The interest rate on your mortgage plays a pivotal role in shaping your monthly payments and the overall cost of your loan. Beyond the percentage itself, understanding how interest is calculated and the differences between fixed and variable rates can help you make informed financial decisions.

How Interest is Calculated 

Mortgage interest is calculated monthly by multiplying your remaining loan balance by the annual interest rate and dividing by 12. For example, if your balance is $300,000 with an interest rate of 6.5%, your interest payment for that month would be $1,625. As you pay down the principal, the interest portion decreases, allowing more of your payment to go toward reducing the loan balance. This dynamic highlights why securing a lower interest rate or opting for a shorter loan term can significantly reduce your total costs.

Impact on Monthly Payments 

Your monthly mortgage payment consists of two key components: principal and interest. Higher interest rates increase the proportion of your payment allocated to interest, raising overall costs. Conversely, lower rates make homeownership more affordable by reducing monthly payments and freeing up more funds to pay down on the principal.

Fixed vs. Variable Rates 

Fixed-rate mortgages offer stability; your interest rate and monthly payments remain constant throughout the loan term. This predictability is ideal for those seeking long-term financial consistency. On the other hand, variable-rate mortgages start with lower initial rates but fluctuate based on market conditions. While they can lead to savings if rates drop, they carry the risk of higher payments if rates rise.

Choosing between fixed and variable rates depends on your financial goals and tolerance for risk. Fixed rates provide security, while variable rates may offer cost savings in favorable economic conditions.

Contact one of our Mortgage Representatives today to assist you in meeting your homeownership goals!

Opinions expressed above are the personal opinions of the author and meant for illustration purposes only. For specific questions regarding your personal lending needs, please call RCB Bank at 855-BANK-RCB. With approved credit. Terms, qualifications and other restrictions apply. Member FDIC, Equal Housing Lender, RCB Bank NMLS #798151.

Sources:

https://www.experian.com/blogs/ask-experian/how-mortgage-interest-works/

https://www.mortgagecalculator.org

https://www.bankrate.com/mortgages/mortgage-calculator/

https://www.bankrate.com/mortgages/what-is-a-mortgage-interest-rate/

When you take out a mortgage, your monthly payment is typically divided into several components, including principal, interest, taxes and insurance. Among these, the principal is the core part of your loan repayment. Understanding how it works can help you better manage your mortgage over time.

The principal is the original amount of money you borrow from a lender to purchase a home. For example, if you buy a house for $300,000 and make a $50,000 down payment, your principal loan amount will be $250,000. This amount does not include interest or other fees associated with your mortgage.

Each monthly mortgage payment you make includes a portion that goes toward reducing the principal balance. In the early years of your loan, most of your payment goes towards the interest rather than principal due to how loans are amortized. Over time, as the balance decreases, more of your payment is applied to the principal.

The way the principal changes over the life of your loan depends on factors like your loan term and interest rate. Shorter loan terms or additional payments toward the principal can help reduce the balance faster and save on interest costs in the long run.

Understanding your principal and how it fits into your overall mortgage can empower you to make informed financial decisions. Paying extra toward the principal when possible is one strategy to pay off your loan faster and reduce total interest paid overtime.

Contact one of our Mortgage Representatives today to assist you in meeting your homeownership goals!

Opinions expressed above are the personal opinions of the author and meant for generic illustration purposes only. For specific questions regarding your personal lending needs, please call RCB Bank at 855-BANK-RCB. With approved credit. Terms, qualifications and other restrictions apply. Member FDIC, Equal Housing Lender. RCB Bank NMLS #798151.

Sources:

[1] How to Calculate Principal and Interest on a Mortgage Payment https://anytimeestimate.com/home-buying/principal-and-interest/

[2] Mortgage Principal: The Core of Your Home Loan Explained https://www.businessinsider.com/personal-finance/mortgages/mortgage-principal

Selecting the right mortgage term is a critical financial choice that can significantly impact your long-term economic well-being. Homeowners face a fundamental decision between 15-year and 30-year mortgage options, each presenting distinct advantages and potential challenges.

15-Year Mortgage

A 15-year mortgage offers a compelling approach for financially disciplined individuals. This option provides notably lower interest rates, enabling homeowners to build equity substantially faster and reduce overall interest payments. The accelerated payment structure means substantial long-term savings, with borrowers potentially saving tens of thousands of dollars over the loan’s lifetime[2].

However, this approach is not without its complexities. The higher monthly payments require a more robust financial foundation. Borrowers must carefully assess their income stability and monthly budget to ensure they can consistently meet these more demanding financial obligations[1].

30-Year Mortgage

Conversely, the 30-year mortgage offers greater financial flexibility. Lower monthly payments provide homeowners with increased financial maneuverability, allowing for additional investments, emergency savings or managing other financial priorities[3]. This approach is particularly advantageous for individuals with variable income or those seeking to maintain more liquid financial resources.

The trade-off, however, is a higher total interest payment over the loan’s duration and a slower equity-building process. Borrowers will ultimately pay significantly more in interest compared to the 15-year option.

Making an Informed Decision 

The optimal mortgage term depends on individual financial circumstances, career trajectory, and long-term goals. Factors to consider include:

• Current income and job stability
• Long-term financial objectives
• Existing investment strategies
• Personal risk tolerance

Financial experts recommend a comprehensive evaluation of personal financial health before making this critical decision. Consulting with mortgage professionals can provide tailored insights, helping borrowers make an informed choice that aligns with their unique financial situation.

Ultimately, the right mortgage term is a personal decision that requires careful consideration of individual financial goals, current economic circumstances, and future aspirations.

Contact one of our Mortgage Representatives today to assist you in meeting your homeownership goals!

Opinions expressed above are the personal opinions of the author and meant for generic illustration purposes only. For specific questions regarding your personal lending needs, please call RCB Bank at 855-BANK-RCB. With approved credit. Terms, qualifications and other restrictions apply. Member FDIC, Equal Housing Lender. RCB Bank NMLS #798151.

Sources:

[1] https://www.investopedia.com/articles/personal-finance/042015/comparison-30year-vs-15year-mortgage.asp

[2] https://www.forbes.com/advisor/mortgages/15-year-vs-30-year-mortgage-calculator/

[3] https://www.cnn.com/cnn-underscored/money/15-vs-30-year-mortgage

When you take out a mortgage, you might encounter something called an escrow account. Think of it as a financial safety net that helps manage your property-related expenses like taxes and insurance. Here’s how it works: each month, a portion of your mortgage payment goes into this account, which is managed by your lender[2].

The primary role of an escrow account is to ensure that your property taxes and insurance premiums are paid on time. This not only protects you from potential penalties but also safeguards the lender’s interest in the property. If these bills aren’t paid, you could face fines or even risk losing your home. With an escrow account, the lender takes care of these payments for you, so you don’t have to worry about saving up for them separately[1][3].

