The Breakdown Of Buying Your First Home

Buying your first home can be a daunting experience because there are some steps involved that you are not accustomed to. You are probably concerned about affording a home. However, you can be assured by the fact that many first time home buyers have completed the process successfully and without difficulties. Success comes with good planning and preparation. We have put together a breakdown of buying your first home which includes the steps in the entire process from the beginning through to closing. While these steps are easy to follow, you may feel more comfortable talking with a mortgage broker before you start. A broker is an independent source of help who works for you and not the lenders.

Review Your Finances And Then Get Pre-Approved For A Mortgage

There are several reasons for this being your first step. Real estate agents will want to know your pre-approved amount so they can find homes that you will be able to buy. Another reason is the assurance you will have from knowing that an expert has determined that you can afford a specific amount of your income for a house payment. You will also learn how much money you will need to put down. While you may not be able to get an exact number for the closing costs, you will get a good idea about what they will be. It is important that you plan for closing costs which are due at the time you sign the mortgage documents at the closing.

Your First Mortgage

As a first time home buyer, you may find that an FHA mortgage will work best with your financial situation. The credit requirements are more lenient and the down payment will be lower. Your pre-approval will stipulate the type of mortgage you have qualified for.

The Earnest Money Due When You Can Make An Offer On A Property

Earnest money is paid to a third party to hold until closing at which time it is deducted from your down payment amount. The purpose for requiring an earnest money deposit is to assure the seller that you want to buy their home. Otherwise, the seller could find their property off of the market for a long time without it being sold. If there is a reason why the sale should not be completed, such as a home inspection report that identifies serious problems, then your earnest money is refunded. Your real estate agent will include in the purchase agreement all conditions which will result in your deposit being returned.

Appraisal

The appraisal is required to assure the lender that the home is worth what you have agreed to pay for it. This is also an assurance that you need to have since the purchase is an investment for you. If the appraisal comes back at a lower price, then you may be able to negotiate a lower sales price. If you cannot, then your earnest money will be refunded.

Home Inspection

This is a most important step because you will want to know every problem the home has. You will need to know if costly repairs will be required, and whether these will affect getting a mortgage on the property. Even newer homes should be inspected since construction defects can be encountered.

Closing

This is the moment when you take ownership of the home. To do this, you will have to pay the remainder of the down payment, which is the amount after the earnest money is deducted, and the closing costs which should be provided to you a few days before the closing. You will be given a list of each item included in the closing costs.

What You Need To Know When Applying For A Mortgage

If you are contemplating applying for a mortgage, then there are some important financial issues that you need to be aware of. Mortgage lenders have rather precise criteria for judging the credit-worthiness of applicants, and this article includes what you need to know when applying for a mortgage.

Know Your Credit Scores

Your credit scores compiled by each of the three major credit bureaus will fall between 300 and 850. You can find your credit scores by visiting www.annualcreditreport.com. Another score is compiled by Fair Isaac and you can obtain this score online also. The best interest rate and terms require credit scores of about 720. Some lenders will consider applicants with lower scores, but the interest rates will be higher. If you are working with a mortgage broker, then they will find the best available rates and terms.

Know Your Income-to-Debt Ratio

Lenders use this ratio to determine whether you can make a house payment which includes the principal, interest, property insurance, taxes, and a private mortgage insurance premium if any is required. Let's look at how this works. To qualify for an FHA mortgage, your total house payment cannot be more than 29% of your gross monthly income. Your total income-to-debt ratio cannot be more than 41% including your house payment, and this ratio is determined by adding your monthly debt service to your house payment. This means that debt service includes credit card debt, car payments, student loans, child support, alimony and any other obligation which requires an ongoing monthly payment. This is another situation where a mortgage broker can assist your efforts to find the best mortgage available if your ratio is higher than the highest stated ratio.

Know The Amount Of Your Down Payment

This is a little more complicated than it appears to be. Your down payment should come from money you have saved or from a recent property sale. There may be an exception for gifts from parents, but you should still be able to demonstrate that you have saved money every month to use for a down payment. If you have not been able to save money from your income, then you will have to demonstrate how you can make the mortgage payment if it is higher than your current housing expense.

Your credit scores will be a major factor in determining the amount of the down payment. For example, if you have high credit scores, you can get an FHA loan with 3.5% down, but you could be required to put as much as 10% down if your scores are low. The best interest rates are only available to applicants who can put 20% down and who have good credit scores.

Know that you can Get Help In Finding The Best Mortgage

Mortgage brokers work with many lenders and they know the lenders that will work with applicants who have a financial status that does not comply with the customary criteria. Discuss your situation candidly with a broker, and you will have at least explored every option available.

