It’s time to reduce it!

When you obligated yourself to that monthly payment it fit nicely into your budget. But then… Things happened. Perhaps it was a job loss or even just a reduction in hours. Perhaps it was an illness or an accident.

Perhaps you had an adjustable rate mortgage that you couldn’t refinance when it reset because your house had gotten underwater or you were temporarily unemployed.

If your mortgage payment is dominating your life and your thoughts, but you really don’t want to give up your house, now is the time to lower those payments.

Method #1: Refinance

No one really expected that interest rates would stay low for so long – and certainly didn’t expect that they’d be lower now than they were 2 years ago. But they are. In fact, you could get an interest rate as low as 3.5%.

What does that mean in terms of real dollars? Here’s an example:

If you took out a 30-year fixed rate mortgage for $250,000 in January 2014 you probably paid the going rate at that time: 4.43%. Today, provided your credit rating is the same, you could refinance at 3.5% and save about $125 per month.

Would an extra $125 in your pocket every month help ease the strain? That’s comparable to getting a pay raise of about $165 per month (or more, depending upon your tax bracket).

You may be paying more than 4.43% – if so, your savings would be even more.

Method #2: Get rid of your mortgage insurance.

Did you get stuck paying mortgage insurance because you had less than 20% to put down on your house? If your mortgage was for $250,000, you’re paying approximately $225 each month.

If you have a conventional loan, you’re eligible to have that insurance dropped once you have 20% equity and have owned the house for at least two years. Since homes are once again appreciating in value, you may have 20% equity and not even know it.  (If you have an FHA loan, you’ll need to refinance into a conventional loan, as all FHA loans carry mortgage insurance.)

Talk with your favorite real estate agent about the probable value of your home. Then talk with your lender to learn the steps required.

If you have mortgage insurance, refinancing can give you a double benefit…

You’d save on the interest payment and save again on the mortgage insurance. In the above examples, the two combined would be $350 each month. What could you do with an extra $4,200 each year?

R.M.L.O

Homewood Mortgage,LLC

O: 469.621.8484

C: 469.438.5587

F: 972.767.4370

18170 Dallas Parkway

Ste. 304

Dallas, TX 75287

Of all the misconceptions that people have about lenders, the idea that they keep a tight hold on the home mortgage purse strings and don’t ever want to ever loosen them is the silliest.

Of course they want to lend you money. That’s how lenders earn their own living. They simply want to be careful and lend it people who have the ability to repay the loan – and that’s in your best interest as well as the bank’s.

No one needs the heartbreak of losing a home because they simply couldn’t keep up with the payments.

The truth is, a good lender can be your best friend as you set upon the journey to home ownership. Your lender can:

Give you confidence and credibility.

By getting you pre-approved for a mortgage loan before you even begin the home search, your lender will give you the confidence to make an offer, knowing you can actually make the purchase. Pre-approval also saves you from disappointment, because once you’re pre-approved, you’ll know just how much you can spend. You won’t waste time or set yourself up for disappointment by looking at homes that are out of your range.

You’ll have credibility with sellers, because pre-approval tells them that you can carry through when your offer is accepted. That gives it more weight and favorability than an offer from someone who only hopes he or she can get a loan.

Your pre-approval, which entails a complete check on your credit and financial history, should be done at least month in advance, so that any questions or concerns can be resolved before you’re ready to buy. While it’s true that approval is only good for up to 60 days, having it re-issued is a simple process.

Show you how to get pre-approved if you get denied.

If you try and fail, a good lender won’t give up on you. Instead, he or she will go over your credit report and financial obligations with you and show you ways that you can improve your standing.

Help you boost your credit score.

While other factors do play a part, the credit score is crucial. You can go to a credit repair company, but your lender will help you without charge. He or she will also expedite the changes, so you can be approved for a loan in less time. Credit bureaus generally take a few months to record the changes and re-calculate your score. Your lender can do what’s called a “rapid re-score” that corrects and updates your score within days.

Help you get approved even if your income isn’t “typical.”

If you earn a regular wage and receive a W-2 at the end of the year, determining your annual income is simple.

