Category: Loan Origination

If you have an adjustable-rate mortgage—commonly referred to as an ARM—you may be wondering when and if you should refinance to a fixed rate home loan. There are numerous factors you should consider when you think about refinancing, and even more to think about when it comes to making the switch from an ARM to a fixed rate mortgage.

What’s the Difference Between ARMs and Fixed Rate Mortgages?

Both of these loan options are quite self-explanatory when you consider their names. An adjustable-rate mortgage is just that, a mortgage with a rate that adjusts over time based on market conditions, while fixed rate mortgages have a stable, secured rate for the life of the loan.

Timing is Everything

When deciding whether to refinance any loan, you want to consider timing. The timing is largely dependent on your unique financial situation but also the state of market at large. A major factor to consider is your credit score; is it high enough to secure a desirable interest rate? If your credit score is lacking, you are likely better off waiting until it improves before refinancing. Luckily, your credit score is not set in stone and there are things you can do to improve it. Another aspect to think about is whether you will be able to afford the closing costs associated with a refinance. Will the benefits of a lower monthly payment will outweigh the price of having to pay closing costs? Depending on the decrease in your monthly payment, a refinance might not be the best option. You will of course also need to look at the market and what rates are. If you are going to end up with a higher rate, especially if it would be considerably so, you’ll likely want to hold off on pursuing a refinance. But if rates have been climbing, it may be better to refinance to the current rate in a fixed rate loan rather than risk having your rate continue to adjust higher and higher. Your best bet for determining whether now is a good time to refinance is to talk to a mortgage professional.

Think About Your Goals

At the end of the day, whether a refinance is in your best interest comes down to your specific situation and your goals. How long do you plan to stay in this home? If you are thinking about moving soon or before your rate changes, it is probably not worth refinancing.   Will you secure a substantially lower rate that will result in a lower payment?  That could still save you money during the time you are in this home despite paying closing costs. If you plan to stay in your home long-term, refinancing to a fixed rate loan can be a smart decision.  If current rates are low and you can secure that lower rate for the remaining life of your loan, that will eliminate the risk of fluctuating rates associated with an ARM.

If you are thinking about refinancing your mortgage, contact one of our knowledgeable Loan Officers today to discuss your options.

What is an Extended Rate Lock?

An extended rate lock is a mortgage loan option that allows home purchasers to “lock” in today’s interest rate and guard themselves from the added cost of rising rates before they settle on their new home. A lower interest rate translates into a lower monthly payment, making extended rate locks particularly valuable in a market where rates continue to rise.

First Home Mortgage’s program offers the upfront safety of a locked interest rate for up to 350 days while you wait to settle on your new home!

Who Can Benefit from an Extended Rate Lock?

This is a particularly valuable tool for homes that are under construction. Extended locks secure your interest rate and protect you from the potential of paying a higher rate at the time the home is completed.

What Are Your LOCK OPTIONS?

Fixed Rate Loans: Lock in interest rates for 110-350 days!*

ARM Loans: Lock in interest rates for 110-170 days!*

*Non-refundable up-front lock fee applies. Fee percentage varies based on loan type and length of rate lock.

Want to Learn More?

If you think this program might be right for you, please reach out to one of our experienced Loan Officers today! We’re here to answer all your questions and help you select the best possible loan option to suit your needs!

What is an ARM Loan?

When securing home financing, some borrowers wonder whether to choose a fixed-rate or an adjustable-rate mortgage (ARM). An ARM is a home loan with an interest rate that adjusts over time to reflect market conditions. With hybrid ARMs, borrowers may access a below-market rate for a fixed term (normally 3-10 years) before their first rate adjustment. In general, the shorter the initial period, the more favorable the introductory rate offered. After the initial fixed period, the interest rate is either raised or lowered  depending on the index rate. While many mortgage shoppers choose a fixed-rate loan because of its stability, there are many pros to an ARM loan.

Why Choose an ARM?

