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You'll need to know about recent sales, work needed on the home and what the sellers are looking for to determine the right asking price. (Getty Images)

Ten questions to help you create an offer that will put you in the best position to have it accepted by the seller.

Now that you’ve found a house you're interested in buying, you definitely don’t want to overpay. Who does? That sweet spot where both the buyer and seller get what they want is where the best deals are made.

To figure out how much your initial offer should be, you have to work backwards from how much you're willing to pay when all is said and done. Analyze comparable sales, market conditions, property conditions and financial considerations along the way. Sound difficult? Not really. As long as the homework is done right and the ducks are lined up, you will feel confident in your initial offer.

Here are 10 questions to ask as you determine your offer price on a house.

What is the market value? In short, market value is what someone is willing to pay for a home. After looking at all the recent comparable sales and factoring in current market conditions, this is the price both the seller and buyer can agree on.

Market value is not a specific number, but a range. At the low end, you're getting a great deal, and at the high end you're paying top dollar. Where you end up on the market value spectrum is determined by a combination of market conditions, motivation and financial comfort.

What do the comps tell you? When determining the sale price, analyzing comps is the most crucial step. Comparable sales are listings which have sold in the past 6 months and are located in the same subdivision or geographic area as the house you're researching.

By focusing primarily on sold homes, you keep the focus on true market value. Active listings only reflect what a seller thinks their home is worth, not what a buyer is willing to pay for it.

Every home and lot is unique, so you'll need to lean on your real estate agent to help you select the most like-kind comps and add or subtract value based on differences in condition, updates, size and more.

What's the list price? Now that you've analyzed the comps to determine what you objectively believe the market value spectrum is, see how this matches up to the list price the sellers have set.

Have they priced the house on the low end of the spectrum in a hot market to potentially attract multiple offers? Are they fishing to see what they can get and have set the price at the high end, or even above the spectrum? Are they making significant price drops regularly?

Most importantly, assume nothing. While analyzing the sellers' strategy can give you some insight into their head space and potentially help determine your offer price, don’t overthink it. No one knows the sellers' true motivations and sometimes not even the sellers themselves know just how far they are willing to bend until they see an offer in front of them.

What does the market look like? Have your real estate agent pull all active, under contract and sold listings from the past 6 months. If there are relatively few active listings compared to sold, current inventories are low and houses are more likely to sell quickly, and vice versa. Of those under contract, if the majority were on the market for a short period of time before changing status, this is another indicator of a hot market. Finally, look at sale price compared to list price to see if houses were selling quickly and for above list price.

How much work is needed on the home? As you tour the home, pay close attention to what improvements or upgrades may be needed, including appliances, HVAC, water heater, roof and more.

While some buyers will assume any of these items can be negotiated after the home inspection, in many areas it's common practice that you won’t be able to ask for replacement or a credit to do so simply based on the age of a unit. Factor these expenses into the initial offer price, or plan for budgeting monthly.

Have you considered the whole offer? Remember that offer price is only one aspect of a much larger picture. Find out where your priorities lie and have your agent do his best digging to find out the same for the sellers. Finding the middle ground is where the best deals lie, whether that means leasing the house back to the sellers for a couple months or purchasing the property as-is, for example.

When should you go low? Typically, an offer at the low end of the value range, or even below, is more likely to be entertained by a house that has been on the market for an extended period of time. As long as you're reasonable and justified in your offer, there's no reason to worry about offending the seller with a low offer.

But never assume. Even if a house has only been on the market a week and you feel it's overpriced, there’s no harm in offering what you feel is reasonable. The only way to really find out how bad the owner wants to sell it is to put an offer on the table.

Depending on how the sellers counter a low offer, you'll have a clearer idea of what their ultimate target price is. If you come in 5 percent below list price price and they counter at just 0.5 percent below, you know they aren’t willing to budge much. You’ll have to decide how far you want to push it and when you want to dig your heels in.

When should you go high? A spring market can be more difficult, as bidding wars are more prevalent and there's typically a quick turnover of listings. Keep your focus on the market value spectrum and don’t let the competition drive you to buyer’s remorse by overpaying.

If you're searching in a hot market and a new listing pops up that is well priced, get over to see it as soon as possible. Once you've researched the comps and feel comfortable with the offer price, this may be an excellent time to present an offer with very little room for negotiation. In the end, it could potentially save you money by not allowing the house to end up in a bidding war.

What about multiple offers? Make sure your real estate agent finds out if the sellers have one or more offers and if so, when the listing agent plans to present all offers to the sellers.

If there are multiple offers, don't expect to negotiate the price. Once again, have your buyer’s agent ask plenty of questions: Will the sellers entertain an escalation clause, or do they simply want your highest and best offer? Are they mostly motivated by price or are there other aspects of the contract that mean more to them? For example, would they like a leaseback? Would they prefer an as-is offer?

