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Mortgage Process

First Home Buyer Checklist

For Millennials, buying your First Home is an exciting adventure. Owning a home is the American dream. It’s also the largest investment most of us will ever make (aside from perhaps the cost of a college education), Knowing what you’ll need before starting the trek is just as important as knowing what isn’t required. Here are some tips.

 Here’s what you’ll need:
♦   Get Mortgage Pre-Approval. A Mortgage Pre-Approval is a commitmenapp approvedt by your lender that they will lend you a specific amount of money when you find your new home.  By getting Pre-Approved for a mortgage before you start house hunting, not only can you shop with confidence, but you’ll be show sellers you are qualified and serious about buying their home.
♦   Enough income to pay monthly mortgage payments. Keep in mind that FHA MIyour monthly mortgage obligation will include not only the mortgage payment, it will also include an escrow payment for your home owners insurance (HOI), taxes, and your monthly mortgage insurance premium (commonly called PMI or MIP).
♦   The ability to maintain the property. You must keep a home in good repair or it will lose value and you’ll lose money. One of the “joys” of homeownership is keeping up with the chores around the house.  You’ll need a lawnmower to maintain curb appeal and you can’t ignore peeling paint or unexpected repairs that eventually come along. If you’re handy you can DIY or you can hire someone to do it for you. Either way, it will cost money. And you ‘d better be prepared.
♦   A decent credit record. Your credit score is the major determining factor in your ability to get a mortgage at the best terms. Low scores are caused by late payments, bankruptcy or collection accounts
There is only one Website authorized by law to provide the Free Annual Credit Report you are entitled to under the Free Credit Reporting Act – annualcreditreport.com. Check it out! And if you see any problems, take action.

Here’s What You Won’t Need:
♦   A big down payment. Sure, it would be nice to be able to make a 20% down payment on your new home. With equity in your home, you canInterest Rates avoid paying PMI, you might get a better rate and you’ll lower your monthly payments.
But it is possible to buy a home with a small down payment. There are several loan programs available to qualified home buyers that allow for down payents as low as 3 to 3.5%; there’s even one that allows for up to 100% financing of eligible properties. Talk to a professional mortgage loan officer about the best option for your family.
♦  Experience. There is a lot of information on the internet about the whole home financing/home purchase adventure. It all tends to result in a giant house puzzlejigsaw puzzle. Look to the experts for help putting those pieces together. A professional mortgage loan officer has the experience to guide you through the complicated mortgage application process. A trusted Realtor can help find the right house, assist with your negotiations and address other issues with the home purchase.

Resource:  http://www.hgtv.com/design/real-estate/a-checklist-for-first-time-homebuyers

 

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Mortgage Process

How To Make an Offer on Your First Home

Buying your First Home depends on negotiating a satisfactory Purchase & Sales Contract with the seller, not just making an offer.

How to Determine Your Initial Offer
Unless you have a Buyer’s Agent, which we strongly recommend, keep in mind that the Dual Agent gets paid by the seller. Make a point of asking this agent to keep your discussions and information confidential.

If you have a Buyer’s Agent, listen to your REALTOR’s advice, but follow your own instincts on deciding a fair price. Calculating your offer should involve several factors
♦  How much of a mortgage have you been Pre-Approved for
♦  What similar homes sell for in the area    Get Pre-Approved
♦  The home’s condition,
♦  How long it’s been on the market,
♦  Financing terms
♦  The seller’s situation.

By the time you’re ready to make an offer, you should have a good idea of what the home is worth and what you can afford. And, be prepared for give-and-take negotiation, which is very common when buying a home. The buyer and seller may often go back and forth several times before they can agree on a price.

Making an Offer
Your REALTOR will assist you in making an offer and in preparing the Purchase & Sales contract 3Contract which will include the following information:
♦  Complete legal description of the property
♦  Price you are offering
♦  Amount of earnest money deposit
♦  Down payment and financing details
♦  Home Inspection Contingencies
♦  Mortgage Contingency Date
♦  Proposed Closing date
♦  Length of time the offer is valid
♦  Attorney review of the contract
♦  Other details of the deal

The Purchase and Sale Contract is a legal document. In addition to the agreed upon price, it stipulates as specific timeline as to what you and the seller must do to complete the sale. It would be prudent to have your attorney review this contract to ensure that your interests are well protected and to be prepared to assist you with any glitches that may occur during the whole process.

