Norman Mortgage News

Why you should get an Inspection

Whether you are buying or selling a home, you should have a professional home inspection performed.

A home inspection will look at the systems that make up the building such as:

• Structural elements, foundation, framing etc
• Plumbing systems
• Roofing
• Electrical systems
• Cosmetic condition, paint, siding etc

If you are buying a home, it is essential that you know exactly what you are buying. An inspection from a professional home inspector will reveal any issues with the home so that you can address them before closing off on the deal. When you make your final offer, be sure that you require an inspection. An inspection contingency should be in the contract. Hire your own inspector, and pay close attention to their report. If you are not comfortable with what they find, then you should cancel the deal.

If you are selling your home, you need to know about such potential hidden problems before putting your house on the market. Nearly all contracts are contingent on a satisfactory inspection being completed, and most buyers will insist that the inspection is done by a professional that they hired. If the buyers inspectors find a problem, the buyer may get cold feet and back out of the deal. It is in your best interest to get ahead of the problems, and deal with them before the buyer can find them. If you don't, you can count on the buyer's inspector finding them, and at the worst possible time.

Making dreams come true with zero down mortgages

I don’t think that saving for a down payment should be the reason you put your dreams on hold. With a zero down mortgage loan, I can help you get your dream home. You’ll not only be able to afford a home sooner, but you may even be able to afford more home. With a zero down mortgage, the amount of loan you can qualify for is determined by your ability to make your monthly payments, rather than how large a down payment you’ve saved. And, for most buyers, this means qualifying for a larger loan.

Buying a home is something we all dream about, usually for years. You may have saved money for a down payment, but just don’t have enough to buy your dream home. If that’s the case, a piggyback loan might be the best option for you. This is different than a zero down mortgage, as a piggyback loan is actually two mortgages. The first mortgage is for 80% of the purchase price. The “piggyback” loan (or second mortgage) covers the shortfall between the purchase price and your down payment savings.

Let me help you explore all your mortgage options. I look forward to helping you!

Reasons for mistakes on your credit report
Credit report errors occur for a number of reasons but they can all have a negative impact on your eligibility for any future credit. It's important to stay on top of your credit report to avoid any mistakes made by the creditors and credit bureaus —Equifax, Experian and TransUnion. Some common reasons for credit report errors include: 

• The individual has applied for credit under several different names (i.e. John Doe and Jonathon Doe)
• Someone made a clerical error in entering or reading information (names, social security numbers, addresses, etc.) from a handwritten application.
• Mix ups with common names. For example, there is likely more than one John Smith living in New York City and often there is the chance that information intended for one John Smith might appear on another John Smith's credit report as he applies for a mortgage.
• The individual gave an inaccurate Social Security number or the number was misread by the creditor.
• Loan or credit card payments were inadvertently applied to the wrong account.

No matter what the reason, the erroneous information could reflect poorly on your credit file, thus causing approval problems when the time comes to apply for a job or obtain a mortgage. If you find errors, no matter how small, be sure you get them fixed, and make sure that you contact all three credit bureaus with your change.

The information in your credit report has a huge impact on whether or not you qualify for a mortgage loan and what interest rate a lender will offer. Therefore, it’s important your credit report reflects a positive image of the way you manage your money. If you're getting ready to buy a home, checking your credit report is the best way to ensure you get the loan and interest rate you deserve.

The easiest way to see what’s in your credit report is to contact the three national credit reporting agencies – Equifax www.equifax.com,
Experian www.experian.com and TransUnion www.transunion.com - and request a copy from each. That’s because the three agencies are independent of each other and the information may differ on all three reports. In addition, you may not know which agency your lender will use to check your credit, so it’s best to verify that all three have correct information about your credit history.

If you've been denied credit, insurance, or employment because of information in your credit report from any of the three agencies, you can obtain a free credit report by contacting the agency within 60 days of receiving a denial notice. In addition, you're entitled to a free copy of your report each year when you certify in writing that (1) you're unemployed and looking for a job within 60 days, (2) you're currently on welfare, or (3) your report contains errors due to fraud. Otherwise, the agencies charge a fee for a copy of your report.

For additional fees, each agency may offer you different report variations, such as:

• A credit report with or without your credit score.
• A three-in-one credit report that lets you see a side-by-side comparison of records, from all three agencies, with or without scores.
• Notification services when your credit history is requested.
• Routine notification changes to your file.
• Subscriptions that allow you to access your report on a regular basis.

