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How to Prepare Your Finances for a Mortgage

March 21, 2018 by admin Leave a Comment

How to Prepare Your Finances for a Mortgage

Preparing to buy a house may be one of the most exciting and scariest moves you’ll make your whole life aside from having kids or getting married. This is a major undertaking but too many people are so afraid of it that they never end up doing it. This is a great step to take in your life, but only if your finances are well prepared. Because we deal a lot with buyers, we want to make sure that all of our buyers are well informed and have done the homework necessary to prepare themselves for a mortgage.

I remember back in 2005 when the subprime mortgage bust was just about to ruin everything and I had a family that was paying $500 a month in rent going up to a $2500 mortgage. I advised against it but at the time they were determined, so determined in fact, they were ready to sell one of their firstborn in order to get the house. I don’t know whatever happened to that family, but I do know that probably was not the best option for them.

Now that we can breathe a little easier and subprime mortgages are not even on the radar anymore, planning for a mortgage does take a little preparation and self-reflection. Here are five simple steps to prepare your finances for a mortgage.

Read More: Get real buying advice from real people

#1. Understand your finances.

You don’t want a full-on analysis of your finances for the first time sitting in front of a lender as they peer over there glasses at you like you’re an idiot. Make sure you understand your finances first before sitting down with a lender. Now, they might be great, but if they’re not, shouldn’t you know that first? Get a copy of your credit history and report from one of the three major companies Trans Union, Experian, and Equifax. (They’re technically all the same but might give you different results).

Go through the report and correct any errors, close up delinquent accounts, or pay off small debts if you can. If you have a credit score over 680, chances are you’ll be able to get a good interest rate. It still will depend on your income and your debts. But, once you have a good handle on your own finances and you understand what others will be looking at when viewing your credit history, you’ll be more prepared to talk with a lender.

How to Prepare Your Finances for a Mortgage

Related: 10 House Hunting and Buying Mistakes to Avoid

#2. Save for a down payment

When you first make an offer on a home you’ll need an earnest money deposit. This is typically 1% to 3% of the asking price of the house. This money is to “hold” the property until it closes and it’s a good-faith gesture that you’re willing to put money down on the house so no one else comes along with a better offer. This earnest money deposit will go toward your down payment so you can consider that when saving for your down payment. The higher the down payment the wider your options will be. You might be able to get better terms, lower interest rates, and lower closing costs. Anywhere from 5% to 20% is a good number to shoot for. Some FHA loans do allow for a 3.5% down payment but you will be sacrificing other benefits.

More: Can I buy a house that’s not for sale?

#3. Find a good lender and shop around.

Even though this is a much bigger purchase than a couch or dining room table, you shouldn’t shop around any less. Ask your bank, credit union, mortgage broker or even your real estate agent about different options when it comes to your lender. Find someone you are comfortable with. Often times larger banks can pass you want from one person to another will small brokerages deal on a more one-on-one basis. This personal touch might be a little bit more expensive but speaking from experience, having one person to go to for all of the lending issues rather than 10 is a benefit.

How to Prepare Your Finances for a Mortgage
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#4. Be realistic about what you can afford.

This gets really exciting but just because your lender says you can afford $500,000 doesn’t mean you need to max out that budget. This is the very most your income can support and if you max that out you may not have money for repairs, replacements or general maintenance of the house. Consider looking at homes 10% under your max budget and it’ll give you a little bit of wiggle room for competing bids or save you money in the long run.

Read More: Is it okay to find a Realtor® at an open house?

#5. Don’t make any major financial moves during this time.

Once you started down the road to homeownership don’t make any sudden moves. Don’t quit your job, don’t apply for any more credit right now, don’t make any large purchases or accept any large amounts of money from people unless it’s a gift for your down payment, in which your lender should know about. Think of it as putting a freeze on all of your finances. Of course, you can still pay your bills and go out to dinner, but don’t make any major moves financially until your home closes.

I’d love to offer more information and suggestions on reputable lenders in the Sunset Beach real estate area. Give us a call today or browse our website for more information, details, and of course all the listings throughout the area.

Filed Under: Buyers Tagged With: finances, first time buyer, lender, mortgage

Lennar Homebuilder to Pay Student Loans?

November 2, 2017 by admin Leave a Comment

Lennar Homebuilder to Pay Student Loans?

Looking for a new home loan that will also pay student loans? America’s homebuilder Lennar is offering a new mortgage option specifically for millennial’s. This alone is designed to make home buying a reality for many millennial’s who may be stuck with so much student loan debt that they can afford a down payment.

Eagle Home Mortgage is a subsidiary of Lennar Homes and when millennial’s specifically use this program, they can direct up to 3% of the purchase price to pay their student loans when they buy a new home from Lennar. You can have your own buyers agent but you have to go with the Eagle Home Mortgage program. This can add up to $13,000 in student loans depending on the sale price of the property. Payments can go toward loans from universities, trade schools, certificate granting programs, and community colleges. It cannot be used for loans that parents have taken out to pay for their child’s education.

So, is this a good idea?

