Which Financing Option is Better For Your Financial Future in California? A Home Equity Line of Credit – HELOC or A Mortgage Loan Refinance?

Do you need extra cash for specific needs like home repairs or college costs? Which should you choose: a home equity line of credit (HELOC) or a mortgage refinance? Which is your best choice depends on how much money you need, how much equity you have in your home, what purpose you intend for the cash, and whether you have an FHA, VA, or other type of mortgage.

Cash-Out Refinance vs. HELOC Interest Rates

You’ll pay more interest on a HELOC than you will with a cash-out mortgage refinance. HELOCs can have interest rates two to three points higher than the best rates on mortgage refinance loans.

What is the difference between a cash-out and a straight refinance loan?

A straight mortgage refinances loan will allow you to refinance a percentage of the value of your mortgage. Mortgage refinance programs like the VA streamlined Interest Rate Reduction Refinancing Loan (IRRRL) won’t allow you to take additional cash out of the equity in your home. 

A cash-out loan, which is also available as a VA and FHA loan product, and some other loan programs, lets you take cash out of your home’s value. A VA cash-out loan is a unique benefit for qualified veterans. Nearly all cash-out programs limit how much additional cash you can borrow based on your home’s value. A VA cash-out refinance could allow you to borrow additional cash up to 100% of your home’s value. 

What’s a home equity loan? Is it the same as a HELOC?

A home equity loan isn’t the same as a cash-out refinance and it’s not the same as a HELOC, either. A home equity loan can be a good choice if you need money to pay for home repairs or for another one-time, essential cost. Home equity loan amounts are based on the amount of equity you have in your home. 

Why choose a cash-out refinance over a HELOC?

A home equity line of credit has some benefits, which include acting as a revolving line of credit instead of a one-time cash payment. You can have varying payment amounts with a HELOC, but its higher interest rate often makes a straight one-time cash-out refinance more attractive financially. HELOCs are usually better financial deals than high-interest credit cards, however.

A cash-out refinance is going to offer you better loan terms and a more appealing interest rate than nearly all HELOC alternatives. When you’re shopping for a cash-out mortgage refinance, you can save time and compare terms from different lenders by working with an experienced mortgage refinancing professional. An experienced local independent mortgage broker may have multiple resources and lending channels allowing them to find the refinancing product that’s right for you.  If you are interested in learning more about your options get in touch with us here at California Platinum Loans.  We are a Local Independent Mortgage Broker shop with many niche loan products we can custom tailor to your specific situation.

Is The Condo You Want to Buy Non-Warrantable? See How California Platinum Loans Can Get You The Loan You Need to Buy That Unwarrantable Condo Today

What does it mean if you want to buy a condo but it’s non-warrantable? You want a mortgage, but you may have heard you can’t get financing for a non-warrantable condominium. If you’ve found a condo you love in the neighborhood you want, but get the news that it’s “non-warrantable,” can you still get a home loan to buy it?

What does it mean if you want to buy a condo but it’s non-warrantable? You want a mortgage, but you may have heard you can’t get financing for a non-warrantable condominium. If you’ve found a condo you love in the neighborhood you want, but get the news that it’s “non-warrantable,” can you still get a home loan to buy it?

What does it mean if a condo is “non-warrantable”?

This term refers to criteria established by Fannie Mae and Freddie Mac, the two main agencies that buy conventional mortgages from the original lenders, usually a bank. Both of these agencies have requirements for condominium projects as a whole to be eligible for financing that qualifies for their programs. 

One way a condo could be “non-warrantable” is owner payments to the Homeowners’ association. If more than 15% of owners are behind on their HOA payments, then a condo in that association is non-warrantable. At least half of the condos in an association must be owner-occupied for the condos to be warrantable, also. Condo projects that require a membership, for example, golf clubs or country clubs, aren’t warrantable.

Fannie Mae and Freddie Mac don’t keep ongoing lists of which condominiums are warrantable, but you can find lists of condos that qualify for FHA or VA loans. If the condo is on these lists, it’s very likely to be warrantable as the lists have similar criteria.

Lenders will order a project review to determine if a condo is warrantable or non-warrantable as neededHow do you get a loan for a non-warrantable condo?

You’ll need to work with an independent mortgage broker who has access to direct lenders, also called portfolio lenders, who may specialize in non-warrantable condo loans. You’ll have an easier time finding these opportunities if you work with an experienced mortgage loan professional who can offer you a variety of financing options, all in one place.  So you are completing a single mortgage loan application and the independent mortgage broker working on your side is able to filter through dozens of wholesale channel portfolio lenders that lend on non-warrantable condo’s and select the best fit lender for your unique situation. Call or email us here at California Platinum Loans for more information on these and many other loan products.

Have An FHA Home Loan? STOP Wasting Your Money NOW: Refinance NOW And Eliminate Your PMI/Mortgage Insurance ASAP

If you have an FHA loan, you may be getting tired of paying mortgage insurance every month in addition to your house payment and property taxes. There are so many advantages to FHA loans, but they do require you to pay mortgage insurance, sometimes called MIP (Mortgage Insurance Payments). On a conventional mortgage, mortgage insurance can also be called PMI (Private Mortgage Insurance). Unlike your life insurance policy, MIP doesn’t protect your family if you should become ill or die. It protects your lender and the amount of money they have loaned for your home.

Can you remove mortgage insurance from an FHA loan?

If you paid less than 10% down payment on an FHA loan, you will pay mortgage insurance for the life of your loan. Part of the insurance is a one-time mortgage insurance premium, which is paid when you took out the loan. Usually, the lender will finance this one-time insurance payment as part of your loan. You’ll also continue to pay an annual mortgage premium based on the length of your mortgage.

FHA rules for mortgage insurance payments are complicated. If you got your FHA loan after June 3, 2013, and you made a down payment of more than 10% on a 15, 20, 25 or 30-year FHA loan, you are eligible to apply for cancellation of your mortgage insurance payment (MIP) after 11 years. For older FHA loans taken out before June 3, 2013, you will pay MIP up to 78% LTV based on your original purchase price. Older FHA loans with borrowers who paid more than 22% down never had a MIP requirement. You may be able to refinance your FHA loan with a lower MIP depending on your equity in the home. If you’ve missed a mortgage payment during your loan, you won’t be able to drop the MIP until or unless you refinance into a conventional loan. HUD and FHA can change these rules at any time at their sole discretion.  So it’s best to reach out to an independent mortgage broker and home loan professional at California Platinum Loans for the most current guidelines as they relate to your specific FHA loan. 

Can you refinance your FHA mortgage to eliminate MIP?

Another option for getting rid of mortgage insurance is refinancing the mortgage completely. You have many options for different home loan products which could not only eliminate your mortgage insurance requirement but could also provide you with lower monthly payments.

If you’re tired of paying mortgage insurance every month and you want to put the money to better use, contact a home loan professional today to learn your options for eliminating mortgage insurance on an FHA mortgage by refinancing your current FHA loan into a new conventional mortgage loan.