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Real Estate Agents: How the government shut down will affect your business

With: John Meussner, Loan Officer & Mortgage Coach @ Mason-McDuffie Mortgage

So it’s been a day and the government is still shut down.  What exactly does that mean?  I’ll spare the humor and all the things I’d like to say – basically it means that some services are available, and others aren’t.

     While many vital services are still in action and exempt from shutdown, many others have been frozen, and could inadvertently have a pretty poor effect on the housing market, especially if this shutdown lasts for more than a couple days.

Please note: Not all lenders will have the same processes during a shutdown, just like in 2013. Your experience may vary. For example we are good to proceed on USDA Loans as-is during the shutdown.

USDA loans – the USDA loan program is frozen.  Since files are approved by USDA offices directly, there will be no more guarantees or housing loans issued by the USDA offices until the shutdown is over.  This could have a pretty terrible effect for those who live in rural areas or need 100% financing.

VA loans – VA loans should be in full swing, as the program is run based mostly on fees.  Where there might be an issue is when someone needs a VA certificate.  When the government shut down in the 90’s, there was a delay in obtaining certificates, and this will likely be the case again.  New applications will be taken, and files will be underwritten and funded, though.

FHA loans – FHA loans aren’t expected to feel a real impact from the government shutdown so long as the shutdown doesn’t last for a long period of time.  HUD is running at a significantly reduced staff, though, so getting information and paperwork to & from HUD could take a lot longer than usual.  The good news is, loans will still be insured & they will still have staff delegated to underwriting.

Conventional loans – while many are stating the shutdown is ‘no big deal’ for conventional financing, this is simply not the case.  Yes, conventional loans will be applied for, underwritten, approved, and funded.  BUT, over the past few years, as we all know, lenders have taken extra steps to fight fraud, and 2 of these steps are social security verifications and IRS 4506-t transcripts.  These services will be unavailable, and therefore loan files may be put on hold until the shutdown is over.

     Some borrowers will be in more trouble than others – for self-employed borrowers, they may be at the mercy of the shutdown as a work around for 4506 transcripts isn’t currently available.  Also, for any government employees that are in the midst of the loan process it will be extremely difficult to get any verifications of employment done.

   I’d strongly recommend being proactive in making sure none of your clients are surprised by any potential delays – sellers should understand that the shutdown can cause delays at no fault of buyers.  Anyone buying or refinancing should be aware of what type of loan they are getting, and if the potential is there for delays, they should plan accordingly.

     Hopefully in a day or 2 this blog post won’t matter & things will be running smoothly once again between our elected officials, but as a preemptive stragegy, it would be a good idea to know this information.  And for an added benefit you’ll already know what to be ready for if this happens in the future.

–  John Meussner

Phone
(949) 247-7530
Email
jmeussner@masonmac.com

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Top 5 Things to Look for When Hiring a Realtor

Today’s Guest Blogging topic is: How to hire the best Realtor for your needs

With: Jessica Wallace, REALTOR @ COLDWELL BANKER

Working with the right Realtor makes a huge difference in your success in home buying or home selling.  The ‘right’ Realtor will be different for each person as well depending on personalities and goals.  Here is a list you can use for a general rule of thumb when looking for a Realtor to help you buy or sell a home.

TOP 5 THINGS TO LOOK FOR IN A REALTOR:

#1  LOCAL EXPERTISE

This is a big one, you want your agent to be extremely knowledgeable in the areas you are looking to buy or sell a home.  Having deep local knowledge of the nuances in pricing in an area, familiarity with other local agents and lenders is huge and working with an agent that really knows their marketplace will help you be successful.

#2 EXPERIENCE = YEARS IN THE BUSINESS + NUMBER OF SALES PER YEAR

With each real estate transaction I have done, I learn something new every time.  I have been selling homes since 2004 and the amount of knowledge I have attained is crucial to my client’s success  It helps when a tricky or difficult situation comes up in a sale that I can draw on my experience to make things happen and solve problems.  Make sure to look up an agents average number of sales per year.  You don’t want to work with a part time agent that is not fully invested and knowledgeable about the real estate business.

