How I Bought My First Home – Part 1

 First Time Homebuyers  Comments Off on How I Bought My First Home – Part 1
Sep 012017
 

In 1987 I walked into a real estate office.  I wanted to buy a home in New Hyde Park, Long Island.  I worked in the electronics industry and I knew nothing about buying a home.  I only wanted to become a homeowner.  I felt if I put my trust in the real estate agent he would guide me along the path to my goal.  I WAS WRONG.       

The man in this office in New Hyde Park in 1987 basically laughed at me.  He asked some key questions about salary, cash I had saved up, and credit.  I answered honestly and in complete detail.  He said, “You can’t afford a home here in New Hyde Park,” then turned his back on me.

Not being a person who takes, “No” for an answer, I pushed him.

Is there nothing here in this town we can afford?” I said.

He grudgingly took out the MLS book (no computer back then, it was a BOOK the size of a phone book) and pointed to a tiny black and white photo of a house.

I looked at the photo and said to him, “Well, okay, I guess that looks like a nice house.”

You should know it doesn’t have a driveway or a garage.”

I was a little flummoxed because I really wanted my own driveway.  I was tired of driving around Astoria looking for a parking spot and my dream of homeownership in New Hyde Park included a driveway.  BUT I really wanted to buy a home and so was willing to compromise.

Okay,” I said, “I really wanted a driveway, but I’d be willing to settle if it meant I could buy a home of my own.”

He had a “poker face” on, looked me straight in the eye and said, “You should know there’s no on-street parking allowed after Midnight every day.”

I walked out of that real estate office feeling very dejected.

Stay tuned: Next week, I discuss my nasty birthday surprise that turned into Homeownership.

You can find more great advice on buying your first home on this website. Take a look around.

Follow me on Twitter! @tcurranmortgage – https://twitter.com/tcurranmortgage

Do you have questions?  Click on ASK TREVOR and I’ll respond to any and all inquiries, even if you’re not buying a home in
New York State.

Check out my Trulia profile HERE

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Find me on TWITTER: @tcurranmortgage

Happy House Hunting!

Buy NOW or WAIT to Buy a Home?

 First Time Homebuyers  Comments Off on Buy NOW or WAIT to Buy a Home?
Aug 192017
 

There are two schools of thought when it comes to buying your first home.

  1. Wait until you save up enough money for a large down payment and closing costs. This way you get a lower monthly mortgage payment.
  2. Don’t wait: buy your home today, enjoy the personal and financial benefits of homeownership now. Finance as much of the price of the home as the bank will lend you: use very little of your own money.

I subscribe to the first concept.

I believe it’s a fantastic idea to save up the money, and get the lowest monthly payment. Who wants a large monthly mortgage payment? The choice of course is that your struggle is in the years it takes to save up the money. I definitely believe in that idea: you see a real benefit from your years of hard work, sacrifice and saving.

Here’s the problem with that line of thinking: we live in the NY Metro area, one of the highest cost-of-living areas in all the United States. Even if you were to live on the most absurdly frugal budget, work three jobs seven days a week, and save every penny of your money, it could be a long, long while before you save up the considerable monies needed for a “large” down payment and the closing costs.

Start with the closing costs: New York State has among the highest closing costs in the nation. On average, 4.5-5% of the purchase price is money allocated JUST to closing costs.

Now to the “large” down payment: because rates are so low, if you are like most of my clients and you want to see a substantial reduction in your monthly mortgage expense (let’s say, $600 or so) then you’re going to need a LOT of money down. In dollars and cents that means, if my proposed mortgage payment is $3100 a month and I want to pay no more than $2500 a month, I’ll need a whopping $94,900 towards the downpayment! Holy cow!

Even if you could work three jobs, seven days, live super-frugal, and bank every penny, the average family would still need to wait 4 years or more to save up that kind of money (assuming you could put away $30,000 a year).

So, while I love the first concept of waiting/saving, I live in the real world.

It’s the rare individual or family that can manage that strict of a lifestyle to save such money. That’s why I’ve always specialized in low down payment mortgages. Because in the real world of the NY Metro area, we just can’t get that kind of a leg up on housing. Prices go up, interest rates change, etc, etc.

