The Federal Reserve’s Decision to Cut Mortgage Rates

December 23, 2020 by Cindy Steelman

This year has caught many of us unprepared, resulting in unexpected circumstances in nearly every industry. The real estate industry is no exception. Even as the Federal Reserve cuts short-term rates and pumps money into the mortgage finance system to deal with this instability, there are still plenty of considerations you need to take into account when thinking about buying your dream home.

The Reason For The Rate Drop

In order to ensure the stability of the real estate market, the Federal Reserve decided to cut the rates on all existing mortgages subsidized or guaranteed by the government. Since then, the federal funds rate has remained near zero, with central banks promising not to raise mortgage rates again until they are confident that the economy has survived and recovered the current circumstances.

This was to lighten the load on the average person. Many people have already lost much during this year, and this was a way to help people to get lower mortgage payments by allowing homeowners to refinance into a lower monthly payment and to help people who are purchasing to receive a lower monthly payment.

Why is This Necessary?

In times of economic uncertainty, the market can behave in unpredictable ways. The US government did not want a complete financial disaster, so, by cutting the cost of money helped the housing market. Home sales are now at record highs.

These recent financial injections not only make it easier for people to retain ownership of their homes, it makes mortgages and other financing plans for buying a house more accessible to an aching market. This gives everyone who was suffering the weight of the these trying times a chance to buy a home even amidst economic uncertainty.

What I Need To Know About Refinancing in 2021

Plenty of homeowners have decided to refinance, so many lenders are faced with heavy workloads and more complicated approval processes. As such, it would do you well to lighten the load by submitting a complete application with all the necessary documentation.

It also helps to understand what your refinancing goals are. Are you looking to get a lower monthly rate? Shorten your loan term? Replace your adjustable-rate mortgage with a fixed-rate loan? Are you seeking to borrow more than you own in a cash-out refinance? These are just some of the questions you need to ask so you and your lender can agree on mutually beneficial terms.

Buying A Home or Refinancing with Steelman Mortgages

2020 has brought plenty of uncertainty in nearly every aspect of life. Not only have we been forced to stay indoors to stave off the spread of this disease, but we have also been subject to an unstable market and rising prices. As such, it is important to keep abreast of all the important decisions of the federal government, as they can help you make the right choices about your future and prepare for what’s coming more easily.

If you’re looking to refinance, buy a home, and so on, give Steelman Mortgages a call at (916) 847-7263. We can provide you with all the best mortgage options. There’s nothing we love more than helping people achieve their desired lifestyles and obtain their dream home.

3 Myths of Reverse Mortgages You Shouldn’t Fall For

December 22, 2020 by Cindy Steelman

Compared to other financial concepts, mortgages are often perceived as some of the most complex of the bunch, especially when it comes to reverse mortgages.

During the homeownership process, the idea of getting a reverse mortgage may come up sooner or later because of how costly matters can get in the long run. Regardless of whether it’s over a sudden change of heart or the reality that owning a house is no longer as feasible as it used to be, a solution like this will come in handy whenever used properly.

However, the main problem of reverse mortgages—no matter how helpful they are—is that the intimidation associated with them comes from the fact that people don’t know enough about them. It also happens that the misconceptions that surround the financial solution in question don’t help with the aforementioned problem, and you might be falling for them yourself.

Debunking Different Reverse Mortgage Myths

On the surface, reverse mortgages can seem straightforward. After all, the name alone is self-explanatory because getting such a solution entails using your property’s equity to get funding from the bank, right?

Well, all seems so simple until you actually find yourself struggling to decipher whether or not a seemingly true myth is real enough. Unfortunately, far too many Californian homeowners put themselves deeper in tough financial stops after falling for misconceptions that pointed them in the wrong direction!

Suppose you’re thinking about getting a reverse mortgage to help ease up the current financial situation or predicament that you might have but are a bit hesitant to do so. In that case, there may be a few misconceptions holding you back. To help ensure that you enter the whole experience or process in the most well-aware way possible, let’s debunk common reverse mortgage myths you shouldn’t fall for:

Myth #1: When you get a reverse mortgage, your heirs won’t be able to get your home. Understand that pulling out a reverse mortgage won’t put you in a situation wherein you’ll end up losing all that you worked hard for right after you pass on. Compared to other myths on this list, the dreaded possibility that a home won’t be passed down to one’s descendants is one of the most prevalent reasons that Californians opt-out of using their equity for themselves. If you decide to take a reverse mortgage your estate will still inherit the home in the future. Family members will need to deal with a lien, the reverse mortgage, on the title for the payoff amount. This can be done by refinancing the reverse mortgage into a forward mortgage into an heirs name (or several heirs) or the home can be sold and all proceeds, after paying the fees including paying off the reverse mortgage, will go to the heirs.

