Housing News

What’s In Your Wallet (It Makes a Difference) Part 2

February 3, 2012 by 1 Comment

Fix Your CreditWorking on your credit scores so you can purchase a home?

If you are not behind on payments, and you think you can manage the payments as they are (without closing accounts)… let’s talk about one of the most important things you can do to raise your credit score.

Take out your wallet… Look at the Credit Cards; and find the ones that have the name of a STORE on them (these are just examples):

Best Buy

Rooms To Go

Belks

Victoria Secret

Apple

Lowe’s

Sears

Pottery Barn

Radio Shack

Put those in one stack. Then take out the ones with the name of the BANK on them:

Chase

Bank of America

Wells Fargo

CitiGroup

Put those in a Stack. Then take all the rest of them out:

Discover

American Express

Capital One

Provident

American Airlines

And put those in a Stack. Now—if you REALLY have all of these credit cards, and they all have balances on them… you should have some really nice stuff! WOW! (ROFL!) But I digress…

So, when you have an extra $50, which ones do you pay down first?  Well, our suggestion is that you pay OFF the first stack as fast as possible. Not just down to 50% balance versus Credit Limit… these are the ones you really ought to cut up and close. Do NOT use STORE credit cards if you can help it! It’s not worth the discount to defer payments on Rooms To Go if you care about your Credit Score! Listen to Dave Ramsey and buy the furniture when you can afford to pay cash!

With the other two stacks— work to get rid of the Capital One, Provident, “B” Tier cards as quickly as possible and cut that card up. You might not want to cancel the account, having the limit there is okay with a zero balance—but they are difficult to deal with and charge very Large Fees.

Once you have THOSE cards paid off, start working on the “Bank” credit cards. Pay each one down to at least a 50% balance. If you do this—you will have a GREAT credit scores!  That’s the GOAL!  Right?

 If you have questions about buying a home, or want specific information about your credit – please call Steve and Eleanor Thorne, Mortgage Banker in Cary !  919-659-5058　

 

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What’s In Your Wallet (it makes a Difference)? Part 1

February 2, 2012 by Leave a Comment

new homes raleighAre you considering a Home Purchase???  Many of us realize that credit scores are the Holy Grail—the one thing you do not want to screw up… and if you have, it’s the one thing you want to figure out how to FIX… FAST!

We talk to people all the time who have been laid off, or had an accident, or got sick, or relocated and then hit hard times. The first thing you need to do is GET OVER IT! Get past the anger and the sleepless nights trying to juggle everything, and start making a plan.

All too often people could increase scores and save years of problems if they asked for help EARLIER. We recommend talking to a Consumer Credit Counseling Service (NON PROFIT) before you get behind on bills. They can get credit card rates lowered, past due and over limit fees dropped, and your total monthly payments manageable. Once you’ve made 9 payments into these Services, you will probably see a positive difference in your Credit Score!

Again—you want to make sure to talk to NON-Profit Consumer Credit Counselors. They will typically keep only a very small fee for distributing the payments.

Are you trying to improve your score so you can purchase a home?? Contact Steve and Eleanor Thorne at Mortgage Banker in Cary , Cary, NC  919-649-5058

 

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First Time Homebuyers – Don’t Just Check On The Rate!

January 23, 2012 by Leave a Comment

 

Buying A House?There are tons of first time homebuyers out there negotiating the best deal on their new home, and now it’s time to get a mortgage.

Most of them only know how to ask one question:  What’s the Rate?

We’ve been in the mortgage business for over 20 years – and the only thing most people know to ask is - “What’s the Rate?” 

While that’s a great question, it’s kinda’ like going into a shoe store and asking if they have any shoes in a size 9.  Just shopping the rate is not necessarily going to get you the best price.

And what is the best price anyway!?!  Most of the clients that call us speak to my husband, Steve.  The first thing he ALWAYS says is, “hey, thanks for calling!  So you were referred to us by (insert name of friend, co-worker, agent, builder)?  That’s great!  [Read more...]

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Mortgage Programs To Purchase Foreclosed Property

January 17, 2012 by Leave a Comment

 careful buying foreclosuresThere are tons of people who know that we are at or near the bottom of the real estate market, and they are ready to purchase a home.  Many of the folks we are talking to are looking at foreclosed property, because they believe they can get the best deals. 

There are some special points you should remember:

  • Many Banks will not finance manufactured housing.  If you are considering a mobile home, foreclosure, please tell your mortgage lender about the property type UP FRONT (If the lender is seasoned they know to ask this), because it makes a huge difference.

