NE TEXAS Real Estate News

Whether You Rent or Buy, Either Way You're Paying a Mortgage! | Simplifying The Market

Whether You Rent or Buy, Either Way You’re Paying a Mortgage!

  

There are some people who have not purchased homes because they are uncomfortable taking on the obligation of a mortgage. Everyone should realize, however, that unless you are living with your parents rent-free, you are paying a mortgage – either yours or your landlord’s.

As Entrepreneur Magazine, a premier source for small business, explained in their article, “12 Practical Steps to Getting Rich”:

“While renting on a temporary basis isn’t terrible, you should most certainly own the roof over your head if you’re serious about your finances. It won’t make you rich overnight, but by renting, you’re paying someone else’s mortgage. In effect, you’re making someone else rich.”

Christina Boyle, Senior Vice President and head of the Single-Family Sales & Relationship Management organization at Freddie Mac, explains another benefit of securing a mortgage as opposed to paying rent:

“With a 30-year fixed rate mortgage, you’ll have the certainty & stability of knowing what your mortgage payment will be for the next 30 years – unlike rents which will continue to rise over the next three decades.”

As an owner, your mortgage payment is a form of ‘forced savings’ which allows you to build equity in your home that you can tap into later in life. As a renter, you guarantee the landlord is the person building that equity.

Interest rates are still at historic lows, making it one of the best times to secure a mortgage and make a move into your dream home. Freddie Mac’s latest report shows that rates across the country were at 4.22% last week.

Bottom Line

Whether you are looking for a primary residence for the first time or are considering a vacation home on the shore, now may be the time to buy.

Posted by NE TEXAS REALTY GROUP on February 6th, 2018 11:06 AM

Gap Between Homeowners & Appraisers Narrows to Lowest Mark in 2 Years

Gap Between Homeowners & Appraisers Narrows to Lowest Mark in 2 Years | MyKCM

In today’s housing market, where supply is very low and demand is very high, home values are increasing rapidly. Many experts are projecting that home values could appreciate by another 4% or more over the next twelve months. One major challenge in such a market is the bank appraisal.

When prices are surging, it is difficult for appraisers to find adequate, comparable sales (similar houses in the neighborhood that recently closed) to defend the selling price when performing the appraisal for the bank.

Every month in their Home Price Perception Index (HPPI), Quicken Loans measures the disparity between what a homeowner who is seeking to refinance their home believes their house is worth and what an appraiser’s evaluation of that same home is.

In the latest release, the disparity was the narrowest it has been in over two years, as the gap between appraisers and homeowners was only -0.5%. This is important for homeowners to note as even a .5% difference in appraisal can mean thousands of dollars that a buyer or seller would have to come up with at closing (depending on the price of the home)

The chart below illustrates the changes in home price estimates over the last two years.

Gap Between Homeowners & Appraisers Narrows to Lowest Mark in 2 Years | MyKCM

Bill Banfield, Executive VP of Capital Markets at Quicken Loans urges homeowners to find out how their local markets have been impacted by supply and demand:

“Appraisers and real estate professionals evaluate their local housing markets daily. Homeowners, on the other hand, may only think about their housing market when they see ‘for sale’ signs hit front yards in the spring or when they think about accessing their equity.”

“With several years of growth, owners may have more equity than they realize. Many consumers use the tax season at the beginning of the year to reevaluate their entire financial life. It also provides a good opportunity for them to consider how best to take advantage of their equity while mortgage interest rates and borrowing costs are still near record lows.”

Bottom Line 

Every house on the market must be sold twice; once to a prospective buyer and then to the bank (through the bank’s appraisal). With escalating prices, the second sale might be even more difficult than the first. If you are planning on entering the housing market this year, let’s get together to discuss this and any other obstacles that may arise.

Use the buttons below to share with your Personalized Posts profile...
Posted in:Financing Tips and tagged: Home Financing
Posted by NE TEXAS REALTY GROUP on January 26th, 2018 11:47 AM

Veterans Affairs Loans by the Numbers 

Veterans Affairs Loans by the Numbers [INFOGRAPHIC] | Simplifying The Market

Some Highlights:

  • Since the creation of the VA Home Loans Program, 22 million veterans have been able to achieve the American Dream of homeownership.
  • So far in 2017, $188 billion has been loaned to veterans and their families through the program.
  • VA Purchase Loans are on the rise in 46 out of 50 states and Washington, DC.

