Wednesday, September 30, 2020

Minimum Down Payment For First-Time Home Buyers

Someone once asked me: With the way the economy 
has taken a toll on savings accounts, the traditional 20% down payment seems out of reach for many first-time home buyers like myself. Are more first-timers going the route of 5%-15% down payments? Or should I wait until I've got the 20% saved?

I can answer your question in two ways because you're asking two separate questions.

I take "realistic" to mean whatever makes sense for a buyer. There are some who believe that 20% is a "realistic" minimum down payment because it avoids mortgage insurance. Lenders view borrowers who make a smaller down payment as presenting more risk. Because of this, lenders require mortgage insurance to manage their risk. That insurance costs the borrower money.

If a buyer has enough money for a 20% down payment and closing costs and has something left over for cash reserves, 20% is fine. I say that with one caveat: if you carry any consumer debt with rates higher than that of a mortgage, it is FAR better to pay those more expensive items off with available cash than to put it into a home down payment. 

There are many loan programs designed for lower 
down payments 3% on conventional or
3.5% for FHA, No down payment for VA and USDA
. Down Payment Assistance (DPA) is offered by FHA Government Grant program for 2% - 3.5% do
wn payment help, that is considered a gift and doesn't have to be paid back. 

If a buyer doesn't quite have enough cash for a 20% down payment plus closing costs, waiting to save up the money can be very expensive. First, home values are increasing in most areas of the country today. This means that if there is an appreciation rate of 4%, the $300,000 home you have your eye on today will cost $312,000 a year from today. There is also the matter of rising interest rates. 

If you have the ability to buy today regardless of the amount of cash you have—as little as 3% plus closing costs can get you into a home—buying now is a good idea. Yes, there will be mortgage insurance (MI), but that is temporary; once you can demonstrate to the lender that your loan balance is 80% of the home's market value or less, if you have an FHA loan you will need to refinance to remove your mortgage insurance.. but generally once you have 20% equity you can get your MI removed. 

I hope this is useful. Call me if you want to get pre-approved and see how much you qualify for, then you just need to find a home.  

Thank you for visiting my blog, please leave me a comment and let me if you like my blog and the information I post. 


Roxy Redenbaugh, Broker
Sr Mortgage Consultant
Residential and Commercial
The Greatest Compliment I Can Receive Is A Referral From Friends, Family, and Business Associates,
NMLS#269926 Company NMLS#1930219

Thursday, September 3, 2020

Which FICO Score Is Most Important

 People often ask me:  Which FICO scores are most important for mortgage applications?


We GENERALLY use what is called the "mid score." Most people have three FICO scores—one from each of the three credit repositories (Equifax, Experian, and TransUnion). We discard the high and the low using the one in the middle—the mid score.

This is especially important when we are doing a "rapid rescore" or "credit bureau update." These both mean the same thing: using documentation acceptable to the credit bureaus, we can bypass the normal monthly reporting cycle for creditors. If we are paying down revolving debt, for example (credit cards), we will get a current statement from the borrower reflecting the lower balance. The credit report vendor will submit that document to the bureaus and get a new FICO score within about five days based on the lower balance. FICO scores begin to suffer when credit card balances exceed about 30% -50% of the credit limit. The credit report vendors charge a fee for the rescore service, and since we are only looking improve the mid score, only one or two bureaus need to be updated. This saves the borrower a couple of hundred dollars. I also have tools available that help to analyse your accounts and simulate a what if situation, meaning if I pay down this or that account how will it effect my credit scores. 
Credit standards are not as stringent as some believe. You can buy a home with lower scores than you might think. 

If you have questions about our credit, reach out. I'm here to help.

Thank you for visiting my blog, please leave me a comment and let me if you like my blog and the information I post. 


Roxy Redenbaugh, Broker
Sr Mortgage Consultant
Residential and Commercial
The Greatest Compliment I Can Receive Is A Referral From Friends, Family, and Business Associates,
NMLS#269926 Company NMLS#1930219

Friday, August 7, 2020

Fun Real Estate Facts That Will Make You Smile

Sometimes it’s not the big real estate news about trends and statistics that send us falling onto our backsides — it’s the lesser-known facts that make us smile, make us think and realize the world is a crazy-messy place.