 

#3 REVIEWS – REPUTATION

Do your research on the Realtors you are considering and see if they have any reviews online on sites like Zillow, Google, Realtor.com, LinkedIn.  Read about other people’s experience with the agent and if they do not have any reviews or very little I would be wary.

#4 PERSONALITY

Everyone is different and has distinct ways of interacting and even a very experienced Realtor might not be the right one for you if you don’t mesh with their personality.  You could be spending a lot of time together and potentially dealing with stressful issues that come up.   If your Realtor’s personality rubs you the wrong way, even if they are great at what they do, you may want to consider working with someone that you are more comfortable with on a personal level.


#5 TECHNOLOGICAL SAVVY

You want a Realtor that keeps on top of the newest trends and technology in real estate, especially when you are selling a home.  Understanding how to leverage technology and social media to bring the greatest amount of exposure to the home you are selling will potentially get your more money for your home in a shorter amount of time.   If your Realtor is not using professional video, photos and a social media strategy to sell your home, they are doing you a disservice.

When it comes to selecting someone to help you through one of the biggest financial transactions of your life, make sure to chose wisely my friends.   

More about the Author:

Jessica Wallace is a Realtor in Santa Cruz with Coldwell Banker and has been selling homes since 2004.  As a native of Santa Cruz, Jessica uses her local knowledge and years of experience to help her clients be successful and achieve their Real Estate goals while making the process as enjoyable and stress free as possible.  

Contact Jessica @  831.419.9345 or you can send her a message HERE.
Website: www.BuyorSellSantaCruzHomes.com 

Disclaimer: : The views, data, and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of Mason-McDuffie Mortgage Corp.

 

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Insights on How the New Tax Bill may Impact You

Even though we are not tax professionals, we wanted to give you some general insights regarding how the new tax bill* may impact you starting this year.

If you have a large first mortgage loan amount, you will be grandfathered in to the interest deduction up to $1,000,000 of your loan as long as it closed prior to December 15, 2017.  From that date, going forward, you’ll be limited to the interest paid up to $750,000 of the mortgage. One thing to note, is that the interest deduction has expressly indicated “acquisition debt” which coincides with purchase money loans and rate/term refinance loans.  It remains to be seen if this will be impacted with cash out refinances in the future for tax-purposes.

 

If you have a second mortgage (fixed or home equity line of credit, also known as a HELOC), the interest paid on these loans is no longer tax-deductible. (Formerly interest paid up to $100,000 was tax-deductible.) I believe that with our still-low mortgage interest rates, it may be beneficial to talk about the possibility of rolling the first and second mortgage loans into one loan through refinancing. And, in the future, cash-out refinances will be more likely vs. getting a second mortgage, since the interest paid on those are akin to the interest paid on credit cards and auto loans – no longer deductible! (However, see the paragraph above this one on commentary on interest paid on cash-out refinances.)

If you move, the rule requiring you to live in the home two of the last five years in order to exclude the net gain from capital gain income is still in place (congress wanted to raise it to five of the last eight), however, in 2008 the rule quietly changed to exclude the time you rented the home from the amount you can exclude from capital gains.  This will impact people who lived in their homes, kept them as rental properties and bought new homes (or moved and rented, but retained their home as a rental), then decided to sell or move back into the home so they met the “2 of 5” limit.  The IRS has issued Publication 523 that includes a worksheet indicating exactly how much of your net gain is owed as capital gains and how much is not.  You can find more information and the work sheet here https://www.irs.gov/forms-pubs/about-publication-523

Other items to note:

Property tax and state tax payments are now limited to $10,000.

Unreimbursed employee expenses and tax preparation fees are no longer deductible.

Moving expenses for anyone other than military personnel is no longer a deduction.

