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24 06, 2014

The FHA Hawk Program for New Homebuyers is Coming: Here’s How It Affects Your Mortgage Insurance Premiums

The FHA Hawk Program for New Homebuyers is Coming: Here's How It Affects Your Mortgage Insurance PremiumsThe FHA offers many new programs and incentives for new homebuyers to take advantage of so that they can be part of the effort to ease the credit crisis. If you are in the process of shopping for a mortgage prior to shopping for your new home, it can benefit you to learn about programs that you may qualify for that are being created by the Federal Housing Administration and piloted.

One such plan, which has been approved as a four-year pilot program, is referred to as the FHA HAWK Program. Read on to learn how this program works and how it can affect mortgage insurance premiums.

What Is The HAWK Pilot Program?

The FHA HAWK program, which stands for Homeowners Armed With Knowledge, is designed to help first-time homebuyers make educated decisions when borrowing and buying a home. Individuals who are eligible to participate must qualify and meet the definition of first-time home buyer.

They will also be required to complete a housing counseling and education program that is available through HUD where they will learn financial information that can help them make smart home buying decisions.

Some of the topics covered in the educational program include: how to better manage finances, mortgage options, how to evaluate affordability, and understanding your rights and the responsibilities that come with homeownership. Upon completion of the program, the applicant can submit their application for an FHA-insured mortgage and receive specific FHA mortgage insurance pricing incentives that will lower premiums.

What Type of Mortgage Insurance Incentive Will You Receive?

Once you participate in the program, the Federal Housing Administration will give all of the borrowers who qualify for the incentive a mortgage insurance premiums incentive by applying a 50 basis point reduction in the upfront premiums and a 10 point reduction in the annual premium starting at the time the loan originated.

As long as the borrower stays in good standing with their lender, they will receive these incentives and fee reductions for the life of the loan. This brings the upfront premiums down from 1.75 percent to a more manageable 1.25%. Add in the fact that you are saving on annual premiums that range between.45 and 1.55 percent, and you can see how beneficial this program can be over the period of 30 years. Finance experts predict that the average buyer will see a savings of $325 per year, which is a savings of $9800 over a 30 year loan term.

The FHA is piloting this new HAWK program in an effort to reduce delinquency of borrowers who borrow from FHA-insured lenders and to also reduce the costs of loan processing. By offering first-time homebuyers a discount to learn about the market, the FHA is trying to battle the ongoing credit crisis and in the same time service more educated buyers. If you would like to learn more about how you can reduce the mortgage insurance premiums that you pay initially and throughout the life of your loan, contact your trusted mortgage agent and discuss your options when it comes to the HAWK program.

23 06, 2014

What’s Ahead For Mortgage Rates This Week – June 23, 2014

What’s Ahead For Mortgage Rates This Week June 23 2014Last week’s scheduled economic news included the National Association of Home Builders /Wells Fargo Housing Market Index, Housing Starts and Building Permits. The Fed’s Federal Open Market Committee (FOMC) issued its usual statement at the conclusion of its meeting, and Fed Chair Janet Yellen also gave a press conference.

Home Builder Confidence Improves, But Housing Starts Slow

NAHB released its Housing Market Index report, which reached its highest reading in five months. The index moved up from 45 to 49; a reading of 50 indicates that more builders are confident about housing market conditions than those who are not. David Crowe, NAHB chief economist, said that builder confidence is in line with consumer confidence; he noted that consumers are waiting for a stronger economic recovery before buying homes and that builders didn’t want to build more homes than markets would bear.

According to the latest figures from the Department of Commerce, May housing starts fell to 1.00 million from April’s reading of 1.07 million on a seasonally adjusted annual basis, and missed the consensus reading of 1.02 million. Building permits issued in May fell by 6.40 percent to 991,000 permits issued for single and multi-family construction. In recent months, permits for single family homes have fallen, while permits for multi-family units are increasing. This concerns economists as single-family homes generate sales of retail goods including furniture and home improvement supplies, while multi-family housing is often occupied by renters and yields fewer home related purchases.

Warmer weather was expected to add to the pace of housing starts, but this did not occur during May.

Fed Reduces Asset Purchases, Mortgage Rates 

FOMC members reduced the Fed’s monthly asset purchases by $10 billion, for a monthly volume of $35 billion in Treasury securities and MBS. The meeting minutes noted FOMC concerns that inflation has not yet reached the committee’s benchmark of 2.00 percent inflation as a benchmark of economic recovery.

The minutes reflected FOMC’s position that it will maintain the target federal funds rate at between 0.00 and 0.25 percent for a considerable period after the asset purchases under the current quantitative easing program have ended. While analysts previously associated “considerable period” with a time frame of six months, Fed Chair Yellen stated during her press conference that there was no formula for determining the Fed’s actions; she emphasized that the Fed and FOMC would monitor a wide range of economic indicators, economic reports and developments in support of any decisions to change current monetary policy. 

In response to a question about tight credit, Chair Yellen cited banks’ reluctance to lend to all but those with “pristine” credit scores as a factor contributing to slower recovery in the housing sector.

Mortgage Rates, Jobless Claims

Freddie Mac reported lower mortgage rates on Thursday. The reading for a 30-year fixed rate mortgage was 4.17 percent, a decline of three basis points. Discount points were also lower at 0.50 percent. The average rate for a 15-year fixed rate mortgage was lower by one basis point at 3.30 percent; discount points were unchanged at 0.50 percent. The average rate for a 5/1 adjustable rate mortgage fell to 3.00 percent from last week’s reading of 3.05 percent. Discount points were unchanged at 0.40 percent.

New jobless claims were higher than expected at 312,000; analysts had predicted a reading of 310,000 against the prior week’s reading of 318,000 new jobless claims.

No economic reports were released Friday.

What’s Ahead

This week’s economic calendar includes several housing-related reports. Existing home sales, the Case-Shiller Housing Market Index and New Home Sales will be released along with multiple consumer-related reports and weekly updates for mortgage rates and new jobless claims.

