Amortization – How to choose between 10 or 30 year options?

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When you acquire a mortgage, the lender divides the repayment schedule into several monthly installments over a fixed period. Amortization is the process of spreading out the mortgage over multiple years and into a series of fixed payments. The total mortgage amount, including the principal balance and interest, is supposed to be paid off with the last installment.

As a borrower of an amortized mortgage, you need to repay a specified monthly amount that pays off a portion of both the principal and interest. After every installment, the total loan balance decreases and finally gets paid off with the last payment.

For example, if you obtain a $20,000 amortized mortgage for five years, the lender will divide it into 60 monthly installments, including the principal and the interest amounts. Presume you need to pay approximately $377 per month and respectively $294 and $83 go into squaring off the principal and interest. Then, it will be $295 and $82 respectively in the next month. Over the loan term, the amount of principal payment will increase, and the interest will decrease (although the monthly installment will be the same).

At America Mortgages, you can enjoy an amortization period longer than the mortgage term in the case of commercial loans. For instance, if you take a loan for ten years, the amortization period could be 30 years meaning the monthly installment amount will be similar to a 30-year loan.

If you are to repay this amount over 120 months at $1,000 per installment, the rate will continue for 119 months. In the last month, you will pay the remaining balance ($81,000 in this case) by one balloon payment.

Amortization is available on fixed-rate mortgages and home equity, personal, and auto loans. You won’t get this facility on credit cards and interest-only loans.

Definition of ‘Assets’ on Loan Application Form 1003

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Assets refer to a wide variety of items you own that have a monetary value. When you apply for a mortgage, the lender looks into your asset inventory and determines their cash value to make sure that you are capable of returning the loan despite facing financial hardship, such as a job loss, during the repayment period.

There could be various asset types, including:
● Money, savings and checking accounts, certificates of deposit (CDs), and other similar sources — cash and equivalent to cash
● Tradable stocks, bonds, or something that can be converted to cash without dropping their actual price — liquid assets
● Lands, vehicles, antiques, business property, and anything that has monetary value but cannot be converted into cash quickly and may lose some of their value in the conversion process — fixed assets
● Investment money that is lent for interest, including government bonds, securities, and any type of investment money that yields interest — fixed-income assets
● IRA, 401(k) accounts, mutual funds, or anything that secures your ownership in a company — equity assets

You can also categorize them into tangible (physical) and intangible (nonphysical) assets. The lender assesses your positive net worth, indicating your assets have more value than your liabilities. It also helps establish your debt-to-income ratio.

To do the required evaluations, America Mortgages requires only an International Credit Report, Accountant Reference, and some paper documents verifying your funds.

Advantages Of Investment Mortgage Loans Over Cash Purchases

Investment Mortgage Loans

As a U.S. real estate investor, investment mortgage loans can be very beneficial to you. America Mortgages focuses specifically on these types of mortgage loans. There are several programs on hand that make it possible for borrowers to get a mortgage to invest in real estate.

Some of them are better than others, but they can all help you out in some way. If you are considering getting a mortgage, here are a few advantages that you can get from an investment mortgage loan.

Advantages

Use other people’s money – The biggest advantage of using investment mortgage loans is that you get to use other people’s money. Many financial experts have said that you should use other people’s money whenever you can. When you get a mortgage, you only have to put up a certain percentage of the property’s money, but you still get to benefit from owning the whole property. You get to take advantage of the property’s appreciation, and you get to use it for whatever you want. This allows you to hang on to your capital and use it for other investments.

Reasonable interest: With most mortgages, you will be able to get a very affordable interest rate as long with or without a U.S. credit score (FICO). When you get a low-interest rate like you can with an investment mortgage, it can save you a substantial amount of money. For the cost of the loan, it is usually well worth it to get a mortgage instead of using your funds. Hang on to your cash and use it towards additional investments.

Easy approval: With an investment mortgage, you will usually be able to tell whether you are approved relatively quickly. America Mortgages has pretty cut and dry standards when it comes to getting you approved for an investment mortgage. America Mortgages has loan programs for U.S. Expats with or without U.S. credit. We understand that living abroad often changes factors and your ability to borrow in the U.S. Our loan programs are tailored towards your exact situation.

Not a U.S. citizen, Foreign National, or considering relocating abroad for work or school? We can help. Our Foreign National / Non-U.S. citizen mortgage loans were created for these situations. Qualify with No U.S. credit. No U.S. residency. No income verification. It’s not simple, but we have it down to a science with our expertise in this market. You will know where you stand and if you will qualify within a reasonable amount of time.