For many homeowners, having an escrow account simplifies budgeting. Instead of scrambling to pay large lump sums once or twice a year, you contribute smaller amounts monthly, making it easier to manage your finances[2]. However, it’s essential to note that the amount you pay into the escrow can fluctuate based on changes in your tax assessments or insurance premiums[1].

While some loans require an escrow account, others might give you the option to handle these payments yourself. If you’re disciplined with saving and prefer more control over your finances, managing these expenses independently might be appealing. But for many, the convenience and peace of mind offered by an escrow account make it a valuable part of their mortgage arrangement[2].

Contact one of our Mortgage Representatives today to assist you in meeting your homeownership goals!

Opinions expressed above are the personal opinions of the author and meant for generic illustration purposes only. For specific questions regarding your personal lending needs, please call RCB Bank at 855-BANK-RCB. With approved credit. Terms, qualifications and other restrictions apply. Member FDIC, Equal Housing Lender. RCB Bank NMLS #798151.

Sources:

[1] https://www.forbes.com/advisor/mortgages/mortgage-escrow/

[2] https://www.wsj.com/buyside/personal-finance/mortgage/what-is-escrow

[3] https://www.consumerfinance.gov/ask-cfpb/what-is-an-escrow-or-impound-account-en-140/

Home appraisals play a crucial role in the home buying process, acting as a safeguard for both buyers and lenders. When you decide to purchase a home, the price agreed upon between you and the seller isn’t always reflective of the property’s true market value. This is where an appraisal comes in.

A home appraisal is an unbiased assessment conducted by a licensed appraiser who evaluates the property based on various factors, including its size, condition and location, as well as recent sales of comparable homes in the area[1]. This process ensures that you, as a buyer, are not overpaying for your new home. If the appraisal comes in lower than the purchase price known as an “Appraisal Gap” it can provide leverage for negotiation or even allow you to walk away from the deal if you’ve included an appraisal contingency in your contract[3].

For lenders, appraisals are essential as they confirm that the amount they are willing to lend aligns with the home’s actual value, protecting them from potential losses[3]. If the appraisal is too low, it can delay or derail the transaction, making it vital for all parties involved to understand its importance.

Now, let’s talk specifics. Oklahoma and Kansas home appraisals usually costs between $350 and $700 for a single-family home[2][4]. Factors like the size of the property and the type of loan can affect these costs. For example, larger properties or government-backed loans might require more detailed appraisals, which can be pricier.

In essence, home appraisals not only help buyers make informed decisions but also ensure that lenders are making sound investments. This process is a critical step in the journey of homeownership, providing peace of mind and financial security for everyone involved.

Contact one of our Mortgage Representatives today to assist you in meeting your homeownership goals!

Opinions expressed above are the personal opinions of the author and meant for generic illustration purposes only. For specific questions regarding your personal lending needs, please call RCB Bank at 855-BANK-RCB. With approved credit. Terms, qualifications and other restrictions apply. Member FDIC, Equal Housing Lender. RCB Bank NMLS #798151.

Sources:

[1] https://www.amerimacmanagement.com/about/blog/what-is-the-importance-of-the-appraisal-process/

[2] https://www.houzeo.com/blog/how-much-is-a-home-appraisal-in-kansas/

[3] https://www.forbes.com/advisor/mortgages/how-home-appraisals-work/

[4] https://www.houzeo.com/blog/how-much-is-a-home-appraisal-in-oklahoma/

For many people, homeownership is a significant way to accumulate long-term wealth. As they pay down their mortgages, homeowners build equity in their homes and eventually a majority of them own their homes outright. For many older homeowners, mortgage payments absorb a significant percentage of their income, preventing them from saving enough to fund a decent retirement. In addition, some senior homeowners may require more funds to cover house repairs, medical expenditures or other urgent needs. For these homeowners, a reverse mortgage can be an appealing financial tool that allows them to convert some of the equity in their property into cash without having to sell it.

So, why should a homeowner understand reverse mortgages? When considering taking out a reverse mortgage, the homeowner must understand that the home’s equity is used as security. This loan type allows homeowners 62 years and older access the equity in their homes in one of three ways:

1. By a reverse annuity mortgage or periodic payments from the lender.
2. By taking out a “reverse equity mortgage,” which offers a sizable single payment.
3. By creating a line of credit that can be pulled upon as needed.

An important notation for the homeowner of 62 years old or older with a paid-off or low-balance mortgage that takes out a reverse mortgage, you do not have to make any payments on the loan as long as you live in the house. This is what makes them different from “forward” mortgages. The homeowner repays the reverse mortgage when the house is sold or the homeowner dies.

The benefits of reverse mortgages are accompanied by significant risks, especially when the reverse mortgage is in place for an extended period. To benefit from a reverse mortgage, you must also be willing to bear the associated expenses. These loans may have greater origination, closing charges and annual insurance premiums. A reverse mortgage could also impact how your family will inherit the property.

While such a loan can lower your home equity over time, you could still come out ahead if home prices improve. Before opting to apply for a reverse mortgage, you should consult with an approved reverse mortgage counselor to see which type of reverse mortgage is right for you.

You can contact one of our Mortgage Representatives today to assist you in meeting your homeownership goals!

Opinions expressed above are the personal opinions of the author and meant for generic illustration purposes only. With approved credit. For specific questions regarding your personal lending needs, please call RCB Bank at 855-BANK-RCB. Some restrictions apply. RCB Bank is an Equal Housing Lender NMLS #798151 and Member FDIC.

Sources:

Knaack, P., Miller, M., & Stewart, F. (2020). Reverse mortgages, financial inclusion, and economic development: potential benefits and risks. World Bank Policy Research Working Paper, (9134). https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3528858

Loibl, C. Reverse Mortgage Borrowing and Financial Well-Being of Older Adults. files.consumerfinance.gov. consumerfinance.gov

Lee, Y. T. & Shi, T. (2022). Valuation of reverse mortgages with surrender: A utility approach. The Journal of Real Estate Finance and Economics. https://link.springer.com/article/10.1007/s11146-021-09869-7

Private Mortgage Insurance, or PMI, is a term that often swirls around the world of homebuying, leaving many prospective homeowners confused about its purpose and implications. Understanding PMI is crucial for anyone looking to purchase a home, as it can affect the overall cost of homeownership.

PMI is typically required by lenders when a homebuyer makes a down payment of less than 20% of the home’s purchase price. It serves as a protection for the lender in case the borrower defaults on their loan. While PMI benefits the lender, it allows buyers to qualify for a mortgage with a lower down payment, making homeownership more accessible to many.

There are a few ways that you can pay the PMI: monthly payment or single upfront payment. The most common method is a monthly premium. In this case, your lender automatically adds PMI to your monthly mortgage payment. This reduces the large upfront payment though monthly payments will be higher. Once the loan-to-value ratio reaches 80%, homeowners can request cancellation of PMI.

If the monthly premium is not an option then there is the upfront premium where the costs are paid in full. In this case, your lender arranges for you to pay PMI when you close on the loan. While it’s an additional closing cost, your monthly mortgage payment will be lower.

