Showing posts from June, 2017
3 Neighborhood Demographics You Need to Consider Before Buying

Many home buyers start their home search with a pretty good idea of where they want to live but others may not. Others might be renters and have just started the home buying process. Renters typically want to live near where they work and access to their job is a priority. Or, buyers can be those who are moving from one city to another and have no real idea of where the best place to live will be. But there are resources that can help narrow down the search process. Here are three primary neighborhood demographics you need to look into.
Safety. You want to live in a safe and secure neighborhood so the local crime rate will be in your top three demographics to research. You can contact the local police department about property crime in the neighborhood or visit any of the online resources that tracks and logs reported crime by location. Simply enter an address of a potential purchase and crime statistics will be reported.
Loan Officers: Private Lender vs. Bank

When financing real estate, borrowers soon discover they have more options than they perhaps originally thought. They must decide how much money to put down as well as pick out the right loan program. Once the loan program is decided upon the borrower then decides which rate is best for their particular situation. And we haven’t even touched on the property itself. Borrowers must decide not only where they want to live but what type of property they want to purchase. But before any of that, borrowers must decide where they want to get their loan from, a bank or a private lender. What are the differences? Is a loan officer at a bank the same as a loan officer at a private lender?
Typically at a retail bank, the bank down the street or downtown, the loan officer is there to accept the loan application and document the loan file. The loan officer has a list of loan programs the bank offers and reviews them with the applicant. Once the loan applicati…
How to Negotiate Closing Costs

Getting a home loan involves closing costs. There really is no other way around it. Buying and financing real estate means various entities get involved at the behest of the mortgage company in order to keep the loan in mortgage guideline compliance as well as provide necessary documentation and information the mortgage company needs in order to make a decision about a home loan. Some of these fees however can be negotiable while others not so much so.
Closing costs are divided into two basic categories- lender fees and non-lender fees. Lender fees are those that the lender charges the borrower for directly. A lender might require an underwriting fee. An underwriter is the individual at the mortgage company who reviews the submitted loan file and determines whether or not the loan meets the required guidelines for an approval. A lender might also charge a processing fee which covers the overhead of preparing the loan for submission to the underwriter. Th…
Basic Mortgage Terms Every Mortgage Shopper Should Know

The mortgage industry certainly has its fair share of “mortgage lingo” that can sound a bit foreign to those not in the lending or real estate business. Sometimes loan officers can have a conversation with potential home owners and speak way over their heads, while the loan officers never realize that’s what they’re doing. Especially very early on in the process when potential applicants begin shopping for a mortgage and getting information on financing. Here are a few basic terms you need to know before you pick up the phone or send that email.
APR.  APR stands for Annual Percentage Rate. When you shop for rates and request a formal rate quote, you’ll also see the APR. The APR is described as the cost of money borrowed expressed as an annual rate. It is calculated using the note rate on the mortgage plus associated finance charges. It’s not what your payment will be based upon.
Term. The term is how long the loan will amortize, or…
Mortgage Industry Changes... Who Wins?

The mortgage industry has mostly settled in now that 2008 and 2009 are in the rear view mirror. Guidelines have been mostly standardized and given a few exceptions mortgage lenders offer the same suite of mortgage programs. And lenders like this uniformity. They know that when they approve a mortgage loan it’s in full compliance with lending requirements. Yet there have been changes over the past year or so and we wanted to point out a couple that we think are the most important.
Perhaps the most significant change was the first loan limit increase in nearly a full decade. That’s because the average home values finally increased across the country to the point where Fannie Mae and Freddie Mac could authorize an increase in the loan limit. The loan limits went from $417,000 to $424,100 for most parts of the country. The Federal Housing Finance Agency, or FHFA, compares October to October average home values and the year-to-year increase justified …
Why Millennials Still Have Difficulties Finding a Home

Today the class that has the biggest impact on our economy is the millennial class. This group, roughly aged between 18 and 34 has replaced the so-called Baby Boomers as the ones that buy more things and spend more money. Baby boomers are retiring and saving their money. Yet the real estate industry has been keeping a keen eye on millennials and wondering when they’ll start buying their first home. Why is there a perception that millennials are sitting on the sidelines instead of actively searching for real estate?
One big factor is saving up for a down payment. Millennials can go shopping for a home but once they’re told how much down payment they need to have as well as how much closing costs will be, they have to rethink their plan. Rents are up in most areas of California and that means less money each month available to sock back in a savings account. Even for a loan down payment loan such as an FHA mortgage needing just 3.5%…
Buying or Refinancing Your Home This Summer? Tips for Success

