refinancing a mortgage

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Mortgage Q&A: “Is now a good time to refinance my home?”

If you’re one of the few people asking this question right now, the short answer is most likely no.

And the reason it’s a no is because mortgage rates have skyrocketed over the past 18 months or so.

But like everything else in the mortgage world, the answer does depend on the situation.

Not everyone has the same mortgage rate, nor do they have the loan product, or the same needs.

Very Few Homeowners Benefit from a Refinance Right Now

  • A refinance typically only makes sense if you can obtain a lower mortgage rate in the process
  • This is very difficult to accomplish at the moment with rates averaging 7%+
  • Most homeowners already refinanced a couple years ago when rates were priced around 3%
  • Refinancing will make sense again once rates fall and/or more borrowers take out mortgages at today’s higher rates (giving them a future refinance opportunity)

First things first, there are two main mortgage refinance options available to homeowners, including the rate and term refinance and the cash out refinance.

There is also the streamline refinance, which is a fast-tracked type of rate and term refinance.

For simplicity sake, a rate and term refinance allows a borrower to lower their interest rate, change their loan term, and/or switch loan products.

The cash out refinance allows a borrow to tap their home equity and perhaps change their rate, term, and loan product as well.

At the moment, very few borrowers are applying for rate and term refinances because interest rates aren’t favorable.

Conversely, everyone and their mother was applying for one back in 2020 and 2021, when mortgage rates hit record lows.

This made perfect sense because you could swap your existing 4-6% mortgage rate for one in the 2-3% range, or even in the 1% range if it was a 15-year fixed mortgage.

Rate and Term Refinances Are Virtually Nonexistent

Times have changed, and now that mortgage rates are closer to 7%, there’s very little reason to pursue a rate and term refinance.

A new report from ICE revealed that only about 5,500 rate and term refinances have been originated per month, on average, over the past year industrywide.

To put that in perspective, there have been roughly 650,000 rate and term refis funded each quarter going back 15 years.

Today, it’s closer to 16,500 per quarter, which is record low territory. It’s also a pretty clear sign that a rate and term refinance doesn’t make sense for most people.

As a rule of thumb, if you can’t lower your existing mortgage rate by say 1% or more, it doesn’t make sense given the closing costs, the time, and the hassle.

And resetting the clock on your mortgage in the process. So unless your current mortgage rate is say 8.5% or higher, it likely doesn’t make sense.

The one caveat is someone who is removing a co-borrower or spouse from their loan out of necessity. But even this is being avoided if at all possible due to the great rate disparity today.

The bulk of these types of refinances is coming from legacy vintages, aka older home loans.

Eventually when interest rates fall, those with today’s 7-8% mortgages will make up the bulk of rate and term refis.

[When to refinance a home mortgage]

The Cash Out Refinance Share Is Nearly 100%

On the other side of the coin, we’ve got a cash out refinance share that has hit record highs lately.

Per ICE, it grabbed a staggering 96% market share in the fourth quarter of 2022, the highest level on record, and hasn’t really changed much since then.

Ultimately, the only reason to refinance a mortgage right now is to tap equity, often because the homeowner needs cash.

This explains why virtually every refinance originated today includes cash back to the borrower.

Because most homeowners have very low mortgage rates, often locked in for the next 30 years, there has to be a compelling reason to give that up.

And that reason is a dire need for cash, even if it means losing their ultra-low mortgage rate in the process.

But while the cash out share is extremely high, the volume of cash out refinances remains low relative to prior years.

Despite tappable equity being close to its 2022 highs, less than $8B was withdrawn from the housing market via a cash-out refinance in August.

While it might sound like a large number, it’s about 70% below the highs seen last year, a consequence of those higher interest rates.

In other words, the overall volume of cash out refis is also way lower than it has been in past years, again because of the high mortgage rates available.

Instead, those who need money are likely opening a second mortgage, such as a HELOC or home equity loan.

Both options allow the homeowner to keep their first mortgage untouched, meaning they don’t lose the low fixed rate.

[How to Lower Your Mortgage Rate Without Refinancing]

Who Would Refinance Their Mortgage Today?

So let’s walk through some different scenarios to see who, if anyone, could benefit from a refinance right now.

Imagine a homeowner who purchased a $500,000 property in 2021 when 30-year fixed mortgage rates were 2.75%.

The property is now worth $600,000 and they want cash to pay for other expenses.

There’s basically no way they’re going to give up their 2.75% rate, so a second mortgage would be the only deal that made sense.

