About the Author:  Chuck Walden (NMLS #148160) is a loan officer with GMAC Mortgage.  Email Chuck at chuck.walden@gmacm.com or call 678-725-8076. Website is www.ChuckWalden.com

United States Department of Housing and Urban ...

United States Department of Housing and Urban Development Seal (Photo credit: Wikipedia)

 

Wow, I can buy a home for $100!  Time and time again, I get phone calls from potential buyers about this program.  Those that have not found a good real estate agent yet, or an informed agent, are very confused about how this works.  Sure, HUD has foreclosed homes for sale that qualify for only a $100 down payment.  But, that is not entirely true.

How much money will you need?  The story goes like this…..

1.  You will be required to give an earnest money check for either $500 or $1000 when your offer is accepted.  If any of this money is not needed it will be credited back to you.

2.  HUD has already completed an appraisal on the property and most lenders can use this appraisal. However, just like everything else, the appraisal has an expiration date.  Most lenders will allow you to use the HUD appraisal for 90-120 days.  If not, your appraisal fee will be between $400-$500.

3.  Never buy a home without having your own home inspection performed.  This fee typically runs around $300.  Obviously, prices can vary

4.  Supply vs. Demand – There are less HUD homes on the market today than there were a year ago.  Less supply equals greater demand.   Greater demand equals higher prices.  Typically, HUD homes are getting offers above list price.  If HUD has listed the home for the appraised value (the norm), and you bid higher than the list price, you will be required to bring the difference.  For example, if a home is listed for $100,000 and you offer $101,000, you will be required to bring the difference of $1000.

5.  Upfront Mortgage Insurance Premium – Currently, this fee, charged on any FHA transaction, is 1.75%.  A $100,000 loan carries a $1750 premium that you would need to bring to closing.

6.  Escrows – An escrow account is set up on a new home purchase for the purpose of paying your property taxes and homeowners insurance annually when they are due.  You will have to pay your first year annual premium for your homeowners insurance at closing plus 3 extra months of reserves.  You will be required to pay 2-3 months of property taxes at closing.  If your homeowners insurance is $720 per year ($60 per month), you will need to bring $900 to set up the insurance portion of your escrow account.  If your property taxes are $1200 per year ($100 per month), you will need to bring $200-$300 to closing for your property tax portion of your escrow account.

As you can see, $100 will not cover everything.  And, I guarantee that your loan will not be approved unless you have adequate reserves, or money left over after closing.  No one wants to use all of their money in the purchase of the home and not be able to turn on the electricity and water after closing.

Now, there are two things you can do to help offset these costs.  You are allowed to ask for the seller to pay a portion of your closing costs.  Also, GMAC Mortgage has a program called Purchase Power which will pay for the majority of your closing costs without raising your interest rate to cover those costs.  A couple of items not covered would be owners title insurance and intangible taxes paid to the state.  Use these two to help offset your costs at closing, but remember, you will need more than a $100.

Loan

Loan (Photo credit: Philip Taylor PT)

About the Author:  Chuck Walden (NMLS #148160) is a loan officer with GMAC Mortgage.  Email Chuck at chuck.walden@gmacm.com or call 678-725-8076. Website is www.ChuckWalden.com

It’s time to act.  If you have been patiently waiting for better rates and better home prices, 2013 could be your last chance.

1.  Move if you’re a buyer – Rates are still awesome and you may never hear the words “it’s a perfect time to buy a house” again.  Interest rates are expected to increase this year.  Higher rates mean more money out of your pocket and the amount of home you can afford will decrease.

2.  Be picky about your lender – Always ask your friends and family who they trust or have used in the past.  I guarantee that you will not only find out who to use, but you will definitely find out who not to.  Talk with the recommended lenders about service and turn times.  Buying a home can be the most stressful event in your life.  Closing on time should not be taken for granted.  GMAC Mortgage has a closing on time guarantee. Trust me.  Your agent and you will appreciate not having to worry.

3.  The fat lady hasn’t sung until the loan closes – At the risk of sounding strange….closing a loan is a battle.  It doesn’t matter if you have an 800 credit score, no debt, and a seven figure income.  You must work hard with your loan officer as a team.  If they need something, get it now.  Putting things off even one day slows down the process.  Three things I always tell me buyers.  First, do not accept any money from anyone until your loan closes.  What if we need an updated bank statement and there is a large deposit listed?  This is a problem and even more documentation is needed.  Second, do not apply for any credit until the loan closes.  Do not apply for any credit cards so you can get a discount of the new stove for the new house.  Your credit will be monitored and if an inquiry pops up, more documentation is needed.  Third, do not quit your job.  Now, I know this sounds crazy, but I have seen it happen on the day of closing.  You have to have a job with income.

