Why Every Home Buyer Should Get Mortgage Pre-Approval

What is the benefit of having a Mortgage Pre-Approval when looking for a new home?

There is a difference between a Mortgage Pre-Qualification and a Mortgage Pre-Approval.

A mortgage pre-qualification is based on the information you verbally give to your loan officer to  get a snapshot of how big a house you might afford and how much money you can afford to borrow to buy it.

A Mortgage Pre-Approval is an application file reviewed by an underwriter to be sure your income; assets and credit history qualify you to get the loan you are applying for.

Knowledge is Key:  A Mortgage Pre-Approval gives you a firm idea of how much house you can afford. The underwriter bases this amount using a formula that compares your income to your total outstanding debt.
The Debt:Income Ratio (DTI) is derived from the monthly payments that show up on your credit report and the income documents you surrendered as part of the process. 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.

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

Confidence in Your Offer:  Knowing that the key information in obtaining a mortgage has been reviewed by an underwriter will give you, and the seller, confidence that your offer is bona fide.

Keeping Your Spending On Track:  Having detailed information on your interest rate, mortgage payment, closing costs and down payment requirements will help you stay within your monthly budget.

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

Move in Quicker:  Having Mortgage Pre-Approval will save you time when you submit your complete mortgage application for approval. Everything has been done beforehand. All you need is and inspection, appraisal and closing documents. The faster you close, the sooner you can begin to enjoy your new home.

pre-approval 2If you are looking to buy a new home, a Mortgage Pre-Approval is the smartest way to get into your new home. Call Me at 860.945.9284 to discuss the right mortgage option for your family and to take advantage of my  FREE Jump Start Mortgage Pre-Approval service.


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


Preparing To Own Your First Home

Preparing To Own Your First Home
referralAs a First Time Homebuyer, you’re about to make one of the biggest financial decisions of your life. For Millennials, a new home represents the most expensive purchase they’ll ever make. One of the best things you can do is read, research and learn about the mortgage application process. The more you prepare, the more confident you’ll feel about purchasing the home you want.

Mortgage Pre-Approval
Being pre-approved by a lender gives you the confidence to shop for a new house, knowing exactly how much you can afford. You can avoid looking at properties that don’t fit your budget. The pre-approval helps you know exactly what is possible right from the start. In fact, most realtors expect you to be pre-approved.

How Much Can You Afford?
A good place to start is to look at your current expenses. You probably have FHA MIboth “fixed” expenses… i.e. car payments, taxes, or day care … and “discretionary” expenses… i.e. things like travel, clothing, entertainment, or other areas where you can decide how much to spend.
Then, make up a budget. You’ll see how much of your monthly income is already committed to “fixed” expenses, as well as how much you have to spend on a mortgage payment, taxes, and insurance for a home.
Of course, how much you can afford also depends on how much debt you have. Long-term debt – i.e. debt that will take more than 10 months to pay off – is what lenders are most concerned about. If you have long-term debt that is considered “excessive” for your income, it will probably limit how much you can borrow. If you have a lot of long-term debt, you may want to pay off some of it before you apply for a mortgage.

mortgage financeRemember: I’m always here to help make things easier.  Reach out to Me at rick.cignoli@norcom-usa.com to discuss your mortgage options and to take advantage of my FREE Jump Start Mortgage Pre-Approval service.

Can You Afford Your Dream Home?

Saw a recent article filled with a lot of statistics about the number of homes on the market that were not affordable to the average American.  After reading a few paragraphs of statistics, I found myself asking:
•   If so many homes are not affordable, how many are affordable and affordable to whom?
•   For those homes that are not affordable, why aren’t’ they?
•   And since when does the price range of all the homes on the market have to be affordable to all buyers?

Now, today’s page of the Business Section today  that foreclosure filings have increased this year, not only in CT, but across the country as well. These homes will go on the market because they are not affordable any more. And if they aren’t affordable, who can afford them?

Family Finances Most First Home Buyers come to me for Mortgage Pre-Approval with big dreams, high hopes and a lot of questions. Too often folks want to buy a home in a price range they cannot afford. Usually it’s because their situation does not merit the interest rates they see in the newspaper; they haven’t considered real estate taxes and home insurance; and the cost of mortgage insurance may not be in their calculations.

 It is my job to help home buyers set realistic expectations and help them see how big a house they can afford and how large a mortgage they qualify for. Getting prospective home buyers Pre-Approved for mortgage is an exercise to insure that “families live comfortably and financially secure in their own home.”

First Home Buyer Tips for The Millennial Generation

The Millennial Generation grew up during the housing crash, so rightfully they are more cautious of becoming homeowners because of the foreclosure problems they’ve read about or their parents may have experienced.
Now, facing high student loan debt and a tough job market, studies show that Millennials are less likely than other generations to experience homeownership. And during the last few years, the real estate market has been especially scary for would-be homeowners. What’s a Millennial to do?

Here are a few First Home Buyer Tips for the Millennial Generation to help you pursue your dream of home ownership someday:

Get Pre-Qualified
Learn as much as you can from a local Mortgage Broker you trust “to really understand the mortgage process; what types of mortgage programs are available: and what types of paymentsconfused and upfront costs are associated with specific property types,” says Malcolm Hollensteiner, Director of Retail Lending Products & Services at TDBank.
By connecting with a lending professional beforehand, Millennials will be able to find out what it takes to qualify for a loan and maybe even get Pre-Qualified for one.
Buyers and SellersPart of the learning process also includes becoming knowledgeable about the real estate market you’d like to buy a house in. A Real Estate Agent who knows about the local markets will help you determine where you want to live, give you an idea of what properties are available in your price range, and allow you to develop a solid game plan.
Map Out Your Future.
Are you financially prepared to take on the debt of a mortgage? Do you have enough money saved up for a rainy day fund? Have you accounted for the maintenance costs of owning a home? How much of your hard earned savings are you willing to contribute toward the Down Payment on a First Home and the Closing Costs associated with the purchase? These are all very real questions that Millennials should ask themselves when dreaming about buying their First Home.
Plus, homes nowadays may not appreciative in value the same way they did during the boom years. So consider renting as an alternative if you can’t afford the costs of owning a home or are unsure of your plans five years from now.
Review Your Credit and Finances.
With many Millennials mired in high student loan debt, it’s important to take a good look at your credit and any outstanding debt you might have before you even begin thinking about money managementbuying your First Home. To determine whether you qualify for a loan, lenders will take a look at your debt-to-income (DTI) ratio. Any student loan payments, expensive car payments or credit card debt you have will affect the ratio. Try to pay down as much student debt as you can, consolidating your student loans, to improve your debt-to-income ratio.
good-credit-vs-bad-creditAlso, resolve any credit issues before beginning the process of buying a house. You want to put yourself in the best position possible. So if you don’t have enough credit history, for instance, find out what you need to do in order to build credit.
Use Technology to Your Advantage.
More than previous generations, Millennials have at their disposal a number of online tools that can help ease and speed up the home-searching and home buying process. From online calculators that help you determine how much you need to save in order technologyto buy a home to real estate listing websites, the Internet can be your best friend as you navigate the real estate waters.
Even something like Google Street View can show you what a neighborhood is like and, of course, there are sites that review potential real estate agents you’re thinking of hiring. Many of these tools are available as apps as well, so take advantage of them.
Think Low-End.
New federal law says the maximum allowable DTI on a mortgage is 43% of a borrower’s gross monthly income. That includes the mortgage payment, monthly escrow for taxes and home shoppingHomeowners Insurance, monthly Mortgage Insurance plus  any other debt payments. “Just because you might be qualified up to a certain loan amount doesn’t mean you have to buy that much property,” says Hollensteiner.
Hollensteiner also says that Millennials are particularly good at looking at properties that are within their budget. “The millennial generation grew up during the housing crash, so rightfully they’re more trepidatious of becoming homeowners because of the foreclosure problems,” he says. “Understand that homeownership is as much an investment in the community as an investment in your own financial portfolio.”

dreamOwning your own home has been the American Dream for decades. It’s a dream that has been sorely tested by the real estate crisis and economic developments in recent years. I have the belief that anyone that deserves to own a home should be able to do so. The Dream is still attainable for those Millenials who do their homework, establish a game plan and work hard to achieve that goal. 

The article Tips for Millennials Hoping to Buy a Home originally appeared on Fool.com. and MyBankTracker.com


Late Mortgage Payments Compared To Delinquent Credit Cards

Low Monthly PaymentsI’ve been working with a client for almost a year now attempting to refinance their mortgage and save them a considerable amount each month. The challenge has been low credit scores due to delinquent credit card payments.

Recently, the clients called to say they listened to my advice. Their credit cards were all up-to-date. With current low rates and increasing values, it seemed that now was the perfect time to revisit their plans.Mortgage Checklist
They had my checklist of documents we’d need to begin the mortgage process and agreed that the best place to start was with a new credit report.

I was quite surprised to discover that their credit was even worse. The borrower was correct… all his credit cards were up to date. The big problem was they had been paying the mortgage payment 30 days late for the last 4 months. They got caught up on their credit cards by being delinquent on their mortgage payment. Not a good idea!

Now we’ll have to wait another 12 months. Hopefully  all payments will be made on time next year and by then their credit scores will have recovered to a point where it makes sense to refinance.

Remember… pay mortgages first, car payments second, installments debts next and then credit cards. For excellent credit scores ALL payments need to be paid on time.