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Reverse Mortgages: Read the Fine Print

A reverse mortgage is a type of mortgage that allows homeowners to borrow against the accrued equity in their homes. The loan is paid back when the loan borrower moves or dies. There are advertisements for reverse mortgages all over the television, radio, and on the internet. However, some of these advertisements make incomplete or inaccurate statements. This is not a risk-free loan.

Older homeowners were surveyed about their impressions of reverse mortgage ads. Many believed that these loans did not have to be repaid. Others believed that the federal government provided the money. Some believed that they could access the equity in their homes interest-free. Many ads say that you can live in your home as long as you want and you still own your home. The ads neglected to mention that seniors could lose their homes if they don’t satisfy all the loan requirements.

With more Americans living longer, it is possible that reverse mortgage borrowers may outlive their loans, so borrowing without careful consideration of the pros and cons of a reverse mortgage is not a good idea.

A Reverse Mortgage is a Home Loan

A reverse mortgage is a home loan. It is not a government benefit. Reverse mortgages have the same fees and interest structure as other loans and must be repaid just like any other mortgage loan. U.S. federal insurance guarantees that borrowers will receive their loan funds even if their lender is experiencing financial difficulties or the balance of their loan exceeds the value of their home.

You Can Lose Your Home with a Reverse Mortgage

You can keep ownership of your home and live there as long as you want only if you comply with all the terms of the reverse mortgage loan. If you do not pay your taxes, or your homeowners’ insurance, or leave your home empty for more than six months, you may be considered in default on your loan. Your home can be foreclosed upon when this occurs. The best thing to do if you are considering a reverse mortgage is to speak with a mortgage specialist like the ones at Superior MCI.

What Happens if you Outlive Your Loan Proceeds?

A reverse mortgage does not guarantee your financial security no matter how long you live. Currently, people are living much longer lives than they were twenty years ago. Having short-range and long-range goals for living after retirement should be your motivation. In this way, if you want to access some of your home equity, you will wait for the right time so you won’t run out of retirement resources as you grow older.

Superior Mortgage Company, Inc. can advise you about the best mortgage loan option for you. We understand how important these decisions are and offer residential and commercial loans as well as a wide range of products and services to give you the best options for your mortgage loan. Call Superior Mortgage Company, Inc. at 845-883-8200 or email sales@superiormci.com for additional information.

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What Kind of Home is the Perfect Choice for You?

Buying a home is usually the most expensive purchase you will ever make. It will shelter your family, provide security, and be your investment into the future. But what kind of home is right for you? Are you looking for a single-family home, condo, co-op, or townhome? How many floors do you want? How much square footage? Do you need a one or two-car garage? Would you like a pool? If you are feeling overwhelmed by all the choices, Superior MCI can help to break it down.

The Choices

A single-family home is an unattached home for only one family and has some green space on every side. You are completely responsible for any maintenance, repairs, upkeep, landscaping, and structural extras you wish to add.

A townhome is very much like a single-family home except that you are typically sharing a wall with a neighbor. The property is usually narrower than a single-family home and may have more than two floors. The homeowners’ association (HOA) is generally in charge of the common areas belonging to all the townhome owners. Monthly dues are paid to the HOA by the townhome owners for upkeep, maintenance, and repair of the common areas. Structural changes to the townhome are generally not permitted.

A condominium, or condo, is a group of apartments where the homeowner owns the air between the walls but not the physical walls, ceilings, or floors of the unit. The HOA takes care of cleaning the windows, fixing pipes, and maintaining common areas such as a pool. In other words, condo owners share ownership of the common areas. The HOA collects monthly dues for the upkeep of the building.

A co-op is a bit confusing because they aren’t seen as real property. In essence, when you buy a co-op, you become a shareholder in the corporation that owns the property. If the property is a multi-family building, you have exclusive rights to your unit. Co-ops are popular in urban areas and require a monthly maintenance fee for repair and maintenance. The co-op board controls decisions relating to the building, including who can buy a co-op in the building.

Ask Yourself Questions

To find out which home is best for you and your significant others, there are several facts to consider, such as:

· How big is your family?

· Do you have pets?

· Do you have a lot of stuff?

· Are you a ‘do-it-yourself’ person who likes home projects?

· If you think a co-op is for you, can you handle co-op board drama and putting your personal life on blast for a co-op board? Co-op boards can reject your application without letting you know why.