Multiple-offer situations are the pressure cookers of residential real estate. If you aren’t careful, you may feel obligated to do whatever necessary to win the bidding war and ultimately end up with buyer’s remorse. Trust in your research from reviewing the comps and determine the price you're willing to go up to without losing sleep regardless of whether you win.

How do you avoid regrets? One strategy buyers have used is to bid an extremely high price to beat out the other competitors with the expectation that the appraisal will come in low and you can renegotiate later. Do yourself a favor and do not adopt this method. Not every appraiser truly knows the market and may just give you the benefit of the doubt that the agreed-upon sale price is justified.

Not to mention, a listing agent will likely spot this method a mile away and be less likely to take your offer seriously. At the end of the day, don’t play with fire, because getting burned is awful and wallets are highly flammable.


To view the original article click here             Apply to Buy a Home             Apply to Refinance

Posted by Jackie A. Graves, President on April 23rd, 2018 7:02 AM

Your credit history can determine if you can get a loan, and even where you live or work. Credit scores are built from your credit history and can determine how much you pay to borrow money for a car or house. Yet, many people don’t know where to start when it comes to building, improving, or protecting their credit history. Three common credit problems are:


  • Lack of enough credit history

  • Denied credit application

  • Fraud and identity theft


Below are some tips on how to deal with these issues.


1. Lack of enough credit history


Many people may not know that having no credit history, or a limited credit history, can create issues similar to having negative information in your credit history. If you don’t currently have a credit history, you’re not alone. One in ten adults experience "credit invisibility," meaning they do not have any credit history with one of the three nationwide credit reporting companies. Many more don’t have enough of a credit history, sometimes referred to as having "thin" credit, to generate a credit score. People with thin or no credit history may find it difficult to apply for a loan or rent an apartment.


What you can do:


Take action to help build your credit history responsibly. There are a number of products considered helpful in establishing or rebuilding credit histories, and they provide you with the opportunity to practice making on-time payments that are reported to the credit reporting companies. These may include secured credit cards, credit builder loans, or retail store credit cards.


Use our Building credit from scratch checklist to learn more about these and other ways to build your credit history.


2. Denied credit application


If you’ve been denied an application for a loan or line of credit, there are steps you can take to improve your credit score or dispute inaccurate information on your credit report.


What you can do:


Find out why your application was denied. If a lender rejects your application, they are required under the Equal Credit Opportunity Act (ECOA)  to tell you why your application was rejected or tell you that you have the right to learn the reasons if you ask within 60 days.


If you were denied due to an "insufficient credit file," you can use this checklist to learn how to build and keep good credit.


If a lender rejected your application based on your credit report, they must provide specific information about why your application was rejected or tell you that you have the right to learn more about why you were denied if you ask within 60 days.


Review your credit reports. Make sure the information in your credit reports is accurate. If you find errors, take steps to correct them.


Improve your credit history with a few best practices, such as paying your bills on time and limiting your credit use to no more than a third of your credit limit.


3. Fraud or identity theft


Identity theft occurs when someone uses your name, Social Security number, date of birth, or other identifying information, without authority, to commit fraud.


What you can do:


If you think you’ve been a victim of fraud or identity theft, there are several steps you can take to protect your personal information from being misused. These steps include:


Reviewing your credit reports each year to make sure they contain only information about you


Immediately reporting any inaccurate or suspicious information on your credit reports


Placing a fraud alert or security freeze on your credit reports


Consider signing up for identity monitoring or credit monitoring services. Some of these services are free, and others cost money. If you’re considering these services, be aware that there are other free and low-cost services to protect consumers, including a security freeze or fraud alert.


If you are considering signing up for identity or credit monitoring services, make sure you fully understand the terms and conditions related to trial periods, fees, cancellation requirements, and other conditions so that you don’t face unexpected fees, charges, or other limitations.


If you were impacted by the Equifax data breach, we have additional information on the steps you can take to respond when your personal information is exposed in a data breach.


Next steps


Building or rebuilding your credit will take time and planning. The steps above can guide you on your journey.


If you want more help, consider talking to a credit counselor. Most reputable credit counseling organizations do provide free educational materials and workshops, though some do not. Building or improving on your credit won’t happen overnight. Anyone who claims to be able to do this for you may be scamming you.


To learn more about credit reports and scores, check out our tips and frequently asked questions.


To view the original article click here             Apply to Buy a Home             Apply to Refinance



Posted by Jackie A. Graves, President on April 22nd, 2018 7:05 AM

There are two types of home equity loans: term, or closed-end loans, and lines of credit.

Both are sometimes referred to as second mortgages, because they’re secured by your property, just like your original (first) mortgage.

Home equity loans and lines of credit are usually for a shorter term than first mortgages. The most common type of mortgages runs 30 years, while equity loans typically have a life of five to 15 years.

The loan

A home equity loan, sometimes called a term loan, is a one-time lump sum that is paid off over a set amount of time, with a fixed interest rate and the same payments each month. Once you get the money, you cannot borrow further from the loan. To see current home equity loan rates, use Bankrate’s home equity loan rates tables.

