What Are Trigger Leads?

RCB Bank Mortgage Matters- Trigger Leads

“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/

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First-Time Homebuyer’s Guide to Getting a Mortgage

RCB Bank Mortgage Matters

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

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Fixed-Rates vs Variable-Rates: Which is Best for You?

Lock with Key

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

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How Your Credit Score Holds the Key to Mortgage Approval

RCB Bank Learning Center - Credit Score effect on mortgage

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. You can also take advantage of RCB Bank’s Loan Promotion to Save $500 by December 31, 2023. Click Save500 today!

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

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Mortgage Pre-Approval vs. Pre-Qualification

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. You can also take advantage of RCB Bank’s Loan Promotion to Save $500 by December 31, 2023. Click Save500 today!

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/

 

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The Pros and Cons of Refinancing Your Mortgage

RCB Bank Mortgage Matters- Pros and Cons of Refinancing

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.

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Section 184 Indian Home Loan Guarantee Program Reduced Upfront and Annual Loan Guarantee Fees

RCB Bank Mortgage Matters

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.

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What is the Difference Between a Mortgage Interest Rate and an APR?

RCB Bank Learning Center - Mortgage interest apr

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/

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What Exactly is a Mortgage?

RCB Bank Mortgage

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/

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Questions You Should Ask Your Mortgage Lender

What questions should you ask your mortgage lender?

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/

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What is a Mortgage Loan Originator?

RCB Bank - What is an MLO?

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

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Navigating the Mortgage Process With Student Loan Debt

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

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Simple Ways to Improve Your Home’s Value

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

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Final Home Walkthrough Checklist

Person handing over house keys

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

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What is an Escrow Shortage?

What is an Escrow Shortage? RCB Bank Mortgage Matters

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.

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5 Things to Know Before You Buy a Home

RCB Bank Mortgage 5 Things to Know

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.

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In the Market for a Second Home? Now May be the Time to Buy

Couple looking at a house.

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. 

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How Long Does it Take to Get a Mortgage?

couple looking off into distance at house

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.

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Spring Clean Your Mortgage

Mortgage spring cleaning

Spring traditionally is a time of regrowth, new life and budding. You may get the itch to deep clean and organize your house.

And while you’re at it, you should consider a “spring cleaning” of your mortgage as well. These tips could lead to saving money, so take the time to look to see if any of these situations apply to you.

Private Mortgage Insurance

Private Mortgage Insurance, known as PMI, is required on some loans. If you started your loan with PMI, it will fall off once you reached the date when the principal balance of your mortgage is scheduled to fall to 78 percent of the original value of your home. This date should have been given to you in writing on a PMI disclosure form when you received your mortgage. If you can’t find the disclosure form, contact your servicer. Also, if your home has increased in value since you purchased it, your Loan to Value (LTV) ratio may be at a point to discontinue your PMI early. You can request this from your lender and they would determine with an updated evaluation of your home with an appraisal. Discontinuing your PMI can free up some extra money each month if this applies to you.

Insurance

Check to see if your homeowner’s insurance policy has risen, and shop around for a lower rate. Getting a quote costs no money. Are you bundling your home and auto policies? Most insurance carriers offer a discount for bundling policies. It’s a good idea to get quotes to see if there’s savings of which you weren’t aware. Also check to see if your agent might have you over-insured. Lowering your policy to what you only need vs. more than you need could lower your cost as well.

Tax refund

If you receive a tax refund, consider using it as an additional payment toward the principal of your mortgage. Making one additional monthly payment a year can shave up to four years off your mortgage!

Refinancing

Now is a good time to think about refinancing your home. If you’ve owned your home for awhile and don’t plan on moving anytime soon, refinancing likely will save you a significant amount of money. In some cases, refinancing to a 15-year mortgage will make more sense.

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.

Source:

https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/

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Can You Buy a House With No Money Down?

Can I buy a house with no money down

Buying a house likely is the biggest purchase you’ll ever make. 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.

But there are alternatives to a conventional mortgage. There are some loans where you can buy a house with no money down. Other loans are available with little money down as well.

So how do you know which one is the best for you?

Let’s navigate some of the options.

USDA loan

The USDA loan program – otherwise known as the rural development loan – requires no money down. However, borrowers must meet certain credit and income requirements to qualify. And even though there is no down payment, a “funding fee” of 1% of the total loan amount is required, but that can be rolled into the loan if necessary. According to the 2017 USDA Rural Development Performance Report, nearly 72% of the nation’s land mass is rural. You can see if your area qualifies on the map linked here.