20 06, 2014

Dos And Donts Of Buying Distressed Real Estate

How to Build the Ultimate Tree House for Your Children in Just Seven StepsDistressed real estate is real estate in need of serious repairs. These properties are often called “handyman specials.” If you have the skill or the money to complete the repairs, you can often find great deals. Here are some dos and don’ts of buying distressed real estate.

DO Get A Home Inspection

Distressed homes need repairs. Some of these repairs, like broken floor tile, are easy to see. Others, like water damage in the attic, can be easily hidden. The only way to know for sure what you’re buying is to have the property inspected by a professional home inspector.

DO Pay Attention To The Home’s Market Value

You don’t want to buy a home and spend your hard-earned money for repairs only to find out the home is worth less than what you paid for it. Have your agent complete a comparative market analysis so you know what the home is worth.

DO Have An Estimate For Repairs

There’s no point buying a distressed home if you can’t afford the cost of the home and the repairs. Get an estimate from at least three contractors before you buy. Knowing the cost of repairs beforehand will help you make the best decision.

DON’T Think About Potential Profit

You’ve probably heard countless stories about people who bought distressed properties and sold them for outrageous profits. However, the reality is that most distressed homes are sold for a small profit or no profit.

DON’T Buy A Home Just Because The Price Is Low

When you buy distressed homes, you have to consider more than just the asking price. Add together the cost of repairs, insurance, and what you can realistically expect to make from the sale. This will tell you if the home really is a good investment for you.

DON’T Buy If You Don’t Have The Money

No matter how good a deal you find on distressed homes, they aren’t worth it if they will stretch your budget too far. The last thing you want to deal with is damage to your credit score and the risk of foreclosure in the event you can’t pay for the home.

19 06, 2014

FOMC Statement: Quantitative Easing Tapered by $10 Billion

FOMC Statement Quantitative Easing Tapered by 10 BillionThe Federal Open Market Committee (FOMC) determined that current economic conditions warranted another $10 billion reduction in the Fed’s asset purchases.

Citing improvements in economic indicators including labor markets and national unemployment, committee members said that further tapering of its quantitative easing (QE) asset purchases was warranted. The Fed will now purchase a total of $35 billion monthly in treasury securities and mortgage-backed securities.

While continued reductions in the Fed’s asset purchases could contribute to rising mortgage rates, the FOMC statement said that the Fed’s “sizeable and still increasing” holdings of long-term securities is expected to hold down long term interest rates including mortgage rates.

The FOMC statement included its standard caveat that reductions to QE purchases are not on a preset course and that committee members will continue close analysis of financial and economic news and conditions as part of decisions to change the volume of QE asset purchases.

Committee Monitoring Unemployment, Inflation

Unemployment remains “elevated” according to the FOMC statement. Committee members said that they will continue to monitor unemployment readings, but committee members expect that overall improvement in economic conditions will continue to justify the current target rate for federal funds at between 0.00 and 0.25 percent.

The FOMC statement notes that this “highly accommodative” policy will likely remain in effect for a considerable period after the QE asset purchases conclude.

Committee members continue to monitor the inflation rate, which remains below the FOMC target rate of 2.00 percent. Noting that inflation persistently below the Fed’s target rate could hamper economic growth, the FOMC said that it expects inflation to move toward its target rate within the medium term.

FOMC Releases Forecasts for Key Indicators

FOMC released a table of its forecasts for certain economic sectors. Highlights include a projected reading of 6.00 to 6.10 percent for national unemployment for 2014, and the rate of inflation for personal consumer expenses at between 1.50 and 1.70 percent for 2014. According to its projections, the Fed’s target inflation rate of 2.00 percent is likely to be reached in 2015 or 2016.

Fed Chair Yellen Gives Press Conference

A major theme of Fed Chair Janet Yellen’s press conference was that there is no set formula for Fed decisions concerning interest rates, inflation and tapering its volume of asset purchases. She cited geopolitical risks including conflicts in Europe and developing civil crisis in Iraq as examples of influences on U.S. financial markets, energy supplies and prices.

Ms. Yellen said that while consumer spending has increased, the Fed wants to see wage growth exceed inflation so that consumers would see an actual increase in their incomes. She also cited the Fed’s target inflation rate of 2.00 percent as important to continued economic recovery.

A wide range of opinions among FOMC members about federal interest rates was mentioned by Ms. Yellen as an example of overall uncertainty about the economy and developing economic trends. She cautioned investors to be mindful of this uncertainty.

18 06, 2014

Should You Finance The Sale Of Your Home By Yourself?

Should You Owner Finance Your Home For Sale?You’ve decided to put your home up for sale. Now, how are you going to make the most money selling it and get it sold the fastest? Perhaps you should consider providing owner financing, also known as seller financing. 

Why Isn’t The Buyer Getting Bank Financing?

Usually a buyer gets bank financing when buying a home. If the buyer approaches you with a deal that involves you doing the financing, you’ll want to ask why. 

It could be that they can’t afford a big down payment, and can’t be approved for a loan without it. Or, they may not be able to get financing at all, due to no credit or bad credit.

In that case, you’ll want to evaluate if you can afford the risk. Can you make the monthly mortgage payment in the event they default?

If you determine that the deal isn’t too risky, you can finance the home yourself for a greater profit. But, there are some instances when you won’t be able to owner finance your home for sale.

When Can’t I Owner Finance My Home?

You may not know that in order to finance your home yourself, you have to be able to pay off your current mortgage in full prior to making the sale. If you can’t afford to make the full payment, you won’t be able to owner finance the property.

If you already own the house outright, you’ll be able to finance the property. You may decide to owner finance part of the sale price for a higher interest rate. 

This would be an ideal situation for a buyer who can qualify for a bank loan for most of the sale price, but is unable to be approved for a higher loan amount to get the rest.

After a year of making payments to the bank, the buyer may be able to finance the remaining amount, and then you’ll receive a lump sum for that amount. 

What Else Do I Need to Know?

