5 Great Reasons to Refinance Now

5 Great Reasons to Refinance Now 1024 536 Jason Breeland

5 Great Reasons to Refinance Now

The housing market has been up and down for a while now. Many were fortunate enough to take advantage of a time period where it was a buyer’s market. Others may have made a purchase when it was a seller’s market. Either way, refinancing your investment in your home is a choice that is worth consideration for a number of reasons. And there is no time like the present to seriously consider those reasons.

1. Shorter Terms On Your Loan

Interest rates are extremely low right now and if you are sitting on a 30-year mortgage, you are likely going to see a significant change in how quickly you can pay off your home with a refinance. For example, if you took out a loan at about 5 percent and you can refinance into a 15-year mortgage at a much lower percentage rate, say somewhere around 3 percent, you will see a slight increase in your mortgage, but you will pay the house off in half the time.

2. Home Equity Cash Outs

Refinancing isn’t just used to reduce the length of a loan or the interest on the loan, it can also be used for major life events. Imagine, for example, that you are looking for a career change – or just want to start that business you have always dreamed of – refinancing to take cash out of your home equity can give you a sizable loan at a fair interest rate. Just make sure you are able to repay the loan in time.

3. Lower Your Payments

You may have taken out a loan at 5 percent, which we discussed earlier, and want to find a way to lower your payments on a monthly basis. While you may not be able to lower your interest rate, you may have the ability to lengthen the time of your loan. Look at the options with your lender and a financial advisor. You may be paying on your home for longer, but the savings each month – if invested wisely or saved – could more than make up for the extended loan period.

4. Move From an Adjustable-Rate Mortgage

At one time, adjustable-rate mortgages were the best option for many borrowers. You weren’t locked into a particular rate and you could potentially see your interest rates drop frequently. Now that the economy is getting back on track, rates are likely going to slowly rise. If you have good enough credit, you can likely move to a fixed-rate loan which will keep your interest from fluctuating. This is great for budgeting as your monthly payment will be the same, year after year.

5. Lower Your Interest

You may already be in a fixed-rate mortgage and feel like you are left out in the cold. You don’t want to shorten your terms and you aren’t looking to extend them either – but you would like to save some money. Refinancing to a lower interest rate can potentially save you thousands of dollars over the course of your loan. This will require a decent credit history, but may be the perfect way to start planning for your future financially.

Contact a MiLEND mortgage expert today to discuss the available options that will allow you to begin enjoying a lower monthly mortgage rate or term.

How to score the best mortgage rate in 2017

How to score the best mortgage rate in 2017 1024 533 Jason Breeland

How to score the best mortgage rate in 2017

Despite the collapse of the housing bubble and subsequent Great Recession of 2008, mortgage rates have been on a significant downward trend over the course of the past thirty-five years, which is fantastic news for those looking to buy a home. Although rates have risen a little since their low point in 2012, the relative uncertainty of the market moving forward (pundits disagree about how much affect the Donald Trump presidency and the Fed raising rates again will have on rates) makes this a great time to lock in and take the plunge on a new mortgage. If you are considering taking out a home loan in 2017, here are four indispensable tips to help get you the lowest rate you are eligible for.

#1: Improve Your Credit Score

Your credit score is one of the most important factors lenders use to determine your eligibility for a low interest rate besides your income. It’s a simple formula: the higher your credit score is, the lower the rate you will be eligible for. Credit is usually measured on a scale to 850, but if you can get yours above 760, you will unlock the best rates available. Don’t know your credit score? Use a free tool such as creditkarma.com. Your bank might also offer a free credit score.

Don’t have the best credit? Don’t panic, analyze the problem and take action. You can easily raise your credit score up to 100 points by paying off outstanding balances on any open lines of credit, requesting an increase in the amount of the credit line, or resolving any outstanding debts that have gone to collections. You can see the effect different scores have on your rate here.