The line

A home equity line of credit (HELOC) works more like a credit card. You are allowed to borrow up to a certain amount for the life of the loan — a time limit set by the lender. During that time you can withdraw money as you need it. As you pay off the principal, your credit revolves and you can use it again. Let’s say you have a $10,000 line of credit. You borrow $5,000, but then pay back $3,000 toward the principal. You now have $8,000 in available credit. This gives you more flexibility than a fixed-rate home equity loan.

Credit lines have a variable interest rate that fluctuates over the life of the loan. Payments will vary depending on the interest rate and how much credit you have used. When the life span of a line of credit has expired everything must be paid off. A lender may or may not allow a renewal. To see current home equity line of credit rates, use Bankrate’s home equity line of credit rates tables.

Lines of credit are accessed by specially issued checks or a credit card. Lenders often require you to take an initial advance when you set up the loan, withdraw a minimum amount each time you dip into it and keep a minimum amount outstanding.

Financial institutions negotiate a home equity loan just like they do a mortgage: You have to pay off the loan or line of credit when you sell the house.

Which type should you choose?

The answer to this question is seldom black and white.

But there are some scenarios where the choice is obvious. For example, let’s say you need $7,000 to pay for your daughter’s wedding next month and $3,000 to fix your roof, which will take a week. You know exactly how much you need and both amounts are due in full fairly quickly. If you don’t have plans to borrow again, a straight home equity loan for $10,000 is more suited to your purpose.

But if you need money over a staggered period of time — for example, at the beginning of each semester for the next four years to pay for Jimmy’s schooling or for a remodeling project that will take three years to finish — a line of credit is the better choice. It gives you the flexibility to borrow only the amount you need, when you need it.

And if you borrow relatively small amounts and pay back the principal quickly, a line of credit can cost less than a home equity loan.

Credit card debt consolidation

Consumers who have run up credit card debt will often borrow a lump sum and pay off their Visa, MasterCard and department store charges, then pay back the bank over time at a lower interest rate than the cards would have imposed. This sort of debt consolidation is the single most-popular reason people have for taking out home equity loans, and fixed-rate home equity loans are used slightly more often for this purpose lines of credit.

To help you determine which loan best suits your needs, ask yourself:

  • When do I need the money?
  • For how long do I need the money? Is it for a short-term purpose, or a long-term?
  • How long do I need to pay it off?
  • How big a monthly payment can I handle?
  • Would a line of credit tempt me to use the money carelessly because it works similar to having a charge card or checking account?
Ask your lender:
  • How long is the term of the closed-end loan?
  • What is the life span of a line of credit?
  • How large a line of credit do I qualify for?
  • Is my line of credit renewable when the life of the loan expires?
  • What are the interest rates?
  • Do I have to use my credit line right away? (If you’re opening a credit line for future or emergency needs, you’ll want one that doesn’t require a minimum draw at closing.)
  • Under what circumstances can you freeze, reduce or demand full payment of my loan?
  • Can I lease my house during the time of the loan?
  • Will you loan to me if my house is on the market (and at what rate)?
  • If interest rates go down, how low will my loan go?
Looking for alternatives to using home equity? Consider a personal loan – Find the Lowest Personal Loan Rates

To view the original article click here             Apply to Buy a Home             Apply to Refinance

Posted by Jackie A. Graves, President on April 21st, 2018 9:17 AM

Make sure you understand how these two types of mortgages differ.

Potential homebuyers with credit problems, low income or not much saved for a down payment may have trouble finding a home loan. For those borrowers, an FHA-insured loan might be a good solution. Here's what you should know if you're weighing whether a conventional or FHA mortgage is the best way to go.

What Is an FHA Loan?

The FHA insurance program provides a means for many prospective homeowners to achieve the dream of owning a home who might not have otherwise been able to do so.

An FHA loan is a mortgage issued by a federally approved bank or financial institution that, unlike a conventional mortgage, is insured by the Federal Housing Administration. This mortgage insurance provides the security that qualified lenders need in order to take on a riskier loan.

But that security comes with a cost for the buyer: With FHA loans, the buyer must pay a 1.75 percent upfront mortgage insurance premium at closing, regardless of the down payment. Then, the buyer must make monthly mortgage insurance payments for the life of the FHA loan if the down payment is less than 10 percent. It can be canceled after 11 years if the down payment is 10 percent or more.

According to the agency's website, the FHA has insured more than 47.5 million properties since the program was created in 1934, making it the largest mortgage insurer in the world.

Comparing FHA With Conventional Mortgages

There are several key differences between FHA and conventional loans. Each has its advantages and drawbacks. Here's a quick comparison:

Conventional mortgages

FHA loans

Minimum FICO credit score

Typically no lower than 620

Typically as low as 580

Minimum down payment

As low as 3 percent, but 5 to 20 percent is typical

As low as 3.5 percent

Mortgage insurance

Monthly payments are required if you have a down payment of less than 20 percent, but generally, the insurance can be canceled when your loan-to-value ratio reaches 80 percent.