There are several ways to avoid or eliminate PMI altogether. Firstly, saving up for a larger down payment can help buyers avoid PMI requirements entirely. Additionally, some lenders offer piggyback loans or lender-paid PMI options, although these may come with their own set of terms and conditions. Check with your potential lender for more information before proceeding.

Understanding the costs and implications of PMI is crucial for prospective homeowners. While it can increase monthly payments, PMI enables many individuals and families to achieve the dream of homeownership sooner rather than later. However, it’s essential to weigh the long-term costs and benefits and explore all available options before committing to a mortgage with PMI.

In conclusion, PMI plays a significant role in the homebuying process, particularly for those with smaller down payments. By demystifying PMI and understanding its implications, prospective homeowners can make informed decisions when navigating the complexities of mortgage financing.

You can contact one of our Mortgage Representatives now to assist you today with lending and PMI!

Opinions expressed above are the personal opinions of the author and meant for generic illustration purposes only. With approved credit. For specific questions regarding your personal lending needs, please call RCB Bank at 855-BANK-RCB. Some restrictions apply. RCB Bank is an Equal Housing Lender NMLS #798151 and Member FDIC.

Sources:

What is Private Mortgage Insurance?. Consumer Financial Protection Bureau. (n.d.). https://www.consumerfinance.gov/ask-cfpb/what-is-private-mortgage-insurance-en-122/

Elem, O. (2023, September 13). PMI Calculator: Mortgage Insurance Calculator. Omni Calculator. https://www.omnicalculator.com/finance/pmi

“Trigger Lead” is a term used in the mortgage industry to refer to a type of lead generated when a consumer’s credit report is accessed by a lender or creditor for the purpose of extending credit. These leads are often sold to other lenders or service providers who then use the information to reach out to the consumer with offers for credit or other related products.

When a consumer applies for a mortgage or other type of loan, their credit report may be accessed multiple times by different lenders during the application process. Each time a lender pulls the consumer’s credit report, it generates a trigger lead, indicating to other lenders that the consumer is actively seeking credit.

This can result in the consumer receiving numerous unsolicited calls or offers from lenders trying to win their business. While trigger leads can be beneficial for lenders looking to attract new customers, they can be overwhelming and intrusive for consumers who may already be dealing with the stress of the loan application process.

To opt out of trigger leads, consumers can take steps to limit the number of calls they receive. One option is to register for National Do Not Call Registry. A second option is to opt out of prescreened mail offers by visiting OptOutPrescreen.com or calling 1-888-5-OPT-OUT (1-888-567-8688).

Additionally, there are efforts underway to address the issue of trigger leads at the legislative level. A bill currently under construction in the House aims to regulate the use of trigger leads and provide consumers with more control over who can access their credit information. If passed, this legislation could help protect consumers from unwanted solicitations and give them more control over their personal financial information.

Contact one of our Mortgage Loan Originator now to assist you today!

Opinions expressed above are the personal opinions of the author and meant for generic illustration purposes only. With approved credit. For specific questions regarding your personal lending needs, please call RCB Bank at 855-BANK-RCB. Some restrictions apply. RCB Bank is an Equal Housing Lender, NMLS #798151 and Member FDIC.

Sources:

National Do Not Call Registry www.donotcall.gov

Cantu, T. (2024, January 16). Trigger leads – how borrowers can opt out. Mortgage Professional. https://www.mpamag.com/us/specialty/wholesale/trigger-leads-how-borrowers-can-opt-out/473054

Trigger leads –. – No other lead offers so much for so little as trigger leads. (2024, February 26). https://triggerleads.com/

Buying a home for the first time can be an exciting yet daunting experience. One of the most critical steps in this process is securing a mortgage. Here’s a simple guide for first-time homebuyers on navigating the mortgage process.

• Assess Finances: Before starting your homebuying journey, evaluate your finances. Calculate your monthly income, expenses, and debts to determine your borrowing capacity.
• Check Credit Score: Your credit score influences mortgage eligibility and rates. Review your credit report to ensure its correctness.
• Explore Loan Options: There are various types of mortgages available, each with its terms and conditions. Common options include conventional loans, FHA loans, VA loans¹, and USDA loans². Research these options to find the best fit for your financial situation.
• Get Pre-Qualified: Strengthen your buying position by getting pre-qualified for a mortgage. Provide financial documents like pay stubs and tax returns to your lender.
• Gather Required Documents: Prepare necessary documentation, including proof of income, employment verification, and property information for the mortgage application process.
• Understand Closing Costs: In addition to the down payment, be aware of closing costs, which typically range from 2% to 5% of the home’s purchase price. These costs cover various fees, including appraisal fees, title insurance, and attorney fees.
• Stay Informed: Maintain communication with your lender and real estate agent. Ask questions and stay updated on deadlines and requirements.

By following these steps and staying informed, first-time homebuyers can navigate the mortgage process with confidence and secure financing for their dream home. Visit RCB Bank Mortgage FAQ for more information.

Click now to find one of our Mortgage Representatives to help you find that perfect home!

(1) Subject to eligibility requirements. (2) Subject to income and property eligibility requirements. 

Opinions expressed above are the personal opinions of the author and meant for generic illustration purposes only. With approved credit. Terms, qualifications, and other restrictions apply. For specific questions regarding your personal lending needs, please call RCB Bank at 855-BANK-RCB. RCB Bank is an Equal Housing Lender and member FDIC. RCB Bank NMLS #798151.

Sources:

Brodskey, S. (2023, September 27). How to get a mortgage for a rental property | mortgages and advice … https://money.usnews.com/loans/mortgages/articles/how-to-get-a-mortgage-for-a-rental-property

When it comes to securing a mortgage, one of the critical decisions you’ll face is choosing between a fixed-rate and a variable-rate mortgage. Each option comes with its own set of advantages and considerations and the right choice for you depends on your financial situation, risk tolerance and long-term goals.

Fixed-Rate Mortgages

Fixed-rate mortgages lock in one interest rate for the entire loan period, providing stability. This keeps your monthly payments consistent, making budgeting easier. This steadiness is appealing amid economic instability or rising interest rates.

The primary advantage of a fixed-rate mortgage is interest rate protection. You pay the same mortgage rate even if market interest rates rise. This stability can be reassuring, especially for homeowners who prefer to avoid financial surprises.

In exchange for predictability, fixed-rate mortgages have somewhat higher beginning interest rates than variable-rate mortgages. After getting a fixed-rate mortgage, you can’t profit from reduced interest rates until you refinance.

Variable-Rate Mortgages

On the other hand, variable-rate mortgages, also known as adjustable-rate mortgages (ARMs), offer a different dynamic. These mortgages have interest rates that can change periodically, usually in alignment with fluctuations in a specified benchmark interest rate, such as the Prime Rate.