There are a lot of things to take into consideration before deciding if owner financing is right for you. Be sure to do your homework and understand the benefits and risks of owner financing. It is also wise to consult with a real estate lawyer and a professional real estate agent.

Thinking of listing your home for sale and offering owner financing? Let me help you determine if owner financing will benefit you. Call your trusted mortgage professional today.

17 06, 2014

What To Do When Your Real Estate Loan Is Declined

What To Do When Your Real Estate Loan Is Declined There are many reasons why a mortgage loan could be declined. It doesn’t have to be the end of your real estate dreams. Here are a few things to consider if you’ve been turned down for a mortgage.

Loan-To-Value Ratio

The loan-to-value ratio (LTV) is the percentage of the appraised value of the property that you are trying to finance. For example, if you are trying to finance a home that costs $100,000, and want to borrow $75,000, your LTV is seventy-five percent.

Lenders don’t like a high LTV. The higher the ratio, the harder it is to qualify for a mortgage. To reduce the percentage, you can save up a bigger down payment. Some lenders may approve the loan if you buy mortgage insurance, which protects the lender in the case of default, but makes your mortgage payment higher.

Credit To Debt Ratio

Lenders will be less likely to approve your mortgage loan if you have a high credit-to-debt ratio. The ratio is figured by dividing the amount of credit available to you, on a credit card or auto loan, and dividing it by how much you are currently using.

High debt loads will scare away most lenders. Try to keep your debt to under fifty percent of what is available to you. Lenders will appreciate it, and you will be more likely to be approved for a mortgage.

No Credit Or Bad Credit

Few things can derail your mortgage loan approval like credit issues. Having no credit record can be as bad for your approval chances as bad credit. With no record of timely loan payments from anywhere, a lender is unable to determine your likelihood to repay the mortgage. Some lenders will consider other records of payment, like utility bills and rent reports from your landlord.

If you have frequent late charges or collections, you’ll need to work on getting those paid on time, every time. There aren’t many lenders who will approve someone with bad credit, especially in today’s market.

Talk to your loan officer to determine which problem applies to you, and learn the steps to fix it. Then, you can finance the home or condo of your dreams.

If you’re ready to buy a home or condo, I can help. Together, we’ll determine how much you can afford, and I’ll negotiate to get the best price and terms for you. Get in touch with me so I can help you. 

16 06, 2014

What’s Ahead For Mortgage Rates This Week – June 16, 2014

What’s Ahead For Mortgage Rates This Week June 16 2014Last week’s economic news was quiet in the housing sector, but retail sales and employment-related reports provided indications of less consumer spending and reduced consumer confidence.

On Monday, James Bullard, St. Louis Fed President, commented that inflation appears to be rising. Although not a voting member of the Fed’s Open Market Committee (FOMC), inflation has been a topic of concern to the FOMC in recent years. Mr. Bullard had previously noted that inflation was stable.

His remarks set the stage for this week’s FOMC meeting and press conference by Fed Chair Janet Yellen. Analysts expect the Fed to continue tapering its asset purchases as it winds down its quantitative easing program.

Labor related reports were mixed last week. Job openings in April rose to 4.46 million in April; this was the highest reading since September 2007 and exceeded the March reading of 4.17 million job openings in March.

More good news came from the U.S. Labor Department, which 4.71 million hires in April. This was the highest rate of hiring since June 2008 and represented a year-over-year increase of 6.00 percent. At the start of the recession at the end of 2007, about 5 million job openings were reported.

Mortgage Rates, New Jobless Claims Rise

Weekly jobless claims were reported at 317,000 as compared to expectations of 310,000 new jobless claims and the prior week’s reading of 312,000 new jobless claims. The four-week rolling average of new jobless claims rose by 4,750 new claims for a total of 315,250 new jobless claims. The four-week gauge of jobless claims evens out weekly volatility and is viewed by analysts as a better indicator of labor market trends.

Mortgage rates were higher according to Freddie Mac. The average rate for a 30-year fixed rate mortgage rose by six basis points to 4.20 percent; discount points rose from 0.50 to 0.60 percent.

The average rate for a 15-year mortgage rose by eight basis points to 3.32 percent with discount points unchanged at 0.50 percent. The average rate for a 5/1 adjustable rate mortgage rose from last week’s reading of 2.93 percent to 3.05 percent. Discount points were unchanged at 0.40 percent.

The Fed’s quantitative easing program was implemented to control long-term interest rates, including mortgage rates. Gradual tapering of this program is allowing mortgage rates to rise. Other influences include investor concerns over recent decisions made by the European Central Bank.

Consumer sentiment slipped slightly for June according to the University of Michigan Consumer Sentiment Index. June’s reading was 81.20 as compared to an expected reading of 82.80 and May’s reading of 81.50.

What’s Ahead

Next week’s scheduled economic news includes the NAHB Housing Market Index for June and Housing Starts for May. These readings are important indicators for housing supplies, as a lack of builder confidence can translate to fewer housing starts. Housing markets were impacted by high demand for homes against low inventories of available homes during 2013 and into 2014.

Also noteworthy is the FOMC post-meeting statement and Fed Chair Janet Yellen’s press conference. The FOMC sets the Federal Reserve’s monetary policy and is expected to announce further tapering of the Fed’s quantitative easing program. It will be interesting to learn the Fed’s perspective on inflation, which has been stuck below the Fed’s target level of two percent.

Friday’s release of Leading Economic Indicators for May round out this week’s economic reports.

13 06, 2014

What Are The Closing Costs Of Real Estate?

What Are The Closing Costs Of Real EstateYou’ve found the perfect property and a great mortgage loan with the best interest rate you can find. What’s next in the home buying experience? Signing the contracts and paying the closing costs. But what exactly are closing costs?

Here Is A List Of The Most Common Closing Costs:

  • Titling Fees – These include the title search and title insurance, and the associated attorney fees. These costs are usually paid by the seller but can be assigned to the buyer.

  • Recording Fees – The government charges a fee to record the change in ownership of the

    [city] real estate. This can be paid by either the seller or the buyer.