Summer’s here. That means schools are out, vacations are planned and the daily drill changes. One great big change is to buy a home and the summer months are the most popular for those buying a new home. It’s easier to make the switch when public schools are out for the summer and if moving to a new system the kids will be in their new home and ready for the fall. Or, maybe you already have a home and a mortgage and are thinking of refinancing your current loan. Perhaps rates have fallen for you or you want to switch from an adjustable rate loan into a fixed. Either way, if you’re seeking financing this summer, you need to know these tips.
First, know exactly where you stand regarding your credit history. Even though you certainly think your credit report is just fine, thank you, you should pull up a credit report on your own if not for anything but to look for mistakes. Reporting errors are unfortunately relatively common …
Bad Credit and VA Loans

The term “bad credit” is a relative one but in the eyes of a mortgage company, bad credit is associated with a three-digit credit score. A credit score can range from 300 to 850 with a higher score representing better credit. Borrowers who are VA eligible might be surprised to learn that the VA doesn’t require a certain minimum credit score whatsoever but instead lenders must make a reasonable determination as to the creditworthiness of the applicant. However, even though the VA doesn’t require a minimum most VA lenders do and that score is 620. It doesn’t mean that a score below that won’t get approved, it’s just the likelihood is lower. In fact, recent changes with the VA home loan program issued by the VA allows for an approval with a score as low as 500. But again, that doesn’t guarantee an approval for someone with bad credit.
If an applicant is turned down because of bad credit, there should be a conversation with the loan officer who can point out why th…
Get the Lowest Interest Rates Without Overpaying

You know that mortgage companies offer a variety of loan programs to meet various needs. The most common loans today are those underwritten to conventional guidelines. There are those eligible for a VA loan. The FHA mortgage is a good choice due to its low down payment requirement and relaxed credit guidelines. And each of these individual loan programs also offer different terms. You can get an FHA loan spread out over 30 years. Or you can get an FHA loan with a 15 year amortization period, for example. Conventional loans can be found in 10, 15, 20, 25 and 30 year terms. You have choices, no doubt. But did you know that each individual loan program offers different interest rates for the exact same loan? They do, and here’s how to get the lowest rate without overpaying.
Let’s say your loan officer suggests a conventional 30 year fixed rate mortgage. Each day, the loan officer receives an interest rate sheet from the lender and the 30 y…
5 Tips for Buying a Rural Home

Are you one of those who enjoy living in the country? Or, are you thinking of leaving the suburban life and want to buy a home in a rural or semi-rural area? You’re certainly not alone. In fact, around 15 percent of the United States population lives in what is referred to as “rural” areas. A rural area is defined by the United States Census Bureau as any census tract with less than 2,500 in population. If you’re in the process of looking for a home in the country it’s important to understand how lenders evaluate homes in rural areas. Here are five things you need to know.
Turn on the Lights.  Actually, this means more than just electricity but all utilities including gas, heating and water. Depending upon how “country” the area is, it’s likely your water will come from a well. If not, then the water is brought to your home by connecting to local water lines. As it relates to water, you’ll want to have the water tested (one side note, well water is free).
5 Things First Time Buyers Should Know Before Starting Their Search

When you finally decide to stop renting and start looking for your very own home, it’s an important as well as an exciting decision. There’s a lot more that goes on when buying compared to just signing another 12 month lease but before you get started, here are five important tips that will help.
How’s Your Credit? Have you looked at your credit report lately? If you haven’t, it’s time to. Even though you know you’ve made timely payments on your credit card and automobile loan you still want to check. Unfortunately, credit reports are known to have errors on them and there’s the slight possibility someone else’s bad credit is showing up on yours. You can get a free copy once per year at, a free service provided by the three main repositories.
Talk to a Loan Officer. Don’t start visiting a bunch of websites to get information about how to qualify for a mortgage. There are so many different programs…
Buying a Home After a Foreclosure

No one applies for a home loan with the intention of defaulting on the note and being foreclosed upon nor does a lender issue a loan with the intention of doing the same. Lenders and borrowers alike go into a transaction with a “win-win” mindset. The buyers get financing and the lender receives interest on the loan. Yet things can go wrong in life as the unexpected happens and a foreclosure is the only way out for some borrowers. However, it’s not the end of the world. A prevailing myth is that a foreclosure keeps you from buying a house for 10 years but that’s simply not the case. Depending upon the type of loan you select and what program you’re qualified for, you can get a brand new home loan sooner than you think.
Government Loans. There are three primary government-backed home loan programs. They are the VA, FHA and USDA mortgage loans and each have provisions to provide financing after a foreclosure. If you’re VA eligible, the waiting period is t…
Invest or Save in the Bank: Which is Better?

Whether you’re planning on saving your money for a down payment on a home or to take a vacation or buy a car, you do have options. You can put your money in a savings account or you can invest your funds. They both have their advantages but how can you decide which is best for you? Should you save or let your money grow by investing? Let’s take a closer look at the two before deciding on your own.
First, saving is the act of setting aside money each month after bills are paid where the funds can be located in an accessible, secured location. Most often this is simply a savings account. Your cash is deposited with a bank, securely, and you can access the cash if needed any time you want with a debit card or by visiting the bank. But before we get into the pros and cons of each, you first want to consider “cash reserves.”
Cash reserves, from a lender’s perspective, are an amount that is equal to a certain number of monthly mortgage payments. …
I Was Pre-Approved. What Does That Mean?