Upfront and monthly payments, sometimes for the duration of the mortgage term, are required.

FICO score

Your FICO credit score, which is the most widely used score among lenders, generally needs to be at least 580 to qualify for an FHA loan. If your score is between 500 and 579, you need to come up with a down payment of at least 10 percent. Conventional loans generally require that you have a FICO credit score of at least 620 to qualify, and a higher credit score is needed to qualify for the best interest rates.

Down payment

You can get an FHA loan with a down payment as low as 3.5 percent. Though some conventional mortgages have a down payment requirement as low as 3 percent, most typically require a down payment of 5 to 20 percent, according to the Consumer Financial Protection Bureau.

Mortgage insurance

No mortgage insurance is required on a conventional loan with a down payment of at least 20 percent. Though if your down payment is less than 20 percent, you will be required to pay for private mortgage insurance, or PMI. Once your loan-to-value ratio (the amount left on the mortgage divided by the property's appraised value) reaches 20 percent, the PMI requirement will go away and so will the need to pay this monthly cost. This is not done automatically: You will need to request that your lender remove the PMI payment.

By contrast, FHA loans require an upfront mortgage insurance premium and monthly mortgage insurance payments.

Debt-to-income ratio

You can usually qualify for an FHA loan with a less favorable debt-to-income ratio, known as a DTI. Your DTI is calculated by taking the amount you pay each month toward debt and dividing it by your monthly gross income. Your debts may include car, rent, mortgage, student loan payments, installment debt and child support payments, and monthly minimum payments on credit cards. The lower your DTI, of course, the better.

Purchase restrictions

Conventional loans can be used to purchase a vacation home, investment property or primary residence. FHA loans are limited to owner-occupied properties, which can include multi-unit properties as long you live in at least one of the units.


Conventional mortgages generally present fewer hurdles in terms of processing and inspections. For example, the FHA has minimum property standards, and if the property doesn't meet them, the seller or the buyer may need to pay for repairs before it can qualify for a mortgage. This might include ensuring that any peeling paint in the property is addressed. Who pays for the repairs might be a topic of negotiation between the buyer and seller.

"While FHA loans can be advantageous for some home purchases, some sellers don't want to deal with the red tape involved with FHA buyers," says Christopher Clepp, a financial advisor with the Chicago office of Strategic Financial Group. In a competitive bidding situation where sellers have many offers to choose from, this can put a buyer at a disadvantage.

Loan limits

It's a common misconception that FHA loans are only for lower-income borrowers with credit challenges. However, one aspect of the FHA program that might dissuade a higher-income borrower is its loan limits, which are, in many cases, lower than those of conventional mortgages.

For 2018, you can take out an FHA home loan in a low-cost area for less than $300,000. In a pricey area, the FHA loan limit is nearly $700,000, according to the U.S. Department of Housing and Urban Development. Limits vary depending on your location. There are special exceptions for both FHA and conventional loan limits for Alaska, Hawaii, Guam and the U.S. Virgin Islands, which have a single-unit limit of more than $1 million.

For example, in a low-cost area, the loan limits are:



1 unit



2 unit



3 unit



4 unit



In a high-cost real estate market such as San Francisco or the District of Columbia, the limits are:



1 unit



2 unit



3 unit



4 unit



Sources: HUD and Fannie Mae

Choosing the Right Type of Loan for You

Consider these factors when deciding between an FHA loan or a conventional mortgage:

Your FICO score and credit history

"An FHA loan is a great option for those with poor credit," says Casey Fleming, mortgage advisor with C2 Financial Corp. and author of "The Loan Guide: How to Get the Best Possible Mortgage."

Indeed, for those with a particularly low credit score, an FHA loan might be your only option. You may also decide to put off buying a house and work on building your credit instead.

The down payment you can afford

If you don't have the cash for a large down payment, an FHA home loan might be your best option. FHA loans require a down payment of at least 3.5 percent. Some lenders offer conventional loans with down payments as low as 3 percent, but most require a down payment of 5 to 20 percent.

How long you plan to own the home

On an FHA loan, the monthly mortgage insurance premiums will stay in place for at least 11 years. A conventional loan typically has no upfront premium and allows the borrower to request that the lender cancel the monthly premium when the loan-to-value ratio hits 80 percent.

If you are only planning to put down less than 20 percent and expect to stay in the home for a short period of time, the FHA monthly mortgage insurance premium may not matter much. However, if you plan to own the home for at least 11 years, you will pay the monthly premium for the full 11 years, even if your loan-to-value ratio improves. In the future, you may be able to refinance to a conventional mortgage with no mortgage insurance requirement, if your financial situation qualifies.

The APR and overall cost

When determining what the best loan is for you, factor in any upfront closing costs, required mortgage insurance and other fees that can come with the mortgage. These types of costs can turn a mortgage with a lower interest rate into an unattractive option.

The APR, or annual percentage rate, is the annual cost of procuring your loan and includes not only the quoted interest rate but also any other fees that you will be paying over the life of the loan. Comparing loan APRs is a good way to evaluate their overall costs.

