Rural Development - Rural Housing Gets Annual Fee On Top of Decreased Upfront Fee

If you are familiar with the Guaranteed Rural Housing loan offered through the USDA’s Rural Development department, then you know that the loan program does not require the payment of monthly mortgage insurance. They do have an upfront “guarantee fee” that is financed into the loan (although this amount may be paid from the buyers funds at closing).

This will change on October 1^st 2011. Rural Development is implementing a monthly mortgage insurance premium along with their upfront guarantee fee. Currently the guarantee fee is 3.63% of the loan amount and there is no monthly mortgage insurance. October 1^st the guarantee fee will be reduced to 2.00% and a monthly factor of .30% of the loan amount paid over 12 months.

So, what does this mean for home buyers? Here is a comparison:

                            Current          October 1st

Sale Price	$100,000	$100,000
Loan Amt.	$103,630	$102,000
Interest Rate	4.500%	4.500%
Loan Payment	$525	$517
Monthly M.I.	$0	$25
Total Loan Pmt	$525	$542

As you can see, the new monthly payment will be higher by $17….not really a deal breaker.  Especially since this is one of only two zero down mortgage loans in existence!

As a reminder, the Rural Housing loan offers the following features to home buyer:

• $0 down payment
• Low monthly mortgage insurance
• Flexible credit and qualifying ratios (scores down to 600)
• Seller can contribute up to 6% of the sale price towards buyers closing costs
• No pre-payment penalty
• No loan limits
• Some counties have geographic restrictions 
• Income restrictions vary by county

So, even though the monthly payment will be slightly higher on Rural Housing loans after October 1^st, it is still a great option for home buyers!

If you have any question, please feel free to contact me at 810-987-1200. 

This blog is a repost of Jim Papthedore's mortgage blog

Score: What is it Good For? The Elements of a Credit Score

A credit score is an extremely important financial tool. It provides access to the financing you need in order to buy a car, a home, or pay for college tuition, among other things. Since higher scores equate to lower costs and vice versa, it's vital to understand the factors involved in calculating your score. Here are the five elements that make up a credit score, in order of importance: Payment History: 35% impact. Paying debt on time has a positive impact. Late payments, judgments, and charge-offs have a negative impact. Delinquencies that have occurred in the last two years carry more weight than older items. When applying for a mortgage, every point in your credit score can make a big difference. So don't make any major financial or credit decisions - even paying off an old debt or delinquency - without first discussing it with your mortgage professional. Outstanding Credit Balances: 30% impact. This factor marks the ratio between the outstanding balance and available credit. Ideally, consumers should make an effort to keep balances as close to zero as possible, and definitely below 30% of the available credit limit when planning to enter into a loan transaction within 3-6 months. Credit History: 15% impact. This marks the length of time since a particular credit line was established. A seasoned borrower is stronger in this area. Type of Credit: 10% impact. A mix of auto loans, credit cards, and mortgages is more positive than a concentration of debt from credit cards alone. Inquiries: 10% impact. This quantifies the number of inquiries (or requests for credit) that have been made on a consumer's credit history within a 6-12 month period. Each individual inquiry - up to 10 - can hurt your credit score by as much as 5 to 30 points. Any additional inquiries thereafter will not affect your credit score. In other words, don't start the loan process until you're ready to act. Otherwise each individual credit inquiry could cost you. However, scoring models have now been adjusted to count multiple "hard" inquiries within a 45-day period as a single request. So, when you're ready, your credit will be too. If you or anyone you know has any questions about credit scores or what can be done to repair them, please don't hesitate to call.

Biggest Credit Myths, Mistakes, and Misconceptions

Good credit is well worth the effort it takes to both achieve and preserve it. If you have good credit, the following tips will help you keep it that way. If you are looking to improve your credit, however, now is the time to get started. Give us a call. We'll review your credit and find out exactly where you stand. In the meantime, if you plan on entering into a loan transaction in the next 6 to 12 months, you simply cannot afford to make the following credit mistakes: Don't fall behind on existing accounts. This includes your mortgage and car payments. One 30-day late can cost you anywhere from 30-80 points or more depending on the other factors being reported on your credit reports. Don't pay off old collections or charge-offs during the loan process. Paying collections will decrease your credit score immediately due to the "date of last activity" becoming recent. If you want to pay off old accounts, do it through closing, and make sure that 1) you validate that the debt is yours, and 2) the creditor agrees to give you a letter of deletion. Don't close credit card accounts. If you close a credit card account, it will appear to FICO that your debt ratio has gone up. Also, closing a card will affect other factors in the score such as length of credit history. If you have to close a credit card account, do it after closing, and make sure that it is an account you’ve opened more recently. Remember, 10% of your credit score is made up of your Mix of Credit, so it is important that you have at least 1-2 major credit cards open and in good standing. Don't max out or overcharge your credit accounts. This is the fastest way to bring about an immediate drop of 50-100 points in your credit score. Try to keep your credit card balances below 30% of their available on your monthly statement, and especially during the loan process. If you decide to pay down balances, do it across the board. Meaning, make an extra payment on all of your cards at the same time. Don't consolidate your debt onto 1 or 2 credit cards. It seems like it would be the smart thing to do; however, when you consolidate all of your debt onto one card, it appears that you are maxed out on that card, and the system will penalize you as mentioned above. If you want to save money on credit card interest rates, wait until after closing. Don't do anything that will cause a red flag to be raised by the scoring system. This would include adding new accounts, co-signing on a loan, or changing your name or address with the bureaus. The less activity on your reports during the loan process, the better. Don't do it alone. If you feel that the credit challenges you're facing are too much, or you don't have enough time to do the work necessary to improve your own credit, don't lose hope and give up. Give us a call. We can help. In many cases, small changes to your credit profile could yield big results that could save you thousands of dollars on your mortgage. However, if professional credit repair does become necessary, we'll gladly provide you with a referral to an experienced professional credit repair specialist you can trust. Stay tuned for more great credit tips!

