closing costs Archives - Hanover Mortgages

Apache is functioning normally

June 1, 2023 by Brett Tams

Imagine a situation where you could transform your mortgage into a more favorable and empowering financial tool. Picture the possibilities of accessing the equity in your property or securing lower interest rates. Welcome to the world of mortgage refinancing. Refinancing your mortgage is like hitting the reset button on your home loan, allowing you to replace your current mortgage with one that better aligns with your financial goals. The general rule of thumb is that you’ll pay between 2% and 6% of the refinance value. Here’s how it breaks down.

For help figuring out how to refinance your mortgage in a way that works for you, consider working with a financial advisor.

Mortgage Refinances Basics

A mortgage refinance refers to the process of replacing an existing mortgage with a new one, typically to take advantage of more favorable terms or to access equity in a property. Refinancing means receiving a new loan to pay off your current loan and obtaining a lower interest rate, longer loan duration, or a different type of mortgage. For instance, you might refinance your fixed-rate mortgage to a 5/1 adjustable-rate mortgage (ARM) for a lower interest rate.

Remember, although mortgage refinancing can provide a more favorable loan, it involves closing costs and fees. As a result, it’s essential to calculate whether the potential savings or benefits outweigh the expenses over the long term.

Average Cost to Refinance a Mortgage

Refinancing a mortgage means paying for the loan servicing required for your original mortgage. While the average refinance costs 2% to 6% of your loan amount, costs vary depending on your circumstances. In addition, interest rates have risen in the last two years, making borrowing more expensive.

Here’s a breakdown of refinancing costs:

Application fee: $0-$500
Attorney fees: $500-$1,000
Credit report fee: $10-$100
Discount points: 0%-3%
Document preparation fee: $50-$600
Flood certification: $15-$25
Home appraisal: $300-$700
Home inspection: $300-$500
Origination fees: 0.5%-2%
Recording fees: $25-$250
Reconveyance fee: $50-$65
Tax service: Varies
Title insurance and search: $400-$900

Factors Affecting Refinance Costs

Refinancing your mortgage can save you a significant amount of money. However, it’s critical to note that, similar to acquiring a new home loan, a refinance entails closing costs that can impact your immediate and long-term financial situation. Compared to closing on a comparable purchase loan, the closing costs for a refinance are generally lower. The precise amount you’ll be required to pay depends on various factors, such as:

Your Loan Size

As mentioned above, lenders base mortgage insurance and other costs on your total loan amount. Therefore, the larger your loan, the higher the refinance cost.

Your Lender

Each lender has its own fee structure. For example, some lenders may waive your credit report or application fee. As a result, it’s wise to shop around for lenders and ask for a summary of fees before committing to a specific lender. This way, you can compare the offers available.

Your Location

Costs of home inspections, recording fees, taxes and more depend on your location. Therefore, where you live can change your refinance costs by hundreds or thousands of dollars.

Your Credit Score

Your credit score and history demonstrate your consistency and reliability as a borrower. As a result, your lender charges lower interest rates to customers with higher credit scores because they present less risk. On the other hand, a low credit score means you’ll pay more interest, increasing your refinancing costs.

Your Home Equity

Similarly, home equity can also impact the interest rates available when refinancing. Generally, lenders offer better rates to borrowers with higher levels of equity. With more equity in your home, you represent less risk to the lender, which can result in more favorable interest rate options.

In addition, the loan-to-value ratio (LTV) is a crucial factor lenders consider when evaluating a refinance application. You can calculate it by dividing the loan amount by the property’s appraised value. Lenders typically have maximum LTV ratios they are willing to accept. For example, if a lender has a maximum LTV of 80%, they will only refinance up to 80% of the home’s appraised value. So, if your original mortgage required private mortgage insurance (PMI) because you had a low down payment or a higher LTV ratio, refinancing can help you eliminate PMI. Building equity to achieve an LTV ratio of 80% or less can eliminate PMI, reducing your monthly payment.

Your Loan Duration

Refinancing means receiving new terms for your loan. For example, you might extend your loan by five years or more through a refinance. Although doing so can lower your monthly payment, it usually increases the amount of interest you pay over time. On the other hand, shortening your loan duration means paying it off more quickly, reducing paid interest.

Your Type of Mortgage (Fixed-Rate or Adjustable-Rate)

With a fixed-rate mortgage, the interest rate remains constant throughout the entire loan term. The rate you agree upon at the beginning of the loan remains unchanged over the life of the mortgage, whether over 15, 20, or 30 years. This stability allows you to have predictable monthly mortgage payments, making budgeting easier. The downside is your interest rate is permanent, even if market trends in the future produce lower interest rates.

In contrast to fixed-rate mortgages, adjustable-rate mortgages (ARMs) have an interest rate that can change periodically. Typically, an ARM has an initial fixed-rate period, such as 5, 7, or 10 years, during which the interest rate remains stable. This rate is usually lower than fixed-rate mortgages. Then, after the initial period, the interest rate can adjust periodically based on an index, such as the U.S. Treasury rate. Therefore, the interest rate can fluctuate over time, potentially resulting in higher or lower monthly payments. If interest rates rise, your payments may increase, but if rates fall, your payments could decrease.

Your Specific Mortgage Program

In addition, you’ll pay different amounts for mortgage insurance depending on the loan type. For instance, mortgage insurance for conventional loans costs 0.15% to 1.95% of the loan amount every year. For FHA loans, you’ll pay a 1.75% premium upon closing and 0.15% to 0.75% of the loan amount every year. VA loans have a funding fee at closing of 0.5% to 3.6%. Lastly, USDA loans have a 1% upfront fee and a 0.35% annual fee.

Your Type of Property

The type of property you own can impact the refinancing process. Lenders may consider different factors and have specific guidelines based on the property type. Here are a few ways the property type can affect a refinance:

Primary Residence: Refinancing a primary residence typically offers the most favorable terms and options. Lenders may provide lower interest rates and more flexible terms for primary residences because borrowers prioritize them over other real estate and assets.
Investment Property: Refinancing an investment property, such as a rental property or vacation home, often comes with slightly higher interest rates and stricter eligibility requirements. Lenders may impose stricter debt-to-income ratios, require larger down payments and assess the property’s rental income potential to determine the feasibility of the refinance.
Condominiums: Refinancing a condominium may have specific requirements. Lenders may assess the financial health of the condominium association, including factors such as the percentage of owner-occupied units, insurance coverage and reserve funds. Additionally, lenders may have stricter appraisal requirements for condos to ensure the property’s value and marketability.
Multi-Unit Properties: Refinancing a multi-unit property, such as a duplex, triplex, or apartment building, may involve different considerations. Lenders typically evaluate the property’s rental income potential, occupancy rates and the borrower’s experience as a landlord. The appraisal process may focus on the property’s income-generating capabilities.
Manufactured or Mobile Homes: Refinancing a manufactured or mobile home may have specific requirements and considerations. Lenders may have stricter criteria for these types of properties due to their unique characteristics. They may require specific certifications, consider the property’s foundation and location and have limitations on the loan-to-value ratio.

Typical Cost Breakdown

Here’s an example of how these numbers work. According to a recent report by Freddie Mac, the average rate refinance is about $273,500. So, here’s how the costs look at percentages of the loan balance on average using the dollar figures introduced earlier:

Application fee: 0%-0.18%
Attorney fees: 0.18%-0.36%
Credit report: 0.003%-0.03%
Discount points: 0%-3%
Document preparation fee: 0.018%-0.2%
Home appraisal: 0.11%-0.25%
Home inspection: 0.11%-0.18%
Origination fees: 0.5%-2%
Recording fees: 0.009%-0.09%
Reconveyance fee: 0.018%-0.023%
Title insurance and search: 0.14%-0.33%

Additional Considerations

Here are several other aspects of refinancing a mortgage to contemplate before taking action:

Interest Rates Variations

Interest is the foundation for how lenders make money on loans. As a result, it’s one of the primary expenses for refinanced mortgages. The rate is a percentage of your principal balance, and your monthly payment goes toward interest first, then the principal. As a result, a higher interest rate means you’re paying more for the cost of the loan and less on the loan itself, increasing the cost and requiring more time for repayment.

Choosing Between Fixed-Rate and Adjustable-Rate Mortgages

Remember, a fixed-rate mortgage offers an interest rate that doesn’t change throughout the loan. This feature offers predictability for monthly payments until you repay the loan. On the other hand, adjustable-rate mortgages (ARMs) have interest rates that shift according to market trends after the initial fixed period. The advantage of ARMs is that your initial rate is usually lower than fixed-rate mortgages, and the adjustable rate afterward could also remain lower, increasing your savings.

Potential Savings Over the Long Term

How long you plan to live in your home is another crucial factor regarding refinancing. The refinancing process entails paying closing costs, which can outweigh the savings the interest rate reduction provides. Therefore, it’s best to estimate how long you plan to stay in your home to determine if you can break even or save money through refinancing. One method is to calculate the break-even point by dividing the total cost of the refinance by your monthly savings.

For example, say you save $100 per month, and the closing costs amount to $5,000. In this case, it would take approximately 50 months (or over four years) before you experience savings on your refinance. If you intend to stay in your home for longer than that, refinancing is worthwhile.

Loan-To-Value Ratio (LTV)

The eligibility of your mortgage for refinancing is influenced by the current value of your home compared to the loan amount. During the refinancing process, an independent party appraises your home to determine its market value. The appraised value is critical since the LTV usually can’t exceed 80%. If your home’s value has declined since you purchased it, you might lack sufficient equity to refinance, or you may need to bring additional funds to cover the difference between the home’s value and the loan amount.

Income Stability and Debt-To-Income Ratio

Other debts besides your mortgage, such as car loans or credit card debt, can impact your ability to refinance or the interest rate you receive. Lenders evaluate your debt-to-income ratio when you apply for a refinance. To calculate this ratio, divide your monthly debt payments by your gross monthly income. Generally, a debt-to-income ratio below 43% is desirable for mortgage or refinance qualification.

In addition, your current income and employment status, will influence the refinancing application. Specifically, changes in your income or employment can affect your refinancing eligibility. For instance, you may qualify for a better rate or more favorable terms if your income recently increased.

Conversely, suppose your income has decreased or you recently changed jobs. In that case, the refinancing process may be more challenging, depending on the duration of your current job or the extent of the income reduction. If you’ve recently started a new job, giving your situation several months to stabilize before attempting to refinance can help you qualify for a loan.

Cash-Out Refinance

Freddie Mac’s most recent report shows that 41.9% of refinances in 2021 were cash-out refinances. A cash-out refinance means liquidating a portion of your equity, putting thousands of dollars in your pocket. Homeowners cash out their equity for numerous purposes, such as improving the home, paying off debt, or starting a business. As a result, this refinance enlarges your mortgage, and you get a lump sum in return.

Strategies to Minimize Refinance Costs

Because refinancing can be expensive, it’s recommended to reduce costs as much as possible. This way, excessive fees won’t ruin the benefits of the refinance. These strategies can help you do so:

Shopping Around for Lenders

The whole lending market is open to you when refinancing. Although refinancing with your current lender might be convenient, you could find better rates and terms by getting quotes from several lenders and comparing the offers. This way, you’ll get the best deal available and save money on fees and interest.

Negotiating Fees and Closing Costs

Negotiating fees and closing costs with the lender is also an option. Many fees have wiggle room on the price, so asking lenders about discounts and waivers can be fruitful. In addition, a preexisting relationship with a lender, such as having a bank account or loan beforehand, allows you to access special deals.

Utilizing Mortgage Points

Lastly, you can purchase mortgage points to reduce your interest rate. Typically, they cost 1% of the loan amount per point. As a result, you can cut your interest rate down by paying several thousand dollars up front, reducing interest payments over time. It’s crucial to calculate when you break even if you do so. For example, say you spend $1,500 to lower your interest rate by 1%, lowering your monthly payment by $50. In this scenario, it will take 30 months to break even.

