Category: Mortgage

Steps You Can Take To Prepare For Buying A Home In Maui

Maui real estate
With national inventory down almost 30%, the Maui housing market has become more competitive. That’s especially true when it comes to mid-priced, affordable houses. So how do you get ahead in a hot market? The key is preparation. The sooner you start preparing to buy a house, the easier it’ll be to beat the competition. But even if you’re already house hunting, it’s not too late to take some of these steps and improve your Maui homebuying prospects.

Check your credit

Once you decide to buy a home, the first thing you’ll need to do is check your credit. This involves getting your credit report from each of the three bureaus (Experian, TransUnion, and Equifax), and pulling your credit score. Your credit determines whether you’re eligible for a mortgage, and it influences your mortgage rate. The higher your score, the lower your rate. Ideally, you should check your credit at least six to 12 months before applying for a mortgage. This allows time to improve a low personal score, if necessary. To get your credit file, contact each of the three bureaus separately, or order all three copies from Each year you’re entitled to one free report from each of the bureaus.

Figure out your DTI

Your debt-to-income (DTI) ratio is the percent of your monthly gross income that goes toward debt repayment. Mortgage lenders use this percentage to gauge affordability. Generally speaking, lenders prefer a DTI ratio that’s no higher than 36% to 43%, depending on the mortgage program.

For example:

  • If you have a gross monthly income of $5,000
  • Your monthly debt payments (including a future mortgage payment) shouldn’t exceed $2,150
  • Your DTI is 43% ($2,150 / $5,000 = 0.43)

To improve your DTI ratio, pay off as much debt as possible before applying for a mortgage. This includes credit cards, auto loans, student loans, and other loans. You don’t have to be debt-free to purchase a home, but less debt can increase purchasing power.

Save money

Today, the majority of mortgage programs require a down payment. This amount ranges from a minimum 3% to 5% for a conventional loan, and a minimum 3.5% for an FHA home loan. So if you pay $200,000 for a house, you’ll need at least $6,000 to $10,000 as a down payment. Keep in mind, too, if you purchase with less than a 20% down payment, you’ll likely pay mortgage insurance. This insurance protects your lender in the event of default. Some mortgage programs allow borrowers to use gift funds to cover all or a percentage of their mortgage-related expenses. There are also multiple down payment assistance programs (DPAs) in every state. These offer grants or loans — sometimes forgivable loans — to qualified homebuyers who need help with their down payments.

How to Improve Your Homeowners Insurance Coverage

Maui home loans
If you own a home in Maui, you need to have adequate homeowners insurance coverage. Nearly all mortgage lenders require it as part of the conditions for issuing a home loan anyway. However, as time goes on, you may find that you want to make certain changes to your homeowners insurance to create a better plan. Here are four ways in which to improve your insurance:

Change Limits

One of the easiest ways to improve your insurance coverage is to make changes to your coverage limits. For example, you may choose to raise your deductible in order to have a lower monthly premium or vice versa. You may decide that you can afford to reduce the coverage limit on roof repair and replacement or a similar coverage area. Small changes to coverage limits often result in small rate reductions that add up to bigger savings over time.

Shop Around

As with most types of insurance, you have the option of shopping around for better rates. You might be able to find another company that is offering similar coverage for a lower price. Be careful to only drop certain types of coverage if it’s advantageous to do so and don’t shop solely on price. Do note that you can usually get better rates by bundling homeowners insurance with other types of coverage, such as car insurance.

Consult an Agent

If you’re confused by the various homeowners insurance options and want to ensure you get the best policy for your needs, it might be best to consult a professional. A qualified insurance agent can explain all the details of various homeowners insurance policies and assist you in selecting or building a policy that’ll meet your specific needs. They will gather information about your Maui home and your unique situation to make suggestions regarding the types and limits of coverage you should have.

Improve the House

Some factors that impact your homeowners insurance rates are security and disaster preparedness features. This can include everything from home security systems to hurricane-proof windows. Insurers view homes that have these features as less of a risk to insure and reflect that in lower rates. Keep your insurer informed of changes that might affect your coverage, whether that’s installing a security system, removing a pool or bringing home a puppy.

If you’re looking to improve your homeowners insurance coverage, you have several options. Always weigh your choices carefully before making a decision. With the right changes, you can craft a homeowners insurance policy that better suits your needs!