Now imagine a homeowner who purchased a property for $300,000 in 2004 that is now worth $650,000. They need cash and their remaining mortgage balance is only around $130,000.

They might consider refinancing and pulling out cash because their existing loan is small and their old rate may have been 6% anyway.

It might not be ideal, since they were only a decade from being free and clear, but at least they aren’t giving up a low rate on a big loan balance. And again, they need cash.

When it comes to a rate and term refinance, we’ll likely need mortgage rates to come down a bit more from current levels to appeal to recent home buyers.

If these buyers have been taking out mortgages with rates in the 7-8% range, it’s possible they’ll be able to save money by swapping the old loan for a new one at say 6%.

In the meantime, homeowners can pay extra each month to reduce the interest expense, assuming they have the means to do so.

Read more: Alternatives to Refinancing a Mortgage

Source: thetruthaboutmortgage.com

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According to the Federal Reserve, consumer debt in the United States in the second quarter of 2021 totaled more than $4.2 billion. So if you’re struggling with debt, you’re definitely not alone. If you’re looking for a way to dig yourself out of debt, a debt consolidation loan could help.

But what is a debt consolidation loan? Find out if it’s the right option for you by learning more about it, including pros and cons. You’ll also find information about other alternatives.

In This Piece

What Is Debt Consolidation?

Debt consolidation occurs when you bring multiple existing debts under a single umbrella. This usually means you use some type of credit or other financial tool to convert multiple debts into a single debt. Debt consolidation loans are one of the most popular ways to consolidate debt.

What Is a Debt Consolidation Loan?

A debt consolidation loan consolidates, or combines, your various debts under a single account.

Pros of Debt Consolidation Loans Cons of Debt Consolidation Loans
Potentially lower interest rates, especially if you now have the credit score to consolidate high-interest loans under better terms

May require good credit to obtain or get a good rate
A single payment, making it easier to manage your finances Might leave paid-off credit card and other revolving accounts open, creating an opportunity to run up even more debt than you started with
Your debt possibly spreading out over a greater amount of time, making each monthly payment more affordable Could potentially temporarily impact your credit score if it involves closing a lot of other accounts

What’s the Difference Between Debt Consolidation and a Personal Loan?

A personal loan is an unsecured loan that you can use for just about anything. In some cases, you could use the funds from a personal loan to consolidate some debts, making it a debt consolidation loan.

However, a loan specifically for the purpose of debt consolidation may be handled a bit differently. For example, in some cases, the lender may not pay the money directly to you. They might pay off your debts directly instead.

Alternatives to Debt Consolidation Loans

Your options depend on your credit, existing assets, and how much debt you want to consolidate. Some alternatives to debt consolidation loans are highlighted below.

1. Refinance Your Mortgage If You Have Equity

If you have equity in your home, you can refinance it or take out a home equity line of credit, or HELOC. These options give you cash you can use to pay down debt.

Pros of Refinancing a Mortgage to Consolidate Debt Cons of Refinancing a Mortgage to Consolidate Debt

Home equity loans and HELOCs tend to have much lower interest rates than personal loans and credit cards

You use your home as collateral for the debt, which means if you don’t pay it, the lender has a claim on your house
You may be able to deduct interest on home loans to reduce tax burdens Variable-rate loans could come with increased interest in the future
The total number of payments you need to manage each month is substantially reduced Credit cards you pay off could be run up again, leaving you with more debt than you started with
You’re less likely to forget to pay a debt related to your home  

Tip: Don’t pocket the money that refinancing frees up every month. Instead, use it to create an emergency fund. Once that’s set up, use the money as prepayment against your home loan or to boost retirement savings.

2. Use a Balance Transfer Card

Apply for a balance transfer card if your credit is in good shape, or call a card provider to ask if they’d be interested in offering you a balance transfer option on an existing card. This lets you transfer higher-interest credit card debt to a card with lower interest rates. Some balance transfer cards offer 0% APR for six to eighteen months on balance transfers for new account holders.

Pros of Balance Transfer Cards for Debt Consolidation Cons of Balance Transfer Cards for Debt Consolidation

Can substantially reduce the cost of credit card debt

Balance transfers usually come with fees of 3% to 5%—still less than your typical interest costs might be on high-interest credit card debt, but something to keep in mind
Makes it easier to pay off credit card debt It can be tempting to use your old credit cards again, running up more debt and ending up with double the debt you started with
Might let you consolidate multiple cards into a single account for easier management If you don’t pay off the debt in the introductory period, you could end up with expensive interest fees

Tip: Keep your old credit card accounts open for extra benefits to your credit score. It helps your credit utilization rates and credit age. But avoid using those accounts unless you have the money to pay them immediately.