Posted by NE TEXAS REALTY GROUP on November 10th, 2017 9:39 AM
Don't Let Fear Stop You from Applying for a Mortgage | Simplifying The Market

Don’t Let Fear Stop You from Applying for a Mortgage

A considerable number of potential buyers shy away from jumping into the real estate market due to their uncertainty about the buying process. A specific cause for concern tends to be mortgage qualification.

For many, the mortgage process can be scary, but it doesn’t have to be!

In order to qualify in today’s market, you’ll need to have saved for a down payment (73% of all buyers made a down payment of less than 20%, with many buyers putting down 3% or less), a stable income and good credit history.

Throughout the entire home buying process, you will interact with many different professionals, all of whom perform necessary roles. These professionals are also valuable resources for you.

Once you’re ready to apply, here are 5 easy steps that Freddie Mac suggests you follow:

  1. Find out your current credit history & score – even if you don’t have perfect credit, you may already qualify for a loan. The average FICO® Score of all closed loans in September was 724, according to Ellie Mae.
  2. Start gathering all your documentation – income verification (such as W-2 forms or tax returns), credit history, and assets (such as bank statements to verify your savings).
  3. Contact a professional – your real estate agent will be able to recommend a loan officer that can help you develop a spending plan, as well as determine how much home you can afford.
  4. Consult with your lender – he or she will review your income, expenses, and financial goals to determine the type and amount of mortgage you qualify for.
  5. Talk to your lender about pre-approval – a pre-approval letter provides an estimate of what you might be able to borrow (provided your financial status doesn’t change), and demonstrates to home sellers that you are serious about buying!

Bottom Line

Do your research, reach out to professionals, stick to your budget, and be sure that you are ready to take on the financial responsibilities of becoming a homeowner.

Posted by NE TEXAS REALTY GROUP on October 31st, 2017 11:18 AM
What You Need to Know About Qualifying for a Mortgage
What You Need to Know About Qualifying for a Mortgage [INFOGRAPHIC] | MyKCM

Some Highlights:

  • Many buyers are purchasing a home with a down payment as little as 3%.
  • You may already qualify for a loan, even if you don't have perfect credit.
  • Take advantage of the knowledge of your local professionals who are there to help you determine how much you can afford.
Posted by NE TEXAS REALTY GROUP on May 12th, 2017 9:58 AM
Get All the Facts about PMI | Simplifying The Market

When it comes to buying a home, whether it is your first time or your fifth, it is always important to know all the facts. With the large number of mortgage programs available that allow buyers to purchase a home with a down payment below 20%, you can never have too much information about Private Mortgage Insurance (PMI).

What is PMI?

Freddie Mac defines PMI as:

“An insurance policy that protects the lender if you are unable to pay your mortgage. It's a monthly fee, rolled into your mortgage payment, that is required for all conforming, conventional loans that have down payments less than 20%.

Once you've built equity of 20% in your home, you can cancel your PMI and remove that expense from your mortgage payment.”

As the borrower, you pay the monthly premiums for the insurance policy, and the lender is the beneficiary. Freddie Mac goes on to explain that:

“The cost of PMI varies based on your loan-to-value ratio – the amount you owe on your mortgage compared to its value – and credit score, but you can expect to pay between $30 and $70 per month for every $100,000 borrowed.” 

According to the National Association of Realtors, the average down payment for all buyers last year was 10%. For first-time buyers, that number dropped to 6%, while repeat buyers put down 14% (no doubt aided by the sale of their home). This just goes to show that for a large number of buyers last year, PMI did not stop them from buying their dream homes.

Here’s an example of the cost of a mortgage on a $200,000 home with a 5% down payment & PMI, compared to a 20% down payment without PMI:

Get All the Facts about PMI | Simplifying The Market

The larger the down payment you can make, the lower your monthly housing cost will be, but Freddie Mac urges you to remember:

“It's no doubt an added cost, but it's enabling you to buy now and begin building equity versus waiting 5 to 10 years to build enough savings for a 20% down payment.”

Bottom Line

If you have questions about whether you should buy now or wait until you’ve saved a larger down payment, let’s get together to discuss our market’s conditions and to help you make the best decision for you and your family.

