Is a reverse mortgage a good idea? For homeowners who don’t know the ins and outs of lending, this topic can be quite confusing. 

Fortunately, this guide from some of the best mortgage lenders in Tucson, Arizona, can help you navigate your finances and settle any debates regarding a reverse mortgage loan. If you’d like some help, you can also contact experts like Altitude Home Loans to find some clarity on the matter.

What Is a Reverse Mortgage?

A reverse mortgage is a special type of home equity loan exclusively available for homeowners above the age of 62. Borrowers can tap their home equity (usually over 60% of the home’s value) to receive payments so that they can continue living in the house. 

The lender you choose will calculate the loan-to-value ratio before making an offer. The figure indicates whether the home’s current market value could potentially cover the loan amount still outstanding on the mortgage. It’s important because you or your heirs will need to pay off the loan, and you’ll have no trouble repaying the lender up to the value of the house.

With a reverse mortgage, you get the equity portion back in monthly payments, a lump sum, or a line of credit from the lender. A financial planning professional can help you navigate which type of payment will suit your needs. However, note the following:

• While you won’t have mortgage payments, you will still need to cover your property taxes, homeowners insurance, and other related expenses.
• The balance of the loan will go up every month since fees and interest rates accrue. 
• Typically, you’ll have one year to repay the loan if you move out prior to closing out the reverse mortgage loan.

When Is a Reverse Mortgage a Good Idea?

So, when is a reverse mortgage a good idea if you’re an eligible homeowner? Consider taking out a reverse mortgage for the following:

• Pay expensive medical bills or debts.
• Cover your monthly expenses.
• Make your home more accessible with costly home improvement projects.
• Help your family with finances.

The supplemental payments you receive through this loan can be a significant help. You don’t need to be struggling financially to take out a reverse mortgage loan, either. For instance, you might choose to put the money toward paying for a grandchild’s college expenses. 

Are There Drawbacks to a Reverse Mortgage?

While there are certainly times when a reverse mortgage is ideal, there are a few drawbacks. For example, these loans tend to come with higher fees and closing costs. They also cost more to pay off due to accruing interest fees, which are not tax-deductible.

Also, keep in mind that scammers who prey on seniors research this loan, too, so only turn to a trusted lender.

Speak With a Mortgage Specialist From Altitude Home Loans Today!

Is a reverse mortgage a good idea for you? Can you focus only on principal reduction in mortgage payments? Contact Altitude Home Loans at (520) 500-1010 or submit a request online today to connect with a specialist who can set you on the right financial path!

Falling on hard times makes diligent mortgage repayments more challenging. In the past, homeowners with negative equity were able to access principal reduction programs. But today’s property owners need to look elsewhere.

What is principal reduction when it comes to your mortgage loan? Below, Altitude Home Loans discusses mortgages and home purchasing in Tucson, AZ. Read on, and be sure to call us if you’d like to know more.

What Is Principal Reduction?

The idea of principal reduction involves decreasing the amount someone owes on a loan, not counting the interest portion. Finding ways to reduce the principal amount ensures borrowers have an easier time repaying the loan. It also alleviates the risk of foreclosure and reduces the total interest owed over the term.

During 2008’s subprime financial crisis, the market crash meant that many homes ended up with negative equity (they were worth less than originally invested). Lenders agreed to drop the principal balances of their loans to aid distressed borrowers. This move kept people in their homes and averted the foreclosures that mortgage companies might have had to deal with.

That’s also why programs like the Hardest Hit Fund (HHF), HAMP, and Principal Reduction Modification became available.

How Principal Reduction Helped Homeowners and Banks

So, what did principal reduction do for homeowners? And why did the government and banks encourage these programs?

Foreclosures leave property owners without homes and banks financing losses. Homeowners of the past would usually take mortgages they couldn’t afford, betting on getting more money for selling their property as real estate prices increased from year to year. However, when property values decreased instead, there was a collective inability to pay, and countless homes dipped into negative equity. 

With principal reduction programs, struggling homeowners remained in these houses and tried to get back on their feet.