In NC, the mortgage lender has restrictions on their ability to pay closing costs if it is a very small home (less than $75K) .  If you have very little, to no money, to put into the transaction, you should ask HUD (or Freddie, or the bank – whoever is selling the property) to pay for your closing costs as part of the contract.

We do not offer any 100% financing programs that will allow you to make improvements/repairs to the property.  We do offer rehab loans, for properties with a total value (meaning purchase of the property plus the cost to rehab) of less than $295,000 in Wake County. 

Generally, the borrower must make a 3.5% downpayment for this loan.  HOWEVER, if you are purchasing a HUD foreclosure, we might be able to do a $100 downpayment.  It must be negotiated into the contract with HUD.  (SEE DETAILS BELOW!)  [Read more...]

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Documenting A Mortgage Loan in 2012

January 16, 2012 by Leave a Comment

Yep – We’ll Take a Thumbprint of Your Second Child, Too

Tons of PaperworkIf you purchased a home in 2006 and find yourself in the enviable position of purchasing again now… you might be surprised by some of the ways the mortgage process has changed.

Oh Sure… you’ve heard that it’s hard to get a mortgage, but you’ve got 800 credit scores, a ten year job, cash in the bank (2.5 kids AND a dog!)!  You might think the stories about a tough time getting a mortgage is all about those “other” poor souls.

These days… it doesn’t matter how much money you make, what a great deal you got on the house - or if you have 2.5 kids… we want to know everything, and we have to PROVE/Document everything.

AND… just because your loan is approved does NOT mean that we are through asking you for more stuff!  Once a loan is approved by an underwriter, it OFTEN (luck of the draw) goes through a rigorous quality control audit.  The audit can require (in addition to any details the underwriter requested) a full tax return, or an updated credit supplement, or an additional bank statement.

To understand this a little better, consider the Privacy Acts, and how we now use the Internet to store varying data.  You might say on a loan application that your telephone number is 222.334.4555… and that MIGHT be the right number.  However, when the QC Auditor goes to verify that telephone number as yours (usually online through a service like Reverse Lookup) – they find that it’s your CELL number, and therefore not listed. [Read more...]

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Seller Paying Closing Costs For Your New Home?

November 25, 2011 by Leave a Comment

Do You Have Bags Of Money Available To Buy A House?Sellers can pay the closing costs for the buyer in many cases – however, just like everything else associated with getting a mortgage these days, you need to know the rules, to be sure the underwriters will accept it!  Ignorance of the rules can turn a seller contribution to closing costs into a Catch-22.

Why is this important?

It can be the difference between a loan approval and a loan denial!

Seller contribution is a fancy way of saying a part or all of the closing costs are paid by the party that is selling the property.  This could be a builder, a home owner, or the bank.  For example, a seller could “contribute” or pay up to 3% of the real estate closing costs on behalf of the buyer.  Simple, right?

If you are not working with a Real Estate Professional, you might not know how this should be worded, and negotiate a contract that says (for instance) Seller will pay $3000 in closing costs.  Doesn’t seem like much of a difference on a $100,000 loan… right?  3% of the Sales Price is $3,000.  However different loan programs have a cap on the amount the seller can pay – and at the last minute, you could be required to pay more than you’d expected!

If the buyer’s loan program has a “cap” for “allowable” seller contributions is exceeded, that overage dollar amount is then called a seller concession.  Seller concessions, as defined here, serve to reduce the buyer’s loan amount dollar for dollar!!  So working with a professional, can DEFINITELY help a new buyer avoid a potentially difficult last minute rush to find the additional cash needed to close!

For example, say you want to buy a $100,000 home and you have 5% down payment and not a penny more. The standard FNMA guideline at 95% only allows for a 3% seller contribution toward costs. Let’s also assume you qualify for a $95,000 loan and not a penny more. The loan is structured as a $95,000 conventional loan that allows for 3% in seller contributions which the seller agrees to pay. The 3% equals $3,000 but you discover the total real estate closing costs are $3,500!

Where is the extra $500 going to come from? You don’t have it. You can’t raise the loan amount based on our assumptions. It’s got to come from the seller, right?

Wrong.

According to program guidelines, 3% is the maximum contribution and any extra would be classified as a concession reducing the loan amount and still requiring you come in with $500.

There’s the Catch-22…sellers cover costs to close the deal with cash-strapped buyers…but give too much, and the “Sellers self-serving generosity” can actually kill the deal.

In the real world, there are solutions about 99% of the time. But I added this scenario just to illustrate how not knowing the Catch-22 in the underwriting guidelines can cause real problems.

