Sunset Beach and Beyond Realty

Home » mortgage

Going Through Divorce? Consider These Three Mortgage Issues

by Leave a Comment

Going Through Divorce? Consider These Three Mortgage Issues

There are many things to consider about your current or desired mortgage when going through a divorce but the main three are probably: credit, income, and equity or down payment. Let’s take a look at why these are the main three things to consider when it comes to mortgages and divorce.

Credit:

How good is your credit? You can be making a ton of money, but if your credit is bad, you won’t be able to get a loan. For this reason, you’re going to want to check your credit score and obtain a credit report. You can do this through your lender or through annualcreditreport.com.

Income:

What’s your income? Do you have enough money coming in to:

A) not only afford the loan, but

B) budget all your household needs such as utilities, maintenance, etc.

When you split one household into two, you really need to consider things from a budgeting perspective as certain expenses overlap.

Equity or Down Payment:

Are you wanting to refinance your current home? Then you need to make sure you have enough equity. Are you wanting to purchase a new or second home? Then, you need to make sure you have a down payment.

[Read More: Great info for buyers from real people]

If you’re hoping to refinance up to the full value of your home or buy a new home with no down payment you need to realize that a lot of those loan programs have gone away. Therefore 

Contact

you really must have enough equity or funds to complete the transaction.

If you have any questions regarding selling a home or buying during a divorce don’t hesitate to give us a call. We can help get you in the right direction.

 

Home Buying: Cash or Mortgage?

by Leave a Comment

Cash it may be king when it comes to real estate but are there times where you might want to get a mortgage instead?Home Buying: Cash or Mortgage?

The real estate industry is quite volatile right now; home prices are up, inventory is down, and rates are slowly creeping upwards. Buyers might be scrambling to find a home, and even then they may be entering a bidding war.

Cash doesn’t always win in a bidding war, though. Terms, dates, and timelines can also drastically affect a seller’s decision on whether or not to accept an offer. A buyer might be offering cash, but if the terms do not fit into the seller’s timeline, a financed offer might be much better.

If you have cash to buy a house, you want to consider all the different costs, interest rates and pros and cons when it comes to the purchase of a home all-cash. It can make it much more attractive to sellers, especially in a competitive market but everything else has to line up for the seller as well.

[Read More: Is it ever okay to overpay for real estate?]

We’ve had buyers that are well financed and put down a hefty down payment and have won one out in a bidding war against all-cash. Again, there are a lot of different factors involved. The financed offer promise to close within 25 days, our buyers had a substantial down payment and earnest money deposit, and there were no contingencies, and they even waived the home inspection. All that is very attractive to the seller, and of course, the seller still gets the full offer price.

Now, if the buyer had come with a financed offer contingent on the sale of another property, a two or three-month closing date, and strict contingencies as to home inspections and other items, a cash offer weaving all of those other details is much more attractive.

A cash offer may also allow the homeowner to sell the house more easily or even at a loss, regardless of market conditions. This is something that the seller should discuss with their listing agent before moving forward on a lowball cash offer. Cash offers can be a lot less than a financed offer but provide better terms that may be more attractive.

Obtaining financing can have significant benefits to a buyer. If they have a lot of cash and could pay outright, they may not want to tie up all that money in a real estate purchase. If you go with a mortgage, you can give yourself some flexibility with the money you do have.

Paying in cash also has tax implications. Mortgage interest payments are tax-deductible, which is very attractive to finance offers. This might be an advantageous way to finance the house due to the reduced tax obligation. It can also protect your money. If you use all cash to buy a house, then all of that liquid cash is wrapped up into a real estate purchase. You may not be able to turn around and sell it whereas if you are financing, someone else’s money is tied up and you can hang onto it a little bit longer before selling.

One thing is for certain if you decide to finance the purchase of the house you want to make sure that you can easily afford the principal payment, interest, homeowners insurance, property taxes and any other fees that may be tacked on to your monthly housing expense such as homeowners association fees or mortgage insurance. Talk to your real estate agent and your lender about the best options for the type of home you want to buy, especially if you have both cash and financing options on the table.

Is a Loan Modification My Best Option?

by Leave a Comment

Is a Loan Modification My Best Option?A loan modification might be a good option for homeowners struggling to pay their mortgage each month but still want to keep the home. Loan modifications typically start out at a fixed rate of interest for the first five years and then convert to an adjustable rate mortgage or the homeowner can refinance. This is really just a temporary fix so that homeowners can get back on their financial feet. If you’ve already started the loan modification process, the first adjustment might be easy to take but then the subsequent adjustments in the monthly payments over time can make the homeowner wish they had chosen a short sale instead.