Similar Stories:        http://www.richmond.com/realestate/resources/article_43dc062c-abad-11e4-9d9b-4f6d478b87bc.html

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Mortgage Process

What is A Mortgage Rate Lock?

At some point during the mortgage application process, the borrower must exercise their agreement with the lender to lock in the rate for their final mortgage. 

rate lockWhat is a Mortgage Rate Lock?
A Mortgage Rate Lock protects the borrower from the risk that interest rates will increase during the rate lock period. It guarantees that the lender will offer the borrower a specific combination of interest rate, points or interest rate credit at the closing of their loan.
If market rates rise after the rate is locked, the borrower will still get the lower rate, to the lender’s detriment. But there’s a downside: If rates fall after the rate is locked, the borrower might not be able to take advantage of that opportunity. 

When Can a Mortgage Rate be Locked?
Buyers typically must wait until a seller has accepted their purchase offer for a specific property before they can lock in an interest rate for their mortgage. In addition, the lender must have certain information about the borrower and the details about the transaction before a rate can be locked. This includes receipt of all signed legal disclosures, the borrower’s credit score, anticipated loan-to-value ratio, property type and the borrower’s signed intent to proceed with the transaction. Until all pieces of the puzzle are in place, the lender can not accurately commit to any final interest rate, cost and terms.

How Long Can a Mortgage Rate be Floated?
When a mortgage rate is locked depends on the borrower’s tolerance for risk. The purchase and sales contract dictates when the loan must close. The borrower may opt to let the final mortgage rate ride or “float” with the market until they feel they can get the best deal. Of course they run the risk that the market will turn in their time period and rates will rise from current conditions.
A good mortgage loan officer may have, in good faith, projected a final mortgage rate for processing purposes, but the mortgage application cannot be approved until the final rate has been locked in.
In today’s mortgage processing environment, a mortgage rate could be floated until about 14 days prior to the prescribed closing date. This should give the lender to deliver the final disclosures, the underwriter time for a final review of the application and to issue a “clear to close,” and time for the closing deportment time to deliver closing package to the closing agent.

Should You Choose a Longer Rate Lock Period?
Borrowers are well advised to choose a 45 to 60 day rate lock period to ensure they can get the agreed upon rate even if there is a delay in processing their mortgage application. If a loan fails to close within the rate lock period, the borrower will charged the higher of the original lock and the current interest rate. If rates are higher, the borrower may be offered the opportunity to extend the original rate at a cost of 0.25 points for each 7 day period. (A point equals 1.00% of the base loan amount)

How Much Does a Rate Lock cost?
lockMost lenders will not charge for a Mortgage Rate Lock.  . But a rate lock isn’t free. Rather, a longer rate lock typically involves a higher interest rate, which is more expensive for the borrower. The interest rate or “pricing” difference between a 15-day rate lock and 60-day rate lock might be as little as one-eighth or could be as much as half of a percentage point. The longer period protects the lender from potential market deterioration. The shorter the rate lock period, the more risk the borrower is taking on, but they should be getting a better price.”

No Mortgage Loan officer is an interest guru. But he does understand the lender’s commitment to you and will do his best to honor the rate lock obligation. However, the complexity of your application and issues like: failure to provide additional documentation in a timely manner, appraisal concerns, possible title problems all add time to the process.

There is rarely a reason not to lock a loan as soon as you can. Interest rates change daily, sometimes hourly. To protect yourself against the volatility of the marketplace, it’s a good idea to lock your rate once you are satisfied with the rate. The reason some buyers dislike loan locks is because they want to grind every dime out of a transaction that is humanely possible. Just remember that if the rate was acceptable when it was locked three weeks ago, a drop of an 1/8 of a point or so isn’t the end of the world. You don’t need to be that kind of borrower to get a good deal.

Read more: http://www.bankrate.com/finance/mortgages/questions-rate-lock-answered.aspx#ixzz3cy8lb29i

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Select Properties

12 Maple Avenue Thomaston CT For Sale – Eligible for 100% USDA Financing

First Home Buyers! This cozy, very solid, gas heat home is ready for a new owner.
It’s Eligible For up to 100% Financing with a USDA Rural Housing Development Mortgage. Closing costs can be included in loan amount. Low rates! Low MI! Beats FHA and CHFA any day!

http://www.ctreal.com/Search/L149616#tr1264940

Call Me at 860.945.9284 for details on the USDA Guaranteed Rural Housing Development Loan and to take advantage of my FREE Mortgage Pre-Approval service
Then call Marcus Santore at Marrin Santore Realty to schedule a showing and be ready to make an offer.

