U.S. Air Force illustration/Senior Airman Grace Lee
Many consumers are shocked to find out that their Credit Karma or other online scores do not match their true FICO score when it’s finally run by their mortgage lender.
This happens quite often – and it’s important to understand
the differences and reach out to your mortgage professional first.
Unfortunately, many would-be buyers have an incorrect view
of their actual credit worthiness and begin looking at homes too soon in the
process.
To repeat, the key thing to remember here is to reach out to your mortgage professional to get your official FICO score.
Dive Deeper
I’d invite you to find out the particulars here – as the free online credit products and the FICO score used in mortgage qualification process are noticeably different. Essentially, they use different algorithms to come up with their own score.
Most lenders determine a borrower’s creditworthiness based
on FICO® scores, a Credit Score developed by Fair Isaac Corporation (FICO™).
This score tells the lender what type of credit risk you are and what your
interest rate should be to reflect that risk.
FICO scores have different names at each of the three major
United States credit reporting companies. And there are different versions of
the FICO formula. Here are the specific versions of the FICO formula used by
mortgage lenders:
Equifax Beacon 5.0
Experian/Fair Isaac Risk Model v2
TransUnion FICO Risk Score 04
The Key Takeaway
The major takeaway is that your Credit Karma score will be different than your FICO score…and in most cases, the free, online score is better than the FICO score – at least that has been my experience.
Paying cash for a house has its advantages. Purchasing with cash rather than getting a mortgage could help you as the buyer win a bidding war when buying a new home. You may even be able to negotiate a lower price on the home if you’re paying cash.
After all, cash in hand is a sure thing, and a mortgage approval can take some time and isn’t always guaranteed.
Delayed financing is a specific program that allows the buyer to take cash out on a property immediately in order to cover the purchase price and closing costs for a property they had just purchased with cash.
How Delayed Financing Works
Delayed financing is a mortgage that is originated on a property after you already own it, in comparison to a typical mortgage that is used for the acquisition of a property. The delayed financing mortgage option allow buyers to compete with all-cash buyers when purchasing the property.
By financing the property after the initial cash transaction, the borrower/buyer is able to regain their liquidity because the money isn’t tied up in the house after the delayed financing is completed.
Keep
in mind that the value of the property might not the same as the purchase
price. Borrowers will need an appraisal done by their new lender to determine
the value. Moreover, your new loan can’t
be more than what you paid for the property plus your closing costs and lender
fees.
Why Delayed Financing?
Delayed financing is generally helpful for:
Investors who want to compete with all-cash buyers’ short timelines
Investors who want to have more bargaining power because they’re paying with cash
A property that has multiple offers and the seller doesn’t want to wait on financing
Investment properties, vacation homes, and primary residences
An investor who wants to take their cash out and buy another investment property
The primary reason to utilize delayed financing is that buyers can stay liquid. Investors use delayed financing to recover their cash and be able to purchase another property.
Generally,
delayed financing is right for an investor who wants to take advantage of all
of the benefits of purchasing a home using all cash. They can often negotiate a
lower price, close faster and compete with multiple other buyers. An investor
who doesn’t immediately qualify for conventional financing may also opt for
delayed financing.
An Investor’s Point of View
In
this case, the buyer is an investor and purchases a property using all cash. The buyer then wants to free-up some cash
back to buy another property.
The
buyer can then delayed financing to recoup the cash and take a loan out on the new
property, utilizing the cash back from the initial transaction!
A Primary Occupancy Borrower’s Point of View
The
buyer can also use this option to compete with all-cash buyers and negotiate
better terms. Delayed financing can be done as quickly as three weeks after
purchasing the property, which is different from a standard “cash-out
refinance” transaction, where the borrower must wait six or more months.
How Long Do You Have to Wait to Refinance?
If you’re doing a delayed financing transaction on a property you purchased in the last 6 months, you’re allowed to take cash out immediately without any waiting period.
Under normal circumstances, if you bought a home with a mortgage
instead of cash, you have to be on the title at least 6 months before you can
take cash out and refinance your home, so delayed financing is a notable
exception.