Posted by NE TEXAS REALTY GROUP on May 2nd, 2017 11:34 AM
Renting or Buying… Either Way You’re Paying a Mortgage | Simplifying The Market

There are some people who have not purchased homes because they are uncomfortable taking on the obligation of a mortgage. Everyone should realize that, unless you are living with your parents rent-free, you are paying a mortgage - either yours or your landlord’s.

As Entrepreneur Magazine, a premier source for small business, explained this month in their article, “12 Practical Steps to Getting Rich”:

While renting on a temporary basis isn't terrible, you should most certainly own the roof over your head if you're serious about your finances. It won't make you rich overnight, but by renting, you're paying someone else's mortgage. In effect, you're making someone else rich.”

Christina Boyle, Senior Vice President and head of the Single-Family Sales & Relationship Management organization at Freddie Mac, explains another benefit of securing a mortgage vs. paying rent:

“With a 30-year fixed rate mortgage, you’ll have the certainty & stability of knowing what your mortgage payment will be for the next 30 years – unlike rents which will continue to rise over the next three decades.”

As an owner, your mortgage payment is a form of ‘forced savings’ which allows you to build equity in your home that you can tap into later in life. As a renter, you guarantee the landlord is the person with that equity.

Interest rates are still at historic lows, making it one of the best times to secure a mortgage and make a move into your dream home. Freddie Mac’s latest report shows that rates across the country were at 4.23% last week.

Bottom Line

Whether you are looking for a primary residence for the first time or are considering a vacation home on the shore, now may be the time to buy.

Posted by NE TEXAS REALTY GROUP on May 1st, 2017 12:23 PM
Again… You Do Not Need 20% Down to Buy NOW! | Simplifying The Market

A survey by Ipsos found that the American public is still somewhat confused about what is required to qualify for a home mortgage loan in today’s housing market. There are two major misconceptions that we want to address today.

1. Down Payment

The survey revealed that consumers overestimate the down payment funds needed to qualify for a home loan. According to the report, 40% of consumers think a 20% down payment is always required. In actuality, there are many loans written with a down payment of 3% or less.

Many renters may actually be able to enter the housing market sooner than they ever imagined with new programs that have emerged allowing less cash out of pocket.

2. FICO® Scores 

The survey also revealed that 62% of respondents believe they need excellent credit to buy a home, with 43% thinking a “good credit score” is over 780. In actuality, the average FICO® scores of approved conventional and FHA mortgages are much lower.

The average conventional loan closed in February had a credit score of 752, while FHA mortgages closed with a score of 686. The average across all loans closed in February was 720. The chart below shows the distribution of FICO® Scores for all loans approved in February.

Again… You Do Not Need 20% Down to Buy NOW! | Simplifying The Market

Bottom Line

If you are a prospective buyer who is ‘ready’ and ‘willing’ to act now, but are not sure if you are ‘able’ to, let’s sit down to help you understand your true options.

Posted by NE TEXAS REALTY GROUP on April 14th, 2017 11:22 AM

What do lenders look for on loan applications?

From first grade on, we are all striving to satisfy somebody. The teacher, the pastor, the coach, the boss—they all have expectations. The sooner we learn to see the world their way, the faster we can get ahead.

Mortgage lenders are in the same category. Their opinion of your creditworthiness rests on a few simple things. Some you can't change much in the short term. But all of them, in the course of a lifetime, are well within your control.

Payment history

This is the number one issue on any creditor's list. A pattern of slow, late, or missed payments will knock down an applicant's credit score faster than bowling pins on Ladies League Night. Your ability to pay is huge, determined in large part by your income and other competing debts. But there is also willingness to pay. And against all odds, even with crushing debt-to-income ratios, there are some people who always manage to make the Mastercard payment. An unblemished payment record can partially offset negatives elsewhere. Your payment history is perhaps 35 percent of your total creditworthiness.

Percentage of available credit you're using

In the underwriter's eyes, pushing your credit limits is a cardinal sin. It's better to have two accounts at half-limit levels than one maxed out. Some say 30 percent is the ideal debt-to-limit ratio on a revolving account, so consider juggling three cards if that's what it takes.