Two Principal Reduction Programs Examples

The main principal reduction programs were the Principal Reduction Modification Program and Home Affordable Modification Program.

• Principal Reduction Modification. The Federal Housing Finance Agency began this program in 2016 for Fannie Mae or Freddie Mac loans. The borrowers had to owe $250,000 or less and meet several criteria.
• Home Affordable Modification Program (HAMP). Borrowers had to show they were experiencing financial hardship. And the property could not be unlivable or condemned. This program ended in 2016.

What to Do If You’re Struggling to Pay Your Mortgage

While previous principal reduction programs are no longer an option, it isn’t only loan forgiveness that potentially reduces how much you have to pay back. Some property owners are able to pay their mortgages off early. If that’s not you, looking into ways to reduce your mortgage payment or get help with your mortgage is still essential.

Why not ask for a loan modification or loan forbearance for a short period? Refinancing can also lower monthly repayments.

Learn More About Mortgage Assistance

What is principal reduction able to achieve for today’s homeowners? Altitude Home Loans would love to tell you more about it. We have extensive knowledge about how inflation affects housing prices, home refinancing, mortgages, and more, so call 520-500-1010 today for more information!

Buying a home comes with lots of paperwork, including the mortgage commitment letter. What is a mortgage commitment letter, and what does it mean for your home-buying journey?

Our team at Altitude Home Loans offers home purchasing assistance in Tucson, AZ. We’ll walk you through the contents of a mortgage commitment letter so you better understand what it means for potential purchases. Call us at 520-500-1010 to learn more, and read on to learn all about how it fits into the process of buying a home.

What Is a Mortgage Commitment Letter?

Most people can’t afford to purchase property without financial assistance. That financial assistance comes in the form of loans from designated lenders. Before providing that assistance, the lender must carefully review multiple aspects of your financial health, including:

• Your credit score
• Your personal finances 
• Your income
• Your current assets 

After a thorough application review, the lender decides whether or not to pre-approve your application. 

So, what is a mortgage commitment letter, and how does it fit into all of this? A mortgage commitment letter is the document the lender sends to you after pre-approving your application for a loan.  

Types of Commitment Letters

While mortgage commitment letters are a positive sign, they don’t necessarily represent a resounding “yes” from the lender. There are two types of mortgage commitment letters with different meanings. Before you get your hopes up, review the letter to understand what it means.

• Conditional mortgage commitment: This most common type of commitment letter means that the lender pre-approved your application. However, the lender hasn’t yet underwritten specific loan terms. At most, they’ve drafted potential terms to which they may agree. But you must meet their requirements first. 
• Firm mortgage commitment: This letter specifically states the loan sum your lender offers to help you reach closing costs on a property. 

Each type has an expiration date. Any terms stated in the letter only hold value until that date. Although only firm mortgage commitments hold any official terms, both letters can show sellers that you’re serious about your offer.  

Why Are Commitment Letters Important?

While commitment letters don’t always guarantee loan approval, they do show that the lender considers you a viable candidate for a loan. They can also help you lock in an offer on a property with a seller. Either type of letter can increase your property options and help you get an edge in a competitive buyer’s market. 

After you obtain a mortgage commitment letter, you are one step closer to procuring the property you need for your family. It increases your bargaining power in a ruthless real estate market by eliminating purchasing competitors without disposable funds on hand.

Let Altitude Home Loans Assist You 

What is a mortgage commitment letter? Ultimately, it is a way for you to improve your purchasing options while getting an edge with sellers. At Altitude Home Loans, our experienced loan officers can help you procure adequate loans that help you cover transfer taxes and other property fees. 

Call 520-500-1010 for assistance in your home-buying journey today.

The deed of reconveyance is one of those real estate terms many people don’t know, but it is still crucial for homeowners to understand.

Property owners use a deed of reconveyance to transfer property from a lender to a borrower after paying off their mortgages. If you’ve ever had a mortgage, then it’s essential to understand what a deed of reconveyance is. 

This article explains how a deed of reconveyance works and what you need to know about them. If you want to learn more about obtaining a home-purchasing loan in Tucson, call our team at Altitude Home Loans at 520-500-1010.