Fleming cautions, "FHA loans can be a more expensive option after factoring in the mortgage insurance due at closing and the monthly mortgage insurance premiums, even if the stated interest rate is lower than a conventional alternative." 

Consider Hiring a Mortgage Broker

While you can certainly assess mortgage options on your own, it may make sense to hire a knowledgeable professional, like a mortgage broker.

Ask friends, family members and colleagues to refer someone who is reliable and who will put your needs first. As you evaluate brokers, it's also a good idea to check out their experience, professional affiliations and, of course, if they've had any major complaints against them. Make sure the broker knows about all types of loan programs spanning conventional, FHA and the VA programs if you are a veteran or active-duty military service member. Often, the broker's fees may be paid by the lender or the borrower.

And make sure you're prepared when you meet with the broker. Dan Green, long-time mortgage professional and founder of the mortgage education site Growella, suggests, "Before applying for a mortgage, consider your loan traits [like your credit and how much of a down payment you expect to make] and what you're trying to accomplish. Then, ask your mortgage professional, 'Where am I going to get the best combination of rate and price?'"

To view the original article click here             Apply to Buy a Home             Apply to Refinance

Posted by Jackie A. Graves, President on April 20th, 2018 7:23 AM

Your credit score matters (especially if it’s low), but it’s not the only number that you should care about when it comes to your money. If you’re paying off debt, for example, you want to be aware of something called your debt-to-income ratio. It doesn’t just affect your ability to get loans; it’s also just a good overall measure of your financial health.

What is your debt-to-income (DTI) ratio?

Generally speaking, your debt to income ratio is pretty much what it sounds like: the ratio of debt you have divided by your gross monthly income. Whereas your credit report and score doesn’t include any details about your income relative to your debt load, that’s exactly what your DTI ratio is all about.

“DTI is a more holistic way to see if you’re living within your means because it provides a true view of your monthly debt obligations relative to your monthly income,” says Erin Lowry, author of Broke Millennial. “A credit score is certainly a piece of your financial profile, but not the full picture. For example, you can be heavily burdened with debt and still have a strong credit score.”

If your DTI ratio is high, lenders might not loan you money or credit, or they may give you worse interest rates, even if your credit score is in shape. This doesn’t really matter if you’re not shopping for a loan or credit card, but you still want to avoid a high DTI ratio if only because a higher ratio means you’ll have a harder time paying back your debt.

How to calculate your DTI ratio

It’s pretty easy to calculate your own DTI ratio, but there are online tools that will do it for you automatically and keep track of it, too. Intuit’s newly released Turbo app, for example, monitors your credit score but also tracks your DTI ratio and gives you personalized advice. If you’re already a TurboTax or user, you can use your login credentials to try Turbo yourself.

If you want to do the math yourself, it’s simple:

"DTI ratio is a simple formula. Divide your monthly debt obligations divided by your gross monthly income, and multiply that number times 100,” says Lowry, who partnered with Turbo.

For example: Let’s say you pay $200 a month in student loans, $850 on rent and $120 for your auto loan. Your monthly gross income is $3,500.

($200 + $850 + $120) ÷ ($3,500) = 0.3342
Then, x 100
= 33.42 percent

When you’re applying for a mortgage, be aware of something called your household ratio in addition to your DTI ratio (which can also be referred to as your back-end ratio.) Your household ratio is the amount of your home-related expenses (including property tax, prospective mortgage, insurance, etc.) divided by your monthly income.

“While mortgage lenders typically look at both types of DTI, the back-end ratio often holds more sway because it takes into account your entire debt load,” Nerdwallet says.

The “ideal” DTI ratio

Ideally, you want to keep your DTI at 36 percent or less, Lowry says. At least, that’s a ballpark figure lenders look for when deciding your creditworthiness. According to Nerdwallet, mortgage lenders also prefer a household ratio that’s even lower.

“Lenders tend to focus on the back-end ratio for conventional mortgages, loans that are offered by banks or online mortgage lenders rather than a government program,” they report. “If your front-end DTI is below 28 percent, that’s great. If your back-end DTI is below 36 percent, that’s even better.”

Of course, you should aim for a DTI ratio of 0 percent if your goal is to be debt free. Either way, it’s another number to keep tabs on, beyond your credit score.

To view the original article click here             Apply to Buy a Home             Apply to Refinance



Posted by Jackie A. Graves, President on April 19th, 2018 6:56 AM

Here’s what they could save with just one more quote

Once borrowers begin their home-buying process, they rarely shop around for their mortgage, most often preferring to go with the first lender they find.

The Consumer Financial Protection Bureau previously cited that almost half of borrowers seriously consider only a single lender or broker before deciding where to apply. And 77% of borrowers only end up applying with a single lender or broker.

As it turns out, this could be causing them to lose out on a lot of money, according to the April Insight report from Freddie Mac.