Financing the whole shebang (purchase price and some of the closing costs) seems like a crazy idea when you see the numbers (monthly payment), but realistically it works to your benefit.

The mortgage interest is tax deductible for most homeowners (please consult with your tax professional). Your take home pay increases because you own a home! You don’t have to live a no-frills lifestyle sacrificing for something that seems so far away and unattainable. You can have your home, improve your life both with the real financial benefits and the intangible benefits (pride of ownership, financial awareness) that come with homeownership.

Do you have questions?  Click on ASK TREVOR and I’ll respond to any and all inquiries, even if you’re not buying a home in
New York State.

Check out my Trulia profile HERE

Check out my Zillow profile HERE

Find me on TWITTER: @tcurranmortgage

Happy House Hunting!

What’s A Seller’s Concession?

 First Time Homebuyers  Comments Off on What’s A Seller’s Concession?
Aug 192017
 

Home Buyers in the New York area often present an Offer to purchase a home with a request to include closing costs in the purchase price. In the terminology, we call this a “Seller’s Concession.” Although it’s not a “true” Seller’s concession (see bottom).

Seller’s Concession: this is the process where you present an Offer to buy a home with the request of the Homeowner that the price include some or most of your closing costs. When you sign the contract of sale the price will include the closing cost “concession” and there will appear language in the contract stating, “Seller to pay $XX,XXX of Purchaser’s closing costs.” See limits on Seller’s concessions below.

EXAMPLE: Purchaser and Seller have agreed on a purchase price of $412,000. But the Purchaser needs assistance with closing costs in the amount $20,000. The final price on the contract of sale will be $432,000. “Seller will pay $20,000 of Purchaser’s closing costs at closing” is the language included in the contract of sale. The Purchaser’s Down Payment and financing is based on the higher purchase price, including the Seller’s concession.

Allowable SELLER’S CONCESSIONS
1. FHA financing currently allows for up to a 6% Seller’s concession for closing costs, regardless of how much your down payment is. Minimum down payment for FHA loans is currently 3.5%
2. CONVENTIONAL financing currently allows for up to a 6% Seller’s concession for closing costs with a down payment of 10% or more. If your down payment is less than 10%, a 3% maximum Seller’s concession is allowed.

What’s a TRUE Seller’s Concession?

The true definition of a concession is when a Home owner/Seller decides to pay something out of their own pocket to encourage Buyers to buy their home.  For example, in a true Seller’s concession situation, a Homeowner might have their Realtor include in the written Listing Agreement that the Seller will provide a credit at closing in the amount $750 for a new washer/dryer.  The idea is for the Seller to spend a little bit of their own money to entice Buyers to buy their home, sooner, rather than later, especially in a competitive market.

Meanwhile, in New York…where closing costs are so high…many Buyers ask Sellers to include the Buyer’s closing costs in the price of the home by increasing the agreed upon price, not by asking the Seller to pay those closing costs out of the Seller’s proceeds.  It can be complicated, but, then again, so is life in the Big City!

The New York State Bar Association has a special Rider to be included with the contract of sale acknowledging that all parties have agreed to this increase in the price.  This way everything is transparent to a Lender when they process and approve a mortgage loan where the price includes a Seller’s concession.

Do you have questions?  Click on ASK TREVOR and I’ll respond to any and all inquiries, even if you’re not buying a home in
New York State.

Check out my Trulia profile HERE

Check out my Zillow profile HERE

Find me on TWITTER: @tcurranmortgage

Happy House Hunting!

 

Definitions: Closing Costs in New York

 Definitions, First Time Homebuyers, The Affordable Home, Veterans  Comments Off on Definitions: Closing Costs in New York
Feb 012017
 

Closing TableDefinitions: Closing Costs in New York.

When people think of closing costs typically they think of the fees paid at the closing table. The fact is, closing costs are all fees associated with the purchase (or refinance) of a house. For our purposes in this definition, we’ll concentrate on closing costs associated with purchases in New York.