If you’re self-employed, are a business owner, or work in an industry that experiences peaks and valleys, it becomes a little more complicated.

Your lender will look at your last two years of tax returns in place of pay stubs and W-2 forms, and will determine your actual income after considering things like amounts deducted for depreciation. He or she will also give you good advice. For instance, if 2016 has been your best year ever, you might be advised to wait until after you’ve filed your 2016 taxes to make your loan application.

To get the best possible service from your lender…

Pick up the phone. On-line forms are nice, and yes we do use them, but talking person to person is the best way to create a working relationship. It allows both you and your lender to ask questions and helps the lender understand your position and just what kind of help you might need.

Here at Homewood Mortgage, the Mike Clover Group, we’re always happy to talk with future homeowners. We enjoy getting our clients pre-approved and seeing them fulfill their dreams of home ownership. In fact, it’s our life’s work.

So give us a call. You can reach us at 1-800-223-7409

Are you one of them? Are you sticking with a too-high interest rate because you’re not sure if you’ll qualify, or because you dread finding a lender and going through the process?
We’ll admit, getting a mortgage loan can’t be classified as fun, but it could be well worth your effort. Before you decide not to bother, consider these questions:
1. How much could you save? It all depends upon the rate you’re paying right now, and the rate you could qualify for in a refinance. It also depends upon how much a lender will charge to process your new loan.

Just for reference, consider this: For every $100,000 you owe, your payment will drop by at least $50 with a 1% reduction in your interest rate.

2. Do you plan to stay in your current home long enough to make it worthwhile? Unless you qualify for a program that allows a refinance without paying for an appraisal fee, etc. it will generally take a year or more to “break even” on loan costs. So if you’re planning to sell the home soon, refinancing is a poor idea.

3. Is your current lender the best choice for a refinance? He or she may or may not be the best choice, but it can’t hurt to start there – provided you were happy with the service you received the last time around.

Make an appointment and speak with your current lender. Find out the rate and terms he or she will offer specifically to you. Unless there’s some special program, this will involve going through the approval process, but it can be worth the effort in the long run.

Next, see what other lenders have to offer. It’s fine to check with 2 or 3 lenders before making a choice, and those lenders need not be in your own community. As long as they’re willing to talk with you on the phone and do return your calls when you have a question, it isn’t necessary to sit down across a table.

You will have already gathered all the information they need, so it will be easier the second time around. Don’t worry about having your credit report accessed twice. The credit bureaus know that people shop for loans, so if the inquiries are all within a short period of time, extra inquiries won’t harm your credit.

4. How can you find the right lender? One good way is to ask your favorite real estate agent for referrals. Agents work with lenders every day and know which have good programs – and good service.

It’s important to choose a lender who will take time to talk with you and explain anything you don’t understand. It’s also important to find someone who will return calls promptly and with whom you feel comfortable.

5. What should you be looking for when you interview a lender?

Interest rates: These change daily, so if this is the deciding factor, check with each of your top choice lenders on the same day.

Terms: Be sure that the lender outlines the terms attached to your loan, and tells you what can or will happen if the loan is sold. This is especially important with variable rate loans, but do be on the lookout for early payment penalties.

Closing costs: While this has become more regulated, there’s still a difference in closing costs between lenders, so get this in writing. This is one of the figures that plays heavily into whether or not a refinance is a good idea. If closing costs are $3,000 and you’ll only save $50 per month, it will take 5 years to break even.

APR: This is the annual percentage rate. It differs from the interest rate you’ll be quoted in that it combines the interest rate with closing costs such as origination fees and mortgage insurance and gives you the cost of your loan expressed as a percentage.

Closing time: When you’re quoted an interest rate it will be “locked” for a set number of days, usually 45. If the loan doesn’t close within that specified number of days, it “unlocks” and the rate can change. If you’re refinancing to save .5% and the rate goes up by.5%, then it makes no sense to go forward.

Each lender will give you a good faith estimate outlining rates, terms, and fees. Take them home and make comparisons, so you can make a wise decision. If two are the same or very close, choose the one who gives you a good feeling.