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Mortgage Process

The Mortgage Underwriter and Your Mortgage Application

The Mortgage Underwriter is one of the most important people in the Mortgage Application process. Without the approval of an underwriter, no lender will fund or close on a loan. It is the job of the underwriter to ensure a borrower can repay the loan they are applying for and to determine that the sales price is supported by the appraisal value before granting lending approval.

app approvedApproval of a Mortgage Application is based on several things: income, credit history, debt ratios, and savings.
♦  A borrower must be able to prove a stable income and job history needed to repay the loan.
♦  They also must have a credit history that reflects a stable record of repaying obligations and a balanced debt to income ratio. Additionally, a borrower’s monthly debt must fall within acceptable limits determined by the loan product’s guidelines.
♦  Lastly the borrower must show that they have enough money saved for their down payment and closing costs. It is also smart to have a few months of mortgage payments saved away in case of an emergency.

It is the Mortgage Underwriter’s job to make sure all of these factors meet particular loan guidelines. The underwriter will evaluate all of this information and sometimes ask for more information or explanations from a borrower to clarify and support their decision on the  Mortgage Application.

Mortgage Underwriters also review the Appraisal to make sure it is accurate and thorough, and that the home is truly worth at least the purchase price. A property’s appraised value is also reviewed by the underwriter to ensure the value supports the amount of the loan you are requesting. A good underwriter will also take into consideration the condition of the property, the location of the property and how it may be affected by natural disasters, such as floods.

An Mortgage Underwriter does his or her best to evaluate the potential risk involved when lending to a borrower. In January 2014, the Consumer Financial Protection Bureau enacted stricter requirements on some mortgages, which included tougher background checks into your bank account, spending and employment history.  If an underwriter does not follow all guidelines and makes a poor lending decision and the loan defaults, meaning a borrower stops making payments on their mortgage, it could result in a hefty cost to the lender.

The Mortgage Underwriter has final approval and final responsibility for the Mortgage Loan.  They must make important decisions based on the facts presented in the file, their own judgments and similar application experiences. The Mortgage Underwriter has to take a calculated risk and do his/her best to determine if a file adheres to not just the letter but the intent of the loan program guidelines. It is not an easy job.

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Mortgage Process

Why Every First Home Buyer in CT Should Get Mortgage Pre-Approval In 2015

What is the benefit of having Mortgage Pre-Approval when looking for your First Home?

There is a difference between Mortgage Pre-Qualification and Mortgage Pre-Approval.
♦ Mortgage Pre-qualification is based solely on the you verbally share with your Mortgage Officer to qualify for a mortgage loan. The Mortgage Pre-Qualification Letter basically says that the lender will give your a mortgage when they see that the information you told us about is correct and meets certain qualifying standards.Get Pre-Approved
♦ With a Mortgage Pre-Approval, the buyer supplies all the written documentation of the information they claim to be true. This formal application is reviewed by and underwriter to be sure the credit, income and assets are sufficient to obtain the loan you are applying for. Loan Officers can not issue a Mortgage Pre-Approval. Only a Mortgage Underwriter can issue a valid Mortgage Pre-Approval Letter.

If you are looking to buy your First Home is 2015, a Mortgage Pre-Approval is the smartest to get into your dream home. Here’s Why …

1.  Knowledge is Key:   A Mortgage Pre-Approval gives you a firm idea as to how big a house you can buy and how much of a mortgage you can afford. Lenders base this amount using a formula (your Debt-to-income ratio) that compares your income to your total outstanding debts, including your proposed new housing expenses. This will keep you focused on the big picture and help to prevent being disappointed if you fall in love with a home that is too expensive for your means.

2.  Improve Your Negotiating Position: When a seller is comparing two offers and one of the buyers has Mortgage Pre-Approval, they have a high confidence level that their sale will go through and close sooner. This may help you to win in a competitive bidding situation.