Individual personal exemptions (in 2017 the amount is $4,050 per person listed as tax payer and dependent) are eliminated.  However, the standard deductions have also increased and there is a $500 per dependent tax credit. Tax credits are much more favorable to the “bottom line” in tax preparation than tax deductions are.

Child care expenses have increased to $2,000 per child and now the credit doesn’t phase out until the AGI is over $200,000.

And the tax brackets have improved, allowing everyone to potentially pay less in federal income taxes!

*Again, this post is not intended to give you advice on your tax situation.

To find out how this new law impacts you personally, please contact your own tax advisor.

We hope you will find the above information useful as you do your tax planning under the new law.

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All About Private Money

Education & Value is what our blog is about. Yapping about ONLY mortgage related business is boring and not what we strive for as a company. This is why we bring in guest bloggers to talk about all areas of business.

Today’s topic is: Private Money aka Hard Money Lending

With: Mark Van Dellen, Senior Business Development Manager at CALCAP Lending, LLC.

Background of Private Money Financing

Private money financing has always been around. It was thrown for a loop, however, when the Dodd/Frank Act passed in 2010. No longer were consumer loans a viable option for private money financing. Dodd-Frank basically eliminated balloon, equity-based loans as an option for homebuyers or homeowners. So, instead, private money lenders have focused on business purpose loans to continue to provide short term, equity based loans. Business purpose loans for 1-4 unit residential properties are exempt from RESPA, TILA and some of the other state regulations enacted to protect consumers and homeowners.

 

What is a business purpose loan? It is the opposite of a consumer purpose loan. A consumer purpose loan is defined as a loan to a natural person on a residential property (1-4 residential units), when the purpose of the loan is to obtain funds for a personal, family or household purpose. A business purpose loan is a loan on residential property primarily for business, commercial or agricultural purpose (includes loan to acquire or improve rental property), NOT occupied by the borrower, OR 2.) Loan to business entity (i.e. Inc., or LLC) (Note: A Trust is NOT considered business entity.)

Private money loans are typically short term, 1 to 3-year bridge loans, interest only, with interest rates around 7-12%, depending on the equity of the property and credit rating of the borrower. Little or no regard is paid to the borrower’s income when determining the approval of the loan. Equity is king. Loan to value ratios rarely exceed 70 or 75%.

Another factor that influenced the growth of the private money market were fix n flippers – entrepreneurs who purchased foreclosed and run-down homes for renovate and resale. These homes would typically not qualify for conventional financing because of the condition of the property or the need to purchase them very quickly to get the best price possible.

A second growth factor was the boom in 1-4 unit properties being rented out. Many people lost their homes during the 2008 financial crisis and many people do not qualify for homeownership financing because of the newer, stricter Dodd-Frank rules and rapid home price increases in many parts of the country.

Why borrowers choose Private Money Financing

Real estate investors choose private money for a variety of reasons. Often times, it’s a timing issue. If the close of escrow date is coming due and conventional financing fell through, investors will go to private money as a last resort. Other times investors might choose hard money because they need construction rehab financing and institutional lenders don’t have a lot of lending options for that. Finally, if the borrower’s credit rating or income do not meet institutional requirements they will choose to go the private money route.

Pros vs Cons of Private Money

Like most things in life, there are two sides to every option. Private money allows for a lot of great options like fast closings, little documentation, and looser credit standards. Downsides include larger downpayment or equity requirements, higher interest rates and the uncertainty of future financing, since these loans are typically 1-3 years in length.

 

Private Money Loan Options

Most private money lenders offer a wide variety of loan options. There are purchase loans which are especially well suited for real estate investors that are trying to obtain an under-market home and close as fast as an all-cash offer. These typically can range up to 75% of the purchase price. There are also the options for a cash-out refinance that allow borrowers to take equity out of their property in 10 days or less to use towards renovation of other rental property or other business purposes. These might have more conservative LTVs, usually around 65% for a good credit borrower. Finally, private money gives fix and flip developers the ability to leverage multiple projects at a time, since they can borrow most of the funds needed to purchase and remodel the home. These are typically up to 75% of the purchase price of the home and up to 100% of the rehabilitation dollars, as long as the after repaired value is under 70%.

