Scottsdale mortgage

Scottsdale mortgage holders often ask questions about the best way to prepay their home loans – and save money in the process. Follow these tips and you can save thousands of dollars in interest over the life of your mortgage. In addition, prepaying your loan will mean it will pay off earlier than the original term.

Scottsdale Mortgage Holders Can Save Thousands

Prepaying your mortgage by just one additional payment a year can reduce a 30-year loan down to roughly a 23-year term. When you pay bi-weekly (every other week) for example, you're really making 26 half-payments (52 weeks divided by 2 equals 26 weeks.) You could also make an additional payment at some point during the year to effectively make 13 monthly payments instead of 12. Still, some people like to add 1/12 of their mortgage payment to each monthly payment and accomplish the extra payment that way.

Some mortgage lenders charge a fee for prepayments. Hopefully, if you already have a mortgage, yours doesn't contain a prepayment clause. The majority of Scottsdale mortgage lenders allow prepayment without penalty. If you're shopping for a mortgage or are considering refinancing, avoid signing a mortgage with a prepayment penalty.

Prepaying your mortgage works best when you pay the same amount each month. Decide whether you're going to pay an extra $50, $100 or whatever amount you choose and stick with that amount for at least a year. When you change the prepayment amount, just make sure you keep a written record and check your statement closely to see that the extra amount has been subtracted.

Regardless of how you make any extra payment(s) – or if you decide to make a lump-sum payment – make sure your lender enters the payment properly. If you question how, or if, it was applied, contact your Scottsdale mortgage lender immediately so they can either explain it to you or correct it if it's in error.

 

You can find a lot more Scottsdale mortgage information in our Scottsdale Mortgage Info section of articles to your right just below the Scottsdale Real Estate Categories. We also update mortgage news constantly on Twitter and Facebook. We hope you'll check us out there as well.

Scottsdale mortgage lenders have “seen it all.” With banks paying low interest rates and the stock market in the midst of a mini-crash, it’s tempting to just keep your cash at home. However, if you’re planning to buy a home and need that cash for a down payment you’d better rethink that investment “strategy.” You won’t be able to use it unless it’s accounted for.

Getting a Scottsdale mortgage will not be any easier with cash, and could in fact, muddy the waters.

Scottsdale Mortgage Market: Cash Isn’t King

In a recent survey by American Express, 57% of consumers say they have cash in a bank account. Surprisingly though, 53% admitted to keeping additional cash stashed in their home.

If you’re preparing to go to a loan closing, cash isn’t king. You’ll need a cashier’s check from a bank or other financial institution. One mortgage lender says, “Cash on hand is unacceptable… No title company is going to accept (actual) cash… at the closing.” The lender will view the cash with a big red flag, and will assume it was gained illegally — despite your claims to the contrary.

Nowadays, real estate agents and mortgage professionals are keenly aware of the possibility of money laundering. Even bringing a modest amount of cash to a closing could prompt the filing of a Suspicious Activity Report with the Financial Crimes Enforcement Network (FinCEN) of the U.S. Treasury Department.

In a 10-year study from 1996-2006, FinCEN reported that 20% of residential real estate sales transactions earmarked as suspicious showed evidence consistent with money laundering.

If the financial institution can’t document a legitimate source of the cash, even a mortgage pre-approval letter from a Scottsdale mortgage lender is virtually useless. A pre-approval letter states there is sufficient income, assets and a qualifying credit score for financing. The pre-approval is still subject to final verification by a credit underwriter at the mortgage lending company.

As a result of the Secure and Fair Enforcement for Mortgage Licensing Act of SAFE Act of 2008, and increased safeguards on “stated income” loans in the Dodd-Frank law of 2010, lenders must account for every dollar in a mortgage lending transaction.

In addition, the Patriot Act in 2001 tacked on more restrictions to discourage terrorist groups from money laundering in mortgage transactions.

Cash savings must be on deposit in a financial institution account to be counted as part of the overall asset evaluation. Plus, it has to be in the account at least 60 days for mortgage lenders to term the cash “sourced and seasoned.” A cash gift from a relative must also be documented to make sure that money isn’t considered a loan which may hurt the borrower’s debt to income ratio.

Scottsdale mortgage lenders advise if you’re planning to buy a home with a mortgage loan, deposit the cash into a bank account as soon as possible. Don’t be surprised when your bank files a Currency Transaction Report (CTR) with the IRS. Even smaller cash deposits over short periods to “fly under the radar” of the legal reporting limits of deposits over $10,000 will be reported.

Despite the warnings, mortgage lending experts say around 5% of loans each year involve cash money issues. Most of them can be ironed out — as long as the borrower informs the lender early in the process.

Get more Scottsdale mortgage tips and information by looking up our other articles in the Scottsdale Mortgage Info list of articles under Scottsdale Real Estate Categories. We also post mortgage related news and information on our Facebook page and on Twitter. Check us out there as well.

As predicted by some in the Scottsdale mortgage industry, sales of existing homes fell sharply in November. Insiders say the new consumer disclosure rule was to blame. The rule resulted in delays in many mortgage loan closings.

As predicted by some in the Scottsdale mortgage industry, existing home sales fell in November.

