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Source: https://www.schwab.com/resource-center/insights/content/tax-changes-9-questions-to-ask-your-advisor

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As one of the first independent mortgage companies in the country to offer a 1% down conventional loan program, we are incredibly proud to bring this product to our local market.  This program will have tremendous effects on the ability for potential homeowners to purchase property with less money down, while gaining an immediate equity boost that can help build true real estate wealth.

This program is designed for homebuyers who have taken good care of their credit, have a strong track record of employment and income, but do not have the typical 5%-20% down payment required by most loan programs.   Until now, one of the few low down payment options (for non-veterans) was the FHA loan program.  The standard FHA program however, typically has  large upfront mortgage insurance costs along with monthly mortgage insurance throughout the life of the loan. This will add thousands of dollars in closing costs during the acquisition and hundreds of dollars to your monthly payment.  Our new 1% program requires zero upfront mortgage insurance, the option of no monthly mortgage insurance, all on a long term 30 year fixed rate.

 What is INSTANT EQUITY?

Let’s look into a $500,000 purchase price scenario. In this example, you would be required to come up with roughly $5,000 (1% x $500,000).  There will then be a $10,000 (2% x $500,000) lender contribution, to add to your $5,000 down payment.   Because of this contribution, you will only need to borrow $485,000 ($500,000 – $15,000). 

When you move into your new home, you owe $485,000, and your property is likely valued at $500,000. Remember that equity is the difference between what you owe and what your property is worth.  You now have $15,000 in instant equity that you only contributed $5,000 towards.  This immediately puts you into a stronger financial position than almost any other low down payment option available today.

Call one of our mortgage advisors today to find out how our program can make your vision of homeownership a reality and set you on the path to a strong financial future. 

On Wednesday, December 14th, Janet Yellen, Chairwoman of the Federal Reserve announced the raising of the benchmark short term interest rate by another .25%.  This brings the total increase of .5% in one years’ time with more expected for 2017. The raising of this benchmark can directly affect Home Equity Lines of Credit(HELOCS), auto loans, credit cards and even student loans.

 For homeowners exploring a HELOC, this should be another warning sound.  HELOCS typically have an introductory teaser rate period which can be very enticing. However, once your teaser rate period has expired, your rate and payment will most certainly increase, and this latest decision by the Feds will only exaggerate that effect.  Unless you have the ability to pay off the funds you have used in a couple of years, you could be setting yourself up for a very unfavorable position.   Today, most HELOCS out of their teaser period will have rates of 4.75%-5% or more, with typically no ceiling until 18%-19%. 

You wouldn’t (or shouldn’t) max out your credit cards for large renovations.  Using a HELOC is similar to using a large credit card. It can leave you with large amounts of debt and unplanned payments that will increase as interest rates continue to rise.

At Myers Capital we provide our clients real estate financing solutions that match their short and long-term goals. We take the time to educate our clients about all the options and strategies available so that they may make better decisions now and into the future.  Whether you’re planning to use your equity to renovate, consolidate debt, or even acquire new property, obtaining a fixed rate home equity loan can make your financial future substantially more secure.