Delayed Financing
Qualifications
There
are certain qualifications that need to be met in order to qualify for a
delayed financing transaction. Most
specifically, the property must have been originally purchased using all cash.
Lenders generally have the following qualifications for this type of transaction:
Arm’s Length Transaction: You can’t be related to or have a personal relationship with the seller
Closing Documents: Closing statement from the property purchase
Proof of Funds: Showing where you got the funds to purchase the property
New loan amount can be no more than the actual documented amount of the borrower’s initial investment in purchasing the property plus closing costs.
Appraisal: Ordered by the lender and paid for by you, generally $500-plus
There can be more needed and other regulations may apply, but these listed above are most standard.
Although you may have just ordered an appraisal when you originally purchased the property, as mentioned previously, the lender will want to conduct their own appraisal before they approve your loan.
It would be my pleasure to help any borrower with a delayed financing transaction, so don’t hesitate to reach out to me for more information or to get started!
One of my favorite baseball instructors is Steve Springer, of Quality At-Bats fame. If you haven’t read much or followed Spring, you really should. He’s one of the best in the business when it comes to baseball instruction.
His specialty is the mental game, although his mechanical teaching is fantastic, as well.
The topic of the video that I’m sharing has to do with players that don’t find themselves in the starting lineup regularly. This is a must-see video on how to handle being a bench player and the right mind set that must accompany this position.
Some key quotes:
“Don’t be that guy where it’s all about me”
“Take batting practice like it’s your game…take ground balls like it’s your game…take fly balls like it’s your game and be ready when the coach calls you.”
Take Steve’s advice to heart – there can only be 9 guys in the lineup – and teams carry 25+ players, so do the math. There’s not a starting spot for everyone.
Steve Springer’s baseball hitting lessons incorporate the mental side of hitting along with increasing bat speed drills and coaching improved hitting mechanics. Players and coaches of all levels – youth little league, high school, college and pros agree – Quality At Bats™ is one of baseball’s best hitting programs.
Most experts expect that the summer homebuying season will be quite strong. But a question remains about this real estate market: will it favor buyers, sellers, or both? Let’s take a closer look at who might benefit the most from the upcoming real estate buying season.
Remarkably, based just on consumer confidence, it appears that the summer homebuying season may be beneficial for both buyers and sellers.
According to Fannie Mae, one of the nation’s top mortgage investors, Americans are extremely optimistic about the housing market’s direction.
Growth typically means that it’s a good time to both buy and sell a home, and indicators are that Americans believe interests rates will stay relatively in check while their incomes will increase.
While consumer confidence may be high, some economists are ambivalent about the strength of the housing market.
There are some signs that the market is flattening, instead of continuing to race upward. Experts are actually divided on this issue, as home prices are still appreciating.
For instance, home sales at the national level are slowing slightly, although the rate of home appreciation is still increasing, albeit at a slightly slower rate. In addition, it’s taking a bit longer for homes to sell in some areas of the US, which means the days of homeowners benefiting from bidding wars might be on the wane.
This isn’t necessarily the case out west, as inventories are still low and there are more buyers that sellers. At the same time, with interest rates stabilizing, homes are still extraordinarily affordable, compared to historical norms.
So, who actually is going to benefit from the strong summer market?
Taking into account these facts, it looks like home buyers will have a slight advantage this summer. For starters, home prices are still on the rise but not as sharply as they once were.
Some sellers are also reducing their original listing price, which indicates they’re having trouble attracting buyers. Finally, the Federal Reserve has signaled that interest rates should stay relatively stable through the summer, which is the reason for the strong market, and as almost everyone knows, low interest rates are better for buyers. Rates have been steadily ticking downward over the last 2 months or so.
The summer homebuying season is going to be very strong, and tilted in favor of home buyers. If you’ve been thinking about buying a new home, now might be the perfect time – feel free to contact me for more information!
I’ve consistently pointed out that the mental part of baseball is an undervalued and lesser taught piece of this great game. Sure, mental toughness and “having a good approach” are buzzwords used by coaches every day…but what can you do to teach it?