When you’re considering a refinance anywhere in Texas, call the Mike Clover Group at Homewood Mortgage. We’ll be happy to get you pre-approved, and then to go over all the numbers with you so you can see whether a refinance is in your best interests.

Yes, it takes a little time, but it will be time well spent if it can save you many thousands over the life of your loan. Remember, money you save is worth more than you earn because it’s not reduced by income tax!

You can reach us at 800.223.7409 or apply on line at mikeclover.com.

As home investors all know, “You make your money at the time of purchase.” How? By being a wise buyer.

While it’s true that you’re buying a home to live in, not to re-sell, you still need to keep that wisdom in mind. So consider another old investor adage: “Buy the worst home in the best neighborhood.”

No, I don’t mean you should buy a ramshackle, run-down home that will cost you thousands before the first year is up. By “worst” I mean you should consider homes that need a bit of cosmetic care, or perhaps a thorough scrubbing.

Carefully consider these points:

Begin by choosing that “best neighborhood.”

“Best” can be defined as a neighborhood that is, in general, well-kept. Look for pride of ownership in the neighboring homes. Notice the number of for sale signs. If they’re there in abundance, it might be safe to assume there’s a reason why so many people want out.

Unless you’re choosing a seniors’ only development, “best” can also be defined by the school district. Learn the boundaries, then go on line to research the schools and their ratings. Even if you have no children or your children are grown, you should think ahead to the day when you want to sell.

Once you’ve chosen a neighborhood – or two or three – begin working with an agent who knows the territory and will work hard on your behalf. Remember that loyalty to just one agent will get the best results.

As you begin your search…

Look Beyond Curb Appeal: Smart home sellers know that curb appeal sells homes – but not all home sellers are smart and not all have the time, energy, and money to create a beautiful exterior. One can always find Fusion Exteriors here, though. So take a second look at the homes other buyers are passing by because the lawn isn’t mowed or the window trim needs a new coat of paint. Look past the overgrown shrubbery to see the house itself, the size of the lot, and the possibilities for landscaping.

Interior condition: Beautifully staged homes sell faster and for more money. That’s a fact few can deny. And yet, you may walk into a house that’s completely cluttered, with unmade beds, dishes in the sink, and windows you can scarcely see through.

Many buyers will take this as a sign that the whole house is in disrepair and simply pass it by. Or, they pass it by because they want a house that’s move-in ready. But do look twice, because you might be looking at a rare bargain.

Be alert for signs of structural damage as evidenced by:

• Water Damage (contact BC Restoration Services in that case)
• Pest damage (that is crucial, if you really like the house better immediately call for specialists like those from the #1 Pest Control in Chicago, Illinois!)
• A sagging roof line
• Large cracks in the foundation
• Uneven or spongy floors

If you don’t see those things, then move forward and make your purchase contingent upon the results of a professional home inspection.

Whether the problem is exterior or interior condition, a house that doesn’t show well is apt to be on the market for a long, long time, with more and more price reductions along the way. Plus, the owners may be ready to entertain an offer below the list price. You could possibly save 3 or 4 times the cost of cleaning, repainting, and installing new flooring – or remodeling a kitchen or bathroom, according to the experts in exterior remodeling Fort Lupton.

Look at the floor plan and the functionality for your household. Hating the wall paper or the kitchen counter tops is not a good reason to pass up a house that will suit your family and comes at a bargain price. As long as the house is structurally sound, has room for everyone and a pleasing floor plan, give it a second look.

Don’t get hung up on square footage. Yes, the trend lately has been for larger and larger homes, which of course means larger and larger mortgage payments, larger and larger utility bills, and more and more time and/or money spent on upkeep.

Instead of choosing the largest, most expensive house you can afford, choose a house that has the space you need – and perhaps a floor plan and a lot that will allow for an addition should you (or a future buyer) want to expand.

Don’t over-spend. That big, beautiful, gorgeous home can turn into a lead weight around your neck if you have to forgo other pleasures just to make the payments and pay for upkeep. So consider your lifestyle, your hobbies, and the small pleasures you enjoy.

