Buying a Home or Refinancing in WA State?

Are you (or someone you know) planning to buy a home in WA state? Would you like to refinance your existing loan?

If so, I have good news for you. After looking at local banks, credit unions, and other lenders, I have joined VITEK Mortgage Group, a lender with a stellar reputation. As a mortgage loan officer, I can shop the wholesale divisions of lenders such as Wells Fargo, Chase, Ditech, Caliber, and more — as well as VITEK’s own line of loan products.

It is important to me to get the very best loan at the very best pricing available for my clients. Having the ability to shop without being limited to only one lender’s loan products gives me the ability to do that. If I worked for a bank or credit union, I would be limited to their loan products only — and when it comes to a mortgage, it is NOT a “one size fits all” situation.

If you want a seasoned professional who wrote the book on mortgage rip-offs and money savers to do your loan shopping for you, then I am your gal. Not only that, but I go another step in helping you get a good title and escrow company, because now in 2015, too many title and escrow companies are piling on the junk fees and over-charges.

As a loan originator for VITEK Mortgage Group, I can extend their Peace of Mind Guarantee:

* Guaranteed On-Time Closing
* Guaranteed Real-Time Status Updates
* Guaranteed Best Value

VITEK stands for Value, Integrity, Teamwork, Excellence, Knowledge.

That is pretty much everything you and I want in a company.

I am licensed in WA state and will soon be licensed in CA as well. (I have met all the requirements for California and am awaiting on the Dept. of Business Oversight for their acknowledgement.)

Please let me know how I can help you with your home purchase or refinance.

NMLS License # 1284134

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Oops! Dream House Built on Wrong Lot

Dream House wrong lot A Missouri couple thought they were having their $680,000 dream home built in the perfect location. They purchased a lot in the gated community of Ocean Hammock, an exclusive community that is accessible by beach or air.

As you can see from the photo, it’s a three-story home with balconies from which to enjoy the impressive view. What a vision! The only problem is that Keystone Builders constructed it on the wrong lot, not the land Mr. and Mrs. Voss bought.

How could this happen? East Coast Land Surveying incorrectly marked off the stakes for the home — and didn’t catch their error during any of the three surveys they conducted during the construction process.

The mistake was finally caught by a different surveyor working in the area, but only after the home had been rented out several times.

“We are in total disbelief,” the Vosses told local media.

Both the Flagler County Home Builders Association and the Flagler County appraiser said that houses built on the wrong property “happen more often than people think.”

Perhaps a trip down to the construction site early in the process is a prudent step for home owners to take. In the case of the Vosses, it will be interesting to find out what happens next.

Source: Housing Wire

How Mortgage Lenders Calculate Your Debt Ratio to Determine What Price House You Can Afford

kitchen counter top viewBefore you fall in love with that gorgeous home, figure out whether or not you can afford it. Remember this:

The one who holds the money makes the rules.

If the underwriter says your debt ratio is too high, you will be denied. (And be forewarned: the spreadsheet you made showing you can afford it means nothing. The underwriter will not give it a moment’s glance.)

As I mentioned in a previous post, your loan officer can calculate your debt-to-income (DTI) ratio for you. But what if you want to do it yourself? What if you want to double-check the loan officer? Here’s how it’s done.

1) Take your gross income (before taxes and other deductions). Use the highest figure on your W-2 forms. You must have been employed in the same line of work for the last two years in order to count the income. If you have a brand new part-time gig, it won’t count. If you have brand new bonus income, it won’t count.

For self-employed people, use the Adjusted Gross Income near the bottom of page one of your tax returns. Again, you must be self-employed for the last two years. If you have a new business, you cannot count your self-employment, even if it is in the same line of work as your previous W-2 job.

2) Add up your monthly outgo. Use all of the minimum payment obligations that show on your credit report. If you pay your entire credit card bill each month, you do not use that balance in your outgo; instead, use only the minimum payment required.

Do not count expenses that do not show on a credit report such as phone, utilities, cable, gas or bus, or grocery.

