Real Estate Information Archive

You have found your dream house. So what happens now? We have previously talked about taking steps to ensure a smooth and worry free home shopping experience. This included finding a terrific realtor that is established and trusted, securing pre-approval for financing, and making a must-have list so your realtor will know what features you cannot live without. With all that preparation completed in advance, the rest will be a breeze.

The All Important Home Inspection

We are almost there! Only a couple of steps remain before the house belongs to you. The home inspection is a crucial step that you will not want to skip. The inspector will go over the house from top to bottom looking for anything in disrepair. They will mainly be looking for the type of repairs that need prompt attention. After receiving the report, you will then be able to negotiate with the seller. In many cases, they will pay for all or most of the repairs.  

Finalizing the Loan, an Easy Step

This will be a quick and easy process because you have already been pre-qualified for financing. It is a matter of making sure the amount of the down payment, monthly payment, and interest rate are all agreeable. The lender will then complete the process. You will more than likely take care of this over the phone. We are almost finished. 

How Long Until Closing?

Your part is now over. The only matter left is to wait for closing. You probably want to know how long the wait will be. You will be delighted to hear that the waiting period can be remarkably quick. Typically, the lender determines the time and it generally depends on how quickly all aspects of the loan are concluded. All the preparations you made will in all probability speed it along considerably. It could even be as quick as a couple of weeks.

Closing Day Has Arrived!

The big day has arrived….closing day. There will be several documents to sign which is an exciting step toward home ownership. The person conducting the closing will answer any questions you might have. The most thrilling part of closing is when they hand you the keys to your home.

All it takes is a little planning and preparation to make home buying a memorable life experience. There is only one thing left to do. Moving day will be one of the best days of the whole experience. It is the last fun and exciting step toward buying a house and making it your home. And I'd be delighted to help your share that joy!

This blog is maintained by Michael of Kim Hughes & Company. Photo courtesy dougtone/flickr.com

The annual Labor Day Street Fair in Rutherford, NJ is coming back again for the 36^th year in a row! This highly entertaining and successful Bergen County event keeps getting bigger and better every year. This year, there will be more than 100 antique dealers lining Park Avenue, numerous craft vendors overflowing the Williams Plaza onto Glen Road and Franklin Place, food vendors on Park Avenue, local community groups, live music at the Lincoln Park band shell, and much much more!

This will definitely be a great time for you and your family that you won’t want to miss, so make sure you come out on Monday, September 5 (Labor Day) to Lincoln Park and Lincoln Avenue in Rutherford!

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Staging is a method used to set your home up so that it appeals to a variety of possible buyers.  It will help to impress them and it will make your home look tidy, well taken care of and spacious.  They can picture themselves moving in!

Below are some of the top mistakes sellers make when they are preparing their house for the market:

• Don't go it alone. Get advice from others on what looks neat and organized. Get your realtor’s advice; or if selling on your own, have a trusted third party walk the home with you and point out areas that look cluttered or cramped.
• There is no need to make extensive renovations or replace all the furniture. Keep things simple and your investments small. Updates to paint, replacing light fixtures or changing out pillows or bedcovers can all go a long way to giving your home an updated look without major expense.
• Leave out personal items and knick-knacks. Be sure to remove family photos, school projects and other personal items that might make it hard for a new family to envision themselves living in the space.
• If you need some inspiration, visit a few model homes for sale for ideas on attractive staging.  Open up heavy curtains with tie backs and make sure that your furniture isn’t in the way of creating, bright open spaces. If you need to take some things out, try temporary storage.
• Avoid painting with dark or intense colors. Keep your wall and flooring colors to neutral, adaptable tones. Even if bright or varied color palettes are trendy, they are too much for most prospective buyers..
• Avoid overstaging with accessories. Over the top accessories, including flowers, scents, and home décor items not only make it look like you are trying too hard, they can detract from the real form and functionality of your house.

When staging your home, keep it simple! Let people be able to envision their own belongings there and have them ponder all the possibilities in making this their Bergen County dream home.

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Have you received notification that your home loan  been sold? Many homeowners are in the same boat, so try not to be surprised when your home loan has been sold to a different lender. Though it may be a shock, it is very common these days for a mortgage to be sold. Just as other financial commodities are sold, home loans are sold on the free market just like stocks and bonds. When a mortgage is sold to a different financial institution, it means that the servicing rights to the loan have been transferred to the new lender. 

They will let you know, and then you will start sending your mortgage payment to a new company. The transaction may be seamless or you may see changes, so you should understand what has happened and what your rights as the borrower are.

You probably received a statement when you got your mortgage that indication some level of likelihood that your loan might be sold during its life to another lender. If that does happen, then federal mandates require both the seller and the buyer of your paper to notify you of the pending sale and the closed sale.