Your lender will tell you what you can afford based on verifiable income and expenses – but he or she has no idea whether you’ll feel deprived if you can’t attend concerts, dine at 4-star restaurants, or send your children to exclusive summer camps. You do know, so add a line to your budget called “enjoying life” and ask your lender to calculate your top home price with that as one of your expenses. A review by paul koger states that it is better to have the basic knowledge of trading while considering buying a house as it helps you in making wise choices based on the market condition.

When you’re ready to search for that home, make your first step a call to the Mike Clover Group at Homewood Mortgage. We’ll be glad to get you pre-approved so you can search with confidence.

You can reach us at 469.621.8484 or apply on line at mikeclover.com.

The 14 million or so self-employed borrowers in the U.S. naturally mourned when the housing crisis hit and banks tightened up their lending guidelines. Gone were the days of no-doc and stated income loans.

Following that, self-employed borrowers were required to complete a staggering amount of paperwork – enough to almost prove that they didn’t even need the loan. Like all borrowers, they had to submit information regarding income, debts, savings, employment history, and a record of where they’ve lived.

Of course the lender checked their credit and verified the information provided. All borrowers were (and are) also required to show the source of any large or atypical deposits to their bank accounts.

For self-employed borrowers, even more was required. For instance, in addition to bank records, they were required to submit copies of two years of complete federal income tax returns, plus documentation verifying the vitality of their business activities.

These stringent policies have now been eased.

First, self-employed borrowers who don’t regularly pay themselves wages from their business must now show only that they have access to income from the business. If not a sole proprietorship, this can be accomplished with a letter of incorporation or a K-1 filing showing the borrower’s ownership percentage.

Of course, they do need to show that the business income can support withdrawals.

The other two changes have to do with submitting federal income tax returns.

The old requirement for two years of tax returns has now dropped to one year. The borrower must show self-employment income from the business over the entire twelve months, and a cash-flow analysis must verify that the business is sound. The benefit – if things didn’t go so well the previous year, or if you were just getting started, you no long need to disclose the fact.

Next, borrowers who qualify for a mortgage loan without counting income from their self-employment are no longer required to submit their business tax returns as long as they have business w2 income and they qualify with that income only. This is a big plus for those whose self-employment is not yet contributing to their income – or for whom self-employment provides substantial “paper losses” to offset income tax on their wages or salaries.

If you’re self-employed and wish to purchase a new home or refinance an existing home, get in touch! The Mike Clover Group at Homewood Mortgage would love to help.

You can give us a call at 469.621.8484 or apply on line at mikeclover.com.

Mike Clover

R.M.L.O

Homewood Mortgage,LLC

O: 469.621.8484

C: 469.438.5587

F: 972.767.4370

18170 Dallas Parkway

Ste. 304

Dallas, TX 75287

For the past several years, would-be homeowners have been on the fence, wondering at first whether prices would continue to drop, and then feeling uneasy about the economy. And then of course there was that period of time right after the housing crash when lending standards were too stringent for many people.

But now… it may be time to take the plunge and either move up to a house better suited for you and yours – or move from renting to owning. Here are four good reasons:

1.      Prices are expected to keep rising.

Reports show that home prices in the U.S. have appreciated by about 6% in the past year. That varies from city to city, with some remaining steady and others appreciating at a much higher rate.

Core Logic predicts that over the next twelve months, prices will rise another 5.4%, and The Home Expectation Survey predicts an appreciation of more than 3.5% per year for the next 5 years.

So erase the thought that you’ll “get a better deal” next year than this year.

2.      Interest Rates are Still Low

While Freddie Mac’s Primary Mortgage Market Survey shows that interest rates for 30-year mortgages have remained at 3.5% or less for the past quarter, many of those “in the know” predict that rates will have increased significantly by this time next year.

Since a 1% rise in interest rates equals approximately $56 more per month in your mortgage payment for each $100,000 of loan value, this rise will definitely affect your buying power.

3.      Unless You’re Living With Mom & Dad, You’re Paying a Mortgage – it just might not be your own

Unless you have no housing costs because you live with family or friends, you’re paying for the roof over your head.