Add in the new proposed mortgage payment for the house you want to buy. Include principal, interest, taxes, insurance, and monthly mortgage insurance if putting less than 20% down. (You can use the easy calculator at MortgageHelper.com here.)

3) Divide your total outgo by your gross income. This is your DTI. Most mortgage lenders want to see a max of 38% DTI, but some will go higher if the rest of your application is strong. The highest I’ve seen is 49% DTI with a 800 credit score and significant cash reserves.

For example, if your gross income is $5,000/mo. and your outgo is $3,000/month:

5,000 divided by 3,000 = 60 DTI. That is too high and will be denied.

You would then need to pay down debts and/or choose a less pricey house.

By knowing your price range, you avoid the disappointment of being denied. And again, if it seems too complicated to calculate yourself, all loan officers at mortgage companies and banks are happy to do it for you. They love using their handy HP calculators, so don’t hesitate to ask.

Happy house hunting! It’s a good time to own your own home.

What Price House Can You Afford?

front door of a houseEmily Johnson found the perfect house for her family. Four bedrooms, three baths. The master suite had a garden Jacuzzi tub, just what she  needed after a long, hard day of work. There was plenty of street appeal, too. After hours of looking on the Internet, she’d found The One.

Her next step was to contact the real estate agent who was listing the house and ask to see inside.

Emily fell in love.

That evening, she brought her husband out to see the house, and he agreed with her that it was just what they wanted. They asked the real estate agent how they could make an offer. And that’s when everything fell apart.

You see Emily, like so many other house shoppers, had done everything wrong  — starting with her initial search.

What Went Wrong?

When you want to buy a house, your first step is not searching the Internet for what you want. Your first step is to find out how much house you can afford. That way, you can tailor your search to what is appropriate and realistic. What’s the point of falling in love with a house that is out of your price range? Why set yourself up for disappointment?

house modest2To find out how much house you can afford, ask a mortgage loan officer for a pre-qualification.

A pre-qual is a quick evaluation by phone. The loan officer will ask you a couple questions about your income, outgo and down payment, then give you an estimate for the loan amount and home price you can qualify for.

No credit check is needed. To make sure your credit report is not pulled without your authorization, do not give out your social security number.

Once you know your true price range, you can cruise the Internet to your heart’s delight. By looking at homes you can afford, you set yourself up for success and avoid heartbreak.

 

Is It a Good Time to Buy Real Estate?

realtor2A new Gallop poll suggests Americans are ready to buy real estate again. Optimism about the housing market is up, especially in the West where 72% of respondents said they expect home values to rise. And it’s no wonder.

Home prices have recently risen by double digits in several Western states, and especially so in California.

People in the South are slightly less optimistic, where 54% said it’s a good time to buy.

Midwestern folks seem to agree with 53% home values are rising.

Skepticism runs higher in the East where only 44% expect an increase in values.

Home owners are more optimistic than renters. Of all Americans who own a home, a big majority at 81% expect real estate prices to increase. On the other hand, only 44% of renters expect prices to increase.

Perhaps there’s a marketing clue there for real estate agents and mortgage lenders. Current home owners are feeling more urgency to sell and move up before prices continue upward than are renters.

And speaking of pessimism among renters, those who would have eagerly sought loan approval in the past are now of the mindset that they won’t qualify. A surprising 56% of renters said in a national consumer survey that fear of rejection is holding them back for applying for a home loan. The two biggest concerns are credit and income qualifications.

Good News for Home Buyers

It comes as a surprise to some that perfect credit is not required. Not all lenders have the same requirements. If you fear that your bank is too strict, call a local mortgage broker. Brokers, somewhat like travel agents, have access to multiple wholesale lenders. A mortgage broker will do the shopping for you. Brokers know which lenders will go down to a 620, or even lower, credit score for an FHA loan. And the good news is that a mortgage broker does not necessarily cost any more than a bank. Nowadays, many small and midsize lenders are both brokers and direct lenders (with their own money). This gives them greater flexibility and gives you a greater chance of approval than going to a bank or credit union that has only their own money and strict guidelines to offer.