Important potential advantages and possibilities to consider with an ARM for the right homeowner or homebuyer include:

• A comparatively lower rate when you purchase or refinance, fixed for the entirety of the introductory period (normally 3-10 years)
• Use your current home equity to get cash through a cash-out refinance while still maintaining a low monthly payment
• Afford a new or larger home with a lower initial payment
• Pay less for your mortgage in a home you plan to stay in long term

It’s important to note that you can always consider refinancing into a fixed-rate mortgage once the initial period ends.

How Can We Help?

First Home Mortgage offers a Jumbo Arm Loan, providing the opportunity of a lower initial interest rate for loan amounts well over conventional loan limits.

The Secured Overnight Financing Rate (SOFR) ARM offers a fixed rate period followed by semi-annual adjustments to the interest rate. Our latest product offers 5 year/6months, 7 year/6 months and 10 year/6 months options.

This valuable loan option is available for purchase and cash-out refinance loan amounts up to $3 million dollars! This means qualifying borrowers may have the opportunity to secure a below-market fixed rate for 5, 7 or even 10 years!

If you or someone you know are interested in purchasing or refinancing a home, please reach out to one of our experienced Loan Officers today to discuss your best options!

Whether you’re buying, selling, or refinancing a property for the first time or fifth, you’re going to be balancing lots of information, paperwork, communications, and transactions. It can be easy to get overwhelmed, and unfortunately, there are individuals out there who may try to take advantage of you during real estate transactions. Below are five common real estate scams you should be aware of in order to avoid being swindled.

Wire Fraud

Arguably the most common real estate scam is wire fraud, particularly in relation to escrow. These scams generally take the form of some kind of communication, be it by phone or email (these days, it’s most commonly email), from an individual claiming to be a representative of your escrow or title company. They will give you instructions for how and where to wire the money. Wire scammers are becoming increasingly sophisticated in their tactics; they often use fake websites and email addresses meant to mirror that of the company you are working with to make them seem legitimate. It is essential that you do not open any links you aren’t sure about and that you check with your Loan Officer to confirm any instructions you’ve received are accurate. Refer to contact information you previously received from your lender, title company, and closing agent rather than trusting what was included in the phone call or email.

Foreclosure Relief

Foreclosures are public record, and deceitful individuals may specifically target people who are in danger of losing their homes. These scammers will generally offer to stop the foreclosure process or greatly reduce mortgage payments in exchange for a large upfront payment. Once the money is received, they disappear, leaving the person who paid them in an even worse state than before; now, not only are they still facing foreclosure, but they’re out even more money. If you are facing foreclosure, you should contact your loan servicer to discuss your options. Make sure the people you seek guidance from are professionals you know you can trust; do not take the word of someone who cold calls or emails you out of the blue claiming to want to help.

Loan Flipping

Loan flipping occurs when someone (often purporting to be a lender) convinces a borrower to repeatedly refinance their mortgage, tacking on exuberant points and fees to each transaction—which usually involve borrowing even more money than the last—to the point where the borrower’s equity is greatly limited and they’re unable to keep up with loan payments. You should only refinance your home when you have done your research on the pros and cons and, with the help of a trusted mortgage professional, concluded that it is in your best interest to do so. A good lender or Loan Officer will not pressure you to do anything you are unsure about. If the person you are working with is being particularly pushy in trying to persuade you to refinance (especially if they have already done so in the past), it may be time to consider seeking another opinion.

Predatory Lending

Predatory lending can take numerous forms, but some key things to look out for are exceptionally high rates, excessive (and often hidden) fees and penalties, loan flipping, a lack of a credit check, loan packing (tacking on unnecessary additional financial products to your loan), and balloon payments (payments and fees that are delayed until later in the life of your loan).

These lenders often target at-risk borrowers such as those with low credit scores, a lack of cash, low income, and the elderly. It can sometimes be hard to tell what is and isn’t normal coming from a lender, especially when you are a first time buyer. A good way to ensure you are working with a trusted, legitimate lender is to seek out recommendations from friends and family who have been through the mortgage process before and look at online reviews. Check your lender and loan officer’s credentials to confirm they are properly licensed.