 You’re either paying it to the bank who gave you a home mortgage loan or you’re paying it to a landlord. The big difference is that when you pay it to the landlord, you’re also paying what he or she hopes will be a margin of profit for owning the property. As a tenant, you’re also paying into a fund to cover repairs, maintenance, and vacancies.

If you choose to purchase a home similar to the one you rent, your monthly outlay for a mortgage payment should be less than the rent you’re paying.  AND… you’ll be gaining equity each month.

4.      It’s Simply Time to Become a Homeowner

Why does anyone want to own a home? The reasons range from a desire for independence to wanting to put down roots in a community. You may want a home you can alter to suit your own family or you may want the security of knowing that your monthly outlay for housing can’t rise.

Whatever your reasons, when it’s time – it’s time. If it’s time for you – don’t wait, because waiting could cost you thousands of dollars.

When should you NOT consider purchasing a home?

When you know your employment is shaky or when you know you’re apt to move to a different city within the next 2 or 3 years.

Getting pre-approved for a loan before you shop is wise…

So visit to fill out our on-line application at http://www.mikeclover.com/ or call us at 800-223-7409 and we’ll get started.

Your pre-approval will serve two valuable purposes:

·         It will show you what you can afford, so you don’t fall in love with a home that is out of range.

·         It will strengthen your position with sellers – because they’ll be able to see that you can follow through with your offer.

Don’t wait. If now is the right time for you to own a home – get in touch today.

Mike Clover

R.M.L.O

Homewood Mortgage,LLC

O: 469.621.8484

C: 469.438.5587

F: 972.767.4370

18170 Dallas Parkway

Ste. 304

Dallas, TX 75287

You owe your individual ability to own a home to your own hard work and enterprise, but take a step back and consider how you got the freedom to own that home – and the freedom choose where and how you work and live.

For that, you owe the veterans who put their lives on the line to protect America and every American’s freedoms. Thousands did lose their lives in that effort. Of those who came home again, many suffer from physical disabilities they will carry for the rest of their lives.

Without veterans, we would without a doubt be living with no freedom to choose anything at all. 

We think that makes veterans highly deserving of home ownership.

That’s why we feel distressed when we hear real estate agents recommending that their listing clients decline to sell their homes to those using Veterans Association financing.

Their story is that VA loans are tougher – and that they cost the seller too much. While it is true that the VA won’t approve loans on sub-standard housing, the old regulations that required a seller to pay all of a veteran’s loan costs are a thing of the past.

The only standard borrower’s cost that cannot be paid by the veteran is the termite inspection fee – and in many cases inspectors waive that $75 – $100 fee when the buyer is a Veteran.

The fact is, agents who discourage their clients from accepting offers from veterans are ill-informed and sadly behind the times. They’re also forgetting who paid for our freedom to purchase and sell homes.

Any buyer can ask for seller concessions, and many do.

Whether the buyer is paying cash, using a conventional loan, borrowing through an FHA loan, or going with VA, he or she has the option to ask for seller concessions – and many do. Those concessions might include the seller paying some or all of the borrower’s loan costs, or might be something entirely different, such as giving an allowance for new flooring.

You as the seller are under no obligation to accept that offer as it is written, but can either reject it or negotiate with the buyer in an attempt to settle on a price and terms acceptable to both of you. This is the same whether the buyer has cash or is getting any type of loan.

Veterans aren’t asking for and don’t expect free housing. They’re simply asking for the same consideration and opportunity to purchase a home as any other citizen.

We believe they should be given that opportunity. In fact, we believe their offers should be given the highest consideration and priority.

Without veterans, you and I would not have the freedom to own a home, much less the right to sell one.

When you have a choice, choose a veteran to purchase your home – it’s the right thing to do.

Mike Clover

R.M.L.O

Homewood Mortgage,LLC

O: 469.621.8484

C: 469.438.5587

F: 972.767.4370

18170 Dallas Parkway

Ste. 304

Dallas, TX 75287

If you’re planning to sell your home within the next 3 years, the answer is no. Refinancing typically carries closing costs amounting to 3% to 6% of your loan amount, so you need to be planning to stick around long enough to reap the benefit.