  • Survey Fee – A survey fee can be required by the lender. It is a fee for the survey of the land or lot, and its structures, to determine that it matches the property description.

  • Mortgage Application Fees – Occasionally mortgage application fees are included in the closing costs, but usually are paid prior to closing by the buyer.

  • Appraisal And Inspection Fees – An apriaisal and inspection are required by the lender to ensure that the value of the property is equal to that of the loan, and to make sure there aren’t any underlying problems that detract from the property value. These fees are usually paid by the buyer.

  • Points – Points are equal to one percent of the principal of the loan. These discount points are paid by the buyer to the lender to reduce the final interest rate of the loan.

  • Brokerage Commission – The seller pays the real estate agent the brokerage commision fee for listing, showing the property, and handling the contract negotiations. The commission is usually a percentage of the sale price of the property, and determined in advance by the seller and the real estate agent.

  • Underwriting Fees – The buyer pays underwriting fees to the lender to pay for the costs of determining if the buyer qualifies for the mortgage loan.

  • Property Tax – County property taxes are usually required to be paid for six months in advance at the time of closing. The buyer is responsible for these fees.

13 06, 2014

DIY Or Hire It Done, Renovating Real Estate Investment Properties

DIY Or Hire It Done Renovating Real Estate Investment PropertiesSometimes, when buying – or even thinking about buying real estate for investment purposes, you’re faced with the need to fix up the property. 

The question then arises: Should I fix it up myself or hire it done? Unfortunately, no one can give you the right answer. However, there are a few questions that you can ask yourself to help decide the issue:

1. Do I Have The Time?

Time is an issue that many people forget about, but it should be one of the deciding factors. Some renovations, such as handles, hinges or kitchen hardware can take very little time to do. Others, like retiling a bathroom, can take hours, or even days to accomplish. 

If you don’t have the time to do these things personally, you’ve already answered the question.

2. Do I Have The Money?

Obviously, money is as important a factor as time. Often, if you don’t have the time, you do have the money to hire someone. However, if you have neither the money nor the time, you may need to reassess whether you can really afford the real estate you’re thinking of buying. 

You may want to continue looking to find something that needs fewer repairs or that you can get at a lower price.

3. Do I Have The Know-How?

Granted, there is a lot of do-it-yourself information out on the Internet. However, if you don’t have the necessary knowledge to understand what they’re saying, you’ll either have to research more, or hire someone. 

Being knowledgeable on what you’re doing may not be so important when, say, you’re painting the living room, but it’s incredibly important if you need to rewire a room or want to knock down a wall.

The main key when deciding on what property to buy, what renovations need to be made and whether to do it yourself is simple: Be realistic. Be honest with yourself.

Can you really do this? Can you really afford it? Remember, if the answer is “no,” it could just mean “not right now.”

Don’t be afraid to wait until you have everything in place before picking your investment properties. If you’re careful with your time and money management, you may find yourself able to buy that dream real estate investment property.

12 06, 2014

How To Build The Ultimate Tree House For Your Children In Just Seven Steps

How to Build the Ultimate Tree House for Your Children in Just Seven StepsBuilding a tree house is a time honored tradition for many families. One of the benefits of having a yard is the ability to build a tree fort for your children.

If you’re planning to build a fun fort for your kids, here are seven steps to help you create the ultimate tree house.

The Ultimate Plan For The Perfect Playhouse

The best projects are often the most thought out. Sit down with your children and lay the plans for their tree house. Let them contribute their thoughts and ideas so they feel a part of the planning process.

Although you won’t need an engineering degree to build a quality tree fort, it’s important to calculate all the measurements and specifications of the build.

A Solid Foundation For Your Tree House

Prepare the location for your future tree house by trimming away any precarious branches or boughs on the tree you plan to build on. Ensure that your tree house will be well supported, and reinforce any questionable spots.

If your tree fort is being built from the ground up, make sure you’re working with a level foundation.

Have The Right Tools For The Job

Make sure you have all the tools you’ll need to construct your tree house. Power tools and construction equipment can be borrowed from friends and neighbors or rented from your local hardware store.

When the time comes to gather your building supplies, be creative and consider re-purposed supplies. These materials are less expensive and add character and charm. You can find recycled and salvaged items at various recycled construction supply companies and through online classifieds like Craigslist.

Construct Your Tree House With Confidence

When you’re constructing your tree house, make sure it’s structurally sound. Watch tutorials online – you’d be amazed at the things you can learn from watching YouTube videos!

Make sure to measure twice and cut once. Using the proper cutting tool for each cut will help you achieve cleaner, more precise cuts. Also make sure to obtain any permits that may be required for the project.

A Personalized Theme Encourages Creativity

Choose a theme that relates to your child. If they love fairies, use that as the inspiration for your design. Pirate forts and superhero lairs are perfect places to spark imaginative play and creativity.

Incorporate cannons, cupboards and ropes with pulleys to create a unique and fun space for your children to play.

A Colorful Paint Job Brightens The House

When the walls are up and the building is done, it will be time to choose paint colors. Bright colors are a great way to brighten and liven up an outdoor space.

You could even consider creating a mural. Choose something that fits with the theme. This is something that you and your child can do together, or that you can do on your own as an added surprise.

Perfecting Your Child’s Play Space

Once your tree house is built, it’s time to get it ready for play. Decorate the space with fun decor and functional items. Throw pillows and rugs can add color and personality to a child’s play space. Window coverings can be made from scrap fabric or bed sheets.

Creating a tree fort for your child is a memorable experience and a labor or love. A unique space that sparks imagination and nurtures creativity is a wonderful gift to give a child.

11 06, 2014

4 Tips To Lower Homeowners Insurance For Your Home

4 Tips To Lower Homeowners Insurance For Your HomeWith the prices for everything skyrocketing these days, every penny counts. This includes your homeowner’s insurance costs. If you’re thinking of buying a home and need homeowner’s insurance, here are a few tips on getting quality insurance for a fair price:

Tip #1: Shop Around

Ask family and friends about their homeowner’s insurance. Check the Yellow Pages, the National Association of Insurance Commissioners (NAIC) and the state insurance department. 

