Category: Housing Market (Page 25 of 40)

The Top 10 Mortgage Questions a Borrower Should Ask

June 29, 2019 / Tom Bonetto

It’s a good idea to put together a list of questions to ask potential lenders in order find out which one will be best for you. These and other questions should help you choose the right lender and the best home loan.

How do I obtain pre-approval?

One of the best ways to ensure a smooth home buying process is what you do before you begin your home search.

Mortgage pre-approval, without the pressure of a closing date, is easier than trying to engineer a full approval from the ground up. And having a pre-approved mortgage means you can close faster when you’re ready to buy.

Ask the lender what documentation they need and what processes they have in place to secure and automated underwriting approval. If they can’t provide that information, find another lender! You can find out more about the pre-approval process here….

Which type of mortgage is best for me?

This question will help you know if you’re talking to someone who wants to sell you a loan quickly — or a trusted loan advisor who will be looking out for your best interest.

When you ask, “What are my options?” for a particular type of loan, the mortgage lender should dive deeper into your situation and ask YOU questions about your financial goals. You can really gauge the professionalism of the lender by the questions he/she asks.

What’s your communication style?

Mortgage lenders can communicate with you in multiple ways – including by phone, email and text. Some are tech savvy and others prefer traditional methods.

The point is to be clear about what you prefer.

If you respond more quickly to text messages versus voicemail – tell your loan officer. Often times, there are time sensitive issues that arise during the loan process, so it will make everyone happy if your loan officer knows how to get questions answered, additional documentation etc. in a timely manner.

How often will I be updated on the loan’s progress?

You should be introduced to all parties that will be involved with your loan – from the originator, to the processor, and any other assistants. Have their contact information handy during the loan process.

And how will you be updated on the progress: by email, phone or an online portal? How often?

I recommend that you share your service expectations upfront, and check to see if the lender you are working with has these types of processes in place that meet your requirements. If not, move on!

How much down payment will I need?

A 20% down payment may be nice, but borrowers have multiple choices. Qualified buyers can find mortgages with as little as 3% down, or even no down payment, depending on the property location.

Again, there are considerations for every down payment option and the best lenders will take the time to walk you through the choices, based on your stated goals. You can find out more about down payment requirements here….

Will I have to pay mortgage insurance?

If you put down less than 20%, the answer will probably be “Yes.” Even if the mortgage insurance is “lender paid,” it’s likely passed on as a cost built into your mortgage payment, which increases your rate and monthly payment.

You’ll want to know just how much mortgage insurance will cost and if it’s an upfront or ongoing charge, or both. You can find out more about mortgage insurance here….

Are You Equipped to Approve Loans In-House?

Underwriters review loans and issue conditions before approving or rejecting a loan. Ask if the lender handles its own underwriting and does their own approvals. This can be a make or break proposition if you need to close the loan in a timely fashion.

What other costs will I pay at closing?

Fees that are charged by third parties, such as for an appraisal, a title search, property taxes and other closing costs, will be paid at the loan signing. These costs will be detailed in your official Loan Estimate document and your almost-time-to-sign Closing Disclosure.

Your lender should be absolutely upfront regarding this. You can find out more about closing costs here….

How long until my loan closes?

Of course, you want to know what your target closing and move-in dates are so you can make preparations. And just as important: Ask what you should avoid doing in the meantime — like buying new furniture on credit and other loan-busting behavior.

Is there anything that can delay my closing?

Well, buying a home is a complex process with many stages and requirements. While delays are normal, the best way to avoid them is to stay in touch with your lender and provide the most up-to-date documentation as quickly as you can. If you have any past credit issues or job related changes, let your lender know immediately to avoid any last minute delays.

5 Things Real Estate Agents Should Know About Mortgages

June 22, 2019 / Tom Bonetto

Unless all of your clients are cash buyers, mortgages are an integral part of any real estate agent’s business. Knowing some basics about mortgages will make you a better adviser to your clients and a more effective agent.

With that in mind, here’s a brief list of topics that real estate agents should understand in order to best help and advise their clients.

Although it is by no means necessary to become a mortgage expert, the following five mortgage insights will increase your value as a real estate professional.

The minimum down payment is not 20%

Most agents already know this, but a 20% down payment is the amount necessary for a buyer to avoid paying private mortgage insurance (referred to as PMI) on the loan. There are many conventional loan programs require as little as 5% down.

For first-time homebuyers, recent conventional loan programs introduced to the market allow buyers to get a loan with only 3% down. If you work primarily with first-time homebuyers, you should also be aware of down payment assistance programs offered by local governments and municipalities.