3.  Confidence in Your Offer: Knowing the the paperwork supporting the key information needed to obtain a mortgage has been reviewed by and underwriter will give you, and the seller, confidence that your offer is bona fide.

4.   Keep Your Spending on Track: Having detailed information on your interest rate, down payment requirement, closing costs estimate and mortgage terms will help you stay with in your budget and be prepared for the closing of your loan.

5.   Time is Valuable: Knowing what you and cannot afford can save you time and frustration in the house hunting process. This will also help your Realtor find the perfect house in your price range.

6.  Move in Quicker: Having Mortgage Pre-Approval will save you time when your application is submitted for final approval. Most of the paperwork has been done, so all you should need to do is have the property inspected and appraised. The faster you can close, the quicker you can move into your dream home.

The Mortgage Pre-Approval process is not quick and not necessarily easy. But most REALTORS® will tell you that getting Mortgage Pre-Approval is the key to getting the new home you want.

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Mortgage Process

What Determines a Borrower’s Mortgage Rate?

Here’s a follow-up to my blog What Makes Mortgage Rates Go Up and Down. Now let’s talk about What Determines a Borrower’s Mortgage Interest Rate?

As we discussed, many factors determine the interest rate on a particular mortgage. A Interest Rates Will Riseborrower’s rate will reflect general conditions in the financial markets, the type of mortgage they chose, the lenders assessment of the risk involved in your financial situation and, of course your credit history.
That’s why a quick “rate quote” over the phone or a rate you saw online or pulled from a newspaper advertisement may not reflect the interest rate you will finally be offered once a lender has evaluated your specific circumstances as presented in your mortgage application.

Risk Matters
When lending money to finance a home purchase, lenders and their investors seriously consider the risk that these borrowers may not repay the money loaned to them. For example: the larger the down payment, the greater the investment in the property and the lower the perceived risk. Therefore, the lower the mortgage interest rate. Vice versa: The smaller the down payment, the less equity in the home and the greater the risk of default. The higher the risk, the higher the interest rate

When someone calls me inquiring about interest rates, I tell them, “I don’t sell interest rates.” I go on to explain, “There is no “one low mortgage interest rate.” Rates fluctuate daily-even hourly-with movements in the financial markets. A borrower’s final interest rate is determined on the day it is “locked” by an assessment of:FHA MI
•  Mortgage type
•  Mortgage term
•  Loan amount
•  Type of property
•  Credit Score
•  Debt-to-Income Ratio
•  Amount of cash the borrower will contribute to the down payment, closing costs and points.
I might tell them, “Today, at noon on July 2, 2014, it is conceivable for a buyer want to buy a single-family home selling for up to $400,000 with a conventional 30 year fixed rate mortgage has a credit score greater than 740, is able to make a 20% down payment and is willing to pay all closing costs and about 2 points to get a rate in the 4.00% range. If any of these criteria do not fit your situation, then the rate will be higher. How does that sound to you?”

Bottom Line
In the final analysis, it is the borrower’s unique personal situation that determines his/her final mortgage interest rate. His financial position will help him decide which mortgage program right for him and what interest rate scenario is right for his family budget, how big a house he can buy and how large a mortgage he can afford to repay. My job was to guide you to that decision.

Do not hesitate to reach out to me with any questions or concerns you may have about how your situation might impact your mortgage interest rate. I’m here to help.

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Market Updates

Is The 2014 Spring Home Buying Season in CT a Bust? What Do You Think?

I live in a small CT town with a population of about 23,000 persons. According to City Data.com, we have 8,300 houses in town. According to Zillow.com & Realtor.com there are home for salecurrently about 225 properties for sale in town including SF homes, condos, a few multi-families and some land lots. Every Sunday, the local paper lists recent sales in area towns. For the past 5-6 weeks no sales have been reported for our little town. Last Sunday, the paper reported that 24 properties were sold; 30% of which were sold to the bank for a $1. I did a quick check of neighboring towns with lower populations, similar demographics and higher housing density and their figures seemed to be comparable.

Then I read a blog by CTNewsJunkie that cites a report by the state Labor Department and Economic Development Department that seems to blame the housing market for the pain we jobssuffer. The report contends that “if the slowdown in housing, which began in the summer of 2013, continues, job growth will slow this year and again in 2015.  They forecast job growth in CT will “slow to fewer than 20,000 new jobs from YE 2013 to late 2015.” Now that’s new jobs statistics and doesn’t consider a contraction of the total work force due to job losses particularly in the Financial Services and Goods Producing sectors.