If you have questions about purchasing a home and qualifying for a FHA mortgage loan in NC – please call Steve and Eleanor Thorne!  919-649-5058.  We offer the best First Time Home Buyer Programs available at the Best Rates in Raleigh!  We also work with the TOP Real Estate professionals in NC, and would be glad to refer you to someone who knows how to structure a contract with the Seller Paying Closing Costs!

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Selling As You Separate

November 25, 2011 by Leave a Comment

swordplayLately, we’ve talked to several people who are going through a divorce – or are at least telling us that they WANT DESPERATELY to get out of a marriage.

Their real estate is holding them back.

I guess it’s not surprising that folks with money issues are also having marriage issues – but there are important details they need to consider:

  • Who is on the Deed and who is on the note?
  • Is there an escrow?  If not – who has the insurance policy?  Are the taxes current?
  • If the separation agreement calls for one spouse to “buy out” the other spouse – are they qualified to do that?

One of our recent encounters had a guy with 6 jobs in the last 2 years trying to cash out refinance so he divorcecould “buy” his wife out.  They had over $50K in credit card debt, and a house that was being reduced by 7% every month per the separation agreement.  He’s a contract employee who goes from job to job.  Granted, he has the next 5 months of contracts worked out – but he’s a contract employee.  He has mid 600 credit scores.  He has no cash reserves.  The house payment is currently 60 days past due.  His child support is $3000 a month.

“Why would you risk foreclosure as you wait for the house to be reduced to the “right” price?,” I asked.  “Why not price the house correctly the first time?” Because they can’t talk to each other.

If you are in / or considering a divorce – please be certain that you follow these basic steps to protect your credit and your assets:

  • Obtain a copy of your credit report.  Monitor it.
  • Close all joint accounts
  • Find a real estate agent to represent the sale of the property
  • Be realistic about the repairs that need to be done and the staging required.  This is the best time to clean, declutter, depersonalize and pack.
  • LISTEN to your agent.  Listen to your counsel.  BE REALISTIC so that you can have move on with your life!

Please contact us for information about refinancing your home.  Steve and Eleanor Thorne,Mortgage Loan experts in Cary, NC  919-649-5058

 

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97% Mortgage Loan Program Can Get A Gift For The 3% Downpayment in NC

November 23, 2011 by Leave a Comment

Happy Feet!Until recently, borrowers with down payment money representing less than 5% of a property’s purchase price were limited to FHA loans. We now offer a Fannie Mae program that requires only a 3% down payment, and that 3% can be a gift! Unlike USDA Home Loans, you do NOT have to be within a “Rural” footprint, and there are no income “caps.”

For the right borrowers, conventional financing to 97% offers certain advantages over FHA loans. Conventional financing allows just 3% down payment versus FHA’s 3.5% requirement. The loans tend to be a bit easier to work through the process and loan costs are generally lower than with FHA loans, which include an upfront mortgage insurance premium  (their version of PMI) of 1% of the loan amount, and the monthly mortgage insurance premium of 1.15%.

The appraisal process is also somewhat less stringent for conventional financing, allowing slightly more latitude in property choice… this is especially true if you compare this program to USDA Home Loans, since you can use this program to purchase in Cary or Raleigh City Limits.

The “downside” to this conventional loan, is that those with a “Short” credit history, are not likely to meet the more demanding credit requirements. To qualify, the debt-to-income ratio cannot 41% (meaning 41% of your GROSS before taxable income for the housing payment and all of your other debts) and credit scores must be 740 or higher.

Conventional financing to 97% is also held to the true conforming loan limit of $417,000.  Within a few weeks, Congressional Changes will mean that in Wake County, NC the maximum FHA limit will again be $305,000 (today it’s $271,050).   In addition to the upfront mortgage insurance premium of 1%, and typically higher underwriting and processing costs, FHA mortgage insurance often carries a higher monthly payment. Depending on loan size, mortgage insurance payments can easily run several hundred dollars per month.  On a Conventional Loan of this type, we can offer you a slightly higher interest rate to cover the mortgage insurance (called Lender Paid PMI), or we can do a single premium, cutting the cost and the total monthly payment significantly.

FHA borrowers are also locked into longer mortgage insurance periods than are those with conventional financing. FHA loans carrying a term of 15 years or more require mortgage insurance for the first 5 years of the loan. The mortgage insurance can be removed after 5 years have elapsed and there is 22% equity in the property.  Our experience is that  the borrower must often petition for its removal. By contrast, with conventional financing, mortgage insurance is automatically removed once the loan-to-value ratio reaches 78% of the original purchase price. The borrower can also definitively remove mortgage insurance sooner by providing an appraisal showing that they have at least 20% equity in their property.