Federal law allows for free access to credit reports

Thanks to the 2004 amendment to the federal Fair Credit Reporting Act (FRCA), each agency is now mandated now provide you with a free copy of your credit report, at your request, once a year. This can be accessed at www.annualcreditreport.com, regardless of your employment or financial situation.

Whether you are thinking of buying a home or simply curious about what’s in your credit report,  it’s important to correct any errors you discover as soon as possible.  You don’t want errors in your credit report affecting your eligibility for credit in the future. 

Buydown options

A buydown is a type of financing where the buyer or seller pays extra points (also called discount points) to reduce the interest rate on a loan. Buydowns make it easier to qualify for a loan because they lower a loan's interest rate. They can also allow you to buy more house for your money.

There are generally two types of buydowns: a permanent buydown and a temporary buydown. A permanent buydown lets you pay extra points to get a low interest rate over the life of your loan.

A permanent buydown can be paid by the seller or the builder to incentivize finalizing a sale by creating lower monthly payments. Assisting with a buydown may be beneficial to sellers as well, if they are having difficulty selling their property, or if market conditions are slower. It increases the buyer’s ability to qualify for a loan, therefore, allowing the home to be sold quicker. Plus, a buydown offer is usually less than a price reduction on the home.

In a temporary buydown, you prepay interest in exchange for a lower rate during the early years of a loan. The most common temporary buydown is called 3-2-1, meaning the mortgage payment in years one, two and three is calculated at rates 3 percent, 2 percent and 1 percent, respectively, below the rate on the loan. On a 2-1 buydown, the payment in years one and two is calculated at rates 2 percent and 1 percent below the loan rate. And on a 1-0 buydown, the payment in year one is calculated at 1 percent below the loan rate. 

A temporary buydown can be a benefit to a buyer whose current income is low but anticipates that it will increase during the next two years. First-time homebuyers who need to purchase all of the furnishings that go into a new home may also find a temporary buydown appealing.

Down payment funding alternatives

For many buyers, especially first-time buyers, saving up the funds for the down payment can be a seemingly insurmountable hurdle to home ownership. This doesn’t have to be the case. As your loan originator, I can help you find creative ways to come up with your down payment.

Using a gift for your down payment
One way to fund a down payment is by using a gift. For many loan programs, a gift may be used for a portion or all of the required down payment.  Money given as a gift for a down payment can’t come from anyone.  Family members are the usual source, but an employer may also be acceptable.   If this is an option open to you, please let me know.  I can help you determine which loan programs accept gift funds for down payments and who may give the gift.   I’ll also supply the gift letter that the person giving the gift is required to sign.  The gift letter states that the funds are a gift and will not be paid back.

Down payment assistance charities

If a willing and able family member is not available, buyers now have the option of turning to a non-profit for down payment assistance. 

Caution should be taken when searching for a down payment assistance charity (aka down payment assistance program).  There are many reputable organizations providing buyer assistance, but there are dubious ones as well.  You may want to research the charity with the Home Gift Providers Association (HGPA) (http://www.downpaymentalliance.org/) before making a commitment.

Generally, a down payment assistance charity will give the buyer money for a down payment that does not have to be repaid.  The seller will contribute an equal sum to the charity at closing or soon after.  The seller will also pay an administration fee to the charity.  Sounds good, right? 

This can be a good option for buyers who don’t have other means of securing a down payment.  However, you should be aware that this means of funding the down payment may inflate the selling price of the house.  You’ll want to consult with your real estate professional about how such a program may affect the selling price.

Zero down mortgage loans

Service persons and veterans can qualify for a VA Loan that requires no down payment.  VA Loans are guaranteed by the U.S. Department of Veterans Affairs.  In addition to no down payment, these loans usually offer a competitive fixed interest rate and limited closing costs.  While the VA does not issue the loans, it does issue a certificate of eligibility required to apply for a VA loan.

There are also private sector alternatives that offer 100% financing of the home purchase price.  Let me help you find the down payment and mortgage alternative that’s right for you. 