Although 3 years is typical, how long depends upon the interest rate you’re paying now and the interest rate you could get today, so take the time to do the math before making a decision.

Otherwise, here are 4 good reasons why you should sit down with us at Homewood Mortgage and discuss your alternatives.

The first and most obvious reason is if you’re paying too much interest!

Conventional wisdom says that if you’re paying 1% or more above the rate you could get today, then it’s time to consider refinancing.

According to Core Logic, more than 1/3 of homeowners are paying at least 4.5% – and some of that number are likely paying more than 5 or 6%. Refinancing would save them thousands of dollars.

What if you don’t want to increase the time left on your mortgage?

Some homeowners hesitate to refinance because they’ve paid their mortgage down to 10 or 15 years and don’t want to start over. The good news is, taking out a 15 year loan will get you an even lower interest rate – and if you keep making the payments you’re making now, you’ll have that loan paid off even sooner than your original plan.

Next: You’re paying mortgage insurance.

Mortgage insurance adds a hefty fee to your payment each month, while giving you nothing in return. So if you now have at least 20% equity in your home, refinance into a conventional loan and get rid of that extra expense.

With home values climbing steadily, you could have more equity than you realize, so check into it.

Remember: You need to qualify for a conventional loan, since ALL FHA loans now carry mortgage insurance, regardless of your down payment.

Third, you need to take some cash out of your home equity.

If you’ve got some high interest credit card debt to pay off; if you need to invest in some repairs or upgrades to your home; or if you’re carrying a higher interest second mortgage that you could retire, a cash-out refinance could be a wise move.

Just remember – refinancing to take out cash for a car, a boat, or a vacation is a very, very poor idea.

Four: You’d like to shorten the life of your loan.

Yes, you could do this by simply making a larger payment each month, but why not take advantage of the low interest rates available for 15- year mortgage loans – so that more of those dollars go to reducing the principal each month?

To refinance or not to refinance should depend on just two things:

• Whether you plan to stay in your house for the foreseeable future.
• Whether the numbers make good sense.

We’ll be happy to discuss your situation with you. Then we can get you pre-approved for a loan and tell you what interest rate you’d be offered.

After that, we’ll help with the calculations so you can see the total costs and the total savings you’d see with a 15-year loan or a 30-year loan.

We’re the Mike Clover Group at Homewood Mortgage – and we’d love to help you save money!

Just give us a call at 1.800.223.7409.

Mike Clover

R.M.L.O

Homewood Mortgage,LLC

O: 469.621.8484

C: 469.438.5587

F: 972.767.4370

18170 Dallas Parkway

Ste. 304

Dallas, TX 75287

The answer lies in you, and your plans for the future.

First – what’s the difference between a fixed-rate and an adjustable-rate mortgage (ARM)?

A fixed-rate mortgage comes with principal and interest payments that remain the same over the life of the loan – whether it’s 15 years, 20 years, or 30 years.  30-year mortgage loans are the most common, while shorter term loans carry a slightly lower interest rate.

An ARM starts out with a fixed rate for the first few years, then it adjusts based on market indexes. That initial rate is always significantly lower than the rate on a fixed-rate mortgage.

The interest rate on this loan adjusts after a pre-set time. It might be 3 years, and could be up to 10 ten years. Some can only adjust by a set percentage per year, and some do have a lifetime cap. Some only allow for upward adjustments, so if the market indexes go down, your rate will remain the same.

The bottom line: Read all the fine print before choosing an adjustable-rate mortgage. Make sure you understand the terms.

But back to the question – which is better?

Fixed-rate Mortgages:

If you crave safety and predictability, and you see this as your long-term home, then you’ll probably prefer a fixed-rate mortgage loan. With interest at all-time lows, you might feel that interest can’t go anywhere but up, so a fixed-rate mortgage is your safest bet. This is the favored choice among those who plan to live in their homes for the predictable future.

The bonus: The only thing that can change is your taxes and insurance, so as your income rises, your house payment will occupy a smaller and smaller space in your budget.

The downside of a fixed-rate mortgage is that since payments will be higher, you might not qualify to purchase as much house as you might want. Also, should rates keep falling, you’ll have to refinance in order to take advantage of it.