 

The bulk of closing costs are indeed paid at the closing table. These include:

• Origination fees and other miscellaneous fees (application, underwriting, document prep, etc.) paid to your mortgage lender
• Flood Certification Fee paid to independent verification of flood zone
• Title charges paid to the title company (including searches and insurance for you and for your mortgage)
• The fee paid to your attorney to represent you (you might pay a retainer fee to your Attorney in advance of the closing)      Closing Attorney
• Municipal fees paid to record your mortgage and record your deed
• Taxes or transfer fees required to be paid to your state, county, or local municipality
• Escrow deposits to create your escrow accounts for the purpose of paying your annual homeowner’s insurance renewal premiums and property tax bills when due
• Miscellaneous Fees associated with your loan application and/or closing: Title Closer “pickup” fee, Title endorsement fees, Bank Attorney, and etc.

You will pay other fees in advance of closing, too. These include:

• Home Inspection: All Homebuyers should obtain a Home Inspection report from a Certified Engineer or Home Inspection Service. This report will give you advance warning of the condition of the plumbing, heating, electrical, roofing, foundation and other structural and age-related issues for the house you wish to purchase.
• Appraisal Fee: An Appraisal determines the value of the house for the purpose of making a lending decision. Typically the appraisal fee is paid for within 5 days of the Lender sending you a Loan Estimate of Closing Costs. (Lenders are not permitted to incur any fees on your behalf such as an appraisal fee or application fee or an origination fee until 4 days after they have sent a Loan Estimate to you; you must have time to review this document and agree by signing an “Intent To Proceed” form before a fee such as an appraisal fee can be charged to you)
• Application Fee: Many Lenders charge application fees in the beginning of processing a loan application.

Preparing for Closing

Prepare for closing by reading your Closing Disclosure

• First Year Homeowner’s Insurance: When you buy your home you are required to purchase, prior to closing, the first full year of Homeowner’s Insurance for your home. You must present proof of this insurance, including a receipt indicating the insurance premium has been paid in full for one year, prior to closing your mortgage loan. If you are including escrows in your monthly mortgage payment for your insurance and property taxes (required by all Lenders for FHA Insured Mortgage Loans and most Conventional Loans), then your Lender will pay your renewal premium every year after your first year from your escrow account.

Closing Table

Do you have questions?  Click on ASK TREVOR and I’ll respond to any and all inquiries, even if you’re not buying a home in New York State.

Check out my Trulia profile HERE

Check out my Zillow profile HERE

Find me on TWITTER: @tcurranmortgage

Happy House Hunting!

How To Prepare to Become a Homeowner

 First Time Homebuyers, The Affordable Home, Veterans  Comments Off on How To Prepare to Become a Homeowner
Jan 232017
 

START. No matter what your timeline for when you plan to become a Homeowner. START. Put “all your ducks in a row” as it were.
START. Now. Why? Too many Homebuyers wait until they’re actively looking for homes. Then it becomes overwhelming because of the lack of preparation.   

Think about it. You’re out on a Sunday afternoon visiting three open houses you saw advertised on Zillow. The first house is a wreck, and a bank foreclosure to boot (and that wasn’t in the advertisement!). But the second house, painted in a lovely yellow tone with the perfect fieldstone finish around the foundation, in great condition, and priced right…now this is a house worth considering!

So you want to put in an Offer. But you are not yet Prequalified for mortgage financing. (Preapproved? Prequalified? Same thing, no matter what the real estate agents tell you!). Oh, and you don’t even have an Attorney selected. Home Inspector? Who? What? WAIT…whoa…WOW…this is overwhelming!!!

START. Find a great Licensed Mortgage Loan Originator with a reputable Direct Lender. If you follow the “get pre-approved” link on Zillow, you’ll be referred to an excellent and local mortgage professional. But don’t stop there. For that mortgage professional, or any mortgage professional you come across in your research, do a little background checking…you know, like a “Private Detective!” You can verify the license of your mortgage professional at National Mortgage Licensing System Consumer Access HERE. When you’re on the site, click on “Self-reported Employment History.” If the mortgage person was managing a pizza restaurant three years ago, well, I’ll let you draw your own conclusions. Remember, longevity in this business is hard to accomplish and in the doing, the mortgage pro gets better and better and…yes, experience counts!

START. Get referrals to two very important members of your home-buying team: a great Attorney who specializes ONLY in real estate and a Certified Home Inspector. Interview them; review the cost; determine if you like these pros. Put them on notice you’re not yet ready to buy, but you’ll want them at a moment’s notice once you’re out there shopping for a home.