Inman News featured some amazingly entertaining real estate facts we’d like to share, and there is no time like the present — when we are reeling over stock market volatility and wondering what comes next — to get a bit of comic, head-scratching relief.

You want fries with that? Did you know that the McDonald corporation possesses one of the world’s most comprehensive (international) real estate portfolios? Franchisees do all the burger-flipping work while the Big D enjoys the land-holding and franchise fee revenues without worrying about the calories.

Some people are billionaires, but you wouldn’t know it by the way they live. Mogul Warren Buffet lives in the same house he bought in 1958 for a cool $31,500. Think his mortgage is paid off by now? A number of high profile celebrities have some frugal leftover tendencies as well, including Jay Leno, who made the choice to never spend his $15 million a year TV show salary, Leonardo DiCaprio, who drives a Toyota Prius, and Paul McCartney, who had his daughter pay her own way through college and asks party guests to pay for their own drinks.

You don’t have to sound brassy if you have a brass doorknob. You just don’t tend to pass on the flu as easily. According to a number of sources, brass doorknobs disinfect themselves, being the most antimicrobial metal of all. So next time you turn the knob or push down on a brass lever, you’ll have fewer worries that you may start sneezing because of it.

It’s a red letter day when you pay off your mortgage. The Scots not only think so — and they make sure you know about it. In Scotland when someone writes that last monthly mortgage check they run out and buy a bucket of and paint their front doors red. This mortgage-free announcement is thrilling to homeowners who definitely think it’s worth proclaiming.

Think a tiny paperclip is no big deal? Think again. Beginning in 2005, Canadian Kyle McDonald traded a paperclip for a pen, then for a doorknob, then a camp stove, a generator and on and on. He traded rent, favors, and even a movie role until he ultimately got a 2-story farmhouse for all his swapping efforts. Don’t let anyone tell you it’s not the little things that count.

Sometimes Public Enemy #1 is a nice guy. Some say this may be an urban myth, but the story continues to be told. Charles (Pretty Boy) Floyd, a Depression-era gangster not only robbed banks. He also served as a kind of modern-day Robin Hood, destroying mortgage documents in the process and freeing a number of citizens of their financial obligations. Sometimes the little guy comes out on top.

Capitalism produces winners and losers, but who’d a thunk the game Monopoly was designed by

a woman to teach us a lesson? Still a bestselling board game, the concept taught us to buy up property, stack it with hotels, and charge fellow players sky-high rents for the privilege of accidentally landing there. But the little-known inventor, Elizabeth Magie had no idea that it would encourage its players to celebrate values opposed to those she intended to champion. A devout and vocal socialist, Magie proclaimed ‘the equal right of all men to use the land is as clear as their equal right to breathe the air – it is a right proclaimed by the fact of their existence.’ Seems Americans never grasped that idea.

Although India is a land of haves-and-have nots, one of the haves built a billion-dollar home. It boasts 27 floors (six of them for parking), 3 helipads, is staffed with 600 people, offers a 4-story hanging garden and is complete with a movie theater. We’re not sure how many bathrooms one needs for a life well-lived, however.

Thank you for visiting my blog, please leave me a comment and let me if you like my blog and the information I post. 


Roxy Redenbaugh, Broker
Sr Mortgage Consultant
Residential and Commercial
The Greatest Compliment I Can Receive Is A Referral From Friends, Family, and Business Associates,
NMLS#269926 Company NMLS#1930219


Sources include Wikipedia and many others.