3. Borrow from Retirement Savings

If you have retirement savings, you might be able to borrow from it to pay off debt. Remember, though, that you’ll need that money later. Only consider this option if you can pay back the money quickly so you don’t lose time building your retirement funds.

Pros of Borrowing From Retirement Savings for Debt Consolidation Cons of Borrowing From Retirement Savings for Debt Consolidation

Doesn’t require a credit check, so you don’t need a healthy credit file

You might owe taxes and penalties on the money if you withdraw early from your retirement
Interest rates are low, and you’re actually paying it back to your own account You can borrow against some employer-sponsored retirement plans, but debt consolidation might not be an allowed reason
  You could reduce how much money you have in retirement, especially if you can’t pay back the money

Tip: Consider this option as a last resort loan or if you have some money coming in soon, such as from a tax return. If you can pay the money back within a month or two, you don’t have as much to lose.

4. Ask a Friend or Relative for a Loan

If you know someone who has some extra money, it might be worth asking them for a loan at a low interest rate. You can use the money to pay off your debts and make one monthly payment to the person in question.

Pros of Asking Someone for a Loan for Debt Consolidation Cons of Asking Someone for a Loan for Debt Consolidation

No credit check or requirements

If you blow it, you might ruin an important relationship
Your family member or friend can earn some interest The IRS can be a real pain when it comes to family loans, so consult a tax professional
  Loan payments won’t be reported to your credit reports or potentially help your score

Tip: Treat the transaction as you would with a bank or other lender. Put everything in writing, agree to fees or penalties if you miss payments, and strive to make timely payments.

5. Try Debt Counseling

Debt or credit counseling with a reputable organization can help you create a viable personal budget and potentially negotiate with creditors for better terms. Debt counselors may help you understand how to better manage your income and expenses and leverage debt payoff strategies to get out from under your debt.

Pros of Debt Counseling Cons of Debt Counseling

Can provide you with some tools to better manage debt

May not reduce the overall cost of your debt
May help you see solutions that you didn’t see before May rely on you making personal sacrifices in your budget
Helps you pay off debt with your own resources, which can be satisfying If you don’t work with a reputable organization, you might be scammed out of large fees with promises that the company can’t keep

Tip: Don’t work with debt counseling companies that offer 100% guarantees to reduce or wipe out your debt or that charge excessive fees. These are red flags that could point to scams.

6. Enter a Creditor Assistance Program

Many creditors have assistance programs to help account holders who are experiencing financial distress due to sudden loss of income or an emergency. These programs range from mortgage modifications, which might reduce your interest rate or total monthly payment, to skipping a single payment and having it added onto the end of the loan penalty-free.

Pros of Creditor Assistance Program Cons of Creditor Assistance Programs

May not require good credit, especially if you have a solid payment history with the creditor

Aren’t always available
Could offer a fast, convenient solution to short-term cashflow issues You can typically only take advantage of these tools once or once every so often

Tip: Anytime you’re experiencing financial distress or might be late with a payment, don’t ignore the issue. Call your creditor to find out what they might be able to do to help.

7. Bankruptcy

Bankruptcy is a last-resort option that can help you discharge or restructure your debts and make a new start in a few years.

Pros of Bankruptcy Cons of Bankruptcy

If successful, you can have all or many of your debts discharged

Bankruptcy can be a long and stressful process
You may be able to keep certain assets, such as your home or car It can dramatically impact your credit in the short term
Filing for bankruptcy establishes an automatic stay, so creditors can’t continue to attempt to collect or foreclose unless the bankruptcy is dismissed Depending on what type of bankruptcy you file, you may not be able to get credit for a while

Tip: Talk to a bankruptcy attorney about this option before you take action. Most provide free consultations to help you understand if bankruptcy is a good choice for you.

The Bottom Line on Debt Consolidation

If you’re struggling with debt, you’re not alone. And you do have options. Look into a debt consolidation loan or one of the options above to start working on financial stability for the future.

Source: credit.com

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Today we’ll take a good look at On Q Financial, a direct mortgage lender based in Tempe, Arizona that wants to make getting a mortgage simple.

In fact, their slogan is, “Mortgages Simplified,” so my guess is their loan process is pretty straightforward and possibly easier than the other guys.

That could have something to do with their digital mortgage offering that promises a faster and easier experience, complete with a smartphone app that can do most of the heavy lifting.

While they’ve only been around since 2005, they’re growing rapidly and making a name for themselves in the industry.