5 Questions Realtors Should Be Prepared To Answer

Home buyers want as much information as possible about a home they would like to buy and the neighborhood the home is in. Most home buyers have used the internet to learn about home buying procedures and the facts about a home that they should want to know before they make an offer to buy it. We have studied the issues that home buyers believe are important, and as a result, we believe that these are 5 questions realtors should be prepared to answer.

1: Why Is The Home For Sale?

Perhaps the owners just want a change of scenery or a different size home, but it is possible that another less acceptable reason is motivating the seller. A real estate agent should be able to answer this question directly and without hesitation while keeping in mind that any serious problems must be disclosed. One concern could be the area crime rate.

2. Does The Property Have Any Serious Issues?

The real estate agent has an ethical and legal obligation to disclose any issues that make the home unsafe, structurally unsound, or that would cause it to be in violation of any code. The buyer should examine the home's foundation, and if any cracks are discovered, then an explanation of the cause should be provided.

3. Have Any Renovations Been Made or Any Remodeling Been Done?

This information may be important to a buyer when they assess the overall condition of the home. Buyers should want to know if any work required a permit and if it did, was the work inspected upon completion. It would be important for the buyer to know if a permit was not obtained.

4. Has The Home Experienced Any Water Damage?

This is an important question since any water damage is cause for concern. A leak in the roof may have caused toxic mold to grow or roof support members to weaken. A roof leak can also cause water to run down behind the interior walls and cause mold to grow. Of course, any problem that caused the home to flood with any amount of water is cause for concern. If this happened, then efforts to remove the water and to remediate any water damage should be documented. Buyers will be concerned about the extent of the damage and any latent problems arising from the damage.

5. Are Any Other Offers Pending?

Astute buyers will ask this question because the answer will determine if they have any real interest in making an offer. Buyers will likely know that one offer does not make a sale, but multiple offers may compel them to keep looking.

Critical Ways That VA Home Loans Differ from Standard Mortgages

Veterans who are looking to purchase a new home or refinance their current home should always consider a VA home loan as an alternative to a standard mortgage. These loans come with a wide variety of benefits that could protect a homeowner’s finances for years on end. Here is a closer look at five of the primary differences between a VA home loan and a traditional mortgage.

Down Payments

The minimum down payment for most homes is around 5 percent, but those wanting a larger home or lower payments may have to provide a down payment as high as 20 percent. With a VA loan, however, veterans could purchase their home with an incredibly low down payment or even no down payment in some situations.

Government Guarantee

The VA does not provide home loans directly to veterans, but instead helps guarantee loans offered by approved lenders. If the loan is defaulted on, then the VA will help to pay back some or all of the money. This government guarantee means that lenders are much more willing to make quick sales with little in the way of a down payment.

Credit Score

Maintaining good credit is absolutely vital when it comes to an affordable mortgage, and even a minor drop in one’s credit rating could affect their chances of receiving a loan. VA home loans are approved at a much higher rate as long as the veteran is not deemed a major financial risk. In some instances, the approved credit rating can be as low as 620 depending on a number of factors such as the overall value of the home. If you aren’t sure if you qualify for a VA home loan, contact Low VA Rates or a similar institution for a professional analysis.

Mortgage Insurance

Along with the down payment, one of the largest initial costs of purchasing a home is mortgage insurance. Unless the buyer can provide a down payment of at least 20 percent, most lenders will require mortgage insurance until sufficient equity has been built. VA home loans, on the other hand, often require little or no mortgage insurance.

Foreclosure

Around one out of every 200 homes that are sold will be foreclosed upon, but VA home loans are rigorously guarded by lenders. Instead of allowing the home to be foreclosed, these lenders will often do everything in their power to make alterations to the loan in order for it to be financially manageable.

Those who are looking to save themselves time, money, and stress should consider their options for VA home loans if they are a past or current member of the military.

Courtesy of: Home Advisor

When Businesses are Acquired or Merged, What Happens to the Real Estate?

A wise person once postulated a merger is like a marriage, an acquisition is like the arrival of a new baby and a disposition is like a divorce, of sorts.

In all of these instances, a new way of doing business emerges and some excess occurs. If you doubt, for a moment, what I am saying about excess, consider commercial real estate. When a merger with another company, division or operating unit is affected, there generally is a surplus of the physical plants from which business operations are conducted.

If you acquire a competitor, their customers, billing, shipment schedules, culture, and facilities must be morphed into your existing company. A sale of your business can result in the assignment of an existing commercial real estate lease or the origination of a new lease in the case of an owner-occupied building.