Source: TBWS   

Tuesday, July 28, 2020

'Aging in Place' Helps To Fuel Housing Shortage

As the baby boomer generation has aged, it has also stayed put. And for all the innovations builders and product manufacturers have come up with to help seniors “age in place.” they may have also made it difficult for would-be home-buyers, causing a lack of housing inventory.
According to a new report from Freddie Mac, 2019 will see a significant shortage of available homes here in the U.S., failing to meet needs by 2.5 million units. It doesn’t help that at the same time millennials are buying fewer homes at this point in their lives compared with previous generations at similar periods.
As seniors continue to prefer to stay where they are as the optimal way to live out their remaining years, housing inventory has tightened nationally. According to the report, for people between the ages of 67 and 87, home-ownership rates dropped by 11.6 percent for previous generations but only 3.6 percent for the current (leading edge) generation of seniors, identified as having been born between 1931 and 1941.
New advances in information technology may be the culprit, as well as accessibility to better healthcare and education, with the report crediting those advancements as “boosting and extending” housing demand among seniors. The result? The current senior generation has become much slower in transitioning out of home-ownership than prior generations.
The U.S. Census Bureau says lost units will need to be replenished at a rate of 350,000 homes per year in order to bring the market to a “well-functioning” status. “Vacant homes increase liquidity in the market, enable prospective buyers to find a match, and give prospective sellers confidence to list their home for sale,” the Freddie Mac report states. “Vacancy rates are an important indicator of housing market vitality. Too high a vacancy rate reflects a moribund market, while too low of a rate reduces the efficiency of the marketplace.”
While this does not bode well for home shoppers, it will boost spending on renovations, according to Chief Economist Sam Kater. “We believe the additional demand for home-ownership from seniors aging in place will increase the relative price of owning versus renting, making renting more attractive to younger generations.” If that is true, however, those in a position to purchase the limited number of homes available may well see their property values increase more quickly than anticipated. 
Thank you for visiting my blog, please leave me a comment and let me if you like my blog and the information I post. 

Roxy Redenbaugh, Broker
Sr Mortgage Consultant
Residential and Commercial
The Greatest Compliment I Can Receive Is A Referral From Friends, Family, and Business Associates,
NMLS#269926 Company NMLS#1930219

Source: Realtor, Reversemortgagedaily, FreddieMacTBWS

Thursday, July 23, 2020

Mortgage Giants Freddie Mac and Fannie Mae Offer More Relief To Worried Homeowners

In a move sure to bring a sigh of relief to millions of distressed homeowners, loans backed by Fannie Mae and Freddie Mac will now defer all missed mortgage payments, tacking them on to the end of their loans already in forbearance.
Borrowers who took forbearance due to COVID-related issues will not have to repay their missed payments until they sell their homes, refinance their current mortgage or their mortgage matures. Under the program, the borrower begins making their mortgage payments again when they’re able.
For homeowners in forbearance due to COVID-19, payment deferral allows them to make up missed forbearance payments when they sell their home or refinance. This new forbearance repayment solution responsibly simplifies options for homeowners while providing an additional tool for mortgage servicers. Borrowers who can pay their mortgage should, because missed payments remain an obligation that will ultimately have to be repaid.” The extension can continue up to 180 days beyond the 180 days granted by forbearance. 
The issue is that forbearance is not forgiveness; therefore, borrowers in forbearance have to repay their missed mortgage payments one way or another. The GSEs’ (government-sponsored loans’) new payment deferral allows borrowers who took forbearance to shift as many as 12 months of mortgage payments to the end of their loan and is available to homeowners who have completed a COVID-19 related forbearance plan and are able to continue making their full monthly contractual payment but cannot afford full reinstatement or a repayment plan to bring their mortgage loan current.
According to Freddie Mac, the maturity date, remaining term, interest rate and payment schedule of the borrower’s mortgage remains the same as it was before. In addition, Freddie Mac said that utilizing the payment deferral option does not prevent a homeowner from someday being eligible for a Freddie Mac modification if payment relief is needed in the future. This option will begin being offered to borrowers on July 1, 2020.
For more information on how this all works, I am available to answer your questions. 
Thank you for visiting my blog, please leave me a comment and let me if you like my blog and the information I post. 

Roxy Redenbaugh, Broker
Sr Mortgage Consultant
Residential and Commercial
The Greatest Compliment I Can Receive Is A Referral From Friends, Family, and Business Associates,
NMLS#269926 Company NMLS#1930219

Monday, July 13, 2020

A Fun Look Back At The Homes Of The 1920s

It has now been 100 years since the start of the Roaring '20s when flappers danced in Great Gatsby. Prohibition was still a decade away. As for housing styles, it's fun to compare today's homes to those a century ago, dresses above their knees, jazz began permeating the night club scene with insane rhythms, and men dressed like the Great Gatsby. Prohibition was still a decade away. As for housing styles, it's fun to compare today's homes to those a century ago.

