In this post, we gave you some ideas for how you can pay off your mortgage quickly. Our main focus was on techniques you could use such as making extra payments and rounding payments up. In this post, we are going to share a few general best practices with you for paying off your home loan early.

3 Best Practices for Paying Off a Mortgage

1. Put the money toward your principal, not the interest. Regardless of the method you are using to pay your mortgage off early, it is vital to make sure that the extra money you are sending the lender is being applied properly. You have to be explicit when you send the money. Write that it is only to be applied to your mortgage principal. Otherwise, it will go toward the interest. If you are not reducing your principal, the interest will just keep piling on, so the money is wasted. So long as you are specific, the lender will only be able to put the money toward the principal, so you can keep making progress toward paying off your mortgage.
2. Make sure you have an emergency fund. Some homeowners become overzealous about paying off their home loans as fast as possible. In the process, they end up putting every extra dollar towards their mortgages without thinking about other financial needs. You do not want your car to break down or an urgent medical bill to come up without the money to cover it. Make sure you have an emergency fund at all times so that you do not need to take out additional loans if something unexpected happens.
3. Consider investing. Something else that homeowners sometimes overlook when they are trying to pay off their mortgages quickly is that sometimes, it may be more profitable to hold some money in reserve for other purposes such as investing. It could well be that if you invest some of your extra money now instead of putting it toward your loan principal, your profits could end up exceeding the additional interest payments from paying off your mortgage more slowly. In that case, investing could be worth it.

The Grandview Lending Team is Here For You

We hope the recommendations we gave you above help you to pay off your mortgage early while keeping your finances in balance. If you want to learn more about paying off your mortgage, contact Grandview Lending at (317) 255-0062.

As part of the mortgage application process, you will be asked to provide bank statements. Lenders will check your bank statements both for income verification purposes and to try and prevent fraud.

Before you turn in your bank statements, you may be wondering what might catch a lender’s attention when going over them. Below, we discuss what looks good and bad on bank statements when applying for a home loan.

Your Bank Statements Should:

• Help paint a clear and complete picture of your income. This is especially important if your W-2 does not include all of your income or if you do not have a W-2. In fact, you can apply for a special type of mortgage called a “bank statement loan” if either of these is the case.

• Show that you can afford your down payment and closing costs.

• Demonstrate that you have adequate cash reserves, and will continue to after you pay the costs above.

Your Bank Statements Should Not:

• Show unusual and unexplained fluctuations in your income levels. If you are in a situation where fluctuating income is just part of your life, you will need to provide a comprehensive, written explanation (i.e. in the case of self employment).

• Suggest you will not be able to afford the home loan and/or be unable to pay your regular bills along with your mortgage.

• Have overdrafts. Yes, overdrafts can happen to anyone—but it is really important that before you apply for a mortgage, you make sure you steer clear of these incidents. If lenders see overdrafts, they may think you do not know how to manage your money and keep up with your expenses appropriately.

• Display large deposits that you cannot explain. You cannot use a loan to make your down payment and pay your closing costs for your mortgage. So, if you have a large deposit in your account unrelated to your income, you need to be able to explain where it came from so it does not disqualify you from a mortgage. Make sure you have documentation to back up your statement.

Ask Us Your Bank Statement Questions or Apply for a Home Loan in Indianapolis Now

Now you know what lenders are looking for when they check your bank statements as part of the application process for a mortgage.

If you have additional questions about bank statements or bank statement loans, please give us a call at (317) 255-0062.

When you contact us, you can also schedule a consultation to begin the mortgage process. We look forward to helping you buy a home or refinance in Indianapolis or anywhere in the state of Indiana.

When you are shopping for a home, you will need to think about budgeting for homeowners insurance. As you do, you may start to wonder whether homeowners insurance is a requirement to own a home.

The short answer is “no, you do not technically need homeowners insurance just to own a home.” But the longer answer is, “yes, you absolutely should get it, and in most cases, you will still have to get it.” Below, we explain why homeowners insurance is not optional, regardless of your financial scenario.

Mortgage Lenders Require Homeowners Insurance

First of all, if you are buying a home with a mortgage, then you doneed homeowners insurance.

It has nothing to do with laws. It has to do with the policies set by lenders.

If you are not taking steps to protect the property, lenders are not going to be comfortable approving you.

Therefore, if you want to be approved for a mortgage so you can move forward with your home purchase, you must get homeowners insurance.

So, even though you can legally own a home without homeowners insurance, you cannot successfully buy a home with a mortgage without tit.