Length of credit history

You can't change your age. But you can get started on the path to creditworthiness at a young age by opening a Visa account and faithfully paying off the balance each month. Never borrow money needlessly, but if it makes all-around sense, consider a car loan. A two-year track record of on-time payments will greatly raise your standing among potential mortgage lenders.

"Mix" of credit types

It's also preferable to have a variety of credit types such as mortgages, credit cards, car loans, and personal lines of credit. A diversified mix is characteristic of someone with a long credit history.

Proof of income

Note the two key words—"proof" and "income." Your hard work as a landscaper may buy you a nice living, but unless you file a 1040 at tax time, you'll be having a lot of short conversations with loan officers. Even in an age when contracting and freelancing is widely accepted, conventional employees with "W-2" pay stubs have a leg up over the self-employed.

Collateral

Assets go a long way to offset lenders' fear of risk. A property leveraged at 80 percent is less worrisome than one at 95 percent. And a six-figure 401(k) balance is a comfort too, even if they can't come after the money. It gives you options other than defaulting on a loan.

Recent efforts to get more credit

A red flag goes up if your loan request is preceded by a flurry of credit applications elsewhere, especially if they were successful. Can you pay the mortgage if you're also financing a new boat? Rapid expansion of credit can signal desperation and the start of a downward debt spiral if someone's income isn't sufficient to pay the bills.

Posted by NE TEXAS REALTY GROUP on April 7th, 2017 3:17 PM

10 Ways to improve your credit score

We always hear about how important it is to have a good credit score. After all, even if you have a good score, an excellent one will get you better mortgage rates and save you more money. But what improves your score the most? What lowers it? And how can you budget your finances to get the highest score possible? Here are 10 ways to improve your credit score, and help you achieve your financial goals.

  1. Don't open too many credit cards at once

    Each time you open a credit card, the company makes an inquiry of your credit. Too many inquires in a short amount of time can lower your score.

  2. Don't charge more than half the limit on your credit cards

    It is better to have 2 cards with a limit of $10,000, and only charge $5,000 on each, than to have one card maxed out at $10,000.

  3. Don't cancel credit cards once you get them

    While it may seem like a good budgeting method, canceling a card will erase all of the payment history built up - which makes up a large percentage of your overall credit score. Cut up any cards you don't use, and maintain the lower the limits on them.

  4. Pay your bills on time

    Any payment later than 30 days is bad for your credit.

  5. Diversify your debt

    Don't have all of your debt in one type. For example, it's better to have $10,000 spread out among credit card debt, student loan debt, a car loan, and a mortgage, than it is to have the entire amount in credit card debt.

  6. Only charge what you can afford to pay off each month


  7. Monitor your credit score

    Get the free reports 3 times a year at freecreditreport.com

  8. Dispute any wrongful claims you find on your credit report


  9. If you're unsure about specific lifestyle changes needed to improve your credit, check out Fresh Start

  10. Be aware of your limits

    Monitor your spending closely so you don't charge more than half your card limits

Posted by NE TEXAS REALTY GROUP on May 31st, 2016 2:19 PM

The VA Loan Advantage

                                      

The VA Loan program is the most powerful home loan program on the market for many veterans, service members and military families. These flexible, government-backed loans come with significant benefits that open the doors of homeownership to veterans who might otherwise struggle to obtain financing.

VA loans require no down payment or private mortgage insurance. They feature competitive rates and terms and allow qualified borrowers to purchase a home with little to no money out of pocket.

The increasing popularity has stemmed from the loan program's signature benefits, which include:

1. No Down Payment

Saving money and building credit can be difficult for service members who are constantly on the move. With the VA Loan, qualified borrowers can finance 100 percent of the home's value without putting down a dime. Take a look at the chart below to see how much you can save through the no-money-down benefit of the VA Loan.

VA Loan Savings at Closing:

Loan Amount0% Down5% Down10% Down20% Down
$150,000$0$7,500$15,000$30,000
$250,000$0$12,500$25,000$50,000
$350,000$0$17,500$35,000$70,000
$450,000$0$22,500$45,000$90,000

2. No Private Mortgage Insurance

Many conventional lenders require borrowers to pay private monthly mortgage insurance unless they're able to put down at least 20 percent, which is a tough task for many veterans. Private mortgage insurance (PMI) is an insurance that protects lenders in case of a borrower default.