Other places to shop for insurance include consumer guides, insurance agents and online insurance quote services. Don’t just look for lower prices, however. You need a fair price for the services you need.

Tip #2: Raise Your Deductible

The deductible is how much you have to pay before the insurance company starts to pay a claim on your home. The higher the deductible, the lower the premiums. If you live in a disaster-prone area, your policy may have a separate deductible for specific types of damages. 

Make sure, when reading the policy, you carefully go over damage-specific information.

Tip #3: Use The Same Insurer

Some companies will take five to fifteen percent off your premium if you buy more than one policy from them. If the insurer offers homeowner’s, auto and liability coverage, you stand a chance of having a lower premium than if they only offer one or the other. 

The key is to make sure that the combined price is lower than if you bought them separately.

Tip #4: Improve Home Security

By installing a sophisticated fire sprinkler system and a fire/burglar alarm that rings the monitoring stations, some companies will cut your premium as much as fifteen or twenty percent. 

For a smoke detector, burglar alarm or deadbolt locks, you can usually get at least a five percent discount. Check with your insurer to make sure that the system you’re installing will lower your premiums, though; the systems aren’t cheap and not all of them qualify for a discount.

Read everything carefully before you sign, to make sure the policy covers your insurance needs without adding on hidden fees. Even a little money saved can go a long way toward making it easier to live within your budget. 

Ready to buy a home? Let me help you find the perfect home and get it at the best terms and price. Call or email your trusted real estate professional.

10 06, 2014

Understanding Your Credit Score And How It Impacts Your Home Ownership Prospects

Understanding Your Credit Score And How It Impacts Your Home Ownership Prospects

Understanding your credit score and how it impacts your home ownership prospects your credit score is an important part of your financial profile. It has a direct impact on your ability to take out loans.

The score itself is a numerical reflection of your credit history. It gives lenders a way to discern your reliability before approving a loan like a mortgage for instance.

Though this is the basic function of a credit score, it can also have a far-reaching influence over other aspects of home ownership.

Mortgage Loan Approval: Will Your Score Make the Cut?

First and foremost, the status of your credit score is a deciding factor in whether or not you are approved for a loan.

Even if you put down a large down payment on your home, a low credit score can still cause the loan to be rejected. For this reason, it’s best to wait until you’ve built up a good credit score before looking to purchase a house.

Mortgage Interest Rates: The Lower The Score The Higher The Rate

High interest rates are another reason to hold off on purchasing a home until you’ve obtained a very good credit score. While applying for a loan with the minimum credit score required might get the loan approved, it also means having to pay higher interest rates.

Shooting for a credit score above the bare minimum before applying for a mortgage will increase the likelihood of receiving a much lower interest rate. A higher credit score demonstrates a credit history of timely payments and the ability to successfully pay off debts, which are key factors in mortgage approvals.

Homeowner’s Insurance Approval And Premium Rates

An insurance broker running a credit check might seem a little out of the ordinary, but in actuality when is comes to home insurance, companies frequently run credit checks on prospective clients. When an insurance company inquires about your credit history, all they receive is your credit score and nothing more.

The nitty-gritty details of your credit history remain private. So, why are insurance companies running credit checks in the first place? Credit scores are an integral part of the scoring system they use to determine premium rates for each client.

Though your credit score might seem irrelevant in determining how likely you are to file an insurance claim, the industry argues that there is a documented connection between those who are more likely to file insurance claims and the lowly state of their credit scores. This trend has led insurance providers to offer higher insurance premiums to those with lower credit scores.

In some cases companies may refuse to insure a client based on a poor credit rating. Credit scores have a profound influence over financial transactions. You ability to make a large purchase like a new home can be severely hindered by a poor credit score.

If you have a low credit score, consider taking some time to repair your credit history before applying for large loans. Correct any lingering errors on your credit report and get into the habit of making consistent, timely bill payments.

Addressing these issues could dramatically improve your credit score in a year’s time, putting you in a much better position to tackle home ownership.

9 06, 2014

What’s Ahead For Mortgage Rates This Week – June 9, 2014

Whats Ahead For Mortgage Rates This Week June 9 2014

Last week’s economic news was mixed. Construction spending grew, but fell below the expected level. CoreLogic reported that April home prices continued to rise, but did so at their slowest growth rate in more than a year. Employment reports for private sector and government jobs indicated fewer jobs, but the national unemployment rate was steady. Here are the details:

Construction Spending, Home Price Growth Slows

Construction spending reported by the Department of Commerce reached $953.5 billion annually, and increased by 0.20 percent month-to-month against expectations of an 0.80 percent increase and the March reading of 0.60 percent growth.

According to CoreLogic, the rate of home price growth slowed to 10.50 percent year-over-year in April as compared to the 11.10 year-over-year rate of increase in April 2013. Home prices increased by 2.10 percent over March; these gains in home prices were the slowest posted in more than a year, but there was good news.

No states posted a drop in home prices, and eight states posted new record highs for home prices.

CoreLogic said that although a short supply of available homes has driven home prices up, price gains lost momentum due to affordability; CoreLogic expects home prices to increase at a slower pace and projects that home price growth will reach a pace of 6.30 percent by April 2015.

Mortgage Rates Mixed

Freddie Mac reported that mortgage rates for fixed rate mortgages rose while the average rate for a 5/1 adjustable rate mortgage fell. The average rate for a 30-year fixed rate mortgage increased by two basis points to 4.14 percent; discount points fell to an average of 0.50 percent. The average rate for a 15-year fixed rate mortgage also increased by two basis points to 3.23 percent; discount points were unchanged at 0.50 percent. Rates for a 5/1 adjustable rate mortgage averaged 2.93 percent, a drop of three basis points. Average discount points rose from 0.30 to 0.40 percent.

Jobs, Unemployment Data Suggest Economic Strength

Labor markets impact consumer decisions to buy homes; several labor-related reports released last week indicated that the economy continued to gain strength as more jobs were added and fewer workers filed jobless claims.