This financing category is not for everyone. It is, however, something you should be knowledgeable about because you will have customers that fit these specialized uses. You will want to work with an experienced private money lender because they will know the ins and outs of this financing option. And what a great opportunity for conventional lenders. Borrowers who obtain private financing for the acquisition of rental property will need you for permanent financing for their rental properties.

More about the Author:

Mark has been responsible for all phases of the firm’s sales growth since 2009 having originated over 500 private money loans for $200,000,000. Mark is a graduate of The University of Southern California’s Price School of Policy with a Bachelors in Planning and Development and a Masters Degree in Planning with an emphasis on Economic Development. Currently, he is an Alumni Board Member with USC Price School of Policy as well as a mentor with USC’s career services.

Contact Mark @ mark.vandellen@calcapfinancial.com | Office: 626.765.5768
Website: www.calcapfinancial.com

Disclaimer: : The views, data, and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of Mason-McDuffie Mortgage Corp.

 

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Should You Use a Local Lender?

If your local lender is our team at Mason Mac, then yes, you should always use the local lender.  We kid, we kid…ok, maybe we’re serious.  There is a perception when shopping for a mortgage that’s often shared by real estate agents, and that is that the local lender is always a better option than a non-local or national lender.  Sometimes, that’s an accurate assumption, but there are many reasons why working with someone other than the lender next door may be your best bet when getting home financing.

 

Is it better to use a local mortgage company? It’s best to use a GOOD mortgage company

The Mortgage Process is Automated

Document storage and transfer within a lender?  All done via computer.  Locking a loan, setting up a loan, and processing the loan from start to finish?  All done on a computer and over the phone.  Everything in the mortgage process is automated, so whether your loan officer and their loan team are next door or several states away, if they’re good, your experience getting the loan will be good, and vice versa.

 

Your local is someone else’s far away

A common refrain amongst people with bad experiences with non-local lenders is “I used someone that wasn’t local and had a terrible experience, so I’ll never do that again!”.  The problem is, whoever that lender was that provided the terrible experience is likely right around the corner from lots of home buyers, home owners, and real estate offices, so that terrible experience is likely the same for them as a “local lender” as it is from afar.

Lenders that provide a less than stellar experience may be far from you, but they’re also someone’s local lender.  Since everything is automated, the experience of getting a loan should be largely the same whether you can walk to your local mortgage office or if they’re 3000 miles away.

 

Exceptions?

The exception when dealing with local VS non-local lenders is face time.  Of course, you can technically “facetime” via iphone, but if you’d like to meet your loan officer face to face and not online, then a local lender would be the better option.  Or if you prefer to handle documentation by physically dropping it off, the local office may be convenient.  That said, if the local lender offers a higher rate or higher fees, are you willing to pay a lot more for that face time?

When going to a local office, chances are you’ll only meet your loan officer, too – probably not your processor, underwriter, or any of the other people that work on your loan file, as they typically work from operations offices.

 

The Verdict

Some people prefer to keep things local, but in today’s mortgage market, it’s largely unnecessary.  With the entire process being automated, phone and internet have brought us to a point where you can expect the same level of service and the same product offerings whether your lender is a block away or located on the other side of the country.  If you know how to shop for a mortgage loan properly, you’ll be able to speak with people near and far to determine who to use to get the right mortgage for you.

 

With offices in several states, on both coasts, and scattered across time zones from east coast to Hawaii, chances are Mason McDuffie has you covered, and in being one of the most tech savvy lenders in today’s market, you’ll notice the same great level of service and receive the same easy mortgage process whether you’re a neighbor to one of our offices or looking for a loan from several states away.

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Can a Non-Citizen Get a Mortgage?