Your current lender must notify you, in writing, at least fifteen days before your next payment is due. The lender is also required to give you complete contact information – company name, physical address, phone number and account manager of the new servicer.

The servicer buying your loan is required to provide this information to you as well. They are required to provide a direct link to a person you can speak to – not just an automated system.

This protects you from mortgage scams directing you to send payments to an unknown entity via P.O. Box or wire and gives you the right to ask questions about the status of your loan and receive prompt answers. In addition, you are protected from any delinquency status for 60 days during the transition.

Loans with late payment documentation will most likely stay where they are as most servicers aren’t interested in purchasing loans that have troubles go along with them.  If you have an application for a loan modification, the same thing applies, it most likely will not be sold.  If it does happen to be sold after you have began the loan modification process, be prepared to provide them with additional paperwork. You may even have to start all over where it is a new lender.

The Mortgage Bankers Association of America (MBAA) has a great consumer site – The Home Loan Learning Center. You can also contact them for more information via phone at (202) 557-2700.

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Are you afraid of being turned down for a mortgage? Or maybe you have been turned down. The stagnant economy and tight lender requirements have many home buyers concerned.  The good news is that you may not have to walk away from your dream home.  There are alternatives that many home buyers are searching out as alternatives to traditional mortgages now that the lending guidelines are tighter than ever.

Below are a few options to consider, but note that everyones situation is different and some of these may not be right for you.

• Borrow From Life Insurance: You may have a whole life or other insurance policy that increases in value over time. If you borrow against that cash value, you don’t have to go through standard loan qualification.  Be sure to check with your insurance company about the risks involved
• Owner/Seller Financing: If the seller is an investor, or if the seller owns the property free and clear, they may offer owner or seller financing options to help move the property. You will still be responsible for principal, interest and scheduled payments through a promissory note, but you probably won’t go through the rigorous qualification process that a bank requires. Typically owner or seller financing also saves mortgage origination fees and other fees tacked on by most lenders.
• Borrow From An IRA: If you have a self-directed IRA, then you know that you can use the IRA to invest in a number of assets, including mortgages. Although you can’t use your own IRA to buy your personal home, a family member or other investor can use a self-directed IRA as the investment vehicle for your property. Private investors often step in to help with acquisition loans, although you can expect to pay a higher rate for the initial loan.
• Lease/Purchase Option: Many investment owners are willing to offer a lease/purchase option or rent to own agreement. You are able to rent the property for a specific term, usually with higher payments than the market rate; and your rents go toward the purchase or down payment of the property.

Always do your homework with any home purchase, if you are looking at alternative financing methods. Make sure the title to the property is free and clear and that you meet all the state lending requirements for your specific financing. A realtor or title company should be able to help you through the process. You also want to be sure that you are able to afford the monthly payment or repayment plan and that the investment in the home you want is sound.

Have any other ideas for homeowners who are considering other options for financing? 

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Are you in need of a laugh and a good time? The AnitaLaugh Improvisation and Sketch Comedy troupe will be performing their “love of laughter” show February 13 at 7:00PM at the Westwood Community Center. 

This show is full of celebrity impressions and memorable characters! Go and enjoy a night of comedy that is appropriate for all ages and bring your family!

Join the laughter and entertainment at 55 Jefferson Avenue in Westwood.  Click here for more information.

Improv comedy is the best, have you ever been to one?

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In this day and age, lenders have to be stricter with their requirements on who they approve for home loans.  If you are planning on buying a new home and applying for a mortgage the current requirements are very important to know. One of them is your debt-to-income ratio. 

Debt-to-income ratio is the percentage of a consumer's monthly gross income that goes toward paying debts.  It includes credit card debt, existing mortgages, auto loans, and any other personal debt.

Your mortgage lender will look at your Debt-To-Income (DTI) to evaluate your ability to afford your new mortgage. You should have a good idea of what your DTI ratio is before you approach a lender or consider buying a new home.

Best case scenario, you want to achieve a low DTI ratio. A high number means that you have less disposable income and less ability to maintain the home once you purchase it. With foreclosures at an all-time high, lenders are not willing to assume any additional risk in lending.

Most lenders seek DTI ratios in the 20-36% range or lower, with no more than 28% of debt dedicated to the mortgage itself. While some lenders will consider higher ratios, DTIs in the upper 30% range are considered high risk.

There are several different calculators available online to help you determine your ratio, and you can always check with your financial institution for guidance on determining your DTI ratio.

Here’s a simple formula:

Add all your monthly payments (mortgage or rent, car, credit cards, any other debt payments)

Add your gross income (before taxes), bonuses, alimony, or any other outside income and divide by 12

Then divide the total number in (1) by the final number in (2)

The result is your DTI ratio.