ADP reported that 179,000 private-sector jobs were added in May as compared to 215,000 jobs added in April. The Bureau of Labor Statistics released its Non-farm Payrolls report for May; 217,000 jobs were added as compared to projections of 210,000 jobs added and 288,000 jobs added in April.

New weekly jobless claims were reported at 312,000 as compared to expectations of 311,000 new jobless claims and the previous week’s 304,000 new claims. The four-week rolling average of weekly jobless claims fell by 2250 new claims to 310,250; this was the lowest reading since June 2007, and was 10 percent lower than the reading for the same week in April 2013 and was 17 percent lower than for the same week in 2012.

Another sign of economic growth was reported last week. Continuing jobless claims dropped to a seasonally-adjusted annual rate of 2.60 million for the week ended May 24; this was the lowest reading reported since October 2007.

The national unemployment rate for May matched April’s reading of 6.30 percent, and was lower than projections of 6.40 percent for May. The Federal Open Market Committee of the Federal Reserve (FOMC) has repeatedly cited an unemployment rate of 6.50 percent as a benchmark indication of economic recovery; it appears likely that the Fed may continue its tapering of asset purchases as it winds down its quantitative easing program.

What’s Ahead

This week’s scheduled economic news includes Retail Sales, Retail Sales without vehicle sales, and the Producer Price Index. Freddie Mac mortgage rates and Weekly Jobless Claims will be released Thursday, and the University of Michigan will release its Consumer Sentiment Index on Friday.

6 06, 2014

Which Type Of Pool Is Right For You? We Look At The Best Designs For Your Backyard

Which Type of Pool Is Right for You? We Look at the Best Designs for Your BackyardThe decision to install a pool is generally one that is applauded by at least certain members of the family. Whether you have children or not, however, having a pool at home is certainly something you can enjoy for yourself.

But what if you don’t think your yard is particularly suited to a pool? Don’t rule out the idea just yet; instead, consider some of these different pool designs to suit different sizes and styles of backyards.

Make The Most Of Your Small Backyard

For a relatively small backyard, you should always choose the right pool design that will ensure you make the most of the space.

A particularly good option for a smaller backyard is opting for an above-ground pool and having a custom wood deck built around one side of it. The addition of the the wood deck will offer easy access for the kids to get into the pool, and will also give you a place to sunbathe while watching the kids splash around.

Single-Use, Modern Yard: Fiberglass Pool

For an ultra-modern backyard that is relatively small, and especially for a single-use backyard that is going to be dedicated to your swimming pool, a fiberglass pool might be your best option. Since the pool arrives in one single piece, already fully finished, the installation process is very quick and efficient.

Offered in a variety of different shapes, sizes, and styles, you can surely find a fiberglass pool that fits your single-use yard, and you could even have it ready to use within one week. You’ll find that the smooth surface of a fiberglass pool is appealing. These pools are also easy to maintain as only a few chemicals are required for cleaning.

With this type of pool that you’ll commonly find in vacation homes with modern, polished concrete backyards, you can turn your home into your favorite holiday destination, and much quicker than you might have guessed.

Customizable Concrete Pool For A Large Yard

If you have a large yard and aren’t concerned about using up too much space by having a swimming pool put in, why not opt for the most customizable concrete variety? A concrete pool can be constructed in virtually any shape or size you choose, allowing you to put your best creativity to use.

You can opt for texturized pool surfaces as well as well as plenty of add-ons and built-in features, such as a custom entry or a ledge for sunbathing. Customized concrete pools usually take about 12 weeks to build. You can also opt to have a concrete or tile surface installed around the pool, while still leaving plenty of grass and gardening space in your backyard.

These pools are also a great option for irregular backyards, as they can be customized to fit into virtually any shape, just as long as your yard is large enough.

When it comes to house shopping, you can opt to buy a house that already has a pool. Or if you’d prefer to be more involved in the process, you can simply look for a house with a suitable yard.

5 06, 2014

How Pre-Qualifying Helps You Find the Right Home

How Pre-Qualifying Helps You Find the Right HomeToo often, home buyers are disappointed when they find their dream home only to discover they are not able to get a mortgage to purchase the property. There are methods that potential buyers can use to ensure this does not happen to them. One of these options is to ensure you obtain a pre-qualification from your lender.

It is important to understand the difference between a pre-approval and a pre-qualification. While both are helpful, they do not carry the same weight.

What Are The Differences Between These Options?

A pre-qualification allows a borrower to determine how much money they may be able to borrow. For most borrowers, this allows them to start the house-hunting process with a mortgage amount in mind. Borrowers should understand, while the loan amount can be calculated, changes in interest rate as well as the borrowers credit are not evaluated in this process. In general, the lender will request specific information from the borrower including income and expenses as well as ask about their credit. None of this information is verified by the lender before sending a pre-qualification letter.

On the other hand, a pre-approval requires the borrower to provide a number of documents to the lender, typically the same documents borrowers need to apply for a loan. Oftentimes, this leads borrowers to speculate as to whether a pre-qualification is useful.

Why Pre-Qualification Helps

There are many valid reasons why potential homebuyers should ask about pre-qualifying for their mortgage. Some of these include:

  • Home prices – if a borrower is eligible for a mortgage of $200,000 they will know they will have to seek homes in a specific price range. If a borrower is only able to put down 10 percent, they know the maximum home price they can afford is $220,000.
  • Down payments – in most cases, borrowers who can afford to put down a large down payment will have more options available to them. In some cases, understanding how much mortgage a borrower may qualify for beforehand allows them to save additional money for a down payment.
  • Estimates of dollars needed – another advantage to pre-qualifying is borrowers can get an idea of what additional closing costs they may need to qualify for a mortgage. This can be very helpful for a first time home buyer.

Pre-qualifying for a loan can save a home buyer from being disappointed. There are few things that are more upsetting than finding a home you love only to discover you are not eligible for the loan you need in order to purchase that home.

