Tips On Buying Your First Home

Buying your first home can seem pretty overwhelming at first. You search everywhere for the perfect location, saved your money and took the time to research. All that's left is to secure that mortgage! But how does the process start?

First, you will need a mortgage lender to issue you a mortgage pre-qualification form. From there the lender will ask you your gross (before tax) income is, what your monthly debts are (car payments, credit card minimums) and how much you have saved for your mortgage down payment and closing costs.

Remember, you are not looking to be approved quite yet just qualified.

The mortgage prequalification tells you that you should be able to afford a loan of X dollars and buy a home at X price. Although it is not an approval, it can save you a lot of time. One of the most important things mortgage pre-qualification tells you is what you can afford now. Pre-qualifications covers your income, assets, and debts. 

However, pre-qualification does not even involve a lender checking your credit or verifying your income.

Once you are prequalified for your home loan, the next step is easy. Complete a mortgage application with a local or online lender.

So do not be afraid to start the process of getting approved you can never be too prepared! Contact me today to begin the process!

Why it may be better to buy a home in the fall

I am sure you have heard that the best time to buy a home is in the spring because there is an abundance of listings but many people are now saying that fall is when the real magic can happen and here is why.

High inventory of leftover homes from the summer are readily available. Come October sellers are ready for something to bite because their homes have been sitting on the market all summer.
Which then leads to another reason as to why the fall might be best.
Sellers are motivated to close by the end of the year. Everyone wants a fresh start come January 1st, so the sooner they can sell their home before the desire to start fresh at the beginning of the year, the better.

My third point then follows.

Fall landscaping is the best, I mean come on, beautiful changing of colors, cool weather, piles of bright, fresh smelling leaves. This is the perfect scene for staging and selling a home.

Next to landscaping, many families want to be in a new home before the start of school so that their children don't face too much of a disruption. Therefore, the competition is much lower in the fall to buy a home.

Fall begins the start of holiday season, you begin with Halloween and then comes Thanksgiving and before you know it Christmas is here and everyone is holding parties and having family over to celebrate. The last thing a seller wants or needs is a sale looming overhead.

Sure the spring is great, the flowers are blooming the birds are chirping but the fall truly may sneak up to the first place spot for buying a new home.

Tips on the Appraisal Process For Homebuyers

Homebuying can be an overwhelming process with many crucial steps, which you are hopefully guided through by a great Mortgage Lender and Realtor on your side. One of the most important steps in buying a new home is to have an appraisal done to ensure that you are getting out of your future home what you’re putting in! Following these important steps can make getting your home appraised a breeze!



What All Buyers Need To Know About The Home Appraisal Process


Do you know what a home appraisal is, or why it’s so important for you to have? Many people misunderstand this crucial component of the home buying experience.

In a nutshell, an appraisal is a valuation of your home; it’s a way for lenders to ensure that they aren’t providing a mortgage that isn’t worth what the home is worth. Your appraisal must match or exceed the value of your loan, otherwise you’ll run into hiccups.

An appraiser is someone who uses comparable sales in your neighborhood as well as the condition of your home in order to make a sound valuation of your home. They’ll include factors both inside and outside the house.

If an appraisal is lower than the amount you thought the house was worth, there are several options, including renegotiating the deal and paying the difference. If it’s higher, it benefits the buyer. But knowing more about appraisals, whether you’re a homebuyer or seller, can help the whole process go more smoothly.

Article originally appeared on Lighter Side of Real Estate

Rely on a Realtor's Recommendations?

Learning from the experience of others holds a lot of value, especially for first-time homebuyers. While consumers are more knowledgeable than ever about the housing market with blogs available (like this one), reading professional recommendations and ratings, or doing a little market recon before even picking up the phone, at some point they have to trust the professionals they’ve so dutifully researched.

Photo by Lukas from Pexels

While a mortgage lender will always argue that they need to be hired first, starting with a Realtor you trust can be a great move! They make it their business to know who does good business. A Realtor’s connections and recommendations will be properly vetted as reliable, friendly professionals and most importantly - get the job done.

There are plenty of skeptics out there who feel like using referred business lends way to some dubious profiteering. I’m glad to assure you that the Real Estate Procedures Act (RESPA), a piece of legislation designed to protect homebuyers, strictly prohibits kickbacks for referring mortgage lenders.

Realtors more than anything want your deal to go through and have a successful sale with happy customers, which is why they make recommendations based on their client’s needs. They’re familiar with lenders’ products and what might be a most successful path for their clients whether they are first-time buyers, renovators, investors, etc. Their recommendations are based on who they’ve worked with and who has the follow-through to make the deal happen.

Believe it or not, the rate isn’t the most important quality of a lender. Typically, many larger lenders remain competitive by offering similar rates, anyway. A Realtor doesn’t know rates, they know service and they’ve already weeded through the non-closers. Taking a .05% lower rate won’t mean anything if the lender fumbles at closing. So if you’ve already found a Realtor you trust, their recommendations for mortgage lenders are likely to be trustworthy professionals, too.

No matter who you hire first— a Realtor or a Mortgage Professional— getting pre-qualified (or at the very least, pre-approved) before home shopping is MUST!

How to work toward more home loan options

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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: 

Inc.com

Time.com

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 

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! 

3 Reasons Homeowners Should Itemize

 Photo: Vladimir Solomyani on Unsplash

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!