How Does a Deed of Reconveyance Work?

When you take out a mortgage, you borrow money from a lender. Once you’ve fully paid your mortgage loan, your lender will issue you a deed of reconveyance. This document confirms that your title now belongs to you, the borrower.

Having a deed of reconveyance is crucial if you want to sell your home in the future. Real estate agencies and prospective homeowners alike can do a title search on your property, looking for relevant legal documents. If you have a deed of reconveyance, they’ll know that your home is no longer at risk of foreclosure.

If you ever need a new mortgage, you’ll receive another deed of reconveyance confirming that you paid off your previous mortgage. It’s important to keep in mind that deeds of reconveyance vary from state to state. For example, some states prefer to use satisfaction of mortgage documents, but these are the same in all but name.

Parts of a Deed of Reconveyance

A standard deed of reconveyance includes the following:

• The name of the lender
• The name and address of the mortgage borrower
• Property description and post office information
• Proof that the borrower has paid their mortgage in full
• Lines for signatures from all parties and a third-party notary

Any deed of reconveyance document missing one or all of these pieces is invalid. Ensure that your deed of reconveyance document follows relevant standards for your state. If you have any questions about your financial obligations, don’t hesitate to contact your local mortgage professionals.

What Happens with Incorrectly Filed Deeds of Reconveyance

Erroneous or non-existence deed of conveyance documents cause title issues. A homeowner who lacks a proper deed of conveyance will have a hard time selling their property. Check with your local county record’s office to ensure you have a proper deed of reconveyance on file.

What Is the Difference Between Conveyance and Reconveyance?

Conveyance refers to the transfer of property ownership from one party to another. Additionally, conveyance requires a deed that outlines the parties involved and the property in question. However, reconveyance refers to transferring a property title between a lender to a borrower.

Professional Mortgage Services in Tucson, AZ

If you need a deed of reconveyance for your Tucson home, look no further than Altitude Home Loans. Our team knows all about the mortgage process steps and can gladly help you along your mortgage journey. Contact us today to speak to one of our certified mortgage professionals in Tucson, Arizona, by calling 520-500-1010.

Buying a new home can be quite an exciting (and somewhat stressful) experience, especially when it comes to tax rates, fair market, and closing costs. You might wonder, “how do I afford a new home?”. To help answer questions like this when looking for a home purchasing loan in Tucson, read more about the process below.  

When you make the decision to start looking for a new home, you might be thinking to yourself, “what are transfer taxes on a mortgage?”. While the rules of transfer tax can change depending on your location, it’s important to be prepared by knowing what a transfer tax is and how it appears on a mortgage. 

In this blog post, we’ll discuss what transfer taxes are and how the team here at Altitude Home Loans can help you throughout the process. 

What are Transfer Taxes? 

Before we fully dive into answering the question of “what are transfer taxes on a mortgage?”, let’s go over mortgage and what it is.

A mortgage is a loan agreement between the buyer and a lender and it’s what gives you the capability as a new homeowner to purchase real property. Over time, you continue to make mortgage payments. If you fail to do so, the lender you made the agreement with can take the property back. This is why it’s important to keep up with your payments after buying a home. 

A transfer tax, not to be confused with property taxes, is a one-time payment enforced by the state or local jurisdiction when a transfer of real estate property occurs between the seller and a qualified buyer. To put it simply, it’s what happens when a property changes ownership. The transfer tax is equal to the percentage of the appraised value of the property you’re purchasing.

Depending on where you are located, the buyer and seller can negotiate who will pay the real estate transfer tax. While it may seem like an intimidating decision to make in theory, the customs surrounding the local real estate market will ultimately help make that decision. 

Turn to a Professional Lender to Explain Your Mortgage Responsibility

If you’re ready to purchase a home, start with us at Altitude Home Loans. Once you find your home loan officer, all you have to do is apply for your loan through our easy-to-follow online portal on our website. Your personal loan officer will reach out and guide you through the process. It’s as easy as that!

With our professional team of home loan officers, we can guide you in the right direction for mortgage payments and transfer taxes. 

