Focus On Total Monthly Payment

 First Time Homebuyers, How-To Negotiate, The Affordable Home  Comments Off on Focus On Total Monthly Payment
Apr 122015
 

WOW! What a beautiful day today here in The Bronx to be out and about House Hunting! If you’re shopping for your first home today here’s some simple advice to help you make the right decision on your home buy.

1. Wish List: Be sure to have a WRITTEN wish list of everything you want in a home. Include features, condition (how much improving are you willing to do?) and location (proximity to transportation/work and desired school districts). When you find a home that comes pretty close to your wish list, it’s a good house for you!

2. Focus on TOTAL Monthly Mortgage Payment. Your total monthly mortgage payment includes the Principal and Interest of your mortgage loan, one-twelfth of your property taxes/Homeowners Insurance/Flood Insurance/Mortgage Insurance (depending on the mortgage loan program), otherwise called “PITI.”

Your Mortgage Banker should be only a phone call/text/email/tweet away from providing you with an accurate TOTAL monthly mortgage payment. I advise this to be the best option for accurate information as opposed to online calculators. Your Mortgage Banker will be more familiar with local common and customary costs such as Homeowners Insurance and Flood Zone costs as well as local property taxes (be wary of the property taxes listed in the real estate listing for under-estimating).

If you’re qualified for a mortgage loan program that requires mortgage insurance (PMI, FHA, or VA Guaranty) those online calculators can’t correctly calculate your monthly insurance. If your Mortgage Banker isn’t available or isn’t familiar with those local common and customary costs you need to find a different Mortgage Banker!

3. Make OFFERS promptly. Nothing demonstrates that you are a serious buyer like making an OFFER on a home immediately. Don’t wait until Thursday! If a home comes close enough to your basic Wish List requirements and the total monthly mortgage payment fits your comfort zone then strike while the iron is hot!

You’ve got nothing to lose and everything to gain! Sellers want to work with serious buyers, and so do their real estate agents. Get your Offer prepared in writing with your agent before you go home. Then enjoy your evening and let the real estate agents and the Seller fret, worry, and negotiate with YOU.

4. Prepare your counter-offer position. Assuming the Seller doesn’t accept your initial Offer, prepare your pricing strategy for the next highest price you’re willing to go up to. Once again, focus on Total Monthly Mortgage Payment. Never pay more than you’re comfortable with! And, prepare your “walk away” strategy, too. Some Sellers and their agents are just too unrealistic with their pricing expectations.  If they don’t respond to your Offer in a reasonably prompt manner, and with a reasonable counter-0ffer (less than 5% of List Price is NOT reasonable IMHO), then it’s time for you to walk away from the negotiating table.  Let them chase YOU.  After all, you’re a prepared and serious buyer, not a time-waster.

negotiating

5. Line up your professionals to move your deal along.  Be sure to have your ATTORNEY, your HOME INSPECTOR and, of course, your Mortgage Banker all lined-up and ready to jump on your home buying bandwagon once you and the Seller have worked out and agreed on your terms and price.  Your professional team should respond to your heads-up about your accepted Offer within less than two hours, IMHO, to help you prepare to buy your home.

Do you have questions about Total Monthly Mortgage Payment?  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.

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Happy House Hunting!

 

 

 Posted by at 4:43 pm

Purchase and Renovate: ONE LOAN

 First Time Homebuyers, The Affordable Home  Comments Off on Purchase and Renovate: ONE LOAN
Apr 102015
 

It’s Sunday afternoon and you’re out there house hunting. It’s part of the process.

All of a sudden, you’ve found the right house. It’s the house you want: the price is right, the location is right, the amenities are allright. But there’s a problem with this house that is otherwise not so right: it needs a new kitchen with appliances. Oh, and the windows are ancient, ugly, drafty and in serious need of replacement.

retro k

You want this house. And you’re rather move in to your new “right” house with that a new kitchen, appliances, and windows.

But how to purchase the home and find the money to renovate?

Maybe Uncle Harold can lend you the money after the closing. But, do you really want to ask Uncle Harold for such a favor? Then you know you have to invite him for every Thanksgiving and every Christmas and every Fourth of July barbecue. You LOVE Uncle Harold, but EVERY holiday? Umm….

And what if the house won’t pass muster with your Lender’s appraisal? Maybe those windows and broken kitchen cabinet doors will catch the Appraiser’s attention and she’ll call for them to be repaired prior to closing. (We call that a “Subject To” appraisal: the appraisal is subject to completion of required work before the Lender will close your mortgage loan) The Seller is willing to do only minimal work to help you pass an appraisal, but do you really want to rely on the Seller’s handiwork to repair the kitchen cabinets and/or windows?