With a VA Loan, however, there is no PMI. This is because the federal government backs all VA Loans and assumes the risk on behalf of the borrower that is typically covered by the PMI.

This VA Loan advantage allows you to build more and more equity in your house, effectively saving you thousands of dollars over the life of your mortgage.

PMI Savings per Month:

Loan AmountMonthly Savings
$150,000Save $115/mo
$250,000Save $191/mo
$350,000Save $268/mo
$450,000Save $345/mo

3. Competitive Interest Rates

Interest rates on home loans are based on risk assumed by the bank to finance the loan. Because the VA backs each VA Loan with a guaranty, financial institutions carry less risk and can offer interest rates that are typically 0.5 to 1 percent lower than conventional interest rates.

Pair that lower interest rate with the ability to purchase a home with no money down and no private mortgage insurance and the savings start adding up significantly.

Lower Interest = More Savings:

Loan Amount$150k$250k$350k$450k
Savings from a 0.5% reduction in interest$14,760$24,480$34,200$43,920
Savings from a 1% reduction in interest$28,800$48,240$67,320$86,400

(Assumes 10% down on loan; see additional notes at bottom of page)

Additional Benefits

Basic Allowance for Housing

Basic Allowance for Housing (BAH) is a significant benefit for qualified active military members. Lenders can count your Basic Allowance for Housing as effective income, which means you can use BAH to pay some or all of your monthly mortgage costs.

BAH varies based on your pay grade, your geographic location and your number of dependents. Learn more about Basic Allowance for Housing.

No Pre-Payment Penalty

With many different types of loans, paying off a home loan before it matures results in a pre-payment penalty. This is because lenders miss out on additional opportunities to collect interest payments. The pre-payment penalty is a way for financial institutions to recoup some of that money.

The VA Loan allows borrowers to pay off their home loan at any point without having to worry about a pre-payment penalty. With the absence of a pre-payment penalty, borrowers are free to consider future home purchases and refinancing options.

Posted by NE TEXAS REALTY GROUP on May 3rd, 2016 10:52 AM

Documents the mortgage lender will want from you

Couple with a baby on lap, working on paperwork © Monkey Business - Fotolia.com

Mortgage lenders require paperwork that verifies every facet of your financial life: income, debts, assets and more.

The lender will request the following documents, so gather them before you apply for a mortgage.

Checklist

  • W-2 forms from the previous two years, if you collect a paycheck.
  • Profit and loss statements or 1099 forms, if you own a business.
  • Recent paycheck stubs.
  • Most recent federal tax return, and possibly the last two tax returns.
  • A complete list of your debts, such as credit cards, student loans, car loans and child support payments, along with minimum monthly payments and balances.
  • List of assets, including bank statements, mutual fund statements, real estate and automobile titles, brokerage statements and records of other investments or assets.
  • Canceled checks for your rent or mortgage payments.

About the W-2s

Guidelines typically require the most recent Form W-2 wage and tax statement, but some borrowers are asked for two years of W-2s.

"If your loan hasn't closed by the time that new W-2s should be received by the employees, then (the lender) may ask for that, certainly," says Julie Miller, a residential mortgage planner for Broadview Mortgage Corp. in Tustin, California.

About the profit statement

Self-employed borrowers may have to submit a current-year profit and loss statement, especially if the year is more than half over or they haven't filed their prior year's tax return.

During the housing boom, many self-employed borrowers got loans with little or no income documentation. Those loans are rare now.

About paycheck stubs

Loan guidelines typically specify one month of verified income. You can prove this with paycheck stubs. Employees who are paid electronically may be able to access a corporate website to print out paycheck stubs.

 

About tax returns

You will be expected to provide tax returns, including all the pages and schedules. The returns will be scrutinized for unreimbursed employee business expenses, self-employment business losses and signs of loan fraud, such as reported income that doesn't match your W-2s.

You'll be required to sign IRS Form 4506-T, which allows the lender to get a transcript of the tax return from the IRS. It's not a bluff: The lender will get the transcript of your tax return straight from the IRS and compare it with the copy of the return that you gave to the lender.

Ordering your tax transcript "has become an industry standard as fraud prevention," says Brad Blackwell, executive vice president and portfolio business manager for Wells Fargo Home Mortgage.