4.  Check your credit annually – www.annualcreditreport.com is a great website to track your credit.  If you are planning on buying a home later this year, pull your three free reports and make sure that every item listed is in fact yours.  If not, take the steps to correct it.  Take a look at your credit card balances.  Generally speaking, you never want to go over 30% of the credit limit.  People tell me all of the time that they pay it off in full every month.  Great, but that will not matter if I check your credit and you have a $750 balance on a $1000 limit card.  Keep that balance at or below $300.  Do you have a MasterCard, Visa, AMEX, Kohl’s, Target, Sears, and Discover cards?  That’s too many.  Available credit is also a factor in determining credit scores.  If you’re interested, call or email me to discuss how to tackle this problem.

5.  Get preapproved – A good real estate agent will never show you a house without you getting preapproved first.  Some still do, but I think you would agree that it’s a waste of time and money to drive you around only to find out later that you don’t qualify.  Find out how much house you can afford and then proceed from there.  Lenders (good lenders) will give you exact figures on payment and a price range you should concentrate on.  It is imperative that you are armed with this knowledge before you Google the first area to start looking.

2013 I going to be a great year, but change is ahead of us.  Please let me know if I can help in any way.

About the Author:  Chuck Walden (NMLS #148160) is a loan officer with GMAC Mortgage.  Email Chuck at chuck.walden@gmacm.com or call 678-725-8076. Website is www.ChuckWalden.com

The market is better.  Rates are low.  Home prices are rising.  BUT what if there was more?  Hopefully, I can answer some of those questions and give you a way to move more property, make more money, and do an even better job for your customer.

What if a lender offered to pay the majority of the closing costs?  Would this help your negotiations?  Of course it would.  What if closing costs and seller concessions weren’t an issue?  What if you could throw out the standard 3% seller concessions because it wouldn’t even matter?  Talk about a negotiating tool.  Wouldn’t it be awesome if your buyer could come to the table with just their down payment.  Do you think they would remember that and refer more business to you?

What if a lender guaranteed you would close on time?  I know you’ve heard that before.  BUT, what if they offered to pay your buyer $500 if they didn’t close on time?  Do you know of any lenders that want to pay money to a buyer.  I don’t.  Talk about motivation.

What if a lender communicated with you constantly so you never had to “wonder” what was going on with the transaction?  Have you ever had to pick up the phone and ask?  My bet would be yes.  Wouldn’t it be great if you knew when the file came out of underwriting?  Or, that the appraisal and title are in and there are no issues?  Even if there are issues, you want to know.  You need to know.

What if you felt like you had control over every transaction?  You knew your buyers or sellers were in good hands.  You knew that they were getting the best deal out there.  You knew that you were going to close on time. 

Maybe this sounds like a perfect world to you and there’s no way this could ever happen.  I challenge you to find out.  My job is to make the purchase of a home as stress free as possible.  With some of the lowest rates in the industry, guaranteed to close on time, most of the closing costs paid by the lender, and communication throughout the process……Is there anything else you, your buyer, or your seller needs?  If there is, I would love to hear about it.

If you’re interested, I would love to talk with you to show you how this is a reality.  These tools will no doubt help you to grow your business, receive more referrals, and make more money.  Feel free to email me at chuck.walden@gmacm.com or call me at 678-725-8076 anytime to discuss how I can do this for you.  It’s new to your market so be the first to take advantage and don’t delay.

Renovation

Renovation (Photo credit: HatM)

About the Author:  Chuck Walden (NMLS #148160) is a loan officer with Prospect Mortgage.  Email Chuck at chuck.walden@prospectmtg.com or call 678-725-8076. Website is www.ChuckWalden.com

Recently, in Georgia, an interesting thing has occurred.  There is a housing shortage.  If you place an offer on a home, there may be 10 or more offers already submitted.   Over the last few months, this has become increasingly frustrating to the buyers I am speaking with on a daily basis. On one hand, it’s great for the housing market because houses are beginning to be sold for more than the listing price.  But on the other, potential home buyers are having difficulties buying homes.

One thing that I have seen separate winning offers from others is potential buyers are making offers on homes that need a little TLC.  These homes are not receiving as many offers if any.  The 203K loan program is a perfect fit for this market.  If you’re not familiar with the 203K, a basic synopsis is below.

1)  There are two types of 203K loans.  The first is called a Streamline K.  This is for any repairs or renovations needed when the dollar amount is $35,000 or below.  The second is a Consultant K.  This would be for any repairs or renovations needed when the cost is greater than $35,000.