Well, I’m linking an article by Alan Jaeger regarding some specific advice on “mental practice” every day.
Addressing The Mental Game: Prioritizing Your Practice Plan
Practice plans have been passed down for generations, and they
of course have plenty of merit. But at what point (and what cost) are we going
to continue to center our practice plans around physical preparation when we
know that between the lines, the game is at least 90 percent mental? Hitting,
throwing and running bases are all indispensable, as is bunt defense, pitchers
fielding practice and first and third run downs.
But this is the 21st century – times have changed.
The good news is that society is changing for the better.
More than any other generation in the past 50 years, this generation is privy
to the reality that Mental Training is not only a credible field, but it’s
application to sports and life is a essential. Which begs the question — what
are you doing to act on this reality?
Done as a precursor to practice each day, each coach will be
given enough information to lead his players through a 10 minute, mental
training exercise or session that revolves around breath work.
Ultimately, whether we call “mental practice” relaxation, meditation
or mental focusing time, the application of these exercises on a daily basis
will have the greatest and most profound effect on your players minds. For
without practice how can you expect any skill to be developed and maximized.
Understanding Where We Want To Be: The Zone, Locked In, Unconscious
Having a great mental game is as much about understanding where
we want to be, as where we don’t want to be.
When things are going well it seems
like the mental game is simple. And when things aren’t going so well the game
can be very frustrating and complex. Understanding “how” we go in and out of
these states of mind is extremely valuable.
In sports, we actually have many
terms for this “optimal” state of mind. It’s been referred to by many names,
including “The Zone”, being “Unconscious” and being “Locked In.” The technical
term for this state of mind is called a Peak State, and has very specific
attributes, including:
The absence of thought
A complete immersion with
the action
A sense of being process
oriented
A sense of calm or peace
A detachment from the
outcome.
By understanding the components of
a peak state of mind, we can better understand ways to train the mind in order
to put it in alignment with this ideal state.
Breath Work: The Core Ingredient Of Your Mental Practice
Mental Practice is a very broad field that includes breathing
exercises, imagery, visualization, affirmations, and so on. You can also
get forms of mental practice from among other things, Yoga, Martial Arts and
being in Nature. Anything that brings the mind into a state of “presence”, a
state of peace and quiet can be categorized as mental practice.
But the most common element that
I’ve found in mental practice revolves around the breath.
There are many reasons why the breath is at the center of mental training exercises universally, including several physiological benefits (relaxation, lower blood pressure, oxygenation), but some of the other profound benefits may be more subtle. For example, the breath is always happening now, which symbolically, can be extremely helpful in teaching the mind how to be present.
The breath is not a thought, thus, the more time you spend with your breath, the more time you are training your mind how to be in a “no-thought” state. Again, the absence of thought and being present are two major characteristics of a Peak State of mind. Thus, the breath alone can be a catalyst in changing the mind from a result oriented default, to a process oriented default.
Other benefits that can often be
associated with breath work include calmness of mind, improved concentration,
focus, patience, discipline and inner trust. Inner trust, which is similar to
the term confidence, is a by product of spending time in a relaxing and comfortable
space each day, and getting to know your self and your inner workings.
Considering that your breath keeps you alive 24 hours a day, it’s safe to say
that a lot can be gained simply by spending time, appreciating and
understanding our breath.
Looking where to begin?
Control your breath. Learn how to take deep breaths, in your your nose, out through your mouth. Let your belly expand, not your neck. Try this during your practice sessions and see how you feel.
Want to Learn More About the Mental Game of Baseball?
Here’s the link to Alan’s book that talks about his approach. It’s called “Getting Focused, Staying Focused: A Far Eastern Approach to Sports and Life.”
Thomas Eugene Bonetto
Mortgage Loan Originator
NMLS: 1431961
About The Coach
Tom Bonetto has been helping his customers and players achieve their best for nearly 30 years. His goal is to provide both a superior customer experience and tremendous value for both his business associates and his players alike.
The views expressed are my own and do not necessarily reflect those of Starlight Mortgage.