They weren’t in the top 100 based on 2018 HMDA data, but now refer to themselves as a top-50 lender.

On Q Financial Quick Facts

  • Direct mortgage lender headquartered in Tempe, Arizona
  • Founded in 2005 by former mortgage loan officer John Bergman
  • A top-50 mortgage lender with more than 550 employees and 70 locations
  • Offers a digital mortgage experience that allows you to apply via smartphone app
  • Specialize in home purchase loans but also offer refinancing
  • Licensed in 47 states and DC (not available in Hawaii, New Jersey, or New York)
  • Helped over 10,000 families purchase a home in 2019

On Q Financial Digital Mortgage Process

On Q Financial prides itself on making the often-agonizing home loan process fast and easy, so you should expect a better experience than what you may have heard or are used to.

Their “Mortgages Simplified” digital mortgage solution allows you to submit income, asset, and employment information through your smartphone thanks to an app called Simplicity, available for both Apple and Android devices.

Aside from offering a full mortgage application via the app, it has various mortgage calculators, document scanning and uploading capabilities, and provides real-time loan status notifications.

Instead of having to gather your W-2 forms, paystubs, and bank statements, you can link your financial accounts and import everything right into the loan application.

They say this cuts down the processing time by four to seven days so you can close your home loan a lot quicker and with less work.

It’s also more secure than dealing with paperwork and probably more accurate too, leading to fewer duplicate requests from underwriters.

On Q Financial also offers full mortgage pre-approvals that go be beyond a basic pre-qualification with actual upfront underwriting.

Those who want a face-to-face or more personal experience are welcome to visit a local branch or get on the phone with a loan officer as well.

You can also apply right on the website and select a loan officer by name if one is known to you or if you’ve been referred to a specific individual.

All in all, they make it pretty easy to get going on your mortgage loan application.

What On Q Financial Offers

  • Home purchase loans, renovation loans, construction loans, and refinance loans
  • Conventional loans, government home loans, and jumbo loans
  • Down Payment Assistance (DPA) and interest-only also available
  • Various fixed-rate and adjustable-rate loan programs to choose from
  • Lending on all residential property types including manufactured homes

One great thing about On Q Financial is the breadth of loan options available – they’ve basically got you covered no matter what type of real estate transaction is involved.

With regard to home loan type, they offer both conventional loans backed by Fannie Mae and Freddie Mac, and government home loans backed by the FHA, USDA, and VA.

They are big on home purchase loans thanks to their strong relationships with local real estate agents, and equally proficient when it comes to refinancing a mortgage, including cash out refinances.

There are also several down payment assistance (DPA) options available for first-time home buyers with limited assets.

Beyond that, they offer home renovation loans, such as an FHA 203k loan and Fannie Mae HomeStyle loan, along with construction loans.

Their builder division specializes in one-time close (OTC) construction loans, which are available via conventional, FHA, USDA, or VA.

The loan covers both the interim construction costs and the eventual mortgage, converting from a construction loan to a permanent home loan once construction is completed.

They also offer financing on manufactured homes and the Native American Home Loan HUD184.

On Q Financial can also go BIG if you need jumbo loan financing, with loan amounts as high as $5 million and low down payment options.

In the non-QM space, they also offer interest-only financing, which isn’t available from too many lenders these days.

You can get a fixed-rate mortgage with several different terms (10, 15, 20, 25, and 30 years) or an adjustable-rate mortgage such as the 5/1 ARM or 7/1 ARM.

And they lend on primary residences, second homes (vacation properties), and investment properties.

On Q Financial Contact-Free E-Closing

On Q Financial has been offering a hybrid closing option for several years, combining some online document submission with in-person signings.

But because of the COVID-19 pandemic, they realized it was urgent to develop a completely remote closing solution.

Their new E-close option is totally contact-free and allows you to close remotely from just about anywhere.

It relies upon secure document signing and automated verification, and certain core technology like an internet connection and webcam for identity verification.

When the pandemic first started, they were able to close a refinance loan for a borrower who was stranded in Costa Rica, completely online.

On Q Financial Mortgage Rates

In terms of interest rates, On Q Financial says they offer “low, low rates and excellent service.”

Just how low is a bit of a mystery because they don’t make mention of their rates otherwise anywhere on their site.

I prefer a lender that openly advertises their mortgage rates, even if they’re just generic rates, to get a better feel for their competitiveness.

For me, doing so shows they’re more transparent than other lenders. Unfortunately, On Q Financial chooses to keep their rates close to their chest.

The same goes with lender fees, so we’re in the dark when it comes to rate and fees.