Save money during the holidays and buy that dream house in the New Year

The holidays can put a dent in your savings especially if you're planning to buy a home. But there are several ways to cut costs so your finances aren't in the red by New Year's Day. Consider the following money saving tips:

• In lieu of buying presents for every family member, suggest a gift exchange and draw names out of a hat.
• Agree on a spending limit for gifts for friends and family and stick to it.
• Make your holiday meals a potluck and assign each guest an item to bring.
• To prevent the urge to overspend when shopping, use cash and leave your credit cards at home.
• Consider buying a joint gift rather than individual gifts for a family such as a zoo membership or movie tickets.
• Instead of holiday wrap, buy monochromatic wrap in holiday colors such as green, red, or gold that can be used all year.
• For young children, half the fun of holidays is often opening the gifts. Wrap small, inexpensive items separately - coloring books, crayons and picture books or novels, even stocking stuffers work well. Or recycle hand-me-down toys by wrapping them up and putting them under the tree.
• Instead of spending a lot of money on gifts from the mall, give homemade treats like fudge, truffles, cookies or jams and jellies.
• To cut down on postage and holiday card costs, send mail only to out-of-town friends and family you're not likely to see throughout the year. Or send e-cards, which are usually free.
• To keep your electricity bill down, use a timer to turn outdoor lights on and off at designated hours.
• If you know you won't be able to pay your credit card off right away, make sure you use a single low-interest card to make purchases - that way you can easily track them.
• When traveling during the holidays, try to fly on the day of the actual holiday (Thanksgiving Day, Christmas Day). It's usually cheaper and there are plenty of seats.
• Subscribe to receive e-newsletters from your favorite online merchants. They will often e-mail coupons to use for savings on purchases and shipping costs. Or subscribers may receive private sale information.
• Sometimes buying an item online is cheaper than going to the store since many sites don't charge sales tax and offer free shipping. Use the savings to have the gift mailed directly to the recipient instead of standing in line at the post office.
• Instead of buying an expensive gift, make a donation to a worthy cause in a friend or family member's name.

Avoid Holiday Theft

Although we'd like to believe the holidays bring out peace on earth and good will towards men (as the Christmas carol goes), the weeks between Thanksgiving and New Year's Day tend to be a prime season for criminals. However, do not worry, as there are some easy precautions you can take to prevent becoming a victim of theft. To best protect yourself and your belongings, consider the following safety tips:

When holiday shopping:

• Don't park in unlit areas at night.
• Put your shopping bags in your trunk. Don't try to cover items on your seats with a blanket. Your best option, if possible, is to take your packages straight home after a shopping spree and then go back out.
• Don't carry large amounts of cash with you. However, if you must, keep it in your front pocket, not in your purse or wallet.
• Be extra careful when carrying a purse - they are the prime targets of criminals in crowded shopping areas. If you must carry one, make sure it has a strap that can go over the shoulder and be held tightly under the arm, making them more difficult for purse snatchers to grab.
• Keep a record of all of your credit card numbers in a safe place at home.
• Beware of strangers approaching you. More than any other, this is the season when thieves may try various methods to distract you with the intention of taking your money or belongings.

At home:

• When leaving home for an extended time, have a neighbor or family member watch your house and pick up your newspapers and mail.
• Leave a light on when you leave your home at night or put your lights (including Christmas lights) on an automatic timer.
• Make sure your holiday gifts are not visible through the windows and doors of your home.
• Don't advertise that you are away from home on social media.
• Never say you are away from home on the outgoing message on you answering machine or voice mail. Simply say you are unable to get answer the phone at the time.

With everything going on during the holidays, it's easy to become careless and vulnerable to theft and other holiday crime. Protecting yourself and your home from potential crime is the easiest way to ensure a safe and happy holiday season.

VA Loans

VA loans are made by private lenders, and guaranteed by the U.S. Department of Veteran Affairs (VA) to qualifying veterans for the purchase of a home. The guarantee means that the lender is protected against loss if you fail to repay the loan. Most of the time, there is no required down payment on a VA loan, and the borrower often receives a lower interest rate than is available with other loans.

Other benefits of a VA loan include:

• Negotiable interest rate.
• Closing costs comparable, and potentially lower, than other financing types.
• No private mortgage insurance requirement.
• Right to prepay loan without penalties
• Mortgage can be taken over (or “assumed”) by the buyer when a home is sold.
• Counseling and assistance available to veteran borrowers having financial difficulty or facing default on their loan.

Although mortgage insurance isn't a requirement, the VA charges a funding fee to issue a guarantee to a lender against borrower default on a mortgage. The fee may be financed in the loan amount, or paid in cash by the buyer or seller.

A VA loan can be used to buy or build a home, or improve a home with energy-saving features such as solar or heating/cooling systems, water heaters, insulation, weather-stripping/ caulking, storm windows/doors or other energy efficient improvements approved by the lender and VA.

Veterans can apply for a VA loan with any mortgage lender that participates in the VA home loan program. A Certificate of Eligibility from the VA must be presented to the lender to qualify for the loan.