Credit Repair Service: What to Expect

Google the term "credit repair" and 19 million results are instantly generated. With so much information available, and so much of it conflicting, how do you know which credit repair company is legitimate and which ones are really just looking to take advantage of desperate consumers? The following are steps you can take to know exactly what to expect from a legitimate credit repair company and the valuable services they provide: Get a referral from your mortgage professional. Not only do we work with credit repair specialists on a regular basis, our business depends on your success. It's in our best interest to make sure you are represented by professionals who are experienced in dealing with creditors, the credit bureaus, and collection agencies. Interview your candidates. Make sure they understand and can explain to you how credit scores are calculated. Remember the 5 factors that make up a credit score that we discussed in a previous article? Without a detailed knowledge of the specific elements that make up your credit score, how can they possibly create a successful strategy to increase your score? Don't believe the hype. Credit repair takes time. Don't fall for advertisements from companies promising miracles in just a few days or weeks. Remember, it took time for your score to get where it is, and it will take a legitimate credit professional time to fix it, depending on your situation. For the most part, expect 3 to 6 months for the best results, and up to a year or more if you have more serious problems like bankruptcies or identity-theft issues. Don't spend more than $1,500. Depending on your situation, expect to spend between $800 and $1,500 for a legitimate credit repair company. Again, if you have serious credit challenges such as charge offs, collections, public records or identity theft issues, expect to be in the higher range and vice versa. In today's market, where FICO scores one point below 740 could cost you thousands of dollars in interest and monthly payments, you'll be glad you made this investment in your financial future. Monitor your progress. Be sure to communicate with both your mortgage professional and your credit repair representative throughout the process. To ensure success, we all need to be on the same page. With the right team of professionals, you can expect your credit score to increase between 10 to 220 points over the course of 6 weeks to 6 months. That's going to save you a lot of money on your mortgage, credit cards, auto loans, and even student loans. Credit repair is a valuable, worthwhile service when you're working with the right company. If you have questions about credit repair and how it affects your chances of securing a mortgage or refinance, don't hesitate to call. We'll be glad to review your credit and see what, if anything, needs to be done to help you meet your financial goals and needs.  Also, we will be happy to refer you to some excellent credit repairs specialists. If you or anyone you know has any questions about credit scores or what can be done to repair them, please don't hesitate to call.

5 Ways to Raise Your Credit Score - And Fast

If you are looking to improve your credit score quickly, now is the time to get started. Give us a call. We'll review your credit and find out exactly where you stand and where you need to get to. In the meantime, here are some great strategies you can utilize right away to give your score a little boost. Create Some Balance: While paying down installment debt (car, school, mortgage, etc.), on time, and as agreed, shows responsibility and will definitely boost your credit score, paying down or paying off revolving debt, such as credit cards, can cause a quick and significant jump in your credit score. The trick is to get and keep your balances below 30% of your credit limit on each card on your monthly statements. For faster results, attack those cards with balances closer to their respective credit limits first, as opposed to those cards with simply the highest debt. Remember, if you pay off any credit cards completely, do not close your accounts without discussing it with your mortgage professional first. Cancelling those cards may inadvertently undo all of your hard work. Know Your Limits: Make sure that your credit card issuers are reporting the correct limits on your accounts to the three major credit bureaus. Without an available limit, your account will appear to be maxed out at its highest reported balance each month. This could cost you up to 80 points in certain instances. Some creditors, such as American Express® and certain cards issued by Capital One®, actually have a policy of not reporting available credit. However, most companies will report your credit limits if you ask them in writing. Take Some Credit: If you have a credit card account in very good standing, make sure that all three credit bureaus know about it. Just like your credit limits, some creditors don't report your information to all three credit companies - this is why credit scores often vary between bureaus. If this is the case, give them a call to find out why. Correcting this oversight could provide a significant boost to your score. Also, if you're in very good standing, ask your creditor for a lower rate or higher credit limit. This will increase the gap in the debt you owe versus the credit you have available. Sometimes hinting about closing an account can suddenly bring out the generous spirit of certain card issuers. Give it a try. The worst they can say is no. Protect Your Interests: Your credit score is calculated based solely on the information available to the credit bureaus. If you have a HELOC, make sure it's listed as a mortgage or an installment account on your credit reports and not a revolving debt. If you had a bankruptcy, be sure that all items associated with the bankruptcy are being reported as included in the bankruptcy with a zero balance. This action could increase your score by 50-100 points. Because simple mistakes like these can wreak havoc on your credit score, it's important to monitor your credit every four to six months. Even the Score: If you find information on your credit report that you believe is inaccurate or incomplete, then you have the right to dispute it free of charge. For the fastest results, visit the appropriate credit bureau's website and file a dispute online. If supporting documents are necessary, you have to file your dispute by mail. If you'd like more information or a copy of our Sample Dispute Letter, give us a call right away. We'll be glad to help you in any way we can or, if it becomes necessary, refer you to credit professionals you can trust. If you or anyone you know has any questions about credit scores or what can be done to repair them, please don't hesitate to call.