Variable-rate mortgages provide lower beginning interest rates than fixed-rate mortgages, making them appealing to borrowers seeking reduced upfront payments. Variable-rate mortgages provide reduced monthly payments without refinancing when interest rates fall.

Variable-rate mortgages risk increasing interest rates. Your mortgage interest rate and monthly payments may rise with market rates. Variability makes budgeting harder and may not suit individuals who seek financial consistency.

Choosing the right mortgage for you

To determine the best mortgage for your situation, consider the following:

• Risk Tolerance: For stability and avoiding future interest rate rises, a fixed-rate mortgage may be better. If you can handle some unpredictability and market volatility, a variable-rate mortgage may be right for you.
• Financial Goals: Consider your long-term financial objectives. Fixed-rate mortgages provide locked-in payments for long-term homeowners. Variable-rate mortgages may save money if you expect a brief stay.
• Current Market Conditions: Keep up with interest rates and economic projections. This information might help you decide when to lock in a fixed or variable rate.

Fixed- and variable-rate mortgages have pros and cons, so the right choice depends on your needs. Consult a financial adviser or RCB Bank mortgage representative to help you assess your long-term financial objectives and make a choice that meets your requirements.

Click now to find one of our Mortgage Representatives to help you find that perfect home!

Opinions expressed above are the personal opinions of the author and meant for generic illustration purposes only. With approved credit. For specific questions regarding your personal lending needs, please call RCB Bank at 855-BANK-RCB. Some restrictions apply. RCB Bank is an Equal Housing Lender and member FDIC. RCB Bank NMLS #798151.

Sources:

Kopp, C. M. (2023, June 1). Fixed interest rate: Definition, Pros & Cons, vs. Variable Rate. Investopedia. https://www.investopedia.com/terms/f/fixedinterestrate.asp

Fixed vs. variable interest rates: What’s the difference? (2023, October 17). https://www.valuepenguin.com/loans/fixed-vs-variable-interest-rates

Aspiring homeowners are no strangers to the challenges of securing mortgage approval, and in this quest, one often-overlooked factor emerges as a crucial element —the elusive credit score.

In the world of real estate, where dreams of owning a home come with a price tag, understanding the connection between credit scores and mortgage approval rates can be a game-changer. Your credit score is not only a number representation; it has the ability to significantly impact your ability to get a mortgage and become a homeowner.

Your credit score is more than just a score—it’s a passport to your homeownership journey. There is a direct link between higher credit scores and the likelihood of having that mortgage application stamped with approval.

The industry has long acknowledged credit scores as an essential metric of financial trustworthiness. Yet, what many may not realize is the extent to which lenders rely on this three-digit number to gauge an individual’s financial habits and risk potential.

Digging into the intricacies, it becomes apparent that a higher credit score not only secures better interest rates but significantly boosts the odds of getting that coveted nod from lenders. In a landscape where competition for mortgage approvals is fierce, understanding the nuances of credit scores becomes a strategic advantage.

What does this mean for the average home seeker? It’s a call to action, urging individuals to be proactive in cultivating a credit profile that appeals to lenders. Timely bill payments, debt reduction, and vigilant credit report monitoring are highlighted as key steps in this journey towards creditworthiness.

Schedule an appointment with an RCB Bank Mortgage representative today for more information while you search for your dream home.

Opinions expressed above are the personal opinions of the author and meant for generic illustration purposes only. Offer available for most purchases and refinances. With approved credit on RCB Bank Mortgage secondary market loans locked between October 1, 2023 and December 31, 2023. Must meet minimum loan and program underwriting requirements. Lender credit must be used toward borrower closing costs. Not redeemable for cash or down payment funds. This offer is not valid with any other RCB Bank Mortgage incentives, promotions or discounts. OHFA Bond and 5/5 ARM products are not eligible for promotional credit. This offer is subject to change or terminate without notice. Other loan terms and restrictions apply. RCB Bank is an Equal Housing Lender. NMLS #798151 and Member FDIC

Sources: Brennan, C. (2020, April 20). How your credit score affects your mortgage rates. Forbes. https://www.forbes.com/advisor/mortgages/how-your-credit-score-affects-your-mortgage-rates/

Nerdwallet. (2020, September 15). How credit score affects your mortgage rate. NerdWallet. https://www.nerdwallet.com/article/mortgages/credit-score-affects-mortgage-rate

As the real estate market continues to evolve, prospective homebuyers are faced with various choices and decisions. One of the pivotal considerations in the homebuying process is understanding the distinction between Mortgage Pre-Approval and Pre-Qualification. To shed light on this often-confusing subject, experts weigh in to help homebuyers make informed decisions.

Mortgage pre-approval and pre-qualification are frequently used interchangeably, but they carry different implications and serve distinct purposes in the home financing journey. According to financial experts, the differences lie in how thoroughly each process is evaluated.

Mortgage Pre-Qualification

Mortgage pre-qualification is the preliminary step in the home loan process. It involves a basic assessment of an individual’s financial situation based on self-reported income, debts, and credit. Lenders use this data to provide a rough estimate of the loan amount a borrower might be eligible for. It’s a valuable starting point for those beginning their homebuying journey, offering a snapshot of their financial capacity.

Mortgage Pre-Approval

On the other hand, mortgage pre-approval is a more comprehensive and rigorous process. It requires potential homebuyers to submit detailed financial documentation, including income verification, credit history, and other relevant information. The lender then conducts a thorough analysis to determine the exact loan amount a buyer qualifies for. A pre-approval holds more weight in the eyes of sellers, as it signifies a buyer’s seriousness and financial capability. Experts emphasize the importance of obtaining a mortgage pre-approval before house hunting in today’s competitive real estate market. Pre-approval simplifies the homebuying process and gives buyers an edge in a seller’s market.

While both pre-qualification and pre-approval have their place in the home financing process, understanding the key differences empowers buyers to make informed decisions aligned with their unique circumstances. As the real estate landscape evolves, education remains a powerful tool for aspiring homeowners navigating the path to homeownership.

Schedule an appointment with an RCB Bank Mortgage representative today for more information while you search for your dream home.

Opinions expressed above are the personal opinions of the author and meant for generic illustration purposes only. Offer available for most purchases and refinances. With approved credit on RCB Bank Mortgage secondary market loans locked between October 1, 2023 and December 31, 2023. Must meet minimum loan and program underwriting requirements. Lender credit must be used toward borrower closing costs. Not redeemable for cash or down payment funds. This offer is not valid with any other RCB Bank Mortgage incentives, promotions or discounts. OHFA Bond and 5/5 ARM products are not eligible for promotional credit. This offer is subject to change or terminate without notice. Other loan terms and restrictions apply. RCB Bank is an Equal Housing Lender. NMLS #798151 and Member FDIC

Sources: Equifax. (n.d.). Difference between pre-qualified and pre-approved. https://www.equifax.com/personal/education/personal-finance/articles/-/learn/difference-between-pre-qualified-and-pre-approved/

Refinancing your mortgage can be a tempting option for homeowners looking to lower their monthly payments or take advantage of lower interest rates. However, like any financial decision, there are pros and cons to consider before making the leap.