Back East, in places like Quincy, MA, "streetcar suburbs" were growing quickly, containing American Foursquares, Dutch Colonials, and "Quincy Capes" that were built alongside multi-family homes. House and Hammer's Jon Gorey, who lives in that area, says 1920s floor plans seemed to be made for entertaining and boasted 12-ft ceilings throughout. "The downstairs rooms are almost always connected all the way around in a circular flow pattern — which, any child can tell you, is perfect for racing around in circles. Instead of doors between rooms, there are often wide, cased openings. And when every room opens into another, and another, it helps to relieve any claustrophobic inklings you might otherwise get in a small house."
Homes in the wild west were built with different building materials than those used in colder climates. As historians note, the Los Angeles of the 1920s was roaring like it never had before. Hollywood was in its infancy and the "Go West, young man" mentality had people from all over the country dreaming of a different life. Realtor David Lubell, who specializes in selling historic Los Angeles homes, says that Mediterranean architecture began dominating southern California, derived from styles of the Iberian and Italian peninsulas. "Of course, the climate in southern California makes this a sensible outcome, but the story is more complex than just the weather," says Lubell. "More than two centuries of Spanish-Mexican settlement also had a tremendous influence on the stylistic choices in Los Angeles. The indigenous peoples use of adobe mixed with the Spanish Colonial forms set the foundation for a different kind of architecture than in the rest of the United States." This is, of course, even more prevalent in parts of the American Southwest.
This is also when modernism began to find its footing, beginning with the opening of Bauhaus, the German art school that combined crafts and the fine arts and began to spread its design love everywhere. Art deco touches meant homes were flashy, sophisticated, and fun all at the same time. Geometric shapes, shiny fabrics, stylized images of skyscrapers and airplanes, and exotic touches from Africa, Egypt, and the Far East were brought together to form an eclectic and exciting home interior. 
As for the nuts and bolts of homes of the 1920s, lath-and-plaster was still the ticket. Galvanized pipes were employed both within the house and for sewer lines as well. No one back then knew they corroded over time. And the now-infamous knob-and-tube wiring was everywhere. So if you were to buy a 1920s home that had never been updated, you'd be looking at replacing all plumbing and electrical conduits as well as the electrical panels. Toilets of the 1920s had long cords attached to tanks placed high on the wall, and tubs were surrounded by 360-degree curtains. Interestingly enough, you can still find manufacturers who make those strange looking toilets and, of course, clawfoot tubs are still the rage. How about those craftsman homes, such a beautiful home that still provides many homeowners with continued enjoyment to this day. 
Kitchens were large, usually with a large informal dining table in the center. And for those who could afford it, iceboxes were traded in for modern electric refrigerators, introduced in 1920. No longer did homeowners need to wait for the ice to be delivered by a guy in a truck. It was now contained in trays in a freezer compartment, ready to break out for cold drinks at a moment's notice.
So as you look to consider doing some updating to your home in the coming decade, remember that it was the 1920s that began a tradition of distinctive style in home interiors. It was a prosperous (and sometimes irreverent) time in U.S. history. The elements of it that have been preserved to this day are living proof good architecture and design can stand the test of time.
I hope this has been fun come back soon. 
Thank you for visiting my blog, please leave me a comment and let me if you like my blog and the information I post. 

Roxy Redenbaugh, Broker
Sr Mortgage Consultant
Residential and Commercial
The Greatest Compliment I Can Receive Is A Referral From Friends, Family, and Business Associates,
NMLS#269926 Company NMLS#1930219

Source: TBWS

Thursday, July 9, 2020

How To Select A Loan Officer

Someone once asked me: If you were shopping for a Mortgage broker. How would you select one? Do I need a mortgage broker to get a mortgage?

You might believe, the interest rate is one of the last reasons to choose a lender. I say this because almost all loans get ultimately sold to the same pool of investors-Fannie Mae, Freddie Mac or Ginnie Mae. Lenders earn their money by originating and funding loans which they then sell to investors for a small profit. The investors pay a set price for these mortgages, depending on what the market is doing on any given day.

It's important to know this as a consumer so that you realize that there isn't a huge spread in rates between one lender and the next. You should be looking for different criteria for choosing a lender to purchase or refinance a home.

You asked about mortgage brokers, but it might be a good idea at this point to talk about some terminology. A mortgage broker is a licensed person who acts as a go-between for lenders and consumers. The broker will typically receive a fee from the lender for those services. It does not usually cost more to use the services of a mortgage broker.