VA loan

If you are an active or retired United States military service member, as well as some reserves, you can potentially get 100% mortgage financing through the Department of Veteran Affairs. In fact, nearly 90% of all VA backed home loans are made without a down payment. You will still need to do a certificate of eligibility and may have to finance a VA funding fee into your mortgage, but overall, VA loans are some of the best mortgage deals out there.

Specialty loans

Some lenders choose to offer loans outside of the traditional, conventional federal regulations.

Some lenders offer no down payment mortgages for physicians, dentists and other medical professionals who are buying a primary residence. They can’t be used for buying a second home or vacation home.

Check with your bank to see what other options they offer.

Conventional 97 loan

For first-time homebuyers, Fannie Mae and Freddie Mac offer a Conventional 97 loan that only requires a 3% down payment that has no income limits, but tighter restrictions than conventional loans, and it carries higher interest rates. They also offer a 3% down payment loan that doesn’t require you to be a first-time homebuyer but it does have income limitations.

To receive a Conventional 97 loan, you will need a strong credit score, reliable income and employment, and a debt-to-income ratio under 43% (in most cases). The property must be your primary residence. This includes a single-family home, a condo, planned unit development or co-op. If you are not a first-time homebuyer, Fannie Mae and Freddie Mac also offer 97% loans with lower interest rates and mortgage premiums, however these are limited by income.

FHA loan

The Federal Housing Administration offers mortgage loans with as little down as 3.5%. FHA loans do require a monthly fee over and beyond your interest rate – similar to mortgage insurance. This is charged to the borrower two different ways; as a one-time fee of 1.75% of the loan amount and as a monthly premium. The duration and cost of your MIP may last for the duration of the loan. However, you do have the option to refinance your home at any point after you close the mortgage. This may be especially helpful when you have paid 20% of the home’s value and can get a new loan that does not require the monthly fee. Similar to the Conventional 97 loan, there are no income limits, the home must be your primary residence.

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://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do

https://www.va.gov/housing-assistance/home-loans/loan-types/

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Mortgage Shopping Tips for the New Year

mortgage resolutions for new year

The new year traditionally is a time of reflection and resolutions. If one of your resolutions is to buy a house this year, here are some tips that will help that resolution become a reality.

Improve your credit score

If you have any debts or credit card balances, work on eliminating them or paying them down. Even if completely eliminating your debt isn’t possible, paying it down could increase your credit score – and even a small boost can mean lower interest rates on a mortgage. Also, paying these off might feel good, but don’t close those accounts as that could lower your score if you eliminate the positive reporting tradeline.

Avoid big purchases

Sure, you might need new appliances and new furniture in your new house. But wait until after you’ve closed on your mortgage before pulling the trigger on those purchases. Spending money on big-ticket items decreases your available cash – which is key in the home-buying process. Or if you use your credit card or take out a store line of credit to pay for it, it could hurt your credit score.

Save, save, save

Save every penny you can. Having money saved for a down payment and closing costs can majorly help you in the loan process. The more money you have in savings, the better. Evaluate your spending habits – if you eat out for lunch every day, bring your lunch instead and save the difference. If you stop for coffee a few times a week, skip it and save that money, too. These small things will add up over time.

Research lenders

Finding the right mortgage professional will make the process much easier. Your lender will be your mortgage resource and will help you every step of the way to bring your resolution to fruition. It also will be important to get preapproved for your mortgage, which the lender will help with as well.

Determine what you want in a house

Just what specifics do you want in your home? Do you want to live closer to work, or in a specific school district? These are the things that are good to know ahead of time, and they will help you narrow down available houses. And then, start looking!

Making a resolution and sticking to it always is fulfilling. And if buying a house is on your resolution list this year, these steps should help make the process much easier.

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.

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Navigating the Three-Day Loan Disclosure Waiting Period

couple reviewing documents

Timing is everything, and that is especially true when purchasing a house. Whether you’re waiting for the right home or applying for a mortgage, there are many time-sensitive processes to follow to ensure you can get the home and the financing you want.

It may seem like there’s a lot of hurry up and wait going on. But because it is likely the biggest purchase you’ll make in your life, there’s a good reason for the wait.

For traditional mortgages, the most noticeable is the three business-day waiting period between receiving your closing disclosure and the consummation date (often known as your closing day). This three business-day rule was introduced in October of 2015, and it applies to both original mortgages and refinancing.