Know the Score: Three Steps to Better Credit

If you are looking to buy, invest in, or refinance real estate now or in the coming months, your credit is going to play a more significant role in today's tight-fisted credit environment than it has in the past. It's that simple. Would-be borrowers need to address any and all credit issues now to avoid having to pay for it later.

But, here's the kicker. Nearly 80% of all credit reports contain errors of some kind. Recent studies also indicate that about one-fourth of these reports contain mistakes so egregious that applicants could actually be denied credit! Don't let this happen to you.

Step One: Get Your Report
The three main credit bureaus, Equifax, Experian®, and TransUnion®, are required by law to provide you with a free copy of your credit report once every 12 months. To request your free copy (one from each company) visitAnnualCreditReport.com or call 1-877-322-8228. (Note: free credit reports do not include credit scores. Scores can either be purchased online or pulled by your mortgage professional.)

While you're online, be sure to visit  www.optoutprescreen.com as well. This will help you avoid the hassle of becoming a "trigger lead" and being bombarded with unsolicited mortgage offers, and make life a lot easier throughout the mortgage process.

Step Two: Dispute Inaccuracies
Study your credit reports and make sure everything is accurate. If you do find any discrepancies, you can legally dispute mistakes or outdated items for free. Once notified of a mistake on your report, a credit bureau has thirty days to investigate and respond. If the information can't be confirmed, then the item should be removed. (If you'd like more information on this process, give us a call. We'll send you our Sample Dispute Letter to help get you started).

Step Three: Meet With Your Mortgage Professional
Now that the information on your report is accurate, what if there are still some items in your credit history you would rather forget about? All is not lost. For some, small changes to your credit profile could yield big results that could save you thousands of dollars. For others, enlisting the services of a professional credit improvement company may be required. This important process can take up to six months or more, so don't wait. Give us a call. An experienced mortgage professional can share other insights into the ins and outs of credit scoring and credit repair.

Stay tuned for more valuable credit tips.

TIPS FOR A SMOOTH LOAN APPROVAL

Here is a list of helpful tips to ensure an effortless loan process. These DO’s and DON’Ts will help avoid any delays with your loan approval.

DO call us if you have any questions

DO continue living at your current residence

DO continue making your mortgage or rent payments

DO continue to use your credit very sparingly

DO keep working at your current employer

DO keep your same insurance company

DO stay current on all existing accounts

DON’T apply for new credit (even if you seem pre-approved)

DON’T buy any furniture via credit or with closing funds

DON’T change bank accounts

DON’T make any large deposits

DON’T close any credit card accounts

DON’T consolidate your debt onto 1 or 2 credit cards

DON’T finance any elective medical procedure

DON’T join a new fitness club

DON’T make a major purchase (car, boat, fur, jewelry, etc.)

DON’T max out or over charge on your credit card accounts

DON’T open a new cellular phone account

DON’T open a new credit card

DON’T pay off any loans or credit cards without discussing it with us

DON’T pay off charge offs without a discussion with us first

DON’T pay off collections without a discussion with us first

DON’T start any home improvement projects

DON’T take out a new loan

DON’T transfer any balances from one account to another

If you encounter a special situation, it is best to mention it to us right away so we can help you determine the best way to achieve your goals.  810-987-1200.

