21
Apr
By support
Home Buyer Tips

Investor Thoughts: What Home-buyers Can Learn from a Real Estate Investor’s Stand-point

Investor Thoughts: What Home-buyers Can Learn from a Real Estate Investor's Stand-pointThere are plenty of things to consider when purchasing a home, from the size of place that you’re looking for to the amount of home you’re able to afford. While it’s certainly worth knowing what you want going in, here are a few factors that investors often think about when it comes to making or breaking the appeal of a real estate purchase.

Will The Location Last?

‘Location, location, location’ is a popular expression for a reason, and it’s among the first things that any person purchasing a property will consider when they think about long term-investment potential. It can be easy to think that a currently trendy community or beachfront property will always be a great investment, but trendy places go out of style and sea levels can rise. An investor will want a location that’s ideal, but they’ll also consider what the area’s future might hold.

Are You In A Bubble?

If you’ve found the perfect home to live in and are considering an offer, you may not be too worried about it’s selling potential a few years on. However, if you’re buying in a bubble, your price may be inflated, and this can cause problems if you want to make a profit in five years’ time. Real estate is on the up and up all over the world, so a true investor will consider if the market value will continue to rise or if it’s readied for a considerable economic setback.

Will It Survive The Trends?

The market for condos is certainly booming right now with the rising price of real estate, but many people are also choosing to move away from urban centers to buy a little bigger and start a family. Whether it’s an open concept or a sizeable townhouse, it can be tempting to buy the type of home that is hot right now, but these trends may not be so popular in the coming years. Instead of going for flash, consider what will always be in style or can at least be easily renovated.

The most important thing when purchasing a home is buying a place that you can feel good about, but real estate investors know that there are a number of important factors to consider. If you’re currently on the market for a new home and are weighing your options, contact your trusted local mortgage professional for more information.

24
Mar
By support
Home Buyer Tips

How the Truth in Lending Act Protects You When You Take Out a Mortgage

How the Truth in Lending Act Protects You When You Take Out a MortgageIf you’re planning to get a mortgage, it’s critical that you know your rights under the law. The Truth in Lending Act (TILA) is a piece of federal legislation that governs how mortgage lenders can and cannot operate their businesses.

So how does the Truth in Lending Act protect you, and what are your rights under this legislation? Here’s what you need to know.

Your Lender Must Give You A Timely Loan Estimate

A Loan Estimate (previously known as a Good Faith Estimate) is a document your lender provides you that details information about what kind of a mortgage you’ve applied for. Your Loan Estimate includes terms such as your estimated monthly payment, your estimated interest rate, and whether or not your mortgage balance is able to rise even if you make payments.

Under the Truth in Lending Act, your lender is obligated to give you a good-faith Loan Estimate within three days of when you apply for your mortgage. If your lender fails to provide your Loan Estimate within three days or fails to fix reported errors within 60 days, you can sue for damages and report the lender to the federal government.

Your Lender Must Notify You Of Rate Changes

The Truth in Lending Act states that your mortgage lender is required to give you an annual percentage rate estimate within 1/8 of one percent of government guidelines. Your lender must use the government-approved mathematical formula to provide your rate estimate.

If your estimated rate may be subject to change, your lender is obligated to disclose the first possible change you’ll see to your interest rate, and the maximum degree to which it may change. Your lender is also required to disclose the maximum possible changes for subsequent rate adjustments.

There Are Strict Rules About How And When Lenders Can Charge Late Fees

If your lender typically administers fees for late payments, TILA will specify that your lender must notify you – in advance – the date on which a late fee will be imposed and how much the late fee will be. TILA states that no late fee can exceed 4 percent of the amount past due, and a payment is only considered late if it is 15 or more days past due (or 30 or more days past due if you prepaid your interest). Your lender also cannot charge you a late fee on top of a late fee.

TILA is a powerful consumer protection law that gives would-be homeowners a great deal of power. By knowing your rights under TILA, you’ll be able to confidently negotiate with lenders and avoid any unnecessary problems. Contact your local mortgage professional to learn more.

15
Mar
By support
Home Buyer Tips

3 Tips and Tricks to Make Mortgage Pre-Qualification Easy

3 Tips and Tricks to Make Mortgage Pre-qualification EasyIf you’re planning to buy a home, you should know that the mortgage pre-qualification process is the first in a series of steps that eventually lead to home ownership. A pre-qualification is different from a pre-approval – the pre-qualification meeting is simply you and your lender hashing out how much you can afford to spend on a property. But once you’ve been pre-qualified, it makes the mortgage process easier.

So how can you make the pre-qualification quick and painless so you can get on with your house hunt? Here’s what you need to know.

Get Your Debts In Order

One of the major questions during the pre-qualification meeting will be your credit history and debt payments. Your lender will use your social security number to look up your credit history and determine how your income and current monthly debt payments stack up. If you have a high amount of debt, you may want to do everything you can to pay it down to qualify for your dream home. However, it’s important to go over the details with a trusted mortgage professional for specific guidance here.

Chart Your Income And PITI

Your lender will use a specific ratio (the PITI to income ratio) to determine how much it’s willing to lend you in order to buy a home – and that’s why, if you calculate this ratio beforehand, you’ll know what to expect going into the meeting. PITI stands for “Principal and Interest, including Taxes and Insurance”.  It refers to the four components of a standard mortgage payment. Your PITI ratio, often referred to as the “front end ratio” then, shows how much of your income goes toward your monthly mortgage payment.

To calculate your front end ratio, simply divide your gross monthly income by your monthly mortgage payment (your PITI amounts plus your mortgage insurance). Most lenders will want to see a PITI to income ratio that is under 28%.

Build Up Your Savings Account

It’s important that you have some savings over time that can be used for a down payment, closing costs and reserves.  Although there are some very low down payment options, having a decent balance in your savings account always helps you qualify easier for a mortgage.  

Closing costs are the fees associated with getting a mortgage loan.  These can also be negotiated to be paid by the seller if you choose.  But once again, they aren’t required to make that concession, so it would be wise to move toward saving for those expenses. 

Reserves are the amounts that will need to be collected to cover your taxes, insurance and mortgage insurance on the property.  These will fund the “reserve” in your escrow account so you’ll always have enough to cover those expenses as they come due throughout the year.  Your mortgage company keeps this money for you and pays the expenses on time as well.

Pre-qualifying for a mortgage can seem like a daunting process, but it’s actually quite simple. Your mortgage advisor can help you to understand what goes into a pre-qualification. Contact us today to learn more about how pre-qualifications work and how you can get started.