#2: Save Up For a Down Payment

This is another simple rule: the bigger the down payment, the lower the interest rate you will qualify for. The magic number here is 20%. If you can get to that, you will also not have to pay for mortgage insurance, which can effectively add half a percentage point to your rate!

#3: Get a Raise

Another key factor in the rate you will be able to secure is being able to show that you have the necessary income to afford the loan you want. The higher your income, the more trust lenders will have in you, and the less fees you will be charged.

#4: Do Your Homework

Not all mortgages are created equal. To get the best rate possible, you will need to get a 15-year fixed rate mortgage (FRM), which means your payments will be stable at the rate which was agreed upon when the loan was taken out. Don’t be fooled by the tempting option of an adjustable rate mortgage (ARM), which will give you a cheaper fixed rate for a few years in exchange for much higher, more variable rates for the rest of the life of the loan. Over the lifetime of the loan, you will end up paying much more in interest for a 30 year FRM or an ARM than you would a 15 year FRM.

Contact a MiLEND mortgage expert today to discuss the available options that will allow you to begin enjoying a lower monthly mortgage rate or term.

Mortgage Amortization Explained

Mortgage Amortization Explained 1024 536 Jason Breeland

Mortgage Amortization Explained

Put simply, amortization is the process by which you pay back a debt through equal payments on a routine basis over a specific period of time, like 30 years. Every payment that you submit, usually on a monthly basis, is then divided up and put towards certain portions of your debt. In the case of most loan arrangements, part of your payment goes to the interest and the other part is applied to the principal.

At the start of your term, interest costs are high and a majority of your payment is going towards paying interest, while a smaller portion goes toward repayment of the principal balance. This is particularly true for any loan with a long term. While many mortgages can run as long as 30 years, you will most likely encounter this sort of arrangement.

But as time passes and you continue making your payments on time, a smaller portion of your payment is applied to the interest and a larger portion is applied to the principal.

So when your mortgage is amortized, it means that your payments are structured in such a way that by the full term of the loan your final payment is enough to pay of the remainder of your loan balance. For instance, if your mortgage has a 30 year term you will submit 360 equal monthly payments that will pay off the balance of your mortgage in full over the 30 year period.


How to Amortize your Mortgage

There are all kinds of online calculators and spreadsheets that you can find to help you determine the amortization on your mortgage. Go to www.milendinc.wpengine.com and use our payment calculator.  It is quick and easy to use and will help guide you on what payment amount you can expect on any loan amount and term.

Just think of it this way, every payment is based upon three factors: the term of the loan, the interest rate, and the amount you borrowed. They work in conjunction to decide how much of your payment goes to interest and how much goes to principal. So let’s say you have a 30-year fixed mortgage for $100,000 and an interest rate of 6%.

Take your starting balance of $100,000. Your monthly principal and interest payment over 30 years at a 6.0% fixed interest rate will be $599.55 per month. At 6% interest, that breaks down to an interest charge for the first month of $500.00. Simple multiply your balance of $100,000. X .06 = $6,000, and divide that by 12 (for 12 months) and you get $500 as your 1st interest payment.  Subtract that from your payment of $599.55 and you’re left with $99.55, the amount applied to principle.  Subtract the $99.55 from you loan balance of $100,000 and your balance is now reduced to $99,900.45

To calculate the 2nd months do the same calculations using the new balance of $99,900.45. With that same $599.55 principal and interest payment, the amount that goes towards interest would be $499.50 and the remainder of $100.48 is applied to the principal. The loan balance after your second month is $99,800.40. You subtract the $100.48 from your starting balance of $99,900.45. If you continue to make these same calculations for the 360 payments or until the end of your term, you’ll notice that the interest charge gets a little smaller with each monthly payment and more of the payment is applied to the principal until the final payment pays off the remaining balance in full.