If you’re wondering if a non-citizen can get a mortgage in the US, the short answer is yes.  The longer answer is also yes…but with a few additional details and restrictions.

Straight from the Fannie Mae selling guide (the book that lenders use to determine eligibility for conventional loans):

 

“Fannie Mae purchases and securitizes mortgages made to non–U.S. citizens who are lawful

US citizenship is not a requirement to get a loan. Whether a legal resident alien, Visa holder, or foreign national, you have loan options!

permanent or non-permanent residents of the United States under the same terms that are available to U.S. citizens. Fannie Mae does not specify the precise documentation the lender must obtain to verify that a non–U.S. citizen borrower is legally present in the United States.”

 

 

 

With this paragraph in mind, lenders who approve or deny loans based on Fannie Mae guidelines can help a non-citizen get a mortgage so long as they can provide documentation showing they’re legally in the US.  This documentation usually comes in the form of a green card or a Visa.

Acceptable Visas

 

Most Visa types are acceptable to get a mortgage loan if it can be reasonably determined that a borrower will remain in the country for the foreseeable future.  The H-1B and H-1B1 Visas are the most commonly seen from applicants, and these borrowers are treated exactly like US Citizens in getting a mortgage loan.

Some Visas are not acceptable to most lenders, though.  For example, student Visas that have a reasonable expectation that the student will leave the country upon completion of an educational program could pose a problem for loan approval.  Lenders generally have the burden of proving a borrower will be reasonably able to maintain their mortgage for the 3 year period following issuance of the mortgage loan, so if there’s uncertainty, lenders will always tend to err on the side of caution.

Other Options

For those borrowers who cannot qualify for standard conventional financing, FHA has flexible guidance on if a non-citizen can get a mortgage as well, and for those who can’t obtain FHA financing, options exist through Foreign National programs.

Foreign national loans frequently come with higher down payment requirements and sometimes higher rates, but for a non-citizen looking to get a mortgage in the US, there are a lot of options available!  As for foreign national loans, the options vary greatly on those as well, and though your loan officer can answer specific questions on those programs (and more), that’s a different blog for a different day.

 

If you have any questions about getting a mortgage as a non-citizen, please give us a call and we’ll be happy to help!  We have lending options for everyone and will work with you every step of the way to buy a home.

 

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5 Ways Your Lender Can Help You Get the House

In today’s competitive housing market where many areas nationwide are seeing a far-leaning seller’s market with limited inventory, it’s important for buyers to put their very best foot forward and have all their t’s crossed and i’s dotted before they find “the one”.

Most buyers don’t consider just how much their mortgage lender can help them land their

Loan officers can help buyers win in a competitive sellers market
Your mortgage lender should be an asset in getting your offer accepted

dream home, but aside from a buyer’s real estate agent, the lender is the next most important asset a buyer has when putting together an offer.  Using these 5 tips will help ensure you’ve got yourself in the best position to get an offer accepted.

Work with a Reputable Lender

One of the things a listing agent will consider when advising their seller whether or not an offer is a good one is the name of the mortgage company on the pre-approval letter.  Especially in a multiple offer situation, a seller is likely to choose the offer that’s most likely to make it to the closing table on time and with no headaches or financial harm.   That means if your competition is working with a reputable lender and you’re pre-approval is from anonymousmortgage.com or ABClowestrateXYZ Mortgage, you’ll be at a disadvantage with all other things being equal.

It’s a bonus if the listing agent knows the company and has had a good experience in the past.  If the seller asks for their input, reassurance and a seal of approval from their agent can help an offer in getting accepted.  On the flip side, if a listing agent has had a terrible experience with the lender, the seller will likely hear all about it before making a decision.  Choose your lender wisely, and be wary of internet refinance lenders.