There are also mortgage bankers. Although you might think a "banker" is someone sitting behind a fancy desk in your local Too Big To Fail bank, the term is actually broader than that. A mortgage banker is someone who originates and funds mortgages in the name of his or her company. They will then sell the funded loan to the investor for a small profit. It does not cost more to use the services of a mortgage banker or a commercial bank when you are seeking a mortgage. 

You might ask what the difference is between a "banker" and a "broker." Both do essentially the same job, but under today's regulations, there are minor differences between the two types of loan originators. A broker is considered the "originator" under the new regulations. A banker is seen as a "creditor." The disclosure documentation is very slightly different between the two, but in most cases, there are functionally the same. A banker, however, may have a bit more flexibility when it comes to getting your loan funded. 

Let's consider that "broker" and "banker" are essentially interchangeable terms. Many people who used to be brokers are now bankers. Some don't even change the name of their company or their location. 

I'd suggest that a better way to ask your question might be to ask, "Am I better off going to my neighborhood Too Big To Fail bank or finding an independent lender (broker or banker)?" Here is what you should look for when you look for a mortgage.

First, you should be aware that getting a mortgage today involves more moving parts than previously. This means that having a loan officer to guide your application through the process is very important. It doesn't matter whether your loan officer is a banker or broker; what matters is that you have a point of contact to answer questions and let you know how the process is going.

A good loan officer will also help you as a trusted advisor; they should be able to let you know if there are ways where you might tweak your credit score so as to get better pricing on your loan. For example, raising a credit score from 735 to 740 could save $1,000 on a $400,000 loan. Accomplishing that could be as simple as reducing the balance on a single credit card.

Your loan officer should also have a good feel for the performance of the market. Mortgage rates change every day, based on the price of a type of bond called a Mortgage Backed Security (MBS). The price of the MBS changes during the day according to market activity. It directly affects the rates for mortgages. To give you an idea, if the price of the MBS goes up from one day to the next by .25% (that would be $.025 per $100 of bond value), the cost of a mortgage will improve by .25%. That means that a $400,000 mortgage would be $1,000 less expensive. 


This doesn't mean that the cost of your loan is constantly fluctuating. There will come a time in the mortgage process when you have to "lock" the rate. This means that the lender is now committed to fund the loan at an agreed price and terms, regardless of what happens in the market. If your loan officer believes, from being aware of the market activity that rates might improve over the near term, he or she may advise you not to lock right away. Conversely, your loan officer may believe that rates may increase soon based on market activity and would encourage you to lock early, thus protecting from rising rates. No one is right all the time, but you're far better off dealing with a lender who understands the mortgage markets.

To answer your question—FINALLY—the answer to your question is no…but regardless of whether you go to a Too Big To Fail bank or an independent lender (broker or banker), your interests are best served by finding someone whom you can trust as a resource and trusted advisor. 

I hope this is helpful. Good luck!


Thank you for visiting my blog, please leave me a comment and let me if you like my blog and the information I post. 

Roxy Redenbaugh, Broker
Sr Mortgage Consultant
Residential and Commercial
The Greatest Compliment I Can Receive Is A Referral From Friends, Family, and Business Associates,
NMLS#269926 Company NMLS#1930219

Wednesday, June 17, 2020

Selling Your Home During Quarantine: all the same rules apply, but looks are everything!