START. Credit: let the mortgage professional tell you if your credit is sufficient for mortgage financing. I meet lots and lots of consumers who—while checking their own credit reports—decide ON THEIR OWN that their credit isn’t sufficient. Except…wait for it…you don’t work for the bank! Let the bank tell you if your credit is acceptable, or not. You’ll most likely be surprised.

START. Income: here’s the basics for qualifying for a mortgage loan. 2 years consistent employment history. We’ll use your current salary to qualify (not what you were paid before you got that big raise three months ago). Unless you get lots of overtime, or bonuses are a regular occurrence, or if you are Self-Employed, we don’t need to average your income; we’ll use the current salary. For those other income situations, your mortgage pro will do the math for you based on the different loan program guidelines (FHA has different requirements from FannieMae and different from FreddieMac). If you recently graduated college with a degree, we can use the education history (in most cases) towards the two year requirement.

START. CASH!!! Here’s the thing, even if you’re buying in New York, where the closing costs are the highest anywhere, you really can buy a home with minimal down payment. Because many loan programs allow the Seller to pay your closing costs through a “Sellers’ concession.” You’ll negotiate this into your purchase price when you make an Offer.

START. Put your team together. Review your Credit, your income, your cash. Rely on a trusted mortgage professional to tell you exactly where you stand today for a mortgage loan. Focus on monthly payment. Even if you’re not going out looking for homes until next summer, preparing for that experience is one of the smartest things you can do today in your endeavor to become a Homeowner!

Do you have questions?  Click on ASK TREVOR and I’ll respond to any and all inquiries, even if you’re not buying a home in New York State.

Check out my Trulia profile HERE

Check out my Zillow profile HERE

Find me on TWITTER: @tcurranmortgage

Happy House Hunting!

May 182015
 

inspector 1You definitely want to be present at the inspection; budget anywhere from 2 to 5 hours for the inspection. Dress as if you might get dirty; bring a flashlight. You’ll go through the house side by side with your Inspector. After the inspection, your Inspector will discuss with you any major issues you need be aware of to discuss with your Attorney. You’ll get a written report shortly after the inspection day.

Typically your Home Inspection will alert you to problems in five key areas, and these key areas directly relate to the contract of sale in a New York home purchase:

1. Foundation: sound and solid
2. Roof free of leaks
3. Plumbing working and leak-free
4. Heating system sufficient and operating
5. Electrical system sufficient and up to code

image w definitions

If there is a serious problem with any of these five items, typically the Seller has a responsibility under the terms of the contract of sale to repair the problem at their expense, not the Purchaser’s expense. Sometimes a Purchaser will receive a credit at closing to repair one of these items (assuming the home and the defective issue has not compromised the Lender’s appraisal). When the Purchaser receives a credit at closing, the amount of the credit is based upon legitimate estimates for repair and negotiations between the Attorneys representing each party.

Other items you discover are in need of repair/upgrade (i.e. dishwasher not operating properly; air conditioner on second floor inoperable, etc.) can be negotiated for a repair credit or replacement at the Seller’s expense. Again, these negotiations are typically handled by the Attorneys.

It is not as common as you might think that a purchase price is reduced due to repairs from a Home Inspection. Best to consult with your Attorney for more detailed information in this area.

 

 
Do you have questions?  Click on ASK TREVOR and I’ll respond to any and all inquiries, even if you’re not buying a home in New York State.

Check out my Trulia profile HERE

Check out my Zillow profile HERE

Find me on TWITTER: @tcurranmortgage

Happy House Hunting!

It’s Not Enough: 6 Months Reserves

 First Time Homebuyers  Comments Off on It’s Not Enough: 6 Months Reserves
Aug 272013
 

I’ve noticed a trend on the ‘net over the past two years or so where lots of folks advocate buying a home ONLY when you:

  • Have 20% Down payment
  • Have the cash for your closing costs (here in New York 4.5%-5% of purchase price!)
  • Have 6 to 12 months monthly budget in reserves

 

6-12 months reserves is NOT enough.

Look at the recent recession: many, many, MANY Americans were out of of work for several YEARS. Lots of folks tapped into their savings and retirement accounts to survive; lots of others lost their homes altogether. Clearly, having ONE Year in reserves wasn’t enough.