In other words, take the time to shop around with other lenders if you speak with On Q to ensure they are competitive.

While easy and fast is good, a cheaper mortgage might be even better long-term.

On Q Financial Mortgage Reviews

They have a very strong rating on Zillow, a whopping 4.98 out of 5-stars, which is pretty much as close to perfection as you can get.

It’s based on nearly 1,800 customer reviews, many of which indicate that the mortgage rate was lower than expected.

They also have a 4.8 out of 5-star Google Review Rating based on 140 ratings from past customers.

Since 2005, they’ve been an accredited business with the Better Business Bureau, and currently have an A+ rating.

They have 1 out of 5 stars on the BBB, but only on a very small sample size of four total customer reviews.

Many of their individual loan officers also come highly rated via SocialSurvey.

On Q Financial Pros and Cons

The Good Things

  • A fast digital mortgage process
  • Free smartphone app for both Apple and Android
  • Tons of loan programs to choose from
  • Ability to update pre-approval at any time while shopping different homes
  • E-closing option for contact-free loan fundings
  • Free mortgage calculators on site
  • A multilingual website (Spanish, Russian, Simplified Chinese)

The Maybe Not So Good Things

  • Not yet licensed in every state
  • Do not disclose mortgage rates or lender fees
  • No second mortgages available

(photo: Alan Levine)

Source: thetruthaboutmortgage.com

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A reverse mortgage may help older Americans who find they need more money in retirement. It’s common for inflation and rising medical costs to be issues. A reverse mortgage allows them to convert some of their home’s equity into cash, which can benefit their financial situation.

Protections established over the past few years by the U.S. Department of Housing and Urban Development (HUD) focus on lowering the risk previously associated with reverse mortgages. What’s more, the federal and state governments have taken aim at deceptive marketing practices that can minimize the complex aspects of reverse mortgage agreements.

That said, it’s wise to proceed with caution. There are still considerable cons to reverse mortgages, and borrowers may be unaware of the finer points. One important fact: It is possible to lose one’s home if you don’t comply with all the loan terms. Take a closer look at this topic here.

Why Do People Choose a Reverse Mortgage?

A reverse mortgage allows qualifying homeowners age 62 and older to convert part of the equity they’ve built up in their primary residence into money they can use to pay off their existing mortgage or for any other expenses that come up in retirement (from health-care costs to home repairs).

The big selling point for reverse mortgages is that the loan usually doesn’t have to be paid back until the last borrower, co-borrower, or eligible non-borrowing spouse dies, moves away, or sells the home. And when it is time to repay the loan, neither the borrower nor any of the borrower’s heirs will be expected to pay back more than the home is worth.

Main Types of Reverse Mortgages

There are three basic types of reverse mortgages. The most common is a home equity conversion mortgage (HECM), which is the only reverse mortgage insured by the U.S. government and is available only through an FHA-approved lender. An HECM can be used for anything, but there are limits on how much a homeowner can borrow.

There are also proprietary reverse mortgages, which are private loans that may have fewer restrictions than HECMs — including how much a homeowner can borrow.

And there are single-purpose reverse mortgages, which are typically offered by nonprofit organizations or state or local government agencies that may limit how the funds can be used. Most of the time, when someone refers to a reverse mortgage, though, they’re talking about an HECM.

Reverse Mortgage Terms to Know

There are safeguards in the reverse mortgage process that protect borrowers, but there are also loan terms borrowers are required to uphold or risk defaulting and potentially triggering a mortgage foreclosure. They include:

Staying Current With Ongoing Costs

Borrowers must stay up to date on property taxes, homeowners insurance, homeowners association fees, and other costs, or they could risk defaulting on the loan. An assessment of a borrower’s ability to pay for those ongoing expenses is part of the reverse mortgage application process, and if it looks as though money might be tight, a lender may require a borrower to set up a reserve fund, called a “set-aside,” for those costs. (In this way, it’s akin to an emergency fund, which is there to cover expenses if needed.)

Maintaining Full-Time Residency

Borrowers (and eligible non-borrowers) must use the home as their primary residence — the home they occupy for most of the year. If they move out of the house or leave the home for more than six months, or receive care at a nursing home or assisted living facility for more than 12 consecutive months, it could result in the lender calling the loan due and payable.

The lender also may choose to accelerate the loan if the borrower sells the home or transfers the title to someone else, or if the borrower dies and the property isn’t the principal residence of a surviving borrower.