Understanding the Home Appraisal Process

Consumers are often baffled by the home appraisal process. They may feel their home is worth a certain dollar amount, and therefore, the appraised value doesn't make sense to them. It is important to know that appraisal guidelines are dictated by the lenders. In many states, the lenders must disclose the purpose of the appraisal, as each situation carries its own set of rules. In essence, lender guidelines force appraisers to put a fair market value on a home based upon comparable sales in the area where the home is located, as the home must be bracketed according to size and value. For example, there is no set amount associated with a great view, pool, spa, bathroom upgrades, etc. If a homeowner installs a custom pool that cost them $30,000, and the local marketplace supports the value of a pool at $15,000, that item will be bracketed as [$15,000] on the appraisal. Upgrades can usually be expressed at full value in newer homes since they required investing additional money onto the cost of building the home. On the other hand, the amount invested in upgrading or remodeling an older home is rarely reflected in full in the final appraisal. The reason is the home had value in its original condition, and again, the value of the upgrades must be supported by comparable examples within the same marketplace. These comparisons must be drawn from current market activity within the last six months. Some lenders may want to look at both closed and pending sales to see if there is any room for negotiation. This is a safeguard to prevent appraisers from over-valuing the home in question. It is further stated in the guidelines that appraisers can only place a value on homes that have closed escrow. However, when property values rapidly increase within a marketplace, appraisers are generally permitted to make concessions and put more weight on the evidence provided by comparisons to pending sales and listings. This allows for a "real time" appraisal. Although there is no formal standard to speak of, most lenders give the appraiser a 5% margin of error. If the file is reviewed and the appraiser is off by 8%, there is a good chance the value will be cut by the full 8%. It is in the best interest of both the appraiser and the homeowner not to push the value up higher than the market will support, otherwise the property evaluation may be exposed to a strict appraisal review. As a loan executive, I make it a point to follow lender guidelines at all times, and work within the systems they provide. This promotes a good relationship with the lender, and smooth closure for my borrowers. As always, you are welcome to contact me if you have any questions. Call me directly for a free consultation.

Rates Near 2011 Lows

You may have heard that home loan rates have improved and are back down to near historic levels. In fact, I've been slammed with emails and phone calls from people who wanted to take advantage of this wonderful situation.

But you need to keep the following in mind…While some people say good things come to those who wait, others say to strike while the iron is hot. In this case, the "iron is hot" with rates at exceptionally low levels. And while weak economic reports here in the U.S. and the economic crisis in Europe are two of the main reasons rates have improved recently, signs of inflation are beginning to creep into our economy–and that never bodes well for home loan rates. That's why it's more important than ever to act now.

Give me a call if you want to see if you can take advantage of this window of opportunity to save significantly on your monthly budget. I look forward to hearing from you!

Quick Tips for Getting Started on Your Home Purchase

Buying a home can be a complex process, but it doesn't have to be. With a little preparation, you can save a lot of time and hassle by having all of your documents ready when your mortgage professional needs them.

To start with, the lender will need personal information to verify employment for you and your co-borrower (if there is one). They will also need information regarding all of your debts and assets.

In order to expedite the paperwork process, start gathering the following items:

• Most recent paystubs for one month.
• W2s from the last two years.
• Signed copies of your last two years' tax returns, including all schedules that were filed.
• If you are self-employed, a year-to-date profit and loss statement.
• Homeowner's insurance company name and number.
• Most recent bank statements for two months.
• Most recent statements from any retirement and investment accounts for two months.

What costs are involved?
Within 3 days of your application, your Loan Officer must provide you with a good faith estimate of closing costs. Along with any down payment, you will have to pay closing costs as well. This is a brief rundown of some of the fees that could be associated with your new mortgage:

• Application/Processing Fee – Charged by the loan officer to process your loan application.
• Appraisal Fee – Charged by the appraiser to determine the current value of the property.
• Closing Fee – Charged by the closing agency (escrow, attorney, title) to ensure the close of your transaction.
• Credit Report Fee – Charged by the credit reporting agency to provide your credit report to your loan officer and/or lender.
• Title Search/Title Insurance Fees – Charged by the title company to ensure the property is free from liens or title defects.
• Origination Fee – Paid to the originator to obtain a lower interest rate. This is usually expressed in the form of points. One point equals 1% of the loan amount.
• Discount Points – Paid to the lender to secure a lower interest rate.
• Miscellaneous Fees – VA and FHA loans may have other fees associated with them. Private Mortgage Insurance (PMI), document preparation, notary, recording and tax service are other fees which may fall under this category.

Let us help you evaluate your personal situation and assist you in finding the loan program that works best to meet your individual goals and needs.

Call me directly for a free consultation.

Don't Make That Big Deposit or Transfer!

You've probably heard the saying, "When you fail to plan, you plan to fail." That is especially true when it comes to buying a home today. Underwriters are following strict guidelines–and that means even things like bank deposits and transfers are under scrutiny.

Here's some insight on how underwriters analyze bank statements...and what you need to know and do (or not do) during the loan process.

Today, many banks require an explanation and proof of source of funds for any large non-payroll deposits that are listed on a bank statement. What is deemed a large deposit is largely determined by the underwriter and can be as low as a few hundred dollars. The reason for the underwriter's concern is that an applicant may be borrowing money from individuals, or accepting money from an interested party to the transaction, to help with the settlement costs.