All of a sudden Uncle Harold spending all his holiday time with you is looking like your only option…

But there are several programs where your Lender can provide you the mortgage money for your home purchase and for the renovations. The beauty of it? A Purchase and Renovation Loan!  ONE LOAN and thus ONE MONTHLY MORTGAGE PAYMENT.

The first, and most commonly used, is the FHA 203k Rehab Mortgage . With this program you can actually do a full house gut-renovation if you wanted to. It all depends on how much mortgage money your Income, Assets, and Credit allow you to qualify for, AND how much the home will be worth AFTER your proposed improvements. That’s right, that same appraiser who might have “subjected-to” your “right” home will now tell you how much the home will be worth with the new kitchen, appliances and windows. Yup, definitely improves value and the “After-Improved” appraisal will reflect that. Better still, the Lender’s approval decision is based on that “after-improved” value.

The FHA also offers the FHA 203k Streamline program. You need a minimum of $5,000.00 in improvements to qualify (can you say “Appliances?”) and the maximum is $35,000 for improvements. This program offers a faster, more efficient process of approving a purchase/renovation loan. And meets your “right house” scenario of new kitchen, new appliances and new windows, unless you’re selecting crazy expensive product/services.

old k

FannieMae has a similar program for your renovation needs, too. FannieMae HomeStyle. This program is similar to the FHA 203k for purchasing and renovating that “right” home you found.

So, don’t lose hope. You can buy that house that’s so right for you. Ask me for more details by clicking “Ask Trevor.” I’m happy to give free advice all day long; it’s what I do.

new k
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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 Posted by at 2:12 pm
Sep 072014
 

tax refundIt’s tax time and many homeowners receive large tax refund checks. Here’s some advice I’ve put together for you on different ways to use that money.

This article was the first in my series “The Affordable Home.”  In the series I seek to focus on the intangible benefits of homeownership by making them, well, tangible.  I believe the affordable home is the sensible and proper approach to homeownership; so many new homebuyers today specifically focus on the affordability of the mortgage loan instead of the “HGTV” aspects of a house. I find this attitude refreshing for two reasons.

First, it’s an “old” attitude: in decades past the idea of buying a home revolved around diligent budgeting to save up the down payment and the concept the monthly payment should be affordable.

1950-oct-28-crop

The features of the house—granite countertops, high end appliances, paved driveways—were minor considerations and certainly did not make for sound decision-making when buying a home.  Those features could be added later, if one so desired, and those “old-timers” (I was once one of them) knew that.

 

Second, during the past decade, during the “Boom” the focus was on something I considered completely nuts: buy a home, an amazing home packed with big rooms, big features, and big monthly payments, at any cost.  Affordability be damned.  I struggled as a mortgage professional during those years to try to talk sense into people.

Since it’s tax-time, the advertising from folks who want your refund checks are everywhere.  There was the TV advertisement: “Just in time for your tax refund we’ve received a new stock of bamboo flooring!”

bamboo

It occurred to me that this is the time of year when many people, especially homeowners, get large tax refunds and the sharks start circling looking to take a bite out of that refund check.  To this I say, “STOP!  Take a minute to reflect on what you should do with your money!  You worked hard for it, and you bought an affordable home so you could get that refund, don’t throw it away without giving it due consideration.”

Here are my suggestions to spend your tax refund wisely:

1. Consider investing the money for your future.  My pal Nick, the owner of the Westside Steakhouse  was at one time a stock broker.  Here’s his take on wisely using your money:: “Never spend more than you make and save some money every week.”  Awesome advice and I believe that fits very handily into my concept of the affordable home.   Especially in this day and age of doubt over pensions, we consumers must be smarter and more responsible with our planning for retirement.  Follow Nick’s advice and invest your tax refund to begin or supplement your savings plan.

The New York Times “Your Money” section featured a wonderful piece recently about a new vehicle that makes it easier for us to create a sound investment strategy without all the costly bells and whistles.  Here’s the link to that article:  Financial Advice for People Who Aren’t Rich

I have long advised my clients to consider retaining a Financial Advisor to provide counsel on all things finance-related: investing, budgeting and insurance.  You can find a local Financial Advisor in the your area here:  National Association of Personal Financial Advisors

And here is sound advice from a CPA about investing not just your refund, but investing throughout the year and the tax benefits/ramifications: Fund Your Retirement Or Your Child’s College?