Contact Altitude Home Loans in Tucson, AZ

If all this financial jargon is confusing you, you’re not alone. Many homebuyers struggle to understand the financial complexities of their first home purchase. To ease those concerns, you need a mortgage broker who is qualified to help. Our team here at Altitude Home Loans can help with answering questions like “what are transfer taxes on a mortgage?”.

Call us today at 520-500-1010 or contact us online to schedule an appointment with a home loan officer at Altitude Home Loans in Tucson, AZ.

Owning a home remains a significant aspect of the American dream, but it’s more complicated than many realize. As potential homeowners begin obtaining a mortgage, they quickly discover that they need mortgage insurance, a good credit score, and a regular income. To help simplify some of this, here’s a look at the difference between MIP and PMI and how they may affect home loans in Tucson by Altitude Home Loans.

What Is Mortgage Insurance?

When speaking with a mortgage company for the first time, many home seekers expect to pay a minor downpayment on their ideal home. Sticker shock sets in when they learn that most lenders need at least a 20% downpayment on the total of their home’s purchase price. Lenders know that most people don’t have that kind of money, using mortgage insurance to fill that gap.

Mortgage insurance allows you to put a lower downpayment on your home. However, a lower downpayment makes you look less invested in the long-term ownership and payment on a home or property. With mortgage insurance, your mortgage lender has protection if you can no longer make your monthly mortgage payment.

Defining MIP, or Mortgage Insurance Premiums

MIP protects federally backed loans. Typical loans covered by MIP include FHA (Federal Housing Administration) loans and first-time home buyer loans. Borrowers with low credit, low income, and an inability to pay a significant downpayment benefit from MIP.

An upfront mortgage insurance premium, or UFMIP, equals 1.75% of a home loan’s total amount and tacks that additional amount onto loan closing costs. Your monthly mortgage payment includes an equally-divided annual premium for your mortgage insurance, usually .45% to 1.05% of your loan split into 12 payments.

With mortgage insurance premiums, borrowers may pay as little as 3.5% down on their home purchase. They may also receive a better interest rate on their loan, though they may pay more for their mortgage insurance than PMI borrowers. Understanding the difference between MIP and PMI helps you choose which option fits you best.

Defining PMI, or Private Mortgage Insurance

PMI offers greater term flexibility to eligible home buyers who qualify for conventional mortgages. The cost of private mortgage insurance depends on factors such as loan amount, credit score, and annual household income. Generally, PMI borrowers present a lower foreclosure risk to mortgage lenders.

If you choose to pay for a home with a conventional loan, know that PMI may range from .5% to 2% of your initial loan amount. Most homeowners can expect their PMI to be around 1% of their loan. PMI payments typically cost significantly less than MIP.

Can I Cancel Mortgage Insurance?

You can request the removal of PMI after you’ve reached 20% of your home equity. FHA MIP requires that you make a down payment of more than 10% of the home loan to qualify you for cancellation. If you don’t pay at least 10% down, you must pay for MIP throughout your loan’s lifetime.

Are you interested in purchasing a home in Tucson, AZ? Contact Altitude Home Loans to pre-qualify today. Learn more about Private Mortgage Insurance and about the difference between MIP and PMI. 

Purchasing a home is a significant investment. When values decline, homeowners can be left devastated with an underwater mortgage.

At Altitude Home Loans, we understand the changing market and can help you know where you stand. Call us, Tucson’s trustworthy home purchasing officers, at 520-500-1010 to find out more.

What Does It Mean to be Underwater?

You are underwater if you owe more on your home loan than the home is worth. Your home loses value due to declining property values. Unfortunately, you must continue to pay the home mortgage for its initial value unless you take steps to mitigate it.

Why do Property Values Decline?

Home values decline when the economy declines. When the economy falls, people lose jobs and income, making them less likely to buy homes. Therefore, a decline in home buying leads to a reduction in home values.

Other declines occur based on changing neighborhood demographics, like when businesses close in one area and rebuild in another. Homebuyers want homes closer to the consumer industry with newer stores, restaurants, and jobs.