One of the biggest advantages of refinancing your mortgage is the potential to save money. If you can secure a lower interest rate than what you currently have, you could significantly reduce your monthly mortgage payments. This can free up extra cash that can be used for other expenses or savings. Additionally, refinancing can also allow you to switch from an adjustable-rate mortgage to a fixed-rate mortgage, providing stability and predictability in your monthly payments.

Another benefit of refinancing is the opportunity to tap into your home’s equity. If you’ve built up equity over time, refinancing can allow you to access that money for home improvements, debt consolidation, or other financial needs. This can be especially useful if you have high-interest debt that you want to consolidate into a lower-interest mortgage.

On the flip side, there are also some drawbacks to consider when refinancing your mortgage. One of the main cons is the cost associated with refinancing. Closing costs, appraisal fees, and other expenses can add up, making refinancing a costly endeavor. It’s important to carefully calculate whether the potential savings outweigh the upfront costs.

Another potential downside is the extended loan term that often comes with refinancing. While this can lower your monthly payments, it also means that you’ll be paying off your mortgage for a longer period of time. This can result in paying more interest over the life of the loan, even if you secure a lower interest rate.

Lastly, refinancing may not be an option for everyone. Lenders typically require a certain credit score and income level to qualify for refinancing. If your financial situation has changed since you initially obtained your mortgage, you may not meet the necessary criteria to refinance.

To summarize, refinancing your mortgage can offer significant benefits such as lower monthly payments, access to home equity, and financial flexibility. However, it’s important to carefully weigh the potential savings against the upfront costs and extended loan terms. Additionally, not everyone may qualify for refinancing, so it’s crucial to assess your financial situation and consult with a mortgage professional before making a decision.

Sources:

Campisi, N. (2022, June 24). Should I refinance my mortgage?. Forbes. https://www.forbes.com/advisor/mortgages/refinance/when-should-you-refinance-a-home/

Brown, J. (2021, June 8). Scanning…… Fox Business. https://www.foxbusiness.com/money/why-refinance-your-mortgage-pros-and-cons

Opinions expressed above are the personal opinions of the author and meant for generic illustration purposes only. With approved credit. For specific questions regarding your personal lending needs, please call RCB Bank at 855-BANK-RCB. Some restrictions apply. RCB Bank is an Equal Housing Lender, NMLS #798151 and Member FDIC.

Department of Housing and Urban Development (HUD) will be implementing a reduction in the Upfront and Annual Loan Guarantee Fees under the Section 184 Indian Home Loan Guarantee Program. Published in the Federal Register Notice (88 FR 28598) on May 4, 2023, effective on July 1, 2023.

Fee Reduction Details

The reduction in the Upfront Loan Guarantee Fee decreased from 1.50 to 1.00 percent, and the Annual Loan Guarantee Fee from 0.25 to 0.00 percent.

Guidelines for the fee reduction:

1. Loans without Firm Commitments as of July 1, 2023: Lenders must apply the reduced loan guarantee fees to all Firm Commitments issued on or after July 1, 2023.
2. Loans with existing Firm Commitments and a closing date scheduled for on or after July 1, 2023: If a Firm Commitment was issued before July 1, 2023, and the loan is scheduled to close on or after that date, lenders must request an updated Firm Commitment reflecting the reduced loan guarantee fees before the closing. Failure to do so will require lenders to refund the difference to the borrower.
   • Upfront Loan Guarantee Fees paid in cash at closing: Lenders must reimburse the difference between the 1.50% fee and the 1.00% fee through a cash reimbursement.
   • Upfront Loan Guarantee Fees financed at closing: Lenders must reimburse the difference between the borrow-financed charge at 1.50% and the revised rate of 1.00% by applying the refund to the outstanding principal balance. The new fee structure requires lenders to amend the Note and amortization schedule or reclose the transaction.
   • Annual Loan Guarantee Fees paid by the borrower: Lenders must refund any payments obtained from the borrower in cash and stop collecting them. Post-closing refund payments, whether cash or applied to the unpaid principal balance, must be made within 90 days. Lenders must record refunds in the borrowers’ loan files.
3. Loans closed prior to July 1, 2023: The fee reduction is not retroactive and will not apply to any loans closed before July 1, 2023.

Section 184 Indian Home Loan Guarantee Program, established under the Housing and Community Development Act of 1992, allows HUD to establish certain loan guarantee fees, and includes the Upfront Loan Guarantee Fee and an Annual Loan Guarantee Fee. The Upfront Loan Guarantee Fee is a percentage of the loan’s principal obligation, and the Annual Loan Guarantee Fee is a percentage of the remaining guaranteed balance.

Source: Section 184 Indian Home Loan Guarantee Program | HUD.gov / U.S. Department of Housing and Urban Development (HUD)

2023-09479.pdf (govinfo.gov)

Opinions expressed above are the personal opinions of the author and meant for generic illustration purposes only. With approved credit. For specific questions regarding your personal lending needs, please call RCB Bank at 855-BANK-RCB. Some restrictions apply. RCB Bank is an Equal Housing Lender and member FDIC. RCB Bank NMLS #798151.

A lot goes into the decision to buy a house, and so does the decision to take out a mortgage to pay for that home. Having a good understanding of what all your mortgage entails will take some of the mystery out of the process.

There are various costs associated with a mortgage, including:

• Interest rate
• Points (Or discount points; With these you pay more upfront, but receive a lower interest rate and end up paying less over time)
• Fees
• Other charges

There is a cost you will pay each year to borrow the money for your home. According to the Consumer Financial Protection Bureau, that is the interest rate, which is expressed as a percentage. The interest rate only reflects the cost of borrowing the money for your home.

An annual percentage rate (APR) reflects your interest rate, but also includes any points, mortgage broker fees and other charges involved in the cost of the loan. Therefore, your APR is usually higher than your interest rate.

The CFPB advises caution when comparing loan options, and to be sure you understand differences between the terms being offered. As just one example, the APR of a closed-end loan includes fees, but the APR of a home equity line of credit does not.

Opinions expressed above are the personal opinions of the author and meant for generic illustration purposes only. With approved credit. For specific questions regarding your personal lending needs, please call RCB Bank at 855-BANK-RCB. Some restrictions apply. RCB Bank is an Equal Housing Lender and member FDIC. RCB Bank NMLS #798151.

Source:

https://www.consumerfinance.gov/ask-cfpb/what-is-the-difference-between-a-mortgage-interest-rate-and-an-apr-en-135/

So you know you want to buy a house, but you’re not sure what your first step should be. Your home most likely will be the biggest purchase you make in your lifetime, and the process of buying and qualifying for a mortgage can be daunting.

But just what exactly is a mortgage? Mortgage loans are used to buy a home or to borrow money against the value of a home you already own.

