Tag: buy a home

Three Things to Know About Debt and Homebuying

~ Carolyn Warren ~ 2 Comments

Getting blindsided on your loan application is not something anyone wants. Not the realtor, not the loan officer, and especially not you, the homebuyer.

Particularly NOW with the volatility in interest rates and changing market, you need to be aware of three things:

  1. When the interest rate goes up, your loan approval can change.
    Keep in touch with your loan officer while you shop for a home, because your preapproval letter can turn void if rates jump up and you are buying at the top of your price range.
  2. If your down payment is minimum, underwriting will be tougher on your debt-to-income ratio.
    Gone are the days when you could push your debt-to-income ratio to 49.9% on a 3% down payment loan and still get approved. With the volatility in interest rate now, most underwriters are saying keep the DTI below 43%.

    43% DTI means all debts on your credit report plus the proposed new mortgage payment (including taxes, insurance, mortgage insurance) = 43% of your gross income.
    Your gross income is what the underwriter says it is, not what your personal spreadsheet says it is.
  3. Any purchase made during the loan process can void your approval.
    Even if you have signed all mortgage disclosure documents, your loan can still be denied if you make a new purchase, such as: furniture, appliances, an automobile, or even open a new credit card.
    Underwriters monitor your credit activity every day until your loan closes and funds.

Yes, they can do that! Federal lending law gives them the right to turn your approval into a denial, even after you have signed the contract, if your financial or credit situation changes.
Once you are preapproved, maintain the status quo until closing. And, please, keep in communication with your loan officer, who is your advocate, looking out for your best interests.

Plan Now to Buy a Home in Spring

~ Carolyn Warren ~ 4 Comments

If you plan to buy a home when the snow melts and the days turn to spring, now is the time to get ready. With a little forethought, you will qualify for a better loan and lower monthly payment.

Review Your Last Two Bank Statements

Ideally, your bank statement will be no longer than two or three pages. If your statement is longer, you can remedy that now before you are required to submit bank statements to the lender.

If you use debit for your purchases, use cash instead. Also, make sure you are not spending money on a daily basis.

Now is the time to go on a spending diet and save money for your new home. Here’s a good way to start…

Circle all charges related to eating out, including fast food, convenience stores, restaurants, and even  gourmet coffee. Now add up the total. Are you surprised? Should you and could you lower that amount by preparing more of your own meals and snacks? Can you save $50 per month? Some people can easily save $250 per month by altering their habits.

The sacrifice now to own a home is well worth the effort.

Next, look at other non-essential charges. Where could you cut back in the interest of getting into your own home? (Or your next step up home?)

Last, look at the ending balances. Is the balance trending upward? Underwriters like to see that you are living below your means, saving money, because the majority of the time, the house payment is higher than the rent payment. This is for your own sake as well, because owning a home comes with more expenses than renting.

Try the Home On for Size

What I mean by that is, set aside the amount of money that equals your new upcoming mortgage payment. Get used to living on less money now so that you don’t suffer payment shock later. Make sure you feel comfortable with the payment. If not, then you know now that you’ll need a smaller loan (and lower priced home) than what you might have imagined.

Avoid ALL Major Purchases

This is a big one, because it’s knocked out so many people from having their ideal home. You must not buy a new car, SUV, truck, or take on any new payment before closing on your house.

I’m thinking about one particular person who saved diligently for an entire  year and worked on repairing and improving her credit. She even hired a professional credit repair service. It worked and all was well until she “celebrated” by buying herself a brand new $40,000 vehicle. The next week when she applied for a home loan, she was stunned to learn she did not qualify. Tragically, she’d chosen to buy a vehicle (which  goes down in value) rather than real estate which increases in value. With the auto payment, she could no longer afford a home loan; thus, she sealed her fate as a renter for five more years.

Thank you for reading my blog.

For all the best tips on building a top tier credit score, see Build and Protect Your Credit Like the Pros here.

 

News For Home Buyers! Bank Buster loan!