It is always a good idea to know your DTI, whether you are ready to buy a new home or you just want to stay up to date on your financial health. This way you can start taking steps to lower your ratio and become as close to debt-free as you can.

With this said, do you know what your DTI is? 

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While it may be a shock to the homeowner, it is actually very common now a days for a mortgage to be sold. Like other financial commodities, home loans are bought and sold on the free market like stocks and bonds. When a mortgage is sold to another financial institution, it means that the servicing rights to the loan have been transferred to a new lender – you will now send your payments to a new company.

The important part is not to panic when you get the news. This transaction may be seamless or you may see changes, so you should have an understanding of what has happened and what your rights are.

You probably received a statement when you got your mortgage that indication some level of likelihood that your loan might be sold during its life to another lender. If that does happen, then federal mandates require both the seller and the buyer of your paper to notify you of the pending sale and the closed sale.

Your current lender must notify you, in writing, at least fifteen days before your next payment is due. The lender is also required to give you complete contact information – company name, physical address, phone number and account manager of the new servicer.

The servicer buying your loan is required to provide this information to you as well. They are required to provide a direct link to a person you can speak to – not just an automated system.

This protects you from mortgage scams directing you to send payments to an unknown entity via P.O. Box or wire and gives you the right to ask questions about the status of your loan and receive prompt answers. In addition, you are protected from any delinquency status for 60 days during the transition.

If you are behind in payments, your loan will likely stay put, as most servicers aren’t interested in purchasing problem loans. If you have an application in for loan modification, your loan will probably not be sold as well. However, if it is sold after you have started the loan modification process, be prepared to provide additional paperwork or even start over with the new lender.

The Mortgage Bankers Association of America (MBAA) has a great consumer site – The Home Loan Learning Center. You can also contact them for more information via phone at (202) 557-2700.

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Most homeowners are familiar with property insurance which protects against fire, theft or other disaster but another insurance that many are not aware of is mortgage protection insurance.

While there are different variations, this type of insurance typically will offer coverage that will pay your mortgage in the event that you are not able to. Mortgage protection insurance (MPI) is essentially life insurance that pays your mortgage if a certain event, such as death, disability or job loss occurs.

As with any type of insurance it is wise to research and do your homework to make sure it is for you. Such factors as your financial situation and your health can factor into your decision to obtain this insurance or to forgo this protection. It is best to do your research to see if this might be something for your situation. Below are some pros and cons of mortgage protection insurance and some things to look for.

The way this insurance works, is that if in the event you die, the insurance company will send a check directly to your mortgage company. If you are disabled, suffer a job loss, the mortgage payments will also go directly to your mortgage company. The terms of these payment such as length in time will vary, typically for a few years.

Another benefit of MPI is most polices are issued on a "guaranteed acceptance" basis. " This means that when you apply, there will be only a few questions and you are accepted-guaranteed. If you are someone who typically is uninsurable due to health issues or work in a high risk occupational field, this is a great opportunity for coverage.

Some cons of mortgage protection insurance is that it is a declining-benefit policy, which means that payoff amount decreases as you pay down your mortgage. In addition, some financial advisors recommends that homeowners consider other ways of planning for their future. 

If you decide to obtain this type of insurance, be sure to shop around and ask about specifics and services in addition to cost. Be sure to research their rating thru A.M. Best Co.

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Although the housing industry is sluggish and sellers are having difficulties, the good news is that Mortgage rates are at an all time low. However, most first-time home buyers won’t be able to take advantage of these record low rates that are always advertised. Here’s why…

Loan History

Even if you are not currently carrying a large amount of outstanding debt, lenders look at loan history, especially large installment payments. They do this to see if you have shown responsibility in handling a large loan. On-time payments and prompt pay-off can be an indicator of how you will perform as a borrower in the future. Many first-time buyers have not established a strong payment history, which can make it difficult in getting that first mortgage without higher rates and fees.

Small Down Payment

Unfortunately, most first time homebuyers can be at a disadvantage as they do not have a cash profit from selling a previous home to offer as a substantial down payment. With lenders now tightening their restrictions and usually requiring 20% down this large sum of money can be difficult to obtain. Without the downpayment you will probably see a higher interest rate. Larger mortgages come with higher interest rates, and loans with small percentages down are seen as higher risk to the lender. Many lenders will charge a higher rate based on their assessment of the loan’s risk.

Negotiating Skills

First-time borrowers should make the time to shop around for mortgages. It is also a good idea to do your homework and become familiar with mortgage terminology, different loan packages and options, FHA programs and creative ways to secure your loan. Many first-time buyers are unaware of the many options available to them and lack the experience to negotiate better terms.

Finally, make sure that your credit score is up where it should be (above 700) and that you have steady income from a reliable employer. Both of these criteria will make a significant difference in your interest rate.
 
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