Have a Responsive Loan Officer with Stellar Communication

Sometimes that dream home is viewed at 7pm, or 10am on a Saturday.  Sometimes, that dream home will be slightly above the amount on your pre-approval (or maybe you have a pre-approval, but need one for a different amount).  In a competitive market, if you need an update from your loan officer and their business hours are 9-5 Monday-Friday, or if they take days to respond to your questions or voicemails, you’ll be at a serious disadvantage if other offers are going in ahead of yours.

Your loan officer shouldn’t be available 24/7, but a good loan officer is always responsive, always returns phone calls, and has an eye on their email in the evenings and on weekends – after all, the real estate business doesn’t stop in the evenings and weekends.  Your loan officer shouldn’t, either.

Get Pre-Underwritten (and DON’T get “prequalified”)

If your lender hasn’t reviewed your application, your credit, and supporting documentation, then you’re not pre-approved regardless of what they tell you.  A ‘prequalification’ is a flimsy notice that you may qualify for a loan, but it’s not nearly as assuring as a pre-approval, which involves a complete application, credit, automated underwriting, and supporting documentation reviewed by the loan officer.

Better yet, work with a lender that offers a pre-underwriting program to let the seller and their agent know that if they choose your offer, there won’t be any surprises.  With pre-underwriting, your mortgage lender will put together a full file and submit it to underwriting before a property is found.  This way, once an offer is accepted, all that’s left to do is the property-related work – inspections, appraisal, and insurance – giving a buyer the same strength as a cash buyer.  Pre-underwriting says to a seller “we’re better than pre-approved, we’re fully approved pending you accept our offer”.

Your Loan Officer Should Explain Your Pre-Approval ON Your Pre-Approval

Put yourself in a seller’s shoes and consider what looks better:

“Mr/s Seller, this buyer is preapproved” OR “Mr/s Seller, we have reviewed this buyer’s credit, income documents, proof of funds needed to close, and have received an approval through automated underwriting.”

Of course letting the seller know that the loan officer completed a thorough review of a buyer’s loan application is the better way to go – but few mortgage lenders do this.  Make sure you work with a loan officer that does.

Make Sure Your Lender Calls the Listing Agent

Your loan officer should act as a huge advocate when you’re putting an offer in on a house.  Calling the listing agent offers the opportunity to explain your strengths as a buyer, but just as importantly shows the listing agent that the lender you’re working with is professional and a good communicator (one of the biggest complaints of real estate agents is that lenders lack proper communication skills).

When buying a home, it’s a team sport.  Buyers want to buy a home, and sellers want to sell.  A loan officer should let a seller and their agent know that they’re a part of the team, and that they’ll do everything they can to make everyone’s life easy, not just the buyer.  A quick phone call also gives the loan officer a chance to explain the pre-approval process, and gives the listing agent a chance to ask any questions they may have.  Communication is very important in the home buying process, having a lender that’s proactive in this area is a major bonus. If you’re currently perusing your mortgage options, please reach out to one of our Mason-McDuffie Mortgage professionals.

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Buying a Home? Make Sure Your Finances Are in Order First

Below is a guest blog post by Janet Elliot of RE/MAX

Purchasing a new home is part of the American Dream, just as much as graduating high school and college, getting married, and having children. It’s also the hardest part of the dream to achieve; you need patience, resilience, thick skin, and great financial planning.

The latter is the most important aspect of buying a home. With that said, you don’t need loads of money in order to purchase – just decent credit and a solid financial plan. So, before you head out to the local open houses, be sure you’ve first tackled your finances in order to know which homes you can actually afford.

Make Sure You Have the Credit

According to Keith Gumbinger, Vice President of HSH, a mortgage information company, the best mortgage rates are given to potential buyers who have a credit score of 740 or above. However, you can still get a home loan with a credit score of 620; in some cases even a 580 credit score can qualify you for an FHA loan.

Just because you may qualify for a loan at 580, it doesn’t mean that you should apply for one. Lenders use your score to determine whether or not they will lend to you, but also at what rate. Lower credit scores mean higher rates.

