mortgage – Trevor Curran

How To Prepare to Become a Homeowner

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!

More “Old Is NEW” Stories and Stuff

Things will slow down when it comes to processing a loan application and purchasing a home. That’s the old way and it’s new again; as it should be.

I’ve written before, “Everything That Was Old is NEW Again.” The “old” ways of buying a home and getting a mortgage are coming back; please fasten your seat belts and move your seats to the upright position: we’re landing.

I spoke to my friend John McEntee, an attorney, the other day. He told me how 5 clients he had tried to refer to me had decided to go to the banks directly for their mortgage loans. (I guess they figured they would cut out the “middleman” and save a few bucks; fact is, mortgage brokers get lower/discounted rates you can’t get at the banks!)

John complained of the terrible state of service at the banks. In one case an appraisal had been done on the house, the appraiser had forwarded the appraisal report to the bank, but the bank lost it. Twice.

Another client faxed over their docs—paystubs and bank statements—to the loan processor at the bank. The bank processing people couldn’t find the docs. John said, “You call and you can’t get an underwriter on the phone, and when you do, they’re all very good with their sweet customer service voice, but they can’t get anything done.” And he wasn’t complaining about any single bank in particular; all the banks had similar problems.

We’re seeing the same thing at our firm. Our emails and phone calls go unanswered quite often at the Lenders we work with. We spend a lot of time jostling between harassing the banks while simultaneously providing a good customer service “face” to our clients and referral sources (we always try to provide the service to such a level the client has no idea just how bad things are with the banks).

I had a meeting with a Regional VP for a BIG bank in our office last week. My complaints were similar to John’s. The problem with my complaints is that WE are processing the loan application. Because of our experience, we kinda sorta REALLY know what we’re doing. So, when we send a file to the bank, it’s complete. Underwrite it and close it! Set it and forget it!

But, we’re having to deal with overwhelmed and inexperienced Underwriters, especially with regards to FHA loans, and we’re being ignored same as the average consumer.

Now, while a lot of the OLD ways are returning to our industry, this abysmal level of service is not one of those things. In the old days, back in the nineties, loans took time to approve and close, but you always had someone you could speak to. Customer service was never truly “exceptional” but it wasn’t disgustingly abysmal, either.

What has made a dramatic return to the industry is the notion that a loan “closes when it closes.”

That is, when the loan application is FULLY processed, FULLY underwritten, with all documentation in order, then the loan can close. And getting to that fully-processed stage requires time, patience, and, often, more documentation.

Here in New York, home buyers use an attorney to represent them for a home purchase. In New York a sale of real property cannot take place unless a written contract is executed between the two parties (Seller and Buyer). Thus, we use attorneys.

The contract is the foundation upon which is built the entire sale/purchase transaction. The terms of the contract lay out everything from the appliances and/or rose bushes to be included in the sale, to the purchase price and time permitted to obtain a mortgage loan.

In recent years during the fantasy boom, contracts here in New York began to call for commitments in two weeks and closings in 30 days. Say good bye to that nonsense.

Now we’re back to the OLD way. It takes time to process and close a loan. I’ve said to many Realtors and attorneys lately that we’ll be seeing a return to 60 day commitment periods and 90 day closing periods written into purchase contracts.

I’m sure these recent ugly customer services issues will work themselves out at the banks. As we settle further into that old mindset of “full documentation,” “common sense underwriting,” and a properly processed loan application, all parties involved will work together to smooth the wrinkles of this new OLD process.

And things will slow down when it comes to processing a loan application and purchasing a home. That’s the old way and it’s new again; as it should be.

When is the best time of year to buy a home?

If you know that buying a home is the right thing to do for your own personal reasons, then YOU make the time. YOU determine the “when.”

Is there a “best” time of year to buy a home?

Is there a time of year when Sellers are more willing to negotiate because they are more desperate?

When is that time? When?

If you trust your fundamentals, if you know that buying a home is the right thing to do for your own personal reasons, then YOU make the time. YOU determine the “when.”

Maybe it’s because I teach my clients how to negotiate like piranhas.

Maybe it’s because I’ve been looking at (and dreaming of) real estate since I was in my twenties living in an apartment in Astoria.

Maybe it’s because of my eighteen years in the mortgage business working all year ’round through all kinds of markets.

Whatever my reasons, I will say to you this: YOU make the time because YOU get out there and find, force and MAKE the deal that you’re happy with.

The “when” is not based on the market; rather YOU determine the when by shopping and finding and making your deal.

I believe in negotiating hard and tough and forcing a price. I believe in getting up and walking away from the table.

I believe the “dream house” exists in our minds, therefore you can never truly “fall in love” with a house.

I believe you, as a Buyer, truly control your own destiny and I believed that even when the market was overheated and Sellers were insane. (In my long experience, Sellers are ALWAYS insane! You just have to search until you find one who’s willing to be a bit more reasonable than the rest!)

Maybe it’s because I believe it’s all up to YOU.

Closing Costs in NY: Arrrgghh!!!

Closing costs, expensive as they are, are a “fact of life” when financing a home in New York.

Yes, it’s a teeth-grinding, heartburn-inducing, stomach-churning experience buying a house in NY with closing costs being so high.

I am not going to go into the long winded and detailed explanation of the breakdown of closing costs. That’s for another time. I really want to express for you the reality of what the closing costs are: HIGH.

(NOTE: I am referring here to the purchase of houses and condominiums, NOT Co-OPs)

First, the average closing costs total out to about 4.5%-6% of the mortgage amount. On a $400,000 loan, that’s $18,000 to $24,000. WHOA! That’s an awful lot of money. I came to realize a long time ago how difficult it must be for the average New Yorker to save up the money for a downpayment on a house, only to later learn they would need all this extra money for the closing costs. That’s why I have always helped my clients obtain financing high enough to allow the minimum down payment (or recently NO downpayment). In this way, the money they’ve saved up is used for the closing costs.

In New Jersey and Connecticut, closing costs are half of the norm here in New York.

I don’t know why that is, or why the costs are so danged high here in NY. I just know that’s the way it is. If you are getting ready to get out there and shop for a house: get used to this idea. It’s painful, I know, but it is what it is.

Next, let’s talk about disclosure. Federal regulations require disclosure of closing costs to the borrower. We Lenders have to send you an estimate of your closing costs as soon as you make your loan application. The problem is these estimates, being estimates, are subject to the discretion of the party preparing them.

Without complicating the issue, let’s just say that it is entirely possible you could receive an estimate of closing costs that is woefully short. Even if the costs disclosed to you are substantially short of what you actually pay, it’s perfectly fine.

At my office, the company prepares the most accurate estimate possible.

For my part, I have ALWAYS given my clients the ugly numbers right from the get-go. I hate surprises and I want my clients to know well in advance how much money they’ll need. My estimates include things that aren’t even listed on the standard Good Faith Estimate: Purchaser’s attorney; adjustments to the Seller for taxes, water, fuel; the “tip” to the title closer, even!

My estimates are usually within less than $1000 of the final cost to my clients.

Finally, beware of “NO CLOSING COST” advertising come-ons. Unless the loan is a Home Equity second mortgage, the borrower has to pay closing costs. This cute advertising gimmick could be perfectly truthful and mean any number of things. Without breaking them down, understand that you will pay closing costs one way or another.

Closing costs, expensive as they are, are a “fact of life” when financing a home in New York.