It's easy to see how this bank requirement can create a lot of frustration, especially for people who are used to moving money between their accounts, which many of us do today. The key thing to remember is that anyone applying for a mortgage should avoid transferring money between accounts or making large non-payroll deposits during the home buying or selling period. While that may feel like an inconvenience, the time and headache you'll save yourself from having to account for all your deposits will be worth it.

Let me know if you have any questions at all about this or if there's anything I can do to help you at this time!

Choosing the Right Real Estate Agent

Choosing the Right Real Estate Agent

Choosing the right person to represent you in negotiating your home purchase is a major decision. Whenever you see the designation of REALTOR® (with a registered trademark) you can rest assured that person is a member of the NATIONAL ASSOCIATION OF REALTORS® (NAR), and has a commitment to meeting the standards of the organization. My team and I have a network of professionals that have done a great job for our clients in the past, and we can provide you with a referral to a qualified representative, and pre-approval to shop as a cash buyer.

How will you know which REALTOR® is right for you?

Seek to work with an experienced Real Estate professional that works with buyers on a regular basis. A real pro will go the extra mile to show you that they will look out for your best interest and gain your respect. Sincerity is a key word here. This type of Real Estate Agent will act promptly to get you information about their team and their methods of doing business, along with quotes and references from past clients.

Once you set an appointment to meet with a Real Estate Agent and his/her team, they should be rolling out the red carpet for you. You should have a personal introduction to each person you are expected to have contact with throughout the buying process. They should go out of their way to establish a long-term relationship with you, rather than thinking of you as a one-time transaction.

An experienced buyer's representative will ask many questions regarding your goals rather than tell you what they think you want to hear. He/she will also take your finances into consideration so that they can help you make the purchase you qualify for. They will seek to exceed your expectations in every way by having a system in place that provides complete customer satisfaction.

What can an experienced REALTOR® do for you?

An experienced professional will have access to the computerized Multiple Listing Service (MLS), which changes daily. He or she can provide you with new listings to consider as they become available, and will also include important demographics and market value information on the area you are seeking to buy a home. This person will serve as a strong negotiator on your behalf and provide guidance every step of the way. In the long run, using a trained professional will save you time and money. It is important to let your Real Estate Agent know what your goals are so he/she can eliminate the listings that do not meet your criteria.

Likewise, it is equally important to let my team know what your goals are so we can provide you with financing that fits your current and long-term goals. Our job is not just to close a loan for you, but to help you build a strong financial future by assisting you with managing that debt in the future. We use an extensive database system that allows us to run reports and determine when refinancing is appropriate and beneficial.

Call me directly for help finding a qualified REALTOR® you can trust.

The Art of Home Purchase Negotiation

The Art of Home Purchase Negotiation

There is much give and take involved in negotiating a property purchase. That's why it's important to have a checklist of what you want to get out of the deal as a buyer. Bear in mind, the home must be appraised and the lender will be looking at the fair market value on a given property. Since property values fluctuate, your Real Estate Agent should do a comparative market analysis so you are aware of what the trends are for the area in which you are shopping. This will give you an idea as to whether the seller's asking price is realistic. You will also want to know how long the property has been on the market, and if any price reductions have occurred during that time.

Make sure your Real Estate Agent is on the same page with you so he/she is able to represent you properly. You also want to know that you are working with an agent that is experienced in representing the buyer. Not all agents have the ability to provide strong representation for both a buyer and a seller. If you have not yet selected a Real Estate Agent to represent you, my team and I can provide you with contacts that have a proven track record of success with our clientele.

Remember a good deal is mutually beneficial.

The seller will also have a wish list of what they want out of the negotiation. Listen attentively to determine what their hot buttons are. You can use this information to leverage what you want out of the deal at some point along the way.

Find out if the seller has a deadline. Perhaps they have already purchased their new home, or have to relocate because of a commitment to a new employer. Find out what the seller's current mortgage balance is and use this to your advantage.

On the other hand, if the seller wants to move because they can't manage upkeep on the home, or don't want to invest in repairs, these problems will be passed on to you. If you are prepared to go into a deal that involves a fixer-upper, there is an FHA financing program designed to provide funds for both purchase and repair. My team and I can provide you with more information on FHA loan programs and secondary financing.

You would also want to know if the seller is planning this move because there are problems in the neighborhood. Take a walking tour of the area and ask the residents what the neighborhood is like. You can also ask the local police department about the crime rate, or check the local newspaper for crime listings. Don't be afraid to ask questions.

When the seller is intent on getting their way on a certain point, make sure you are getting something in return. Typically the built-in amenities such as the dishwasher and garbage disposal will stay with the home. You can negotiate other items in exchange for something that ranks high on the seller's wish list. Be prepared to split the difference so everyone involved is satisfied with the negotiation. A win-win situation for both the buyer and the seller is critical to a smooth close.

