Trevor Curran – Page 4 – Thoughts on mortgages real estate and first time buyers

It’s Not Enough: 6 Months Reserves

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.

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You Need To Build Credit: Where to Begin

You need to build more good credit. I recommend opening the following accounts as a way to build credit:

Sunoco http://www.gosunoco.com/ways-to-save/gas-credit-cards/

CareCredit: available at your Dentist. http://www.carecredit.com/apply/landing.html

CapitalONE secured credit card http://www.capitalone.com/creditcards/mastercard-secured-credit-card/

A secured credit card works like this: you deposit with the credit card company a pre-determined amount, say, $500. This amount is your credit limit. You swipe and use the card same as a regular credit card; the secured card activity gets reported on your credit report thus building your credit history. My advice: open the account and use no more than 50% of your “limit.” Then make MINIMUM monthly payments; don’t replenish the total amount! This type of activity gets much better results on a credit report.

Bank Debit/Credit Card: If your bank offers a card attached to your checking account that can be used as either credit or debit, then you should use the card as credit. Check with your bank to see if they offer this type of card AND if they report the activity to the credit bureaus when you use the card as a credit instead of debit.

Visit my Useful Links page for other great websites that provide accurate and honest advice on building credit.

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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What Is The Future of the Real Estate Market?

What Is the Future of the Real Estate Market:

Buy NOW with a 30yr Fixed Rate mortgage

I recently answered a question on TRULI.com about the future of the real estate market. Here’s what I had to say about that:

The future of the real estate market is the past: it is CYCLICAL. As with many other markets—commodities, stocks and bonds, comic books and baseball cards—prices, values and activity go UP and they go DOWN.

If you seek to buy a home to live in and to reap the intangible benefits of homeownership, then the LAST thing you should be thinking is about market peaks and valleys. Create your “dream list” of location and features you want in a home. Get prequalified for mortgage financing so you know your limits in terms of the monthly payment for a mortgage loan. Then jump in the water, so to speak, and buy your home.

If, on the other hand you’re attempting to “time the market” well,

Good Luck with that.

In my nearly 24 years working in this field, I’ve seen many different “markets” come and go. But one thing has been constant: many people want to live in a home of their own. To them it doesn’t matter what the “market” is doing.

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but they must be approved.

If you wish to Comment on any entry, please do so and I will quickly review and approve.

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Hope that helps!

Definitions: Earnest Money Deposit or EMD

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

Check out my Zillow profile HERE

Find me on TWITTER: @tcurranmortgage

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How To Buy A HUD Home

How to buy a HUD home

1. You must have a Prequalification letter from an FHA Approved Lender
2. You must present your bid/Offer through a HUD Registered Real Estate Broker
3. Helpful Hint: when you make your Offer, add a 2 digit number to the end of the bid price. Example: $357,019 instead of $357,000.
4. You’ll need a Cashier’s check to present with your Offer; the HUD Real Estate Broker will advise of the amount.
5. You can request a renovation loan with your Offer: ask for the 203k Streamline
6. Have a GREAT Home Inspector lined up
7. Have a GREAT real estate Attorney lined up
8. Make your bid and GOOD LUCK!

Find HUD Homes at the HUD Homestore: http://www.hudhomestore.com/Home/Index.aspx

My friends at Yahoo! Finance’s “Destination Home” Series provide a great summary on buying HUD Homes:
How To Buy A Home for $15,000

I welcome Comments for all my blog entries but they must be approved.

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!

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

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.

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!

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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Experience COUNTS! Work with an experienced Mortgage Loan Originator

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?

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?
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/
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.

I welcome Comments for all my blog entries but they must be approved.

Thanks for reading tcurranmortgage.com.

Hope that helps!

It’s a Long Ride on a Short Sale

Definitions: Short Sale

The definition of a short sale is when a homeowner owes more to their current mortgage lender than they can sell the house for on the open market and sells the house for the market price
after negotiating with their lender to accept less.