Increase your reach: With the use of investment mortgages, you can increase your investment power. As you grow, you can keep buying more and more property. In Asia, where property prices have increased, and square footage and yield have decreased, finding an affordable investment outside your home country makes sense. Many people would not be able to purchase property otherwise as it usually takes a significant investment. You can keep picking up more and more stuff as you go.

Build your net worth: Hong Kong, Singapore, Shanghai, and other large Asian cities have cooling measures to stabilize a fast appreciating Real Estate market mainly due to outside investment and the lack of affordable Real Estate options. Being able to build your net worth on a global scale gives with a reasonable mortgage loan that eventually you will have all of the property paid off gives you the same opportunity as anyone else regardless of your passport. You are free to do what you want with all of the property. If you had to rely on your funds for all of this, much of it would not be possible.

The Verdict

Using an investment mortgage can be a great way to get involved in the real estate investment market. Many people have gained considerable amounts of wealth through the use of real estate investment. Therefore, if you are considering getting involved in the field, you should definitely take advantage of investment mortgages. The advantages that you will receive as a result of using them will help you in a number of ways. If you can qualify for one, it makes a lot of sense financially. America Mortgages’ primary focus is helping non-U.S. citizens and Expats obtain prime, quality investment mortgage loans not only in the United States but on a global scale.

What Are You Waiting For?

For more information on U.S. or mortgage loans in other countries, please contact us via our 24/7 link.

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American hotel executive in Toronto purchases home in Austin for rental income.

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The Client

This client was the General Manager of the top luxury hotels in Toronto. Like any hotelier, he’s been away from home since his university days.

How We Helped

Our client had a decent FICO score for someone that’s been away from home for 30 years. That’s because he has used his only credit card regularly for the past 20 years. However, his breadth of credit was not sufficient to carry a mortgage.

We put our client on a 3-month Credit Enhancement Program where our team walks you through a specific process to build, maintain and strengthen your credit profile.

Our client has a FICO score of over 800 and qualified for the cheapest ‘Prime” loan available.

Loan Details

NationalityProperty ValueLoan AmountLTVRate
U.S. Citizen$335,000$268,00080%3.35%
TermStateProperty TypePurposeLoan Type
30 year fixedAustin, TexasSingle-Family Residence (SFR)PurchaseResidential

What is an Escrow?

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Escrow refers to a financial account in which the funds are managed by an intermediary like a law firm or dedicated escrow company on behalf of the two parties committed to a dealing or transaction.

The neutral third party won’t release the funds until the deal is complete.

The use of escrow accounts is quite common in real estate dealings, but it’s a valid means of keeping money on hold under a neutral party for any transaction.

During a home buying process, the first time you will need to use the escrow account is when making the earnest money deposit to reflect your intent of purchasing to the seller. You can get that money back if the appraisal returns the home’s value lower than the sales price or the home inspection finds serious issues with the home.

If you purchase a home on loan, your mortgage lender will ask you to put some money into an escrow account for paying the homeowners’ insurance premiums and property taxes. The provider uses money from this fund to pay tax bills and insurance premiums on behalf of the homeowner. It ensures that the bills are paid on time.

Every mortgage provider will do an escrow analysis each year because the rates of the insurance premium and property taxes are not fixed. This analysis ensures there are adequate funds in the account for paying these bills over the next year. The lender will send you a statement after each yearly review. There could be a shortage (not enough funds to cover the expenses) or overage (extra funds than necessary) in the account.

Setting up an escrow account is mandatory in any real estate transaction.

Scottish doctor buys three-unit triplex in Baltimore to rent to students at John Hopkins.

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The Client

Our client was a former doctor at John Hopkins but moved back to Edinburgh, Scotland. He saw firsthand the number of international students applying to the university and the lack of housing.

How We Helped

Our client identified a cash-flow positive property that was currently rented to students. As he used to live and work in the U.S., he assumed he could call the local bank he used while living in the U.S. Even though he still maintained a checking and savings account with the local bank in Baltimore, they were unable to offer him a mortgage for the purchase. He came across our company online, was pre-approved in one week, and closed the transaction within a month.

Loan Details

NationalityProperty ValueLoan AmountLTVRate
U.K. Citizen$810,000$567,00070%6.125%
TermAddressProperty TypePurposeLoan TypeHome use
5/1 ARMBaltimore, MarylandThree-unit triplexPurchaseResidentialRental apartments for International Students

Couple in Their 70s Refinances Their Existing Investment Property To Release Cash.

