Joe Gonzalez Team

CrossCountry Mortgage

What You Need To Know About A Closed-End Second Mortgage

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What You Need To Know About A Closed-End Second Mortgage

A home is probably one of the most expensive purchases you will ever make. It is important for you to understand all of the options available to you, particularly if you need a quick source of cash, and you might be thinking about taking out a second mortgage. You can use a closed-end second mortgage to cover the cost of repairs, medical debt, and even consolidate your other sources of debt. How do you know if this option is right for you?

An Overview Of A Closed-End Second Mortgage

If you decide to take out a second mortgage, you will typically withdraw the cash you need. Then, if you need more cash in the future, you can take out more down the road. In contrast, with a closed-end second mortgage, you will receive the entire loan amount upfront. Then, you will not be able to withdraw any additional cash if you need more because you have already withdrawn the maximum limit. Generally, you can withdraw up to 80 percent of your home’s equity value, but there are many factors that will dictate your limit.

The Pros

Before deciding whether this is the right option for you, you must weigh the benefits and drawbacks. The biggest benefit is that it gives you access to a quick, large, lump sum payment. You can use this to cover home renovations and pay off debt. You also get access to a fixed interest rate. Unlike other options, you don’t have to worry about the interest rate changing.

The Cons

On the other hand, there are some drawbacks you might notice. You have to use your home as collateral, so you risk losing your home if you can’t meet the payments. In addition, you will probably incur higher closing expenses, and you may have to pay a higher interest rate. This is particularly true if you are taking out a large amount of money.

Weigh Your Options Carefully Before Deciding On A Second Mortgage

If you are looking for a second mortgage, you need to think about all of your options carefully before you decide which one is right for your needs. Consider reaching out to an expert who can help you.

What’s Ahead For Mortgage Rates This Week – January 30, 2023

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What's Ahead For Mortgage Rates This Week - January 30, 2023Last week’s economic reporting included readings on new and pending home sales, inflation, and consumer sentiment. Weekly readings on mortgage rates and jobless claims were also released.

New home sales increase in December

The Commerce Department reported new home sales rose to a seasonally-adjusted annual pace of 616,000 sales in December as compared to the expected pace of 615,000  new homes sales and November’s revised reading of 602,000 annual sales. December was the third consecutive month that the pace of new home sales rose, but new home sales remained well below the 1.04 million sales peak reported in August 2020.

Pending home sales rose by 2.5 percent in December, which outpaced expectations of a one percent decrease in pending sales and November’s seasonally-adjusted annual decrease of  -2.6 percent in pending home sales. New home sales are 26.6 percent lower than they were one year ago.

Month-to-month inflation slows in December

The Commerce Department reported that month-to-month inflation rose by 0.1 percent in  December, which matched November’s month-to-month reading. Core inflation rose by 0.1 percent in December to 0.3 percent and matched analyst expectations. Core inflation readings exclude volatile food and fuel sectors that comprise major expenses for many U.S. households.

Year-over-year inflation rose by 5.0 percent in December as compared to November’s pace of 5.5 percent. Core inflation rose  4.4 percent in December, which matched analyst expectations, but fell short of November’s year-over-year reading of 4.7 percent for core inflation.

Mortgage rates, initial jobless claims fall

Freddie Mac reported lower average mortgage rates last week as the rate for 30-year fixed-rate mortgages fell by two basis points to 6.13 percent. The average rate for 15-year fixed-rate mortgages fell by 11 basis points to 5.17 percent.

First-time jobless claims fell to 186,000 filings as compared to the expected reading of 205,000 initial jobless claims and the previous week’s reading of 192,000 new jobless claims filed. Continuing jobless claims rose to 1.68 million ongoing claims as compared to the previous week’s reading of 1.66 million continuing jobless claims filed.

Consumer sentiment strengthens in January

The University of Michigan’s Consumer Sentiment Index rose to an index reading of 64.9 in January, which surpassed the expected reading of 64.6 and December’s final index reading of 64.6. Readings over 50 indicate that a majority of consumers surveyed have a positive outlook on the economy. Falling gasoline prices contributed to an improved consumer outlook, but grocery prices remained high.

What’s ahead

This week’s scheduled economic reporting includes readings on U.S. home prices, The Federal Reserve’s Federal Open Market Committee meeting, and Fed Chair Jerome Powell’s scheduled press conference. Labor-sector reports on job growth and the national unemployment rate will also be released.

Getting A Mortgage When Self-Employed: What You Need To Know

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getting-a-mortgage-when-self-employed-what-you-need-to-knowThere is a common misconception that someone who is self-employed will not have the tax records or income necessary to qualify for a mortgage; however, that is not necessarily the case. In reality, if you are self-employed, there are a lot of home loan options available to you. It is true that it might require some additional paperwork and planning, but as long as you have the necessary information, you should be able to qualify for a mortgage. 

What Is Necessary To Qualify For A Self-Employed Mortgage Loan?

If you are interested in taking out a mortgage when you are self-employed, you will be held to the same standards as everyone else. This means that the lender is going to require a solid credit score, a long credit history, a favorable debt-to-income ratio, and enough money to cover the down payment. In addition, you will also have to demonstrate a solid income history, just like everybody else. 

That is where the difference comes into play. A W-2 employee may be able to provide a few pay stubs, but someone who is self-employed may be required to provide up to two years of self-employment income. 

How Do I Maximize My Chances Of Getting Approved?

If you are self-employed and want to maximize your chances of getting approved for a self-employed mortgage, there are a few steps you should take. First, you need to make sure your debt-to-income ratio is as low as possible. That way, you can reduce the risk to the lender. You can also improve your chances by preparing financial documents ahead of time. That might mean including profit and loss statements, two years of tax returns, and 2 years of business taxes if you have them. Do not forget that improving your credit score and putting more money down can improve your chances of getting approved. 

Lengthen Your Income History

Finally, if you are serious about getting approved, lengthen your income history. Show that you are willing to provide a longer track record of income, and the bank will feel better about providing you with a self-employed mortgage loan. That way, you have the financing to purchase the house of your dreams. 

 

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