If you’re contemplating a pre-qualification, call your trusted mortgage professional today for more information.

4 06, 2014

Thinking About Buying An Investment Property? 6 Tips To Ensure You Don’t Get Fleeced

Thinking About Buying an Investment Property? 6 Tips to Ensure You Don't Get FleecedPurchasing an investment property is one of the most important decisions that you’ll ever be a part of. As such, it’s a necessity to make your decisions with only the most careful of consideration.

Here are the six tips that you need to heed in order to ensure that you don’t get fleeced.

Find The Right Property At The Right Price

Yes, this is a whole lot easier said than done. However, it’s not impossible. All it takes is some patience and research.

You have to determine what everything in your area is selling for in order to be able to spot a bargain! Further, you need to know that various property classes will outperform each other. For example, land and home units will appreciate differently.

Figure Out The Cash Flow

It’s always a good idea that you know how to maintain your mortgage repayment obligations over the long term. It’s recommended that you analyze the cost of servicing any loan only on an after-tax basis. By taking this approach, you have the power to calculate and put the cost into actual terms that make sense for you.

Look For A Good Property Manager

Finding a good property manager who is a professional in his or her field is vital. Your property manager’s job will be to make certain that everything is in order between you and any of your tenants. A good property manager can extract the best possible value for you from your property and help to keep your tenants in line as well.

Choose The Appropriate Type Of Mortgage

There are many options available for financing the investment property that you choose, so it’s best to get sound advice. Options such as a variable rate loan and a fixed rate loan are both popular choices, but your specific circumstances will dictate what’s most suitable for you. Consider that variable rates often end up being cheaper over time, yet fixed rates at the right time are ideal.

Take Equity From Another Property

Leverage the equity from your residence or another investment property. Doing this is actually an ideal way to purchase your investment property. Equity can be calculated by way of calculating any difference between what you owe on your mortgage and the overall value of your property.

Comprehend Both The Market And Dynamics When Buying

It’s best to analyze what other properties are available in the area when you’re looking at an investment property. It’s very advisable to actually talk to both local people and real estate agents in the neighborhood. They can give you hints on small, yet vital, things like which side of a street is considered more desirable.

These are the six tips to help make sure that you don’t ever get fleeced when buying an investment property. They can make the difference between purchasing a great property that has a high return on investment and purchasing a lemon.

Call your trusted mortgage professional today for some answers and more information.

3 06, 2014

Small Business Owner? Here’s What You Need To Know About Mortgages

Small Business Owner? Here’s What You Need To Know About MortgagesIf you are an entrepreneur or a small business owner, you probably know that there are a lot of advantages to this lifestyle – the freedom, the exciting challenges, the opportunities and the ability to make a living doing what you love.

However, you also know that being a small business owner can make some things more challenging – such as apply for a mortgage for your home.

Many small business owners find it tough to get approved for a mortgage, because their income can be erratic and the banks want to see proof of consistent earnings over a significant period of time.

However, it is possible to qualify for a loan as a small business owner. Here are some important things that you need to know about the process:

Ask Your Mortgage Lender What They Look For

If you ask your mortgage lender, they will probably offer you a checklist for putting together all the information needed in your mortgage package. It should have instructions on what specific documents you need to include if you are self-employed.

Filling Out The Right Forms

When applying for the loan, you will need to fill out IRS Form 4506-T, which is a Request for Transcript of Tax Return. This is basically a form that will allow the lender to look at your tax returns from the IRS, which shows proof of your earnings.

You are not able to show lenders copies of your tax returns. They must get them directly from the IRS themselves.

Submitting A Profit And Loss Statement

It can also help to ask your accountant to prepare a Profit and Loss Statement, which highlights the amount of money that you have brought in compared to the expenses of setting up your business.

If you present several of these on a quarterly basis, it will prove to the bank that your business is growing and is profitable enough to cover your mortgage.

The important thing to remember is not to give up on the idea of owning a home just because you are a small business owner. Ask your accountant for help and take the time to submit the right proof of earnings, so that you get the mortgage for your dream home.

2 06, 2014

What’s Ahead For Mortgage Rates This Week – June 2, 2014

What's Ahead For Mortgage Rates This Week – June 1, 2014Last week’s economic news was fairly quiet due to the Memorial Day holiday on Monday and no scheduled news released on Wednesday.

Home Prices Post Modest Gains, But Growth Rate of Home Prices Slows

Tuesday’s release of the S&P Case-Shiller Home Price Index for March showed that home prices are edging up, but at a slower pace than last year. Home prices increased by 12.40 percent year-over-year as compared to February’s reading of 12.90 percent year-over-year.

Analysts expected prices to fall as construction picks up and more homes are listed for sale. Lower demand due to strict mortgage lending standards and high home prices continued to keep many moderate-income and first-time home buyers on the sidelines.

FHFA Reports Home Prices Increased By Over 6 Percent

FHFA, the agency that oversees Fannie Mae and Freddie Mac also released its home price index for properties connected with Fannie Mae or Freddie Mac owned or guaranteed loans. As of March, FHFA reported that home prices increased by 6.50 percent year-over-year as compared to February’s year-over-year reading of 6.90 percent.

Consumer confidence rose by 1.30 percent for May with a reading of 83.0, which matched expectations.

Last Thursday’s news included the weekly Jobless Claims report, which showed 22,000 fewer jobless claims than expected with a reading of 300,000 new jobless claims reported. Thursday’s reading was also lower than the prior reporting period’s reading of 327,000 new jobless claims filed.

The four-week rolling average of jobless claims also showed improvement with 11,250 fewer claims filed and an average reading of 311,500 new weekly jobless claims filed. This was the lowest number of jobless claims filed since August 2007. Analysts look to the four-week rolling average as more accurate than the weekly readings, which can be volatile.

U.S. jobs have increased by 200,000 jobs per month over the last three months reported.

Pending Home Sales Up for Second Consecutive Month

Pending home sales in April rose by 0.40 percent from the March reading of 97.4 to 97.8. The April reading was the highest for pending home sales since November. Pending home sales provide an estimate of future home sales.