Article provided by: Brooke Chaplan

Why Does My Mortgage Keep Getting Sold?

Maui home loans
A letter arrives in the mail and tells you your mortgage has been sold. It also informs you to send your monthly payments to a new address. Don’t panic! This happens all the time, and you shouldn’t see many (if any) changes. So why does your mortgage get sold—and why can it happen multiple times? Banks and mortgage servicers constantly check the numbers to find a way to make a buck on your big loan. It all takes place behind the scenes, and you find out the result only when you get that aforementioned letter in the mail.

What does a mortgage being sold mean for you?

The short version: When a loan is sold, the terms of that loan don’t change. But where a mortgage-holder submits payment and receives customer service may change as the loan gets sold. And that could affect a few things.

The level of service that you receive may vary depending upon who the servicer is. Certain servicers might offshore a lot of that work, so when you would call into servicing, you could get a call center somewhere and people were less than knowledgeable about the product.

The new servicer might offer different payment options and may have different fees associated with payment types, so be sure to check any auto payment or bill pay functions you’ve set up.

The basics of mortgage servicing

To understand why mortgages are sold, it’s important to understand some basics.

First, when you take out a mortgage to buy a home in Maui, a lender approves your loan and you make payments to a loan servicer. Sometimes, the servicer and the lender are one and the same. More often, they’re not.

The servicer collects the payment and disburses it out. They distribute the payment to the investors, send property taxes to the local taxing entity, and pay homeowners insurance. They are taking care of all the payments coming in and getting them distributed to the people they belong to.

Servicers can sell your mortgage

Lenders can enter agreements with servicers to purchase batches of loan servicing. Or lenders may shop around for a servicer if they’re carrying too many loans on their books.

Servicers are interested in buying loans in order to sell other products to their new-found customers. Many lenders originate loans, and then proceed to sell off the servicing or the loan itself. If the servicer changes, the customer must receive a notification. There will be a grace period in case a borrower accidentally sends payment to the wrong place.

Lenders often sell the loans to financiers as a mortgage-backed security for investors or to government-sponsored entities like Fannie Mae, Freddie Mac, and Ginnie Mae.

Mortgage Payments Are Getting Relatively Cheaper

mortgage payment Maui
The average mortgage payment is about $1,500 per month, according to the U.S. Census Bureau, coming in at about the same amount as the cost of renting (the average cost to rent was $1,476 in October).

Mortgage payments have decreased about 3% since mid-2018. They’re expected to get even lower this year, possibly 3.3% to 5.9% below this year, The Mortgage Reports notes.

The trend is occurring even as home prices rise. Mortgage rates, currently at around three-year lows, are helping more homeowners see a decrease in their monthly mortgage payments.

Census Bureau data shows that mortgage payments can vary quite a bit by location. For example, the Pacific region of the U.S., which faces some of the highest home prices, has an average mortgage payment of $2,096. On the other hand, the East South Central area has the lowest average for a mortgage, at $1,140.

This table from The Mortgage Reports shows the breakdown:

Pacific$2,096Washington, Oregon, California, Hawaii, Alaska
New England$1,912Maine, New Hampshire, Vermont, Massachusetts, Connecticut, Rhode Island
Middle Atlantic$1,856New York, Pennsylvania, New Jersey
Mountain$1,439Montana, Idaho, Wyoming, Nevada, Utah, Colorado, Arizona, New Mexico
South Atlantic$1,437West Virginia, Maryland, Delaware, Washington D.C., Virginia, North Carolina, South Carolina, Georgia, Florida
West South Central$1,397Oklahoma, Arkansas, Louisiana, Texas
West North Central$1,321North Dakota, South Dakota, Nebraska, Kansas, Minnesota, Iowa, Missouri
East North Central$1,296Wisconsin, Michigan, Illinois, Indiana, Ohio
East South Central$1,140Kentucky, Tennessee, Mississippi, Alabama

Source: The Average Mortgage Payment Is Declining. Here’s Why

Interest Rates Are the Lowest They’ve Ever Been!

mortgage rates
You’ve probably heard the words “lowest rates” often in the last few years, but as of yesterday, interest rates fell to the lowest they’ve ever been!

Since the United Kingdom voted to leave the EU, interest rates in the U.S. have been dropping, and as of August 1st, they’ve fallen lower than ever before. This is a once in a lifetime event!
So what does this mean for potential homebuyers and home owners who want to refinance?