Social distancing. It’s just not fun. And it’s certainly not ideal for selling your home, if that was
your plan before this COVID-19 quarantine guidelines made life difficult. Open houses and house tours are, after all, all about the number of feet crossing your threshold — not people keeping their distance.
The current state of the US housing market reveals that homebuyers still want to buy houses. The big difference is that they are making the transition to the virtual home-buying experience (including live video-chat tours) instead of tromping through homes right now. So if you were planning to list your house before all this hit, all is not lost. It’s the perfect time to get your home ready to sell, making it visually virtual delight.
Your first assignment is to walk the perimeter of your home and re-enter it through your front door, imagining it through the eyes of a potential homebuyer. Go through each room in your house and see with homebuyer eyes the amount of clutter you’ve accumulated. Don’t worry, it’s human nature. However, clutter detracts from the beauty of your home and its prime selling features. If you would buy a used car containing a trash bag full of laundry in the back seat or chapstick and hair ties in the center console. Why take chances at this point, when you want the highest price for your house, and you already have challenges showing it during quarantine?
Decluttering means eliminating large furniture/ too many pieces of furniture so that rooms appear larger. If you need tips on this, go online and see what homebuilders or stagers do with each room, and give each room a definite purpose. That means your master should not be your home office, your exercise room and your sleep space all at once. Place extra stuff in storage for now. Or donate it or sell it using appropriate distancing rules and washing your hands often.
This process of decluttering has more of a purpose than just making the home appear more spacious. It’s also helping you prepare for the eventual move. You plan on moving anyways so you might as well start organizing and packing your belongings.... Start by cleaning out your closets and other storage areas before moving onto individual rooms. Sell or donate the items you don’t want to keep, and then begin moving everything else to a storage unit. You’ll be amazed how large your house really is once you begin reducing the amount of ‘stuff’ that fills it from wall to wall.
As you declutter, deep clean, uses the used car analogy. What if that same car you were looking at buying had fast food wrappers on the floorboards, or the steering wheel and dashboard were covered in dust? You would probably think the previous owner didn’t take good care of their car, even if it ran perfectly. Same with houses, presentation is everything.
It’s also a great time to fix a few things. Take notes on each room as well as the home’s exterior and make a punch list, knocking out each task one by one. You’ve definitely got the time. If much of what you see appears dated, why not do a few inexpensive updates, such as changing out the hardware in your kitchen, replacing old doorknobs, updating outlet and light switch plates, adding floating shelves here and there, and doing a bit more feature lighting?
Even if homebuyers hesitate to make an appointment to walk through your home, they will probably drive by it. So curb appeal is definitely called for. “You may live in sunny Sacramento, CA where you can use plants year-round to make your house more appealing to homebuyers, or you may live in Minneapolis, MN where snow may still cover the ground in late spring and you have to work a little harder to make your home shine. Either way, you’ll never get a second chance at a first impression for homebuyers. So rake that yard, pick up debris, pressure wash your driveway, add a few potted plants here and there, consider repainting or staining your front door, and throw down a new welcome mat.
No matter what you do to improve the look of your home before it hits the multiple listing service as well as the video chat world, it will pay off — in photos as well as in person.
Thank you for visiting my blog, please leave me a comment and let me if you like my blog and the information I post. 

Roxy Redenbaugh, Broker
Sr Mortgage Consultant
Residential and Commercial
The Greatest Compliment I Can Receive Is A Referral From Friends, Family, and Business Associates,
NMLS#269926 Company NMLS#1930219

Friday, June 12, 2020

Mortgage Giants Freddie Mac and Fannie Mae Offer More Relief To Worried Homeowners

In a move sure to bring a sigh of relief to millions of distressed homeowners, loans backed by Fannie Mae and Freddie Mac will now defer all missed mortgage payments, tacking them on to the end of their loans already in forbearance.
HousingWire’s Ben Lane reports that under the new program, borrowers who took forbearance due to COVID-related issues will not have to repay their missed payments until they sell their homes, refinance their current mortgage or their mortgage matures. Under the program, the borrower begins making their mortgage payments again when they’re able.
Lane quotes FHFA Director Mark Calabria, saying, “For homeowners in forbearance due to COVID-19, payment deferral allows them to make up missed forbearance payments when they sell their home or refinance. This new forbearance repayment solution responsibly simplifies options for homeowners while providing an additional tool for mortgage servicers. Borrowers who can pay their mortgage should, because missed payments remain an obligation that will ultimately have to be repaid.” The extension can continue up to 180 days beyond the 180 days granted by forbearance.
“The issue is that forbearance is not forgiveness; therefore, borrowers in forbearance have to repay their missed mortgage payments one way or another,” says Lane. “The GSEs’ (government-sponsored loans’) new payment deferral allows borrowers who took forbearance to shift as many as 12 months of mortgage payments to the end of their loan and is available to homeowners who have completed a COVID-19 related forbearance plan and are able to continue making their full monthly contractual payment but cannot afford full reinstatement or a repayment plan to bring their mortgage loan current.
According to Freddie Mac, the maturity date, remaining term, interest rate and payment schedule of the borrower’s mortgage remains the same as it was before. In addition, Freddie Mac said that utilizing the payment deferral option does not prevent a homeowner from someday being eligible for a Freddie Mac modification if payment relief is needed in the future. This option will be available starting July 1, 2020.
For more information on how this all works, contact your mortgage professional.
I am always available to answer any questions you may have. 
Thank you for visiting my blog, please leave me a comment and let me if you like my blog and the information I post. 

