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!

To Prepay Or Not to Prepay, that is the Question

 Tax Benefits of Homeownership, The Affordable Home  Comments Off on To Prepay Or Not to Prepay, that is the Question
May 232015
 

calculator photo2I was included in a FaceBook thread where a homeowner considered whether to refinance his 30year Fixed rate mortgage into a 15 year fixed rate mortgage, or to find an online calculator that would assist him in creating a prepayment plan.

Here’s his query:
Can anyone recommend a decent mortgage calculator site/app/spreadsheet?
We’re currently on a 30 year/4% fixed. Trying to compare two options:
1) Switch to a 15 year/3.65%.
2) Start paying an additional quarterly payment against principal with the existing mortgage.
I know this isn’t exactly advanced math, but I also feel like someone must have put something together that shows the impact of added payments against principal. Mortgage calculators are great at helping figure out the cost of new mortgages (i.e., option #1 above), but not so good at helping jigger existing mortgages (option #2).
Any help?

Here’s my response:Light-Bulb-Clip-Art
First check with your tax professional before you consider a day in the near future when you “burn the mortgage!” While it may feel great to someday own your home free of any debt, you might lose out on a valuable (in real dollars) tax deduction. Second, rather than refinance and incur closing costs again, prepaying a 30 year mortgage is easy-peasy! Simply add 4% of your current Principal and Interest monthly for year one of your prepayment plan. In subsequent years, add ANOTHER 4% of each years’ NEW monthly payment. Treat your mortgage like an employee with “4% cost of living raises” each year. If you follow this course you can prepay a 30 year loan in 13 years. Hope that helps!

 

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!

They’re BACK. Mortgage Losers/Thieves/Lowlifes Return To the Industry

 Uncategorized  Comments Off on They’re BACK. Mortgage Losers/Thieves/Lowlifes Return To the Industry
Apr 182009
 

We’re seeing it. All those mortgage losers who put this industry and the economy in the toilet are returning to prey on consumers once again. They’re returning because opportunities abound to separate hard-working homeowners and homebuyers from their money.

We’re hearing of people getting back into the mortgage business after the long cold “winter” of 2007-2009 when business was hard to come by and only the brave and the bold stuck it out to continue hard-earned careers. These mortgage-professional-wannabees are coming back because low interest rates and a newfound sense of optimism are bringing buyers back and opening up homeowners’ minds to the idea of refinancing.

The Associated Press reported of a warning from Senator Charles Schumer about these mortgage losers. The Senator it seems is also aware of the return of these crooks looking to ripoff consumers. Read more HERE

More than ever when shopping for a mortgage the words “Buyer Beware” ring true. Look for those mortgage professionals with substantial experience and preferably those who you find through a referral from a friend or family member, or your tax professional or attorney. Searching the internet for a mortgage professional is, IMHO, a recipe for disaster. You’re likely to come across many alleged experts who only want to tell you what you want to hear just to get your business. Once they get you to the closing table, everything changes and you can watch your money evaporate from your wallet.

I’ve recently cautioned against working with non-FHA approved mortgage people. These are yet another class of mortgage lowlife who pretend they are allowed to originate FHA loans. Worse, they pretend to know “all about” FHA loans. I just spoke on the phone while writing this blog entry with a young man who told me how he encountered many such people who claimed they could approve him for an FHA loan on a Co-Op apartment purchase. He told me they all seemed very happy to want to separate him from his money for application fees and the like. He contacted me to ask about getting an FHA loan for a Co-Op. He seemed to know already that such a loan was not available, but thought it’s because FHA doesn’t insure Co-Op loans. In fact, FHA DOES indeed insure Co-Op loans (FHA is an insurance program; FHA doesn’t make the loan, they insure the Lender’s loan in the event of foreclosure). I explained this fact to him. The problem with FHA and Co-Op loans is there are no Lenders who provide such financing.

No conversation about mortgage lowlifes would be complete without a mention of those poor homeowners trying to do a loan modification. As I mentioned recently, there are many scams out there with alleged “loan modification experts” very willing to take thousands of dollars in fees from distressed homeowners while providing absolutely nothing in return: no modification, no saving of the house, nothing, nada, zilch. Many of these crooks are, in my opinion, former mortgage losers who have changed their crime tactics from putting unsuspecting people into terrible sub-prime loans. Now they seek to steal your money—and your home—by pretending to counsel you on modifying your loan. BUYER BEWARE.

If you truly feel you wish to modify your loan contact an attorney. Or do it yourself.

On a sidenote, I attended a job fair yesterday seeking to recruit salespeople for the company where I work. I met the recruiters from the FBI and asked them to please, “…hire more people today and arrest more mortgage brokers.” They laughed and asked what I do. “I’m a mortgage broker!” I replied. “Please, I’m serious,” I continued, “these people have destroyed my industry, please hire some good people today and go out and arrest more mortgage brokers.”

Postscript: To the young man who called for advice on FHA and the Co-Op loan: Thank you for your kind compliment about tcurranmortgage.com and thank you for stopping by to read my rantings!!!


I welcome Comments for all my blog entries. I will be happy to review and approve all legitimate comments provided by readers of tcurranmortgage.com. I do not permit unfettered access to comments for obvious reasons: mortgage spammers and their ilk. If you wish to Comment on any entry, please do so and I will quickly review and approve. Thanks for reading tcurranmortgage.com. Hope that helps!

To The Rescue!

 Uncategorized  Comments Off on To The Rescue!
Aug 292008
 

This afternoon we’re closing another loan we rescued from previous disaster with not one, but two other mortgage companies. This morning, we’re continuing to process the “rescued” loan from two nights ago.

Last night I spoke with yet another Realtor down and out because he had a purchase transaction dragging on and on into oblivion with no hope of ever closing. The Seller’s attorney advised him yesterday that today, Friday August 29th was the absolute last day to get an approval.

The Realtor said, “I think I’ll just let this one go and lose this deal.”

I pointed my finger at him and admonished him not to every say such a thing while I was around. Told him to get the file ready and show it to me today at 1pm when I return to his office. Turns out I also know the Seller’s attorney and I’m certain that, after reviewing the file and determining if I can get it approved and closed, that one phone call to that attorney will provide us with the time we need to finally get it done right.

Rescue, rescue, rescue. I encounter so many of these situations, whether it’s for folks trying to refinance their homes or families trying to purchase their first homes. Many times I have to say, “No, this is truly not possible. There is no way to make this loan work.” But my “No” comes in a few minutes, or, at the most 24 hours. The losers keep wasting everyone’s time as if some magic wand is going to fall out of the sky, hit them in the head and provide a miracle cure for the loan in question.

Days turn into weeks as everyone waits for the mortgage loser to come up with a solution, approve the loan and close it. And the losers are not just mortgage brokers, they are mortgage bankers and loan officers of regular banks, too.

This is the fallout of the mortgage meltdown of 2007. Too many losers still populate the mortgage industry, wasting the time of hopeful homebuyers, serious sellers, and realistic Realtors.

Message to mortgage losers: GET OUT OF MY BUSINESS!!!

For those of you industrious readers, working honestly every day in your field, let me wish you a peaceful Labor Day weekend!

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