· Besides your mortgage, condo and co-op fees can add up. If your shared property needs repair, maintenance, and upkeep, can you afford an assessment added on to your monthly costs?

· Generally speaking, if you buy a single-family home, you are free to live in it as you wish. If you buy a condo, co-op, or townhouse, chances are you will be restricted from doing what you want by the covenants, conditions, and restrictions (CC&R’s) of your homeowners’ association.

Superior Mortgage Company, Inc. has all the information you need about residential and commercial loans and offers a wide range of products and services to give you the best options for your mortgage loan. Call Superior Mortgage Company, Inc. at 845-883-8200 or email sales@superiormci.com for additional information

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What NOT to Do During a Recession

In an uncertain economy or an actual recession, you may be facing important decisions such as whether to purchase a car, invest in a risky stock, or become a cosigner for a family member. There are financial risks that everyone should seriously reconsider during risky economic times, including:

 

  • Becoming a Cosigner: Even in the best of times, cosigning on a loan is very risky. If the person taking out the loan forgets to make a payment or is consistently late with their payments, it is your credit history that will be impacted and you could also be asked to make those payments. In an economic downturn, the risks are much greater since the person taking out the loan can lose their job. If you feel you have no choice and must cosign for a loan, it is important to set aside some money in case the worst happens.

 

  • Taking out an Adjustable-Rate Mortgage: When buying a new home, you may choose to take out an adjustable-rate mortgage (ARM). In many cases, this may be a good move, especially if interest rates remain low. If the economy begins to falter, and you lose your job and interest rates increase, your monthly payments will increase. Late payments or non-payments will have an adverse impact on your credit rating, making it difficult to obtain a loan in the future.

 

  • Taking on Debt: Taking out a loan for a car or home may not be a problem when the economy is doing well as long as you make enough money to cover your monthly payments and contribute to your retirement savings. However, if the economy takes a turn for the worse, your risk goes up, especially if employment is not stable. If you are considering adding additional debt to your financial portfolio, this could complicate your financial situation if you become unemployed or your income is reduced. In a worst-case scenario, you could even be on your way to declaring bankruptcy.

 

  • Taking Your Job for Granted: In an economic slowdown, even large corporations can come under financial pressure. While this may simply mean cutting out the open bar at the holiday party, it could also mean cutting the shareholders’ dividends or laying people off. Most jobs become vulnerable during a recession so employees should do everything they can to make sure their employer maintains a positive opinion of their work product.

 

  • Taking Risks with Investments: It is important to always be thinking about the future by investing money. However, a shaky or uncertain economy may not be the best time for an increased level of risk. For example, taking on a new loan to purchase a second home or to add another floor to your home may not be the best idea if the economy is uncertain. If business slows, which can happen during a recession, you may not have enough money at the end of the month to pay your installments on time.

Contact the Mortgage Company with All the Answers

Superior Mortgage Company, Inc. knows everything about residential and commercial loans and offers a wide range of products and services to give you the best options for your mortgage loan. Call Superior Mortgage Company, Inc. at 845-883-8200 or email sales@superiormci.com for additional information.

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Closing on Your Perfect Home

Many homebuyers will tell you that closing on a home can be just as nerve-racking as looking for a home and shopping for a mortgage. Anything can happen at the last moment and frequently does. Your mortgage loan officer can help you understand what the pitfalls are so you are able to avoid or minimize closing problems and delays.

Before Your Closing Date

After deciding on the perfect house for you and your family, and upon getting the right mortgage for your circumstances, you will be tasked with preparing and submitting the required paperwork. Your loan officer, real estate agent and the closing officer should be working together to make sure that the closing goes off without a hitch. However, your closing is only one of many that are being handled by these loan professionals. To assist in making the process go smoother, stay aware of the documentation and deadlines important to the closing to help smooth over any bumps in the road.

Potential Problems and Solutions

· Paperwork Mistakes

Errors in the information you provide can complicate the closing process. No matter if you misspelled a name, got a date wrong, or forgot to include some pages, the mistake can delay the closing by hours or days.

To help prevent this from occurring, review every piece of documentation in advance. Focus on the loan documents and examine them closely. If you don’t understand something on the documents, get your questions answered in advance.

· Mortgage Delays

Do not depend on others to make sure all the paperwork is correct. Your loan officer may be working on several loans at the same time and your loan may not be on the top of their priority list.