~ Carolyn Warren ~ 6 Comments

If you want to buy a home in 2019, this news is for you!

Earlier this week, the top wholesale mortgage lender in the United States announced that they are dropping their interest rates to unprecedented lows with the new Bank Buster program!

What does this mean?!!?

The insider secret is that they are giving mortgage brokers loans at $0 upfront profit to themselves in order to scoop up a bigger share of the market. That’s right…

They are at war with the banks! Perfect timing, too, because more and more people are discovering that they can get better interest rates, faster closing, and better service with much less stress when they go with a mortgage broker.

A mortgage broker shops wholesale lenders to get you the best loan.

A direct lender or a bank has only their own loans.

Banks are great for checking accounts. But come on, they cannot compete with a mortgage broker who specializes in only one thing: mortgage loans. Here’s what I’m talking about…

  • Mortgage brokers close loans faster. For example, as a broker, I closed loans that were a “rush request” in only two weeks — from application to closing! I’ve never heard of a bank doing that. They usually take a month or more to close.
  • A mortgage broker meticulously manages your loan from start to finish. They don’t pass it off to a team member and then focus on getting the next application in line.
  • Mortgage brokers have more loan choices and are not limited to the bank’s limited portfolio of loans.
  • Loan officers at banks are not required to take the 20-hour training and pass a vigorous test. Nor are they required to get a background check, fingerprinting, and get licensed. Therefore, they do not have the same expertise. Truth is, there are loan officers who are guilty of fraud hiding in banks.

If you want the best steak, go to a steak house.
If you want the best Chinese food, go to a Chinese restaurant.
If you want the best mortgage, go to a mortgage broker.

It makes sense! And now, with the new Bank Buster* program, watch out! Because if you’re not checking with your mortgage broker, you could very well be setting yourself up for higher pricing, more stress, and a longer closing time.

FACT: A mortgage broker is required by law to get you the best loan at the lowest interest rate they can. That is not true for direct lenders, credit unions, or banks.

* This new super low interest rate loan program requires a credit score of 640. If your score is 639 or lower, here are two resources for do-it-yourself credit improvement. Both books are available on Amazon.

Thank you for reading and passing on this information.

Feel free to re-blog and post on social media.

I am a licensed in Washington and California, NMLS # 1284134.

Three Things To Do When You Want to Buy a House in the Near Future

~ Carolyn Warren ~ 3 Comments

Is buying a home in your near future? If so, you will probably be asking to borrow $200,000, $300,000 or even $500,000. That’s a lot of cash!

Certain requirements come along with lending large sums of money. Here’s what you can do now to improve your chances of getting approved.

Buying a House?
Here’s Your “Must Do” List

1. Save money like a squirrel saving nuts for the winter. Stop buying $5 coffee drinks, another pair of shoes (when you already have pairs with no holes in the soles), clothes on sale, restaurant meals, and all those other seemingly small — but honestly — unnecessary items. The underwriter wants to see your bank balance increasing every month to show that you will be able to afford a house payment that’s more than your rent.

2. Say no to offers to open new credit. Getting a new credit card to save 10 percent on your purchase today will lower your credit score. It is not worth the savings! You want top tier credit so that you qualify for the lowest interest rate on your mortgage. It makes no sense to save $20 today and pay $1,000s more in interest on your house payment.

3. Be happy driving your old car. One of the biggest mistakes people make is adding an auto loan to their debt ratio. The proper way to prioritize is house first. Everything else is secondary and must wait until after you are in your new home.

THE SACRIFICE YOU MAKE TODAY WILL BE WORTH IT WHEN YOUR REALTOR HANDS YOU THE KEYS.

Do your friends a favor and pass on this information to them. As always, thank you for reading my posts.

 

Seven Credit Mistakes to Avoid When Buying a Home

~ Carolyn Warren ~ 2 Comments

Attention Home Buyers! Do not expect your loan to close smoothly if you make one of these money moves during your loan process (or right before your loan process). In fact, it could actually cause your approval to slip and fall into a denial.

