Best Practices for Paying Off a Mortgage Early

Buy a Home in Indianapolis Indiana

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.

10 Ways to Use Reverse Mortgage Funds

Reverse Mortgages in Indiana

If you are a senior homeowner in Indiana, you can supplement your income by applying for a reverse mortgage.

One reason a reverse mortgage is such a flexible loan option is because you are unrestricted in your use of the funds. Below are some ideas for how you could use the money you receive through your reverse mortgage disbursements.

Things You Should Know About Reverse Mortgage

  1. Pay off high-interest debt. Are you having a hard time keeping up with high-interest debts? If you pay off those debts now, you can stop dealing with the interest. The reverse mortgage itself does not come due until a maturity event (like selling the home or the death of the last borrower). So, if you use it to pay off the high-interest debts, you will find yourself in a better situation financially.
  2. Upgrade or repair your home. You can stay in your home for as long as you want with a reverse mortgage. So, using the funds to upgrade your home or make repairs is an excellent option. You could make a practical upgrade like installing solar panels or other features for higher energy efficiency, which could help you save money. But you also could do something like add in a luxury feature such as a swimming pool.
  3. Pay off medical bills. All it takes is one large medical bill to throw off your financial situation. With a reverse mortgage, you can pay off medical expenses and get back to living your life.
  4. Buy another home or investment property. You can use reverse mortgage funds to make a down payment on a second home or vacation home. You also can purchase an investment property which you could rent out for extra income. Some people also like to use reverse mortgage money to fix and flip.
  5. Put off claiming Social Security. The longer you wait to start claiming Social Security payments, the more money you are eligible to receive. If you are having a difficult time keeping up with your expenses without claiming Social Security, the supplement to your income from a reverse mortgage could help you get by as you defer claiming your benefits.
  6. Fund in-home care. If you need someone to assist with basic tasks around the house but do not want to move into assisted living, taking out a reverse mortgage can help you to afford in-home care. One thing to keep in mind is that if no borrower for the reverse mortgage will be residing in the home for 12 consecutive months, the reverse mortgage comes due. So, that is something to keep in mind if you think you might be moving into assisted living in the future.
  7. Fund a personal project. Another idea for what you can do with reverse mortgage funds that you will not see listed too often is financing a personal project. The reason this use of reverse mortgage money tends to be overlooked is probably because personal projects are so individual in nature. A personal project could take just about any form. Maybe you want to build a boat or create a sculpture. Whatever dream you have, reverse mortgage funds can help you bring it to fruition.
  8. Help your family or friends. You do not necessarily need to spend reverse mortgage funds on yourself. You can use them to help out other people you care about. The simplest example would be if you have a grandchild who wants to attend college. Reverse mortgage money can help pay for their education, reducing their reliance on student loans.
  9. Reclaim peace of mind. Sometimes senior homeowners take out reverse mortgages simply to have a bit more room in their budgets. You do not have to have a specific purpose in mind for spending the funds. Instead, you can simply save the money—or even invest it—just so you have some extra funds waiting should you need them. The peace of mind that brings through reduced financial stress could be a significant improvement to your quality of life.
  10. Take a vacation. One more way that senior homeowners sometimes enjoy using their reverse mortgage funds is to go on a trip. This is your chance to finally cross off some locations from your bucket list and make your travel dreams come true.

Apply Now For a Reverse Mortgage With Grandview Lending

Maybe you are already picturing the ways in which you could make use of a reverse mortgage now that you have had some time to explore some of the possibilities.

To find out now if you qualify for a reverse mortgage, please give us a call at (317) 255-0062. During your consultation, you can receive answers to all of your questions about how you can use a reverse mortgage. We work with senior homeowners in Indianapolis and throughout the state of Indiana.

What Are Lenders Looking for When Reviewing Your Bank Statements?

Buy a Home in Indiana

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:

Your Bank Statements Should Not:

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.

Grandview Lending Sponsorship For Ramsey Solutions Financial Literacy Course for Local Students

Grandview Lending Sponsorship

As a local Indianapolis mortgage broker, Grandview Lending is always looking for ways to give back to the community. We believe the key to a successful financial future starts with a strong education in financial literacy. That is why we have donated Ramsey Solutions’ Foundations in Personal Finance curriculum to Lawrence North High School.