Below are some specific examples (and suggestions) of the role commercial real estate can play in a merger, acquisition, or disposition of a business.

Disposition of a business with long- or short-term leased commercial real estate:

If a long-term lease (longer than two years) is in place, chances are the buyer considered the location and the remaining term of the lease. If the buyer opts to occupy the location, an assignment of the lease obligation generally is requested.

If the buyer does not intend to occupy the location, you as the occupant must deal with a lease that must be satisfied – without the benefit of a business to generate income. Some owners are happy to work with an occupant that is paying a rate substantially below market.

If a short-term lease (two years or fewer) is in place, this can be tricky if the owner believes the occupant (you or the business you are buying) has such an investment (distributed power, AQMD permits, ISO 9002 permits, paint spray booths, offices, freezer/cooler space, conveyor systems, etc.) in the location that moving them would be too costly.

The owner may attempt to negotiate a higher-than-market rate, assuming a move would be too costly. It’s important to determine the buyer’s desire to stay in the location and attempt to negotiate an extension. Otherwise, your buyer may negotiate a lower price for your business, based on the uncertainty of the occupancy.

Merger of two entities:

We saw a great deal of this activity in the latter part of the last decade through bank consolidation. Remember when one bank merged with or was acquired by another and you would find a Wells Fargo branch next to a Wachovia branch in the same retail center (now common ownership)? A bunch of excess real estate was created and had to be purged from the market.

Acquisition in another market:

I have a client who acquired a company in Arizona with three locations. The decision was made to keep all three locations, but there was much work to do in renewing leases, upgrading the sites, and assigning the leases to the new entity.

Strategic or private equity acquisition of the business and real estate:

On two recent occasions, I have encountered a company that was sold – one to a strategic buyer and one company sold to a private equity group.

In both cases the real estate was acquired along with the operating companies. In neither case was the strategic buyer or the private equity group in the business of owning commercial real estate.

Also, in both cases, moving the operating company into another location would have been costly, disruptive, and inefficient. So what was the solution?

In both cases, the new business owners (the strategic buyer and private equity buyer) sold the commercial real estate to a commercial real estate investor, along with a lease back of the real estate. The operating companies stayed put, the new owners disposed of an asset (the unwanted commercial real estate) and defrayed the cost of the acquisitions.

Courtesy of: Orange County Register

What Can the GSFA Platinum Program Do For Homebuyers?

First of all, it is important to know what the GSFA Platinum Program is and how it got started. The GSFA Platinum Program was originally created to help low-to-moderate income homebuyers in California purchase a home by providing down payment and/or closing cost assistance, currently in the form of a non-repayable grant.

It is essential to note that the GSFA grant is not a second mortgage and does not create a lien against the property. The grant is sized up to 5% of the loan amount and it can be used towards your homes down payment and/or closing costs associated with your home, whichever is more suitable to your situation.

The GSFA Platinum Program was created to accommodate homebuyers who were previously struggling to purchase a home. Whether you previously have a mortgage loan or not, this program is designed to help your financial situation. The non-repayable grant that we offer is available with various mortgages loans. Applicants with Conventional, FHA, VA, and USDA 30-year mortgages, are still able to apply for the GSFA grant.

Whether you have previously owned a home, or if it is your first time buying a home, the GSFA Platinum Program is not limited to first-time homebuyers. Your home-buying history doesn’t matter. Everyone who is eligible for the program is able to apply.

In order to qualify for the program, homebuyers only need to meet a few simple requirements. Applicants must have a FICO score of 640 and up, and the home they are looking to purchase must be occupied as their primary residence. Another requirement is that their qualifying income, the total income used to qualify for the mortgage, must not exceed Program Income Limits. In addition, it may not exceed the maximum debt-to-income ratio of 45%.

The GSFA Platinum Program is designed to be flexible to your individual financial situation.

Call us today for more information regarding the program and find out if you qualify!

Mark McDonell

Branch Manager

NMLS#251067

Email: Mark.McDonell3@gmail.com

Cell: 714-240-4511

5 Mortgage Myths Dispelled

If the idea of buying a house both scares and excites you, that's how it should be. If you're only intimidated or only enthusiastic, you're probably going into the mortgage-buying process ill-informed.

After all, in the years before the Great Recession, homebuyers weren't intimidated at all. For quite a few years, many people purchased homes that were out of their price range and often on shaky credit, but since lenders didn't seem concerned, homeowners weren't either.