The presence of fewer homebuyers reduces the value of homes that remain on the market. If the average home in your area is selling for less, your home value may decrease. 

How Do I Know If I Am Underwater?

Compare your mortgage balance with the current value of your home.

Request a payoff statement from your lender. Include the principal balance, interest, taxes, and other loan balances such as home equity loans.

Review real estate websites and compare the recent sale prices of homes in your area with similar square footage and amenities. If the average sale price is lower than you owe, you may have an underwater mortgage. Schedule a property evaluation through your real estate or loan company to determine the actual value of your home.

What Are My Options?

If you are not planning to move soon and have no issues paying your current mortgage, you don’t need to do anything. You can continue to make monthly payments until the market value returns to normal.

If you want or need to sell, you have a few options, including:

• Selling for the best value and owing the difference
• Refinancing to modify your current mortgage rate or interest rate
• Requesting a short sale where the lender sells the home at the best value and takes a loss on the remaining amount

Each has pros and cons.

The safest is selling and owing the difference since it does not impact your credit score.

Refinancing is challenging because you must have a good standing on your current loan. You cannot be behind or have missed a mortgage payment in the last 12 months.

The short sale will negatively reflect your credit score and make it difficult to get future credit and home loans.

Which Option Is Best?

Talk to your lender or a home loan refinancing expert if you aren’t sure. Altitude Home Loans is Tucson’s leading home loan company. Our experienced team of experts can explain your underwater mortgage options and help you decide. For more information, or to learn more about loans for first-time home buyers, contact Altitude Home Loans at 520-500-1010.

Whether you’re a first-time homebuyer or moving up the property ladder, the loan process can seem complicated. Mortgage loans are essential for most aspiring homeowners. Fortunately, the process can be straightforward with proper guidance.

At Altitude Home Loans, our team understands that a bit of information goes a long way toward relieving stress during the home buying process. We’re Tucson’s trusted home loan officers, and we’re here to help.

In this blog, we talk about two stages in the mortgage loan process that people often get mixed up: prequalified vs. preapproved. If you’re just getting started with your home loan applications, brushing up on what each of these phases means will help you prepare for every step of the journey toward your new home.

To learn more about home loans, buying a home, and more, browse our blog or reach out to us at Altitude Home Loans today.

What Is Mortgage Prequalification?

If you’re preparing to buy a home, you may already be familiar with the term “prequalification.” During this stage, homebuyers receive estimates on their borrowing potential. Lenders determine a buyer’s borrowing potential using several factors, including asset information, credit checks, and income.

The primary difference between a prequalified vs. preapproved loan application is that preapproved loans have been vetted and backed by the lender. Prequalified loans typically require more research before reaching preapproval. Many lenders may provide prequalification based on self-reported financial details, so be sure to be as accurate as possible.

If you’re an aspiring buyer beginning the home loan application process, it pays to:

• Check your credit score
• Obtain records of your tax returns
• Collect proof of income
• Obtain banking statements

Lenders generally require these documents during the early stages of mortgage loan applications. Having them handy will speed up the process for you and the lender.

What Is Mortgage Preapproval?

Mortgage preapproval comes after prequalification. During this stage, lenders take extra steps to verify a potential buyer’s credit history, income, and other financial information.

A preapproval letter provides buyers with proof of borrowing status and helps them shop for homes within an appropriate price range. Preapproval is a critical step and is as close to buying a home as a buyer can get without a purchase contract in hand.

How Long Does Preapproval Take?

Preapproval times may vary depending on the lending institution. Always check with your lender before beginning the mortgage loan application process. Be sure to ask critical questions such as:

• Application requirements
• What to expect during the application process
• Potential interest rates
• The current state of the real estate market in your target area

Learn More about Mortgage Loans

If you’re ready to buy a new home, don’t let the complexity of the mortgage loan process stop you short. At Altitude Home Loans, our team is here to help you learn about the steps when buying a house, including what it means to be prequalified vs. preapproved, how to choose the right home for your needs, and more.

To get started on your journey to a new home, reach out to us today.