It has been my contention for the past few months that the Spring Home Buying Season in CT is a Bust. Homes aren’t selling and Buyers aren’t buying because:

o   Mortgage interest rates have risen.Rising Home Prices
o   Investor demand for good deals pushed home prices up
o   Home values are optimistic in relationship to inventory and demand
o   Job security has turned would be buyers and sellers into “Fence Sitters”
o   Job growth in CT has been hampered by a lack of any government initiatives to promote a business climate that would create jobs

Now I’m glad I have an extensive network of referral sources to keep me busy! But I am interested in your  take on all this. Are you a First Home Buyer, a Mover Upper, a Down Don't Sit On the FenceSizer? Or why are you a Fence Sitter? Is this the banner year you expected? Is it a Buyer’s or a Seller’s market? Is the CT housing market out of the woods yet? I am interested in your feedback and welcome your comments.

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Mortgage Process

TheTen Commandments of Buying a New Home

ten-commandments1

1.  Thou Shalt not change jobs, quit a job, or become self-employed.

2.  Thou shalt not not buy or lease a new car, truck or van.

3.  Thou shalt not max out your credit cards or let any current accounts fall past due.

4. Thou shalt not spend the money you have set aside for your down payment and closing costs.

5.  Thou shalt not omit any debts or liabilities from your loan application.

6.  Thou shalt not go out and buy new furniture for your new home.

7.  Thou shalt not do anything that  that will originate an inquiry into your credit.

8.  Thou shalt not deposit any gift funds or make any other large deposits into any of your accounts without checking  with your mortgage broker.

9. Thou shalt not change bank accounts.

10. Thou shalt not co-sign a loan for anyone.

Mortgage Approved

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Mortgage Process

My Credit Scores Aren’t Great! I Don’t Have a Lot in Savings! Can I Still Get a Mortgage?

I don’t have a lot of savings! My credit scores aren’t great! Can I still get a mortgage? The answer is YES! Let’s talk about your situation.

Happy New HomeIf you think having financial problems will stop you from buying a home, think again! Believe it or not, it may not be as difficult as one may think to purchase a home with less than perfect credit. Here are some common financial problems – and some smart solutions that may help you purchase your new home this spring!

General TipWork With a Professional Mortgage Broker
Getting a mortgage is an expensive proposition. – and without guidance from a qualified mortgage financeprofessional you could pay substantially more than necessary. If you’ve got financial issues, going to a regular bank might not be the right solution for you. You may be a square peg that doesn’t “fit” into their square boxes of credit guidelines. Instead, you should work with a Mortgage Broker who has established direct relationships with numerous lenders who offer a a wide range of mortgage options.
Why? Well, if you work with them directly, mortgage brokers might be able to direct you to a lender who will make exceptions to the standard underwriting guidelines. For example, I’m working with lenders who  consider a borrower with a DTI higher than 43%; and a lender who will accept  applications from borrowers with a 580 credit score.

Problem #1 – High Debt-To-Income Ratio (DTI)
I
f you’ve looked into getting a mortgage, you may have heard the term “DTI.” Just what  is DTI and how does it impact your ability to get a loan?
DTI is your debt-to-income ratio – a percentage calculated by dividing all your current debt payments plus what the new mortgage will cost you every month by your gross monthly income. FHA MIThe new “ability to repay” rules mandated by the CFPB in January 2014 limit the borrowers to a maximum 43% DTI. The higher the DTI, the higher the risk of non-payment and the harder it is to qualify for a mortgage. If it exceeds 43%, traditional banks will probably decline the request.
Solution: You have to reduce your monthly payments.A good place to start is your car. I’m working with borrowers now who pay $600 per month in car payments. What’s done is done, but instead of financing those fancy new car a few years back, they might have considered buying a good used with substantially lower monthly payments. The cars are in good shape,have low mileage, so I suggested that they apply at their credit union for a loan to refinance their car loans for 24-36 months to lower their payments. I could argue that it’s best financial decision, and of course they could still make the former payments, but their DTI ratio would improve to a point where they could obtain a mortgage.