Refinancing With MiLEND

For over two decades, the home loan experts at MiLEND have made it our #1 priority to serve clients like you with the utmost in professionalism, integrity, and customer service. Our licensed staff of qualified and experienced loan officers will help you navigate the waters of refinancing your mortgage to save you as much money as possible to maximize your financial opportunities. At MiLEND, refinancing is our specialty and we’re proud to offer not only a wide variety of loan options, but the ability to negotiate more favorable rates due to our high volume of processed loans, when compared to other lenders.


Contact MiLEND today to discuss if refinancing is right for you and your personal financial goals.

How the Fed Rate Hike Impacts Mortgages, Credit Cards, and Auto Loans

How the Fed Rate Hike Impacts Mortgages, Credit Cards, and Auto Loans 1024 536 Jason Breeland

How the Fed Rate Hike Impacts Mortgages, Credit Cards, and Auto Loans

The recent announcement that the Federal Reserve Board was going to raise the rate by one quarter point has a lot of people wondering what that means for their wallet. This incremental increase might sound small but it could have some bigger impacts on your money over the long term in some areas. So if you are among the many who are confused about the effect it could have on your financial situation, let’s have a look at the numbers.


Fixed rates on thirty-year mortgages have already risen nearly a full point since October from 3.47% to 4.13%, which equals an extra $75 on a $200,00 mortgage. This increase is due in large part to 10-year Treasury bond yields moving nearly the same percentage up back in September. But for most short and long term rates, the quarter point increase has already been factored in since the announcement from the Fed had already been expected. However, if there are another two rate hikes of a quarter point, that could bring mortgage rates up to the tune of an extra $30 a month coming out of your pocket on a $200,000 mortgage.

Adjustable rate mortgages stand to feel a bigger effect from the increase. While these are usually modified on a year-to-year basis, you could find yourself paying more with a rise of half a percentage point over the next year. That would be very possible with the inclusion of the recently announced raise of a quarter point. What does it all mean in dollars and cents? You would be shelling out another $60 a month on that same $200,000 mortgage.

Auto Loans

This is one area that won’t feel as much of an impact than some others since the quarter point represents a small amount of additional money in relation to how much one might borrow on an auto loan. So if you have plans to purchase a new car in the coming months, many of the current components will remain the same in determining how much your payments would be.

For example, if you borrowed $25,000 to buy a car, the Fed rate hike really translates to little more than $3 extra per month. Over the course of a year it’s $36, hardly a make or break situation for someone eager to get behind the wheel of a new automobile. So when you’re ready to talk numbers, you still want to make sure you meet credit requirements and shop around for the best price, as you would whether the rate went up or not.

Credit Cards

The rate hike is also going to have a small but definite impact on your credit card. The majority of the cards on the market come with variable rates, so the Fed does have power to make some dramatic changes to your debt. With a hike of a quarter point, that breaks down to an additional $25 a year for each $1,000 you have in credit card debt.

Contact a MiLEND mortgage expert today to discuss the available options that will allow you to begin enjoying a lower monthly mortgage rate or term.

Could a Reverse Mortgage Save Your Retirement?

Could a Reverse Mortgage Save Your Retirement? 1024 640 Jason Breeland

Could a Reverse Mortgage Save Your Retirement?

As baby boomers retire at the rate of 10,000 per day, many of them are woefully underfunded for their future retirement needs. While reverse mortgages have gotten a bad rap over the last decade, the product has changed and become more regulated. Reverse mortgages are now gaining a lot of attention as a viable option for retirement income.

Most people tend to underestimate their life expectancy, save less than they should and fail to consider how much health care might cost in retirement, says David W. Johnson, associate professor of finance at the John E. Simon School of Business at Maryville University in St. Louis.

“Although we are living longer, we are also experiencing more health issues with our increased life expectancy,” Johnson says. “The typical 65-year old couple will need $305,000 to cover out-of-pocket health care costs over their lifetime. Most people have not planned for these type of expenses. Increased life expectancy and unexpected expenses increase the possibility of outliving your assets.”