For example, Henrietta and John own a single family house. The balance on their current mortgage is $267,000. John lost his job and they wish to sell the house to relocate to another state for better employment opportunities. They invite local Realtors to make a “Listing Presentation” as to how much Henrietta and John’s house could sell for under current market conditions. The consensus among these Realtors is a price range of $195,000-$220,000.

Henrietta and John owe more than the house can be sold for. They retain the services of a local attorney who specializes in negotiating short sales. Their attorney then negotiates with their existing Lender to accept less than the $267,000 owed on the house and basically to accept payment based on whatever Henrietta and John can sell the house for.

The negotiating of the short sale is a complicated and difficult process. Henrietta and John’s attorney will need to present comprehensive income documentation to their Lender. The Lender will in turn conduct it’s own analysis of the value of the house and the merits of accepting Henrietta and John’s offer of less money rather than conducting a foreclosure proceeding.

Thanks to recent Federal Government initiatives, the process to negotiate a short sale has become easier. What used to take nearly a year to accomplish can now be negotiated in as little as 45 days, although the average processing time for a short sale approval is probably closer to six months.

When Henrietta and John receive the approval for their short sale, there will be some fundamental conditions in place.

1. Their Lender will receive ALL proceeds of the sale AFTER Henrietta and John have paid customary closing fees for their locale and real estate commissions and legal fees to their attorney.

2. They will not be allowed to receive any funds in their pocket.

3. Their Lender may reserve the right to obtain a “deficiency judgment” against Henrietta and John for the amount of the mortgage loan left unpaid by the approved short sale.

What does a short sale mean for a Homebuyer?

1. Be PATIENT. You may have a considerable waiting period from the time you sign a contract of sale to the point when the short sale is approved on the house you are buying.

2. Get your Mortgage Approval and MAINTAIN your financial status. Once your mortgage loan application is approved and your Lender issues a loan commitment, be sure your Income, Assets, and Credit stay the same as when you made your loan application. Because it may be some time before you close, your Lender will update your documentation used for the loan approval. If your financial situation changes, you may lose your approval altogether.

3. You can’t get Something For Nothing. Don’t think you can get a house in a short sale situation for “fire sale” prices. After all, the house didn’t get burned in a fire, the Homeowner simply owes more than current market prices will bear. If you offer substantially below the market price, chances are the Lender approving the short sale for the homeowner may counter your offer to a higher price. This is based on their independent analysis of market prices for similar homes in close proximity to the house you are buying.

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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Never Fall In Love With The House

RULE NUMBER ONE in my Playbook for First Time Buyers: NEVER FALL IN LOVE WITH THE HOUSE.

Of course, you often have no choice. The reason is simple: buying a home is a very emotional process. You’re going to LIVE there! You’ll create new life experiences and, frankly, that’s emotional.

But when you’re shopping for a home and you want to win at negotiations with a home Seller, or, you just want to be treated with respect by crazy aggressive real estate agents, you have to tamp down your emotions.

I believe in the negotiating tactic of “first one to leave the negotiating table wins.”

That’s really what I mean by “never fall in love with the house.”

How To WIN:

1. Move quickly: Offer your price promptly, don’t explain your price, and sit back and wait for the Seller’s response.
2. Be prepared to sign a purchase agreement (contract of sale) and get your home inspection immediately your Offer is accepted.
3. Watch the Seller’s reaction to your prompt, efficient moves.

Does the Seller respond in a timely manner?
Does the Seller’s real estate agent put up barriers to your Offer being presented/accepted?
Is communication between all parties clear and concise?
Are the other parties driving you kinda sorta NUTS with ridiculous statements and/or demands?

If you get a negative or confusing reaction to these focus points then you need to WALK AWAY. Let the Seller chase after you. IF the Seller is serious about selling the home, they’ll come running after you. IF they have unrealistic expectations on price and/or terms then your walking away is going to save you a lot of headaches.

Don’t fall in love with the house;

be prepared to walk away so you can get what you want.

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

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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

Check out my Zillow profile HERE

Find me on TWITTER: @tcurranmortgage

Ask Trevor A Question