Literacy Course for Local Students

This course offers guidance in basic personal finance. Michael Farrell, President and Owner of Grandview Lending, explains, “Grandview Lending strengthens communities, fosters family, and builds wealth through homeownership that is passed onto future generations. We want to do our part to help that future generation so that they can have the knowledge and tools to prepare themselves financially for the future.”

Mike continues, “If we can educate our children and young adults early on the how & when to save money, spend money, and borrower money, this will help them be set up for success as they begin their future career path.”

Basic high-school curriculums often provide only minimal education in the area of personal finance, despite it being one of the most critical life skills for any young person to develop. Far too many students graduate without even knowing how to keep a budget.

Foundations in Personal Finance has become a popular and successful program across the country, with more than five million students benefiting at the middle school, high school, and college levels. More than 45% of high schools have taught the curriculum. Topics covered include:

Not only is the curriculum thorough, but it is also effective. Testing data shows that students score 24 percentage points higher on average after taking the curriculum compared to their pre-test scores.

The high school students taking Foundations in Personal Finance today will be tomorrow’s young homebuyers and homeowners. Grandview Lending is excited to help get them off to the right start, empowering them to success.

Contact Mortgage Specialist From Grandview Lending Today!

If you want to learn more about how Foundations in Personal Finance will help students at Lawrence North High School, you can contact Ramsey Solutions at (615) 614-4849, or reach out to Grandview Lending at (317) 255-0062.

Do You Need Homeowners Insurance?

Mortgage Broker in 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:

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.

How to Pay Off Your Mortgage Quickly

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.

Buy a Home in Indiana

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.

Has Your Home Value Appreciated? It May Be Time to Drop Mortgage Insurance

Buy a Home in Indiana

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.

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.

Refinance vs. Loan Modification: What is the Difference?

Mortgage Refinance in Indiana

Do you want to make changes to your mortgage, like lowering your interest rate or extending your loan term? If so, you may be wondering whether it is appropriate to get a refinance or request a loan modification. Let’s explain the differences between these two solutions so you know which one is suitable for your situation.

What is Refinancing?

A refinance is a complete replacement of the home loan you have now with a new one that better fits your needs.

What is a Loan Modification?

A loan modification is exactly what the name describes—a change to the loan you have now, but not a full replacement of that mortgage with another.

What Can You Do With a Refinance?

By refinancing your mortgage, you may be able to:

What Can You Do With a Loan Modification?

With a loan modification, it may be possible to:

When is a Refinance Suitable?

For most homeowners, a refinance is the right choice. Loan modifications are aimed specifically at homeowners with a certain set of hardships who are underwater.

When is a Loan Modification Suitable?

If you are underwater, then you probably are going to need to apply for a loan modification. That said, refinancing might be an option—you will need to look into it.

To qualify for a loan modification, you will have to provide a hardship letter and offer a paper trail to prove your statement. Examples of hardships that might be acceptable include natural disaster, chronic sickness, a death in the family, or divorce.

An Example of a Scenario Where Refinance Makes Sense

Let’s say you are currently on your mortgage payments and financially stable. You just want to see if there is a way you can pay a lower interest rate and drop your mortgage insurance requirement since your credit score has increased along with your home equity.

This might be a situation where you could refinance successfully. With sufficient equity, you could change to a different type of home loan with no mortgage insurance. Since your borrower profile is now more competitive, you also might qualify for a lower interest rate.

An Example of a Scenario Where Loan Modification is Suitable

Imagine that you are in a scenario where you are underwater and are worried about going into foreclosure. Your spouse recently died, and there is no way you can make up for their lost income. This could be a situation where you might be able to qualify for a loan modification after documenting your hardship.

Still Not Sure Whether a Refinance or Loan Modification is Right For You?

Now you know the differences between loan modifications and refinances, what you can accomplish with each, and when each one is suitable. While they might sound similar on the surface, you can see they are aimed at homeowners with very different situations.

But if you are still not sure whether you should be looking into refinancing or modifying your loan, we can help. To ask us your questions, please give us a call today at (317) 255-0062. Let’s get your mortgage working for you!

Important Mistakes to Avoid When Applying For a Mortgage

Buy a Home in Indiana
Photo of a modern custom single-level suburban home on a sunny summer day

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!

What to Know About Late Mortgage Payments

Buy a Home in Indianapolis

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.