As baby boomers move into retirement without sufficient income sources, many Americans are going to be unable to meet their basic financial needs in retirement, says Jamie Hopkins, associate professor at The American College of Financial Services in Bryn Mawr, Pennsylvania, and co-director at the New York Life Center for Retirement Income.
“This retirement income shortfall is nothing less than a crisis facing the United States,” Hopkins says.

Reverse mortgages are another tool in the retirement toolbox that could offer seniors cash flow needed to cover living costs. Admittedly, Americans have a strong negative bias toward reverse mortgages, Hopkins says.

“Much of that negative bias is rooted in misconceptions and issues with bygone reverse mortgage issues. The reverse mortgages of today are not the same as reverse mortgages 10 year ago. As such, reverse mortgages deserve a second look today,” Hopkins says.

“Reverse mortgage loans are one of the most misunderstood financial products in existence,” Johnson says.
One of the most common misconceptions is that the bank will own your home if you take out a reverse mortgage, says Reza Jahangiri, chief executive officer at the American Advisors Group in Orange, California.

“In actuality, with a reverse mortgage loan, borrowers retain ownership of their home, as long as they stay current on their property taxes, homeowner’s insurance and otherwise comply with the loan terms,” Jahangiri says. “I believe in the product enough that I recommended a reverse mortgage for my own parents. I have seen firsthand how a reverse mortgage made a difference in the quality of their lives during retirement,” Johnson says.

The market has become simplified in recent years. The Home Equity Conversion Mortgage is used for nearly all reverse mortgages, Hopkins says. It is essentially a government loan sold by private companies.

“The HECM is extremely well regulated. However, that does not mean there are not differences between companies,” Hopkins says. “You should still shop around for the best rate, lender, service, and fees.” For most seniors, the majority of their wealth is stored in their home, which is not a very liquid asset. A reverse mortgage is a way for homeowners to unlock some of the equity in their home without having to make monthly mortgage payments.

Who is eligible?

To be eligible for a Home Equity Conversion Mortgage, you must be a homeowner 62 or older, own your home outright or have a low mortgage balance that can be paid off at closing with proceeds from the reverse loan. You need to have sufficient financial resources to pay for property taxes and insurance, and you must live in the home.

“The loan becomes due and payable when the last remaining homeowner leaves the home permanently,” Jahangiri says.

A reverse mortgage is a non-recourse loan, as the home is the only collateral that can be used to repay the loan balance.

“This means that if the sale of the home does not cover the entire loan balance, then FHA pays the difference, not the borrower’s family,” Jahangiri says.

How much could a borrower expect to receive?

“Depending on their age, homeowners typically can tap between 50 percent and 75 percent of the home’s appraised value, with a maximum loan limit of $625,500. The older the borrower and the lower the interest rate, the higher the available loan amount,” says Tom Dickson, national leader financial advisor channel at Reverse Mortgage Funding in Bloomfield, New Jersey.
Another option that’s growing in popularity is one where a borrower takes out a reverse mortgage standby line of credit, Jahangiri says.

“This is a great option for borrowers who aren’t interested in tapping their equity unless an emergency arises or when they feel the funds are needed,” he says.
Tapping into your home equity through a reverse mortgage HECM line of credit can be an effective way to avoid selling your investments when they drop in value, Hopkins says.

“Let’s say the market drops 30 percent next year. Would you rather sell your stocks that are down 30 percent to get your retirement income or would you rather borrow from your home equity at 3 to 4 percent interest? The answer is clear,” Hopkins says. “You would be much better off using your home equity in a down market year. Doing this could substantially increase the sustainability of your retirement portfolio and help make your money last for a lifetime,” Hopkins says.

Contact a MiLEND mortgage expert today to discuss the available options that will allow you to begin enjoying the twilight of the life you’ve worked so hard for.

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