Hidden Costs to Be Aware Of

In addition, some refinancing costs are less apparent when shopping lenders. Here’s what to keep an eye out for:

Loan duration and its impact on costs: Generally, the longer the repayment schedule, the more expensive the loan. Your loan duration affects how long the interest rate builds upon the principal. So, repaying the loan faster means fewer compounding periods, which equates to less interest accrual.
Tax implications: Both original and refinanced mortgages provide a tax deduction for paid interest. In addition, purchasing points for a refinance loan creates another tax deduction. Specifically, you’ll divide what you paid over the number of years for the loan. So, paying $1,000 for a mortgage point for a 10-year loan results in a $100 deduction every year.
Costs associated with mortgage insurance: Refinancing with a conventional loan can incur mortgage insurance costs if you have less than 20% equity in your home. Specifically, private mortgage insurance (PMI) charges a percentage of your loan amount. These charges can occur at closing and each month as part of your loan payment.

The Bottom Line

Mortgage refinancing can benefit homeowners by allowing them to take advantage of more favorable terms and access equity in their property. However, it’s vital to carefully consider the costs involved in the refinancing process and determine whether the potential savings or benefits outweigh these expenses in the long term. As a result, it’s necessary to understand how numerous factors, including the loan amount, origination fees and discount points, can impact the overall cost of refinancing and evaluate the potential savings. Other considerations include the option of a cash-out refinance, which allows homeowners to access their equity, and using strategies to minimize refinance costs.

Tips for Refinancing a Mortgage

It’s a good idea for homeowners to analyze their financial situation and goals before refinancing their mortgage. Fortunately, you can consult with a financial advisor to evaluate your circumstances and make informed decisions that align with your long-term plan. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
The real estate market fluctuates daily, making it challenging to understand when refinancing is beneficial. You can get an interest rate estimation using SmartAsset’s rate comparison tool to see if the market conditions suit you.

Photo credit: ©iStock/cnythzl, ©iStock/Daenin Arnee, ©iStock/dusanpetkovic

Source: smartasset.com

Apache is functioning normally

June 1, 2023 by Brett Tams

A few weeks ago, I wrote about how I refinanced my mortgage for the second time in a year. The second refinance wasn’t actually part of my master plan, but I ended up having to refinance in order to remove my private mortgage insurance. And although refinancing our home again proved to be a huge pain, we are now saving $135 per month by no longer paying private mortgage insurance premiums.

Thankfully, we managed to secure a no-cost refinance that only cost us in time and effort. It’s a huge relief that the process is finally over, and I am fairly hopeful that this is the last time we will ever have to refinance.

Refinancing Has Its Perks

Luckily, I am no stranger to the benefits of refinancing. Not only did we refinance our primary residence, but we also refinanced our two rental homes within the past 18 months. We did so in order to take advantage of record low interest rates and to shorten the terms of their loans.

Now that we have refinanced our rental properties, they will be paid off much faster. In fact, our two rental properties are due to be paid off in about 13 years. Once they are completely paid off, we will then have another (somewhat) passive income stream and will be that much closer to our lifetime dream of early retirement.

Since I have refinanced properties so many times, I decided to write about some of the reasons that people choose to refinance. Like me, you may find that refinancing could save tens of thousands of dollars in interest and years of mortgage debt repayment. Unfortunately, it does take some effort to get the process started. However, the time and effort spent could easily be worth it depending on your situation. Here are some reasons that you may want to consider refinancing your home loan.

5 Reasons You May Want to Refinance

Refinance to shorten the term of your loan. If you have a 30-year mortgage, now may be a great time to consider refinancing. With record low interest rates, you may find that a 15-year mortgage is not much more expensive than the 30-year loan payment you have been paying.

Start by entering your information into a mortgage calculator to see what your new payment might be. If your new estimated payment is feasible, consider contacting a mortgage professional. (When we first refinanced our home from a 30-year mortgage at 5 percent to a 15-year mortgage at 3.25 percent, our payment only increased by about $200. Since the increase fit easily into our budget, the decision was a no-brainer.)

Refinance to lower your interest rate. As I mentioned before, interest rates are near a record low. And as I write this, 30-year mortgage rates are hovering above 3 percent and 15-year loans can be secured for an even lower rate. If your home is now financed at a higher interest rate, it may be a great time for you to consider refinancing. You could literally save tens of thousands of dollars just by taking the time to fill out the necessary paperwork and gather the needed documents.

Refinance to lower your payment. Refinancing your mortgage at a lower interest rate could mean drastically reducing your payment and saving tens of thousands of dollars in interest. Lowering your mortgage payment could also free up hundreds of dollars per month that could be saved or invested. Although refinancing to lower your payment could increase the term of your loan, it could make sense in your particular situation.

Refinance from an adjustable-rate mortgage to a fixed-rate loan. If you currently have an adjustable-rate mortgage, now may be the perfect time to refinance into a fixed-rate loan. Interest rates are low now, but they may not stay this low forever. Locking into a low, fixed rate can protect you from rising interest rates in coming years. Additionally, a fixed payment is easier to plan for and budget.

Refinance to cash out home equity. It’s a tempting proposition to cash out your home equity by refinancing your home. It could even be a great financial move in some circumstances. For instance, it may make sense to cash out some of your home equity in order to buy an investment property or start a business. It mostly depends on what you are trying to achieve and if you are someone who can manage your debts responsibly.

Can Refinancing Help You Meet Your Goals?

Before refinancing, consider what your goals really are. Do you want to lower your monthly mortgage payment? Do you want to pay off your mortgage and get out of debt faster? Only you can answer these questions.

It is also important to take all closing costs and fees into consideration. Depending on which new loan you choose, you may have to pay thousands of dollars in fees for your new mortgage. It may take several years to recoup the costs of refinancing, and it is important to identify your breakeven point. If you plan on moving in the near future, it may not make sense to refinance your home loan at all.

Do You Even Qualify For a Refinance?

Due to government-backed programs, you may be able to refinance your home even if you owe more than your home is worth. The Home Affordable Refinance Program, known as HARP, loosens requirements for traditional refinancing. According to MakingHomeAffordable.gov, your loan must meet several requirements in order to qualify:

The mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae.
The mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009.
The mortgage cannot have been refinanced under HARP previously unless it is a Fannie Mae loan that was refinanced under HARP from March-May, 2009.
The current loan-to-value (LTV) ratio must be greater than 80%.
The borrower must be current on the mortgage at the time of the refinance, with a good payment history in the past 12 months.

Consider Refinancing Decisions Carefully

There are many things to consider before refinancing your mortgage. Most importantly, you should weigh the pros and cons of your particular situation and act according to your own best interest. With some thorough research and planning, refinancing your mortgage could turn out to be the best thing for your family and for your pocketbook. Have a look at the table below for the best mortgage rates.

Have you considered refinancing your mortgage? If so, why did you decide to refinance? If not, why haven’t you?

Source: getrichslowly.org

Apache is functioning normally

May 31, 2023 by Brett Tams

Warehouse, Appraisal, Non-QM, RON Products; Reverse Mortgages: Catch the Wave; Mortgage Apps Continue Decline

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Warehouse, Appraisal, Non-QM, RON Products; Reverse Mortgages: Catch the Wave; Mortgage Apps Continue Decline

By:
Rob Chrisman

3 Hours, 24 Min ago

A biologist, a chemist, and a statistician are out hunting. The biologist shoots at a deer and misses five feet to the left. The chemist takes a shot and misses five feet to the right. The statistician yells, “We got ’em!” Are you selling your house? Me neither. Few people are: there are only about 564,000 active listings. That’s about 11,000 per state. In California, where there are 58 counties, that is an average of less than 200 per county. In Wyoming, the least populated state, there are 58 counties so that’s 190 listings per county. Of course, averages don’t apply like that, but it is important to keep things in perspective, and the overarching issue is a continued lack of supply and a strong demand impacting prices, affordability, and sales numbers. Can lighthouses help? Since 2000 about 150 lighthouses have been transferred to new owners, about 80 given away at no cost to agencies, nonprofits or educational organizations willing to maintain them, and about 70 auctioned off for a total $10 million so far. This year, six lighthouses are up for offer. (Today’s podcast can be found here and this week’s is sponsored by Lenders One, one of the largest mortgage co-ops in the country with a diverse mix of 250+ member companies and providers of an end-to-end solution independent mortgage professionals trust to drive profitability and growth. Listen to an interview with Verisk’s Kingsley Greenland on climate risk, stress testing, catastrophe modeling, and macroeconomic policy.)

Lender and Broker Products, Software, and Services

“Have you found yourself digging through loan files to find price concession records while an auditor awaits? Have you ever wondered if your margin is better or worse than your peers? Have you been looking for a way to track how competitive your pricing is, in real time? Optimal Blue, a division of Black Knight, offers data and analytics tools that provide this actionable business intelligence, and more! Our granular rate lock data provides key insights into your business, as well as benchmarking against 42% of all rate lock activity. Reach out to Optimal Blue now to learn how our data and analytics platform can help you develop smarter, more profitable pricing strategies!”

Beer – it’s not just for drinking anymore. In fact, beer is just one of many everyday items with multiple uses that would surprise you. Want another? Remote online notarization (RON) isn’t just for originations anymore. Recently, servicers have discovered the benefits of using RON for loan modifications, partial claims and even assumptions. On average, servicers reduced the average cycle time from 21 days down to 7 days. While we all know that time is money, the reduction in cycle time and carry costs resulted in a savings of about $500 per loan. In today’s environment where we all need to find savings to help improve our margins this is an easy way to get there. Email Suzanne Singer or stop by NotaryCam’s booth 22 at NS3 in St. Louis next week to learn more about the many uses of RON.

“No one does Non-QM like Newfi Wholesale! Our newly expanded Non-QM product suite offers 90% LTV up to $1.5M, loan amounts up to $4M, 2-1 buydowns, DSCR (no minimum ratio) 1-8 units, and alt-doc solutions that make sense for your borrowers. Most of all, we have a passion to close deals and about 1/3 of all of our funded Non-QM deals have common-sense exceptions! In the words of one of the brokers who work with us: “Looking for an amazing Non-QM lender? Newfi is your go-to lender.” We offer industry-leading Non-QM pricing, technology, and product innovation. For more information contact SVP, Non-QM Development & Strategy Dan Bayer or 925-584-0579.”

Tired of slow, low-quality appraisals? Try The Appraisal Marketplace. The Marketplace allows you to fulfill appraisal orders directly from your LOS, without relying on an AMC or managing a panel. Even better, by leveraging real-time appraiser performance data, its “Uber-style” algorithm matches every order with the appraiser that’s truly right for the job. This gives you the fastest turn times, lowest revision rates & lowest fee escalation rates in the industry. Seriously. Learn more.

“CWDL is committed to empowering our clients and friends with mortgage industry-specific education and insights, even when it’s outside of our core focus on audit, accounting, and tax. So, when our clients mentioned they’d like to better understand the perspectives of warehouse bankers and how they evaluate lenders, we organized a panel of industry veterans to share their insights. Join us for our webinar on June 15 to “Meet the Warehouse Bankers,” as we discuss such topics as when and how to best communicate with your warehouse partners; how warehouse banks evaluate counterparty risk in their clients; what lenders should consider or plan for regarding M&A, a winddown or facility consolidation; and much more. This webinar is free and open to all lenders who are looking for more insight into their warehouse relationships. To register, contact Kasey English.”

Agencies, Investors, Lenders, and Reverse Mortgage Biz

The last time I saw a stat, 10,000 people a day were turning 62. And a lot of them have equity in their houses. The National Reverse Mortgage Lenders Association points out that, “Homeowners 62 and older saw their housing wealth grow by 1.95 percent or $226 billion in the third quarter to a record $11.81 trillion from Q2 2022, according to the latest quarterly release of the NRMLA/RiskSpan Reverse Mortgage Market Index… The increase in older homeowners’ wealth was mainly driven by an estimated 1.95 percent or $268 billion increase in home values, offset by a 1.93 percent or $42 billion increase in senior-held mortgage debt.” So, if you’re looking for a growth business…

Need a Pre-Qual? Plaza’s Reverse Mortgage staff will run a complete analysis of your submitted information and send the findings back to you via e-mail, typically within a few hours. The analysis details available funds, interest rates, fees, and other loan information.