It means that you might want to strike while the iron is hot and take action while rates are low! A fraction of a percentage point may seem small, but it could add up to huge savings over the life of your loan.

And a lower interest rate can mean more money to spend on family trips, remodeling your home, or even a bigger home.

If there’s one thing that the Brexit vote has taught us, it’s that you can’t predict the world events that will affect interest rates in the U.S. Rates can go up at any time.

So if you’re ready to take advantage and buy a home or refinance, give me a call or shoot me an email!

Source: Bloomberg, August 1, 2016

HELOC vs HECM – What’s the Difference?

We get it. Deciphering mortgage terminology is like solving a Rubik’s Cube sometimes! You just want to throw your hands up in the air and say, “I give up! Somebody else figure this out for me!”

That’s what I am here for – to answer your most complex and confusing questions about the mortgage industry.
mortgage Maui
Today’s topic of confusion: The difference between a home equity line of credit (HELOC) and a type of reverse mortgage, a home equity conversion mortgage (HECM). Though at first they seem to be very similar types of loans, they are in fact, quite different.

How Are They Similar?

With both a HELOC and a HECM, you use the equity in your home for other financial purposes. As a reminder, “equity” is the difference between what you still owe on your home and how much it is worth. For example, if your home is worth $500,000 but you only owe $100,000 more on it, you have $400,000 of equity in your home. That’s your money! You’ve invested it; it’s up to you what to do with it.

The main differences come in with who is eligible, how the equity is used, and how it is paid back.

What Is A HELOC?

A home equity line of credit, or HELOC, is a form of credit in which your home’s equity serves as collateral. Because a home is often an individual’s most valuable asset, many use HELOCs only for major items, such as education, home improvements, or medical bills, and not day-to-day expenses.

HELOCs are available to any homeowner, regardless of age, with enough equity in their home.

To start, you will be approved for a specific amount of credit. The credit limit on a HELOC is generally set by taking a percentage (not the total) of the home’s appraised value and subtracting from that the balance owed on the existing mortgage.

Your lender will then review your ability to repay the loan (principal and interest) by looking at your income, debts, and other financial obligations as well as your credit history. Many plans set a fixed period during which you can borrow money, such as 10 years. Some plans may call for payment in full of any outstanding balance at the end of the period. Others may allow repayment over a fixed period (the “repayment period”), for example, 10 years. Once approved for a HELOC, you will most likely be able to borrow up to your credit limit whenever you want. Typically, you will use special checks to draw on your line. Under some plans, borrowers can use a credit card or other means to draw on the line. There may be other limitations on the plan, such as keeping a minimum balance in the account.

What Is A HECM?

A home equity conversion mortgage, or HECM, is a federally approved type of reverse mortgage that allows older homeowners to borrow against the equity in their homes.

It is called a “reverse” mortgage because, instead of making payments to the lender, you receive money from the lender. The money you receive, and the interest charged on the loan, increase the balance of your loan each month. Over time, the loan amount grows. Since equity is the value of your home minus any loans, you have less and less equity in your home as your loan balance increases.

This plan can gives some older Americans financial security after retirement. It assists them with making home improvements, offsets unexpected medical expenses, and supplements Social Security or other income.

Not everyone is eligible. To qualify for a reverse mortgage you must be at least 62 years old, be the primary resident and paid off some, or all, of your traditional mortgage.

There is generally an origination fee and other closing costs, as well as servicing fees over the life of the mortgage. You may also be charged mortgage insurance premiums (for federally insured HECMs).

Once you sell your home, move out, or pass away, the loan must be paid back in full. In most cases, the home is sold to get the money to repay the loan. Once the loan balance is paid, you or your heirs can receive any proceeds above the balance of the loan.

I hope this helps clear up some confusion about these two different ways to use the equity in your home. If you have more questions, feel free to call anytime – [phone]!

Source: Consumer Financial Protection Bureau

How the Brexit Can Save You Money on Your Home Loan

Brexit may be bigger than we anticipated!

Great Britain surprised the world by voting to leave the European Union, but the effects of the decision can be felt around the world and in all sorts of different industries.

For home buyers or refinancers in the United States, the Brexit is actually good news because it could actually lead to even lower interest rates!

Interest rates has actually dropped since the Brexit and are approaching historic lows, and that can only mean one thing for home buyers and home owners – an opportunity to save money.