Sometimes the mortgage industry throws around terms without fully explaining what they mean. And on behalf of all mortgage companies everywhere, we apologize. When loan officers speak with clients sometimes they talk as though they’re speaking with a colleague in the business who understands the unique terms lenders use on a regular basis. One of these terms is “pre-approval.” When your lender sends you a pre-approval letter, what, exactly, does it mean? Is it the same thing as pre-qualify?
To a point, pre-approval and pre-qualify are the same but not by very much. With a pre-qualification it means you’ve had an in-depth conversation with a loan officer about how much you might qualify for based upon current market rates. You’ll tell the loan officer how much you make each month, where you work and for how long, talk about your credit history as well as letting you know about how much down payment you will need as well as about how much your cl…
The Difference Between Mobile and Manufactured Homes

Sometimes consumers get the terms “mobile home” and “manufactured home” confused or even use them interchangeably. Yet they’re not the same at all but they do share a bit of history. Mobile homes were originally introduced in the 1930s and were extremely popular. People would hook up a mobile home, which literally was advertised as a home on wheels, and travel. Soon though, due to their increasing popularity, mobile homes became bigger and added amenities such as hookups for water and electricity. They became so large and equipped so travelers could actually live in them as their permanent residence if they decided to. When financing a mobile home, it was identical to financing an automobile with installment payments every month.
In the 1970s, the industry began to change as the perception of a “mobile home” wasn’t all that attractive so the quality of construction and amenities began to change.  Building codes were implemented and …
VA Loans: Buying a Home with a Non-Veteran

The VA home loan program just can’t be beat for someone wanting a home loan requiring as little cash at the closing table as possible. VA loans don’t require a down payment, certain closing costs are restricted and the veteran isn’t allowed to pay for them and there is no monthly mortgage insurance payment. When a couple buys a home together only one of the buyers needs to have their VA eligibility as long as they’re married. If they’re not married and there is a co-borrower on the loan, a VA loan can still be used but there are a couple of adjustments.
The VA loan program is one of three government-backed loans and carries with it a guarantee to the lender should the loan ever go into default at 25% of the loss. That guarantee applies when the veteran is the only applicant on the loan and is VA eligible or is married and the couple applies for the VA loan jointly.
But if they’re not married and the co-borrower is not VA eligible, the guaran…
What is CalHFA and How Can I Benefit From It?

Have you heard of the CalHFA loan program? Unless you’re an approved mortgage lender you probably haven’t. The CalHFA loan program was developed by the California Housing Finance Agency which provides lending guidelines mortgage lenders follow to assist lower to middle income buyers buy and finance their very own home. While many of CalHFA borrowers are first time home buyers, being a first time buyer is not a requirement.
Lenders can approve either a conventional CalHFA loan or an FHA-insured CalHFA loan. With a conventional loan, the maximum loan limit is $424,100 and the FHA loan maximum is subject to local FHA limits for the area in which the property is located. The interest rates on either are fixed rate loans amortized over a 30 year period. The loan can only be used to finance a primary residence and the property can be a single family home as well as in an approved condominium project.
There are certain income limitations that bo…
VA vs. FHA

Of the three government-backed home loan programs of USDA, VA and FHA, it’s the VA and FHA that make up the majority of the group. They are considered government-backed because the loans carry with them an inherent loan guarantee. Should a government-backed loan ever go into default, which is relatively rare, the lender is compensated for part or all of the loss. The VA guarantee compensates the lender at 25% of the loss while the FHA loan pays the lender 100% of the loss. Otherwise, the loans are remarkably similar as it relates to loan terms, loan programs and interest rates.
While the FHA loan can be used by anyone who qualifies and can be used to finance a property in most every location, the VA home loan program is restricted to who can be eligible. Those who are eligible for a VA loan include veterans of the armed forces, active duty soldiers with more than 180 days of service, National Guard and Armed Forces Reserve members with a least six years of service and surv…
Self-Employed Refinance Tips

When applying for a refinance self-employed borrowers are evaluated a bit differently compared to someone that receives a pay check from an employer on the 1st and 15th of every month. When lenders decide whether or not a borrower can afford to make the monthly payments they compare total monthly credit obligations, including the new mortgage payment with gross monthly income. Pay check stubs easily show how much someone makes each month as well as provide a year-to-date total. For self-employed borrowers, lenders review the two most recent federal income tax returns, both personal and business. This is the routine whether for a purchase or a refinance. When preparing for a refinance, here are some tips for the self-employed.
You’ll need your two most recent federal income tax returns so go ahead and locate those and keep them handy. Your lender will ask for them so it’s best to submit them along with your initial loan application. The lender looks for con…