Plaza Home Mortgage posted Video Marketing to Seniors. And brokers can use Plaza’s Reverse Calculator to run scenarios and you’ll quickly and easily see how much borrowers could receive, no personal information required.

Fairway Independent Mortgage Corporation has had a reverse division for many years and has seen continued growth.

CrossCountry Mortgage (CCM) announced that it is expanding its reverse mortgage division by making additional investments, resulting in what it calls “enhancements.” “Borrowers heading into retirement are seeking solutions that will benefit their future. CCM’s newly established Reverse One Team offers a specialized network of advisors and tools for loan officers to become certified specialists in originating reverse mortgage loans.”

Reverse training and certification programs among “forward” lenders are increasing. Fairway Independent Mortgage Corp. and Guaranteed Rate, for example, offer pathways within their organizations for forward professionals to become certified in reverse mortgages. Broker shops including C2 Financial also maintain a reverse training and certification program.

PHH Mortgage delivers for the entire mortgage lifecycle: non-delegated, best efforts, mandatory, bulk MSR, and reverse.

While bringing more forward specialists up-to-speed with reverse origination practices can certainly help to expand an LOs or lender’s business, it is well known that anyone interested in the business must be aware of some of the specific differences inherent in originating the product when compared with more traditional, forward mortgage options. And a solid month, volume-wise, might only be one or two loans.

Anyone interested should check out Reverse Mortgage Daily, and think about the use of video in their marketing and consulting with client’s families. “Homeowners aged 55 and over increasingly embrace online video as one of their preferred ways to research and discover information…68% of Baby Boomers use YouTube to watch videos. Half of them watch videos more than once per week, and they’re watching news, educational content, and DIY tutorials.”

Capital Markets: Housing Prices Ramping Up

The bad news is that mortgage applications continue to falter. The good news is that we finally had a little rally yesterday as bond markets responded to weekend news that President Biden and House Speaker McCarthy reached an agreement to raise the debt ceiling. Rates had risen of late as fears of a U.S. default gained momentum. A default would force the Treasury Department to pay higher interest on its bonds to convince investors to stick around, with mortgage rates and other borrowing costs tending to follow Treasury rates.

In Federal Reserve news, New York Fed President Williams discussed inflation, the labor market, and the importance of price stability yesterday by saying, “Inflation remains too high, and high inflation is hardest on those who can least afford to pay higher prices for food, shelter, and transportation.” He explained that the U.S. is seeing signs of a gradual cooling in the labor market, along with a rebound in labor force participation. Still, unemployment nationally remains historically low, at 3.4 percent.

The first trading day of a shortened week was headlined by house price indexes. The FHFA Housing Price Index was up 0.6 percent in March after increasing a revised 0.7 percent in February. The index was up 4.3 percent year-over-year, with prices in many western states starting to decline for the first time in over ten years. The fastest growing states were South Carolina, North Carolina, Maine, Vermont, and Arkansas. The declining states included Utah, Nevada, California, Washington, and D.C. Separately, the Case-Shiller home price index rose 0.7 percent in March, suggesting that the decline in home prices that began in June 2022 may have come to an end. The S&P Case-Shiller 20-city Home Price Index was down 1.1 percent in March with big declines out West, and the Southeast remaining the country’s strongest region.

Today’s calendar kicked off with the usual mortgage applications from the MBA for the week ending May 26. Mortgage applications decreased 3.7 percent from one week earlier, with activity expected to decline again following last week’s increase in yields amid increasing odds of a 25 basis points hike at the June FOMC meeting. During the reporting period, 30-year mortgage rates hit new highs for the year and their highest since last November.

Later this morning brings Chicago PMI for May, Job openings from JOLTS for April, and Dallas Fed Texas services for May. Four Fed speakers are scheduled: Boston President Collins, Governor Bowman, Governor Jefferson, and Philadelphia President Harker. The latest Beige Book will be released in the afternoon ahead of the June 13/14 FOMC meeting. The rest of the week will be dominated by the jobs report on Friday, the last jobs report before the mid-June FOMC meeting. Fed funds futures currently see a 60 percent chance for another 25-basis point hike. We begin the day with Agency MBS prices better by .125-.250 and the 10-year yielding 3.65 after closing yesterday at 3.70 percent; 4.40 percent on the 2-year.

Employment and Transitions

“Are you an account executive looking to change it up!? Why not Kind Lending!? At Kind, our family of diverse and talented Kind Ambassadors are the driving force behind our new approach to the mortgage experience. We are focused on serving the broker community and their borrowers by providing an array of products, top-notch service by experienced and friendly professionals and superior resources to support their business model. Founded by Glenn Stearns in 2020, Kind Lending is one of the fastest growing mortgage lenders in the country, building partnerships with our customers, who ultimately become family and our reason why. At the heart of it all, our people believe kindness matters and a client’s positive experience is everything. Come grow with us! Contact Delfino Aguilar, SVP TPO Production (619.726.0377).”

Earlier this month Freddie Mac (OTCQB: FMCC) announced the winners of its Home Possible RISE Awards®. The annual program, RISE (Recognizing Individuals for Sustained Excellence), salutes Freddie Mac’s top clients across multiple categories for excellence with the Home Possible® mortgage, Freddie Mac’s affordable lending solution for very low- to low-income homebuyers. Hallmark Home Mortgage earned the Home Possible RISE Award for Greatest Volume. “I’m thrilled and honored that Hallmark Home Mortgage has been recognized with the Freddie Mac Home Possible Rise Award for the Greatest Volume in the Corporate Segment. This award is a testament to the hard work and dedication of our entire team, and we are incredibly proud of this achievement,” noted Deborah Sturges, CEO & Founder Hallmark Home Mortgage.

Evergreen Home Loans™ adds to its awards line up. This year, the company placed on the Puget Sound Business Journal Corporate Philanthropy List for the third year in a row. It honors the region’s corporate philanthropists and companies who have made significant contributions to the community through philanthropic work. “We are committed to making a meaningful impact in our local communities,” said Don Burton, Founder and CEO of Evergreen Home Loans. “And we are humbled by the recognition for this award.” As loan officers, you already positively impact lives and communities… Continue to do so with a company that helps associates give back, provides paid hours for volunteer work, celebrates individual growth, and truly lives its unique and award-winning culture. Visit the Evergreen careers page to explore current opportunities.

Are you a loan officer or mortgage banker frustrated with the constraints of retail lending? Tired of competing against lower rates, fees and closing costs? Then now’s the time to take control of your pipeline and career by making the switch to wholesale lending as an independent mortgage broker. Whether you’re looking to open your own brokerage or join a team as a loan officer, you can get up and running without missing a beat with support from the team at BeAMortgageBroker.com. You have nothing to lose and only clients, greater flexibility and compensation to gain.

loanDepot, Inc. has promoted Alec Hanson to serve as its chief marketing officer (CMO). Hanson will “lead a consolidated marketing team, overseeing the development of brand, digital marketing, and organic and digital lead generation campaigns that drive awareness and revenue growth while differentiating loanDepot’s marketing engine as a competitive advantage for loan originators. Hanson will also be responsible for the company’s originator-led field-level marketing capabilities.”

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Source: mortgagenewsdaily.com

Apache is functioning normally

May 30, 2023 by Brett Tams

A variety of significant mortgage rates trended upward over the last seven days. The average interest rates for both 15-year fixed and 30-year fixed mortgages both saw an increase. For variable rates, the 5/1 adjustable-rate mortgage also notched higher.

On the heels of cooling inflation, the Federal Reserve announced on May 3 a 25-basis-point increase to its benchmark short-term interest rate. The Fed’s May meeting marks what could be the last increase we see for the time being. The central bank has signaled that it may soon be time to pause on rate hikes. Depending on incoming inflation data, the next step would be to hold rates where they are for an extended period of time in order to bring inflation down to its 2% target.

As long as inflation continues to trend downward, experts say a pause in rate hikes from the Fed could bring some stability to today’s volatile mortgage rate market.

Mortgages hit a 20-year high in late 2022, but now the macroeconomic environment is changing again. Rates dipped significantly in January before climbing back up in February. Throughout March and April, rates fluctuated in the 6% range.

“Ultimately, more certainty about the Fed’s actions will help to smooth out some of the volatility we have seen with mortgage rates,” says Odeta Kushi, deputy chief economist at First American Financial Corporation.

While rates don’t directly track changes to the federal funds rate, they do respond to inflation. Overall, inflation remains high but has been slowly but consistently falling every month since it peaked in June 2022.

After raising rates dramatically in 2022, the Fed opted for smaller, 25-basis-point rate increases in its first three meetings of 2023. The decision to hike by 0.25% on May 3 suggests that inflation is cooling and the central bank may soon be able to pause its rate hiking regime. While the central bank is unlikely to cut rates any time soon, positive signaling from the Fed and cooling inflation may ease some of the upward pressure on mortgage rates.

“If inflation keeps coming down, that will be the biggest driver, outside of the Fed, that’s really going to help bring rates down to a better level and improve affordability for home buyers,” says Scott Haymore, head of capital markets and mortgage pricing at TD Bank.

However, mortgage rates remain well above where they were a year ago. Fewer buyers are willing to jump into the housing market, driving demand down and causing home prices in some regions to ease, but that’s only part of the home affordability equation.

“Even though home prices in many parts of the country have fallen since the start of the year, high rates make buying prohibitively expensive for many,” says Jacob Channel, senior economist at loan marketplace LendingTree. It’s still difficult for many buyers, particularly those looking for their first home, to afford a monthly payment.

What does this mean for homebuyers this year? Mortgage rates are likely to decrease slightly in 2023, although they’re highly unlikely to return to the rock-bottom levels of 2020 and 2021. However, rate volatility may continue for some time. “Expect mortgage rates to yo-yo up and down in the first half of the year, at least until there is a consensus about when the Fed will conclude raising interest rates,” says Greg McBride, CFA and chief financial analyst at Bankrate. (Like CNET Money, Bankrate is owned by Red Ventures.) McBride expects rates to fall more consistently as the year progresses. “Thirty-year fixed mortgage rates will end the year near 5.25%,” he predicts.

Rather than worrying about market mortgage rates, homebuyers should focus on what they can control: getting the best rate they can for their situation.

“The most important thing is that they find the right home. The second most important thing is obviously to find the most efficient way to finance it,” says Melissa Cohn, regional vice president of William Raveis Mortgage.

Take steps to improve your credit score and save for a down payment to increase your odds of qualifying for the lowest rate available. Also, be sure to compare the rates and fees from multiple lenders to get the best deal. Looking at the annual percentage rate, or APR, will show you the total cost of borrowing and help you compare apples to apples.

30-year fixed-rate mortgages

The 30-year fixed-mortgage rate average is 7.04%, which is an increase of 15 basis points from seven days ago. (A basis point is equivalent to 0.01%.) Thirty-year fixed mortgages are the most common loan term. A 30-year fixed rate mortgage will usually have a smaller monthly payment than a 15-year one — but usually a higher interest rate. Although you’ll pay more interest over time — you’re paying off your loan over a longer timeframe — if you’re looking for a lower monthly payment, a 30-year fixed mortgage may be a good option.

15-year fixed-rate mortgages

The average rate for a 15-year, fixed mortgage is 6.42%, which is an increase of 18 basis points compared to a week ago. Compared to a 30-year fixed mortgage, a 15-year fixed mortgage with the same loan value and interest rate will have a larger monthly payment. But a 15-year loan will usually be the better deal, as long as you can afford the monthly payments. You’ll usually get a lower interest rate, and you’ll pay less interest in total because you’re paying off your mortgage much quicker.

5/1 adjustable-rate mortgages

A 5/1 adjustable-rate mortgage has an average rate of 5.87%, an uptick of 8 basis points from seven days ago. You’ll usually get a lower interest rate (compared to a 30-year fixed mortgage) with a 5/1 adjustable-rate mortgage in the first five years of the mortgage. However, you may end up paying more after that time, depending on the terms of your loan and how the rate adjusts with the market rate. Because of this, an adjustable-rate mortgage could be a good option if you plan to sell or refinance your house before the rate changes. Otherwise, changes in the market mean your interest rate may be much higher once the rate adjusts.