Keep it simple and be direct, but above all, know that my team and I are here to assist you.

Call me directly for a free consultation.

Interest Rates When is the Best Time to Lock?

Interest Rates When is the Best Time to Lock?
When it comes to mortgage loans and interest rates, it's never a good idea to gamble. That's why I typically advise my clients to lock in an interest rate at the earliest opportunity. This is just one step of the standardized system we have put in place to ensure the best possible loan experience for each borrower that we work with. A mortgage loan cannot be closed without a locked-in rate, and there are three main elements to take into consideration: Interest Rate Points or fees Length of the lock Locking in a rate does not obligate the borrower to commit to the loan until the loan is actually closed. The lock is merely a security measure designed to eliminate the risk of market volatility throughout the duration of the purchase or refinance transaction. As long as the loan is approved and funded before the end of the lock period, the borrower will receive the interest rate quoted.

When a lender permits an extended lock-in period, the borrower will likely face a higher interest rate or additional fees that could be quoted as points. In other words, the borrower pays for the lender to take on the extended risk of being exposed to potential changes in the market.

For example, let's say a 30-day rate lock commitment costs the borrower one-half point, while a 60-day rate lock commitment costs one full point. If the borrower in this scenario needed the extended lock period, but did not want to pay points, then an alternative would be to accept a slightly higher interest rate. In this case, a 60-day lock would typically have a higher interest rate than a 30-day lock.

Our standard procedure is to lock in a rate as quickly as possible. My team and I want our clients to know that while interest rates fluctuate daily, most lenders do not want to lose any business because of it. If a significant rally causes interest rates to drop 0.25% or more, we know that we can most likely renegotiate the rate. In many cases, lenders prefer this option over losing the loan to another lender. On the other hand, if we'd allowed our clients to sit on the fence and not lock in their rate, we would have exposed them to market volatility without a safety net. Then, if rates were to increase, the borrower might no longer qualify for the loan they want - a situation that we want to avoid at all costs.

By knowing our clients' needs and working intimately with them to make the right decisions early on, my team and I are proud to say that we have helped them to achieve their home ownership dreams.

If you'd like to learn more about the loan programs we have available, please call me!

Stop Paying Your Landlord's Mortgage!

Stop Paying Your Landlord's Mortgage!

It's staggering when you think about the cost of living, especially if you're a renter and not a home owner. If you are currently paying $1,000 a month for rented housing, then over the next three years, your property management company will effectively have reaped $36,000 of your hard earned cash! You're paying their mortgage when you could be building equity in your own property.

What if I don't have the money to buy a home right now?

There are many loan programs available that offer low and no down payment options. Some programs permit gift money as a down payment, and often sellers are willing to make a contribution to your purchase if they want to sell the home quickly.

There are many benefits of home ownership to consider, most of all, tax deductions. Let's take a look at how advantageous this can be as a homeowner:

How much is tax deductible?

Tax deductions vary, but the IRS has laid out solid rules. They also have several tax publications full of helpful information worth taking the time to read. Publication 530, Tax Information for First-Time Homeowners, is very thorough, as is Publication 936, Home Mortgage Interest Deduction. For quick reference, you can refer to Tax Topics 505, Interest Expense, and 504, Home Mortgage Points.

These publications often refer to local and state guidelines, so you may want to consult a CPA to answer all the questions that arise from reading these materials. Here are a few tips you should know up front:

Real Estate taxes are deductible on a primary residence. Real Estate taxes are paid at settlement or closing, or through an escrow account.

Mortgage interest is deductible on a loan to purchase, build or improve your home. Your lender will provide you with a Mortgage Interest Statement (Form 1098) to list the total interest paid during the year. This should include any deductible points paid for that year.

Pre-paid interest is deductible in the year it is paid. At the close of a real estate transaction, borrowers usually pay for the interest on their loan that falls between the closing period and the first of the next month. Mortgage payments are made "in arrears" so when a loan is closed mid-month, there is interest due to the new lender which must be paid in advance.

If you are building a home, the interest on the construction loan is deductible. The construction period cannot exceed 24 months prior to the date that you move in if you claim this as your primary residence.

Call me to discuss your specific needs and we'll find the program that's right for you.
We have a variety of low down payment and no down payment programs available.

Credit Tips That Will Score Lower Interest Rates

Credit Tips That Will Score Lower Interest Rates

A good credit score translates into lower interest rates for home-shopping borrowers. In a mortgage lender's eyes, the higher your score is, the less risk you are, and the more likely it is you will pay off your debt. For this reason, borrowers with lower scores usually end up paying higher interest rates on their loans. If this is you, don't panic. There are a number of things you can do to adjust your credit score to receive a favorable review from the underwriter. Here are a few suggestions: Should I pay off all my past due balances and charge-offs? This is usually a good idea, but you only need to worry about the past due balances and charge-offs that have occurred in the last two years. Items more than two years old have little effect on your current credit score. In fact, if you pay off delinquent items over two years old, it can actually bring your credit score down - something you don't want to do. Bringing that score up means you'll get a better interest rate on your loan.

