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

What-Is-Collateral

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 another 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 a mortgage refinance loans.

What Is the Difference Between a Cash-Out and a Straight Refinance Loan?

A Cash-Out & 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, let 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?

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?

Cash Out Refinance

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.

Source

https://www.bankrate.com/home-equity/home-equity-loan-vs-line-of-credit/

In Today’s Top Stories: This Year’s First Time Homebuyers Can Expect to Have More Choices in Terms of Housing Loans

One of the three big credit bureaus, TransUnion, predicts that there will be 8.3 to 9.2 million first-time home buyers between 2020 and 2022. This is almost 50% more new home buyers than 2015, and 25% more than 2017.

Where is the trend coming from? First, unemployment is low. More people have the opportunity to save money for down payments, and home prices aren’t rising quite as fast as they have been in recent years. Home loan interest rates, including on 30-year and 15-year fixed rate conventional, FHA, and VA mortgages, continue to be at low levels.

What do first time home buyers want in their first home?

The traditional view of a “starter home” leading to starting a family, then moving up the home-buying ladder isn’t as common as it used to be. Today’s first time home buyers are more interested in using home ownership as a wealth-building tool. They primarily see home ownership as a good financial alternative to paying rent. Some first-time home buyers may still be living with family or may be sharing housing. In this case, privacy and a place to call their own are the primary motivators.

What has delayed first time home buyers so far?

Student loan debt continues to be a challenge for many potential first time home buyers. Some buyers are waiting to get a better job or advance in their careers before making the move to buy a house. And still other first time home buyers aren’t aware of the variety of home loan options that are available to them.

Two thirds of the potential first time home buyers surveyed by TransUnion in 2019 said they hadn’t heard of either Fannie Mae or Freddie Mac, the two government-sponsored home mortgage enterprises that buy the majority of conventional mortgages issued by banks or other lenders. And a large number of first time home buyers still think they need perfect credit, a high income, and a 20% down payment to even consider buying a house.

If you’ve been thinking about buying a home for the first time, you’ll benefit from the help of an experienced home mortgage professional. California Platinum Loans can tell you what your options are and guide you through the process. You can join the new first time home buyers in taking advantage of good home buying conditions and low mortgage interest rates in 2020.

Sources

https://themortgagereports.com/57571/2020-will-be-a-big-year-for-first-time-homebuyers-analysis-shows

Is the Condo You Want to Buy Non-Warrantable?

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.

Buy Conventional Mortgages

One way a condo could be “non-warrantable” is through 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 condos 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.

Source

https://www.valuepenguin.com/mortgages/non-warrantable-vs-warrantable-condos