By examining the dispersion of 30-year fixed mortgage rates across all lenders during a typical week, Freddie Mac could that borrowers could save an average of $1,500 over the life of the loan by getting just one additional rate quote.

In fact, 80% of borrowers who obtain one additional rate quote while shopping for a mortgage will save between $966 and $2,086 over the life of the loan.

And that savings increases to $2,914 if the borrower receives five rate quotes. About 80% of borrowers who obtain five quotes will save between $2,089 and $3,904.

“By shopping more than one mortgage lender, consumers are more likely to get a better interest rate and save money in both the short and long term,” said Len Kiefer, Freddie Mac chief economist. “With lower monthly payments and lower fixed fees, the loan will be more affordable and thus safer, and consumers may have hundreds or thousands of dollars more in their pockets. Not a bad return for a few phone calls or clicks.”

Freddie Mac explained that three factors will affect how much savings borrowers will see by shopping around for their mortgage:

1. The savings will be proportionate to loan size.

2. Borrowers who expect to have their mortgage for a longer term, and neither refinance nor move, will gain more from a reduced rate.

3. The dispersion of rate offers greatly affects the amount of savings.

To view the original article click here             Apply to Buy a Home             Apply to Refinance


Posted by Jackie A. Graves, President on April 18th, 2018 7:31 AM

If you're a homeowner, you probably already know that recent tax legislation means you can now deduct only up to $10,000 worth of property taxes from your federal tax bill. And if you live in a high-tax state—New Jersey, Illinois, and Texas, we're looking at you—that probably feels like a drop in the bucket.

So it's understandable if you're feeling a little extra burn as you pull out your checkbook this tax season. But what can you do besides complain? (Or move?)

Sadly, there's no "get out of paying property tax" loophole—it's an ongoing burden that homeowners everywhere must take on. But there is a chance you can shrink the amount of taxes you owe on your home. Here's how.

1. Know how this game works

Maybe "game" is the wrong word. There's absolutely nothing fun about it! But the property tax system is somewhat labyrinthine and you do need to know the rules. And the most important one is that the amount you pay in taxes depends on the value of your property.

"A property owner’s chances of successfully appealing his or her property taxes depends upon whether the tax assessment is fair and accurate," says Anthony F. DellaPelle, a property tax attorney in Morristown, NJ.

In other words, the assessment of your home should reflect its fair market value. If those two figures don't line up, you should be able to reduce the assessment—and pay less.

If you're lucky, your tax assessor will agree to a reduction without requiring you to file a tax appeal, DellaPelle says.

But there's still a lot you'll need to do to back up your claim.

2. Scrutinize your info

Before you can contest your property tax assessment, you have to know what it is, right? Some communities may allow you to access this information online. Otherwise, you'll have to get it from your tax assessor’s office.

Once you have the information in hand, verify the following:

  • Square footage: Does it overstate your livable space? Look at the room counts," advises Chris Dowler, owner of Dowler Construction in Madison, CT. "Is there an extra bathroom which doesnt exist? Do they show a finished basement area which truly isnt finished? If so, you may have a reason to appeal.
  • Zoning: Is your home properly zoned? If you have a conservation, drainage, or utility easement that minimizes the buildable area of your property, has that been noted?
  • Amenities: Fencing, sheds, in-ground pool, etc. If any of these have been removed, you have a reasonable claim for adjustment, Dowler says.

3. Find out what your neighbors pay

How much is their property tax? It really is your business.

To win an appeal, you want proof that your neighbors who live in a house comparable to yours pay less in taxes than you do. Search here for homes in your neighborhood that have recently sold, or contact a real estate agent and ask for comps to be pulled. The real estate agent may be kind enough to do it without the promise of a sale. You can also be nosy and just ask your neighbors.

But a word of caution: “Be sure you’re comparing apples to apples as reasonably as possible,” Dowler says.

A tax assessor will be skeptical if you argue that your brand-new, six-bedroom house should be taxed the same amount as a 100-year-old, four-bedroom home down the street. And be aware that any improvements you've made to your home (or plan to make) could send your tax bill right back up.

4. Consider hiring an appraiser

Not sure where to start to uncover all this info? Think about hiring a licensed real estate appraiser or property tax appeal service. These pros can put together an official report that includes an expert opinion of your property value.

Just keep this in mind: If your appeal proceeds to court, your appraiser will likely be required to testify, DellaPelle says. And the appraisal report may not be considered legit unless the appraiser's available to testify, so choose someone local that you trust.

5. Understand how and when to appeal

Let’s say that you do find something incorrect on your assessment—maybe your home’s listed as 40,000 square feet instead of 4,000. You can’t just email your tax assessor’s office and demand it be corrected.

“While each state has different tax appeal procedures, appeals usually have an annual deadline that is strictly enforced,” DellaPelle says. Miss that deadline, and you’ll have to wait until the following year to appeal. (And keep paying your tax bill until then.)

You’ll also need to know to whom to appeal. Your tax board could be local, county, or regional. Some states even have a special tax court, DellaPelle says.