It is a good idea to check in on a weekly basis to make sure that they have whatever they need. If there are missing documents or other significant problems, you can contact them more frequently.

· Making Sure the Down Payment Arrives on Time

You may assume that your down payment will be there when the bank tells you. However, the transfer of funds can be delayed for various reasons.

Keep an eye on the transfer. You may even want to make your down payment in the form of a cashier’s check to ensure that the money gets to the right people on time.

· The Title

You must insist on a clear title with no problems before closing. Your lender will also need it.

Get a copy of the preliminary title report from your title company or lender.

· The Walk-Through

What happens if the day before closing, you do a walk-through of the property and the fixtures are missing or there’s a new leak in the bathroom.

Get in touch with your real estate agent to speak with the seller’s agent to solve any problems. There are several ways to work through these kinds of issues with the seller such as negotiating a credit on your closing fees or putting money in escrow until the problems are solved.

Find the Best Mortgage Company

Superior Mortgage Company, Inc. knows everything about residential and commercial loans and offers a wide range of products and services to give you the best options for your mortgage loan. Call Superior Mortgage Company, Inc. at 845-883-8200 or email sales@superiormci.com for additional information.

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Is a Hybrid Loan Right for You?

There are many forms of hybrid loans that can help home buyers. Hybrid, or mixed rate loans, feature both fixed-rate loans and adjustable-rate mortgages, or ARMs, so you can take advantage of having both during the loan payment period. Both types of loans have benefits and drawbacks.

Fixed-Rate Loans

Fixed-rate loans are predictable. Your interest rate will not change so you will always know how much you need to pay every month. Adjustments to your rate do not typically begin until the loan has been in force for a minimum of ten years. 

Adjustable-Rate Loans

Adjustable-rate loans generally start at a much lower interest rate which is helpful for many home buyers. But if interest rates rise, so does your payment. Lower interest rates are also helpful for borrowers with less than good credit scores who may then have time to build a better credit history and a higher credit score. 

Hybrid Loans

Hybrid loans are helpful if you plan to move or refinance your property within a short time. You may be able to get out of the loan before any rate adjustments occur if you make additional payments, or prepayments, to pay off your loan balance before any rate adjustments begin. 

Usually, interest rates on a hybrid loan are significantly lower than rates in a standard 30-year mortgage and do not change until several years later. It is important to speak with your lender about a cap on how much the interest rate can change in a given year. 

A hybrid ARM uses a fixed rate for three years, five years, seven years, or ten years. During that period, the rate stays the same. For example, a 7/1 hybrid mortgage ensures that the rate will remain the same for seven years. After the time expires, the interest rate changes. In a 7/1 hybrid mortgage, the rate is locked for years but will fluctuate every year after the seven year period. 

Determining the Interest Rate

Two factors impact your interest rate. Your lender starts with an index rate and then adds a spread. If your loan uses the London Interbank Offered Rate (LIBOR) as an index to determine your interest rate, your rate will move when the index moves. However, your lender may limit or cap how much your interest rate can change. Initial caps limit how much your interest rate will change when your fixed rate period is over. Periodic caps limit interest rate changes every time an adjustment occurs. Lifetime caps limit how many adjustments can happen over the life of the loan. 

It is vital to work with a mortgage company that can offer you the widest range of products and services when looking for the right mortgage loan. Superior Mortgage Company, Inc., is a specialist in residential and commercial loans and has access to all the loan options available to borrowers. If you want to purchase your first home, a second home, or simply make improvements on an existing property, we can help. We have the skills, experience, and the best products available to help you make the right decision. Call Superior Mortgage Company, Inc. at 845-883-8200 or email sales@superiormci.com for additional information. We look forward to hearing from you

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Mortgages for Self-Employed People

Getting approved for a mortgage takes determination. Getting approved for a mortgage can be even more daunting when you are self-employed. You will typically need to show more documentation related to your income, assets, debt-to-income ratios (DTI), and taxes. Knowing what is involved beforehand is helpful in making the process proceed smoothly.

First Things First

When you are considering getting a mortgage, remember that the lender wants to see that your income is consistent and stable. Make sure your income tax returns are completed for the last two years. If you have not filed your current taxes, you can submit a profit and loss statement as long as it is audited by a certified public accountant (CPA). A lender generally takes an average of your yearly income for the last two years. 