Mortgage rate trends

Mortgage rates were historically low throughout most of 2020 and 2021 but increased steadily throughout 2022. Now, mortgage rates are roughly twice what they were a year ago, pushed up by persistently high inflation. That high inflation prompted the Fed to raise its target federal funds rate seven times in 2022. By raising rates, the Fed makes it more expensive to borrow money and more appealing to keep money in savings, suppressing demand for goods and services.

Mortgage interest rates don’t move in lockstep with the Fed’s actions in the same way that, say, rates for a home equity line of credit do. But they do respond to inflation. As a result, cooling inflation data and positive signals from the Fed will influence mortgage rate movement more than the most recent 25-basis-point rate hike.

We use data collected by Bankrate to track changes in these daily rates. This table summarizes the average rates offered by lenders nationwide:

Current average mortgage interest rates

Loan type	Interest rate	A week ago	Change
30-year fixed rate	7.04%	6.89%	+0.15
15-year fixed rate	6.42%	6.24%	+0.18
30-year jumbo mortgage rate	7.09%	6.93%	+0.16
30-year mortgage refinance rate	7.12%	7.03%	+0.09

Rates as of May 22, 2023.

How to find personalized mortgage rates

You can get a personalized mortgage rate by reaching out to your local mortgage broker or using an online calculator. Make sure to consider your current financial situation and your goals when looking for a mortgage.

Things that affect the mortgage rate you might get include: your credit score, down payment, loan-to-value ratio and your debt-to-income ratio. Having a higher credit score, a larger down payment, a low DTI, a low LTV or any combination of those factors can help you get a lower interest rate.

Apart from the mortgage interest rate, factors including closing costs, fees, discount points and taxes might also affect the cost of your house. Be sure to speak with multiple lenders — such as local and national banks, credit unions and online lenders — and comparison-shop to find the best loan for you.

What is a good loan term?

One important thing to consider when choosing a mortgage is the loan term, or payment schedule. The loan terms most commonly offered are 15 years and 30 years, although you can also find 10-, 20- and 40-year mortgages. Mortgages are further divided into fixed-rate and adjustable-rate mortgages. The interest rates in a fixed-rate mortgage are stable for the duration of the loan. Unlike a fixed-rate mortgage, the interest rates for an adjustable-rate mortgage are only set for a certain amount of time (commonly five, seven or 10 years). After that, the rate changes annually based on the market rate.

When deciding between a fixed-rate and adjustable-rate mortgage, you should consider how long you plan to stay in your home. Fixed-rate mortgages might be a better fit for people who plan on staying in a home for a while. Fixed-rate mortgages offer more stability over time in comparison to adjustable-rate mortgages, but adjustable-rate mortgages might offer lower interest rates upfront. If you aren’t planning to keep your new house for more than three to 10 years, though, an adjustable-rate mortgage may give you a better deal. There is no best loan term as an overarching rule; it all depends on your goals and your current financial situation. Make sure to do your research and understand your own priorities when choosing a mortgage.

Source: cnet.com

Apache is functioning normally

May 30, 2023 by Brett Tams

Today we’re going to talk about a “temporary buydown,” the latest effort by the mortgage industry to provide much-needed payment relief to borrowers.

In recent months, mortgage rates effectively doubled, straining affordability and cooling the hot housing market.

These higher rates have also had a big impact on the mortgage industry, which is typically reliant on low rates to fuel its important mortgage refinance business.

Mortgage lenders understand the impact these higher rates have had on borrowers and prospective home buyers, so there’s a good chance you’ll see more of these offers pop up soon.

Let’s discuss how these buydown mortgages work, if they can save you money, and the general pros and cons.

What Is a Temporary Buydown Mortgage?

buydown mortgage

In short, a temporary buydown is a home loan that features a reduced interest rate for a temporary period of time, whether it’s one, two, or three years.

The interest rate may be 2% lower in year one, 1% lower in year two, and then the standard note rate thereafter.

An upfront cost covers these lower monthly payments, with the required funds set aside in a buydown account.

Each month during the temporary buydown period, the borrower makes a reduced monthly payment, with the additional amount released from the buydown account to cover the difference.

This makes monthly payments more affordable during the beginning of the loan term.

Typically, borrowers opt for these buydowns because they expect their income to increase in the near future. Or the buydown is offered by a home builder or home seller to sweeten the deal.

To that end, these buydowns are often paid by a home seller or builder, or perhaps a mortgage lender.

It may also be possible to apply seller concessions toward a temporary mortgage buydown.

Recently, United Wholesale Mortgage (UWM) and CrossCountry Mortgage have introduced temporary buydown programs to offset high mortgage rates.

Types of Temporary Buydown Mortgages

$400,000 loan amount with 2-1 buydown	Interest Rate	Monthly Payment	Monthly Savings	Annual Savings
Year 1	3.5%	$1,796.18	$474.98	$5,699.76
Year 2	4.5%	$2,026.74	$244.42	$2,933.04
Year 3-30	5.5%	$2,271.16	$0	$0

2-1 Buydown

There are several buydown loan options out there, with the “2-1 buydown” perhaps the most common.

As the name suggests, it lowers your interest rate by a full 2% the first year, and 1% the second year.

For example, if you qualified for a rate of 5.5% on a 30-year fixed, your interest rate in year one would be 3.5%.

In year two, your interest rate would rise to 4.5%. And in year three (and beyond) you’d pay the full note rate of 5.5%.

As seen above, a homeowner would have a payment of $2,271.16 per month on a 5.5% mortgage with a $400,000 loan amount.

During year one, they’d save $474.98 per month and $5,699.76 annually.

During year two, they’d save $244.42 per month and $2,933.04 annually.

That’s about $8,600 total, which would need to be earmarked to cover the buydown cost over those two years.

3-2-1 Buydown

There is also a “3-2-1 buydown,” which is perhaps less common given the enormous expense involved.

This type of buydown lowers the interest rate by 3% the first year, 2% the second year, and 1% the third year.

After that, your mortgage rate returns to the note rate for the remainder of the loan term.

So if the note rate were 5.5%, you’d be looking at 2.5%, 3.5%, and 4.5% in years 1-3.

1-0 Buydown

Going the opposite way, you might come across a “1-0 buydown,” which is simply a 1% reduction the first year.

So if the note rate were 5.5%, you’d get a year at 4.5% before the mortgage reverted back to 5.5% for the remainder of the loan term.

In mid-September 2022, Rocket Mortgage launched its so-called “Inflation Buster,” a 1-0 buydown that provides customers with a reduced interest rate during the first 12 months.

For example, instead of a rate of 5.75%, they might get a rate of 4.75% for the first year, with Rocket covering the difference in monthly payment automatically.

temporary buydowns

As you can see, the 2/1 buydown loan is most popular, followed by 1/0, and 3/2/1, per data from Black Knight and Optimal Blue.

Temporary Buydown Rules

Note that temporary buydown periods typically can’t exceed three years. So the options above will likely be the only terms available.

Additionally, the annual increase in mortgage rate is generally capped at 1%, probably to avoid payment shock.

As noted, borrowers still need to qualify at the full note rate in most instances, unless a borrower is expected to see a large increase in future income (for certain loan types).

Buydowns are also only permitted on certain property types, such as primary residences and second homes, with investment properties often prohibited.

But can be used in conjunction with an FHA loan, VA loan, or conforming mortgage backed by Fannie Mae or Freddie Mac.

It may be possible to use a temporary buydown on an adjustable-rate mortgage with the VA or Fannie/Freddie, but not the FHA.

The buydown funds are also not refundable unless the mortgage has been paid off ahead of time, in the case of a refinance or home sale.

If this were to happen, the proceeds would typically go toward paying off the mortgage or be returned to the borrower/lender. Be sure to ask about this!

Mortgage Buydown Pros and Cons

While receiving a reduced mortgage rate the first couple years sounds nice, the upfront cost generally equals the savings.

In other words, you’re not really saving any money, you’re simply allocating funds in a different manner.

Basically, paying upfront instead of monthly, though if someone else is footing the bill, it can be considered a money-saving move.

Also note that mortgage lenders typically still require you to qualify at the actual note rate. So if the post-buydown rate is 5.5%, you need to qualify at that rate, even if you get a 3.5% rate in year one.

In the past, some underwriters may have allowed a lower qualifying rate, but that became a big no-no after the housing crisis in the early 2000s (VA loans might be the exception).

So what’s the point then? Well, as noted, if a third party is covering the cost of the buydown, why not take it?

Or if you have extra funds from a home builder or seller that can’t be used otherwise, or you don’t want to use them toward say the down payment or other closing costs.

But perhaps a better alternative is paying mortgage discount points, which result in a lower interest rate for the entire loan term. This is known as buying down your rate, on a permanent basis.

For example, you might pay one point upfront for an interest rate that is .375% lower for the entire 30-year loan term.

Another option is to go with an adjustable-rate mortgage that offers a fixed-rate period the first five or seven years (5/1 ARM or 7/1 ARM). You actually save money via a lower interest rate.

And in the case of discount points, save money once the breakeven period has passed.

Read more: Temporary vs. Permanent Mortgage Buydowns: Which to Choose and Why

Source: thetruthaboutmortgage.com

Apache is functioning normally

May 29, 2023 by Brett Tams

Just when you thought all hope was lost, mortgage rates appear to be going down again.

It’s been a very tough start to 2021 with regard to mortgage rates, as the popular 30-year fixed climbed from around 2.75% to 3.35% in the span of about 60 days.

This was clearly an unwelcome development for both prospective home buyers and existing homeowners looking to save via refinancing.

It has eroded purchasing power, which was already dwindling thanks to rapidly appreciating property values, and has pushed millions “out of the money” for a refinance.

But now it seems as if things are beginning to shift to the better, which could reopen the refinance conversation and/or change your home buying presets.

The Mortgage Rate Trend Has Not Been Our Friend Lately

mortgage rate trend

Just take a look at this chart from Optimal Blue, which uses real-time lock data from approximately 35% of the mortgage market.

It tracks conforming 30-year fixed mortgage rates, which are home loans backed by Fannie Mae and Freddie Mac, the most common loan type out there.

As you can see, 2021 started off with a bit of a bang, followed by an even bigger bang in February, which continued to worsen all throughout March.

The 30-year fixed seems to have peaked around 3.353% in late March, and since then has begun to trickle lower.

Today, conforming 30-year fixed rates are closer to 3.287%, which means borrowers might be able to get a rate about an eighth of a percent lower (.125%).

So instead of say 3.375%, 3.25%, or maybe even 3.125% depending on the lender and the closing costs involved.

While not a great deal better yet, it might mark the beginning of a period of downward pressure on rates, which seemed like an impossibility just a week or so ago.

Why Did Mortgage Rates Go Up?

Mortgage rates tend to increase when good news happens
We’ve seen the COVID situation improve markedly this year
And recent jobs reports have been pretty positive as well
This is enough to push interest rates higher, especially since they were so low to begin with

The increase in mortgage rates during the first quarter of 2021 was driven largely by an improving economic picture, coupled with good news related to COVID-19.

We’ve seen relatively positive jobs reports and news of millions of Americans receiving their vaccinations, both of which signal a return to normality.

Those developments also explain why the stock market has reached new all-time highs at a time that seems so uncertain.

Ultimately, when things look/get better on the wider economic front, stocks go up and bond prices fall.

When bond prices fall, their yields go up, and so do interest rates. The 10-year Treasury tracks 30-year mortgage rates the best because it attracts similar investors.

It started the year around 1% and surged to nearly 1.75% before beginning to fall in the past couple weeks.

Long-term fixed mortgage rates followed suit, which explains the movement you might have seen over the past few months if shopping for a home loan.

But now we’re beginning to see a reversal, with 10-year yields now down to around 1.65%. It’s not a huge move lower, but any move lower is more than welcome news at the moment.