6. Consider hiring a lawyer, too

Just because you like DIY projects doesn’t mean you’re qualified to tackle this one.

“Property tax appeals have special rules and procedures that vary from state to state,” cautions DellaPelle. “The consequences of failing to adhere to them can be severe.”

Plus, since there are several ways your appeal can get thrown out (and lots of heady math involved), a tax attorney can help you figure out whether you have a case—and help you win it.

7. Get creative

Depending on where you live, certain laws can raise or lower your taxes.

For instance, in parts of Maine tapping into solar power could raise your taxes. Some states such as Illinois offer property tax exemptions and deferrals to seniors and people with disabilities. Other states are even considering creating loopholes to ease the pain of the new tax legislation.

But even if there isn't a law that can help you, chances are good you can find other people also questioning their property taxes.

How's this for inspiration? When 70,000 parcels in Georgia's Muscogee County were reassessed last summer, some property taxes jumped as much as 1,000%. A local homeowners association quickly mobilized—filed a petition, asked the state to intervene, and even threatened a class-action lawsuit. A week later, residents were given the option to pay their taxes at the 2016 rate or at 85% of the new rate if things weren't resolved by the end of the year.

If you're displeased by your tax bill, there's a good chance your neighbors are, too. Start by talking with them, and see how low you can go.

To view the original article click here             Apply to Buy a Home             Apply to Refinance


Posted by Jackie A. Graves, President on April 17th, 2018 7:08 AM

When you’re in the market for a mortgage, it’s best to shop around to find the best rates or get better lender fees. But because this process typically involves multiple lenders checking your credit score, many buyers are concerned these credit inquiries or often referred to as “credit pulls” will hurt their score, leaving them less inclined to shop around. But the good news is as long as you follow a few guidelines, you can shop around for mortgages without doing too much damage to your credit.

Soft Pulls

First things first, there are two types of credit pulls; a “soft pull” and a “hard pull,” and there’s a stark difference between the two.

A soft pull often happens without you ever knowing about it and doesn’t affect your credit score. Sometimes these types of inquiries are done without your permission, such as in the event you receive an unsolicited pre-approved credit card offer in the mail or when a prospective employer pulls your credit as part of a background check on you. Other times a soft pull happens when you check your own credit score. And if either of these two things have happened, they are categorized as soft pulls, and will not chip away at your score.

Hard Pulls

A “hard pull,” on the other hand, can affect your score. When you’re shopping around for a mortgage, it’s not uncommon for you to speak with multiple lenders. And that means multiple requests for your credit report. This can be concerning because with every “hard pull,” your score can be impacted—unless each pull happens within a specific window. Credit bureaus are aware that potential borrowers will “rate shop,” so you generally have between a 14- to 45-day window, depending on which credit bureau, where all pulls are consolidated and considered just one.

For the purposes of applying for a mortgage, you can almost guarantee the lender will do a hard pull of your credit report. This inquiry will stay on your credit report for two years but will only impact your score for one year. It can shave a few points off your score per inquiry so if you’re shopping around, it’s important to shop around in a set amount of time to avoid being penalized for each inquiry.

Even though these hard credit pulls will stay on your credit report for two years, lenders will be able to see from your report that you’re shopping around for a mortgage, so even if your score is a few points lower than you’d like thanks to a hard inquiry, lenders may take your rate shopping into consideration when assessing your history. A Read more about ways to boost your credit score here.

Shop Around

Since there is a bit of a grace period to shop around for rates, take advantage. If you shop and compare rates from lenders, you can potentially save thousands of dollars. Because buying a home is one of the most expensive endeavors you’ll have, saving any amount of money can be beneficial.

Not only will shopping around and comparing rates help you get the best deal but reading lender reviews and knowing the ins and outs of the quotes you’re receiving can help you avoid paying extra fees. You should talk through your options with a lender and compare their rates with quotes from other lenders. You can also anonymously request quotes from different lenders on Zillow.

It’s also important to check your own credit score, so you know where you stand before you request these hard pulls. If you know your credit isn’t quite where you want it to be, you’ll have time to correct it before a lender pulls it to evaluate you. And since soft pulls won’t negatively impact your score, you can check your score with peace of mind.

To view the original article click here             Apply to Buy a Home             Apply to Refinance


Posted by Jackie A. Graves, President on April 16th, 2018 12:33 AM

The process of buying a home loan can be confusing, especially at the closing.

All mortgages, including those insured by the Federal Housing Authority, come with a laundry list of closing fees that typically add up to 3 percent to 5 percent of your purchase price, depending on the terms you negotiate with your seller and lender.

Here’s what you need to know about FHA closing costs—and how to get the best deal.

FHA loans: A quick overview

FHA loans are issued by private banks and financial institutions approved by the U.S. Department of Housing and Urban Development. Because the loans are insured by the FHA, a government agency, lenders are more likely to approve buyers with less than stellar credit scores and those who can’t afford a large down payment. In fact, buyers can get FHA loans with as little as 3.5 percent down.