Keeping the Home in Good Repair

Because the home is collateral and may have to be sold to repay the loan, lenders may require borrowers to do basic maintenance that will help the property keep its value (e.g., repairing a leaky roof or fixing a problem with the electrical system). If an inspector feels the home is not being properly maintained, the lender could take action.

What Happens If a Reverse Mortgage Borrower Defaults?

If the homeowners default, the first thing that could happen is that future loan payments may be stopped. And if the problem isn’t corrected within the lender’s stated timeline, the loan may become due and payable, which means the money the lender has distributed to the borrower, plus any interest and fees that have accrued, must be repaid. In that case, the borrower typically has four options:

•   They can pay the balance in full and keep their home.

•   They can sell the home for the lesser of the balance or 95% of the appraised value and use the proceeds to pay off the loan.

•   They can sign the property back to the lender.

•   They can allow the lender to begin foreclosure.

No matter what the homeowners decide to do, the process could take months to complete. HECM lenders may offer borrowers additional time to fix the problem that put them into default, or the borrowers may qualify for extensions or a repayment plan.

But in the meantime, there could be other implications — if the homeowners are no longer getting money they need to pay their bills or if the lender reports the default to credit monitoring agencies — that could affect the homeowners’ credit scores.

A Few Alternatives to Consider

The advertisements some lenders use to sell their reverse mortgages can be convincing, and some seniors may see these loans as a convenient way to get some extra cash or as a much-needed lifeline.

But, as with any financial decision, there are advantages and disadvantages — and alternatives — to be considered. There are other ways homeowners may be able to get help that could be less complicated and less limiting than a reverse mortgage.

Here are a few options:

•   Borrowers may wish to tap into their home’s equity with a traditional home equity loan or home equity line of credit. They’ll have to make monthly payments, and their income and credit history will be considered when they apply, but the terms may be more flexible and the overall cost may be lower than a reverse mortgage. Because the home is used as collateral, there’s still a risk of foreclosure.

•   Low interest-rate personal loans might be another option for homeowners who qualify for a competitive interest rate based on their income and credit. Borrowers who don’t have much equity in their home may choose to look into this type of loan, which is unsecured and is paid out in a lump sum. While foreclosure is not a worry with a personal loan, there still may be consequences to the borrower’s credit rating if they don’t uphold the loan terms.

•   Borrowers who are struggling to keep up with their bills in retirement may find that refinancing a mortgage with a new, lower-cost mortgage might be an option to help them lower their monthly payments and stay on track with their budget.

Or, if they need extra cash right away and can get a low enough interest rate, they may want to look into a “cash-out refinance,” which would involve taking out a new loan for a larger amount based on the equity they’ve built up during the years they’ve lived in the home.

Unfortunately, no matter which type of loan homeowners might choose, there could be risks.

The government requires a counseling session for reverse mortgage borrowers for a reason: They’re complex, and it can be helpful to have someone cover all the rules and costs involved.

Homeowners also may want to pay a financial advisor and tap their expertise about what type of loan, if any, fits with their needs, goals, and where they are in their retirement.

Though reverse mortgages are available to homeowners starting at age 62, borrowers who expect to have a long retirement may choose to wait until they’re older to tap into their home equity, so they don’t risk running out of money in their later years.

How SoFi Can Help

For many retirees, the equity they have in their home is their biggest asset. Armed with knowledge about the pros and cons of each type of loan and a long-term plan, borrowers can better protect that asset and their financial security.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% – 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It’s online, with access to one-on-one help.

SoFi Mortgages: Simple, smart, and so affordable.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

*SoFi requires PMI for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Minimum down payment varies by loan type.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.


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Source: sofi.com

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If you live in State 48, there’s a pretty good chance you’ve heard of “VIP Mortgage,” either because you’ve been a customer or you’ve seen one of their ads.

Regardless, they are a major mortgage force in Arizona, having closed billions in home loans there just last year alone.

In fact, they were a top-10 mortgage lender in Arizona based on total volume, only falling behind the biggest mortgage lenders out there.

Those names include Chase, loanDepot, Quicken Loans, and Wells Fargo, along with fellow Arizona lender NOVA Home Loans.

So it’s clear they’ll be a consideration for you if buying a home or refinancing a mortgage in Arizona. Let’s learn more about the company.

VIP Mortgage Fast Facts

  • Direct-to-consumer retail mortgage lender located in Scottsdale, Arizona
  • Founded by Marine veteran Jay Barbour in 2006
  • 20+ brick and mortar branches and hundreds of licensed loan officers nationwide
  • Funded more than $2 billion in home loans last year
  • More than 80% of total loan volume came from their home state of Arizona
  • Currently licensed in 24 states including Hawaii

VIP Mortgage funded more than $2 billion in home loans last year, with a whopping $1.76 billion coming from the state of Arizona.