2. Create an Emergency Reserve.  Take some or all of that refund check and put together your emergency reserves.  Park the money somewhere it’s inaccessible by debit card!  You’ll need ease of access, but putting it within reach of a debit card is a surefire path to disaster.  pile of cash

3. Pay down debt.  This tends to be the long held standard amongst many homeowners I’ve known over the years.  I believe this is an admirable activity, but I believe taking your tax refund to pay down debt should be part of a comprehensive plan for debt management.   To take a page out of my friend Nick’s finance playbook: don’t spend more than you earn.  I advocate tending to your credit use respectfully and as part of your total family budget every month.  This way you won’t necessarily have to take your hard won refund check and pay down a credit card balance.  Of course, if, during the year you experienced an emergency and needed to access your credit to assist with that emergency, then paying off that debt at tax time is a sound strategy since it’s a one time event.

I’ve found that Consumer Action is the best site on the ‘net for sound advice on all things credit related, including how to obtain lower credit card rates and fees and great counselling on preparing and maintaining a family budget.  Find them here: Consumer Action

 Another Smart Strategy for The Affordable Home: Take home more money in your paycheck; get a smaller refund at tax time.

I hope my suggestions are useful to you at this exciting time of year.  Of course, I also advocate that you really shouldn’t get such a large refund at tax time if you’re a homeowner.  I’ve long believed that you should incorporate into your homeowners’ “network of advisors” a great tax professional or CPA.  By doing so, you can lean on your tax professional/CPA to advise you on the correct withholding throughout the year to increase your take-home pay, reduce your end of the year tax refund (and prevent having to pay!), and enjoy the benefits of homeownership every month instead of once a year. Here’s the IRS page on how to calculate correct withholding, but I recommend you do this only under the guidance of your tax professional/CPA:  IRS Withholding Calculator

 

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

Ask Trevor A Question

The Affordable Home: Washing the Dishes

 The Affordable Home, Uncategorized  Comments Off on The Affordable Home: Washing the Dishes
Nov 252013
 

I believe in The Affordable Home.

dishmasterI’ve debated for many years with various folks, friends and family members over washing the dishes, not that I mind the household chore, rather the expense of hand-washing dishes versus using a dishwasher.

Thanks to the National Resource Defense Council, I’m both wrong and I’m right!

They say that using a newer Energy STAR efficient washing machine is the least expensive way to wash your dishes. But they make a good case for “efficient” hand-washing. A new Energy STAR efficient dishwasher uses 3-5 gallons of water and 1kWh energy. dishwasher

Efficient hand-washing, where you use separate tubs to soap the dishes and wash them by hand then rinse in a separate tub thereby not running the water the whole time is nearly as efficient with 8 gallons and 1kWh. More efficient than an older dishwasher which can use up to 15 gallons and 2-3 kWh!

Make your home more affordable: either invest in a new Energy STAR efficient dishwasher or get more efficient in the way you wash your dishes by hand.

More on the NRDC website HERENational Resource Defense Council

 

oldendays-420x0

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

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Key Points for VA Loans

 First Time Homebuyers, The Affordable Home, Veterans  Comments Off on Key Points for VA Loans
Sep 052013
 

veterans 1More Veterans are using their Veterans Benefits to buy homes today with VA Loans.  The problem many of them encounter is this: Mortgage Loan Originators (MLO) don’t have sufficient experience with VA Loans.  This can make for some troublesome times when a Veteran is buying a home.  You definitely want to work with an experienced MLO, someone with at least 15 years experience.   Take some time when shopping for your VA Loan to interview the MLO before you make a decision.

Some key points for you to know when you interview a Licensed Mortgage Loan Originator (MLO) for your VA Loan:

VA Funding Fee is 2.15% of the Loan Amount (and is always financed) for Active Duty Veterans with at least 180 Days active duty. No Funding Fee for Disabled Veterans.

The Funding Fee is different for other service types/periods, including Reservists.

A Veteran can finance 100% of the purchase price of the home.modern home 191

A Seller can pay all of a Veteran’s Closing Costs, and more.

There’s a lot of misinformation out there about VA Loans and your MLO will need to be available to explain and reassure the Seller and the real estate agents of the VA process. For example, many Sellers and/or real estate agents believe that VA Loans take “a LONG TIME” to approve and close. Not true. (My average closing time on VA loans is about 6-8 weeks compared to 3-4 weeks for FHA). They also believe that VA Appraisals ALWAYS slash the value of the house. Not true. I’ve only seen one VA Appraisal come in slightly less than purchase price in the last couple of years, and, in that case, both the Listing Agent and I suspected the value might be tight before. Bottom Line: your MLO has to have clear communication to make it easier for you to negotiate with Sellers when competing against other Buyers with different financing terms.