If you started the process with a loan modification or you’d like to switch to a short sale at this point, lenders are reluctant to offer other options. We always say to contact your lender and communicate but many lenders are simply refusing to offer any other options. Either the person answering the phone doesn’t know or simply doesn’t care; they simply want you to make the modified payments.

This is where you need to speak with a short sale agent. These agents handle numerous homes that either have started off as a short sale or converted from a loan modification. Even though we are not allowed to provide legal advice, we can offer options that might be a better solution. Homeowners may have received a principal reduction, meaning that the lender has forgiven a portion of the loan, especially if the loan remains underwater (where the owner owes more than the home is worth). Once a homeowner has been approved for a loan modification, making the switch to a short sale can be fairly easy, as long as you’re dealing with a reputable and knowledgeable real estate agent. Because the lender has already approved the borrower for a hardship due to the loan modification, the switch should be fairly easy. The homeowner will need a short sale agent in order to list the home, find a buyer and submit the offer before the lender will approve the short sale however, most lenders will be ready to approve a short sale, especially if most of the short sale work has already been done.

Whether you are looking into a loan modification or a short sale, switching from one to the other if you want to sell the home or keep the home can be fairly uncomplicated but it does take the knowledge and reputable resources of a qualified short sale agent and lender that’s willing to work with you. Do you have more questions? Feel free to give me a call at any time and let’s work through this together to find the best option for you.

3 Major Mistakes Home Loan Borrowers Make

by Leave a Comment

When applying for a home loan it can be quite astonishing that someone would loan you this astronomical amount of money but when you’re buying a home, $200,000-$500,000 is the amount of money most people will need to borrow in order to obtain the home. However, once you’ve been preapproved there are mistakes that people make that can lose them the loan. Make sure that once you are preapproved for you sat down and spoken with a lender you don’t make these severe mistakes that could cost you the chance to own a home.

3 Major Mistakes Home Loan Borrowers Make

#1. Overpaying for the house.

So, you are preapproved for $300,000. You find a home that’s priced at $260,000. However, because it’s a hot market you tend to pay a little bit higher in order to get the home. Your real estate agent might suggest an escalation clause, which will increase your offer price to a certain amount in specific increments up to a. This is only used if the seller receives other offers higher than your own. The problem comes when you offer is accepted and yet the appraisal does not match the price. If your offer gets accepted at $290,000 but the home is only appraised at $260,000, there’s $30,000 that, that although you have been approved for, the lender will not support loaning you that much money on a home that is not worth the value. You will need to make up the difference if you’re prepared to finalize the purchase on the house. If not, you may lose the home. Talk to your real estate agent about the best way to negotiate to verify that the home stays within the appraisal. Read more: Is it Ever OK to Overpay for Real Estate?

[Read more:  Questions to Ask When Buying Waterfront Property]

#2. Not understanding your loan commitment.

Prequalification and preapprovals are two different things. Lenders will immediately check your credit history but this does not require any documentation. Prequalification is not necessarily a thing. It is the estimated amount that you might be approved. In order to actually be approved lenders will ask for a variety of legal documentation including pay status, W-2s, bank statements and perhaps tax returns. This will be a more accurate verification process that will almost guarantee you the loan should nothing change between the time you apply for the loan and when the loan closes.

The problem with this is is that many borrowers misunderstand prequalification and pre-approval. Simply estimating how much you can afford is not the actual loan commitment. You want to make sure you understand how much you can afford by a preapproval letter. If you have more questions on the preapproval letter or need to speak to a lender in order to obtain one of these letters contact us today.

[Read more:  Why You’re Losing Out on Every Home You Bid On]

#3. Spending too much money before your loan closes.

If you like many people, you’ve saved for some time to make a down payment and you’ve done your due diligence in paying off credit cards and increasing your credit score, however, once you’ve been approved for the loan and get that preapproval letter one of the worst things to do is to put more on credit. This is not the time to rack up your credit cards, apply for a different loan, or spend large amounts of money. Lenders can run a last-minute credit check the night before closing and if the debt to income ratio is over the required amount, you could be denied your loan.

These are three simple things to be aware of when applying for a mortgage and buying a home. For more tips, browse our website and our blog or contact our office today to get started on the preapproval process or to view any current active listings for sale in Sunset Beach and surrounding areas.

Adapted from Our Home Loan Affiliate Brent Palmer with Palmer Mortgage

MORE:  5 Home Loan Mistakes That Could Cost You

Connect With Us

Recent Posts