According to the Consumer Financial Protection Bureau, a mortgage is an agreement between you and a lender that gives the lender the right to take your property if you fail to repay the money you’ve borrowed, plus interest.

Basically, the collateral of the mortgage is the house itself. The lender holds the rights to the house until the mortgage is fully paid off. Mortgages generally have a set payment schedule (typically over 30 or 15 years), so that the mortgage is completely paid off at the end of your term. Generally, the payments will be made monthly and typically consist of both principal and interest charges.

To get a mortgage, you’ll have to work with a mortgage lender. And before you even start looking at houses, you should get a mortgage prequalification.

There are several types of mortgages – whether it’s a rural development loan, a VA Loan or a conventional loan – and you should work with your lender to navigate the process and see which mortgage is right for you.

The CFPB recommends you focus on a mortgage that is affordable for you given your other priorities, not on how much you qualify for.

Becoming a homeowner is not an easy process, so it’s important to do your research before you decide to buy. That’s why finding the right mortgage lender is crucial, because it’s essential to understand what you’re signing on for when you borrow money to buy a house.

Opinions expressed above are the personal opinions of the author and meant for generic illustration purposes only. With approved credit. For specific questions regarding your personal lending needs, please call RCB Bank at 855-BANK-RCB. Some restrictions apply. RCB Bank is an Equal Housing Lender and member FDIC. RCB Bank NMLS #798151.

Source:

https://www.consumerfinance.gov/ask-cfpb/what-is-a-mortgage-en-99/

If you’re in the market for a home, the first thing you should do before you start shopping is to find a mortgage lender. Your mortgage lender will help guide you through the process and will look out for your best interests.

Your lender will want to evaluate your credit, and you should be evaluating your lender as well. The Consumer Financial Protection Bureau recommends contacting at least three lenders and recommends these tips:

• Share the basic facts about your situation and the kind(s) of loan you are considering.
• Ask the loan officer whether your plan makes sense to them, or whether they might recommend something a little different. If they recommend something different, ask why.
• Ask the loan officer to show you the interest rate, APR, estimated fees, and monthly payments for a couple of different loan options.
• Ask the loan officer to look at your documents and help you understand whether there are any reasons you might not qualify for the loan options you have discussed.

After following those tips, there are even more questions to ask. The more thorough you are during this process, the more prepared you’ll be to make a decision on who you should pick as your lender.

Ask what the closing costs are. There is a large range when it comes to closing costs, but you can expect them to be between 3% and 6% of your loan. So on a $200,000 home, your closing costs as a buyer could amount from $6,000 to $12,000. Closing costs can include an application, appraisal or home inspection fee and a variety of other miscellaneous charges. Make sure you know exactly how much your closing costs will be. However, some closing costs are negotiable, so ask which of those can be negotiated.

Ask if you qualify for any down-payment assistance programs. Having enough money for a down payment often is what keeps potential buyers from being able to make their home purchase. However, there are many down-payment assistance programs that can offer help, depending on your circumstances. One study found that buyers who use down payment assistance programs save an average of $17,766. When you’re talking about that kind of savings, having a mortgage lender who can help you navigate that process is priceless.

Ask if you’ll have to pay mortgage insurance. If you put less than 20 percent down you’ll likely need to get private mortgage insurance, or PMI, and add its cost to your monthly payment. Once the equity in your home reaches 20 percent you can get rid of PMI and reduce your monthly payment. But you should ask your lender what your options are. The answer may be just, “Make a bigger down payment.” Or you may find there are other loan programs that you might qualify for that don’t require mortgage insurance.

Ask who pays taxes and insurance. Most mortgage payments include taxes and insurance. However, some don’t. That’s why you should ask ahead of time. If your mortgage payment doesn’t include taxes and insurance, you’ll have to pay them yourself each year, which can be a big chunk of change when they’re due. But if your mortgage does include taxes and insurance, your lender will collect money as part of your payment each month and put it into an escrow account. When your real estate taxes and homeowners insurance payments are due, the mortgage company will pay the bills from your escrow account.

Opinions expressed above are the personal opinions of the author and meant for generic illustration purposes only. With approved credit. For specific questions regarding your personal lending needs, please call RCB Bank at 855-BANK-RCB. Some restrictions apply. RCB Bank is an Equal Housing Lender and member FDIC. RCB Bank NMLS #798151.

Sources:

https://www.consumerfinance.gov/owning-a-home/explore/contact-multiple-lenders/

https://www.realtytrac.com/blog/2016-down-payment-assistance-affordability-analysis/

It’s common knowledge that your home generally is the most important purchase you’ll make in your lifetime. That’s why who you choose as your mortgage loan originator is just as important as which home you choose.

Your MLO will help guide you through the process and will look out for your best interests. They’ll help you choose which loan is right for you and they’ll help you understand all facets of the home-buying process. MLOs estimate your loan amount and interest rate based on a review of your income, assets and credit report. Getting a mortgage prequalification is an important first step and can help you figure out your home buying budget.

Mortgage loan originators must have a comprehensive knowledge of lending products, banking industry rules and regulations, and the required documentation for obtaining a loan.

“Loan officers evaluate, authorize, or recommend approval of loan applications for people and businesses,” according to the U.S. Bureau of Labor Statics.

To become a registered MLO, the following requirements must be met:

• Submit their personal history and experience (MU-4 form).
• Submit fingerprints for a state and federal background check.
• Have a unique identifier number.

In essence, MLOs are your link between you, your mortgage and homeownership. They’ll walk with you through each step of the process, from origination to closing. It’s generally a good idea to contact an MLO before you start looking at homes, because they’ll give you an idea of your budget and how much you can afford to spend.

Opinions expressed above are the personal opinions of the author and meant for generic illustration purposes only. With approved credit. For specific questions regarding your personal lending needs, please call RCB Bank at 855-BANK-RCB. Some restrictions apply. RCB Bank is an Equal Housing Lender and member FDIC. RCB Bank NMLS #798151.

Sources:

https://mortgage.nationwidelicensingsystem.org/about/Pages/default.aspx

https://www.bls.gov/ooh/Business-and-Financial/Loan-officers.htm

Do you think owning a home is out of reach because of student loans? Have you explored a mortgage in the past only to be denied because of student loan debt?

The Federal Housing Administration made a change recently that has made it easier for those with student loans to qualify for an FHA loan. That change, coupled with the upcoming student debt forgiveness program, could spark the housing industry as more people will qualify for mortgages.

“The change for FHA Single Family Title II forward mortgages remove the current requirement that lenders calculate a borrower’s student loan monthly payment of one percent of the outstanding student loan balance for student loans that are not fully amortizing or are not in repayment. The new policy bases the monthly payment on the actual student loan payment, which is often lower, and helps home buyers who, with student debt, meet minimum eligibility requirements for an FHA-insured mortgage,” according to the U.S. Department of Housing and Urban Development.

Your student loan debt is part of your debt-to-income ratio. Your DTI can affect how much money you’re qualified to borrow and your interest rate. The higher your DTI, the riskier you appear to lenders.