Now, the tide has turned, and prospective homeowners are understandably more leery about making what will likely be the largest purchase of their lives. But maybe they’re too leery. According to a survey of 2,017 adults released last month by Wells Fargo & Co., the country’s largest mortgage lender, many borrowers who can afford a home may be frightened off, believing that buying a house is something they simply can't do.

If you're on either end of the spectrum – squeamish about homebuying or ecstatic with no worries whatsoever – here are some misconceptions about mortgages that may bring you to the middle.

Your credit has to be perfect or near-perfect. Two-thirds of the Wells Fargo survey respondents believed you have to have a very good credit score to buy a house. While there's no doubt that a high credit score will help you get a better loan, it isn't a deal-breaker if your score is middling. If you have some credit blemishes and financial scrape-ups but for the most part pay your bills and make steady income, you probably don't have much to worry about, experts say.

"While credit is scrutinized, some loan types will allow credit scores as low as 620," says Gaye Rowland, senior vice president of SharePlus Bank, headquartered in Plano, Texas. "Other compensating factors such as larger down payments or low debt-to-income ratios can offset some negative credit information. Every situation is analyzed individually."

You must have a down payment worth 20 percent of the purchase price. This, too, is a myth. More than 40 percent of Wells Fargo respondents believed the only way to buy a house was to give a lender at least 20 percent of the purchase price of a house.

Again, it helps to have a 20 percent down payment, particularly if you want to avoid paying monthly private mortgage insurance. But many banks and mortgage companies – especially now that the recession is several years in the rearview mirror – offer loans that don't require a down payment anywhere close to 20 percent.

"We offer many programs that either have 100 percent financing or a 3.5 percent down payment," says Alyssa Schwabe, a spokeswoman for GSF Mortgage, headquartered in Brookfield, Wisconsin.

A house is a great investment. It can be a good long-term investment, but nothing in real estate is guaranteed. Particularly if you plan to live in the home for several years, and you can’t afford to lose a lot of money, you need to think of your house as a house – not a financial tool designed to pad your investments or retirement.

"People tend to purchase their homes with a little bit too much of an investment mentality," says Michael Goodman, a certified public accountant and financial planner at Wealthstream Advisors in New York City. "I'm not saying it isn't part of your overall net worth, but the home purchase really should be for somewhere you're going to live."

He adds that some wealthy homeowners additionally get too caught up in the idea that owning a house is a way to reduce taxes. "People will tell me that they need a tax deduction or a better tax deduction, and so they're going to buy a bigger home. I think that's the stupidest thing I've heard," Goodman says.

Courtesy of: U.S. News

How To Boost A Home's Presentation To Attract Homebuyers

Presentation is one of the three most important aspects determining how quickly a home will sell.

Much like the organic produce piled neatly in handy bins at the grocery store, and the way the makeup is displayed on the mirrored counters at the department store, it is important to be thoughtful and creative regarding the house's presentation during an open house.

Here are three examples of choices to consider to improve the presentation of a house before an open house:

Make sure you are presenting potential buyers with a clean house. The grocery store doesn’t let streaks of ooze and seeds trail down from rotten tomatoes in display cases. The department store doesn’t allow broken chunks of lipstick to linger on the mirrored counters. No way!

They are both cleaned daily if not more frequently.

This must be a similar approach an agent must take before hosting an open house.  Clean the counters, carpets, cabinets, closets, doors, drawers, mirrors, windows, drapes, blinds, and everything else.

It is also important to take note of the other adjustments you may need the homeowner to make in addition to cleaning. As an agent, you need to instruct the homeowner if he or she needs to repair or replace items, remove wall paper, repaint, and/or re-carpet. Noticeable stains, scratches, chips, tears, and gaping holes in the dry wall are mental triggers to a buyer that you’re presenting damaged goods.

Today’s buyers expect perfection, and when the presentation is something less than that, they begin to deduct from their opinion of your house’s value and create resistance to even making an offer.

Stage the home properly. De-clutter and de-personalize are the first steps in this approach. Then you have to arrange and accent. It is critical for an agent to stage the home that is on the market properly and strategically. 

And lastly, as an agent, it is your job to capture the features of the home through photographs. 

A professional photographer who specializes in shooting homes for sale is essential to the presentation of the house.

These pros have wide angle lenses, special flash attachments and those lighting umbrellas.

They also have the know how to shoot the bathrooms without the glare from the mirrors and how to diffuse the blazing sun coming into your kitchen window.

And consider a drone. A video of your sparkling clean, strategically staged house will boost the presentation to the pool of buyers to the next level.

Courtesy of: OC Register