Tuesday, May 8, 2018

How to work toward more home loan options

Photo by Andrii Nikolaienko from Pexels


There are many perspectives when it comes to how long getting a mortgage takes. Many articles read that it doesn’t take as long as you think, just one to three days! Some articles warn that it’s a many month process toward reaching the final goal. Having seen everything in-between, it can easily be said that you never know just how long it will take.

For buyers who have planned ahead, done any credit repair work that needed to be done (i.e. not zeroed out any self-employed tax returns for two years or saved for a downpayment) then the process will be smooth as silk! But truthfully, that is rarely the case. Many individuals don’t find out that this kind of effort is necessary until after their initial meeting with a loan officer.


The spring market is fast-paced and sometimes pre-qualification letters aren’t enough to out-compete another bidder. In a seller’s market, like the current Richmond market, many sellers won’t entertain offers without a pre-approval letter, meaning your credit and income have been verified. 

So if you missed out on this spring market, take the opportunity during the "slower" real estate months of summer to get your financial house in order and broaden your mortgage options.

Save money!
The larger your down payment, the wider your mortgage options.

Adjust your debt-to-income ratio
Get your credit card balances down as low as you can, or consider consolidating debts into one low monthly payment the bank know is achievable along with a mortgage payment.

Don't borrow any more money
Don’t buy a new car when applying for a loan. Don’t take out a loan on something else while applying for a loan. Don’t stretch your credit so thin that the bank questions your repayment ability, okay?

Student Loans won't stop you
“Almost 60 percent of first-time homebuyers said that student loans delayed their saving for a down payment” according to the National Association of Realtors. Having that debt is commonplace and won’t necessarily prevent you from getting a mortgage as long as you’ve managed it wisely.

Credit Repair
Many mortgage lenders are willing to give mortgages to individuals with a credit score of at least 620, depending on their financial history. If your credit is less than perfect, remember that it is only one part of a whole equation. However, if your score is in need of an overhaul here are some general credit rebuilding tips:
  • Look at your credit report for any past due accounts or late payments. If you have accounts, like a student loan payment, that is 90 days or more overdue, pay those off first. Accounts that are 60 to 30 days late will have a less negative impact than accounts that are 90 days or more late.
  • If your credit report is showing that an old bill is unpaid, you should not pay it unless you are able to pay it back in full. A partial payment may make the debt more relevant, which can hurt your credit score.
  • Lenders will see that you have been making an effort to pay off overdue accounts and reduce your existing debt. This will bring your credit score up and help improve your chances of qualifying for a mortgage. 


Resources: 


Monday, April 9, 2018

Homebuying Documents 101



The home buying process can be rife with complications and legalese for anyone who isn’t paying cash upfront, depending on your circumstances. For example, if you are trying to qualify for an FHA loan the home you’re buying needs to meet certain expectations and therefore could require multiple addenda. Or, if you are self-employed, there tends to be an extra burden of proof when it comes to showing the bank how much you make a year (deductions or business expenses can mean “less” take-home pay)!  There are certain extra steps the homebuyer needs to take in order to satisfy every institution involved in the homebuying process.

With that in mind, if your transaction isn’t as straightforward as you hoped, consult a professional who wants to make your experience as transparent as possible! Here are some of the main documents you’ll need throughout the home buying process:


Mortgage/Pre-Approval:
1. Tax Returns (at least one year, if self-employed or commission typically 2 years)
2. W2s (last 2 years)
3. Pay Stubs (last 2 years with year-to-date earnings)
4. Bank Statements (last 2 months)
5. Investment Account Statements
6. Copy of Your Driver's License or Photo ID
7. Credit Report

Submitting an Offer:
1. Copy of Your Pre-Approval Letter
2. Sales Contract (signed and dated)
3. Any Addendum

Closing:
1. Sales Contract (signed by Buyers and Sellers)
2. Title
3. Title Insurance
4. Copy of Your Driver's License or Photo ID
5. Deed
6. HUD-1 Statement
7. Survey
8. Proof of Home Insurance (if required by lender)
9. Proof of Required Repairs

10. Checks 


Thursday, March 8, 2018

Local Lenders Do It Best!

It’s that time of year again! The Spring Real Estate buzz has already started and it’s time to get busy on your pre-approval to be a competitive shopper in this low-inventory market!

By now you’ve probably been bombarded by pop-up ads and indiscriminate commercials on how to “simplify” your way to hundreds of thousands of dollars in mortgage loans. In an industry that now boasts mobile ready money, a personal touch can still make all the difference in getting to buy your dream home— or not.


Source: pixabay.com
Flexibility
The benefit of many local lenders is that they have a “people first” mentality when it comes to doing business. Often times applicants don't qualify right away if they are in need of credit repair or even need help proving income after having written off everything possible as self-employed tax filer. When you work with a local lender there are often programs, workshops, and in some cases, workarounds when it comes to getting you a great mortgage.