This counters the rather hilarious unsolicited phone call I received from an unnamed loan officer yesterday warning me that rates would be back to the 4-5% range this summer!

Why Might Mortgage Rates Move Lower?

First we may have simply overshot the mark and a small correction is in store for rates
Fewer mortgage applications means lenders may have to lower rates to attract more business
The Fed has continued to signal a very accommodating interest rate environment for 2021
Who knows what surprises are in store for 2021 that could dampen the mood rather quickly

So we have an idea of why mortgage rates went up, but why might they move lower?

Well, I often compare mortgage rates to stocks and other investments, which can change in value over time.

One day, stocks might go up, and the next day they may fall. When we broaden the time horizon, we may see long periods where the stock market rises or falls.

It’s not uncommon to get complacent and watch stocks rise day after day with the expectation that they’ll increase again tomorrow.

This is kind of how things were going for mortgage rates, which appeared to keep moving lower and lower, and even lower after that.

In fact, there were 16 record lows set for mortgage rates in 2020, and one new record low set during the beginning of 2021.

This alone could explain why rates all of a sudden took off like a bottle rocket.

But that’s generally the worst time to panic and lock in your rate, just as it is often the worst time to sell when stocks experience a bad week.

Often, it’s better to remain calm, do nothing, and wait for things to stabilize again.

Those who panicked may have just accepted a higher mortgage rate, while those who chose to float their mortgage rate may have been rewarded for their patience.

Now as to why rates could move lower, part of it could just be cyclical, similar to the stock market, with the first quarter super bad for rates.

We may have simply overshot the mark, and so a small correction might be taking place to get rates back to prior levels (or at least somewhat closer to them).

At the same time, mortgage applications have dropped a ton lately, with volume down for the past five weeks in a row, per the Mortgage Bankers Association (MBA).

Remember, when lenders are less busy, there’s a greater chance they’ll lower rates to drive more business.

In other words, they may have been operating with wider margins when rates were super low, but now they’re willing to make less per loan, knowing competition is a thing again.

That could explain why I’m receiving random calls to refinance my mortgage from unknown phone numbers, complete with a fear-mongering sales pitch.

Also note that mortgage rates tend to be highest in the first half of the year, and then improve in the second half, especially during winter.

Lastly, there are a lot of unanswered questions regarding the ongoing pandemic and the supposed economic recovery taking place, not to mention the millions of borrowers in mortgage forbearance plans.

All of these issues, along with a very accommodative Fed that continues to buy billions in agency mortgage-backed securities each month, could lead to lower mortgage rates over the next several months.

That being said, it’s not as if rates are high at the moment, they’re just not at all-time lows anymore. So don’t get too greedy.

Apache is functioning normally

May 29, 2023 by Brett Tams

For those looking to build their dream home, purchasing land is usually the first big step.

While building a house is far from easy, there are ways for first-time homeowners to make their dreams achievable. Land loans are a great resource, often used in conjunction with a traditional loan. Anyone choosing to build a house is likely to at least consider applying for a land loan.

A land or lot loan is a great financing option for those who have always dreamed of buying land and building their own home.

11 Best Banks for Land Loans

Because land loans typically carry higher interest rates than traditional mortgage loans, it pays to carefully consider the pros and cons of several lenders.

Below we’ve compiled a detailed list of the banks and credit unions offering the best land loans available today. Whatever lender you choose, be sure to check beforehand that they are fully licensed to provide mortgage loans.

The Nationwide Mortgage Licensing System (NMLS) is a centralized database of licensed lenders which you can use as a reference.

1. Atlantic Union Bank

Atlantic Union Bank offers land loans for both residential lots and undeveloped land. The bank is based in Virginia.

There are also separate construction loans available for those interested in financing the construction of a residence. Bear in mind that while Atlantic Union has a strong reputation as lenders, having been in business since 1902, they don’t have services like loan calculators, interest rate guidelines, or down payment information on their website.

For more information on a land loan with Atlantic, you’ll need to call them or visit a local branch to speak about a land loan.

2. Old National Bank

Old National Bank is headquartered in Indiana, and has been in operation since 1834. They offer lending products and services to residents of Indiana, Minnesota, Wisconsin, Michigan, and Kentucky. Old National has two different types of financing for land on offer, depending on the size of the property you’re interested in:

Lot Loans are designed to finance land purchases of no more than 5 acres, requiring a 20% down payment.
Land Loans are for larger property, designed to finance land purchases between 5 and 25 acres. These loans come with a minimum down payment of 35%.

Both land and lot loans with Old National will carry various interest rates and repayment terms. You can get either of these loan types for both improved and unimproved land, and there is no obligation to immediately begin building once a loan is secured.

Old National Bank also has around 250 brick-and-mortar locations since merging with First Midwest Bank. If visiting a local branch to speak with a loan officer is your preference, you shouldn’t have to travel too far.

On the other hand, you also have the option of using Old National’s online loan calculator and online loan application service, if visiting a local branch isn’t convenient.

3. Mountain America Credit Union

Mountain America Credit Union is a federally chartered credit union regulated by the National Credit Union Administration (NCUA) and headquartered in Sandy, Utah. They locations across Arizona, Idaho, Utah, Montana, Nevada, and New Mexico.

Mountain America’s lot loans are available with 85% financing on approved credit, fully amortizing fixed-rate and balloon options, and an easy online application process. The loans are designed to be easily converted to a construction loan, ensuring that you can move forward with your home building plans when you’re ready.

4. WaFd Bank

WaFd, or Washington Federal, offers bank loans for improved land up to the value of $700,000, without any immediate obligations to build.

You can use their online loan calculator to receive an estimate of the interest rates you can expect for a land loan. These estimates are based on your credit score, development plans and the specifications of your desired property.

The minimum down payments and interest rates will vary depending on your ideal loan term, as well as all the other details of your application.

You can apply directly for loans through their online portal, as well as in person at a bank branch. Land loans are available from WaFd Bank only in the following states: Washington, Idaho, Nevada, New Mexico, Oregon, Texas and Utah.

5. Banner Bank

Banner Bank is active in the states of Idaho, Washington, Oregon, and California. They offer financing for purchasing both improved and unimproved land. Banner allows customers to borrow up to 75% of a property’s purchase price, and they also claim to bring competitive interest rates and fees.

All loans with Banner Bank are approved in-house, which means a streamlined credit score check and loan approval process.

If you do apply for a loan with Banner Bank, you also have the option of locking in a fixed interest rate or a flexible rate. Banner also offers financing for construction and personal loans.

6. California Bank & Trust

Customers with California Bank and Trust can potentially avail of both a land loan and a construction loan in one. The bank offers financing for up to 60% of the lot purchase value, along with several loan options.

The option to choose either a single or dual-purpose loan, which can cover both land purchase and construction of a home, makes California Bank & Trust an attractive lender. This is a great option for those looking to save both time and money.

You can apply for a loan online, over the phone, or in person at a local branch.

7. Randolph-Brooks Federal Credit Union

Randolph-Brooks Federal Credit Union is not your typical financial institution. As a financial cooperative, its sole mission is to help members save time, save money, and earn money. Over the years, the credit union has expanded its reach to over 1 million members in Texas and beyond, with a strong presence in Austin, Corpus Christi, Dallas-Fort Worth, and San Antonio.

With over 60 branches dedicated to serving members and the community, RBFCU offers a range of land loan benefits and features, including term options up to 15 years, free 60-day rate lock, and up to 90% financing.

And the best part? There are no building requirements from the lender, so you can have the freedom to build your dream home the way you want. Set up automatic payments and let RBFCU help you make your land ownership dreams a reality.

8. Citizens Bank & Trust

Citizens Bank & Trust is a North Alabama-based institution that’s committed to providing a hassle-free lending experience. What’s more, you can roll your loan into a permanent one, saving you on closing costs.

With local decision-making and processing, you’ll get the personalized attention you deserve, while a streamlined application process ensures you get your funds when you need them. You can experience a stress-free borrowing experience when you choose Citizens Bank & Trust for your land loan needs.

9. Alpine Bank

Alpine Bank is active in Colorado, offering financial services including land loans. Specifically, they offer loans for both lot and new constructions, with a maximum loan to value amount of 75% for land classified as improved.

Alpine Bank doesn’t offer lending details on their website. You can use their website to connect with lending experts in your county. You can also reach out for more loan information online, over the phone, or in person at one of their local bank branches.

10. First Bank & Trust

If you’re looking to buy land or a lot and build your dream home, First Bank and Trust Company can help. Headquartered in southwest Virginia, with additional locations in Tennessee, North Carolina, and Virginia, the bank is committed to helping you realize your homeownership goals.

With a range of lot and land loans, you can choose the financing option that’s right for you, while enjoying competitive rates and flexible terms. Whether you’re looking to build your dream home or invest in a piece of land, First Bank and Trust Company has the financing options you need to make it happen.

11. First Hawaiian Bank

First Hawaiian Bank offers land loan options designed for those who are ready to buy land but not quite ready to build. With 2- and 3-year terms available and no prepayment penalty, you can secure the land you want without worrying about costly fees. And with interim financing available to purchase a vacant lot at residential pricing, you can lock down the land you need to bring your vision to life.

Best of all, your FHB land loan can be refinanced into a construction-to-permanent loan with reduced fees, making it easier than ever to get the financing you need to build your dream home.

What are land loans?

Land loans are loan products designed to help individuals and businesses purchase land for development. A bank, credit union, or online lender can offer specific loans for those interested in buying land. Land loans are also known as ‘lot loans’.

Similar to a mortgage loan, land loans provide individuals and small businesses the opportunity to finance the purchase of land for many purposes, such as investment, agriculture, recreation, or development.

However, because these types of loan are considered riskier for lenders, they typically come with a higher interest rate compared to a mortgage loan. In addition, the conditions of the loan will depend on the type of land being purchased, as well as what the land will be used for.

Let’s take a closer look at the types of land that a land loan can help finance.

Types of Land Classification

Your chances of obtaining financing for land will depend partly on the type of land you want to purchase. In general, lenders who offer land loans will view developed land as less of a risk than undeveloped land.

When it comes to land loans, there are three primary types of land considered for financing.

Raw Land

‘Raw land’ is the first classification and refers to completely undeveloped, rural land. Think no buildings, electricity or drainage system. This is the most difficult land to obtain financing for because land loan lenders view it as the greatest risk of abandonment.

As a result, if you plan to apply for a land loan for raw land, you’ll need to demonstrate that you’ve got a detailed plan for development. Showing lenders that you’re competent and dedicated to the project will help you navigate the lending market.

Although the purchase price of raw land is often cheaper than land that is developed, a raw land loan will come with higher rates. You may also be required to put up a more substantial down payment.

Unimproved Land

‘Unimproved land’ is a step up from raw land, and covers a broad variety of possibilities. Unimproved land will often be land that was once developed, or has seen failed attempts at development in the past. In some cases unimproved land will have some limited access to utilities and amenities, but will need significant repair and refurbishing.

An unimproved land loan can also be difficult to get, even though it poses less risk compared to raw land. Again, having a detailed plan and being aware of the challenges at hand will be a huge help when negotiating with lenders. A large down payment and a strong credit score will also be helpful.

While lenders tend to view unimproved land loans as less risky than raw land, it is still common for rates to be a fair bit higher compared to traditional mortgage rates, for example.

Improved Land Loan

‘Improved land’ typically has decent or good access to utilities, roads and water. Because improved land is the most developed land type, it almost always comes with a higher price tag. On the other hand, this means that interest rates will be significantly lower compared to raw or unimproved land loans. You’ll also find more affordable down payments for developed lots.

For most aspiring homeowners, purchasing land that is already developed with access to basic amenities is the ideal. This allows them to immediately get to work building a house, whereas having to develop land first could add at least another year to their construction project.