But what if you know you’ll want to move up to a larger home or move to another community within the next several years? You might want to choose an ARM.

Adjustable-rate Mortgages:

If you know you’ll want to move before many years, you might be wise to choose an ARM and take full advantage of the even-lower rates you’ll enjoy in the first 3, 5, 7, or 10 years. This could be your opportunity to make increased payments and build your equity quickly, giving you more money for a down payment on your next home.

The advantages are that you might qualify for a larger/better home, and depending upon the terms of your loan, you might automatically see a rate and payment reduction if rates go down.

The disadvantage is that you’ll need to be careful to understand each of the terms of your loan, or you could get something you don’t want. For instance, there is an ARM called a negative amortization loan that could put you in a position of owing more than the house is worth. With this loan, you have extremely low payments, and you only pay a portion of the interest due each month. The rest of it is added to the principal, growing the size of your loan each month.

In addition, should we be faced with another housing crisis in which home values drop significantly, you could see a huge jump in your payment and be unable to refinance out of it.

Here at Homewood Mortgage, the Mike Clover Group, we strive to find the right loan for you and your individual circumstances. We’ll be happy to speak with you, to explain all of your options, to answer all of your questions, and to get you pre-approved for a loan before you begin shopping for that new home.

Just give us a call at 469.621.8484 or apply on line at www.mikeclover.com.

Mike Clover

R.M.L.O

Homewood Mortgage,LLC

O: 469.621.8484

C: 469.438.5587

F: 972.767.4370

18170 Dallas Parkway

Ste. 304

Dallas, TX 75287

The Majority of Home Buyers Opt for a 30-year Mortgage. Should you?

Why do 86% of home buyers choose a 30-year mortgage over a 15-year mortgage?

Even though a 15-year loan will carry a lower interest rate, and cost about 48% less over the long term than a 30-year loan, most borrowers look at the short term and choose the lower monthly payment.

Should you?

Here’s how it looks in actual dollars and cents:

Say you’re purchasing a $250,000 home and putting 20% down. Your new loan will be for $200,000. Interest rates fluctuate from day to day, but we’ll say a 30-year mortgage comes with 3.68% interest and you can get a 15-year mortgage for 2.69%.

• $200,000 at 3.68% over 30 years will bring your principal and interest payment to $918.31.
• $200,000 at 2.69% over 15 years gives you a payment of $1,351.54.

That’s a hefty difference in a homeowner’s monthly budget. You could use that $433.23 per month difference to buy new appliances, go out to dinner more often, or even save for a vacation. Or – just save it.

But look at what it will cost:

• $918.31 paid over 360 months (30 years) comes to $330,591.60.
• $1,351.43 paid over 180 months (15 years) comes to $243,257.40.

That’s a difference of $87,334.20.

The lower payment does give a measure of security against a day when you might not be able to afford the higher payment. So if you worry about a future job loss, illness, or fluctuating income, you may want to opt for the smaller payment and put the difference aside as a safety cushion.

Perhaps you know you won’t be staying in the house for 30 years, or even 15 years.

If you’re thinking that you’ll want to move in another 10 years, consider the impact on your loan payoff when you sell the house.

• If you opted for the 15 year payoff, your unpaid balance will be approximately $75,796.
• If you opted for the 30 year payoff, your unpaid balance will be $155,842.

Paying that extra $433.23 per month for 10 years (120 payments) will “cost” you $51,987.60 and reduce your loan payoff balance by $80,046. That’s a savings of $28,058.40.

If opting for a 15-year mortgage is too frightening…

Although you’ll be paying a little higher interest, you can do what young man of my acquaintance does. His monthly payment is $745, of which $237 goes to principal. By writing a check for an even $1,000 each month, he’s paying an extra $256 toward the principal and effectively more than doubling his payments during the early years of the loan.

Mike Clover

R.M.L.O

Homewood Mortgage,LLC

O: 469.621.8484

C: 469.438.5587

F: 972.767.4370

18170 Dallas Parkway

Ste. 304

Dallas, TX 75287