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The Client

A married Singaporean couple in their early 70s living in Singapore with a small portfolio of U.S. investment property. The wife works and owns a small marketing company while the husband is retired. In addition to their home, the pair also own two rental properties.

How We Helped

On advice from their trusted attorney, they were also hoping to increase their LTV to mitigate U.S. inheritance tax and convert their current rental mortgage into an interest-only to increase their yield.

The property was an impressive six-bed family home in Vail, Colorado. The couple had purchased the house over 20 years ago when living and working in the U.S.

The pair were looking to reduce their credit card debt and help their son purchase a home in Singapore.

In total, they were looking to raise $300,000. They had requested a five-year fixed rate on interest-only terms. The clients felt that their advanced age and low income would decrease the finance options available.

The clients were not current on their U.S. tax filings for their rental property, were in their late 70s, and had sufficient but not well-documented income.

As a significant amount of their income was based on future contracts, but their cash-flow was sufficient to service their debt, we suggested our FNStated program, enabling the borrowers to qualify for a higher LTV based on projected income and net rental income from the property.

Age wasn’t a factor, as it is illegal to discriminate against age in the U.S. America Mortgage was able to structure a 30 year amortized mortgage with a 5-year interest-only period giving the needed $300,000 cash in hand and reducing their monthly debt servicing by 13%, thus increasing their yield.

Loan Details

NationalityProperty ValueLoan AmountLTVRate
Singapore Citizen$1,600,000$323,00020%5.75% interest only
TermAddressProperty TypePurposeLoan Type
10/1 ARMVail, ColoradoSingle-Family HomePurchase and RefinanceResidential

What is an Appraisal – and how is it used in a mortgage?

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An appraisal is simply an ‘official’ assessment of a property value. It is an integral part of a home-buying process since the mortgage lender expects the correct valuation of the property you will be purchasing.

When you apply for a loan for buying a house, the mortgage lender will require a report from the appraiser about the market price or a possible selling price of that house. These will be ordered by America Mortgages at the Processing Stage of your loan – on your behalf and will be the only time we will ask for any form of payment.

It’s a rough estimate that the lender uses to determine the mortgage rate. The principal or loan amount will be lower than the appraised value of the property. America Mortgages loans out 75% (for Foreign Nationals) to 90% (for U.S. citizens) of a home’s appraisal value.

The appraisal must be done by a person or an organization with the required licenses in that jurisdiction.

A licensed professional appraiser will work without any bias and make sure that the estimation is fair. When the lender requests the appraisal during the mortgage approval process, it will be randomly selected from a panel of reputable companies to ensure an unbiased opinion.

So, what features of the house matter to the appraiser? Some people have the misconception that eye-catching decoration and luxurious furniture increases the price. In fact, these things add value during other steps of home buying and selling, not in the appraisal process.

A home’s value will depend on its current condition, square footage, number of bedrooms, location, neighborhood, and a handful of other things. Appraisers will also note the views, which means overlooking a beach, lake, or the city. A property in a prime location or a prestigious neighborhood will qualify for a higher loan than those located in a less desirable area.

Normal appraisals range between $500-800 depending on State and location. If a lender requires a Rental Comparison, it may add $100-200 more.

U.K. Citizen living in Hong Kong expands his U.S. Real Estate portfolio with only 35% down using only the income generated from the property.

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The Client

Our client is a British Marketing Director living in Hong Kong. He owns 15 small properties in the Atlanta area and wanted to add to his holding in U.S. real estate.

How We Helped

The client needed to release equity from two of his existing properties in Atlanta to get the down payment for the purchase of a new Orlando, Florida property (4 bedrooms, 3 baths, 3200 sq. ft home with a pool).

The main challenge we had was the client was already in contract, and the loan was declined by an international bank two weeks into the process due to DTI (debt to income) issues.

Our Loan Specialists were able to immediately see the issue and discuss the client’s options on affordability. Once it was understood the client intended to use this property as an investment, America Mortgages was able to structure the loan using only the rental income to service the debt. The existing two rental properties were refinanced in sync with the closing of the purchase.

Loan Details

NationalityProperty ValueLoan AmountLTVRate
U.K. Citizen$1,690,000$1,098,50065%4.875%
AddressProperty TypePurposeLoan Type
15 unit portfolio, Atlanta, GeorgiaSingle-Family HomePurchase and RefinanceResidential