Qualifying For a Loan- What Do I need?

Qualifying for a Loan – What do I need to qualify?

Before you start searching for your new home, the first step is to speak with a lender and determine your budget. This is being pre-qualified for a loan. Once you find the right home, then your lender will order an appraisal of the property and complete your financing. If this is your first home purchase, or if it’s been awhile since you’ve purchased, understanding how to prepare for the qualifying process is the first step to success.

What do I need to qualify for a home loan?

When preparing for your meeting with the lender gather all the pertinent documentation and bring them with you. Most lenders will want to see 2 months of employment pay stubs and bank records as well as the past 2 years of tax returns. After reviewing your income and savings, the lender will also order a credit report which shows all your recurring debt and payment history. This will be used to determine your ability to pay the proposed mortgage.

How does credit, down payment and income affect my ability to get a loan?

There are a variety of loan programs available. From 0% down VA loans to traditional 20% down loans, your lender will review all your options with you so you can determine the best program. Some government guaranteed loan programs, such as the VA or FHA, are more lenient with your credit score requirements as well as other qualifications, such as debt to income ratios.

Qualifying for a home loan might feel overwhelming, but your lender can walk you through the process and requirements. After learning your options, you can make the best financial decision for your new home loan.

Foreclosures- What is A Foreclosed Property?

Foreclosures – What is a Foreclosed Property?

Unfortunately since the mortgage meltdown, foreclosed properties have become more common. Many home buyers see this as an opportunity to find a great home for a bargain price. While foreclosures can offer some nice discounts, understanding how foreclosures work and how this affects the buyer is critical to ensure you are getting a good deal and not a disaster.

What is a Foreclosure?

First it’s important to understand what qualifies as a foreclosure. A foreclosure is a property which has been taken back by the lender in order to satisfy an unpaid mortgage debt. It is owned by the bank or lender and they have now listed the property for sale.

Can I save money buying a foreclosure?

Yes and no! It’s true that lenders do not want to hold onto their foreclosed properties longer than they need to, but they also understand the value of the home in its current condition.

While deeply distressed properties might be listed at very low prices, good homes in decent condition might not be listed below comparables in the same area.

Is the buying process different from a traditional sale?

The actual buying process is the same; you write an offer, obtain financing and close. The differences lay in the protections and opportunities for negotiation during the process. Most foreclosures are sold “as is” and the lender will not negotiate repairs of any kind. There could also be clauses which remove other contingencies, such as financing or appraisal. The buyer needs to read the agreement very carefully.

Buying a foreclosure can be a great way to find a nice property at a discounted price. Not all properties are a good deal however. Understanding the foreclosure market and reading the contracts very carefully is the key to buying a foreclosure – this way you get the most home for your money without buying a problem.

Ask me for more advice as to whether foreclosures should be part of your home search.

Tips to Save For A Downpayment

Tips to Save for a Down payment

Are you thinking about buying a new home? Gone are the days of 100% financing with zero down payment. So if you are not sitting on a pile of cash, the idea of finding the money to pay the down payment might feel daunting. But there are simple ways to raise the cash needed to get into a new home.

• Assess Your Current Assets - The first step is to determine what cash you might have available right now. Do you have a savings account or perhaps a 401k*? Are you nursing a pet project, like a vintage car or motorcycle, which could be sold for additional cash?

• Explore Loan Options - Not all home loans require the typical 20% down payment. FHA and VA loans are available for qualified buyers which allow a very low/no down payment.

• Ask For Help - Some loans allow you to use gift funds from relatives for the down payment. There are also local and state programs which offer down payment assistance and second loans.

• Employment Incentives – Some cities and counties offer help with buying a home for teachers and first responders. If you fall into one of these categories, speak with your lender about options for down payment assistance.

• Government Programs- If you qualify, there are grants at the county level in our area which can be applied to your purchase of a home. There are many restrictions so reach out and we can discuss if you would be a suitable candidate!

Buying a new home is a great way to add to your financial security. Building equity with a property is one way to build wealth while providing for you and your family. Finding the down payment might be easier than you think. If you are ready to explore home ownership, meet with a lender and discuss your unique situation.

Ask for my Home Buyer’s Guide which offers local lenders recommended by previous clients

What Does "Move-In-Ready" Really Mean?

What Does “Move-in Ready” Really Mean?

If you’ve been searching for a new home no doubt you’ve seen the term, “move- in ready.” This description sounds very appealing, but understanding what it actually means is important so you have the right expectations when arranging your home listing tour.