If your MLO asks you for your DD-214 right away, then you know you’re dealing with someone with experience. You don’t need the Certificate of Eligibility or COE as we MLO’s can obtain that directly from VA on your behalf.

thank you veteransFor a New York Purchase you’ll need some cash for your “Good Faith Deposit” when you sign the contract of sale. It’s the rare Seller who will sign a contract with a Buyer who doesn’t at least put $10,000 on the contract (refundable to the Veteran at closing due to the 100% financing). Not that it’s impossible (I’m working with 3 Veterans right now who have less than $5,000 to put down), but it will require serious negotiating on the part of your MLO, real estate agent, and Attorney.

VA Condos: few and far between because the VA just doesn’t approve enough Condos, so focus on Single Family Homes. Find VA Approved Condos

Two Family Homes: unless you have experience in property management (and can prove it), you’ll have to qualify with your own INCOME for the purchase; rental income will be excluded from the qualifications.

You’ll need a Termite Report but YOU CANNOT PAY FOR IT, the Seller must pay.

We qualify Veterans’ Income two ways: a percentage of monthly gross income, or “Debt to Income Ratio” AND a residual income method which is similar to doing a family budget, so it’s a pretty cool way to qualify you. idyll

 

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

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Definitions: Earnest Money Deposit or EMD

 Definitions, First Time Homebuyers, The Affordable Home, Veterans  Comments Off on Definitions: Earnest Money Deposit or EMD
Aug 192013
 

Earnest Money Deposit or EMD

When you sign a contract to purchase a home, you’ll provide an “earnest money deposit” to be held until closing in an escrow account by the attorney for the homeowner. If you are purchasing a HUD Home the EMD check is presented with your Offer by the HUD Approved Broker in the bidding process.

If you’re applying for an FHA loan, the EMD usually equals your 3.5% down payment. If you apply for other types of financing—-VA or Conventional—then your  Real Estate Agent or Attorney will guide you as to the amount requested by the Seller.

There is no “set” or required amount for the EMD, although many Sellers’ often request 10% of the purchase price. This is a matter of some negotiations between your Real Estate Agent/Attorney and the Seller’s Agent/Attorney.

For example, what if you’re closing out a CD for your entire down payment but you only have $10,000 cash on hand for the EMD today? It’s important to discuss with your Real Estate Agent/Attorney before you come in to sign the contract the amount of the EMD.

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

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How-To Convert from “Renter” to “Homeowner”

 First Time Homebuyers, Rent Vs. Own, The Affordable Home, Veterans  Comments Off on How-To Convert from “Renter” to “Homeowner”
Aug 182013
 

Rent today; Buy tomorrow. ???????????????????????????????How to convert from Tenant to Homeowner.

When I rented my first apartment in Astoria, I did not want to be a Tenant my whole life and pay my Landlord’s mortgage. I longed to become a Homeowner.

That’s why I found my way into the mortgage business in 1989 and soon afterward became a Homeowner. Here are the fundamentals any Tenant should know to prepare to become a Homeowner in the future, no matter when that might be.

Credit: Establish 3 credit accounts, no more than 5. Pay your bills on time. Keep your balances to no more than 50% of your credit limit. Don’t pay off the accounts in full. Keep balances active for 12-24 months. All of the above will provide both a good credit score and adequate credit history to qualify for a mortgage loan.

Assets: A basic savings budget isn’t hard to accomplish. Pay your rent first in your budget; then set aside 10% of your income before taxes . Make it a budget priority and you’ll still have money left over for entertainment and restaurants and clothing.

How much money do you need to buy a home? Many buyers spend no more than $25,000 to buy their first homes. There are loan programs with low down payment requirements and many real estate agents negotiate for their Buyers a “Seller’s concession” to include the Buyer’s closing costs (which are HIGH here in New York!) in the price of the home.

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Imani got the keys to her new home with a VA Loan

 

Income: Two years consistent income is the basic requirement for either a salaried individual or a self-employed person. Income from Bonus, Commission, and Overtime is treated differently and is best discussed with your Mortgage Banker.

