Bronx FHA loan – Page 2

In Motion

You’ve made your counter-offer to the counter-offer. Now is the time to continue moving because everything is in the hands of the Seller. This is the best place for you to be in a negotiation: leaving the decision to deal, or not to deal, on the other party.

When you have made your best effort to negotiate by making a prompt and reasonable Offer, with all your details set in place, and with arriving at your best price you’re willing to pay for a home, then you leave it alone and stop thinking and worrying about it. If the Seller is truly serious about selling the home in a reasonable manner (that includes price and terms and knowing the market activity), then you’ll get your response in a positive way.

If the Seller is not serious then you have just avoided a potentially difficult situation buying a home under the wrong price and terms.

Motion on green meadow in nature — Motion

Stay in motion: continue looking at other homes, asking your Realtor to schedule appointments.

Never fall in love with the house. Be prepared to walk away. Keep moving, keep house hunting. It works, I promise.

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

I 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:
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!

About Your Home Inspection

You 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

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!

The document ‘drip’

I once lost a client because he was annoyed with me for asking him to provide documents for his loan application. He felt that my request for ALL the pages of his bank statement (he only provide page 2 of a 6 page statement), various W2 forms and 1099 forms (he had varying income streams) and the complete contact information for his wife’s employer was “too much.” He cancelled his loan application, and I was happy to see him go.

I believe my role as someone’s Loan Originator is to help them have a positive and tranquil experience with their Loan Application and approval process. I believe I should use my extensive knowledge garnered from nearly 24 years in the industry to know most-all the documents an Underwriter will require in order to approve someone’s loan request. So, I ask for a lot of documentation up front at the time of application.

Then there’s my childhood friend Bill who moved out west after retiring here in New York.

He found a house and applied for his loan. I recommended a fantastic national mortgage banking company (I’m not Licensed in Bill’s state). Instead, Bill chose his bank, where he’d had his money parked for many years. A few weeks into the loan process he called me one evening ranting and raving. It seems the bank kept calling him and asking him for more documents every day. He said they were “papering” him to death! We reviewed the requested documents together and I told him they were all reasonable requests. What was unreasonable was the fact his Loan Originator should have gathered these documents with the initial loan application.

As to my former client—the real estate agent who referred him to me told me after he closed how he was complaining during the many weeks it took to get his loan approved how the Loan Originator kept asking him for more and more documents every day. The real estate agent said the guy was pretty stressed over those requests.

When you apply for your mortgage, your Loan Originator can either gather all your documents up front—the mark, IMHO, of a true and experienced PRO—or document “drip” you through to closing.

Here’s what you should be prepared to submit at Loan Application:

__Paystubs: most recent four weeks consecutive

__W-2’s: most recent two years

__Tax returns: Federal Tax returns for most recent two years including all schedules

__Bank Statements: most recent three months consecutive statements, all pages

__Other assets: proof of other cash assets: 401k, IRA, Employer Pension Plan, Retirement funds, Mutual Funds, Stock accounts: Most recent three month statement, all pages

__Photo ID

__Fully signed Purchase Agreement (Contract of Sale)

__Proof of your Earnest Money Deposit

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

Using Gift Money

Often First Time Buyers rely on family to provide extra money for the purchase of a home in the form of a Gift.

In general, before using Gift money from family, I recommend you have a discussion with the Mortgage Loan Originator (MLO) who prequalified you. Depending on the Loan Program she used to qualify you, there may be restrictions on using Gift funds or there may be other requirements.

Gift funds, like all monies used in the purchase of a home, must be “sourced.” That is, your Lender will need to see the source of the Gift money from your family member. In most instances the Lender will also need to track the transfer of those funds from your family member into your bank account.

Again I caution: Speak with your MLO before using Gift monies for the purchase of a home.

A question that often comes up when Gift monies are involved is:

“What are the tax consequences of using

Gift money when buying a home?”

I’m happy to refer you to the website for my good friends at Burns & Rodriguez for professional guidance in this area from tax professionals:

http://www.brodtax.com/newsletter.php#6

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

Appraisal came in SHORT. WHAT NOW?

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.

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.

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:

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

there are FOUR ways to proceed with the transaction.

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.
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.
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.
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!