About the list of debts

All the above documents (W-2s, paycheck stubs, tax returns) tell the lender how much you earn. The list of debts tells the lender how much you owe each month. The lender then calculates your debt-to-income ratio, which is key to the loan decision.

Debt-to-income ratio

Percentage of monthly income that is spent on debt payments, including mortgages, student loans, auto loans, minimum credit card payments and child support.

Debt payments / income

Example: Jessie and Pat together earn $5,000 a month. Their total debt payments are $2,000 a month. Their debt-to-income ratio is 40 percent ($2,000 divided by $5,000 = 0.4).

About the list of assets

The lender will want current bank statements, and possibly previous bank statements, too. These documents will be scrutinized to verify that you're telling the truth about the source of your down payment money. If you saved up for your down payment, without gifts from family, your bank records will verify that.

The lender will want to know your other assets, too. The lender wants evidence that you will have enough savings and investments to weather unexpected expenses after you have paid for the down payment and closing costs.

About canceled rent checks

Often, renters will be asked to supply 12 months of canceled rent checks and bank statements showing that the rent was paid on time. Renters without that documentation can provide the landlord's name and contact information for payment verification.

For current homeowners, the lender might ask for canceled checks and bank statements showing that the mortgage was paid on time. Any late payments are likely to show up on the credit report, too.

Speaking of the credit report

The lender will check your credit reports. Months or weeks before applying for a mortgage, check your own credit reports. Correct any errors, such as:

  • Accounts listed on your report that don't belong to you. Often this is mistaken identity; sometimes it's a sign that you're a victim of fraud.
  • Notations that say an account is open, when you have paid it off and closed it.
  • Incorrect details regarding credit limits, amounts owed, account opening dates.

Other documents you might have to provide

  • Home sale contract, including the purchase price.
  • Proof that a gift isn't a loan.

If you receive a cash gift or grant toward your down payment, you'll have to provide a letter from the giver that declares that the gift isn't a loan. The lender might even want a canceled check and the giver's bank statement.

"It's not that big a deal, except that Mom and Dad don't like to give (their kids) a copy of their bank statement, especially if there is a lot of money in the account," says Joe Metzler, who heads Mortgages Unlimited in St. Paul, Minnesota.

  • A lease agreement, if you're renting out your former home.
  • Proof of rental property income.
  • If your income includes rents from investment property, it needs to show up on your tax return. Canceled rent checks and bank statements showing those deposits might be OK if the property was purchased in the current calendar year.
  • Proof of a child's age if child support is counted as income.
  • Bankruptcy discharge papers.
  • A copy of a divorce decree might be requested in some cases.

Loan documentation tips

When asked for documents, provide them promptly. Never cross out, white out or alter any information on a document. "If you white out anything, it's not a valid document for our purposes," Miller says.

Always provide every page of every document -- even the pages that say "This page is blank." "They want that, too," says Peter Ogilvie, president of First Residential Mortgage Corp. in Santa Cruz, California. "If it says 'page one of seven,' they want to see all seven pages."

Finally, remain ready to supply updated documents. "Documents expire after 60 days," Blackwell says. "So if homebuyers take a long time in their house-hunting effort, we won't need the whole thing again, but they will have to bring the most current paycheck and that type of thing."




Posted by NE TEXAS REALTY GROUP on April 4th, 2016 2:52 PM
Things Not to do Before Closing Escrow

                                   

You're about to buy a home, and are now "in escrow," the homestretch of the home-sale process. During this period, you as the buyer will provide the needed funds for the home (most likely from your lender and with your down payment), the owner will transfer ownership of the property and the sale will be finalized.

Which means that if everything goes right -- all contingencies are met, both the seller and the buyer meet their contractual obligations and your financing to purchase the home is in place -- the home you have been aiming to buy will soon be yours.

But even though closing day is just around the corner, you're not out of the woods yet. There are several missteps a home buyer can take that will put getting a loan, and finalizing the transaction, at risk. Read on to avoid these goofs:

  1. Leaving town or falling off the planet

    Going on vacation or becoming hard to reach while in escrow is not a good idea, especially if your lender needs to get in touch with you to process your loan. Any glitches in that process can push back the closing date for your home. For the same reason, it's not a good idea to change your cell-phone number right now. It's best that you keep in touch with all necessary people while you are working to close on the property.