First it’s important to remember that the descriptions in real estate listings are written by the listing agent or broker. There is no set industry standard for what agents can say in their listings. While there are guidelines and rules which prevent blatant lying, most home buyers have become aware of the fluffy language used to market a home for sale.

The meaning of “move-in ready” is fairly straightforward; it means that the home is in a condition which is acceptable for immediate occupancy. The home meets the standards of living and assures the buyer that the essential elements needed to occupy the home are present and in running condition. For example, the home should have working plumbing, appliances, sound roof, electricity, gas and locking doors and windows.

What “move-in ready” does not necessarily mean is that the home is in pristine condition. A home that is “move-in ready” might still need significant updating and while systems are assumed to be operational, they might still be old or outdated.

“Move-in ready” is a common phrase in real estate listings. Understanding that the home might still need quite a bit of work to suit your taste and lifestyle, you can approach the listing with realistic expectations and determine if the property is the right fit for your needs.

Down Payments Explained

Down Payments Explained

A down payment is the amount of cash a home buyer puts toward the price of a new home. It accomplishes a few things; first it reduces the amount of money you need to borrow and it reduces the risk the lender takes in loaning the money. By reducing the risk, the borrower will typically get a better interest rate on the loan and increase the amount of home they can buy.

How Large a Down Payment Do You Need?

The amount of down payment needed depends on the type of the loan, the lender and the property price itself. While most of the 0% down home loans of the last decade are gone, Veterans can still purchase a home loan with no down payment. Other programs include FHA loans with as little as 3.5% down.

Conventional loans typically require a 20% down payment, but some allow as little as 5%.

Is it Better to Make a Larger Down Payment?

In addition to the down payment, buying a home also requires cash for closing costs and some reserve savings to guard against unexpected financial concerns. One thing to remember though is that any financing with less than 20% down will require private mortgage insurance – a monthly payment which protects the lender in the event of default.

The best amount of down payment should be determined in consultation with your lender and your tax or financial advisor, but the quick answer is “it depends.” By working with a trusted lender, explore your options and you will make the best decision for your needs.

Ask me for the Homebuyer Guide which includes a list of local lenders recommended by past clients

What Type of Mortgage is Right for Me?

What Type of Mortgage is Right for Me?

When our parents were buying their first home, there was one way to finance the purchase. You would walk down to the corner bank and asked for a 30 year mortgage. Today the average home owner moves every 5-7 years. Depending on your needs there are a number of mortgage options you might consider, each with its own advantages and disadvantages, spending some time to understand the options is the best way to choose the right loan for your needs.

While loan programs and terms vary, the most common are:

·      Conventional - A conventional loan is normally still designed to be paid off in 30 years with equal monthly payments during the term of the loan. There are currently conventional loans that require as little as 5% down, although 20-25% is still commonplace.

·      FHA - An FHA loan is guaranteed by the Federal Housing Administration and is attractive for a number of reasons, especially for the first time home buyer. The down payment can be as little as 3.5% and that can be a gift.

·      VA - VA (Veteran Affairs) is a loan program offered for Veterans and their spouses. While the terms can vary from 0-5% down payment, this loan may allow the borrower to finance as much as 100% of the home’s value in the loan.

Your lender will also have more specialized options for you, such as adjustable rate loans and 10 or 15 year loans. They can also explain the additional costs that could be associated with each type of loan program.

Part of purchasing a home is to find the right financing. Your lender will talk you through your options. If you have not already spoken to a lender, or if you need a referral, your real estate agent is a great resource for you.

Ask me for my Home Buyer Guide which includes information on local lenders recommended by past clients

5 Tips for Starting Your Home Search

5 Tips for Starting Your Home Search

Everyone wants to time their home purchase “just right.” Ideally, the picture perfect “buyer’s market”; plenty of well-­‐priced listings, low interest rates and a slow moving real estate market where the buyer has plenty of time to decide on an offer. The reality is that the current market is a fast paced environment where the best homes move quickly and serious home buyers need to be prepared to act when they find the right home.

Fortunately, starting your home search the right way is easy by following these simple tips:

1.   Find a Lender and Get Pre-­‐Approved – Know what you can afford before you start your search. By getting a pre-­‐approval letter, you demonstrate to sellers that you are serious when you write your offer and it proves you can afford the home.

2.   Research Neighborhoods – Each community will have their own personality and advantages; before you spend time looking at homes, choose the right area for your lifestyle and family needs.

