A mortgage is a key debt instrument in the financing arena, as it provides a quick loan to the borrower against the property and is a security to the bank. Typically, the large businesses and individuals use the mortgage as an option for large real estate purchases, without making payment of the full value. The bank is also comfortable in providing money to the borrower, as in case if the borrower stops paying the mortgage, the bank has the authority to take control of the mortgaged property. Mortgage refinance is an important process in the debt sector, which allows the borrower to replace their mortgage on their property with a new mortgage. This process helps to provide new money to the borrower and pay off the original mortgage with the better terms.
Understanding mortgage refinance
Let’s consider this example to understand mortgage refinance. Adam has a mortgage for $500,000 with Bank A at an interest rate of 8%. He found that he could obtain a mortgage for the same amount with Bank B at an interest rate of 5%. Now he takes a loan with Bank B for $500,000 at an interest rate of 5% to pay off the debt of Bank A, which means that he is under no obligation to Bank A. Now Adam is required to pay Bank B only.
Mortgage refinance cannot only be used to pay off the original debt, but it can also be used to pay off other debts. However, in this case, the homeowner should have sufficient equity in real estate.
Pros and cons of mortgage refinance
Starting with the pros of mortgage refinance, if the interest rate is less than the original mortgage, the homeowner can save a significant amount of money and tend to pay less monthly installments. In the long run, mortgage refinance is helpful as the borrower will pay less each month and save extra cash. This cash could be put towards the short and long-term saving goals.
The cons of a mortgage refinance is that there are many closing costs involved while closing the original mortgage such as title insurance, attorney fees, appraisal fees, and some other costs have to be paid again. In case if the original mortgage was recent, then the lending institution waives some of the fees.
It would be a wise step for the borrower to determine the closing costs and other fees associated with the mortgage refinance to get the best deal and save money. However, the amount of interest saved is higher than the closing costs, which is a plus point for the borrower. Therefore, the borrower can consider a mortgage refinance as an option.
A cash card helps you carry digital money for making payments at stores or online. It is a secure and convenient alternative to carrying cash and does not necessarily need a bank account, with the exception of debit cards. A tool for electronic payments, cash cards typically use the funds you already have to make payments, unlike credit cards. Here is a look at free cash cards you can get and use for day-to-day transactions:
Types of cash cards
Cash cards can be linked to a bank account or are registered directly on payment networks with the option to top up your balance. Here are the common types of cash cards you can find:
Prepaid debit cards: Prepaid cards are one of the most popular types of cards. The card here stores a digital balance that can be accessed to make payments at all popular merchants. It works in a way similar to recharging your phone balance every month, but instead, you top up your debit card to make e-payments.
Payroll cards: Payroll cards are employer-issued cards with a prepaid balance to facilitate scheduled payments. Employees get immediate access to funds deposited by the employer as their salary without having to worry about having a bank account, as the card is linked to the payroll account.
Other prepaid cards: Digital merchant banking and payment apps also offer free cash cards that can be ordered online. These accounts do not require a minimum balance, maintenance charges, or any interest on the amount. You can digitally transfer funds to the linked cash card via an app and use the funds for payments at stores or online shopping platforms.
Gift cards are also cash cards that come with pre-loaded balance to be spent on a purchase.
Top free cash cards
You can apply for one or more of the following cash cards linked to payment networks, merchant services, or even apps that offer financial services.
CashApp Cash Card
If you already have an account registered with CashApp to enable merchant banking and in-store transactions, you can order a free Cash Card. The card is compatible with the Visa network. You can apply for the card on CashApp, and the prepaid chip-enabled card will be delivered within a few weeks to your residence. Once you receive the physical card, simply activate the same using the QR code on the card and start using it as you would normally use any prepaid debit card. Applicants as young as 13 years old can apply for the card with parental approval. And those who are over 18 can apply without any restrictions or limitations to avail of the free cash card facility.
Square Cash Card
If you own a business and are in need of digital money to access funds, consider applying for the Square Prepaid card. You can open the account without worrying about recurring fees or obligation to maintain a monthly balance. The card can also be used to withdraw cash from the nearest ATM. The funds are stored digitally in the square balance account and can be easily tracked to know exactly how much is being spent or collected to operate the business. The card comes with a two-step verification process and is synced to your checking account. You can also activate or lock your card using the Square application to prevent unauthorized access. The basic account features a free cash card with no monthly fees necessary. But you can also check out the premium account with services for business owners starting at $35/month for advanced features. Large-scale enterprises can even get a custom quote for enterprise-level solutions for managing inventory receipts and payments.
Mastercard® cash cards
Mastercard® is one of the top two premier payment networks used by banks and financial institutions for introducing free cash cards. Its electronic chip card enables easy money storage and can be conveniently used for payments across popular merchants. There is no comprehensive credit check or bank account required, as you will be able to spend only the value stored on the card. Branch App, Credit Sesame, H&R Block Emerald Prepaid MasterCard, Netspend Prepaid, PayPal Prepaid, Revolut, and Venmo Mastercard are among the top prepaid cards. You can apply to use these cards for payments and merchant banking transactions.