2)  You can choose your own contractor as long as he/she is licensed and has liability insurance

3)  This program can be used to bring the house up to standards and to perform any renovations that you would like.  For instance, if you want to redo the kitchen, add new appliances, upgrade a bathroom, etc feel free to do it

4)  This program does require extra work.  The buyer will need to get a bid(s) for the work being performed

5)  The appraiser will take the bid(s) and appraise the home for what it would appraise for after improvements have been made

6)  After closing, the repairs and renovations are completed and you’re all done

7)  Real estate agents do get paid at closing just like a normal transaction

8)  Make sure to use a seasoned 203K company and loan officer.  If you don’t, you’re setting yourself up for failure. Make sure they lend their own money, have their own draw department, and underwrite their own loans.

I would encourage you to explore this program further. It is awesome for the buyer and for the neighborhoods these homes are located in.  If you are a real estate agent if your searching for a new home, call me or email me if you want more information. It is amazing that more people are finally taking advantage of this program in a seller’s market.  I’m here to help walk you through it every step of the way.

I've started so I'll finish

I've started so I'll finish (Photo credit: get down)

About the Author:  Chuck Walden (NMLS #148160) is a loan officer with Prospect Mortgage.  Email Chuck at chuck.walden@prospectmtg.com or call 678-725-8076. Website is www.ChuckWalden.com 

Now that you have chosen your loan product and your new home, what happens next?  Gone are the days of providing a couple of pay stubs and bank statements.  Each individual situation is different.  Your life “picture” will be looked at in order to determine what items are needed for underwriting.  Typical items will include but are not limited to:

1)  2 years of tax returns – Specific items that will be looked at are – do your tax returns match your W-2’s?  Are there any unreimbursed business expenses on the 2106?  If self employed, did your business have a profit or loss?  Is the rental property you own mentioned on your return?

2) 2 months of pay stubs – Specific items that will be looked at are – does your year to date income make sense?  Are there any repayment of loans mentioned?  Does your salary or hourly wage match what you told your loan officer?  Are there any bonuses or overtime wages?

3)  2 months of bank statements for any asset listed on the loan application – Specific items that will be looked at are – does your bank statement show any deposit that is not payroll related?  If so, where did the money come from?  Be prepared to write or type a letter of explanation regarding these deposits and proof.

4)  A written or typed letter indicating why you want to purchase the home

5)  Proof of rent payments – if you are currently renting from an individual, you will need to provide 12 months cancelled checks showing that you have been making your payments on time.  If renting from a company, you will need to provide contact information so they can confirm payments have been made on time for the last twelve months.

6)  A copy of your unexpired drivers license

7)  A credit card number – this is to order the appraisal on the home you are buying.  Appraisers are paid directly with this credit card before they will view the property

8)  Bankruptcy papers – if you have declared bankruptcy, you must provide the complete bankruptcy package along with the discharge paperwork.

9)  Divorce Decree – if divorced, you must provide the complete divorce paperwork package

What we are trying to accomplish is to present a “picture” of you, the home buyer, to the underwriter. Underwriters do not speak to the buyer, so we need to present a story that says, this is John Smith, this is what he’s about, and this is why he wants to buy the house.

It’s always a good idea to contact your loan officer before you start looking for your new home.  He or she can tell you where you stand, how much you can afford, and if something needs to be addressed.  Also, have all of your paperwork ready at the beginning for review.  I promise it will take the drama out of your home buying.

Apply today at www.chuckwalden.com .  Call today at 678-725-8076.  Email today at chuck.walden@prospectmtg.com

 

 

 

 

 

Loans

Loans (Photo credit: jferzoco)

About the Author:  Chuck Walden (NMLS #148160) is a loan officer with Prospect Mortgage.  Email Chuck at chuck.walden@prospectmtg.com or call 678-725-8076. Website is www.ChuckWalden.com

As a loan officer, I have to look at every loan as if I’m the underwriter.  If I put myself in her/his shoes, what will I see?  What are potential issues and red flags?  A question asked of me constantly is, what does an underwriter look at when evaluating my loan?  Listed below is my opinion on what can make a strong loan.

First, your credit will be evaluated.  Your credit score is a number which will tell the underwriter if you have been paying bills on time and if you have had any issues related to collection accounts, judgments, liens, bankruptcy, or a foreclosure.  if you have credit cards, are they maxed out?  Your credit score is also a great representation of the likelihood of you making your future house payment.  The higher the score, the more likely you are to make your payment and make it on time.