Lower mortgage rates likely supported expanded home sales. Freddie Mac reported that the average rate for a 30-year fixed rate mortgage was 4.12 percent, a drop of two basis points from last week. The rate for a 15-year fixed rate mortgage fell by four basis points to 3.21 percent.

The average rate for a 5/1 adjustable rate mortgage was unchanged at 2.96 percent. Discount points were unchanged at 0.60 for a 30-year fixed rate mortgage and 0.50 percent for a 15 year mortgage. Discount points dropped from 0.40 to 0.30 percent for a 5/1 adjustable rate mortgage.

What’s Ahead

In addition to construction spending for April, this week’s economic news includes several reports that can provide insight about employment and consumer spending.

News events include Motor Vehicle Sales for May, The Fed’s Beige Book report, and Thursday’s usual release of Freddie Mac’s average mortgage rates and weekly Jobless Claims. Non-farm Payrolls and the national unemployment rate for May are also scheduled for release

30 05, 2014

The Green Thumb: Four Easy Ways To Get More From Your Home Garden

The Green Thumb: Four Easy Ways to Get More From Your Home GardenGrowing a home garden creates beauty, oxygen and even food for our families to enjoy. If you’re looking to get more from your home garden, here are four easy ways to improve a green thumb.

A Good Foundation For Your Garden

Good soil is the foundation of a healthy garden. By using quality soil, you can give your garden plants the best start possible. Adding a variety of organic matter to soil will give plants a happy home to grow in.

Add two to three inches of organic matter to your garden bed at the beginning of each season. Compost, dried leaves, grass clipping and dry manure are all good organic materials to use in your garden.

Manures provides nitrogen, which is a great contributor to soil aeration and composting efforts. Being so far along in the decomposing process, the nutrients in manure are readily available for plants.

Fresh manure, however, is more likely to leach out of the soil into groundwater and streams (where the nutrients it provides can become pollutants).

Design Fundamentals To Achieve Harmony And Flow

Although landscaping your home garden is a matter of personal taste and preference, there are some fundamental principles for creating a good garden.

Balance and proportion establish the basic structure of a garden. Order is obtained through symmetry, repetition of plants, and colors or thoughtful contrast. This will create a garden space that is both balanced and proportioned.

Harmony and unity is achieved when different aspects of your garden work together as a whole. Strong focal points and a limited color palette can help with the overall look of your garden.

Prevent the eye from making sudden stops with good flow and transition in your garden. Gradual changes in height and color create the illusion of a larger space, and will make for a full and finished look in your garden.

Variety Is Important And Maintenance A Must

Have a good combination in your garden of annuals, perennials, shrubs, trees and food producing plants. Plants that require little maintenance and come back each year will take some of the pressure off when it comes to seasonal changes and garden preparation.

With more time to focus on bedding plants and vegetable gardens, you’ll yield a bigger reward for your gardening efforts. Water features and other structural focal points work in much the same way; they provide your outdoor space with added beauty and appeal that is easy to maintain throughout the year.

Don’t Be Bothered By Pests And Bugs

Although people have differing opinions on pests, at home a greener garden is always a healthier garden. Harsh pest control products can hurt wildlife and pollute groundwater.

You may be solving one problem, but using chemical pesticides contributes to another. There are many ways keep pests under control without chemical products.

With so many easy to make homemade pesticides to discover, gardeners can ditch the chemical alternative without sacrificing quality. There are also plants such as marigolds that can be incorporated into your garden that deter pests.

A garden is a labor of love that creates a welcoming outdoor space that your family can enjoy. Call your local mortgage professional for more information on creating or finding your perfect home garden.

29 05, 2014

5 Tips To Protect Yourself When Buying Newly Constructed Real Estate

5 Tips To Protect Yourself When Buying Newly Constructed Real EstateBuying newly constructed real estate isn’t much different from buying an “already used” home. What variances there are, however, can make all the difference between buying a diamond or a lemon. 

Here are a few tips to keep in mind when buying new construction:

Tip #1: Don’t Use The Builder’s Sales Agent – Hire Your Own

If they’re the builder’s agent, they’re being paid to represent the builder, no matter what they tell you.  Your own real estate agent, who is representing you, is required to tell you the negatives as well as the positives.  The builder’s agent doesn’t have to tell you the drawbacks of the transaction.

Tip #2: Find Your Own Lending Agency

Again, if you go through the builder, the lending agency may offer you a deal that isn’t in your best interest.  In addition, the builder may actually own the lending company, and will have full information on your personal progress. 

Your real estate agent can refer you to a reputable lender, if you don’t already have one of your own.

Tip #3: Talk To A Real Estate Agent Or Lawyer

Although standard agreements are made to keep everyone out of court, they aren’t necessarily in your best interests. Ask about cancellation rights and make sure you understand both your liability and your commitments.  Also, check your contract to make sure it doesn’t contain warnings about health issues.

Tip #4: Decide What Options Or Upgrades You Want

Remember that the profit margin for many builders is highest in upgrades.  Find out if your lender allows the options and upgrades you’ve chosen to be added to the loan. If your lender doesn’t allow this, the cost of the upgrades will come out of your pocket in cash. 

Tip #5: Research The Builder

It’s amazing how many people think a builder is good, simply because they can build a house. Unless you’re a licensed home inspector, the chance of you catching a cut corner or shoddy building practices is slim to none. 

Check out the neighbors’ homes and talk to them. Are the homes a consistent size or are they shrinking in size?  Do the neighbors have consistent complaints about the quality of their homes?  Also, check public records for lawsuits.

Owning newly constructed real estate and knowing that you’re the first person to live in the home can be a wonderful, exciting experience.  Make sure that you protect yourself so you can enjoy it!

Thinking of buying newly constructed real estate? Talk with me before you start shopping.  If you visit a builder prior to working with me, I won’t be able to legally represent you with that builder. 

To find out more about how I can help you save money and get the best terms when buying newly constructed real estate, call or email your trusted mortgage professional for more information.