3.  Pick the Right Home Style – Learn about the various home styles available in your community. Do you want a single story? Large yard? Do you like older homes or historic-­‐ style properties?

4.  Make a List of Must Have and Like-­‐to-­‐Have – There is a difference! Make a list and be ready to compromise when appropriate by ranking the items.

5.  Take Notes – Often a home buyer can see 3-5 homes in a single day; take notes and if possible, take pictures so you can remember the things you like, and don’t like, about the homes you see once you get home.

In a fast paced real estate market, spending some time preparing for your home search will help you move quickly when you find the right home for you and your family.

No worries- you aren’t alone. Contact me and let’s get started on making your game plan!

Things You Should Avoid After Applying For a Home Loan

Things You Should Avoid After Applying For a Home Loan

You’ve done everything right so far; you’ve found a great lender, received a pre-­approval and submitted your loan package for final approval. Now you’re done, right? Wrong. Until you close on your new loan, it’s more important than ever to keep your credit steady; most lenders perform one last credit check right before they fund and a decline in your score can mean the difference between getting  the home and losing the loan.

Things You Should Never do After Applying for a Loan

·    Don’t Change Jobs – While sometimes it’s unavoidable, especially if a new job is the reason for the move, but any change in income or job status creates risk and should be avoided if possible.

·    Don’t Make any Large Purchases – As tempting as it may be to go shopping for new furniture, wait until after you close to make any large purchases. This applies to furniture, appliances and even new cars. New loans could change your debt to income ratio and cause you to no longer qualify for the loan.

·    Don’t Apply for New Credit – Every time someone runs your credit report, your score is affected. This is not the time to search for a new credit card.

·    Don’t Close Any Credit Accounts – It might seem counter intuitive, but closing or paying off loans or credit cards might actually bring your FICO score down. The length of time you’ve had your credit open is a positive effect on credit scores.

The bottom line is to avoid doing anything to your credit. If you’re unsure of what you can or cannot do, ask your lender; they can guide you in the right direction and make sure you close on your new loan.

4 Tips For Making a Competitive Offer

Most areas of the country are experiencing a brisk real estate market. Well priced homes are moving quickly and often sellers have multiple offers from which to choose. How can you make your offer stand out and put you in a better position to get the home? Fortunately there are a few things you can do to make your offer more attractive to sellers.

4 Tips for Making a Competitive Offer

1.   Offer a Fair Price – When the market is moving quickly, this is not the time to throw out a low ball offer and hope they negotiate. Write an honest price based on market values.

2.   Have a Pre-­‐Approval – It may not be enough to simply offer a pre-­‐qualification letter. When issuing a pre-­‐approval the lender verifies your qualifications and an underwriter gives preliminary approval based on the actual home and a good appraisal.

3.   Flexible Timing – Not everything comes down to price. A seller who is relocating might be more interested in an offer which gives them extra time to move.

4.   Attractive Terms – Most offers include contingencies for items like appraisal, inspection, title, loan approval among others. Working with your lender and real estate agent, consider removing any contingencies you don’t need. If you plan to remodel extensively for instance, you might remove the home inspection contingency. This provides more confidence in your offer vs the competition.

The most important thing in a competitive real estate market is being prepared. Working with your lender and agent, you will understand your options and be able to write a solid offer quickly, putting you in the best position to have your offer accepted.

The Benefits of Growing Equity in Your Home Over

Over the past few decades, the way we view home ownership has changed. Unlike previous generations who bought a home with a 30 year mortgage and celebrated the day they made their last payment, today’s home buyers rarely stay in their home that long. As a result, the way we view mortgages has changed as well and often buyers are not building the equity in their homes the way we used to.

But there are benefits to building equity and paying down the loan, here are just a few.

• Flexibility – Having equity in your home gives you the flexibility to move if you need to or want to. For home owners who plan to either buy a large home or perhaps downsize, having equity allows you to not only put money down on a new loan, but pay for moving and closing costs.

• Safety Net – Life is full of unexpected expenses – job loss or relocation, unexpected illness or accident, natural disasters – the equity in your home can help you navigate these unexpected costs with a line of credit or the proceeds from a sale.

• Asset Recovery – Many homeowners over the last couple decades have found themselves underwater in their homes; negative equity. By either making additional principal payments on the loan or reaping the effect of higher home values, building equity can help create wealth and turn a negative asset into a positive.

Homeowners might not plan to stay in their homes as long as their parents and grandparents, but there are still great reasons to focus on building equity in their homes. A home is an asset, and treated properly is a wealth building tool unlike any other options.