You Need Homeowners Insurance to Protect One of Your Biggest Investments

As just stated, there is no law that says that you must be paying for homeowners insurance simply to be the owner of a property.

Hypothetically, if you were to purchase a property outright, paying 100% at the time of purchase, you could get away with skipping homeowners insurance.

Also, hypothetically, after paying off a mortgage, you could cancel your homeowners insurance policy and still be following the law. But in neither of these cases should you think seriously of not paying for homeowners insurance.

The reason is simple: you are investing a lot of money in your home. Plus, if you plan to stay in it for the long term, it will come to take on sentimental value for you as well. You might even be thinking of passing it down to your heirs one day. It could be part of your legacy.

Naturally, you are going to want to protect that investment. A homeowners policy will help generally cover damages in case of:

• Lightning
• Hail
• Wind
• Fire
• Vandalism
• Theft

With additions to your coverage, you also can protect your home and valuables in case of flooding or an earthquake. Exactly what your policy covers will depend on the specific one you choose and the insurer.

One bad day can easily result in tens of thousands of dollars worth of damages to your home. Hopefully, you will never have one of those days. But if you do, having your policy to fall back on will make a huge difference in your life.

If you do not have coverage, there may be a delay before you can afford to make key repairs to your home. In some cases, you might not be able to afford them at all.

But with coverage, you can swiftly repair your home so that damages do not spread and increase. In doing so, you can protect your home’s structural integrity and longevity.

Having homeowners insurance has an additional benefit as well, which is increasing your peace of mind. Instead of worrying about the damage that the next storm could bring, you can focus on enjoying your home.

If you already live in Indiana, you know just how severe and sudden the weather can be in the Midwest. If you are new to the area, you probably are at least familiar with the Midwest’s reputation for intense weather systems. The local climate makes homeowners insurance extra important.

Homeowners insurance policies can vary in terms of what they cover and cost. We recommend reading 3 Things to Know When Purchasing Homeowners’ Insurance and 3 MORE Things to Know When Buying Homeowners’ Insurance before you proceed. Another post that may interest you is In Case of Loss: Do You Have Enough Home Insurance?

Grandview Lending Inc. Can Answer Your Questions About Homeowners Insurance

At Grandview Lending, we take time to answer your questions about homeowners insurance in-depth. During your consultation, we can provide you with guidance for budgeting and shopping for a policy. 

To get started now, please give us a call now at (317) 255-0062. We work with homebuyers and homeowners in Indianapolis and throughout Indiana. Our friendly loan experts look forward to helping you apply for a flexible mortgage.

Looking for a way to pay off your mortgage more rapidly? Actually, there are multiple strategies you can try to finish paying off your home loan early. Below are a few ideas you can consider.

Ideas To Pay Off Your Mortgage Quickly

1. Go on a biweekly payment schedule. One of the most popular methods for paying off a mortgage more quickly is to switch your payment schedule to twice a month. You pay half at the end of each month, and half in the middle of each month. You would think this adds up to the same amount, but it doesn’t. Owing to the way the calendar is structured, you will have submitted what adds up to 13 full payments by the year’s end rather than 12. What is awesome is that you will have done this in a way that is not at all disruptive to your budget.
2. Cut back on other expenses. It may be time to take a look at your overall budget and ways you can spend less on other things. Maybe you can switch insurance carriers or cell phone plans, or you could drop some subscriptions. You can then put the savings right toward your home loan.
3. Put any extra money you receive toward your home loan. Now and again, you might get some extra cash. You could have a chance to do some overtime hours, or someone could give you a gift or bonus. Put the money to your mortgage immediately.
4. Make an extra annual mortgage payment. Some people like to make an extra mortgage payment each year all at once instead of using the biweekly schedule. Note that when you make extra mortgage payments through any means, you should always make sure your lender is applying your payments to your principal. If you do not tell them explicitly, they will probably put the payments toward your interest, which is not nearly as helpful.
5. Round payments up. Is your monthly mortgage payment some odd amount like $768? If so, think about rounding up and paying $800 each month. If you make it a habit, it will result in you paying off your home loan much faster!
6. Refinance. Another idea for paying off your home loan more quickly is to consider a refinance.You could lower your interest rate and maybe even drop your mortgage insurance requirement. Either or both could go a long way toward helping you pay off your home loan early.