Myth #2: You have to sell your home to the bank when you get a reverse mortgage. Admittedly, the idea of getting a reverse solution can seem intimidating because it seems you are forking your home’s equity over for some payment back to you. However, with a reverse mortgage you are not giving your equity to anyone, you are simply using it for yourself. You will be using your equity to pay the interest on the reverse mortgage (therefore no out of pocket for you) and if you have enough equity you can take a lump sum out to help you buy a car or use towards living expense as needed and you still have no payment because you are using your homes equity to pay for these items.

Myth #3: You may end up getting forced out of your home. As mentioned previously, getting a reverse mortgage isn’t pawning your home. You will not face eviction or foreclosure if you run out of equity to pay the interest on the reverse mortgage. With a reverse mortgage, you stay in your home as long as you would like. Once you vacate your home then it’s time to pay back the reverse mortgage. The reverse mortgage will never force you to leave. Once you vacate your property you can refinance into a forward mortgage, your heirs can refinance into a forward mortgage or another reverse mortgage, your heirs can sell your home and retain any equity left after paying all fees to sell a home plus pay off the reverse mortgage, or if all the equity is used up for yourself then your home can be foreclosed on and it does not require your heirs to pay anything out of your estate.

Reverse Mortgage in Roseville with Steelman Mortgages

For the most part, reverse mortgages can easily come off as intimidating alternatives because of the conditions they entail. However, it’s worth noting that most of the misconceptions they’re associated with aren’t as real as you might think. Through help, you can dispel the uncertainty that you might have over the possibility of getting the solution for your needs!

Are you a homeowner looking for a mortgage broker to help you with a reverse mortgage in Roseville? At Steelman Mortgages, we can make the mortgage process smooth, simple, and pleasant. Call us at (916) 847-7263 now to learn more about how we can help you!

The Truth Behind 4 Jumbo Mortgage Myths: What to Know

December 10, 2020 by Cindy Steelman

For some people, the thought of buying a dream luxury home is just that… a dream. However, jumbo loans can make those dreams a reality. Although not as common as before, these loans can make the process of applying for a mortgage much easier. They are available in some banks and financial lending institutions, and they can help you make your dream home more accessible.

That said, many myths surround jumbo loans and discourage people from applying. If you are interested in getting this type of loan but are unsure about it, let us go over some of these myths to help you make a better-informed decision.

What Is a Jumbo Loan?

A jumbo loan or jumbo mortgage is a type of financing that allows a person to borrow more than the loan limit set by the Federal Housing Finance Agency (FHFA). This loan cannot be guaranteed, purchased, or securitized by Fannie Mae or Freddie Mac. Jumbo loan applicants will undergo more rigorous credit requirements than people applying for a conventional loan.

Loan limits change every year so call Steelman Mortgages at 916-847-7263 for the most recent loan limits.

The Myths and the Truths About Jumbo Loan

Jumbo Loan Will Have an Extremely High-Interest Rate. Jumbo loans can have a higher or lower interest rate than conventional loans. However, it depends on market conditions at the time that you need a jumbo mortgage so you need to check with the current market to know what the current rates are. Jumbo loans are often advertised with adjustable fixed rates for a particular period—mostly between the first three to five years of the loan. After this fixed period, the rate will depend on the index connected to the loan.
You Can Only Use Your Loan for a Single-Family Luxury Property Type. This isn’t true since you can use a jumbo loan to purchase a primary, second or investment property. There are some differences between the property mortgage guidelines for a jumbo loan applicant versus the conventional home loan applicant. These differences can include the down payment required and the debt to income ratio requirement amongst others. You can apply for a jumbo loan on all types of homes.

Some of the other different requirements are:
- A high credit scores
- Sufficient to high income to have a lower debt to income ratio
- Enough savings and investments to cover the cash to close and reserves
You Need to Have Private Mortgage Insurance Before Your Jumbo Loan Gets Approved. Government mortgages require specific requirements, such as private mortgage insurance, from those who cannot provide at least a 20-percent down payment. For jumbo mortgages private mortgage insurance is not available so an applicant can have 10% down and then carry a 1st jumbo mortgage at 80% loan to appraised value and then a second smaller mortgage at 10% loan to appraised value to leave just 10% needed for the down payment. A jumbo loan requires 20% down so by doing a second 10% and having 10% cash down the applicant covers the 20% requirement.
You Cannot Get Loan Approval Without a Huge Down payment. A down payment is still a necessity for any loan type, including a jumbo mortgage. However, since a considerable amount of money is involved with jumbo loans, that means the 20 percent required down payment will also be an large amount. The great news is an applicant can get an 80% loan to appraised value 1st mortgage and a 10% loan to appraised value 2nd mortgage and then only need 10% of their own cash.

Jumbo Loan with Steelman Mortgages

A lot has changed since the introduction of the jumbo mortgage. These changes include making the option of applying for a bigger loan possible with less trouble. Lenders have also adjusted their setups so that more people like you can make their dream homes a reality. Are you a first-time homebuyer in Roseville looking for a mortgage broker to help you purchase your luxury home? At Steelman Mortgages, we can make the mortgage process smooth, simple, and pleasant. Call us at (916) 847-7263 now to learn how we can help you.

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