Problem #2 – Low Credit Score
A borrower’s credit score is the single most important snapshot of your credit risk by good-credit-vs-bad-creditreporting the payment history on all your credit accounts. Lenders perceive a low credit score as a high credit risk and this could negatively impact your odds of being approved for a loan. And if you still qualify for a loan, a low credit score could still cost you. The lower the credit score, the higher the perceived risk and the higher the interest rate to compensate for that risk.
Solution: Get copies of your credit report. Go to www.annualcreditreport.com. the Only Website Authorized By Law to Provide a Free Annual Credit Report. Then discuss your findings with your mortgage broker ask him which areas need improvement. Work with someone you feel is honest, helpful, and has your best interests in mind. In addition to reviewing your overall credit situation, be sure to continue to make all payments on time; pay your credit card balances below your 50 percent of your approved credit line. These steps alone will help show the credit agencies that you’re a better credit risk and help improve your scores. Caution: Do not clear up active collections against you without discussing the ramifications with your mortgage broker.

Problem #3 – Low Down Payment
A major factor deterring home buyers today is saving the cash for the down payment on a home, the closing costs, and still having a few dollars left over in reserves.  This is where your mortgage broker and your Realtor, working in tandem, can help.
Solution: Depending on your situation, you might be able to find a way to buy a home with a low down payment and still preserve your hard earned savings. There are a number of strategies and loan programs that help you get closer to your home ownership dreams.
• Conventional Loan: If you have a fairly good credit score, you might be able to qualify for a mortgage with a down payment as low as 5 percent. The lower the score the minimum down payment may increase to 10%.
• FHA Loan: The Federal Housing Administration (FHA) loan option might be the right choice if you have a low credit score limited cash.  With an FHA loan, the minimum down payment isfha logo 3.5% even if you credit score is in the 620 range. Some lenders will work with a borrower with credit scores down to 580 with overlays to compensate for the perceived risk of default. It doesn’t hurt to talk to your mortgage broker about both these options.
• USDA Loan: In my opinion, the USDA Guaranteed Rural Housing Development Loan program is the best deal in town for those with limited savings. It offers 100% financing for usda 3eligible properties in USDA approved communities. Closing costs can be rolled into the loan amount when the appraised value exceeds the contract sales price. There is no limit on gift funds or seller concessions
• VA Loan: The Veterans Affairs (VA) loan has similar criteria as the FHA loan. But it’s targeted to serve toward past or present military personnel. Veterans may also be able to purchase a home with no down payment through a VA loan.
• Seller Concessions: In certain negotiations, the property owner may be willing to entice eligible buyers to purchase their home by offering to contribute up to 3-6% of the contract price toward the buyers closing costs. It’s important to talk to your mortgage broker and your real estate agent about this option. It’s also important for the buyer to understand that they “can’t have their cake and eat it too.” Buyers can’t expect to offer less than the listing price and still ask for concessions. You may have to pay full price and then hope the seller will take less for the property.
•  Gift Funds: Funds for the down payment and/or closing costs can be gifted to the borrower from a close family member. It is important to discuss this possibility with your mortgagegift funds broker as different loan programs have different limitations on how much the borrower must contribute to the transaction and how much can be gifted. Sourcing the receipt of gift funds, especially wedding gifts, has been a problem for 15 years. DO NOT deposit gift funds into any account without talking to your mortgage broker.
•  State-Sponsored Down Payment Assistance: Another option for borrowers are down payment assistance programs sponsored by certain states, municipalities, and non-profit organizations. They may be offer to teachers, police and firemen who plan to live in their city and/or earn below a certain income level. These programs may be limited to first-time homebuyers. Check with a broker who specializes in these types of programs.

Get Pre-ApprovedSummary: Low credit scores and/or lack of funds may be just a bump in the road to owning your own home. Talk to your mortgage broker about what it takes to get Pre-Approved for a Mortgage and how to get over these hurdles.

 Still Have Questions or Concerns?
Call Me at 860.945.9284 to discuss the right mortgage option for your family and to take advantage of my FREE Mortgage Pre-Approval service. Then you  can call your agent to schedule a showing and be ready to make an offer.

With today’s attractive rates, and my direct relationships with trusted lenders who offer a wide range of affordable mortgage programs, you just might be able to move in with a minimal down payment and low closing costs