Credit Scores

The higher your credit score, the easier it will be to obtain a mortgage. If your credit score is under 700, you may wish to work on improving it before applying for a mortgage. Monitor the three credit scores to make sure that all the information on it is 100 percent accurate. If not, correct any errors as soon as possible. 

Assets

To offset a lower credit score, or if your business is not currently generating the income you would like, consider a larger down payment. You may want to put 20 percent down, even if the lender is asking for five percent, to compensate for a riskier income profile.

Debt-to-Income Ratio

Debt-to-Income ratio (DTI) is a formula used by the mortgage industry that determines if your income is sufficient to repay the mortgage loan that you are applying for. It is broken down into two components. It will calculate what your new mortgage payment will be and divide it by your stable monthly income. For example, if you earn $4,000 monthly, and your loan will require monthly payments of $1,000, your housing DTI will be 25 percent. Lenders usually would like the ratio to be 28 percent or lower. The mortgage payment includes any property taxes, insurance costs, private mortgage insurance if applicable, and homeowner’s association fees. 

DTI is also calculated with all of your recurring debt besides housing and can include credit card payments, car loans, child support, utility bills, and other expenses. Lenders are looking for your DTI ratio to be approximately 36 percent. However, if your down payment is substantial and you have good credit, a lender will look at the total picture to make their decision.

Superior Mortgage Company, Inc. specializes in residential and commercial loans, providing a wide range of products and services to give you the best options for your mortgage loan. Regardless of whether your credit score and DTI ratios need improving, we want to help. We will help you make the smartest choice because our experience and skills are second to none. Call Superior Mortgage Company, Inc. at 845-883-8200 or email sales@superiormci.com for additional information. Let us help make your dreams a reality. 

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Fair Housing Rights for First Time Buyers

Looking for your first home can be an exciting time. It can also be a frustrating time if your efforts to find your perfect house are blocked by unfair or unscrupulous practices. Under the Fair Housing Act, housing discrimination is illegal in almost all housing whether it is private, public, or housing funded by the federal government.

Although the Fair Housing Act covers most housing, it does not cover single family homes sold or rented by the owner without the assistance of a real estate agent, housing belonging to religious organizations, private clubs that do not allow occupancy unless you are a member, and owner-occupied buildings with under four units.

Discrimination is Illegal

HUD’s Office of Fair Housing and Equal Opportunity (FHEO) is committed to ending housing discrimination and promoting economic opportunity through their housing laws. If you think that you may have been denied housing because of your race, gender, family status, national origin, color, disability, or religion, in violation of fair housing laws, you can file a complaint with the FHEO. 

Some examples of discriminatory practices may include:

  • Refusing to rent or sell property;
  • Denying that housing is available;
  • Evicting you without due cause;
  • Discouraging you from buying or renting;
  • Harassing you;
  • Retaliating against you because you filed a complaint;
  • Imposing different sale prices or rent charges based on your protected status;
  • Attempting to stop you from renting or buying by using threats, coercion, or intimidation; and,
  • Delaying or ignoring maintenance requests.

Housing providers must make reasonable accommodations and can modify or replace existing structures to help disabled individuals, and certain multifamily housing must be accessible to people who are disabled through the Americans with Disability Act (ADA).

Discriminatory Mortgage Lenders

Mortgage lenders, such as Superior MCI, are committed to providing fair and equitable loans and other financial assistance to people who are looking for the perfect mortgage for their family. The Fair Housing Act also makes it illegal for any mortgage company to refuse to provide information on loans or impose different points, fees, or interest rates based on race, gender, family status, national origin, color, disability, or religion. 

Contact Superior Mortgage Company, Inc.

Superior Mortgage Company, Inc., specializes in residential and commercial loans. We provide a wide range of products and services as well as the best products and services available. Regardless of whether you want to purchase a first home, vacation home, or commercial property, we can help. If you are interested in refinancing your home or need a Home Equity Line of Credit (HELOC), we can help. Even if your credit is not where you want it to be, contact the mortgage company to obtain the information you need to make the best decision. Call us at 845-883-8200 or email sales@superiormci.com. We look forward to hearing from you.

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4 Things Every First-Time Home Buyer Must Do in Advance

Life takes you to amazing places, but it is your love that gets you home. Are you ready to buy your first home? It is natural to feel the stress, as you are taking one of the most important steps in your life. Let’s make your experience of first home buying worth the biggest and best purchase of your life.