Visa cash cards
Visa is another network partner to consider, with multiple banks and financial institutions being part of its payment gateway. Visa’s ONE VIP, Netspend, smiONE™ Prepaid, ACE Elite Prepaid, CUMONEY® Visa® Everyday, Cashpass Visa, and Commerce Bank are among the top prepaid cards on the payment network. These free cash cards can be obtained without a comprehensive background check for payment at offline and online merchants. The application procedure is straightforward. These cards are great for students and homemakers who want to avoid carrying cash or maintaining a credit score and bank account with a high minimum balance.
There are several alternatives for individuals and businesses to get free cash card facilities to simplify their transactions. Digital payments are increasingly becoming secure and usually come with two-factor authentication to prevent unauthorized access. Cash cards are the perfect way to pay for products and services without the hassle of paperwork.
Property prices are eternally on the rise. Therefore, the demand for home loans is almost always high. To get a home loan, seekers must maintain a good credit score and overall loan repayment behavior. These criteria may seem simple, but fulfilling them becomes challenging for several loan receivers. Due to that reason, many people find it challenging to get conventional loans approved. Pre-approved FHA home loans are the solution for such situations.
What is an FHA home loan?
The Federal Housing Administration (FHA) approves and backs these loans under the jurisdiction of the Department of Housing and Urban Development. Although the FHA pre-approves these home loans, private lenders provide the money directly to loan seekers. These lenders can be credit unions, banks, or even some nonbanks, such as online lenders, who are FHA-backed and licensed to be part of the partnership. FHA home loans are known for their low down payment and interest rates. Usually, first-time home buyers and people with credit payment challenges opt for these loans due to their accommodating and lenient nature.
While the federal government does not directly issue FHA loans, it pre-approves and insures them to safeguard the private lenders who offer them to home loan seekers. The insurance bit comes in handy for the lenders when people who take these loans default on the repayments. FHA home loans help buy or refinance several types of homes, such as two-to-four-unit multifamily homes, condominium units, single-family houses, and precisely manufactured homes attached to permanent foundations.
While people who receive this loan can use it to build new constructions or renovate existing homes, all properties built using them must undergo FHA appraisal.
Requirements to get an FHA home loan
Individuals looking to receive an FHA home loan need to tick certain boxes, such as:
The loan will only be provided if the home being built or bought is a primary residence and not a second home or an investment property.
As specified earlier, the home built or bought with FHA home loans must be appraised by an FHA-approved appraiser beforehand.
Loan seekers will have to let FHA officials inspect the property. After the evaluation, a report can be created regarding the same. This report will contain detailed information about whether the home meets minimum property standards.
Apart from these, aspects of the loan, such as the down payment amount, credit score, mortgage insurance, loan limits, and income requirements, will also be carefully considered before the loan is handed out to seekers.
The FHA holds the authority over the approval or rejection of these loans. Also, this body can add or remove criteria for specific scenarios.
Process of getting an FHA home loan
The loan criteria is only the tip of the iceberg when it comes to FHA home loans. Here’s the complete process of how these loans work:
Show valid documents to confirm that loan seekers meet the minimum requirements, which include a credit score of at least 580 (which is comfortably lower than the 620 that most banks demand in return for conventional home loans), proof of income, records showing no recent bankruptcies, residential address, social security details, and other personal information for verification purposes.
The second step involves choosing an FHA-approved lender to receive the money. Lenders need to have experience in loan origination, possess licensing in each state the lender serves, have a positive net worth, have a bond, a completed application and incorporation papers, and maintain detailed credit reports for loan officers as well as the lender themselves.
While looking for lenders, loan seekers can compare terms, rates, and fees each lender offers before zeroing in on one. Individuals looking for FHA home loans can also consider factors such as the lender’s customer service, physical location, and typical customer.
The next step involves applying for and getting pre-approval from the FHA for a loan. A Pre-approval is the process of a lender reviewing loan-seekers financial documents and credit history before letting them know about their eligibility for an FHA loan. While pre-approval does not guarantee the reception of a loan (there needs to be a further evaluation before that), it speeds up the process.
The subsequent step is to provide documents and officially apply for a loan. That includes submitting the following information: income sources, income amounts, housing expenses, details about previous and current employment, and recurring debts.
The next step involves property inspection and appraisal by a certified FHA appraiser. After this, the FHA will perform the underwriting and approval of the loan. The final step involves signing the loan documents and paying the closing fees and costs of the lender and FHA’s services.
Benefits of FHA home loans
Low creditworthiness requirement
As alluded to earlier, the credit score requirements to receive these loans are much lower than that of conventional loans. This alone makes it easier for people with less-than-perfect credit history (a large majority) to get the loans to build or buy the house of their dreams.
Low down payment
While receiving FHA loans, one can access financing for their home with only 3.5% needed as a down payment. This figure is considerably more affordable than the 20% figure that most other loan providers demand from seekers.
Low DTI requirements
A person’s debt-to-income (DTI) ratio compares their monthly debt to their income. There are many people who earn low incomes and have inherited huge debts from their families. For such individuals, the low DTI requirements of FHA home loans are a welcome relief while looking for financing or refinancing avenues for their houses.