You can find more about down payment options here….and here

Even move-up buyers should get a mortgage pre-approval

Many of the first-time buyers I work with get pre-approved so they know how much they can afford to spend on their new home. But not all realtors encourage move-up buyers to seek pre-approval, and I think they should.

The situation may have changed from the time their clients originally took out a mortgage. Even if they’ve built up a lot of equity, it may not help the buyer if their income or credit is not aligned with the price of the property they hope to buy.

Oftentimes, people who have qualified for a mortgage at one time are surprised by new and current restrictions and underwriting standards. For this reason, real estate agents should encourage their clients to speak with a mortgage broker even if the client thinks they already know the ropes.

This can help avoid surprises or disappointment further down the line and save time for agents and their clients.

Shopping around for a mortgage will not hurt your credit score

Shopping around for a mortgage with multiple lenders is highly recommended, and even though credit inquiries do impact a borrower’s credit score, there is an exception when it comes to credit inquiries from mortgage lenders.

All such inquiries made in the 30-day period prior to scoring your credit are usually ignored. Furthermore, inquiries outside of that 30-day period that fall within a typical shopping period are counted as only one inquiry.

You can find out more on multiple credit pulls here….

Condos have special underwriting requirements

If you’re working on a condo deal, it is in your and your client’s best interest to work closely with the mortgage loan officer to make sure the property meets the lender’s underwriting criteria. This is typically done through a condo questionnaire.

If you are the seller and state on your listing that the property can be conventionally financed, I highly recommend that you have the HOA documentation ready for the prospective buyer.

Among other things, they will be looking out for things such as pending litigation against the condo association, the percentage of units that are owner-occupied and whether any part of the building is used for commercial activity.

Many condo transactions are either seriously delayed or completely derailed by last-minute surprises that should have been discovered early in the process.

You can find out the specifics about condo warrantability here…

Advertised rates aren’t always available

Some realtors encourage their clients to shop around for rates at the last minute or promise mortgage interest rates to clients that they have seen online. This can often lead to frustration because not everyone will qualify for those advertised, ultra-low promo rates and there may be additional stipulations such as a quick closing or mortgage insurance.

That’s why I personally don’t promise rates until I have a completed application and all supporting documents. No two files are the same, so it’s best not to promise something over which we have no control.

There is a lot more to know when it comes to mortgages – and like I stated early, there’s no reason to become a mortgage guru! With that said, these five tips will help you look like a more that capable advisor in the eyes of your clients.

If you have other questions or would like to dive deeper into any of these topics, don’t hesitate to reach out to me!

Home Buyers and Mortgage Seekers – Beware of Online Credit Reports

June 15, 2019 / Tom Bonetto

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.

Also, you can find out here how your credit score affects your mortgage rate – this is also worth the read!

Summer 2019 Forecast – Buyer or Seller Market?

June 1, 2019 / Tom Bonetto

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!

Source: Chicago Tribune

New Investor Product – Fix and Flip

February 2, 2019 / Tom Bonetto

Researchers have found that house flippers renovated more than 200,000 homes in 2017, with an average profit of nearly $70,000 per property. That’s a lot of houses—and a lot of money.

Despite the popularity of house flipping, the biggest barrier to entry and success in this space is cash. Without enough money, you can’t purchase the home, pay for renovations, or find a buyer for the property when the time comes to sell.

Fix and flip loans are used by short-term real estate investors to purchase and renovate a property before flipping it for a profit or refinancing it after rehab. This type of financing for flipping houses offers investors fast closings for properties in any condition.

Finance of America has a fantastic set of offerings in this category…..

Not sure whether you need the Fix & Flip Single Loan or the Fix & Flip Exposure Limit?

The Fix & Flip Single Loan is designed for investors who need funding to flip a single investment property.
The Fix & Flip Exposure Limit is a line of credit offered to experienced investors who plan to acquire and/or renovate multiple properties.
All Fix & Flip Exposure Limits allow investors to close quickly.
Both Fix & Flip Single Loan and Fix & Flip Exposure Limit offer the option of rehab funding, if needed.

Our commercial offerings are quite unique. These products are in-house from origination to funding. Controlling the financing from origination to funding allows our investors to reliably plan the timing for their projects. Timing is always important in the real estate market, especially in construction and rehab.

For experienced investors we establish an exposure limit and for new investors we start our first project together with a single mortgage. Contact me for more details.