To secure an FHA loan, however, the borrower must pay an upfront insurance premium of 1.75 percent of the loan amount, as well as ongoing monthly insurance premiums that vary depending on the loan amount, loan-to-value ratio and length of the loan.

What are FHA closing costs?

Closing costs for FHA loans are similar to those of conventional loans, because private lenders incur the same costs when making the loans, including fees for credit reports, appraisal, title search and other costs. Under HUD rules, lenders are allowed to charge “customary and reasonable closing costs,” not to exceed 3 percent of a qualified loan of $100,000 or more, or 5 percent on loans of $60,000 to $100,000.

This means that if you buy a $200,000 house with a $7,000 down payment, you could potentially pay up to $5,790 in closing costs ($193,000 x .03). In other words, you’d need to save up $12,790 to secure your loan.

How can you lower your FHA closing costs?

Fortunately, by shopping around and negotiating, you can save thousands of dollars. Here are four steps to take to lower your closing costs:
  • Find out how much closing costs are in your area. Costs vary greatly around the country, so look for data on average closing costs in your area. You can use this information when you negotiate with lenders.
  • Get closing cost estimates from several lenders. When you ask lenders for mortgage rate quotes, ask about their closing costs, too. Try to work directly with lenders, since closing costs are higher with brokered loans.
  • Think carefully before paying points. Borrowers can pay points at closing in exchange for a lower interest rate. But when rates are low — or if you plan to stay in your house a short time — it may not be worth the extra cost.
  • Negotiate with the seller. With FHA loans, sellers can pay up to 6 percent of the loan amount to cover the buyer’s closing costs, so if your sellers are motivated, you may want to ask that they pitch in for your closing costs. (Conventional loans don’t allow sellers to contribute as much to closing costs.)
Buying a home is likely the most expensive purchase you’ll ever make: The average home loan request reached an all-time high of $313,300 last year, according to the Mortgage Bankers Association. By taking the time to lower your fees as much as you can, you can put the home of your dreams within reach.

To view the original article click here             Apply to Buy a Home             Apply to Refinance

Posted by Jackie A. Graves, President on April 15th, 2018 8:40 AM

Interest rates for mortgage refinancing are still very low. Is it time for you to refi?

Here’s how to determine whether you will benefit by refinancing your mortgage.

2 major types of refinances:

  1. Rate-and-term refinancing to save money. Typically, you refinance your remaining balance for a lower interest rate and a loan term you can afford. (The loan term is the number of years it will take to repay the loan.)
  2. Cash-out refinancing, in which you take out a new mortgage for more than what you owe. You take the difference in cash or you use it to pay off existing debt.

Other reasons people refinance: to replace an adjustable-rate mortgage with a fixed-rate loan, to settle a divorce or to eliminate FHA mortgage insurance.

Check today’s low rates on a mortgage refinance.

Know how long it will take to break even

Mortgage closing costs can total thousands of dollars. To decide whether a refinance makes sense, calculate the break-even point — the time it will take for the mortgage refinance to pay for itself.

Break-even point

Break-even point = Total closing costs ÷ monthly savings


30 months to break even = $3,000 in closing costs ÷ $100 a month in savings

If you plan to keep the house for less than the break-even time, you probably should stay in your current mortgage.

Mind the term in rate-and-term

The formula above doesn’t measure your total savings over the life of the new mortgage. A refinance can cost more money in the long run if you start your new loan with a 30-year term.


Kris has been paying $998 a month for 10 years. If Kris doesn’t refinance, the payments will total $239,520 over the next 20 years.

With a refinance, Kris could pay $697 a month to repay the new loan in 30 years, or $885 a month to pay it off in 20 years.

$697 x 360 months = $250,920

$885 x 240 months = $212,400

In the example above, Kris borrowed $186,000 at 5 percent. 10 years later, Kris had a remaining balance of $146,000, and refinanced at 4 percent.

Use Bankrate’s mortgage calculator to compare your own loan scenarios:

  • See what happens when you input different mortgage terms (in years or months).
  • Reveal the amortization schedule to see how much total interest you would pay.

Good credit can save you lots of money on your mortgage. Check your credit score for free at myBankrate.

Pros and cons of cash-out refinances

Cash-out refinances often are used to pay down debt. They have pros and cons.

Imagine that you use a cash-out refinance to pay off credit card debt. On the pro side, you’re reducing the interest rate on the credit card debt. On the con side, you may pay thousands more in interest because you’re taking up to 30 years to pay off the balance you transferred from your credit cards to your mortgage.

But the biggest risk in this scenario is in converting an unsecured debt into a secured debt. Miss your credit card payments, and you get nasty calls from debt collectors and a lower credit score.

Miss mortgage payments, and you can lose your home to foreclosure. Home equity debt that’s added to the refinanced mortgage always was secured debt.

To view the original article click here             Apply to Buy a Home             Apply to Refinance



Posted by Jackie A. Graves, President on April 14th, 2018 8:59 AM


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