They did another $130 million or so in the state of Colorado, with the remainder coming from a variety of states, mostly located on the West Coast.

At the moment, they appear to be licensed to do business in 24 states, including:

Alabama, Arizona, Arkansas, California, Colorado, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Michigan, Minnesota, Nebraska, New Mexico, North Carolina, Ohio, Oregon, Tennessee, Texas, Utah, Washington, Wisconsin.

The company has physical branches in Arizona, California, Colorado, Hawaii, Indiana, Texas, Washington, and Wisconsin.

How to Apply with VIP Mortgage

  • You can apply for a home loan directly from their website
  • Or schedule a consultation first with one of their loan officers
  • They offer a digital mortgage loan experience powered by Floify
  • It allows you to complete most tasks remotely via smartphone or computer

While they seem to prefer that you speak to a loan officer first to go over your goals and available options (a loan officer directory is on their website), you can freely apply on your own as well.

If you visit their website, you can simply click on “apply,” at which point you’ll be asked if you’re already working with a loan officer.

Assuming the answer is yes, simply enter their name and it will populate. If no, you’ll be piped over to their digital loan application.

It appears they use Floify’s digital mortgage product, which lets borrowers fill out the app from anywhere on any device.

Additionally, borrowers can review and eSign disclosures from a web-based portal, link financial accounts, and scan/upload supporting documentation.

Once your loan is submitted, you can access the borrower portal at any time to see your to-do list, check loan status, or get in contact with your lending team.

They make it easy to apply and monitor your loan status from start to finish.

Loan Types Offered by VIP Mortgage

  • Home purchase loans and refinance loans
  • Home renovation and construction loans
  • Conventional conforming loans backed by Fannie Mae and Freddie Mac
  • Government loans: FHA/USDA/VA
  • Jumbo loans
  • Reverse mortgages
  • HUD-184 loans (for Native Americans)
  • Down payment assistance programs
  • “Inclusive Loan”
  • Various fixed-rate and adjustable-rate mortgage options available

VIP Mortgage offers tons of different home loan programs, including home purchase loans, refinance loans, renovation loans, and construction loans.

Additionally, you can get a reverse mortgage if 62 and older, or a HUD-184 loan if a Native American.

They’ve also got a proprietary loan program called the “Inclusive Loan” that is geared toward home buyers who experienced a recent foreclosure, short sale, or bankruptcy.

In terms of loan programs, you can get a conventional loan, including conforming loans and jumbo loans, or a government-backed loan such as an FHA loan, USDA loan, or VA loan.

VIP offers both fixed-rate and adjustable-rate mortgages with various loan terms, including a 30-year fixed, 15-year fixed, 5/1 ARM, 7/1 ARM, and so on.

So you shouldn’t be at all limited when it comes to loan choice if you choose to go with VIP Mortgage.

VIP Mortgage Rates

Like many other mortgage lenders, VIP Mortgage chooses not to advertise their mortgage rates on their website.

While there are many reasons not to advertise rates, such as the extra work it takes and the fact that such rates are just ballpark estimations, they can be helpful to get a feel for pricing.

Nonetheless, you can still easily get loan rates if you contact a loan officer directly. And it should be a more accurate quote since you’ll need to provide them with specific loan details first.

It’s also unclear what they charge in the way of lender fees, such as a loan origination fee, underwriting, processing, and so on.

You’ll need to inquire with them directly to determine that. Once you obtain that key information, be sure to shop around with other lenders to see how competitive they are.

VIP Mortgage Reviews

On SocialSurvey, VIP Mortgage has a 4.90-star rating based on nearly 16,000 reviews from its past customers.

The company also landed in SocialSurvey’s Top 10 list for customer satisfaction in the medium lender division back in 2018

They have a 4.96-star rating out of 5 on Zillow, based on roughly 1,100 customer reviews. That’s clearly beyond excellent and a testament to their exceptional customer service.

A good proportion of the reviews on Zillow indicated that the interest rate received was lower than expected, if you’re curious about pricing.

VIP Mortgage is an accredited business with the Better Business Bureau (BBB) and currently enjoys an A+ rating. They also have a 4.33-star rating on the BBB website, which is quite high.