When you do a side by side comparison of the monthly payment on a FHA 97.5% loan and a Conventional 97% loan… you’ll see that the Conventional loan is cheaper.  FHA and USDA Home Loans still provide great options for borrowers with limited down payment money and lower credit score applications. For borrowers with stronger earnings and FICO scores, this newly enhanced conventional financing option may be the better option.

If you are considering a purchase in NC, and want to know what you qualify for, or if you are comparing your monthly payments on a no money down mortgage loan, call Steve Thorne 919-649-5058!  We offer the best programs with the LOWEST Rates available!

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Stop Worrying All The Time!

October 21, 2011 by Leave a Comment

Stop Worrying I’ve been updating Blog Posts all day, and in the background I’ve been listening to CNBC – and they are driving me CRAZY with all of this Gloom and Doom, The World Is Ending, Debt Ceiling Crisis Stuff!  Yikes!  I know I can just change the channel – but I really wanted some BUSINESS updates!  Anyway, as part of my day, I ran across this post I did in 2008… It was written more for myself than anything else – and I guess I kinda felt like it was a good idea to repost, and remind myself again today to STOP WORRYING!

This is one of those “Do as I say, Not as I do,” deals…

There’s a lot to worry about right now.  As a sales person who covers a fairly large county – gas prices drive ME crazy and then there’s the news media helping me out every chance they get – NO WONDER I’M NOT SLEEPING!

But there are some great strategies that can help you manage when things get overwhelming:

1.  Set aside time to worry.  That’s right – schedule time to worry.  Maybe it’s that 15 minutes on the way to the bank – or maybe it’s during your shower.  Schedule a time to worry – and then when you feel those thoughts creeping in during the day – remind yourself that you’re going to focus on that later.

2.  Do a Reality Check.  “Worriers tend to overestimate the likelihood that a fear will become reality,” says one expert.  Are you worrying about something that “might” happen?  Do a reality check and see if there are actions you can take that would avoid the problem you’re worried about!

3. Take Action.  Okay – as a blogger you know this – but when you wake up in the middle of the night and your stomach is in a knot, write it down.  Get it out.  Did you answer the phone, “yeah, what do you want?” to a potential 4 million dollar client?  Call them back and explain yourself.  Afraid you aren’t spending enough time with your children?? Put them on your calender!

4.  Use Visualization.  Are you concerned about not having enough income to go on vacation?  Picture yourself on the beach – with family and fun.  Picture yourself making another sale – and getting another listing.  CHANGE YOUR PICTURE!

5.  Savor NOW.  Worrying is usually about the future… Try to concentrate on the present, the warmth of the sun, the first robin, the smell of dinner, the sounds from your children playing.

6.  Work it out.  Ease muscle tension with deep breathing, stretches, jogging – MOVEMENT.  Park in the farthest spot from the door so that you can walk through the parking lot and collect your thoughts.  Take the stairs.

One of my favorite quotes is from Lee Ioccoca.  He was tasked with turning a bankrupt Chrysler into a company worth owning.  There was so much to do!  Someone asked him, “What should we do now?”  His answer?  “Anything, something, the WRONG thing – just make sure you stay away from NOTHING.”  Any action will feel better than the paralyzing inaction.

So stop worrying and put on your track shoes!  There’s work to be done!  Houses need to be sold – and buyers need to move in!  Call me if you need a hug!!!  919-649-5057

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Getting the Lowest Payment

September 19, 2011 by Leave a Comment

mip

When clients contact us  they are usually looking for the lowest monthly payment – or the easiest way to get into the property with the least amount of money tied up in the transaction.

Most prospects only ask one question… “What’s your rate???”  In truth, there are MANY other questions to ask!

One of the variables consumers should ask more about it Mortgage Insurance.  There are multiple forms of Conventional Mortgage Insurance – running from Lender Paid, to Financed to Monthly.  If you are purchasing in NC Conventional lending currrently requires PMI if you have less than 20% equity in the property.

Government loans also carry mortgage insurance.  For FHA loans this is called MIP, VA and USDA call these Guaranty Fees.  One of the major differences in GOvernment Mortgage Insurance programs and Conventional MI programs is equity investment.  With a government loan you mortgage insurance is required- no matter how much money you put into the initial transaction.

Please note that FHA allows MIP to “age off” if at least 5 years of payments are made and there’s a 78% equity position.  This is a significant program enhancement agents often forget.

If you are looking for the lowest mortgage payment in Wake County, contact Steve and Eleanor Thorne 919-649-5058. We offer the best mortgage rates available.

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