How to Apply for a Land Loan

If you want to buy land and build your dream home, you’ll probably want to apply for a land loan. Land loan applying isn’t complex, and land loans work the same as many other types of loan. Here are the steps involved:

Find a Plot

You should start by first identifying the plot of land you want to buy. It helps to have a few options chosen in advance. For example, in the event that you can’t afford to find a good lending option for your first choice, you can quickly move on to an alternative instead.

Draw up a Development Plan

The next step is to make a development plan for each plot that you have on your shortlist. You may need or want to hire professional help to create a solid plan. Try to include as much detail as possible, without overextending yourself or wasting too much time and money.

When it comes to development and construction plans, both an estimated timeframe and overall cost range are the most important details. A good plan will help you negotiate the best rates with a lender.

Find a Lender

Once your development plan is ready, it’s time to seek potential lenders. Depending on the type of development you’re proposing, as well as the type of land you want to buy, it may take some time to find willing lenders.

Be prepared to also take some time to consider more than one loan offer. Ideally, you can compare multiple lenders, and use a pre-approved quote from at least one lender to negotiate against others.

Complete the Application Process

Once you’ve chosen a lender and been approved for your loan, you’ll be guided through the lender’s application process. The majority of lenders will require information such as your development plan, a credit check, and personal information.

You might also need to provide details on things like zoning considerations, utilities access and land use restrictions, where relevant.

Alternative Land Financing Options

In addition to seeking a land or construction loan, there are several other types of loans and financing options available.

USDA Loans

If you’re looking to own land and build a home in a rural area, you may be eligible for a USDA loan. The U.S. Department of Agriculture offers loans that may assist low and moderate income families in finding a new home. USDA Section 523 loans are for wanting to purchase land to develop, and Section 524 loans are for financing new constructions by contractors.

While it isn’t easy to qualify for a USDA loan, the benefit is they require no down payment and the interest rates are low. USDA loans must be settled within two years, however, so there are no long term options.

FHA Loans

Another government-funded product, FHA loans are tailored towards those wanting to buy land and quickly build a home. The Federal Housing Administration insures these loans, protecting FHA-approved lenders from risk.

FHA loans are not available for land purchase alone, but for those intending to build a home on as well as land. FHA loans are sometimes granted in conjunction with construction loans, too. If you’re eligible for one of these loans, you’ll likely have a lower minimum down payment, but potentially higher interest rates.

Home Equity Loans

Home equity loans may be an appealing alternative to land loans for some homeowners. If you already own a property and have good credit standing, this kind of loan might be a good fit. A home equity loan acts as a second mortgage, and will essentially convert your equity into collateral for a new loan to fund your purchase.

Cash-Out Refinancing

Cash-out refinancing involves homeowners refinancing their homes to increase equity. This type of refinancing is essentially paying off your current mortgage to secure another mortgage, but with a lower interest rate and easier monthly payments.

Once the remortgaging is made official, your bank or financial institution will issue you a check based on the equity in your property. You can then use this payment to fund your land purchase.

SBA Loans

The Small Business Administration (SBA) offers loans to small business owners from the 504 loan program.

These loans are best suited to the purchase of real estate for business reasons, so they are not ideal for regular homeowners. However, if you’re looking for land to purchase to grow your business, you might want to consider an SBA loan.

Generally, the Small Business Administration will cover 40% of the purchase value, with 10% from the borrower and another lender of choice providing the other half of the loan. The terms and rates on SBA loans vary depending on the lender you choose to fund 50% of the land purchase.

Seller Financing

If you’re lucky, you may be able to obtain financing directly from the landowner you want to buy from. Also known as land contracts, these types of loans involve the buyer essentially taking out a loan directly from the seller, often with a substantial down payment.

Seller financing also tends to come with less than competitive interest rates. For those who struggle to qualify for a traditional mortgage or financing, seller financing can often be a great, but more costly, alternative.

Frequently Asked Questions

What is the best loan for buying land?

The best loan option for buying land depends on your circumstances. While improved land loans may seem ideal, the reality is there are multiple loan options to choose from.

Your credit score, debt-to-income ratio, and the condition of the land you wish to purchase are all factors that can influence which type of financing will suit you best.

Is it difficult to get a loan for land?

It’s true that obtaining loan financing for the purchase of land isn’t as easy as getting a regular personal loan. However, there are lenders out there with experience financing land purchases. As with any loan, the bottom line will be your credit score, as well as the size of your down payment. The nature of the land in question is also a primary factor.

If you can’t qualify for traditional financing options, there are alternatives such as USDA loans, FHA loans and more to consider.

Source: crediful.com

Apache is functioning normally

May 29, 2023 by Brett Tams

Today we’re going to talk about the “home equity loan,” which is quickly becoming all the rage with mortgage rates so much higher.

In short, many homeowners have first mortgages with fixed interest rates in the 2-3% range.

Now that a typical 30-year fixed is closer to 6%, these homeowners don’t want to refinance and lose that rate in the process.

But if they still want to access their valuable (and plentiful) home equity, they can do so via a second mortgage.

Two popular options are the home equity line of credit (HELOC) and the home equity loan, the latter of which features a fixed interest rate and the ability to pull out a lump sum of cash from your home.

What Is a Home Equity Loan?

A home equity loan allows you to borrow against the value of your property to access needed cash.

That cash can then be used to pay for things such as home improvements, to pay off other higher-interest loans, fund a down payment for another home purchase, pay for college tuition, and more.

Ultimately, you can use the proceeds for anything you wish. The home equity loan simply allows you to tap into your accrued home equity without selling the underlying property.

Of course, like a first mortgage, you must pay back the loan via monthly payments until it is paid in full, refinanced, or the property sold.

Similarly, you can obtain a home equity loan from a bank, credit union, or direct mortgage lender.

The application process is comparable, in that you must provide income, employment, and asset documentation, but it’s typically faster and less paperwork intensive.

Additionally, your credit report will be pulled to determine your credit scores and overall creditworthiness.

Home Equity Loan Example

Property Value $650,000	First Mortgage	Home Equity Loan	Cash Out Refinance
Interest Rate	3.25%	6.75%	5.75%
Loan Amount	$450,000	$70,000	$520,000
Monthly Payment	$1,958.43	$532.25	$3,034.58
Total Cost		$2,490.68	$3,034.58

Home equity loans are typically second mortgages, taken out by an existing homeowner who already has a first mortgage.

This allows the borrower to access additional funds while maintaining the favorable terms of their first mortgage (and continue to pay it off on schedule).

Imagine a homeowner owns a property valued at $650,000 and has an existing home loan with an outstanding balance of $450,000. Their interest rate is 3.25% on a 30-year fixed.

Obviously they don’t want to lose that low, low rate, so they turn to a home equity product instead.

They would have $200,000 in home equity, though not all of it is necessarily available to tap into.

Most home equity loan lenders will limit how much you can borrow to 80% or 90% of your home’s value.

That means a maximum loan amount of $135,000 if maxed out at 90%.

But we’ll pretend you take out just $70,000, or 80% of your property’s appraised value.

Assuming the loan term is 20 years and the interest rate is 6.75%, you’d have a monthly payment of $532.25.

The loan would amortize like a traditional mortgage, with equal monthly payments until maturity.

Each payment would consist of a principal and interest amount, which would change as the loan was paid off.

You would make this payment each month alongside your first mortgage payment, but would now have an additional $70,000 in your bank account.

When we add the first mortgage payment of $1,958.43 we get a total monthly of $2,490.68, well below a potential cash out refinance monthly of $3,034.58.

Because the existing first mortgage has such a low rate, it makes sense to open a second mortgage with a slightly higher rate.

Do Home Equity Loans Have Fixed Rates?

A true home equity loan should feature a fixed interest rate. In other words, the rate shouldn’t change for the entire loan term.

This differs from a HELOC, which features a variable interest rate that changes whenever the prime rate moves up or down.

To that end, a home equity loan provides safety and stability, similar to a 30-year fixed mortgage.

However, home equity loans have higher interest rates to compensate for that lack of an adjustment.

Simply put, HELOC interest rates will be lower than comparable home equity loan interest rates because they may adjust higher.

You effectively pay a premium for a locked-in interest rate on a home equity loan. How much higher depends on the lender in question and your individual loan attributes.

Home Equity Loan Rates

Similar to mortgage rates, home equity loan rates can and will vary by lender. So it’s imperative to shop around as you would a first mortgage.

Additionally, rates will be strongly dictated by the attributes of your loan. For example, a higher combined loan-to-value (CLTV) coupled with a lower credit score will equate to a higher rate.

Conversely, a borrower with excellent credit (760+ FICO) who only borrows up to 80% or less of their home’s value may qualify for a much lower rate.

Also keep in mind that interest rates will be higher on second homes and investment properties. And maximum CLTVs will likely be lower as well.

All that being said, at the moment home equity loan rates may range from as low as 5% to as high as 12% or more.

As a rule of thumb, you should expect a rate 1-2%+ higher than a comparable 30-year fixed given the increased risk of a second mortgage.

But this spread can shrink or widen depending on market conditions.

Do Home Equity Loans Require a Down Payment?

Now let’s discuss some home equity loan requirements.

While no down payment is required on a home equity loan, since you already own the property, a required amount of home equity is necessary to get approved.

After all, the home equity loan relies upon your property as collateral, and if you don’t have any equity, there’s nothing to lend against.

In other words, you need to have a certain percentage of home equity available to get a home equity loan.

Typically, this is at least 20% of your property’s appraised value to allow for an additional loan against the property.

For example, if you own a home valued at $500,000, you’ll want to have at least $100,000 available.

This would mean an existing first mortgage with a balance of $400,000 or less to allow for more borrowing capacity.

Assuming the home equity loan only allowed for a CLTV of 80%, you’d need even more equity.

For example, a $350,000 existing first mortgage that would allow you to borrow an additional $50,000 via the home equity loan.

Do Home Equity Loans Require an Appraisal?

While it will depend on the company, an appraisal isn’t always required for a home equity loan.

The same is even true of first mortgages these days thanks to advancements in technology.

This may save you some money and make the home equity loan process significantly faster.

However, the bank or lender will still need to determine the value of the property to ensure it is a sound lending decision.

Whether you pay for an appraisal, or are paid a visit by a human appraiser, are entirely different questions.

Either way, understand that the company offering the home equity loan will base the loan amount and APR on some kind of appraised value.

This allows them to determine a LTV or CLTV for which to base pricing adjustments, interest rates, maximum loan amount, and so on.

Do Home Equity Loans Have Closing Costs?

As with the appraisal question, it may depend on the company offering the home equity loan.

Some charge origination fees and other closing costs, while others do not charge any fees.

For example, Discover Home Loans says it doesn’t charge appraisal fees or origination fees.

However, it’s important to look at the big picture, aka the interest rate, to determine what the best deal is.

Similar to a first mortgage, closing costs may not be charged, but the interest rate could be higher as a result.

You would then need to weigh the upfront cost versus monthly interest expense to determine what’s the better deal.

Also note that some lenders may ask that you reimburse them for any waived closing costs if you pay off your home equity loan within 36 months.

This is sort of like a prepayment penalty, though there may be a cap and certain states are exempt.

Just something to keep in mind if you pay off your loan ahead of schedule.

Some home equity loans may have a nominal annual fee, such as $50 per year. And if your loan amount is quite large, title insurance could even be required.

Minimum Credit Score for a Home Equity Loan

Chances are you’ll need at least a 620 FICO score to get approved for a home equity loan these days.

Some lenders may even require a higher credit score, such as a 660 FICO score, in order to get approved.

Also note that your borrowing capacity may be limited by your credit score.

For example, if you have a 620 FICO score, you might only be able to borrow up to 80% of your home’s value.

Meanwhile, a borrower with a 660 FICO might have access to up to 90% of their home’s value.

Additionally, the interest rate will also be dictated by your credit score.

Like a first mortgage, the higher your score, the lower the interest rate. And vice versa.

Do Home Equity Loans Affect Your Credit?

Yes, like a first mortgage, the home equity loan will appear on your credit report.

This includes when the loan was taken out, the outstanding loan balance, and the monthly payment.

Your payment history on the loan will also be tracked over time, which can help or hurt you.

