Actually, the market reacts to two inputs for inflation: the economic numbers themselves, primarily CPI and PPI, and also the Fed’s actions, either reactive or proactive, to the inflation metrics. Current Market Drivers The US labor market is tight and supply chains stay stressed. The Russian-Ukraine war exasperates commodity pricing. The financial system stressed from sanctions against Russia. US inflation setting records. March CPI over 8%; PPI over 11% The Fed under pressure: QE has turned to QT. The inverted yield curve persists with the different debt markets responding in an asynchronous fashion. Results: volatility. But to...
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WHY USE A RESIDENTIAL LOAN TO FINANCE A BUSINESS?
How can you use a residential loan to finance a business? And, why would you? Business loans tend to have higher rates and costs than residential loans, and may be adjustable. The residential loan can be fixed. For instance, if you have equity in your home, or other residential properties, you could refinance and take cash out of one of these properties to purchase the business or investment. The lien would be on your residential property, but the loan terms may be more favorable than the commercial loan. We had a scenario where a client was looking...
April 27, 2022April 28, 2022
PROPERTY VALUATIONS CAN BE MISLEADING
An appraisal is typically required when applying for a mortgage. Many people will look to the price per square foot when valuing a home, however, this valuation could be misleading. If you are purchasing a home, the lender will base the loan amount off of the lesser of the sales price or the appraised value. Appraisers look to comparable sales in the neighborhood when valuing a property; they do not focus on the price per square foot alone. Example: If you are purchasing a 2-car garage 2,000 square foot home for $400,000, appraisers will look for other sales of 2-car...
April 23, 2022April 23, 2022
STEPS TO GET STARTED
Are you considering homeownership? Are you wondering how to begin the process? Here are some steps to get started: • First and foremost, check your credit. It’s best to know your score in advance to get a good loan. Student loans, car loans, and credit cards are all items that are considered in determining your credit score, make sure you pay these each month when they become due (for credit cards, maintain a balance no higher than 30% of the credit limit, this will help your credit score). • Save for a down payment: There are many loan products out...
April 21, 2022April 21, 2022
ARE YOU GRADUATING?
Are you graduating from college? Are you thinking about becoming a homeowner? Many graduates feel they may not qualify to purchase a home. College education is more expensive than ever and many students leave school with substantial student loan debt. Let’s take a look at how lenders consider student loan debt when underwriting a mortgage application. If the monthly payment for the student loan appears on the credit report, it will be used in calculating the debt-to-income ratio. If the credit report does not reflect the correct monthly payment, the undewriter may use the monthly payment that is on the...
April 19, 2022April 19, 2022
SHOULD YOU CONTINUE TO RENT OR COMMIT TO BUYING A HOME?
Nowadays many people question whether they should continue to rent or commit to buying a home? Will the mortgage payment be less than the rent payment? Most people do a financial analysis to see if this makes sense. Whether yes or no, they should consider that the principal portion of the mortgage payment is used to build equity in the home, while the rent payment will go to the landlord and will not be used to build any equity for themselves. Over time, hopefully, they will build equity in their home so that they can either sell and make a...
April 14, 2022April 15, 2022
WAYS TO OVERCOME DEFICIENCIES
Did you know that if a home has water spots on ceiling tiles, broken windows, is missing a stove, or missing cabinets or countertops, the lender may not lend on the property? There may be ways to overcome these deficiencies and still get a loan on the property. There are many properties that are very well priced, but they are in disrepair or missing pertinent household items. If this is the case with your property, make sure you work with your lender. This post will discuss some of these options. One way is for the parties to negotiate the repair...
April 12, 2022April 12, 2022
COMMERCIAL BRIDGE LOANS
One of the loan types that has come into demand recently is a bridge loan. They’re typically used in situations where there’s stress in the situation resulting in a bargain element in the pricing, and time is a material factor. (Our current environment is causing a lot of this.) We have a fair amount of discussion about the terms and conditions of these loans, a lot of it dispelling misinformation floating around the market. We continually get calls & emails from lenders looking for deals to fund. This is normal – the pulse of our business. We can arrange funding...
April 10, 2022April 10, 2022
EVALUATING A LOAN
The APR discloses the cost of credit and is calculated by taking into consideration the finance costs of the loan, and disclosing those costs in terms of the interest rate. The APR is usually different than the note rate on the loan. Often, on a 30-year fixed mortgage, the APR is higher than the note rate. This is due to the costs of the loan. Typical costs that affect the APR are underwriting, processing, origination, discount, escrow, and prepaid interest. Be careful, a simple comparison of APRs will not tell you what product has the lowest rate and costs. There...
April 7, 2022April 7, 2022
THE FHA STUDENT DEBT CRITERIA
The FHA changed the way student debt is assessed and calculated for new homebuyers. Below are some lender criteria for student loans: The lender must use the actual payment amount for the student loan or The monthly student loan payment reported on the credit report, or A half percent (.5%) of the student loan balance if the reported payment is zero If you are a new homebuyer contact Counsel Mortgage Group. We offer a variety of products and services, ask us how we can assist you today. We work for you, not the lender. Counsel Mortgage Group®, LLC Licensed in...
April 5, 2022April 5, 2022