 

Granted, this recession was more severe than those in recent memory, but do you really believe 6 to 12 months reserves is enough?

 

I can understand a more conservative mindset; it’s a natural reaction to the excesses of the “Boom and Bust.”  Believe me, I really do understand because I lived and worked through that debacle.  I still cannot believe people’s behavior in those days.  Lunatic is a good way to describe it.  From the Account Rep’s at the Sub-Prime Lenders to the amateur real estate agents and loan officers to the barely qualified consumers who simply wanted “MORE” I’m still shaking my head to this day.

 

And so we’re left with a new consumer mentality that, when it comes to buying a home, you should almost pay cash for the house, never mind the mortgage loan.

 

I applaud such an attitude.  

The shame is it’s not based in reality.

Even were one to eliminate all unnecessary debt, never dine out, never rent a movie, brown bag your lunch, hand wash your business clothing, commute on public transportation, take a second (and maybe a third) job, the REALITY is that—for most folks—it would take years and years, not to mention incredible discipline, to achieve this perfect home-buying nirvana.

 

Again to the reserves.  Most definitely a commendable behavior.  Maybe worth postponing the purchase of a home and tightening up a family budget to aspire to this noble goal.   But many families want a backyard for their kids to play in today.   Many other folks are well and truly tired of paying rent to complacent landlords.

 

For those folks, there’s a mortgage loan and

the option to purchase a home sooner rather than later

with the available means.

 

Commendable though it may be, saving oodles of cash to put 20% down, pay all your own closing costs and be left with many months of emergency reserves just isn’t practical for many people.  And it doesn’t help those same folks achieve the goal of home ownership.

 

 
Do you have questions?  Click on ASK TREVOR and I’ll respond to any and all inquiries, even if you’re not buying a home in New York State.

Check out my Trulia profile HERE

Check out my Zillow profile HERE

Find me on TWITTER: @tcurranmortgage

Ask Trevor A Question

Experience COUNTS! Work with an experienced Mortgage Loan Originator

 Uncategorized  Comments Off on Experience COUNTS! Work with an experienced Mortgage Loan Originator
Aug 172013
 

If you’re a First Time Buyer you MUST begin your search for a home with a Prequalification AND a Licensed Mortgage Loan Originator with at least 15 years experience.

Why 15 years? This is a person who worked in the mortgage business before the “Boom and Bust” years. During those toxic times all that was needed for a mortgage approval was a credit report and verification the Applicant had a heartbeat.  Access to becoming a Loan Originator was ridiculously easy and it attracted all sorts of the wrong people.  Those of us with real careers in mind often struggled to succeed competing against the amateurs.

In the “old days” of mortage lending we old-timers approved mortgage loans the same way we do now in 2013: with FULL DOCUMENTATION. That’s 2 years income tax returns and W2’s, 30 days recent paystubs and 3 months recent bank statements. It’s not enough, either, to have the documents. Those docs must be reviewed with a critical eye to anticipate obstacles to a loan approval.

For example: you took a loan against your pension two years ago. Your paystub indicates a repayment of that pension loan. If you’re qualifying for a Conventional, FannieMae type loan then the monthly payment of that loan is counted against your income much as a car payment, credit card payment or other monthly obligation. The pension loan payment is counted into the Debt-To-Income Ratio for qualifying purposes. And for some folks, they might not qualify with that payment.

The experienced Loan Originator knows about this guideline and

seeks out these stumbling blocks in the prequalification process.

What to do?

  1. Interview the Loan Originator: How long in the business? Do you focus primarily on Purchase loans or Refinance Loans? Do you review ALL required documents before you issue the Prequalification or do you simply run a credit report and ask me a few questions?
  2. Check NMLS: The National Mortgage Licensing System was created to provide professional standards for Loan Originators and to protect consumers. You can see the Licensing/Registration status of any Loan Originator on the NMLS Consumer Access website. Open up the “Self-reported Employment History” tab to verify that your Loan Originator wasn’t managing a fast food restaurant three years ago before getting into the mortgage business. http://www.nmlsconsumeraccess.org/
  3. Switch Loan Originators: when you called the Lender/Bank you weren’t “assigned” the Loan Originator. YES, you can switch to a different professional!

For the biggest financial decision of your life
work with an experienced professional.

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Hope that helps!