However, your DTI is just one factor in the underwriting of a mortgage. While this change may help your DTI, there also are many other factors used to determine if you qualify for a loan, such as your credit score, income and work history to name a few.

If you’ve applied for a mortgage in the past only to get denied because of your student loan debt, or if you never applied because you feared your student loan debt was too high, now may be the time to seriously research homeownership and start taking the steps to get prequalified for a mortgage.

Whether you chose to start the prequalification process now or after the federal government’s student loan forgiveness program (set for later 2022), it’s best to be prepared so you’re not flying blind into the process. Research mortgage lenders and find one who understands your needs and will help you navigate the entire process, from origination to closing.

Student loan debt may seem to be overwhelming when you’re trying to buy a house. Fortunately, the federal government’s recent changes may clear a path to making your dream home a reality.

Opinions expressed above are the personal opinions of RCB Bank personnel and meant for generic illustration purposes only. With approved credit. For specific questions regarding your personal lending needs, please call RCB Bank at 855-BANK-RCB. Some restrictions apply. RCB Bank is an Equal Housing Lender and member FDIC. RCB Bank NMLS #798151.

Source:

https://www.hud.gov/press/press_releases_media_advisories/hud_no_21_103

Whether you want to boost the value of a home you just purchased or are looking to boost the value of your home to sell it, making home improvements can increase the value of your home.

The value of your home depends on many factors, including the community in which it’s located and the demand for houses in the area.

But some factors you have control over, and these tips can help improve the value of your property as a whole.

Curb Appeal

The first thing you can do is to improve your property’s curb appeal. This generally is the easiest and most economic change to make. Your home’s first impression goes a long way.

According to a 2020 joint study by the University of Texas-Arlington and the University of Alabama, your home’s curb appeal can account for as much as 7% of the property’s total value.

It’s as simple as power washing your driveway, washing your windows and siding, keeping your yard mowed while adding new plants and fresh mulch. These are things that you can do yourself, and they all give your home a great first impression.

Update Your Kitchen and Bathroom(s)

To many people, the kitchen is the home’s greatest feature. And, if we’re being honest, outdated or dim bathrooms aren’t appealing one bit. So updating these two areas can lead to an immediate increase of value in your home. But, these two areas oftentimes are the priciest rooms to remodel, so keep that in mind.

However, if a complete remodel is beyond your budget, a minor remodel could still impact your house’s value. New appliances or a fresh coat of paint on the walls and cabinets can lead to an uptick of value.

A Fresh Look

Speaking of paint, a new coat of paint in other rooms of your home can give it a fresh and updated look. Painting the rooms yourself is a low-cost way to improve the value of your home. A bright coat of paint goes a long way and can add instant charm to your house.

Likewise, painting the doors can have a similar effect. A fresh coat of paint on the front door can make your house look inviting and is another way to improve its curb appeal.

Opinions expressed above are the personal opinions of RCB Bank personnel and meant for generic illustration purposes only. With approved credit. For specific questions regarding your personal lending needs, please call RCB Bank at 855-BANK-RCB. Some restrictions apply. RCB Bank is an Equal Housing Lender and member FDIC. RCB Bank NMLS #798151.

Sources:

https://www.hud.gov/program_offices/housing/sfh/title/sfixhs

https://www.uta.edu/news/news-releases/2020/02/11/curb-appeal

So you’ve decided on a house and your closing day is set.

That means you’re finished and can let out a big sigh of relief, right? Not so fast.

Since your home most likely is the biggest purchase you’ll ever make, it’s best to make absolutely sure everything is as it should be before the keys are handed over to you.

That’s where your final walkthrough comes in.

A final walkthrough allows you to make sure the house you committed to buying is in the same condition as when you first looked at it and that everything is in working order. In essence, this is your chance to make sure your new home is absolutely ready for you.

Usually, it’s just you and the real estate agent at the final walkthrough.

Whatever you do, don’t rush through your final walkthrough. You may want to hurry up and “get to the finish line” of owning your home, but if you rush through this final step, you may overlook something you hadn’t seen before.

Here’s what to look for in your final walkthrough:

• Make sure the seller’s belongings are completely removed – and be sure to check any external storage buildings or attic spaces.
• Check the walls, ceilings and doors to ensure no damage occurred when the seller was moving their belongings out of the house.
• Make sure all faucets – inside and outside – are working with adequate water pressure, that all the toilets flush and that there are no water leaks.
• Check all light fixtures and make sure all the light switches work.
• Test all electrical outlets by bringing a cell phone charger.
• Check for any rodent droppings or pests.
• If the seller promised repairs were to be done, verify that they have been completed.
• If the seller has agreed to leave any appliances, make sure they are there and in working order, and make sure the manuals to those appliances also were left behind.
• Check the yard, and if the property has gates, ensure they latch properly.
• Make sure the seller left all keys and garage door openers in the house or with their real estate agent.

If you have any questions, now is the time to ask them. And don’t settle for an answer you’re not comfortable with. Remember to trust your gut. If something feels wrong, speak up. It’s better to walk away than signing a bad deal.

The final walkthrough is your last chance to fix any problems that may have been unaddressed. Don’t skip anything on the list, and if you find problems, consult your real estate agent to decide the best course of action.

Lenders at RCB Bank are happy to help answer questions even if you are not a customer. Give us a call or visit our online Mortgage Center.

Opinions expressed above are the personal opinions of RCB Bank personnel and meant for generic illustration purposes only. With approved credit. For specific questions regarding your personal lending needs, please call RCB Bank at 855-BANK-RCB. Some restrictions apply. RCB Bank is an Equal Housing Lender and member FDIC. RCB Bank NMLS #798151.

Sources:

https://files.consumerfinance.gov/f/documents/cfpb_buying-a-house_mortgage-closing_checklist.pdf

https://benefits.va.gov/stpaul/docs/VeteransHomeBuyingGuide.pdf

Escrow accounts are a vital part of mortgages for nearly all homebuyers. Some lenders require mortgage borrowers to have escrow accounts, or the borrower may opt in to an escrow account through their mortgage servicer.

Escrow accounts set aside funds for tax and home insurance payments until they’re due. With each mortgage payment, a portion is set aside in the escrow account. When it’s time to pay property taxes and home insurance, the mortgage servicer will pay those bills on your behalf.

A cost increase of any of the items in the escrow account can cause an escrow shortage. For instance, if your property tax rises dramatically or your home costs more to insure if its value increased, this could make an escrow shortage.

If there is a shortage, typically you can pay the amount in full, or have the amount added to your monthly mortgage payment.

An escrow analysis typically is performed about once per year, so escrow shortages generally are rare occurrences.

But as a homeowner, it’s prudent to be prepared for any unexpected costs that come up with homeownership. It’s good to keep your eye on your escrow account, that way you can be prepared if it looks like there’s going to be a shortage.