Lower interest rates mean smaller mortgage payments. Even a small change in interest, like a quarter of a percentage point, can add up to thousands of dollars over the term of a mortgage.

Global economic uncertainty means that interest rates are staying low or could even go down, at least for the time being.

So if you’ve been wondering if now is a good time to buy or refinance, you might want to take advantage of these incredible rates while they’re low.

Ready to take a leap? Give me a call or shoot me an email!

Source: U.S. News, June 24, 2016

Refinance for USDA Mortgage Loan Cheaper, Faster

A recent announcement from the United States Department of Agriculture (USDA) will soon make refinancing a USDA mortgage much faster and less expensive.

USDA Rural Housing Service Administrator Tony Hernandez made the announcement saying, “Helping homeowners refinance their homes to reduce their monthly payments and take advantage of low interest rates will bring increased capital to rural residents and the communities where they live and work.”

The changes go into effect June 2, 2016, and apply to mortgages issued through USDA and those where USDA has issued a loan-note guarantee. Homeowners current on their mortgages for the past 12 months will no longer be required to get an appraisal, provide a credit report or undergo a debt-to-income calculation when refinancing for a 30-year term.
usda loans Maui
These changes will save time and money.

The USDA began testing these changes in a 2012 pilot program. Since then, nearly 9,500 homeowners have refinanced their mortgages. Some saved as much as $600 a month, with an overall average of $150 savings per month.

Only qualified borrowers will benefit and rigorous underwriting standards will still apply to help ensure these loans are consistent with other industry standards. The Department of Housing and Urban Development and Department of Veterans Affairs have similar programs for the homeowners they serve.

Interested homeowners with USDA loan guarantees should give me a call about refinance procedures. Homeowners with USDA Direct loans should contact a USDA housing specialist. A list of State offices is available at:

Current as of June 2016

4 Areas Mortgage Lenders Consider Before Lending You Money

If you’re a first-time homebuyer, the idea of borrowing money for a home can feel overwhelming. Where to even start?!?!

Today I’d like to help you understand four of the key areas that Lenders take into consideration when reviewing your loan application. It’s my goal to help you prepare for exactly what to expect as far as what questions you might be asked, and what documents you’ll want to have on hand for the more common types of home loans.

1. Affordability

To determine how much house you can reasonably afford, the lender will calculate your monthly gross income and multiplying that number by .28. This figure is generally representative of the most that a lender will approve you to spend on a mortgage payment each month.

If the payments on a house that you’re considering exceed this number, you’ll need to come up with additional funds to apply towards the down payment, or search for a home in a lower price range.
mortgage lenders

2. Monthly Expenses

While this calculation may seem simple, lenders are extremely strict in their interpretation of how much money you spend every month. For this figure, you can’t simply state that you won’t spend money on clothes just to meet a specific spending ratio guideline.

Instead, lenders use pre-set numbers to calculate this amount. To their credit, lenders understand that every person, couple, and family has personal needs that must be met and so the goal of this calculation is to ensure that your monthly income exceeds these financial needs even when a new mortgage payment is introduced into your budget.

When you’re applying for a home loan, you will be asked for a detailed itemization of your current monthly bills and documentation of your current income. It’s in your best interest to supply all the information regarding your personal finances so qualifying for a loan is based on your current financial situation.

3. Long Term Debt-to-Income Ratio

This ratio takes into account any monthly payments that extend beyond 11 months. Payments for things like car loans, credit card payments, student loans, and other mortgages are included in this calculation.

Other debts that fall into this category include: judgments, tax liens, alimony, and child support. To ensure that you can afford the home that you intend to buy, it’s always best to disclose everything so that you can make the most informed decision possible.

4. Credit Check

Most potential homeowners have secured some credit in one way or another before deciding to apply for a home loan. Lenders look very carefully at your past payment record to see if you made timely payments on these obligations.

They look at everything from how many late and missed payments you’ve had, to the number of “maxed out” credit card balances you carry, and the overall amount of debt you have in total.

A lender will also be extremely interested in any loans that have defaulted and gone into collections. Be prepared to explain these issues in writing, no matter how minor, or your loan could be declined. A poor credit report could result in you paying a higher interest rate which could mean you end up paying tens of thousands of extra dollars over the lifetime of the loan.

The Bottom Line

Taking on a home loan is usually the single most expensive financial commitment anyone makes in their lifetime. Still, many borrowers go into the process unprepared and uninformed.