  2. Changing jobs

    When you're looking to close escrow and take possession of a home, you don't want to make your lender uneasy. Changing jobs (or going solo/self-employed) during this time period could certainly make a lender queasy and lead that lender to question whether you'll be able to afford that home. Lenders prefer a steady and consistent job history. If you make a job switch just before closing on a home, it could put everything on hold while your lender re-evaluates your financial position.

  3. Being a big spender

    You're about to get a new house, so why not whip out your credit cards and buy a new washer/dryer, dishwasher and refrigerator...or maybe, take out a loan for a new car for your new driveway?

    Because these big purchases (and taking on more debt) will throw off what's called your "debt to income ratio" (which measures how much of your monthly income goes toward debt obligations), a ratio lenders consider when evaluating a loan application. You don't want to end up buying items for a home you don't have -- one that you lost because you nixed your chances of securing that mortgage before it went through.

    You might even run into trouble if you pay for these items with cash -- lenders look at how much cash reserves you have when approving a mortgage. And don't think you're off the hook if you lease a car instead of purchasing one -- leasing a new car at this time could jeopardize your standing with your lender as well.

    Instead, try to keep the balances on your credit cards low and don't take on new debt (this includes co-signing on a loan) until after you close on your home.

  4. Paying bills late

    If you're about to close on your home, stay current on your bills -- you don't want to wreck your credit score just before your loan goes through. Any changes to your credit status could affect the likelihood of closing on your new home, so you want to keep your credit good -- at least until you close on your home.

  5. Opening/closing new credit card accounts

    Opening up new credit cards or closing old ones just before closing on your new home could negatively affect your credit status, so again, wait until making such moves until your mortgage is secure.

  6. Moving big amounts of money

    Before that home is definitely yours, don't transfer large amounts into your checking or savings accounts -- check with your mortgage company before doing so. If they see large amounts of money moving around, they may wonder why and raise the red flag. (E.g., they may think you've secured another loan and have more debt obligations than you did when initially applying for the loan.) Again, you don't want anything to delay or hold up your closing.


Posted by NE TEXAS REALTY GROUP on March 30th, 2016 12:17 PM
                      Need a Manufactured Home Lender?
                                   

Have you been told by your lender that they DO NOT make loans on manufactured homes? This has been an issue that we hear from a lot of clients. Look no further for a lender. 
Berkshire Lending is dedicated to providing you with the best
loan based on your mortgage needs, this includes
Manufactured Homes

FHA 3.5% Down / VA 100% Financing
- Minimum 580 Credit Score (Doublewides)
- Single-wide homes (620 credit score)
- Must be on a permanent foundation
- Home constructed after 06/15/1976
- Owner Occupied only
- No acreage limitation if common for the area
- Be classified as Real Estate
- Home can not have been moved

Conventional 5% / 2nd Home 10% Down
-Minimum 620 Credit Score
-No Singlewide homes
-Owner Occupied / 2nd Homes
-Must be on a permanent foundation
Note: Guidelines subject to change

CONTACT OUR PREFERRED MANUFACTURED HOME LENDER:
Pat Jackson
Sr Loan Officer
972-529-8306
Pat_Jackson@prodigy.net
berkshirelending.com
Berkshire Lending
660 N Central Expressway,
Suite 102
Plano, TX 75074
Nmls 284754
Need a Manufactured
Home Lender?
Call Now! (972) 529-8306
https://www.vlender.com/p/patjackson/
Posted by NE TEXAS REALTY GROUP on February 24th, 2016 11:29 AM



17 Frequently Asked Questions on FHA Loans

Below are answers to the most common questions about home loans backed by the Federal Housing Administration, also referred to as FHA Loans.

1. What are Federal Housing Administration Home Loans?

They are mortgages best suited for borrowers with steady income, but without 20-percent down payments, including first-time buyers, those trying to conserve cash, early-career borrowers, or those with adverse credit history.

2. Do I get my loan directly from FHA?

No. The FHA guarantees your loan but doesn’t lend money. An FHA-approved lender approves and funds your loan, and the FHA guarantees the loan for the lender.