Market Survey: it doesn’t hurt to go out and get to know neighborhoods where you might like to buy a home. Visit open houses on Saturdays and Sundays. It’s okay that you’re not yet buying; tell the Realtor at the Open House you’re just beginning your “survey.” You’ll also get to know market prices for different kinds of homes. It’s okay to “window shop” homes on the weekend at Open Houses!

I hope these fundamentals will help you better understand the path to homeownership is a process that, with preparation and dedication, you can move through easily.

George S. converted from Renter to Homeowner!

George S. converted from Renter to 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.

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Sunday Dinners

 First Time Homebuyers, The Affordable Home  Comments Off on Sunday Dinners
Aug 152013
 

Sunday Dinners

I was speaking to one of my clients yesterday. She has been shopping with her husband since January for the right house. They had two houses locked down in contract only to discover in both cases the Sellers had problems that prevented my clients from closing, even though their mortgage loans were approved.

I have learned one thing in my 23 years helping First Time Homebuyers and I shared that one thing with my client yesterday as a way to help her maintain her energy and optimism.

I told her, “Someday soon in your new house, when you are sitting down to a Sunday dinner with your family at your dining room table you will remember all the hard work, disappointment, crazy sellers, and challenges you had to overcome in order to buy your first home. You will look around that Sunday dinner table and think to yourself, ‘All that hard work was worth it.’”

It’s true: the thing I learned a long, long time ago, through my early experiences as a mortgage professional and through the challenges I faced buying my first home, the thing I learned is that all the hard work pays off. To sit down with your family to that traditional Sunday dinner in YOUR dining room in YOUR own house, oh yes, that’s when you truly reap the rewards from your hard work shopping for that house.

I encourage all of you to stick with it. You will find shopping for that home to be challenging, arduous, and filled with nail-biting anxiety. But it’s all worth it in the end.

Paying rent just isn’t worth it in the long run; 

owning something that’s yours really is worth the work.

Think of your future Sunday dinners next time you are feeling

blue about the home buying experience.

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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Ask Trevor A Question
Nov 222011
 

Wow, 27+ years as a Mortgage Banker! I have seen the occasional short appraisal! I started in November 1989 because I wanted to become a Homeowner so I chose a path which would get me there: Mortgage Professional.

Times were tough back in that market.  Interest rates were high and property values had dropped dramatically.  The employment picture for many Americans wasn’t very promising.  There were a lot of foreclosures and homeowners had a hard time refinancing their mortgages due to lost equity.  Sounds very similar to our recent post-meltdown market with the exception of the interest rates (11% in 1989!!!).

I received a valuable part of my education early on in my career as I dealt with purchase transactions where the appraisal came in for less than the purchase price.  Buyers, Sellers and their respective Realtors are all “IN IT TO WIN IT” and make the deal happen.

How you see your house!

I carry that education with me to this day when my HomeBuyer clients ask me at application time, “What happens if the appraisal comes in for less than the Purchase Price?”   I know many HomeBuyers may think it’s a NO-BRAINER: the Seller will automatically reduce the price.  But that is NOT the case right out of the gate.  Here’s what I learned all those years ago about appraisals that come in short:

How the Appraiser sees your house

When the bank appraisal comes in for less than the contract price

there are FOUR ways to proceed with the transaction.

 

  1. The Purchaser comes up with the difference in cash. If the appraisal is less than the Purchase price, the Seller basically assumes the Purchaser wishes to buy the house according to the terms of the contract, including the agreed upon Purchase Price. Therefore, the Seller assumes the Purchaser will come up with the cash necessary to complete the transaction.
  2. The Purchaser and the Seller meet in the middle. The Purchaser comes up with some cash but the Seller also agrees to reduce the price enough to meet the Purchaser somewhere “in the middle.”  Both sides want to complete the transaction and so they work it out.  This is compromise at its best.
  3. The Seller reduces the Purchase Price to equal the Appraised value. This is the least likely scenario, but not an impossible one.  Sellers often want to complete the purchase transaction on the original terms of the contract, including the price. But a determined Purchaser working with a great Realtor, by digging in and working hard to negotiate can often make it happen.
  4. Nothing happens and the deal is cancelled. The Purchaser either cannot or will not come up with the extra cash and the Seller refuses to reduce the price completely or even a little bit to meet the Purchaser.  In this case the transaction is cancelled, the Down Payment is returned, and everyone goes home unhappy.  The Purchaser has to begin all over again and the Seller has to put the house on the market and try to find a new Purchaser.

In the end, the motivations of all parties to make the deal happen and close the transaction rule the day.  Those motivations drive everyone to find a solution and get the deal closed.  Or not.

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!