Second, your debt to income ratio will be evaluated.  Debt to income is basically money coming in verses money going out.  If you make $2500 per month and your bills are $1250 per month, the debt to income ratio is 50%.  The debt to income ratio is also broken down into two numbers.  The first number is your housing ratio. This number is your total house payment (principal,interest, taxes, insurance, and mortgage insurance if applicable) divided by your monthly income.  The strongest number would be anything at 28% or less.  If your number is over 28%, that’s ok.  Loans are approved all the time with a number higher than 28%.  The second number analyzes your total debt.  This would be your future house payment plus all of your other monthly debt divided by your monthly income.  A solid number is 42%.Once again, loans are approved at a higher number up to and including 50%.  The higher the number, the weaker the loan.

Third, the property you are buying will be evaluated.  Lenders do not want to lend money on a home that has issues or that does not appraise for the amount you are purchasing the home for.  The underwriter will look at the appraisal to determine if there are any safety and health issues, comparable sales in the area, square footage, etc. If you are using FHA financing, appraisals are very strict and if anything is noted on the appraisal that could be a concern, then it will be imperative that the issue is resolved before an approval will be granted.  The appraisal is one aspect of the loan that cannot be predicted.

Fourth, your assets will be evaluated.  The underwriter will look at how much money you are putting down on the home and how much you will have after you close.  If you are using every dollar you have to purchase the home, that will be an issue.  Don’t forget, you have to turn on utilities, buy furniture, etc.  All of which will cost money.  The more money you put down the stronger you look to the underwriter.  The more money you have in the bank after you close, the stronger your file will look.  If your bank statements have large deposits or multiple deposits that are not payroll related, you will have to prove where that money came from.

All four of the above items are important and will be looked at as a total picture.  When discussing buying a new home with your loan officer, do not hold anything back.  Layout your problems, concerns, and dreams.  It’s best for everyone involved in the transaction to be upfront and honest right from the beginning.  This will make your home buying experience much less stressful.  Also, when you first start thinking about purchasing a home, call me. Don’t wait until you have already found your dream home.  It’s much better to know how much you can afford and if there are any issues before you even start looking for your home.

Pontypool Park Choices

Pontypool Park Choices (Photo credit: Wikipedia)

I deal with first time homebuyers on a daily basis and I love it.  Most first time buyers need guidance, advice, and someone they can trust.  One of the main questions I get asked is what choices do I have?  Or, I want a first time buyer program.  It’s my job to ask the right questions in order to lead them down a path where they can achieve their dream of owning a home.

First time homebuyer choices:

A Conventional Loan – A conventional loan normally requires a 5% down payment.  Underwriting guidelines can be a little more stringent and may require a debt to income ratio (money coming in versus money going out) less than 45%.  Anytime you put down less than 20% you will also have a mortgage insurance premium added to your payment.

A FHA Loan – A FHA loan only requires a 3.5% down payment.  Underwriting guidelines allow for a buyer to have some issues as long as there is a reasonable explanation.  This program does have mortgage insurance added to your monthly payment.  FHA also has Upfront Mortgage Insurance.  Until April 9th, this is 1% of your purchase price.  After April 9th, it will be 1.75%.  This amount is charged to the buyer but is added back into the loan and is financed over the life of the loan.

A HomePath Loan – A HomePath loan only requires a 3% down payment.  HomePath loans are only available for HomePath houses.  These are foreclosed homes owned by Fannie Mae.  This loan does not require an appraisal and does not require mortgage insurance.

A Rural Development Loan (USDA Loan) – A USDA loan does not require a down payment.  It does require the home to be located in a specific area and qualify for this program.  Properties can be located online at http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do .  Also, USDA has a cap regarding how much income your entire household receives.  If your household is over this cap, you would not qualify.

Renovation Loans – 203K, HomePath Renovation, and Homestyle.  While these loans do require additional effort on the buyers part, they do help the buyer purchase the home with the repairs or renovations included in the original loan.  After closing, the repairs are made.  These programs are also helping home values and steadily increasing values in neighborhoods.  Each renovation program has its own guidelines and requirements.

VA Loan – A VA loan does not require a down payment.  Being a veteran myself, I always love doing loans for other members of the armed forces.

Buying your first home can be stressful.  Make sure you are dealing with someone who can explain all of your options, clearly, and is willing to hold your hand through the entire process.  If you would like to discuss your options, please feel free to give me a call or email me anytime.  I would love to help you realize your dream.

About the Author:  Chuck Walden (NMLS #148160) is a loan officer with Prospect Mortgage.  Email Chuck at chuck.walden@prospectmtg.com or call 678-725-8076. Website is www.ChuckWalden.com