Should I close existing credit card accounts that I don't use?

No. Part of your credit score is based upon credit history. If you have old credit cards that you don't use very much, you still have the benefit of the credit history they represent.

Rather than trying to pay off all your credit cards, you can move part of the debt from one card to another to even out the distribution of debt. Try to keep balances as close to zero as possible, and definitely below 30% of the available credit limit when trying to purchase a home. Also, if your credit provider will increase your line of credit, the ratio of debt to available credit is automatically reduced.

When married couples have separate credit card accounts, the debt can be transferred from one spouse to another to clear up credit issues for the other spouse. That spouse with clean credit can be designated as the sole borrower on the loan, but ownership of the home can still go in both names.

What about errors on my credit report?

If you have items that are showing up on your credit report that you know you have already paid, request that these items be removed by the credit bureau. They are obligated to rectify this within 30 days.

If there are items on your credit report that are less than two years old, send in your payment if possible and mark the back of the check with the following notation: "Accepting this check is evidence that the transaction is complete and this charge will be deleted from my credit record." If necessary, the cancelled check will be proof that this should be promptly removed from your credit report if it interferes with the closing of your loan.

Call me directly for a free consultation.

Planning Your Mortgage and Seeking Pre-approval

Planning Your Mortgage and Seeking Pre-approval

The Benefits of a Professional Consultant

Choosing the right lender is a key element to managing your mortgage. As a mortgage consultant, my goal is not just to provide you with a loan, but also to help select the one most beneficial to you and your long-term goals, and then, help you manage that debt over time. There are not many lenders out there who provide this type of personalized service.

My job is just beginning when your first loan closes. I will continuously monitor rates on your behalf, and stay in touch with you to make sure we remain on target with your financial goals.

Seek Pre-Approval

What's the difference between pre-qualification and pre-approval?

Pre-qualification is the starting point in your search for mortgage financing. A quick snapshot is taken which includes income, existing debt, savings, length of employment, etc. All of these factors will then be analyzed to determine your loan eligibility.

Pre-approval is written documentation that shows you have the support of a lender who is willing to finance you. It means an underwriter has reviewed your loan application. Based on your income, debt ratio and savings, the underwriter provides the dollar amount you are eligible to borrow. Now you can shop around for houses that fit into that loan amount category.

Here is the nice thing about the pre-approval: It gives you the leverage to shop as a cash buyer! With a pre-approval in hand, you now have the power to negotiate. The seller will take your offer much more seriously knowing you are already approved by a lender. Pre-approval can also shorten the time it takes to close, making even a lower bid attractive to sellers who are seeking to move quickly.

What will my monthly payments be?

The amount of your monthly payment depends on what loan program you choose. We like to provide our clients with an easy-to-read spreadsheet that narrows their choices down and compares different loan programs that meet both current and long-term goals. You will have the opportunity to select a program you feel comfortable with before you make an offer on a home.

What does it cost to get pre-approved?

Pre-approval is FREE! You have absolutely nothing to lose and everything to gain.

Give us a call to begin your pre-approval process. We have a network of Real Estate professionals ready to provide you with excellent service!

Call me directly for a free consultation.

How Purchase Loans Are Made

How Purchase Loans Are Made A Step-By-Step Walkthrough 1.   Pre-approval - Get pre-approved for a mortgage and know in advance exactly how much house you can afford. Completing this step will also increase your negotiating power since you'll be viewed as a "cash buyer". 2.   Loan Search - Put yourself in the hands of an experienced mortgage professional, someone who will help you to determine which financing options best suit your needs today and in the future. 3.   Loan Application - It's crucial to supply the lender with as much information as possible, as accurately as possible. All outstanding debts as well as assets and income should be included. 4.   Documentation - Paperwork supporting the application must also be submitted. Information commonly sought includes pay stubs, two years' tax returns, and account statements verifying the source of the down payment, funds to close and reserves. 5.   The Hunt - Begin shopping for a house. Once you find the right one, the terms of the sale will be negotiated, including the price and potentially the terms of the loan being sought. 6.   Appraisal - Lenders require an appraisal on all home sales. By knowing the true value of the home, the borrower is protected from overpaying. 7.   Title Search - This is the time when any liens against the property are discovered. A lien may have been placed on a property to ensure payment of outstanding debts by the owner. All liens must be cleared before a transaction can be completed. 8.   Termite Inspection - While most purchase loans do not require a formal inspection for termite and water damage, some loans (especially government loans) allow for the possibility. If problems are found, repairs may be necessary. 9.   Processor's Review - All pertinent information will be packaged by your mortgage professional and sent to the lending underwriter, including any explanations that may be needed, such as reasons for derogatory credit. 10.   Underwriter's Review - Based on the information put together by the loan professional, the underwriter makes the final decision regarding whether a loan is approved. 11.   Mortgage Insurance - Many lenders require private mortgage insurance when borrowers put down less than 20 percent on a loan. 12.   Approval, Denial or Counter Offer - In order to approve a loan, the lender may ask the borrowers to put more money down to improve the debt-to-income ratio. The borrower may also need a bigger down payment if the property appraises for less than the purchase price. 13.   Insurance - Lenders require fire and hazard insurance on the replacement value of the structure. Flood insurance will also be required if the property is located in a flood zone. In California, some lenders require earthquake insurance on condominiums. 14.   Signing - During this step, final loan and escrow documents are signed. 15.   Funding - At this point, the lender will send a wire or check for the amount of the loan to the title company. 16.   Confirmation of Funding - The lender authorizes the disbursement of loan proceeds. 17.   Closing - Documents transferring title will now be officially recorded by the County Recorder. 18.   Congratulations, you are now a homeowner! If you'd like to learn more, please give me a call. I'd be happy to speak with you!