The best thing you can do to get your credit score on track before purchasing a home is to get a free credit report from annualcreditreport.com six to twelve months before you go house hunting. This report looks at the three main credit bureaus, giving you insight into your number, and what needs to be taken care of to improve the score.

Doing this up to a year before you start looking allows you plenty of time to increase your score. Mortgage companies aren’t the only ones that look at this number; sellers and real estate agents also look as this number, and it can determine if they will sell to you or take you on as a client. Don’t overlook this step, it’s essential to your success.

Do You Have Too Much Debt?

Your debt is another huge factor when attempting to secure a lender. In fact, it can at times be even more important than your credit score; it’s the first thing they look at when determining your eligibility. The debts they look at include student loans, car loans, credit card payments, and so forth. Ideally, lenders are looking to see if your overall debt plus your potential new mortgage payment is 45% or less than your income.

For example, if your monthly pretax income is $5,000, they want to see that $2,250 or less of it is going toward your mortgage payment and debt. Obviously, the less debt you have, the better. If you can reduce your overall debt by paying off that pesky car loan or student loan, your payment-to-income ratio will decrease and make you a more attractive buyer. In addition, leave older credit lines open, avoid opening new credit lines, stop buying on existing credit, and don’t shuffle your money around; this will leave you in the best position to buy a home.

Set a Budget and Prepare for Your Down Payment

Now that you have your debt and credit score goals where you want them, it’s time to look at your budget and prepare for your down payment. The best way to determine your budget is by using the standard rule when it comes to purchasing a new home. The rule of thumb is to only look at homes that are no more than 2.5 times your gross annual salary. In layman’s terms, if your annual salary is $50,000, look for homes priced no more than $125,000 dollars.

Once you have your max amount, it’s time to speak to lenders to see what your financing options are. You typically will have the choice between two types of mortgages: fixed-rate and adjustable-rate. Fixed-rate mortgages are where your monthly payment and interest rate stay the same the entire time you have the loan, for between 15 to 30 years.

Adjustable-rate mortgages have an introductory interest rate that will change after a specific period of time. Simply put, it could start off at a particular rate for the first two years, but can begin being adjusted annually after that. In general, most real estate agents would suggest that a fixed-rate mortgage payment is the safer financial choice, but every homeowner is different.

Aside from determining your budget and settling on a loan option, you will also need to plan for a down payment. In the best case scenario, you want to have a down payment of 20 percent of the total price of the home, but a minimum of 10 percent down can work for a conventional mortgage loan. Since everyone’s situation is different, some buyers simply cannot come up with that type of down payment.

If you are among those who cannot afford a higher down payment, you can apply for an FHA loan, which can make your down payment as little as 3.5 percent of the cost of the home.

In some cases, if you meet the income limitations of your state, you can even get a five percent down payment loan from traditional loans. Work with your real estate agent and speak with a few lenders to find which style of mortgage and down payment method will be best for your situation.

One Last Thing Before You Make an Offer

Closing costs are another thing to think about before you put in an offer. It used to be you could get some credits for your closing costs and still have your offer accepted, but not so much anymore. To be prepared in the current market, be sure you have at minimum 2.5 percent of the purchase price for closing costs (not including your down payment). This will give you the best chance of putting in a successful offer.

The real estate market is competitive right now, with many sellers taking multiple offers of the asking price and choosing the most solid one. Rise above the competition with closing costs already accounted for. By following these steps, you will be in the perfect position to put in an offer on your dream home. Now it’s time for the fun stuff – heading out to open houses!

janetelliotJanet Elliott has served as a Realtor with REMAX for 28 years in the metro Atlanta area. Janet is also a Certified Residential Specialist or CRS. This is a designation achieved by less than 1% of real estate agents. When not practicing real estate, Janet can be found spending time with family and friends out on the water!

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HOLY TRID! New Regulations for the Mortgage Industry Start Today!