“Can they do that? I have my approval in writing?” you may ask.

Absolutely. The lender can withdraw your loan approval — even after giving you a written commitment — if they perceive that you have become a greater credit risk.

Seven Mistakes to Avoid

1) Don’t apply for new credit of any kind.

2) Don’t pay off collections or charge-offs during the loan process.

3) Don’t close credit accounts, not even old ones you haven’t used in a long time.

4) Don’t increase the balance on your credit cards, which also means don’t buy furniture, appliances, or anything else for your upcoming new home until after closing.

5) Don’t consolidate your debt onto one or two cards.

6) Don’t co-sign on a loan for anyone.

7) Don’t change your name during the loan process.

If you need clarification about any of the seven, let me know. But please, take this advice as “set in stone” unless your loan officer has specifically given you an exception, because the last thing you need is more stress during your loan closing.

 

Can You Pass This Two-Question Money Quiz?

~ Carolyn Warren ~ 2 Comments

Assume you rent an apartment and drive an old car, and you would like to upgrade your life style.

Question #1: If you have to choose between buying a house or a truck, which do you choose?

Question #2: Assuming you can afford to buy both a house and a truck, which one do you buy first?

Before we look at the answers…

A True Story: A young gentleman finished his credit repair work and raised his credit score to 640. This qualified him for the FHA Elite loan for home buyers.

He felt great! He was excited.

So he ran straight to the auto dealership and bought himself a brand  new 2018 Chevy Tahoe. (MSRP $47,500)

Then he drove home and called his mortgage loan officer. “I’d like to get approved to buy my first home,” he announced.

So the loan officer took the application and ordered his credit report–and bam!–he got declined.

“Why?” he asked, totally stunned.

His new truck purchase dropped his score from 640 to 565. Too low for any of the first-time home buyer programs! Too low for the FHA 3.5% down payment program!

Not only that, but with a hefty new payment, he no longer qualified for the purchase price he needed anyway.

Maybe the Tahoe is so luxurious, he’ll be happy living in it. (Bad joke, sorry.)

Let’s See How You Did on the Quiz

Answer #1: Buy the house. Real estate is going up in value. You can increase your personal wealth by owning a home. A vehicle goes down in value the moment it become “used.”

Answer #2: Buy the house first, always, even if your credit score is 800. A higher score and a lower debt ratio will qualify you for better, cheaper financing.

The house is more important than the truck. Buy your most important item first (not the easiest to get).

I welcome your comments. Thank you for sharing this with others and on social media. Too many people are shooting themselves in the financial foot by purchasing a vehicle before the home.

 

 

Buy a Home in 2018!

~ Carolyn Warren ~ 6 Comments

Is 2018 your time to buy a home? If so, here is a Short List to help you reach your goal.

SHORT LIST TO HOME OWNERSHIP

1) Check your credit.

  • Have or establish clean credit for 12 months so the lender can see you are on track financially. One late payment can be excused with a good explanation.
  • To qualify for the best interest rate, you want the following credit score:
    • FHA with 3.5% down payment: 620 to 640
    • Conventional with 3% down payment: 640
    • Conventional with down payment assistance: 640
    • VA with zero down: 580 to 620
    • USDA with zero down: 640

2) Save enough money for your down payment and closing costs.

Now is the time to cut spending and save money. The sacrifice is worth the reward.

3) Avoid opening new accounts.

Do not open a new credit card, line of credit, take out an auto loan, or acquire any other type of financing for the six months prior to buying a home, because doing so could hurt your credit score and/or your debt ratio for qualifying.

“Buy the house first. Buy the car later.”

4) Leave your bank accounts as they are.

Don’t move money around during the three months prior to or during your loan application, because doing so will complicate your loan file and require you to submit more documentation and letters of explanation.

5) Get the cash out of your home!

If you have money stashed in a home safe or hiding under the mattress, get that money into a bank account immediately. Cash is “poison money” and cannot be used for a home loan. The funds must be seasoned in your bank account for three months prior to loan approval.