Something to Think About: How You and I Control House Prices

When people think the economy is improving, they are more willing to spend money; therefore, their mindset actually improves the economy. The same goes for the housing market. If people think values are going up, they want to buy now before their desired home costs more. When more people are selling and buying, the housing market improves and values increase. So even if you don’t think real estate is increasing in value, if your neighbors believe it is, their attitudes and actions can make that happen.

That would make them right then, wouldn’t it? Hmmmm, something to think about.

Statistical sources: Mortgage News Daily  Washington Post

 

 

 

Seller Financing Bypasses Bank Rules

????????????????????????Having trouble qualifying for a home loan with your bank or local lender? Getting frustrated with tight underwriting rules? If so, seller financing might be for you.

Seller financing is when the seller allows you to make payments directly to them, bypassing the bank and Fannie Mae. If the seller does not need all their cash immediately, they might be happy to let you make payments and collect the interest for themselves.

Here is how a typical seller-financed loan works:

1) Most sellers will carry the contract for five years. After that, they want to be cashed out. Thus, the loan is amortized for 30 years with a 5-year balloon payment. This gives you the lower payment a 30-year loan would have, but at the five-year mark (or sooner), you would refinance with a bank loan. This gives you plenty of time to get your credit and debt ratio in compliance with Fannie Mae underwriting.

2) Make sure there is no prepayment penalty so you can refinance sooner than five years, if you choose.

3) A typical interest rate for seller financing is 8% to 10%. Remember, the seller is taking a risk that the lender was not willing to accept, so you have to pay for that. This is also why you want to refinance out of seller financing as soon as you can, preferably after one year. On a short term loan, interest rate is not as significant as for a long term loan.

You should have a real estate attorney write up the contract. It should include the amount owed, the interest rate, the principal and interest payment, that it is a fixed rate, that there is no prepayment penalty, what day of the month the payment is due with a 15-day grace period, and what the late penalty is if you are late (typically 5%  of the payment). It should also spell out the terms of the 30-year amortization and 5-year balloon payment. Do not sign the documents unless you completely understand all the verbiage.

You should also hire an appraiser to verify the value of the home and a home inspector so you know exactly what the condition of the home is. Do not bypass these important steps.

Seller financing is not for everyone, but it has worked very well for others. One home buyer who could not qualify for bank financing, due to a bankruptcy that was less than two years old, was able to work out seller financing at only 5%. That enabled them to get into a home of their own sooner, and they were very happy as a result.

 

 

 

Using Money From Family for Your Down Payment

Money in hand Home buyers who are a little short on cash sometimes ask, “Can I get a loan from a family member to help with my down payment?”

Or, “Can I take a cash advance on my credit card to help with my down payment?”

The answer to both questions is no. Your down payment must be either your own money or gift money from family or grant money from an acceptable source. No part of your down payment can come from a loan, not even from your mom. No exceptions.

If a family member is providing cash toward your down payment, then they will need to sign a form letter stating it is a gift and no repayment is required. Usually, they also need to show the source of their gift money by providing a bank statement(s) or other document such as investment statement.

Why can’t you take a loan from your parents for a down payment? Because the lender thinks that if you get into financial trouble and have to make a choice between paying mom and dad or the mortgage bank, your family ties will be stronger and the bank will lose out. Therefore, it is an unacceptable risk to lending. The bank is not going to take “second position” behind your family.

Any other loan, such as a cash advance from a credit card, is also unacceptable. This would affect your debt ratio as well as put the bank at a higher risk for getting paid.

For a small down payment of only 3.5 percent of the purchase price, look at the FHA loan. FHA allows all of your down payment to be gift money from family.

If you are eligible for a VA loan, you may qualify for a zero down loan.

The no-down sub-prime loans of yesteryear are gone, and I think that’s a good thing. It takes time and discipline to save for a down payment and closing costs, and that’s not a bad thing either.