3. Do FHA loans benefit lenders or borrowers?

Both. If you miss payments due to short-term hardship, the FHA can help (ask your FHA lender how). If you eventually go into foreclosure, the FHA can cover lender losses. Because of this reduced risk, lenders can offer very attractive FHA rates and down payments.

4. What’s the catch? How can the FHA guarantee these loans?

All FHA borrowers pay Mortgage Insurance Premiums (MIP). Currently (as of January 2015), FHA loans have 1.75-percent upfront MIP and 0.45-percent to 1.05-percent monthly mortgage insurance. The monthly percentages change based on loan amount, down payment, and whether your loan term is greater than or less than 15 years. The FHA’s MIP fund is used to help borrowers and lenders.

5. Are MIP fees permanent?

The duration of monthly MIP varies depending on loan amount, down payment, loan term greater than or less than 15 years, and when you put your loan in place.

You can also eliminate monthly MIP if you gain enough equity in your home to eventually refinance into a non-FHA mortgage (ask your lender for details). The upfront MIP can be financed, paid in cash, or covered by a seller credit. It can be refunded on a prorated basis if you refinance into a new FHA loan within 36 months.

6. What kinds of FHA loans are available?

The most common FHA terms are 30-year and 15-year fixed, but there are also adjustable rate options. These loans have no prepayment penalties and are assumable by any qualified future buyer of the property.

7. How do FHA rates compare to conventional rates?

FHA rates are the same and often lower than Conventional Conforming loans. Your lender can do rate comparisons based on your profile.

8. Can I buy an investment property or second home with an FHA loan?

No. FHA loans are for owner-occupied property only. You must move into the property within 60 days of closing a purchase, and must occupy the property for at least one year. After that, you can change how you use the property.

9. What are the basic qualifying rules for FHA loans?

You can have a credit score as low as 580. Your total monthly housing obligation (mortgage payment, taxes, HOA/insurance, mortgage insurance) plus all other debt (credit cards, student loans, car loans, etc.) shouldn’t be more than 43 percent of your income, but your lender can advise on any flexibility they might have on this “debt-to-income” ratio.

10. Do I need money left over after I close?

There are no reserve requirements for FHA loans, though you should strongly consider your reserves in relation to your monthly obligation and income.

11. Are gift funds allowed?

Yes. Gift funds for some or all of cash-to-close are allowed from family members or — in select cases — friends that can be proven as long-term relationships. The gift donor will be subject to federal gift tax rules.

12. Are co-signers allowed?

Yes. Co-signers are also allowed, and the co-signer doesn’t have to live in the property. Your profile is combined with their profile to qualify. The full loan amount and payment will show up on the co-signer’s credit report.

13. Are seller credits allowed?

Yes. A seller can credit up to 6 percent of the sale price toward cash-to-close (which includes but cannot exceed: closing costs, prepaid items, and mortgage insurance).

14. Are there special FHA qualifications for single family homes?

Not really. Single family home approvals for FHA loans are similar to conventional loans. If the purchase contract or appraisal calls for pest work or deferred maintenance, this work will need to be cured prior to the loan funding.

15. Are there special FHA qualifications for condos?

Yes. A condo project must be approved by your lender or by HUD (FHA’s regulator) prior to any unit in the condo project being eligible for FHA financing. They review all the condo legal documentation, budget, unit mix (residential versus commercial), occupancy mix (owner-occupied versus rental ratio), and a number of other factors. Ask your lender if a condo project you like is approved already. If not, these approvals can take weeks, so plan accordingly with your lender and your real estate agent.

16. Are FHA loans relevant for higher-priced markets?

Yes. The national FHA loan limit is $417,000, but limits go up to $625,500 in high-priced markets. With a 3.5-percent down payment in an FHA-designated high-priced market, you could buy a home priced up to $648,000. And you could get up to a $695,000 price with a 10-percent down payment. It’s easy to look up FHA loan limits for your area.

17. What should I do if I want an FHA loan?

You should find a lender to talk to about FHA loans before looking at properties. Before you write an offer on any specific property, ask your lender to review the property for FHA eligibility. Also make sure your real estate agent and lender know if you’re seeking seller credits before you write your contract.

Posted by NE TEXAS REALTY GROUP on February 22nd, 2016 3:46 PM

Recent Posts:

Archives:

My Favorite Blogs:

Sites That Link to This Blog: