First Home Buyer Checklist

For Millennials, buying your First Home is an exciting adventure. Owning a home is the American dream. It’s also the largest investment most of us will ever make (aside from perhaps the cost of a college education), Knowing what you’ll need before starting the trek is just as important as knowing what isn’t required. Here are some tips.

 Here’s what you’ll need:
♦   Get Mortgage Pre-Approval. A Mortgage Pre-Approval is a commitmenapp approvedt by your lender that they will lend you a specific amount of money when you find your new home.  By getting Pre-Approved for a mortgage before you start house hunting, not only can you shop with confidence, but you’ll be show sellers you are qualified and serious about buying their home.
♦   Enough income to pay monthly mortgage payments. Keep in mind that FHA MIyour monthly mortgage obligation will include not only the mortgage payment, it will also include an escrow payment for your home owners insurance (HOI), taxes, and your monthly mortgage insurance premium (commonly called PMI or MIP).
♦   The ability to maintain the property. You must keep a home in good repair or it will lose value and you’ll lose money. One of the “joys” of homeownership is keeping up with the chores around the house.  You’ll need a lawnmower to maintain curb appeal and you can’t ignore peeling paint or unexpected repairs that eventually come along. If you’re handy you can DIY or you can hire someone to do it for you. Either way, it will cost money. And you ‘d better be prepared.
♦   A decent credit record. Your credit score is the major determining factor in your ability to get a mortgage at the best terms. Low scores are caused by late payments, bankruptcy or collection accounts
There is only one Website authorized by law to provide the Free Annual Credit Report you are entitled to under the Free Credit Reporting Act – annualcreditreport.com. Check it out! And if you see any problems, take action.

Here’s What You Won’t Need:
♦   A big down payment. Sure, it would be nice to be able to make a 20% down payment on your new home. With equity in your home, you canInterest Rates avoid paying PMI, you might get a better rate and you’ll lower your monthly payments.
But it is possible to buy a home with a small down payment. There are several loan programs available to qualified home buyers that allow for down payents as low as 3 to 3.5%; there’s even one that allows for up to 100% financing of eligible properties. Talk to a professional mortgage loan officer about the best option for your family.
♦  Experience. There is a lot of information on the internet about the whole home financing/home purchase adventure. It all tends to result in a giant house puzzlejigsaw puzzle. Look to the experts for help putting those pieces together. A professional mortgage loan officer has the experience to guide you through the complicated mortgage application process. A trusted Realtor can help find the right house, assist with your negotiations and address other issues with the home purchase.

Resource:  http://www.hgtv.com/design/real-estate/a-checklist-for-first-time-homebuyers

 

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How To Make an Offer on Your First Home

Buying your First Home depends on negotiating a satisfactory Purchase & Sales Contract with the seller, not just making an offer.

How to Determine Your Initial Offer
Unless you have a Buyer’s Agent, which we strongly recommend, keep in mind that the Dual Agent gets paid by the seller. Make a point of asking this agent to keep your discussions and information confidential.

If you have a Buyer’s Agent, listen to your REALTOR’s advice, but follow your own instincts on deciding a fair price. Calculating your offer should involve several factors
♦  How much of a mortgage have you been Pre-Approved for
♦  What similar homes sell for in the area    Get Pre-Approved
♦  The home’s condition,
♦  How long it’s been on the market,
♦  Financing terms
♦  The seller’s situation.

By the time you’re ready to make an offer, you should have a good idea of what the home is worth and what you can afford. And, be prepared for give-and-take negotiation, which is very common when buying a home. The buyer and seller may often go back and forth several times before they can agree on a price.

Making an Offer
Your REALTOR will assist you in making an offer and in preparing the Purchase & Sales contract 3Contract which will include the following information:
♦  Complete legal description of the property
♦  Price you are offering
♦  Amount of earnest money deposit
♦  Down payment and financing details
♦  Home Inspection Contingencies
♦  Mortgage Contingency Date
♦  Proposed Closing date
♦  Length of time the offer is valid
♦  Attorney review of the contract
♦  Other details of the deal

The Purchase and Sale Contract is a legal document. In addition to the agreed upon price, it stipulates as specific timeline as to what you and the seller must do to complete the sale. It would be prudent to have your attorney review this contract to ensure that your interests are well protected and to be prepared to assist you with any glitches that may occur during the whole process.

Similar Stories:        http://www.richmond.com/realestate/resources/article_43dc062c-abad-11e4-9d9b-4f6d478b87bc.html

What is A Mortgage Rate Lock?

At some point during the mortgage application process, the borrower must exercise their agreement with the lender to lock in the rate for their final mortgage. 

rate lockWhat is a Mortgage Rate Lock?
A Mortgage Rate Lock protects the borrower from the risk that interest rates will increase during the rate lock period. It guarantees that the lender will offer the borrower a specific combination of interest rate, points or interest rate credit at the closing of their loan.
If market rates rise after the rate is locked, the borrower will still get the lower rate, to the lender’s detriment. But there’s a downside: If rates fall after the rate is locked, the borrower might not be able to take advantage of that opportunity. 

When Can a Mortgage Rate be Locked?
Buyers typically must wait until a seller has accepted their purchase offer for a specific property before they can lock in an interest rate for their mortgage. In addition, the lender must have certain information about the borrower and the details about the transaction before a rate can be locked. This includes receipt of all signed legal disclosures, the borrower’s credit score, anticipated loan-to-value ratio, property type and the borrower’s signed intent to proceed with the transaction. Until all pieces of the puzzle are in place, the lender can not accurately commit to any final interest rate, cost and terms.

How Long Can a Mortgage Rate be Floated?
When a mortgage rate is locked depends on the borrower’s tolerance for risk. The purchase and sales contract dictates when the loan must close. The borrower may opt to let the final mortgage rate ride or “float” with the market until they feel they can get the best deal. Of course they run the risk that the market will turn in their time period and rates will rise from current conditions.
A good mortgage loan officer may have, in good faith, projected a final mortgage rate for processing purposes, but the mortgage application cannot be approved until the final rate has been locked in.
In today’s mortgage processing environment, a mortgage rate could be floated until about 14 days prior to the prescribed closing date. This should give the lender to deliver the final disclosures, the underwriter time for a final review of the application and to issue a “clear to close,” and time for the closing deportment time to deliver closing package to the closing agent.

Should You Choose a Longer Rate Lock Period?
Borrowers are well advised to choose a 45 to 60 day rate lock period to ensure they can get the agreed upon rate even if there is a delay in processing their mortgage application. If a loan fails to close within the rate lock period, the borrower will charged the higher of the original lock and the current interest rate. If rates are higher, the borrower may be offered the opportunity to extend the original rate at a cost of 0.25 points for each 7 day period. (A point equals 1.00% of the base loan amount)

How Much Does a Rate Lock cost?
lockMost lenders will not charge for a Mortgage Rate Lock.  . But a rate lock isn’t free. Rather, a longer rate lock typically involves a higher interest rate, which is more expensive for the borrower. The interest rate or “pricing” difference between a 15-day rate lock and 60-day rate lock might be as little as one-eighth or could be as much as half of a percentage point. The longer period protects the lender from potential market deterioration. The shorter the rate lock period, the more risk the borrower is taking on, but they should be getting a better price.”

No Mortgage Loan officer is an interest guru. But he does understand the lender’s commitment to you and will do his best to honor the rate lock obligation. However, the complexity of your application and issues like: failure to provide additional documentation in a timely manner, appraisal concerns, possible title problems all add time to the process.

There is rarely a reason not to lock a loan as soon as you can. Interest rates change daily, sometimes hourly. To protect yourself against the volatility of the marketplace, it’s a good idea to lock your rate once you are satisfied with the rate. The reason some buyers dislike loan locks is because they want to grind every dime out of a transaction that is humanely possible. Just remember that if the rate was acceptable when it was locked three weeks ago, a drop of an 1/8 of a point or so isn’t the end of the world. You don’t need to be that kind of borrower to get a good deal.

Read more: http://www.bankrate.com/finance/mortgages/questions-rate-lock-answered.aspx#ixzz3cy8lb29i

12 Maple Avenue Thomaston CT For Sale – Eligible for 100% USDA Financing

First Home Buyers! This cozy, very solid, gas heat home is ready for a new owner.
It’s Eligible For up to 100% Financing with a USDA Rural Housing Development Mortgage. Closing costs can be included in loan amount. Low rates! Low MI! Beats FHA and CHFA any day!

http://www.ctreal.com/Search/L149616#tr1264940

Call Me at 860.945.9284 for details on the USDA Guaranteed Rural Housing Development Loan and to take advantage of my FREE Mortgage Pre-Approval service
Then call Marcus Santore at Marrin Santore Realty to schedule a showing and be ready to make an offer.

The Mortgage Underwriter and Your Mortgage Application

The Mortgage Underwriter is one of the most important people in the Mortgage Application process. Without the approval of an underwriter, no lender will fund or close on a loan. It is the job of the underwriter to ensure a borrower can repay the loan they are applying for and to determine that the sales price is supported by the appraisal value before granting lending approval.

app approvedApproval of a Mortgage Application is based on several things: income, credit history, debt ratios, and savings.
♦  A borrower must be able to prove a stable income and job history needed to repay the loan.
♦  They also must have a credit history that reflects a stable record of repaying obligations and a balanced debt to income ratio. Additionally, a borrower’s monthly debt must fall within acceptable limits determined by the loan product’s guidelines.
♦  Lastly the borrower must show that they have enough money saved for their down payment and closing costs. It is also smart to have a few months of mortgage payments saved away in case of an emergency.

It is the Mortgage Underwriter’s job to make sure all of these factors meet particular loan guidelines. The underwriter will evaluate all of this information and sometimes ask for more information or explanations from a borrower to clarify and support their decision on the  Mortgage Application.

Mortgage Underwriters also review the Appraisal to make sure it is accurate and thorough, and that the home is truly worth at least the purchase price. A property’s appraised value is also reviewed by the underwriter to ensure the value supports the amount of the loan you are requesting. A good underwriter will also take into consideration the condition of the property, the location of the property and how it may be affected by natural disasters, such as floods.

An Mortgage Underwriter does his or her best to evaluate the potential risk involved when lending to a borrower. In January 2014, the Consumer Financial Protection Bureau enacted stricter requirements on some mortgages, which included tougher background checks into your bank account, spending and employment history.  If an underwriter does not follow all guidelines and makes a poor lending decision and the loan defaults, meaning a borrower stops making payments on their mortgage, it could result in a hefty cost to the lender.

The Mortgage Underwriter has final approval and final responsibility for the Mortgage Loan.  They must make important decisions based on the facts presented in the file, their own judgments and similar application experiences. The Mortgage Underwriter has to take a calculated risk and do his/her best to determine if a file adheres to not just the letter but the intent of the loan program guidelines. It is not an easy job.

Why Every First Home Buyer in CT Should Get Mortgage Pre-Approval In 2015

What is the benefit of having Mortgage Pre-Approval when looking for your First Home?

There is a difference between Mortgage Pre-Qualification and Mortgage Pre-Approval.
♦ Mortgage Pre-qualification is based solely on the you verbally share with your Mortgage Officer to qualify for a mortgage loan. The Mortgage Pre-Qualification Letter basically says that the lender will give your a mortgage when they see that the information you told us about is correct and meets certain qualifying standards.Get Pre-Approved
♦ With a Mortgage Pre-Approval, the buyer supplies all the written documentation of the information they claim to be true. This formal application is reviewed by and underwriter to be sure the credit, income and assets are sufficient to obtain the loan you are applying for. Loan Officers can not issue a Mortgage Pre-Approval. Only a Mortgage Underwriter can issue a valid Mortgage Pre-Approval Letter.