Contact Grandview Lending for More Useful Financial Tips

You have some ideas now for how you can more rapidly pay off your mortgage. Looking for additional suggestions or personalized advice? The loan experts at Grandview Lending can help. To schedule a consultation, please call us today at (317) 255-0062. We can help you decide if a refinance might be in order, and can give you other ideas to help you achieve your financial goals.

Are you paying for mortgage insurance in the form of MIP or PMI? It is to your financial advantage to get rid of mortgage insurance as soon as you can.

If your home value has increased recently, it may be worth checking whether that means you can now shed your mortgage insurance. In today’s post, we will explain exactly how this works.

Who Can Remove Mortgage Insurance?

The exact rules governing your mortgage insurance will depend in part upon the type of mortgage you have and some specific factors pertaining to your loan. But many borrowers can remove mortgage insurance after surpassing a certain amount of equity.

• If you took out a conventional mortgage and you put down under 20%, you have PMI. But after you surpass 20% equity, you may be able to get rid of the PMI. This is at the discretion of your lender.

• If you took out an FHA mortgage, you have MIP. Based on various factors, you may or may not be able to get rid of your MIP once you have a certain amount of home equity.

Home Values Have Increased in Indiana

If you live in Indianapolis or elsewhere in the state of Indiana, you may have seen a significant boost in home equity over the past year.

18 WJTS reports, “Between October 2020 and October 2021, the year-over-year percent change in Indiana home prices was +17.4%.”

That is quite a jump. Below, we discuss how such an increase in home value could help you to stop paying for mortgage insurance.

A Simple Example: How Appreciation Can Help You Remove Mortgage Insurance

For this example, we will assume that you took out a conventional mortgage and that you made a 10% down payment. That means that you pay for PMI.

Imagine that your home was worth $150,000 when you bought it. Since you put 10% down, that meant that your starting equity was $15,000. Now say your home’s value has appreciated to $200,000. That means that your appreciation gains are $50,000.

If you add $50,000 to your original $15,000, you get $65,000. That amounts to more than 30% of $200,000, which means that your equity now exceeds 20%.

That is not even accounting for the fact that you have been steadily reducing your principal by making mortgage payments since you bought your home.

Find Out If You Can Remove Your Mortgage Insurance Now

Now you have seen an example of how home appreciation can help get rid of mortgage insurance. But probably have questions about how home appreciation affects your equity, and what you need to do to get rid of MIP or PMI.

To find out if the climb in home values in Indiana over the past year may be your ticket to getting rid of your mortgage insurance, please contact Grandview Lending today at (317) 255-0062. During your consultation, we can review the details of your individual scenario and let you know what steps to take next.

In this post, we want to share some common mistakes that homebuyers can make when they are applying for a mortgage.

7 Mistakes to Avoid When Applying For a Mortgage

1. Automatically dismissing the idea of an adjustable rate mortgage. A lot of homebuyers automatically decide on a fixed rate mortgage, and do not consider an adjustable rate mortgage (ARM). Sometimes, this decision is the result of having known someone in the past whose ARM ballooned out of control. If you plan to stay in your home for many years, it does make sense to go with a fixed rate mortgage in many situations. A fixed rate mortgage allows you to lock in a low, steady mortgage rate for the lifetime of the loan. But do you plan to stay in your home for only a few short years before you sell it again? In such scenarios, adjustable rate mortgages can be ideal. Their low introductory rates let you lock in short-term savings.
2. Taking closing for granted. Sometimes, a way into the home purchase process, homebuyers will feel like a sale is settled. Even though they have not yet closed on the property, they are confident that all will be smooth sailing going forward. They then decide to move forward with other plans. For example, homebuyers might take out another significant loan, or buy a lot of furniture. Sometimes, they will even go on a trip, or start the process of relocating between cities or across state lines. But sometimes, a purchase can fall through at the last minute. So, do not assume anything--You don’t close until you close.
3. Making large deposits. It is a bad idea to make large deposits during your loan application process. When you do, you will need to be able to document what they are and where they came from. In general, you can expect delays with this process, even if you are prepared. So, if you can avoid it, you should.
4. Not getting pre-approved. Did you get pre-qualified for a loan? That’s great—it’s a good starting point. You now have an estimate of what you can afford. But here is something you may not realize—mortgage pre-qualification only tells you what you may be eligible to borrow based on the information you provided. It is not the same thing as mortgage pre-approval, which tells you an estimate based on an actual check of your credit and income. Because an actual check is involved, mortgage pre-approval also signifies more. While it is not the same thing as a loan commitment, your pre-approval letter is still a statement from a lender saying that they would expect to approve you for a loan based on your information. Proceeding with shopping for a home and making offers with only a pre-qualification is a mistake, since a pre-approval empowers you more. It gives you a more concrete idea of how much home you can afford, and also enhances your bargaining power significantly.
5. Failing to explore different loan options. Even though there are many different types of mortgages out there, quite a few homebuyers do not realize that this is the case. They think that a mortgage is a mortgage, and that is that.But there are actually quite a few significant variations between different types of home loans. They vary in terms of qualification requirements, down payment requirements, and more. It is always in your interest to investigate the broad spectrum of mortgage products before you decide on a loan type. If you are unfamiliar with the different types of home loans available to you, we can explain each during your consultation.
6. Providing inconsistent information, or failing to supply information. Another common mistake when applying for a home loan is to provide inconsistent information, or to leave details out. Even if you think that certain details will be less than helpful to you on your application, it is important not to leave any gaps in information. Any information you fail to offer or provide incorrectly can hold up the application process. No lender is going to proceed without a full, consistent picture of your financial scenario.
7. Not being fully aware of the upfront cost of a mortgage. There are a number of costs that go with taking out a mortgage that homebuyers are sometimes unaware of at the time they apply. Not being prepared for those costs can lead to budgeting mistakes. You probably already know that most types of mortgages require a down payment. But are you aware of the closing costs? The fees that go with taking out a mortgage are generally packaged in with these costs. Fees can vary from one lender to another, so it is important to ask about fees early on in the mortgage process.