Obviously, if you miss a payment (generally by more than 30 days) it can negatively impact your credit score.

Because it’s a home loan, the impact can be quite severe.

Conversely, if you exhibit a lengthy history of on-time payments, it can bolster your credit scores over time.

How to Get a Home Equity Loan

Similar to a mortgage, many banks and independent mortgage lenders offer home equity loans.

However, they aren’t as readily available as first mortgages, so you’ll need to dig a little deeper.

Simply put, just about all mortgage companies offer 30-year fixed mortgages, but only a handful offer home equity loans.

Chase and Wells Fargo, two of the biggest mortgage lenders out there, don’t offer them at the moment.

That could change as they become more popular, but chances are they’ll be a bit harder to come by.

Additionally, because the terms of home equity loans can vary quite a bit, it’s important to speak to several different companies during your search.

For example, some lenders may only offer home equity loans with loan terms as long as 20 years, or with a minimum credit score of 660. Or their loan amounts might be too small for your needs.

The Rocket Mortgage home equity loan recently launched, but requires a median qualifying FICO score of 680 or higher.

Others come with unique options. The PNC home equity loan allows borrowers to switch between a fixed and variable rate. In that sense, it works as a home equity loan and a HELOC in one loan.

Because this type of product can be a lot more diverse than a standard 30-year fixed, shopping around is probably a good idea.

Rates can also range quite a bit from lender to lender, so put in the time to speak with a local credit union, bank, online lenders, and even mortgage brokers.

Home Equity Loan Advantages

Fixed interest rate
Flexible loan terms (5 – 20 years)
Can borrow large amounts
Little or no closing costs
Fast approvals and fundings
Potential tax write-off
Doesn’t disrupt your first mortgage (e.g. a low rate)

Home Equity Loan Disadvantages

Entire loan amount must be borrowed upfront
You pay interest on the full lump sum
No additional draws permitted
Interest rates higher than HELOCs and first mortgages
Have to manage multiple loans
May have annual fee
Potential early closure fees

Are Home Equity Loans a Good Idea?

As seen in my example above, a home equity loan could be a great idea versus a cash out refinance.

But that assumes you need additional cash and your existing first mortgage features a super low interest rate that is fixed.

This might not always be the case, and it will also depend on the rate you receive on the home equity loan.

Additionally, there might be other options to consider instead of a HEL, such as a HELOC or even a 0% APR credit card.

In the past, I’ve made the argument that a credit card could be used to pay for home renovations.

At the end of the day, a home equity loan is still a loan, and likely an additional loan taken out on top of whatever you’re already paying.

So you need to consider if you really need more cash and if tapping your home equity is the way to go.

Read more: Cash Out vs. HELOC vs. Home Equity Loan

Source: thetruthaboutmortgage.com

Apache is functioning normally

May 29, 2023 by Brett Tams

A credit union is a nonprofit institution that’s owned by its members. Compared to a traditional bank, a credit union tends to offer more personalized service.

You can turn to a credit union for a variety of financial products, like checking and savings accounts, credit cards, car loans, and mortgages. Some regional and federal credit unions also offer wealth management services and other extras.

A typical credit union only accepts members who live in a specific region or work for an eligible employer. For example, they may require that you’re a resident of Atlanta, Georgia or work as a teacher.

The good news is some credit unions require less and make it easy for just about anyone to join. If you’d like to join a credit union but don’t want to worry about the strict membership requirements at most institutions, you’ve come to the right place.

38 Best Credit Unions Anyone Can Join

There are hundreds of credit unions that anyone can join, but we’ve done the heavy lifting and found the best ones for you. The credit unions below, which are overseen by the National Credit Union Administration (NCUA) may be an option for you, regardless of what you do for a living or where you’re located.

Just keep in mind that you may have to make a donation, join an organization, live in a certain state, or meet some other eligibility requirement. We encourage you to explore this lengthy to list of credit unions anyone can join so you can hone in on the ideal credit union for your unique situation.

1. Alliant Credit Union

Alliant Credit Union made its debut in 1935 to serve the employees of United Airlines. It stands out for it high-interest savings and checking accounts with low minimum opening deposits as well as excellent customer service.

You’ll also receive access to more than 80,000 free ATMs across the U.S. and get reimbursed up to $20 in out-of-network ATM charges per month. Since it only has two brick-and-mortar locations, you should feel comfortable with online banking. If you’d like to join Alliant Credit Union, make a $5 donation to Foster Care to Success.

2. Connexus Credit Union

Connexus Credit Union was founded in 1935 and has a widespread presence in Wisconsin as well as more than 54,000 ATMs across the country. It couldn’t be easier to join the credit union as all you have to do is pay a one-time $5 fee to the Connexus Association, which supports financial education through college scholarships.

As a member, you can open one of its three checking options with high APYs and a traditional savings account or one that’s specifically designed for the holidays.

3. Pentagon Federal Credit Union

Pentagon Federal Credit Union, or PenFed, was founded in 1935 as a credit union for military and civilian government. Today, this Virginia-based credit union has opened it doors to anyone as long as they open a savings account and deposit a minimum of $5. It offers two savings accounts, including the Regular Savings and Premium Online Savings.

In addition, you can find checking accounts, CDs, and money market accounts. Other products include Coverdell Education Savings Certificates, IRAs, credit cards, mortgages, home equity loans, and student loans. Plus, you can enjoy modern perks like mobile check deposits, online bill pay, and instant transfers.

4. First Tech Federal Credit Union

First Tech Federal Credit Union is headquartered in California. The credit union offers many benefits, such as excellent customer service, many branches throughout the U.S. and Puerto Rico, online banking, and mobile banking.

It also has the Dividend Rewards Checking Account, which gives you 1.00% APY on balances below $1,000. You don’t have to live in California to join as long as you donate to a nonprofit called the Financial Fitness Association.

5. Consumers Credit Union

Consumers Credit Union was established in 1951 as a local credit union. Based in Illinois, it’s one of the largest credit unions in the state with over 100,000 members and more than $1.2 billion in assets.

You can join it, even if you don’t live in Illinois. All you have to do is donate the $5 membership free to an affiliated nonprofit. You can open almost all of its accounts online, except for the checking accounts and IRAs. The credit union also offers a high-yield checking account that offers high interest if you meet certain criteria.

6. Langley Federal Credit Union

Langley Federal Credit Union is based in Virginia and made its inception in 1936. At that time, members of the National Advisory Committee for Aeronautics, the predecessor to NASA, chartered the credit union.

Today, Langley offers membership to anyone who pays a fee to support an important cause in Virginia and deposits at least $5 into a savings account. You can choose from a checking account without a monthly fee, a variety of no-fee savings accounts with competitive interest compounds monthly, and Visa Cards with cash back rewards.

7. Lake Michigan Credit Union

Lake Michigan Credit Union made its debut in 1933 by a group of teachers. Headquartered in Grand Rapids, Michigan, it has 51 branches in Michigan and southwest Florida. Since it’s part of the Allpoint ATM network, members can enjoy free access to more than 55,000 free ATM.

To join, donate $5 to the ALS Foundation and deposit $5 into a Member Savings account. Once you do, you can earn perks through the MORE rewards program and redeem them for complimentary checks and free out-of-network ATM transactions.

You may also open the free, no frills Max Checking account. Note that the Member Savings account, which you must open to become a member, requires a minimum daily balance of $300 or you’ll be charged a $5 monthly fee.

8. Lafayette Federal Credit Union

Lafayette Federal Credit Union was founded in 1935 as an alternative to traditional banks. It offers numerous perks, like no minimum balance requirement or monthly maintenance fees, online banking, mobile deposits, free direct deposit, and special discounts.

You can join it if you live, work, worship, or attend school in Washington D.C. If you live outside the D.C. area, you may still become a member as long as you invest in a lifetime Home Ownership Financial Literacy Council (HOFLC) membership for only $10. This nonprofit focuses on helping consumers navigate the path to homeownership.

9. Affinity Plus Federal Credit Union

Affinity Plus Federal Credit Union has 26 branch locations across Minnesota. APFCU offers MyPlus Rewards that gives you points if you keep a certain amount of money in your bank account or use its debit or credit card.

To be eligible to join, all you have to do is donate $25 to the Affinity Plus Foundation and open a basic savings account. If you live and work in Minnesota or have a family member in the state, there are other ways to become a member.

10. Chevron Credit Union

Chevron Credit Union has been around since 1935 and has 19 branches that span six states, including California, Louisiana, Mississippi, Texas, Utah and Virginia. It operates under two brands: Chevron Federal Credit Union and Spectrum Credit Union.

To become a member, join one of its nonprofit partner organizations, such as the Contra Costa County Historical Society. You’ll also need to deposit $25 into a primary savings account and maintain a $25 minimum balance.

Chevron also offers a second chance checking account called New Solutions for those who need help rebuilding their banking history.

11. Ascend Credit Union

Since its inception in 1951, Ascend Credit Union has offered a variety of products, like checking and savings accounts, a money market account, Christmas Club account, youth accounts, credit cards, and loans.

If you’re interested in these services, join The Nature Conservancy, Tennessee Chapter and you’ll be eligible automatically. Note that there is a one-time fee of $25.

12. Hope Credit Union

Hope Credit Union is a black-owned credit union that was organized in 1995 by the Anderson United Methodist Church in Mississippi. You can join if you pay a $10 membership fee and show a foreign passport, permanent resident card, or Matricula Consular. Plus, you may use an ITIN number instead of a Social Security number.

Hope Credit Union provides a number of personal bank accounts, business banking accounts, and transformational deposits. With its transformational deposits, you can participate in socially responsible investing.

13. Boeing Employees Credit Union

Boeing Employees Credit Union, or BECU, was established in 1935 for Boeing employees and currently caters to more than 1 million members. But despite its name, you don’t have to work at Boeing to join.

Its products and services are available to you if you become a member or donor to the KEXP, which is a nonprofit art organization or the Sea Hawkers Central Council. The most noteworthy benefit of joining is the first-time homebuyer grant in which you can receive $7,500 toward your down payment and closing costs.

14. Hiway Credit Union

Hiway Credit Union made its debut in 1931 to serve employees of the Minnesota Department of Transportation. It offers a free checking account with no monthly fee or minimum balance requirements, a free money market account with a $500 minimum deposit, credit cards, and loans.

You can qualify for a Hiway Federal Credit Union membership if you donate to the Minnesota Recreation and Park Foundation for $10 per year or the Association of the U.S. Army, which costs $40 for two years.

15. GreenState Credit Union

GreenState Credit Union was founded in 1938. It provides its members with personal accounts, business accounts, credit cards, loans insurance, wealth management services, and more.

GreenState was named one of the fastest growing credit unions in 2021. As long as you live or work in the state of Iowa, you can become a member and take advantage of its services without any issues.

16. Cascade Credit Union

Cascade Credit Union made its debut in 1952 to serve employees of the Cascade Division of the Great Northern Railway. Today, it’s open to many people and offers great perks like members-only sweepstakes, competitive rates, online banking tools, financial counseling, and group insurance benefits.

If you’d like to join, simply become a member of the Great Northern & Cascade Railway Association (GNCR) and pay an annual membership cost of $40. The credit union can help you fill out your application online or in-person at a local branch.

17. Wildfire Credit Union

Wildfire Credit Union began in 1937 as Saginaw Telephone Employees Credit Union, its original credit union name. Its first location was in the basement of the home of Hank Kosk, the credit union’s treasurer.

After some office upgrades, the credit union opened the doors to its current location on Bay Road in Saginaw and merged with Flint Telephone Employees Credit Union that same year. Today, Wildfire Credit Union offers several deposit accounts as well as personal banking and business banking services. You can join if you live, work, worship, or attend school in Michigan.

18. Nextmark Credit Union

Nextmark Credit Union made its debut in 1958. Its offerings include personal and business checking, home equity loans, personal loans, credit cards, gift cards, and more.

To join, you must live in a qualifying county in Virginia or make a donation to Herndon Elementary PTA, a Title I school.