Lenders at RCB Bank are happy to help answer questions even if you are not a customer. Give us a call or visit our online Mortgage Center.

Opinions expressed above are the personal opinions of RCB Bank personnel and meant for generic illustration purposes only. With approved credit. For specific questions regarding your personal lending needs, please call RCB Bank at 855-BANK-RCB. Some restrictions apply. RCB Bank is an Equal Housing Lender and member FDIC. RCB Bank NMLS #798151.

You don’t have to be an expert to buy a home. But it does help to be prepared, especially as the housing market continues to boom. If you don’t even know where to start, here are some tips to put you on the path to homeownership.

Find Out How Much You Can Borrow

It may be tempting to start looking at houses right away, even if you’re just browsing. But getting prequalified for a mortgage will let you know exactly how much you can afford to borrow. Finding the right mortgage lender can make the entire process that much easier. If you apply for prequalification and later decide you’re not ready to buy a house in your desired price range, it’s better to learn that before you start shopping for houses.

Keep “Hidden” Costs in Mind

Sure, you’ll know how much the houses cost based on their listing price. But what about insurance, property taxes, closing costs, moving expenses and HOA fees (if applicable)? Knowing about these costs before you start looking at houses can prevent a surprise you weren’t counting on and could sully the joy of buying your home. Ask your mortgage lender about the costs that come during the mortgage process.

Have Your Financial Records Ready

Your mortgage lender will thoroughly examine your finances to ensure you qualify for a loan. You’ll need paystubs, tax records, bank account statements and child support/alimony documentation, if applicable. Before you buy, make sure you have those documents ready so you won’t have to track them down later.

How Long Does it Take?

In pretty much all instances, finding and buying a house isn’t something that can be done in one day. It took an average of 51 days to close a mortgage in 2021, according to ICE Mortgage Technology. That doesn’t mean all mortgages take that long to close. But this will give you an idea of how long the process can take. So while there is no set-in-stone time of how long it takes to get a mortgage, the sooner you start the process, the better off you’ll be.

Down-Payment Options

Conventional wisdom says to aim for a 20% down payment on your mortgage. But saving money for a down payment on your dream home can be downright daunting and likely impossible on an average salary. The down payment is the upfront cash you pay toward the home purchase. Lenders offer a variety of mortgages with different down payment requirements. You can even buy with no down payment in some instances. Explore your options with your mortgage lender to decide how much you’ll need to save for a down payment.

There are a lot of things to know before buying a house. Remember, the more you educate yourself about the process, the more likely you’ll have the confidence to buy the house you want at a price you can afford.

Lenders at RCB Bank are happy to help answer questions even if you are not a customer. Give us a call or visit our online Mortgage Center.

Opinions expressed above are the personal opinions of RCB Bank personnel and meant for generic illustration purposes only. With approved credit. For specific questions regarding your personal lending needs, please call RCB Bank at 855-BANK-RCB. Some restrictions apply. RCB Bank is an Equal Housing Lender and member FDIC. RCB Bank NMLS #798151.

If you’re looking for a place to get away for weekends or longer vacations, or if you’re getting close to retirement and thinking of a place to relocate to, a second home may be just what you need.

A second home also can be a great investment opportunity.

Defining a second home

A second home is defined as a one-unit property that’s located within a reasonable distance from your primary residence. It can be a home you occupy for just a portion of the year.

It is not considered a second home if someone else lives there full time. For example, if you buy a home in Stillwater but you live in Oklahoma City and your child lives in the Stillwater home full time while attending school.

Second homes are typically located near an attraction such as a lake, mountain or beach.

A property can be considered a second home if you live there occasionally because you work far from your primary residence. For example, you live in Tulsa but work in Oklahoma City.

You may short-term rent a second home, but cannot rent it full time. Full-time rentals should be purchased as an investment property.

Financing a second home

The financing guidelines for a second home are similar to financing a primary residence. The down payment on a primary residence is a minimum of 3% in certain instances; the minimum down payment for a second home is generally 10%. Rates typically are higher on a second home than a primary residence. However, the terms usually are the same – up to 30 years.

Your lender will need to verify you have sufficient funds for closing and 6 months’ worth of reserves to cover both your primary and second home loan payments. Government loan programs (FHA, VA, USDA) are not available for second home financing.

If you’re interested in purchasing a second home, talk to a mortgage lender before taking the plunge. They can help you get prequalified. Your lender will help you navigate the process and determine if purchasing a second home is right for you.

Lenders at RCB Bank are happy to help answer questions even if you are not a customer. Give us a call or visit our online Mortgage Center.

Opinions expressed above are the personal opinions of RCB Bank personnel and meant for generic illustration purposes only. With approved credit. For specific questions regarding your personal lending needs, please call RCB Bank at 855-BANK-RCB. Some restrictions apply. RCB Bank is an Equal Housing Lender and member FDIC. RCB Bank NMLS #798151. 

Nowadays, we’re all used to buying something and it coming relatively quickly. With a few clicks, we can select what we want, buy it, and your purchase can be on its way within hours, usually finding itself on your front porch within days.

But if you’ve found your dream home, it won’t be as easy as picking it out and moving in the next day. Just like finding the right house, getting approved for your mortgage takes time.

It took an average of 51 days to close a mortgage in 2021, according to ICE Mortgage Technology.

The mortgage process has several parts, so if you’re thinking about buying a home, it’s best to start the mortgage process first – even before you begin looking at homes. Getting prequalified for a mortgage not only shows owners you’re serious about buying, it also will let you know just how much you’re qualified to borrow.

That doesn’t mean all mortgages take that long to close. But this will give you an idea of how long the process can take.

Getting a mortgage requires a thorough review of your finances, including your income, your assets and your debt. Once you start the process, you’ll need to share financial documents and other relevant information with your mortgage lender.

If you’ve been approved for a mortgage after a thorough review of your finances, an appraisal of the property you want to purchase will take place. Your mortgage lender will request the appraisal. Appraisals can take anywhere from a few days to a few weeks to complete.

Assuming the house appraisal is good, your mortgage lender will do a title search of the property, which ensures you’ll have a clear title. If problems arise with the title, this can add time to the process while the problem is remedied.

Once all of these steps are completed on your mortgage lender’s end, closing finally comes. There is a three-day loan disclosure waiting period that must take place before your official closing day. Once closing day comes, you’ll sign a bevy of paperwork before finally getting the keys to your new home.

So while there is no set-in-stone time of how long it takes to get a mortgage, the sooner you start the process, the better off you’ll be.

Lenders at RCB Bank are happy to help answer questions even if you are not a customer. Give us a call or visit our online Mortgage Center.

Opinions expressed above are the personal opinions of RCB Bank personnel and meant for generic illustration purposes only. With approved credit. For specific questions regarding your personal lending needs, please call RCB Bank at 855-BANK-RCB. Some restrictions apply. RCB Bank is an Equal Housing Lender and member FDIC. RCB Bank NMLS #798151.