Scottsdale Mortgage Fears Realized

The sale of existing homes dropped 10.5% during November from the previous month, according to the National Association of Realtors. With a seasonally adjusted annual rate of slightly more than 4.75 million homes sold, it was the slowest month for existing home sales in more than eighteen months. The decline follows a 3.4% decrease in October, as well.

The chief economist for the National Association of Realtors, Lawrence Yun, said the decline in demand was due, in part, to the Consumer Financial Protection Bureau's recent new disclosure rules. The requirements, known as "Know Before You Owe" or TRID (Truth in Lending Act and Real Estate Settlement Procedures Act integrated disclosures,) went into effect in October. Confirming the fears of many in the Scottsdale mortgage industry, the disclosure forms have increased the time needed to close a loan. The delays pushed closings that should have taken place in November into December, sometimes January.

Lower home inventory and higher asking prices were also responsible for the drop in home demand. The combined impact meant that existing home sales dropped nearly 4% in November compared to November of 2014. That decline was the first year-to-year decrease since September of 2014.

As written in a previous article on this topic, mortgage lenders feared the new changes would create technological hurdles requiring additional software programs and thousands of man-hours.

The disclosure form given to the consumer after the loan application begins — known as the Loan Estimate — covers the rules as to what can and cannot be done by the lender. It includes cost estimates approved by the borrower in writing before the application process can continue. The Closing Disclosure must be given to the borrower within three business days of closing. It shows all the costs paid by the consumer. If the borrower wants to make any changes during the three-day window, the three days start over. As expected, this has caused delays and the "domino effect" creates additional delays in loan closings.

Find more articles about the Scottsdale mortgage market by checking out our Scottsdale Mortgage Info to your right just below our Scottsdale Real Estate Categories.

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Scottsdale mortgage loan experts say over 6 million people nationwide will buy homes next year. Statistics expect roughly 2 million will be first-time homebuyers. Both first-time buyers and others always wrestle with whether or not to pay “discount points” on their mortgage.

The Scottsdale Mortgage Loan: Points?

Discount points on a Scottsdale mortgage loan are designed to save interest over a long term loan payback.

Just what the heck are discount points, anyway? Mortgage discount points are a one-time, upfront closing cost designed to discount the existing mortgage interest rate. One point is equal to 1% of your loan amount. Your interest rate is normally reduced by .25% for each discount point.

Since paying discount points lowers your interest rate, the process is often called “buying down” your rate. As an example, on a mortgage amount of $400,000 at 4% interest, you could elect to pay one discount point or $4,000 and lower your interest rate to 3.75%. For a borrower planning to be in that home for as long as a 30-year term, the interest savings over the life of the loan can be substantial.

Should you pay discount points? The answer is a resounding "that depends." Paying discount points can be expensive. Plus, it will mean you have to come up with more money at the loan closing. Still, it may make sense — especially if you can negotiate with the seller for him to pay part or all of the closing costs.

Paying points to lower your mortgage interest rate could be a good investment over time. However, if you plan to sell your home in a few years or refinance your mortgage you probably won’t recoup the amount you paid in discount points.

Because discount points are used to "buy down" your interest rate, they are usually tax-deductible.

Mortgage experts recommend you consider paying discount points as a luxury, not a necessity. If paying one or more points puts you in a bind by requiring you to pay additional money at the closing, it’s probably best not to do it.

Okay, what’s next? Consult your real estate agent about concessions the seller may make as part of your offer to purchase a home. You never know what you may get until you ask. Discuss discount points with your Scottsdale mortgage loan professional to find out your best course of action.

Get more up to date news and tips on Scottsdale mortgage loans by checking out our other articles under the Scottsdale Mortgage Info section just below Scottsdale Real Estate Categories to your right.

A loan closing attorney who, when reviewing the documents with a new Scottsdale mortgage borrower, used to jokingly say, “You’re welcome to read all these forms, and if you find anything in your favor the lender will be happy to correct that mistake!” Of course, he was only joking and he used that line as an ice-breaker. However, it’s very important that you review your closing documents to make sure they are correct.

Closing Your Scottsdale Mortgage Loan Accurately

Remember, you’re going to be asked to sign almost every document you'll see in the loan closing paperwork. You will be responsible for everything in those agreements. With mortgage terms up to 30 years, that’s a long-term commitment.

While most mortgage lenders are careful to make sure documents are accurate, mistakes do occur. One real estate expert says she has yet to see a loan closing where there wasn’t at least one typo, numerical error or other mistake. Her advice is to hope for the best and prepare for the worst.

The recent TRID (Truth in Lending/Real Estate Settlement Procedures Act Integrated Disclosure) rules require lenders to give borrowers Closing Disclosures at least three days before the loan closing. Mortgage insiders say borrowers should double-check three key areas: the loan amount, the personal and property information and the interest rate.

If you find an error, call your lender as soon as possible. It will either be corrected or new documents will be drawn up. If the mistake is serious, the lender may be required to restart the three-day disclosure period and delaying the loan closing. Such a delay could create a "domino effect" if the sellers need the proceeds from the closing to purchase their new house.

 
One last Scottsdale mortgage loan closing tip — and it may be the most important – remember this: "Read twice, sign once." Correcting the mistake may prevent problems later.
 
Find more tips and articles on Scottsdale mortgage loans to your right in the Scottsdale Mortgage Info section just below Scottsdale Real Estate Categories. And follow us on Facebook and Twitter for daily news and tips we post there.