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What Is Mortgage Insurance and How Does It Benefit Me?

March 3, 2023 by Cachet Real Estate Finance

What Is Mortgage Insurance and How Does It Benefit Me? Let's Take a LookAre you in the market for a new home? If you are considering a mortgage, you may be curious about mortgage insurance, commonly referred to as PMI or MI. Let’s explore the topic of mortgage insurance, including how it works to reduce risk and how it benefits you as the mortgage borrower.

Mortgage Insurance = Risk Reduction

You might not know this, but the toughest part of the home buying process for many individuals and families is coming up with the required down payment. For example, if you were to buy a $200,000 home, you may want to invest $40,000 or $60,000 or more in the down payment. The remainder would be borrowed in your mortgage, which you would then pay off each month.

Most mortgage lenders require a minimum of 20 percent as a down payment. In the example above, this means having $40,000 cash on hand before you buy the home. If you can’t come up with this much, your lender may require mortgage insurance be purchased to protect them in case you default on the loan.

Mortgage Insurance Can Help You Qualify

Since mortgage insurance reduces the lender’s exposure to risk, it can help you in a number of ways during the qualification process. First, you can put less in your down payment than you had initially intended, which can increase your buying power and the size of home you can afford. Mortgages backed with a private insurance policy tend to be approved a bit faster than those that aren’t. Also, if you decide that you don’t need it later, many mortgage insurance policies can be canceled, which saves you a bit of money.

Look For Supplemental Benefits

Finally, don’t forget to ask your mortgage lender about any supplemental benefits offered with your mortgage insurance policy. Some policies protect you in the event that you lose your job or provide a partial claim advance if you can’t pay your mortgage. Note that not all policies have these benefits, so be sure to ask.

While it is true that mortgage insurance provides benefits to lenders, it also offers significant benefits to you as the borrower. To learn more about mortgage insurance or to get pre-approved for a mortgage so you can buy a home, give us a call today. Our friendly team of real estate professionals is happy to help.

Filed Under: Home Mortgage Tips Tagged With: Home Mortgage Tips, Mortgage, Mortgage Insurance

The Top Reasons To Stop Renting And Buy Today

February 10, 2023 by Cachet Real Estate Finance

The Top Reasons To Stop Renting And Buy TodayBuying a house can be expensive, and it can take a long time to save up money for a down payment; however, it might be time for you to stop renting and buy your own place. What are some of the top reasons why it might be time to put down some roots?

Your Rent Is Going Up

The reality is that your rent will go up with time. Every time you renew your lease, it can be frustrating to see that rent check continue to increase. If you are tired of your rent going up, get a mortgage. You could lock in the same payment for 30 years.

You Are Going To Stay Put For A While

Are you planning on staying put for a while? If so, you don’t have to worry about buying a selling a house too quickly. Go ahead and purchase a house! You are going to be here for a while anyway, so you might as well get a stable mortgage.

You Don’t Want To Pay Someone Else’s Mortgage

Did you know that you might be paying someone else’s mortgage with your rent check? Why not use that money to pay off your own mortgage? After all, there’s no reason why you should feel obligated to use your money to pay down someone else’s home loan.

You Want To Build Wealth

If you want to build wealth for yourself and your family, one of the best ways to do so is to own property. Your property should go up in value over time, and 100 percent of the capital appreciation is yours because the value of your loan will remain the same, regardless of the capital appreciation of your house. If you want to build wealth, owning property is one of the best ways to do so.

Stop Renting And Buy Today

Clearly, there are plenty of reasons why you might want to stop renting and consider buying a house. You need to work with an expert who can help you find the right loan option to meet your needs. There are attractive opportunities out there, so if you are ready to build financial wealth, consider buying a house today.

Filed Under: Real Estate Tagged With: Mortgage, New Home, Real Estate

An Often-Overlooked Trick Can Help You Afford A Second House

January 10, 2023 by Cachet Real Estate Finance

An Often-Overlooked Trick Can Help You Afford A Second HouseThe whole idea of investing is to use a portion of your money now to get more down the road. It is important for everyone to diversify their investments, and you might be thinking about buying a second house to do so. Investing in real estate is a goal that a lot of people have, but how can you get started? It was challenging enough to buy your first house, so how can you afford a second one? 

Use A Cash-Out Refinance To Buy Your Second House

One trick that many people overlook is that they can actually conduct a cash-out refinance to purchase a second house. In general, your lender will allow you to cash out up to 80 percent of the value of your home during a cash-out refinance. This can give you a tremendous amount of flexibility that you can use to purchase a second house. For example, if your house is worth $300,000, you may be able to withdraw tens of thousands of dollars in equity.

What To Consider When Using A Cash-Out Refinance

When you apply for a cash-out refinance, there is a chance that the interest rate on your new loan might change. This might mean that you end up with a higher interest rate than before. You must make sure you can afford this new interest rate. Furthermore, you will be required to pay closing expenses. You need to have enough money set aside to cover those closing expenses. Keep in mind that the term of the loan might change as well. If you were close to paying off your house, this type of refinance might reset that clock. It might take you longer to pay off your mortgage than it did before. Consider these factors carefully before conducting a cash-out refinance.

A Cash-Out Refinance Might Be Right For You

In the end, a cash-out refinance could be a great way for you to withdraw equity from your home, using it to purchase an investment property. On the other hand, you need to ensure you can still afford the new loan after you take that equity out of your home. Work with an expert who can help you find the right option to meet your needs.

 

Filed Under: Real Estate Tagged With: Cash Out Refi, Mortgage

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