1. Make Your Own Budget

Imagine, you are interested in buying a home, but the price quoted is unaffordable. It may leave you heartbroken. If you try to cobble up finances, it may add to your stress. Therefore, a first home buyer must determine the affordability before selecting a property. 

Start with your salary and find out how much you can repay monthly. Another important thing for a first-time homebuyer to consider is the down payment.  

The availability of online loan calculators makes it easier to plan your finances and get a clear idea of the amount to pay. It is advisable to restrict your mortgage liabilities to 30% of your income.

2. Consider Down Payment Assistance

The down payment varies from 3 to 20 percent of the house price. If you have not enough savings, explore the option of down payment assistance. Go through the details of eligibility, the pros, and cons of any such federal, state, county, and nonprofit program.

The assistance covers part of the payment or the full down payment. It can be of three types.

  • Down payment grants: You don’t have to repay the amount.
  • Forgivable second mortgage: It comes with zero-percent interest or a deferred repayment. 
  • Matched savings programs: It is a kind of matching grant. 

Check the eligibility, conditions, recapture period, and requirements, such as credit score and the debt-to-income ratio.

3. Get Ready for the Mortgage 

To apply for a mortgage, the first thing you need is a good credit score. It has a bearing on both the loan approval and the interested rate to be offered. Start by checking your credit reports. Even you can use online or offline resources to verify your credit score. If you see any discrepancy, get it corrected. Pay your balances and avoid the card for two billing cycles. Don’t apply for new cards until you buy your own house. It helps improve the score.

Next is preparing all your documents. You need to have the W-2 income statement by your employer, bank statements, and paystubs in order. If you are into a profession or business, you need last three tax returns to submit.

4. Start Mortgage Shopping

Contact different banks and lenders for mortgage pre-approval. It is free and does not impose any liability. Analyze the terms each offer. Consider both fixed and adjustable interest rates based on your tenure and the prevailing economic condition. Never forget to ask about mortgage fees. Ask them the charges for preparing documentation. Check both online and with local banks to see the difference between various mortgage quotes.

The excitement as a first-time homebuyer is discernible and you have a lot to think and do before finalizing your preferred home. With a proper, step-by-step plan, you can make it easy, free from any hassle, and an exhilarating experience to share with others.

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3 Things Every First-Time Home Buyer Should Do in Advance

Are you ready to buy your first home? It is natural to feel the stress, as you are taking an important step.  Make your experience of first home buying worthy of one of the biggest and best purchases of your life.

1. Determine Affordability Before Selecting a Property

Start with your income and figure out how much you can repay monthly. Another important thing for a first-time homebuyer to consider is the down payment.  

The availability of online loan calculators makes it easier to plan your finances and get a clear idea of the amount to pay. It is advisable to restrict your mortgage liabilities to 30% of your income.

2. Get Ready for the Mortgage 

To apply for a mortgage, the first thing you need is a good credit score Start by checking your credit reports. Use available resources to verify your credit score. If you see a poor rating, correct it. Pay your balances and avoid the card for two billing cycles. Don’t apply for new cards until you buy your own house. It helps improve the score.

Next prepare your documents. You need to have your tax information such as W-2 income statement by your employer, bank statements, and paystubs in order. If you own a business, you need to submit your last three tax returns.

3. Start the Mortgage Process

Consider checking with Superior MCI before you look anywhere else. We will be happy to meet with you and offer you the best rates available.

The excitement in being a first-time homebuyer is real. There is a lot to think about and do before finalizing your home purchase. With a step-by-step plan, you can make it easier, free from any hassle, and an exhilarating experience to share with others.

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First Time Home Owner Series: Should a Starter Home be Your Dream Home?

Just because you can afford a 2,500-square-foot home sitting on an acre lot doesn’t mean you should buy it. When shopping for a starter house, some first-time buyers will get pre-approved for a mortgage and then shop based on the maximum they can borrow. If the mortgage company said they can afford it, then why not go for the home at the top of the budget? But doing that can create a bad financial situation if the homeowner is struggling to pay the mortgage each month or if all of the money is tied up. If all of your money goes to maintain your home, you may quickly accumulate debt.

Experts say it’s best to stay in the home you purchase for five to seven years to recoup the costs and to see some return on your investment. Purchase a property you can afford. Instead of going all-in with your first home, opt for a more affordable starter home that won’t break the budget and leaves room for entertainment or unexpected life expenses that will undoubtedly arise.

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