19. Technology Credit Union

Technology Credit Union, or Tech CU, was established in 1960. It’s based in Silicon Valley and provides its members with no shortage of benefits. These include competitive rates, online banking, access to fee-free ATMs, free credit score monitoring, conference room space, and easy online appointment booking. To become a member, join Financial Fitness Association for only $8.

20. Veridian Credit Union

Veridian Credit Union was established in 1934. Most of its members are those who live or work in Iowa or certain counties of Nebraska. However, it’s open to anyone who is a registered user of Dwolla, a financial technology company. This means you can join as long as you sign up for a personal account at Dwolla.

You’ll also need to open a savings account and deposit at least $5. If you’re already a member of a credit union or bank but would like to switch to Veridian Credit Union, the switch kit may be helpful.

21. Harborstone Credit Union

Harborstone Credit Union’s roots date back to 1955, when it was known as McChord Federal Credit Union and served airmen on the McChord Air Force Base. In 1996, the credit union expanded its membership to anyone in the state of Washington and changed its name as a result.

As long as you live, work, or worship in Washington, you may join Harborstone Credit Union and enjoy a variety of financial products and digital tools.

22. NASA Federal Credit Union

NASA Federal Credit Union began in 1949 to serve NASA employees. Since then, it’s grown to more than 177,000 members. While the credit union is headquartered in Upper Marlboro, Massachusetts, there are 12 branches in Maryland, Virginia, and Washington, DC.

Its product lineup includes a simple checking account with no minimum opening deposit, a savings account with a great rate, and several CDs. You can also monitor your credit score and make deposits with the mobile app. If you don’t work for NASA, you can still join. Simply sign up for a one-year membership at the National Space Society (NSS).

Hanscom Federal Credit Union opened in 1953. The credit union has over 20 branches in and around Boston as well as one in McLean, Virginia. It offers fee-free checking accounts, savings accounts with rewards, credit cards, and loans.

To join, you’ll need to support one of its partner organizations, such as the Burlington Players, a volunteer theater group. In addition, you’ll be required to deposit $25 into a free primary savings account.

24. Pen Air Federal Credit Union

Pen Air Federal Credit Union was founded in 1936 to support civil service employees of Naval Air Station Pensacola. It has 16 locations in northwest Florida and southeast Alabama. You may be surprised to learn that you don’t have to be an active duty or retired military member to join.

You’ll be able to take advantage of Pen Air Federal Credit Union if you become a member of the Friends of the Navy-Marine Corps Relief Society and deposit a minimum of $25 into a savings account. As a member, you can enjoy the Pen Air Platinum Mastercard, Share Savings account with the Round It program, and more.

25. State Department Federal Credit Union

State Department Federal Credit Union was founded in 1935. To join, you can become a member of the American Consumer Council for $8. This is a non-profit organization with a focus on consumer education and financial literacy.

The State Department Credit Union offers a long list of products and services, including basic, advantage, and privilege checking, a money market account, share certificate accounts, individual retirement accounts (IRAs), credit cards, and loans.

26. United Nations Federal Credit Union

United Nations Credit Union made its debut in 1947. As long as you join the United Nations Association of the United States of America, you can become a member.

UNFCU has a vast product lineup that includes a checking account, membership savings account, credit cards, debit cards, and loans, like car loans and debt consolidation loans.

Other membership perks include loyalty rewards, credit card rewards, and the member referral program.

27. Premier Members Credit Union

Premier Members Credit Union was established in 1959 for members of the Boulder Valley School District. You’re eligible to join if you make a donation to Impact on Education, a charity in the Boulder Valley School District, and open an online savings account or youth savings account.

As a member, you can expect perks, such as high interest rates on checking accounts, no monthly service fee, no overdraft fees, and free overdraft protection. The credit union also offers an extensive network of branches and ATMs for your convenience.

28. SRI Federal Credit Union

SRI Federal Credit Union is headquartered in Menlo Park, California. It was founded in 1957 and offers membership to anyone who joins the Financial Fitness Association for $8 per year.

The credit union’s account offerings include a checking and savings account, money market account, IRA, health savings account, and youth, teen, and gradate accounts.

29. United States Senate Federal Credit Union

United States Senate Federal Credit Union has been around since 1935. Its mission is to “improve the financial wellness of members throughout all stages and circumstances of life.” Its products are similar to what most credit unions offer.

As a member, you can enjoy access to a number of checking and credit union savings accounts, mortgage loans, personal loans, auto loans, Visa debit cards, and business advisory services. To join, you’ll need to become a member of the U.S. Capitol Historical Society for $65.

30. Wings Financial Credit Union

Wings Financial Credit Union was founded in 1938 by seven employees from Northwest Airlines. To date, it serves more than 320,000 members with more than $7.5 billion in assets. You can join if you donate $5 to the Wings Financial Foundation, even if you don’t work in the aviation industry.

There are no fees on its basic banking accounts, including its checking and savings accounts, a money market account, and CDs. Its high yield savings and checking accounts offer competitive rates to help you grow your money.

31. Skyward Credit Union

Skyward Credit Union was chartered in 1941. It offers a share savings account with competitive rates, an aim higher checking account with no monthly fees or minimum balance requirements, affordable mortgage and home equity loans.

It also offers online banking, a variety of insurance products, and access to over 30,000 surcharge-free ATMs. Like most credit unions require membership, so does this one. To become a member, join the Kansas Aviation Museum.

32. San Diego County Credit Union

San Diego County Credit Union has been around since 1938 and has over 430,000 credit union members. It’s considered the largest locally owned financial intuition in San Diego.

As a member, you can enjoy a free checking account, secured and unsecured credit cards, a wide range of account options with no service fees, and access to over 30,000 ATMs without ATM fees. To join San Diego County Credit Union, become a member of the Financial Fitness Association.

33. Bellco Credit Union

Bellco Credit Union is a Denver-based credit union that opened its doors in 1936. You can join it even if you don’t live in Colorado as long as you donate at least $10 to the Bellco Foundation, pay a one-time $5 membership fee, and deposit at least $25 in a savings account.

Once you do, you’ll have access to several noteworthy products, like the Boost Interest Checking account, which offers a competitive interest rate, the Premier Money Market Account, and two, no-fee credit cards.

34. Bethpage Federal Credit Union

Bethpage Federal Credit Union was founded in 1941 and currently has over 30 branches across Long Island and New York City. It has a reputation for competitive rates on it money market accounts and certificates of deposit (CDs).

The credit union also offers three checking accounts, a few savings accounts, retirement planning services, IRAs, insurance, and more. You don’t have to live in New York to join if you open a $5 savings account. As a member, you may meet with credit union staff virtually and bank on the go with a handy mobile app.

35. First South Financial Credit Union

First South Financial Credit Union opened its doors in 1957 to serve those on the Millington base. Since then, it has become of the safest financial institutions in the U.S., as stated by independent rating agencies. While the credit union has locations throughout Tennessee and Mississippi, its online banking services make it a suitable option if you live elsewhere.

Like other credit unions, it offers a full suite of checking, savings, CDs, and IRA accounts. To join, become a member of the Courage Thru Cancer Association, which supports St. Jude Children’s Research Hospital.

36. Dow Credit Union

Dow Credit Union was founded in 1937 in Midland, Michigan. It provides numerous products, including checking and savings accounts, certificates of deposit (CDs), HSAs, deposit trust accounts, and loans.

Fortunately, you don’t have to work at Dow Chemical to take advantage of them. To join, make a $10 donation to the Dow Chemical Employees’ Credit Union Endowed Scholarship Fund.

37. Blue Federal Credit Union

Blue Federal Credit Union was chartered in 1951 as Warren Federal Credit Union. If you’re looking for a high-yield checking account, you’ll appreciate its Blue Extreme Checking Account with no minimum opening deposit or monthly service fees.

Other perks include a tiered membership rewards program and round-the-clock customer service. The easiest way to become a member is to donate $5 to the Blue Foundation and open a Membership Share Savings Account with $5.

38. Digital Federal Credit Union

Digital Federal Credit Union (DCU), based in Marlborough, Massachusetts, was established in 1979. Today, it is known for its comprehensive range of financial products that includes checking and savings accounts, auto loans, mortgages, personal loans, credit cards, and wealth management services.

Perhaps one of DCU’s standout features is its commitment to digital banking, offering robust online and mobile platforms that compete with larger, nationwide banks. This makes DCU a fitting choice for those who prefer online banking, no matter where they live.

Membership is open to those who are a part of participating organizations or live, work, worship, or attend school in eligible communities. If you don’t fit those criteria, you can still join by becoming a member of a participating nonprofit organization, such as Reach Out for Schools, which requires a nominal donation.

See also: Best Nationwide Credit Unions of 2023

Bottom Line

Not all credit unions are created equal. Some have strict membership criteria, while others are more flexible. Before you join a credit union (or several credit unions) on this list, be sure to consider numerous factors.

You’ll want to look at eligibility requirements, branch location, monthly maintenance fees, accounts offered, interest rates, mobile banking, digital banking, reputation, and customer service. Best of luck as you explore the best credit unions and search for the perfect credit union.

Frequently Asked Questions

Can civilians join Navy Federal Credit Union?

Yes, civilians can join the Navy Federal Credit Union (NFCU), the largest credit union in the U.S. However, this is limited to immediate family members of service members in all branches of the armed forces. This broad eligibility criteria is one of the reasons why NFCU has grown to be the largest credit union in the country.

Can anyone join American Airlines Credit Union?

No, not anyone can join the American Airlines Credit Union. Membership is limited to those who work in the air transportation industry, including airlines, airports, and related businesses, as well as their family members. While this broadens the scope beyond just American Airlines employees, it still doesn’t include everyone.

Source: crediful.com

Bidding wars are new norm

Mortgage Refinances Basics

Average Cost to Refinance a Mortgage

Factors Affecting Refinance Costs

Your Loan Size

Your Lender

Your Location

Your Credit Score

Your Home Equity

Your Loan Duration

Your Type of Mortgage (Fixed-Rate or Adjustable-Rate)

Your Specific Mortgage Program

Your Type of Property

Typical Cost Breakdown

Additional Considerations

Interest Rates Variations

Choosing Between Fixed-Rate and Adjustable-Rate Mortgages

Potential Savings Over the Long Term

Loan-To-Value Ratio (LTV)

Income Stability and Debt-To-Income Ratio

Cash-Out Refinance

Strategies to Minimize Refinance Costs

Shopping Around for Lenders

Negotiating Fees and Closing Costs

Utilizing Mortgage Points

Hidden Costs to Be Aware Of

The Bottom Line

Tips for Refinancing a Mortgage

Refinancing Has Its Perks

5 Reasons You May Want to Refinance

Can Refinancing Help You Meet Your Goals?

Do You Even Qualify For a Refinance?

Consider Refinancing Decisions Carefully

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30-year fixed-rate mortgages

15-year fixed-rate mortgages

5/1 adjustable-rate mortgages

Mortgage rate trends

Current average mortgage interest rates

How to find personalized mortgage rates

What is a good loan term?

What Is a Temporary Buydown Mortgage?

Types of Temporary Buydown Mortgages

2-1 Buydown

3-2-1 Buydown

1-0 Buydown

Temporary Buydown Rules

Mortgage Buydown Pros and Cons

The Mortgage Rate Trend Has Not Been Our Friend Lately

Why Did Mortgage Rates Go Up?

Why Might Mortgage Rates Move Lower?

11 Best Banks for Land Loans

1. Atlantic Union Bank

2. Old National Bank

3. Mountain America Credit Union

4. WaFd Bank

5. Banner Bank

6. California Bank & Trust

7. Randolph-Brooks Federal Credit Union

8. Citizens Bank & Trust

9. Alpine Bank

10. First Bank & Trust

11. First Hawaiian Bank

What are land loans?

Types of Land Classification

Raw Land

Unimproved Land

Improved Land Loan

How to Apply for a Land Loan

Find a Plot

Draw up a Development Plan

Find a Lender

Complete the Application Process

Alternative Land Financing Options

USDA Loans

FHA Loans

Home Equity Loans

Cash-Out Refinancing

SBA Loans