The reason many local lenders have flexibility over larger lenders and may even be able to approve applications rejected by conglomerates because their guidelines and criteria often differ. The bigger guys tend to sell their loans to Fannie Mae or Freddie Mac which also ties them to their strict guidelines. With a smaller lender there’s more opportunity for special financing and often the person receiving your application is has the final say in approving your loan.

A local lender's focus is on the community around them and helping local businesses and homebuyers qualify. Loan Officers have direct access to managers and a team of professionals that are excited about getting creative to help their clients.

Source: pixabay.com

Accountability
As a local lender, we meet with clients face to face every day. We are reminded that time really is money and closing on time is important. I’ve personally experienced working with a buyer who switched lenders for the promise of half a percentage point savings. After I had filed all the paperwork and submitted their pre-approval letter before the switch, the buyers didn’t let their agents know the financing on the deal had changed. When it came time to close, their new lender had done none of the paperwork to move the deal forward and they ended up not getting the house. The lender had no accountability or urgency for their closing date or sale. 

While this is a special circumstance, the fact remains that giant mortgage lenders deal with clients in bulk and meet their own deadlines— not yours. When it comes to accountability, that 24/7 customer service hotline only gets you so far.

Source: pixabay.com

Accessibility
Due to their volume, many national lenders simply treat their customers like a bottom line. While having an 800 number to call might be convenient, you never get the same person twice. Working with a local lender means they have a personal interest in your loan and in working with you to get the best option available. Many online reps follow prompts themselves to lead you toward a box-sized solution. Ultimately, they’re not mortgage lenders they’re tech support. 

Many larger banks brag about their around-the-clock service, however, I have yet to meet a dedicated mortgage professional that doesn’t pick up their phone on a weekend! Not to mention many local lenders have their own specialized apps and technology for easy access to your application and status updates.

Photo by picjumbo.com from Pexels 

Ultimately, If you have a standard W-2 based income at a job you’ve had for years, with no hiccups in your credit history, perhaps a mortgage app is a great tool for you. However, like most of us dealing with life; changing jobs, freelancing or self-employment, non-liquid assets, small business ownership, missing a payment here and there— it may be difficult to fill in all that information with two thumbs.


Don’t leave money on the table or wonder if you’re getting the best mortgage for you. Work with a local lender! 

Tuesday, February 6, 2018

3 Reasons Homeowners Should Itemize


While the new standard deduction has recently been increased by the Tax Cuts and Jobs Act ($12,000 and $24,000 for single filers and joint filers, respectively) if you qualify for these 3 tax breaks, it may still be worth it to itemize.


Mortgage Interest
Writing off the interest on a home loan from federal income tax is a major homebuying incentive. While the maximum deduction was capped at $750,000 on mortgage loans taken after December 15, 2017, that still leaves many Americans eligible to take advantage of the tax incentive.

However, did you also know that you can write off your points?  Points refer to one percent of your loan’s total value. While you can’t claim origination points, discount points— or those you pay upfront to reduce your rate—  are very much deductible.

Property Tax
Many major cities have high property taxes and a homeowner's ability to deduct them from
Federal Income tax is a relief to those who live in high property taxed areas. Take as much advantage of your property tax deduction this tax season because in 2018, these property taxes will be capped at $10,000.

If you just bought your home, don’t forget to include the taxes you paid toward the seller for reimbursement. These are the taxes the seller paid before you took ownership.  You can find this amount on your settlement sheet. http://intuit.me/2DOu0rz

Photo: Bernadette Gatsby on Unsplash


Home Equity Loans & Medical Home Improvement
The only way to deduct interest on future home equity loans is if the funds are used to significantly improve the value of your residence. Conversely, Medical Home Improvements are deductible to the extent that they don’t increase the value of your home.

An example from Fool.com:
“For example, if your house was worth $200,000 and adding an elevator cost you $80,000 but increased your home’s value to $250,000, then you could only deduct $30,000 of the expense.”  If it doesn’t change the value of your home, then you can deduct the entire amount. You can also deduct upkeep expenses for medical improvements in future years. 

Photo: LES CUNLIFFE/ISTOCK/THINKSTOCK

While the standard deduction has increased, in the case of being able to claim all of these deductions, itemizing may be your best bet!

Most Americans can still take advantage of the many homeowner incentivizing tax breaks this year and next. Be sure to talk to your local tax expert to make sure you’re getting the maximum allowable deduction!