When your three business-day waiting period starts is determined by your consummation day. This three business-day rule may include Saturdays, but it does not count Sundays or holidays.

For instance, if you want to sign on a Friday and a holiday falls on a Thursday, you must receive your closing disclosure on Monday. Because of this, the three-day period is NOT measured by hours.

You can sign the closing disclosure any time before you sign your final documents on your consummation day.

This waiting period gives you time to review all the documents to ensure that the terms you’re agreeing to match the terms outlined at the beginning of the mortgage process when you received your loan estimate (which lenders are required to disclose no later than three days after receiving your completed application).

The closing disclosure will show you the final terms of your mortgage, including your purchase price, interest rate, APR, closing costs, monthly payment, and more. Between the closing disclosure and consummation, if the APR, loan product type or prepayment penalty changes, that would require a revised closing disclosure, which in turn would require a new consummation date. Other changes to terms and costs outside of these (like title fees and insurance), will warrant a corrected closing disclosure, but will not require a new three business-day waiting period.

Basically, the closing disclosure is designed to protect you from bait-and-switch tactics if a lender promised you one set of terms but then presents worse terms just prior to the consummation day.

Source: https://www.consumerfinance.gov/know-before-you-owe/

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.

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How to Take Advantage of the Equity in Your Home

Take Advantage of the Equity in your Home

How to Take Advantage of the Equity in Your Home

The equity in your house is one of the most valuable tools you have as a homeowner. It can increase over time, and it can be used to access money in the form of a loan or a line of credit that can pay for big expenses like renovating your home or the consolidation of high-interest debt.

So just what is home equity? It is your home’s market value, minus the amount you owe on it. This is why it usually increases over time – as you pay off your mortgage, you’re subtracting less against the home’s market value. Also, if your home increases in value, your equity rises as well. However, the opposite is true as well – if your home decreases in value, your equity may drop if it decreases more than what you’re paying on the mortgage.

Differences Between a Loan and a HELOC

A home equity loan gives you a lump sum of money up front, and you make payments over the life of the loan at a fixed interest rate to pay it off.

A home equity line of credit (HELOC) is similar to a credit card – you establish a line of credit, with your home as collateral – and you use the credit when you need it. You pay interest only on the money you use, and you can also continue to use the funds as you repay them. These rates are typically adjustable.

How to Build Home Equity

You can make additional payments to the principal of your mortgage to build equity faster.

Appreciation of your home also will increase the equity over time. The increase in value of your home over time is not guaranteed, but has been typical over the most recent history of the real estate market in the United States.

Also, if you make home improvements, that may increase your home’s value, which in turn would increase your equity. Not all home improvements are the same, however, so be sure to research to find out which one would add the most value to your home.

Benefits of Using Home Equity

The Tax Cuts and Jobs Act of 2017 lets homeowners deduct the interest on home equity loans or lines of credit if the money is used to “buy, build, or substantially improve the taxpayer’s home that secures the loan.”

Also, because you’re borrowing against your home, it would be a secure loan or line of credit. Typically loans secured by homes have lower interest rates than other loan options.

Drawbacks of Using Home Equity

Remember that your home secures the amount that you borrow through a home equity loan or line of credit. If you don’t pay your debt, the lender may be able to force you to sell your home to satisfy the debt. Also, some lenders may charge fees, so be sure to look to see if the fees are what you would consider excessive.

Also, if you sell your home using a real estate agent, there are fees associated with the sale transaction from the real estate agency, title company, and more. These costs can be as much as 10% of the value of the home. If you max out your equity and owe more than 90% or so on your home, you may not have enough equity to sell your property after accounting for the fees.

If you’re interested, ask more questions to seek out answers

Ask all the lenders you interview to explain the loan plans available to you. If you don’t understand any loan terms and conditions, ask questions. They could mean higher costs. Knowing just the amount of the monthly payment or the interest rate is not enough. Pay close attention to fees, including the application or loan processing fee, origination or underwriting fee, lender or funding fee, appraisal fee, document preparation and recording fees, and broker fees; these may be quoted as points, origination fees, or interest rate add-on. If points and other fees are added to your loan amount, you’ll pay more to finance them.

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.

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Refinancing to a Shorter-Term Loan

Refinancing

Consider refinancing into a shorter-term loan

Paying off your mortgage is a marathon, not a sprint.

But what if you’ve reached a point of the marathon and found a way to run the rest of it downhill?

Now is a great time to consider refinancing your loan from your current 30-year note to a 15-year mortgage. You’ll likely end up paying significantly less interest over the term of your new loan compared to your current loan.