Roxy Redenbaugh, Broker
Sr Mortgage Consultant
Residential and Commercial
The Greatest Compliment I Can Receive Is A Referral From Friends, Family, and Business Associates,
NMLS#269926 Company NMLS#1930219

Source: Housingwire | TBWS

Tuesday, June 9, 2020

Best Advice I Would Give To First-Time Homebuyers

I was once asked: We're in the process of hopefully purchasing our first home, and I'm a little lost on everything that is going on.  What's the best advice you would give to first-time homebuyers?

Without question, your first step in the home buying process is to begin getting your financing in order. I realize this may seem like slightly self-serving advice since I am in the mortgage business, but the fact is that most people who buy homes today do so with a mortgage. That part is often the most challenging, with far more moving parts and potential snags than in years past.

This fact should not intimidate or deter you; getting a mortgage today is more involved, but it is not the impossible task some would have you believe it is.

It's an excellent idea to know the shape of your credit. Lenders do NOT require that every applicant is solid gold and squeaky clean, but you should be aware where you stand at the outset. If there are errors on your report, or old past-due accounts you have forgotten about or public records (judgments, etc.), now is the time to be aware of them and deal with them.

You can get a free credit report from sites like FreeCreditReport.com that covers just one bureau (Experian) or Creditkarma.com, which covers (TransUnion) and (Equifax). Most of those sites will try to sign you up for various premium services, but what you're interested in at this stage is whether there are items that you should take care of to get approved for a mortgage. If there are any past due accounts, you should bring them current as quickly as possible. Likewise, if there are judgments or collection accounts, try to settle them. In particular, lenders require that any public record items (judgments and liens) be resolved before closing.

One place you can be sure to get the most accurate and up to date information that is on your report is by going directly to each bureau of the three credit bureaus and bypass these companies altogether. At AnnualCreditReport.com will give you a Free report. If you want scores you will have to pay a fee to each bureau. 

Be aware that collection agencies will typically settle for much less than the amount listed on the credit report—but you'll have to report as income the amount they reduced the debt to settle. You should be very careful about paying off any collection accounts older than two years. Doing so will upgrade the status from "collection" (bad) to "paid collection" (slightly less bad). The problem with this is that it will also change the "Date of Last Activity" (DLA) on your report. A collection account that is, say, three years old may reduce your credit score by 10 points. A recent "paid collection" may reduce it 20 points or more.

It's not too early in the process to find a loan officer to help you with this part of the process. You should specifically look for someone with whom you feel comfortable and confident. It is not worth focusing on the rate someone may offer if they aren't available to be your trusted adviser. You want someone who responds promptly to emails, phone calls, and texts, and who gives you straightforward answers in plain language. The difference in rate between different lenders is quite small since all lenders sell their loans to the same pool of investors for the same price on any given day.

When you've found a loan officer you like, you should begin the preapproval process. You'll typically provide current pay stubs, W2s, and bank statements. The loan officer will help you with your application, then submit it to the Automated Underwriting System (AUS). They will get an answer literally in seconds. You are hoping for AUS findings of "Approve/Eligible" or "Accept," depending on which system they are using. The AUS findings will specify what, if any, additional documentation you might have to provide. The important thing is to get your starting point.

You should ask your loan officer if they can do a "TBD Approval." This means that they will submit your loan application to an underwriter for review and approval even though the property is "To Be Determined." When you get your loan approval back in a day or two, it will be the same as though you had an actual "live" deal. Having an underwriting approval in hand will make for a much stronger offer to the seller. This can be a make-or-break a deal if you find yourself competing with any other buyers for a property. Hope this is useful.. good luck!

Get in on our next HomeBuyers 101 Zoom Workshops.. come join us, you can talk to industry professionals about the home buying process, the struggles, the pros and cons and get your questions answered.  Click here and sign up.. 

All attendees get my Free Buyers Guidebook. 

Thank you for visiting my blog, please leave me a comment and let me if you like my blog and the information I post. 

Roxy Redenbaugh, Broker
Sr Mortgage Consultant
Residential and Commercial
The Greatest Compliment I Can Receive Is A Referral From Friends, Family, and Business Associates,
NMLS#269926 Company NMLS#1930219