Tuesday, November 28, 2017

FHFA Announces Maximum Conforming Loan Limits for 2018



(Press Release - click here to visit the original article)
Washington, D.C. – The Federal Housing Finance Agency (FHFA) today announced the maximum conforming loan limits for mortgages to be acquired by Fannie Mae and Freddie Mac in 2018. In most of the U.S., the 2018 maximum conforming loan limit for one-unit properties will be $453,100, an increase from $424,100 in 2017.  
Baseline limit
The Housing and Economic Recovery Act (HERA) requires that the baseline conforming loan limit be adjusted each year for Fannie Mae and Freddie Mac to reflect the change in the average U.S. home price.  Earlier today, FHFA published its third quarter 2017 House Price Index (HPI) report, which includes estimates for the increase in the average U.S. home value over the last four quarters.  According to FHFA's seasonally adjusted, expanded-data HPI, house prices increased 6.8 percent, on average, between the third quarters of 2016 and 2017.  Therefore, the baseline maximum conforming loan limit in 2018 will increase by the same percentage.  
High-cost area limits
For areas in which 115 percent of the local median home value exceeds the baseline conforming loan limit the maximum loan limit will be higher than the baseline loan limit.  HERA establishes the maximum loan limit in those areas as a multiple of the area median home value, while setting a "ceiling" on that limit of 150 percent of the baseline loan limit.  Median home values generally increased in high-cost areas in 2017, driving up the maximum loan limits in many areas.  The new ceiling loan limit for one-unit properties in most high-cost areas will be $679,650 — or 150 percent of $453,100.  
Special statutory provisions establish different loan limit calculations for Alaska, Hawaii, Guam, and the U.S. Virgin Islands.  In these areas, the baseline loan limit will be $679,650 for one-unit properties, but loan limits may be higher in some specific locations.
As a result of generally rising home values, the increase in the baseline loan limit, and the increase in the ceiling loan limit, the maximum conforming loan limit will be higher in 2018 in all but 71 counties or county equivalents in the U.S.   
Questions about the 2018 conforming loan limits can be addressed to LoanLimitQuestions@fhfa.gov.
  • For a list of the 2018 maximum loan limits for all counties and county-equivalent areas in the U.S. click here.  
  • For a map showing the 2018 maximum loan limits across the U.S. click here.   
  • For a detailed description of the methodology used to determine the maximum loan limits in accordance with HERA, click here
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The Federal Housing Finance Agency regulates Fannie Mae, Freddie Mac and the 11 Federal Home Loan Banks. These government-sponsored enterprises provide more than $5.9 trillion in funding for the U.S. mortgage markets and financial institutions. Additional information is available at www.FHFA.gov, on Twitter @FHFAYouTube and LinkedIn.
Contacts:
Media: Stefanie Johnson (202) 649-3030 / Corinne Russell (202) 649-3032
Consumers: Consumer Communications or (202) 649-3811

Monday, November 6, 2017

The Top 4 Reasons Why A Loan Doesn't Go Through



1. Credit Scores
This is probably the scariest and most common reason why people's applications won't go through - but this is exactly WHY you should talk to a Loan Officer early in the process, they can set you in the right path in case you don't have a perfect credit score. Also, there are products that only need a mid 600 score which a lot of people don't know. The sooner that you address this problem, the sooner that you can fix it and move on with the process of buying a home. 

2. Debt to Income Ratio
This is something that can be a little hard to understand but basically if you have too much credit card debt or maybe an auto payment that is high compared to the amount of income you earn every month, you may not qualify for the amount that you'd like. Yes, you may still qualify but knowing how much you qualify for is important when shopping for a home. Speak to a L.O. before you start home shopping and figure out what you can afford. 

3. Cash Due at Signing
Depending on the type of loan that you get, you may be required to bring a lump sum of cash to closing. There are programs that allow you to bring 1-3% and then there's other programs that require 20%. The more you put down, the lower the interest and the shorter loan you can get. Either way, it's important to have some money set aside for closings costs and unexpected expenses. 

4. Change in Employment / Financial Responsibilities
If you lose your job while applying for a home loan or if you buy a car or open a credit card while in the process of getting a loan might affect your chances of getting one. This can also be a factor even if you decrease the number of hours that you're working. For example if you were working full time and then end up working part time or maybe you're just not working enough hours. These are all different scenarios that could prevent your application from getting approved in the end. 

This list is a short one, but it covers some of the basic things you want to fix to avoid doing when you apply for a home loan. Even though some of these circumstances are unexpected, some can prevented or you can prepare for them. If you have any questions about any of this, please make sure to give me a call so we can get you straight for when you decide to apply! 


Wednesday, October 11, 2017

State Housing Finance Agency Programs


How can you make owning a home a reality? You know, a lot of people that I talk to everyday don’t realize that homeownership could be a reality for them. Why? Finances. Most people stress out about money and that they don’t have enough of it to buy a home. What’s so amazing about homeownership is that in some cases, your bills will stay about the same as if you were renting and in some cases, they may be lower! That’s pretty insane right? But it’s true, depending on what type of home you decide to purchase, your mortgage payment could be lower than your current rent. 

So how do we get you in a home without having a big downpayment? There’s quite a few State Housing Finance Agency programs which can help with not only the downpayment but with some of the closing costs too. Yes, you will have to bring some money to the table but it could be much lower than what you think! And if for whatever reason this isn’t an immediate goal for you, it’s important to meet with a Loan Officer to help you establish goals and checkpoints in order to get your finances in order and eventually become a homeowner. 

If you ever want to learn more information about what kind of assistance programs are available to you, make sure to give me a call! I’d love to speak with you about it.