Financial planning experts caution that the plan may be just swapping student debt for mortgage debt. Many experts feel that Lennar should just give a discount on the house rather than roll in student debt on a mortgage loan. However, Lennar states that the 3%, does not include an increase on the home or add to the mortgage loan balance.

According to many millennial’s, they don’t really care, as long as they can get into the real estate market. The millennial age group has an outstanding average student loan balance of about $26,000. This prevents many people from getting into the real estate business and buying homes. If buyers can get into this program which is to 3% down payment, buyers may also be eligible for other programs that can help with closing costs and financial assistance.

Of course, all buyers must meet certain credit and income requirements in order to qualify. The maximum loan amount for this student loan debt mortgage program is $424,100. This covers a wide range of homes in the Sunset Beach and Brunswick County area and covers attached and single-family options around the country from Lennar.

If you’d like more information about this program and the closest Lennar community in our area contact our office today. – 910-612-1931

Filed Under: Buyers Tagged With: home loan, loan, millennials, mortgage, mortgage loan, sunset beach

Going Through Divorce? Consider These Three Mortgage Issues

September 18, 2017 by admin 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.

 

Filed Under: Homeownership Tagged With: buying, credit, divorce, mortgage, refinance

Home Buying: Cash or Mortgage?

February 13, 2017 by admin 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.

Filed Under: Buyers Tagged With: buying with cash, cash offers, finance offers, home buyers, mortgage

Is a Loan Modification My Best Option?

December 19, 2016 by admin 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.

Filed Under: Homeownership Tagged With: modification, mortgage, sell house, short sale

3 Major Mistakes Home Loan Borrowers Make

September 14, 2016 by admin 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

Filed Under: Buyers Tagged With: home buyers, home loan, mortgage

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Zillow – WOIDATRC

"Real estate transactions are usually involved and this was no exception. From our first meeting to the final script on...
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"Real estate transactions are usually involved and this was no exception. From our first meeting to the final script on the purchase contract, Frank and Karen were extraordinary examples of sterling professionalism, care, and concern. Tell me how many buyer brokers would make trips to the potential purchase to check on progress and assure all was in order without being asked. Frank and Karen did. Tell me how many would go the extra mile sans any solicitation to protect the buyers interest during each and every step of a transaction. Frank and Karen did. Tell me how many people have earned your implicit trust for their consistent honesty and integrity. Frank and Karen did. Frank and Karen were expert at developing and maintaining a relationship--a rare talent these days, and more important to us than the actual purchase itself. My wife and I gained more than a new home -- we gained genuine friends. Frank and Karen are consummate buyer brokers and we cannot recommend them highly enough. Frank and Karen, thank you both for the pleasure of having made your acquaintance and for all of your assistance. R & L."
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Steve & Jean DeVito

“The Bakers treated us like family during our whirlwind weekend of looking at houses. Prior to our on-site visit to...
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“The Bakers treated us like family during our whirlwind weekend of looking at houses. Prior to our on-site visit to Sunset Beach they created a portal and populated it with properties that met our ever-evolving criteria. By time we arrived we had a good feel for what we could afford and what was available that met our criteria. The Bakers, especially Karen, were able to make sense of what we thought we were looking for and eventually matched us with a house that we ended up purchasing — Karen called it the “This is it” house and she was right. We are loving our 2nd home and appreciate how painless Karen and Frank made the process. All the paperwork was done seamlessly and quickly and the closing went off without a hitch. The Bakers do not believe in the hard sell — they gave us the knowledge we needed and the guidance we needed to make our dream a reality.”
http://sunsetbeachandbeyond.com/testimonials/steve-jean-devito/

Matt & Amy Carver

Amy and I have bought and sold four properties in the past twelve years. Both of you are the best...
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Amy and I have bought and sold four properties in the past twelve years. Both of you are the best realtors we have ever dealt with. Amy and I both felt we could trust you to look out for our interest. The level of service you provided was outstanding, from taking the trash out, helping the buyer with inspecting the irrigation system, dealing with our tenants, always being there if we needed to ask a question, providing constant updates on the market and always keeping us informed on the sale of our house. I think your next venture should be training other realtors, because both of you have mastered the art of providing excellent service. I will be sure to recommend the Frank and Karen team to anybody looking for a trust worthy, knowledgeable and top performing realtor. It was a pleasure working with both of you.”
http://sunsetbeachandbeyond.com/testimonials/matt-amy-carver/

Ernie & Carol G.

“Karen & Frank Baker are the best. They are very knowledgeable with the area & showed us many homes. When...
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“Karen & Frank Baker are the best. They are very knowledgeable with the area & showed us many homes. When we made up our minds which one we wanted, they got us the best deal on it. We were very satisfided with them. After the purchased was made & we moved in, they were still there to answer any questions or problems that we might of had. Like I said, they are the BEST.”
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Dave & Rose

“Thanks again for all the time you spent with us, As overwhelming as it was, you two made it fun”
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“Thanks again for all the time you spent with us, As overwhelming as it was, you two made it fun”
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  • Should My Agent Advertise My Listing on Social Media?
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