VIP Mortgage Pros and Cons

The Good

  • You can apply for a home loan directly from their website without human assistance
  • They offer a digital mortgage loan process
  • Tons of different loan programs to choose from
  • Excellent customer reviews
  • A+ BBB rating, accredited since 2008
  • Lots of free mortgage calculators on site

The Maybe Not Good

  • Not licensed in all states
  • Do not disclose mortgage rates or lender fees on their website

Source: thetruthaboutmortgage.com

Apache is functioning normally

Ever wonder what share of borrowers are taking out a 15-year mortgage as opposed to a standard 30-year fixed? Or an ARM instead? Well, I was, and so I went looking for the data.

Fortunately, I was able to track down some of the details thanks to the Urban Institute, which provided me with some great statistics since the year 2000.

As you might expect, the 30-year fixed is the king of mortgage originations, though its dominance has been tested over the years. And it does depend if we’re talking about all originations, or just purchases.

Mortgage product type choice definitely varies if we’re talking about a refinance as opposed to a home purchase since borrower needs change over time.

Put simply, it’s more common for a borrower to choose the 15-year fixed when refinancing a mortgage, and a lot less likely to use one to buy a home.

Why is this? Well, generally borrowers will go with a 30-year term because it increases affordability, meaning they can buy more house at the outset.

Later, once they’ve built some equity (hopefully), they can refinance into a shorter-term fixed loan, such as the 15-year fixed, to save on interest and also ensure their loan term isn’t extended from the original maturity date.

Nearly 90% of Purchase Mortgages Were 30-Year Fixed Mortgages

  • The 30-year fixed is easily the most popular type of home loan available
  • It has been for decades and probably will be for the foreseeable future
  • Largely because it’s the cheapest and most pitched mortgage product
  • Ultimately ARMs are too risky for most homeowners and the 15-year fixed is too expensive

I spoke to the dominance of the 30-year fixed, and perhaps that was an understatement. The 30-year fixed claimed nearly 90% (89.5%) of the purchase market in June 2017, per data from Corelogic, eMBS, HMDA, SIFMA and Urban Institute.

It was actually higher at many times over the past 12 months, hitting 92.6% in July 2016.

Back in January 2000, the oldest month where there is data, the 30-year fixed accounted for just 70.3% of purchase mortgages.

Its lowest share since then was in December 2004 and March 2005, when it was selected on just 48.3% of new purchases.

In those same months, the adjustable-rate mortgage share was a staggering 41%. The ARM share continued to be quite high leading up to the housing crisis that ensued a few years later.

But in June 2017, the ARM share was a measly 3% of new purchase loans, which tells you today’s home buyer has very little interest in anything other than the safety of the 30-year fixed.

And only 6.1% are interested in the 15-year fixed, or perhaps only a small handful can actually afford the higher monthly payments thanks to DTI restrictions.

30-Year Fixed Less Dominant on Refinances

  • While still easily number one, the 30-year fixed is less popular when we consider refinance loans
  • You can thank the 15-year fixed mortgage for that
  • It’s a common choice for those looking to avoid resetting the clock
  • Since you can avoid a new 30-year term and also snag a lower interest rate

When it comes to refinances, the 30-year fixed is still the product of choice for most borrowers, but less so.

Per the latest data, the 30-year fixed held a 76.7% share of ALL mortgages in June. Meanwhile, the 15-year fixed grabbed a larger 14.3% share, while ARMs still held a paltry 3.3% share.

If we go all the way back to January 2005, we see the low point for the 30-year fixed across all mortgage originations. At that time, only 44% of borrowers chose it.

During the same month, the ARM-share was 38.7%, while the 15-year fixed grabbed a 9.9% share.

Back in January 2000, the 30-year fixed share was at 59.5%, while the 15-year fixed held 10.9%, and ARMs 21.5%.

So the 30-year fixed is still very popular, though not quite as much as it was back in December 2008, when its market share across all mortgages peaked at 88.4%.

The 15-year fixed peaked at 26.8% in April 2003 across all origination types. And ARMs peaked at 42.1%.

Market Share of All Mortgage Originations Since 2000

30-year fixed low: 44% (January 2005)
30-year fixed high: 88.4% (December 2008)

15-year fixed low: 4.2% (July, September 2007)
15-year fixed high: 26.8% (April 2003)

ARM low: 0.7% (April 2009)
ARM high: 42.1% (April 2005)

Market Share of Purchase Originations Since 2000

30-year fixed low: 48.3% (December 2004, March 2005)
30-year fixed high: 93.7% (March 2009)

15-year fixed low: 2.4% (Feb-May 2007)
15-year fixed high: 15.5% (Jan-Feb 2002)

ARM low: 0.5% (April 2009)
ARM high: 42% (April 2005)

Source: thetruthaboutmortgage.com