The interest rate for a 30-year mortgage in 2006 averaged more than 6.0%. Recent rates for a 15-year home refinance have been in the 2%’s. This is a potential savings of tens of thousands of dollars by refinancing.

Your savings come as the amortization schedule pays down much faster with more money going to principle and less to interest. For example, if you got a $100,000 loan with a 30-year repayment period in January 2006 paying 6% interest, the monthly payment would be around $600. The amount of interest paid per payment would range from around $100 at the first payment to around $250 in 2021. If you refinanced the remaining balance of around $71,000 into a new 15-year loan with a 2% interest rate, the monthly payment would drop to around $460 per month and would save approximately $25,000 in interest compared to the 30-year loan.

But does refinancing your loan make sense?

There is no cookie-cutter approach to refinancing. There are many factors to take into consideration before taking the plunge. The example scenario described above could be different for your situation depending on a variety of unique factors specific to you and your mortgage.

Do you plan on staying in your house for a while longer, or do you plan on moving soon? If you don’t plan on staying in your current home much longer, it likely would not make sense to refinance because of the cost and fees associated with refinancing. Interest rates can emotionally draw you to refinance, but be sure to do the math of how much will you would save monthly and/or over the life of the loan versus how much it costs to refinance. For example, if it cost $4,000 to refinance and you save $100 per month, it will take 40 months — a little over 3 years — to recoup the cost. If you plan on moving prior to that time frame, it probably would not be worth the “feel good” rate.

Other related costs with refinancing

Before jumping into anything, don’t forget to factor in other costs. Can you recoup the cost and gain savings after the break-even point?

There may be closing costs, processing fees, appraisals, loan origination fees, discounts fee, underwriting, and tax service fee. Some third party fees, such as appraisers and title company fees, likely will be the same no matter what lender you choose. Most of the time, the savings over the life of the loan will more than offset these costs, but you should do your due diligence to check this yourself just to make sure.

Choose the lender that works best for you and try to get your rate locked in as soon as possible when you refinance. 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. For specific questions regarding your personal lending needs, please call RCB Bank at 855-BANK-RCB. With approved credit. Some restrictions apply.  RCB Bank is an Equal Housing Lender and member FDIC. RCB Bank NMLS #798151.

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Mortgage Prequalification

Get a mortgage prequalification before you start home shopping

handing over keys

Get a mortgage prequalification before you start home shopping

If you’re shopping for a home, the first step you should take is to get prequalified for your mortgage.

Buying a home can be daunting, especially for first-time homebuyers. But having a roadmap can make the process easier. And that’s where a mortgage prequalification comes in.

By prearranging financing, you can save a considerable amount of time. A lender will examine your credit report, pay stubs, bank statements, etc., and be able to tell you what they think you’re qualified to borrow. Remember, you’re the only one who knows what you can afford based on your living costs. Rather than looking at a myriad of properties, you can narrow your search down to a handful of homes that fit a purchase price and mortgage payment you can make comfortably and examine those in great detail. You’re also less likely to be let down or become disillusioned when you fall in love with a property only to find it’s out of your price range.

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.

Prequalification allows you to move quickly and shows you’re serious

The housing market is booming right now. Houses aren’t on the market for very long. If you want to purchase your dream home before someone else snatches it from you, you need to make sure you’re ready to submit an offer immediately.

When a seller is looking at multiple buyers with interest in their property, it’s important to stand out from everyone else. Say there were three other buyers, and you were the only one with a prequalification letter. You will have a much better chance of getting the seller’s attention because you have direct evidence of your ability to obtain financing. This should reduce any skepticism or anxiety a seller may have.

Timeframe

Once you get prequalified, you’ll receive a prequalification letter. Check your expiration date and keep it in mind while you’re shopping for your future home. Prequalification letters generally are valid for 90 days. If you haven’t purchased a home by then, you can request a renewal by submitting your up-to-date financial information again.

Taking the time to go through the prequalification process for a mortgage has some distinct advantages. Once a lender gives you the green light, it can help you find a great property at a fair price, while eliminating a lot of hassle.

The loan you choose will depend on your financial situation, how much you have to put down and where you want to buy a home. It is always a good idea to talk with a lender before deciding what loans to choose. 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. For specific questions regarding your personal lending needs, please call RCB Bank at 855-BANK-RCB. With approved credit. Some restrictions apply.  RCB Bank is an Equal Housing Lender and member FDIC. RCB Bank NMLS #798151.

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