Home Ownership is both emotionally and financially rewarding. Doing the work to get there is worth the effort.

Happy 2018, Everyone!

Now available on Amazon

Why December is a Great Time to Buy a Home

~ Carolyn Warren ~ Leave a comment

“Buy low, sell high.” We’ve all heard that stock market advice. So how does it apply to buying a home?

During the holidays, fewer home buyers are out there looking. People set aside this time for shopping, parties, travel, and celebration with family. They postpone their dream of becoming a home owner until after the New Year. Thus, December is the perfect time for YOU to make an offer on a home.

With less competition, you have a better chance of getting a Purchase Agreement at the seller’s best price.

My advice is to go for the home purchase now. You can set your closing date after Christmas when it is a convenient time for you to move.

First step: Get pre-approved for financing and obtain your pre-approval letter.

Second step: Contact your local real estate agent for help in locating a home and presenting the offer.

Best wishes and Merry Christmas!

 

Another Source for Down Payment Money

~ Carolyn Warren ~ Leave a comment

With rising home prices and interest rates, it makes sense to buy a home now before real estate becomes more expensive. But what can you do when you don’t have the cash for a down payment or gift funds available? Here’s an idea that just might work for you.

Cash From Another Source

You can take out a loan using a car, recreational vehicle, collectibles, or other item of sufficient value for your down payment on a conventional loan.

You can borrow money from stocks, investments, a retirement account, or from a home equity line of credit from another property for your down payment on either a conventional or FHA loan.

You can borrow money from a family member (documented and recorded) for an FHA loan. Simply tell your loan officer up front if this is your plan, and then he or she will guide you through the steps.

As a Reminder…

Make your house a priority over your car/truck/SUV.

Real estate goes up in value. Vehicles go down in value.

Therefore, it makes no sense to take on payments for a vehicle before you get into your house. Do what’s most important first. Save the fancy wheels for later.

Thank you for reading! Any questions, let me know. I appreciate your comments and “likes.”

 

 

 

Seven Facts About Getting a FHA Loan with Imperfect Credit

~ Carolyn Warren ~ 2 Comments

If you would like to become a home owner but know (or fear) that your credit will not qualify, here are some facts about getting an Federal Housing Admin (FHA) loan:

  1. Perfect credit is not required, but lenders prefer to see that you have been paying creditors on time for the past 12 months. That shows you have put difficulties of the past behind you and are now on track with your finances.
  2. You can get approved 24 months after a Chapter 7 bankruptcy is discharged.
  3. Medical collections can be ignored, because they are too often the fault of the insurance companies.
  4. Other collections, up to a total of $2,000, can be ignored.
  5. The down payment is 3.5 percent of the purchase price. If you don’t have the cash but have family who is willing to help with either a gift or a loan, that is allowed.
  6. Closing costs may be paid by you, by a family gift, or by the seller. Or, the lender can credit you toward closing costs in exchange for a higher interest rate.
  7. Most lenders require that your middle credit score is 580 or 600, depending on how strict they are.

Where Do You Get a FHA Loan?

You get a FHA loan through a mortgage lender. I recommend going to a full-service mortgage lender, because they have more options than a bank or credit union, often close faster, and because I work for a full-service mortgage lender and think they are the best!

What If Your Credit Doesn’t Qualify?

If your credit score is too low or if you have credit blemishes that need to be repaired, may I suggest a handy do-it-yourself guide that won’t cost you an arm-and-a-leg? Credit repair is legal and good folks are doing it and becoming home owners. For example, I am closing a loan for a lovely couple who got tired of paying high rent and will now own a three-bedroom home that includes a big garage with a workout room and half bath — with a smaller monthly payment than their rent. To check out the credit guide, click here.

Thank you for reading my blog. Please feel free to subscribe (see top right) and pass this info along via social media, because a lot of people think their credit is not good enough to buy a home when it is! Perfect credit is not required for home ownership!