If you are looking to buy your First Home is 2015, a Mortgage Pre-Approval is the smartest to get into your dream home. Here’s Why …

1.  Knowledge is Key:   A Mortgage Pre-Approval gives you a firm idea as to how big a house you can buy and how much of a mortgage you can afford. Lenders base this amount using a formula (your Debt-to-income ratio) that compares your income to your total outstanding debts, including your proposed new housing expenses. This will keep you focused on the big picture and help to prevent being disappointed if you fall in love with a home that is too expensive for your means.

2.  Improve Your Negotiating Position: When a seller is comparing two offers and one of the buyers has Mortgage Pre-Approval, they have a high confidence level that their sale will go through and close sooner. This may help you to win in a competitive bidding situation.

3.  Confidence in Your Offer: Knowing the the paperwork supporting the key information needed to obtain a mortgage has been reviewed by and underwriter will give you, and the seller, confidence that your offer is bona fide.

4.   Keep Your Spending on Track: Having detailed information on your interest rate, down payment requirement, closing costs estimate and mortgage terms will help you stay with in your budget and be prepared for the closing of your loan.

5.   Time is Valuable: Knowing what you and cannot afford can save you time and frustration in the house hunting process. This will also help your Realtor find the perfect house in your price range.

6.  Move in Quicker: Having Mortgage Pre-Approval will save you time when your application is submitted for final approval. Most of the paperwork has been done, so all you should need to do is have the property inspected and appraised. The faster you can close, the quicker you can move into your dream home.

The Mortgage Pre-Approval process is not quick and not necessarily easy. But most REALTORS® will tell you that getting Mortgage Pre-Approval is the key to getting the new home you want.

What Determines a Borrower’s Mortgage Rate?

Here’s a follow-up to my blog What Makes Mortgage Rates Go Up and Down. Now let’s talk about What Determines a Borrower’s Mortgage Interest Rate?

As we discussed, many factors determine the interest rate on a particular mortgage. A Interest Rates Will Riseborrower’s rate will reflect general conditions in the financial markets, the type of mortgage they chose, the lenders assessment of the risk involved in your financial situation and, of course your credit history.
That’s why a quick “rate quote” over the phone or a rate you saw online or pulled from a newspaper advertisement may not reflect the interest rate you will finally be offered once a lender has evaluated your specific circumstances as presented in your mortgage application.

Risk Matters
When lending money to finance a home purchase, lenders and their investors seriously consider the risk that these borrowers may not repay the money loaned to them. For example: the larger the down payment, the greater the investment in the property and the lower the perceived risk. Therefore, the lower the mortgage interest rate. Vice versa: The smaller the down payment, the less equity in the home and the greater the risk of default. The higher the risk, the higher the interest rate

When someone calls me inquiring about interest rates, I tell them, “I don’t sell interest rates.” I go on to explain, “There is no “one low mortgage interest rate.” Rates fluctuate daily-even hourly-with movements in the financial markets. A borrower’s final interest rate is determined on the day it is “locked” by an assessment of:FHA MI
•  Mortgage type
•  Mortgage term
•  Loan amount
•  Type of property
•  Credit Score
•  Debt-to-Income Ratio
•  Amount of cash the borrower will contribute to the down payment, closing costs and points.
I might tell them, “Today, at noon on July 2, 2014, it is conceivable for a buyer want to buy a single-family home selling for up to $400,000 with a conventional 30 year fixed rate mortgage has a credit score greater than 740, is able to make a 20% down payment and is willing to pay all closing costs and about 2 points to get a rate in the 4.00% range. If any of these criteria do not fit your situation, then the rate will be higher. How does that sound to you?”

Bottom Line
In the final analysis, it is the borrower’s unique personal situation that determines his/her final mortgage interest rate. His financial position will help him decide which mortgage program right for him and what interest rate scenario is right for his family budget, how big a house he can buy and how large a mortgage he can afford to repay. My job was to guide you to that decision.

Do not hesitate to reach out to me with any questions or concerns you may have about how your situation might impact your mortgage interest rate. I’m here to help.