Today marks the 1st day of new federally mandated regulations known as “TRID” (TILA-RESPA Integrated Disclosures). The Consumer Financial Protection Bureau (CFPB) has introduced these new regulations as part of their “Know Before You Owe” initiative.

New forms are part of TRID whose purpose is to help make it easier for borrowers to understand complex mortgage documentation. Home mortgages are important for consumers so that they can achieve the dream of homeownership. As much as we try to make the mortgage process less complex for our clients it is still not as simple as we all would like. These new TRID forms look to help with the complexity by merging four forms into two forms.

The New Forms

During the mortgage process, we as the mortgage lender are required to give you these two new forms. One form, the Loan Estimate, you will receive early in the process. The second form, the Closing Disclosure, you will receive later on so you can review the final loan terms before you close.

The Loan Estimate

The Loan Estimate replaces both the initial Truth-in-Lending (TIL) statement and the Good Faith Estimate (GFE).

Within 3 business days after receiving certain information on your loan application (income, property value, etc.) you will be sent a Loan Estimate.

Your Loan Estimate (LE) consists of three pages. The first page lists general information about your loan:

Applicant info and property details
Loan type, purpose and terms
Projected payments during the loan term
Estimated closing costs and how much cash you’ll need at closing

The second page of the Loan Estimate breaks down the closing costs:

Origination Charges (this covers our expenses to do the loan)
Other Costs (third-party charges like homeowners insurance)
Calculation used to determine estimated cash required at closing
Adjustable interest rate table, payment table (for ARM loans only)

The last page shows information about your lender and further details to help you choose which loan is right for you:

Contact info for us “the lender” and your loan originator
Comparisons (consistent table format to make comparing different loans easy)
Other Considerations (details specific to this loan from this lender)
When you’ve decided on your loan option, you MUST sign the Intent to Proceed document. Without this consent, we as your lender cannot move forward with processing your loan.

Closing Disclosure

The new Closing Disclosure replaces both the final Truth-in-Lending disclosure and the HUD-1 statement.

When your loan has been processed and is ready to close, you will have a final discussion with us to go over the loan and its terms. We want to make sure you understand and agree to everything. We will then provide you a Closing Disclosure detailing your loan terms.

The Closing Disclosure is designed to be easy to read and contains the same information as the Loan Estimate essentially. It will reflect your final fees, charges and includes additional information relating to your escrow account (which holds funds to pay your taxes & insurance(, if applicable. You need to review and confirm everything matches what you have agreed to.

The New 3-Day Waiting Period

We as your lender are required to give you a minimum of three business days to review the Closing Disclosure before your closing can take place. If changes to the Closing Disclosure are made, another three-day review period may be required.

To prevent a delay in the closing of your loan, it is important to acknowledge receipt of the Closing Disclosure as soon as you receive it.

Here at Mason-McDuffie Mortgage we have been working hard to make sure our clients have a seamless transaction with these new regulations. If you have any questions about the new regulations or forms, please contact your Loan Originator, or you can email us at info@mmcdcorp.com.

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Benefits of a Homestyle Renovation Loan

homestyle loan benefits

According to Fannie Mae, the “HomeStyle Renovation mortgage permits borrowers to include financing for home improvements in a purchase or re-finance transaction of an existing home”.

The HomeStyle Renovation Loan gives borrowers a convenient option to pay for renovations. Additionally, this loan provides an alternative to a second mortgage, home equity line of credit or other type of financing.

Eligible borrowers for the HomeStyle Renovation Loan include:

  • Home Buyers
  • Homeowners
  • For-profit investors
  • Non-profit investors
  • Local Government Agencies

Potential Borrower Benefits:

  • Cost-effective way to make home improvements.
  • A single loan provides the borrower with lower closing costs and potentially lower interest rates on a first mortgage.

For more information on the HomeStyle Renovation Loan, please contact your local Mason-McDuffie Mortgage Loan Officer or find one here http://www.mmcdcorp.com/find-loan-officer.

All information for this post was sourced from Fannie Mae.