Blog – Page 24 of 838 – Mike Pfefferman

20

Aug

Mortagage Tips

When to Ask for Repairs vs. Taking a Credit

Buying a home is a significant investment, and ensuring the property is in good condition is crucial. There are times when asking the seller for repairs is the best course of action, but in other situations, requesting a credit may be more beneficial. Understanding when to choose each option can help you navigate the buying process more effectively.

The Impact of Loan Types on Repairs

Certain loan types, such as Federal Housing Administration (FHA) and Veterans Affairs (VA) loans, require the home to meet specific condition standards. If the house doesn’t meet these standards, the loan could be rejected. This means if the seller doesn’t address necessary repairs before closing, financing could fall through, and the home may need to be relisted. Prospective buyers might be wary if they see a home sale fall through, which could impact the seller negatively.

Many buyers don’t want to deal with repairs post-closing and prefer the seller to handle them. If it’s a repair that doesn’t require immediate attention, many buyers opt to take a credit to save money at closing.

An inspection report will not flag out-of-date styles or bad paint jobs, but if it identifies issues, and the buyer wants to make design decisions in the process, a credit can be a great solution.

Negotiating Credits for Renovations

For instance, one of Kenny’s clients recently negotiated a credit for replacing the kitchen flooring due to damage from a long-term water leak. The credit was the ideal solution because it was less of a hassle for the seller and allowed the buyer to choose their preferred flooring and design.

Credits are also advantageous if the repair timeline would delay the sale, the buyer has a DIY background or simply wants control over choosing contractors and overseeing the project. No one will put more care and attention into fixing a new home than the buyers themselves and for sellers, repairs are often just another task to complete before the sale

Negotiating Credits and Repairs Without Losing Your Dream Home

When negotiating repairs or credits, it’s essential to avoid falling out of contract over the repair issues. For example, during the purchase of an accessory dwelling unit (ADU), working closely with the seller’s Realtor helped ensure the deal didn’t fall through over the need for a new roof. Offering the full list price, agreeing to a fast close, and opting against a home sale contingency were also strategic moves.

To negotiate effectively without losing your dream home, prioritize repair requests and focus on major issues. Be willing to take on minor repairs yourself and remain flexible and open to compromises, such as splitting costs or combining credits. Also, consider the current market conditions and the seller’s motivation.

Understanding when to request repairs and when to take credit can save you time, money, and hassle, making the home-buying process smoother and more rewarding.

19

Aug

By Mike Pfefferman

Financial Reports

What’s Ahead For Mortgage Rates This Week – August 19th, 2024

The results are in, and both the CPI and PPI inflation reports confirm that inflation has come in lower than expected, surpassing expectations. This is a great result leading forward for the next FOMC Rate Decision meeting, as there is high optimism now that the rate cuts are coming this year. With next week’s FOMC Minutes guiding the next meeting, we can expect to hear their stance going forward. We also see a matching indicator in Retail Sales, showing a significant gain across the board, while auto sales had the largest increase in one and a half years. This aligns with previous consumer confidence reports and will serve as a good reference when making the next rate decision for the Federal Reserve.

Consumer Price Index

Inflation stays mild; the 2.9% annual pace is at its lowest since March 2021. The bulk of inflation in July was concentrated in housing; accounting for 90% of the increase in the consumer price index. Energy and food were on the tamer side. Energy prices were flat and the cost of food rose 0.2%.

Producer Price Index

In July, the Producer Price Index (PPI) for final demand increased by 0.1 percent.eh Prices for final demand goods moved up 0.6 percent, and the index for final demand services fell 0.2 percent. Over the 12 months ending in July, the overall prices for final demand increased by 2.2 percent. Wholesale inflation shows few warning signs. Fed interest-rate cut is still on track.

Primary Mortgage Market Survey Index

15-Yr FRM rates are seeing an increase by 0.03% with the current rate at 5.66%
30-Yr FRM rates are seeing an increase by 0.02% with the current rate at 6.49%

MND Rate Index

30-Yr FHA rates are seeing a 0.01% increase for this week. Current rates at 6.10%
30-Yr VA rates are seeing a 0.02% increase for this week. Current rates at 6.12%

Jobless Claims

Initial Claims were reported to be 227,000 compared to the expected claims of 234,000. The prior week landed at 233,000.

What’s Ahead

With only the FOMC Minutes coming up next week, the rest of the week has a notably light schedule. However, the regular weekly reports are still expected to be delivered as usual.

16

Aug

By Mike Pfefferman

Mortgage Application

Understanding the Difference Between a Co-Borrower and a Co-Signer

When it comes to securing a mortgage, the terms and roles can often be confusing. One such term you might come across is “co-borrower.” Understanding what a co-borrower is and how they differ from other roles in a mortgage can help you make informed decisions when navigating your home loan process.

What is a Co-Borrower?

A co-borrower is an individual who applies for a mortgage loan alongside the primary borrower. This person shares the responsibility of repaying the loan and is equally liable for the debt. Essentially, a co-borrower is a partner in the mortgage process, helping to strengthen the loan application by adding their income, credit history, and assets to the equation.

The Difference Between a Co-Borrower and a Co-Signer

While the terms co-borrower and co-signer might seem similar, they serve different roles in the mortgage process.

Co-Borrower:

Shared Responsibility: Both the primary borrower and the co-borrower are equally responsible for repaying the loan.
Ownership Rights: The co-borrower typically has an ownership interest in the property. This means their name will be on the title of the home.
Credit Benefits and Risks: Both the primary borrower’s and the co-borrower’s credit scores are affected by the mortgage payments. Timely payments can boost both scores, while missed payments can negatively impact both.

Co-Signer:

Limited Responsibility: A co-signer agrees to repay the loan if the primary borrower defaults but does not have ownership interest in the property.
No Ownership Rights: Unlike a co-borrower, a co-signer’s name is not on the property title.
Credit Risk: The co-signer’s credit score is impacted by the primary borrower’s ability to make payments, but they don’t receive any credit benefits for timely payments.

When to Consider a Co-Borrower

In some cases, having a co-borrower can significantly improve your chances of mortgage approval and potentially secure better loan terms. Here are a few scenarios where a co-borrower might be beneficial:

Boosting Income: If your income alone is not sufficient to qualify for the loan amount needed, a co-borrower’s income can help meet the lender’s requirements.
Improving Creditworthiness: If your credit score is lower than desired, a co-borrower with a higher credit score can help balance out the risk for the lender.
Sharing Financial Responsibility: If you and your partner or family member are purchasing a home together, having both names on the mortgage can make sense for shared financial responsibility and ownership.

Understanding the role of a co-borrower and how it differs from a co-signer is crucial when navigating the mortgage process. A co-borrower can provide additional financial strength to your mortgage application, sharing both the responsibility and benefits of homeownership. When considering a co-borrower, ensure that both parties are clear about their obligations and the impact on their credit scores. By understanding these roles and their implications, you’ll be better prepared to make informed decisions about your mortgage journey.