Avoid Changes to Your Financial Profile During the Loan Process

Avoid Changes to Your Financial Profile
During the Loan Process

Once your loan package has been sent to the lender, there are a number of things you should avoid doing that will change your financial picture. Remember, the lender is looking for stability and consistency. If you want the best interest rate, keep that in mind. Here are a few things to consider:

The lender is looking to see what your source of down payment is.

Your lender will most likely ask you to provide proof of your liquid assets. This includes bank statements for checking and savings accounts, verification of investments, and any other liquid assets. Some of the things they ask for may seem trivial, but keep in mind, if you are planning a move to a new home, it's important to have all documentation readily available. If the lender asks for cancelled checks or deposit receipts to meet certain conditions, you want to be able to find these things quickly to avoid delaying the closing of your loan. Make sure your paper trail is easy to document, and don't move money from one account to another.

Major purchases tip the scales against your favor.

Avoid making any major purchases. You might be thinking about purchasing new appliances for the new home. This is not the time to do it. Avoid making any major purchases on jewelry, appliances, furniture, vacations, or anything with a significant price tag.

Buying or leasing a car can make a negative impact on the way the lender views your financial status. This is a big ticket item that dramatically affects your debt-to-income ratio. You may feel you have room in your budget to purchase a new car, and think this is a worthy investment if you are looking for a home that will mean a longer commute for you on a daily basis. But by tacking a car payment onto your existing debt, you reduce the amount that you will qualify for in a home loan. A $400 a month car payment can reduce your approved loan limit by as much as $50,000. Think about doing this after your loan is approved if you really need it.

If you have to change jobs, you may be asked to document why this change occurred.

If you are changing jobs to increase your income, that's a no-brainer for the lender. If you have an erratic work history to start with, another job change may make it look worse for you.

If you are an hourly wage employee, most likely a job change will have no effect on your ability to qualify for a loan. If you have a track record of a consistent amount of overtime or consistent bonuses over the last two years, the lender views this favorably. If you change jobs, there is no way of knowing if the new employer will pay overtime. Many do not! If you work on a salary + commission or straight commission basis, it has a dramatic effect on your stability. If you are considering starting your own business, again, this is something to consider after your loan is funded.

Call me directly for a free consultation.

How Much Money Should You Borrow?

How Much Money Should You Borrow?

While it might be tempting to borrow whatever amount of money your lender is willing to give you, it's important to think carefully about how much you'll actually need to borrow in order to purchase a new home. From the down payment to taxes to insurance and interest rates, there are many factors to consider when making this important, life-changing decision.

Contrary to popular sentiment, there is no standard formula for accurately calculating the specific dollar amount you should borrow when purchasing a new home. Many websites do offer special borrower calculators that claim to factor in important variables, and yet final results vary vastly from one site to the next. Other websites offer general rules of thumb, suggesting that you should never borrow more than 2 1/2 to 3 times your gross annual income, or that 28%, 32%, or even 40% is the maximum amount of debt you should ever take on.

And, while these insights may be helpful as you begin thinking about the overall borrowing process, meeting with a reputable loan professional and getting yourself pre-approved (not pre-qualified) is really the only way to know the exact amount of money you can and should borrow. By getting pre-approved, you not only increase the chance of finding the perfect house for your needs, you also become a "cash buyer", instantly increasing your bargaining power.

As a mortgage professional, I see my role differently than a traditional loan officer. While my job is to match you with the best mortgage available for your specific needs, I feel that it's also my duty to make sure it's the most responsible product as well. After all, what if something unforeseen or unexpected were to occur? What if you have an accident or you lose your job?

Whether you choose to work with me or not, be aware. A lender will often offer you the maximum amount of money that you qualify for, whether you actually need the full amount or not. Because of this, it's vital to sit down with a professional you can trust to figure out your complete financial picture.

If you or someone you know could benefit from this type of free consultation, give me a call. I would be happy to assist you!