In the case of home loans, ignorance is not bliss so your best bet is to accurately assess your financial situation, gather the necessary required paperwork, and prepare for the questions that may be asked of you based on your individual circumstances.

My job is to help you do just that. I’d love to talk to you more about buying your first home and I will walk you through all the steps along the way. Give me a call at [phone] soon!

Source: Salted Stone

The information contained in this article has been prepared by an independent third party and is distributed for educational purposes only. The information is considered reliable but not guaranteed to be accurate. The opinions expressed in this article do not represent the opinions of Skyline Home Loans.

May is National Military Appreciation Month so I want to take this special opportunity to thank all of you who are serving now or who have served our Nation in the past!

It is hard to find a way to truly show my appreciation for your selfless service. That’s why today I’m posting this blog about the Veterans Administration (VA) home loan and how it can help military families get the best mortgage they can at an affordable rate with little or even no down home loans

I know it’s not much in comparison to your sacrifices. But I hope you’ll find the following info to be of help to you or someone you love.

This month – and always! – our family here at Skyline Home Loans salutes our Nation’s military. Thank you for your service to us all!

What is a VA home loan?

Essentially, the VA home loan is a guarantee for part of your loan. With this guarantee, the VA agrees to cover a certain percentage of the loan should you be unable to pay it back.

The VA is not a bank, so the loan itself is instead issued from an approved lending institution and serviced through that entity. Approved lenders accept the VA’s guarantee as comparable to a down payment, and offer mortgage rates and amounts accordingly.

Who is eligible for a loan?

Any veteran, active service member, and surviving spouses (in some situations) may apply. Applicants must have a good credit score and cannot have defaulted on any past VA guarantees.

You must have served in the military for a specific length of time in order to be eligible for a VA home loan. Service requirements for full-time military members vary from 90 to 181 days, depending on when you served.

National Guard and Reserve members may also apply, but minimum service requirements may be longer if you have never been called to active duty.

What limits apply to the loan?

The limits of the guarantee stand at 25% of the loan, but the limits on the overall size of the loan for which the VA can do a 25% guarantee vary according to location. As of 2014, according to the US Department of Veterans Affairs, the basic entitlement is a $36,000 guarantee per service member or up to 25% of a loan below the limits. Loan limits start at $417,000 and may vary according to the County the property is located in. All loan limits are subject to change.

What information will you need to apply?

As with any home loan, you will need basic information about your income, assets, and credit history, as well as proof of your military service history.

Required documents include:

  • Valid identification documents (driver’s license, passport, etc.)
  • Proof of service, such as a DD Form 214 for veterans or current statement of service for active members
  • Pay stubs for at least the most recent two months
  • W2 forms and/or tax return forms
  • Proof of assets, including recent investment statements

Different lenders may require slightly different information, but these are generally the only documents needed to obtain approval from the VA.

How do you apply for a VA home loan?

The first step in applying for a VA home loan is to obtain a Certificate of Eligibility (COE). While lenders may have access to automatic VA approval when you submit your mortgage application, it’s always a good idea to apply for the COE ahead of time.

Automatic approval only works if all required information is already available, so your loan could be delayed if you put off obtaining the COE.

You can apply for your COE online through the VA eBenefits Portal, or by sending a completed Form 26-1880 to the VA Loan Eligibility Center. The address for mailed applications is printed in the upper right corner of the required form.

The COE serves as a VA pre-qualification, guaranteeing that you will receive the stated coverage for your loan. With COE in hand, you now have to apply with an approved lender for the full amount of the mortgage.

Keep in mind though, that even with a COE, it’s ultimately dependent on the financial institution to approve or deny your loan. They may accept the VA guarantee for the entire down payment, or may require additional collateral or out-of-pocket down payment. The lending institution also determines exactly how much they’re willing to lend based on your income and credit history.

The purpose of the VA home loan is to ensure that you and your family are able to obtain adequate housing by reducing or eliminating the burden of a down payment. And if the loan remains in good standing and is completely paid back, then you may qualify for additional VA guarantees in the future.

All limits and guidelines are reviewed regularly by the Veteran’s Administration to ensure that they continue to meet current needs. Any questions regarding specific situations can be directed to the Regional Benefit Office serving your state.

For more information about VA home loans check out my free eBook. Download it today!