Moving Company Scams

When it’s time to move, you may seek the help of professional movers. Be wary of companies that quote prices far lower than competitors, especially if they offer a non-written estimate without seeing your home and belongings. Predatory movers may suddenly charge much more than what you were initially quoted and even demand additional money before releasing your personal property. Much like with lenders, you should do your due diligence in evaluating the merit of moving companies before hiring them in order to avoid losing your money and even your possessions.

What to Do About Scams?

If you believe you have identified or fallen victim to a scam, you can and should report it in order to hold the fraudsters accountable and hopefully prevent others from being scammed. The FTC has an online fraud report tool and the Better Business Bureau offers their “Scam Tracker” where you can not only report scams but also do research to ensure the individual or company you are working with is not fraudulent.

A great way to minimize your risk of being scammed is to work with legitimate professionals right from the outset of the mortgage process. If you are considering buying, selling, or refinancing your home, contact one of our experienced and trustworthy Loan Officers today!

Buying a new home is always a big undertaking, and the current seller’s market can make the process even more challenging. With limited inventory and frequent bidding wars, buyers can feel a natural uncertainty in landing the house you want. Selling your current home before finding your next one can be even more stressful, since you’ll have such a short time to act before your current home settles and you need to move.

For homeowner’s who have equity in their current property and are interested in moving, a Bridge Loan can offer a great solution to take the pressure off while house-hunting!

First Home Mortgage’s Bridge Loan Program offers a short-term loan used to “bridge” the gap between buying your next home and selling your current home, giving buyers the power to purchase a new home before selling their current property.

The benefits of this loan program include:

• Allowing you to place a non-contingent offer on a home before selling your current residence. This is particularly important in today’s “seller’s market”, as it makes your offer more competitive.
• Helping you gain funds for the down payment on your next home before selling your current home (a down payment of 20% or more allows you to avoid costly PMI).
• Avoiding the anxiety of having to find a home to purchase in the short time period after your current home sells and before settlement. With housing inventory at historic lows, and many homes receiving multiple competitive offers, it can be difficult to find your next home in such a short time frame!

Important considerations if you’re interested in this program include:

• The Minimum/maximum bridge loan amounts are $25,000/$300,000.
• The Maximum bridge loan amount is dependent on the equity in the current home as determined by a standard appraisal.
• The Bridge loan is secured on the current home and repayable when the home sells.
• Your current home must be listed for sale or under contract at the time of loan generation.
• This program is offered in conjunction with the mortgage loan on your next property.
• Your departing residence must be located in CT, DE, DC, FL, MD, MA, NC, RI, or VA.

Make the most of the current market with this unique loan offer and reach out today for more information! https://firsthome.com/find-loan-officer/

Income restrictions, minimum credit scores, and other program requirements and qualifications may apply.

The FHFA has announced a new refi program to benefit low income borrowers with single family mortgages. These mortgages will be backed by Fannie Mae and Freddie Mac. This new program is designed to help those who were not in a position to take advantage of 2020’s low rates.

This new option could save borrowers and average of $100-$250 a month on their mortgage but lenders will be required to ensure it saves the borrower at least $50 a month. Simultaneously, the borrower’s interest rate will drop by at least 50 basis points. Lenders will also provide a maximum $500 credit for an appraisal if the borrower is not eligible for an appraisal waiver.

“We look forward to implementing Fannie Mae’s new RefiNow option as soon as possible to ensure all eligible homeowners are able to avail themselves of this money saving opportunity,” says Fannie Mae’s CEO, Hugh Frater.

Qualifications for this program:

• Must own a GSE-backed mortgage
• Income must be at or below 80% of the area’s median income
• Current on mortgage payments for the last 6 months and missing no more than 1 payment in the last year
• Must not have a mortgage with an LTV ratio greater than 97% and DTI cannot be higher than 65%
• FICO score must be 620 or higher

The Federal House Financing Agency plans to roll this out to those eligible tentatively beginning this summer.

Contact one of our Loan Officers today to see if you qualify!

Source: FHFA releases new refi option for low-income borrowers – HousingWire