Grandview Lending is Your Mortgage Expert in Indianapolis

Grandview Lending, Inc. can walk you through the mortgage process step by step, helping you to steer clear of any pitfalls. To get started now, please call (317) 255-0062 to schedule your consultation. We are excited to help you buy a home in Indianapolis or elsewhere in the state of Indiana!

Most of the time, we focus in these posts on what you need to know about applying for a mortgage. But you probably also have questions about what happens after you sign on a home loan, including what to expect if you happen to miss a payment.

What Happens if You Miss a Mortgage Payment?

Within Your Grace Period

The consequences of missing a mortgage payment depend in large part on how long it will be before you are able to make the payment and get current on your home loan. They also depend on the lender’s specific policy on late payments.

It is not uncommon to miss a mortgage payment and figure it out a couple days later. It could happen either because you forgot, or because there was a delay of some sort that you could not control with the payment method you selected.

If that happens, lenders usually are not going to penalize you for it, especially if it does not happen all that often.

In fact, your grace period may extend longer than you might expect. About 15 days is typical. But because there are variations, you need to check the late payment policy set by your lender to be sure.

Outside of Your Grace Period

If the grace period comes and goes and you still have not made the mortgage payment, then there will be a penalty. You can expect it to range between 3% and 6% of your monthly mortgage amount in most cases.

Each time you fail to pay your mortgage on time, it is also possible that your lender will report it. If that happens, your credit score may decline.

This might happen in or out of the grace period, depending on the lender’s decisions with respect to reporting.

When Does the Foreclosure Process Begin?

When the grace period passes, the lender cannot immediately begin foreclosure proceedings. Usually, you have three to six months to get current before foreclosure proceedings commence. Once again, the time frame depends on the lender.

What Should You Do If You Think You May Miss a Payment?

If you are worried that you will miss a payment, get in touch with your lender right away. By doing so, you may be able to prevent a hit to your credit score by requesting that the lender not report the missed payment.

The lender is most likely to honor this request if you usually pay on time.

In some cases, if you are on very good terms with the lender, you might also be able to request that late fees be waived if you expect to pay a couple days after the grace period has ended.

Most importantly, you will be communicating with your lender and reassuring them of your good intentions. Keeping the lines of communication open can help to protect and strengthen your relationship with your lender.

What Should You Do If You Cannot Keep Up?

Hopefully, if you miss a mortgage payment at some point in the future, it will be a one-off, and not a symptom of a bigger financial problem.

But if you do find yourself persistently struggling to keep up with your payments, there are a few different options.

You can start out by asking your lender about forbearance. Another idea is to apply for a mortgage relief program.

Refinancing might also be what you need to do to get current and stay current with your mortgage payments. Extending your loan term can reduce your monthly mortgage amount.

We Can Answer Your Mortgage Payment Questions

If you have any additional questions about making mortgage payments, Grandview Lending can answer them.

When you apply for a mortgage, we will discuss your finances in-depth and help you choose a mortgage product that you will be able to afford now and over the years ahead.

Please call (317) 255-0062 to schedule your consultation.