity Line of Credit (HELOC) began, and it could be the start of yours too.

What is a HELOC? A Home Equity Line of Credit, or HELOC, is a financial tool that allows homeowners to borrow against the equity in their homes. It’s a flexible option for accessing funds without the need to refinance your existing low-interest mortgage.

Why Consider a HELOC?

• Maintain Your Low Mortgage Rate: With a HELOC, you can access funds while keeping your current mortgage intact.
• Diverse Uses: From consolidating high-interest debts to funding home improvements or covering educational expenses, a HELOC offers a versatile solution.

Standalone HELOC: This is perfect for homeowners like John and Sarah, who wanted to tap into their home’s equity without affecting their favorable mortgage terms. It’s independent of who originated your mortgage and offers a straightforward way to access cash.

Piggyback HELOC: Ideal for new borrowers, this option allows you to secure a mortgage and open a HELOC simultaneously. It’s particularly useful for those needing extra funds for down payments or looking to qualify for a conforming loan.

Client Story: Take the case of Emily, a single mother who used a HELOC to fund her daughter’s college education. “The flexibility and ease of access to funds were a game-changer for me,” she shared. Emily’s story is just one of many where a HELOC has provided financial breathing room.

Key Benefits of Our HELOC:

• Flexible Withdrawals: Borrow from $25,000 to $500,000 as needed.
• Accommodating Credit Scores: We cater to a variety of financial situations.
• Variable Rate with Interest-Only Option: Tailor your payments to fit your budget.
• Broad Property Coverage: Suitable for various property types.
• Streamlined Appraisals: Quick and efficient process.

Understanding the Terms: Let’s break down some key terms:

• LTV (Loan to Value): This ratio determines the maximum amount you can borrow.
• Variable Rate: Your interest rate may change over time based on the market.

Your Path to Financial Flexibility: A HELOC with America One Mortgage Corporation is not just about accessing funds; it’s about empowering your financial future. Whether it’s for debt consolidation, home renovations, or educational expenses, we’re here to help you unlock the potential of your home equity.

Get Started Today: Ready to explore how a HELOC can benefit you? Contact us to start your journey towards financial flexibility. And remember, just like John, Sarah, and Emily, your home might just be the key to achieving your financial goals.

Homeownership is more than just a place to reside; it’s a valuable asset that can provide financial solutions when you need them most. With a HELOC from America One Mortgage Corporation, you’re not just borrowing money but investing in your future.

 

Call America One Mortgage Corporation

1-888-942-5626 or reach out to us at www.LoanRhino.Com

In 2022, the prime rate went up by 4 points, going from 3.5% to 7.5%. This happened because the Federal Reserve wanted to better manage inflation. By July 2023, the prime rate had gone up to 8.5%

But what does all of this actually mean? What is the prime rate, and how does it impact financial products like credit cards and loans? Why does it fluctuate and how?

What is the prime rate?

The prime rate refers to the best possible interest rate a lender can offer to a borrower. Only the most creditworthy of borrowers with the lowest risk of default are eligible. As a result, the prime rate is typically reserved for corporations.

Individual financial institutions determine the prime rate, not the federal government. However, the prime rate is heavily influenced by the federal funds rate set by the Federal Open Market Committee (FOMC). In most cases, the prime rate equates to the current federal funds rate plus 3%.

How does the prime rate impact financial products?

Lenders use the prime rate as a benchmark for determining consumer interest rates on financial products like loans and credit cards. For example, a low-risk borrower might receive the prime rate plus 9% (compared to 15% for high-risk borrowers).

When the prime rate fluctuates, so do the interest rates consumers receive. Prime rate fluctuations also impact variable-rate products like credit cards, adjustable mortgages and home equity loans.

What makes the prime rate go up and down?

The prime rate isn’t fixed, has no limits and can fluctuate over time. Fluctuations tend to coincide with changes in the federal funds rate, the benchmark most commonly used to determine prime rates. But the prime rate can also be impacted by inflation and loan demand.

Want to learn more about your loan options? Get in touch.