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Category: Mortgage

Understanding the Home Appraisal Process

What you should know about home appraisals.

Do you know what a home appraisal is, or why it is so important for you to have? Many people misunderstand this crucial component of the home buying experience. In essence, an appraisal is a valuation of your home – it is needed to ensure the homebuyer, the home seller, and the mortgage lender receives the accurate value of the real estate in question.

Generally, you can choose your real estate agent and lender, but you cannot choose your appraiser. The appraiser will be chosen by your lender to provide a level of independence from the buyer and seller. This helps to produce an unbiased report on the worth of the house.

The most important component involved in arriving at a property’s value is called comparable sales, or comps for short. These are similar properties, usually located within a mile or so of your property, that have sold within the last 90 days. The appraiser will compare the home’s features against the comparables’ features to get a better understanding of the home’s value. Factors range from square footage, appearances, amenities, and condition. The appraiser will take special note of improvements that greatly add value to a home. These include new flooring, kitchen and bathroom remodeling, adding living space in a basement, and additions to the property.

Once the appraiser has inspected the property, he or she will provide a written report with their analysis and conclusions about the property’s value. If the home appraises at or above the purchase price, then you’ve completed a major step in the home-buying process and can move towards closing! Sometimes, a home will appraise for much less than the agreed-upon purchase price. Generally, you will have a legal way out of the sale if the appraisal comes in too low. Another option is to renegotiate for a lower sale price based on the appraised value.

Have more questions about the home appraisal process? Buying a home is no small feat, so it pays to have a trusted, experienced professional on your side! Contact Dean Rathbun when it comes time to finding the perfect plan of action to buy your home. We are happy to help you.

Top Home Buying Fears and How to Face Them

How to handle common home buying worries.

Buying a home is a huge commitment, and it’s likely that it’ll be your biggest transaction ever. It’s only natural that homebuyers have fears going through the extensive and significant process. However, a lot of these problems swimming around inside your head could just be wasting your time and energy. Check out these top home buying fears and how to overcome them.

  • Deposit Money

When you’re interested in a home, you need to put earnest money down to show you are serious about purchasing the property. It’s a fear that many buyers have – once you put that deposit down, you could easily lose that money if the sale doesn’t work out for one reason or another. However, with the right safeguards in place, it’s nearly impossible to lose your deposit. Work closely with your real estate agent to put the right contingencies in place. Pay close attention to the dates to ensure your contingencies don’t expire before you are finished closing on the house.

  • Maintenance

When renting, the landlord takes care of all the repairs and broken appliances. When you’re the homeowner, you need to face the issues and expenses yourself. There are a lot of costs involved with owning a home, from repairs to mowing the lawn to buying more furniture. However, this fear is a good and healthy fear. It forces serious future homeowners to work within their budget and plan accordingly.

  • Structural Issues

Go into house hunting with the knowledge that there is no possible way to buy a perfect house. There is always going to be something wrong – even with new builds. Hiring a home inspector should alleviate these concerns, as he or she will be able to detail any problems with the house before you purchase it. Include a home inspection contingency in your purchase agreement so that if the inspection uncovers problems, you are not obligated to go forward with the sale.

Contact Dean Rathbun when you’re looking to secure the right mortgage for your needs. We work with your credit score and financial picture to ensure that you lock in the right home loan to land that house of your dreams. Give us a call to get started.

How to Save for a House and Tackle Debt

How to Pay Off Debt When Saving for a House

Most of us mere mortals have a bit of debt to our name. That baggage is loaded with interest rates, loans, and payback deadlines. Fortunately, just because we owe a bit of money doesn’t mean that our vision of buying a dream house dissipates. It can take some time, but luckily you can save for a house and tackle your debt!

Intrigued yet? Read on!

Set Savings Goals 
All future homeowners realize that a home includes saving for a hefty down payment. Commit to a specific price range for your future house and set a savings goal!

Set Up a Separate Savings Account
If you don’t already have a savings account for your down payment, set one up! Keeping your savings separate means that you won’t dip into it for car repairs or a shopping splurge.

Strategize Your Debts
Make a list of all of your debts and interest rates for each. The debt snowball method may help you: pay off your smallest balance first while keeping up with the minimum payments on your other debts. Once that first one is eliminated, direct that money to the next highest balance, and so on! Don’t forget to budget your down payment savings into this plan.

Stick to It!
Paying off debts and saving for a house are both long-term goals. Be consistent and you’ll see movement!

Contact Dean Rathbun when you’re looking to secure the right mortgage for your needs. We work with your credit score and financial picture to ensure that you lock in the right home loan to land that house of your dreams. Give us a call to get started.

How to Buy a Home When You’re Self-Employed

How to Qualify for a Mortgage When Self-Employed

Buying a home is daunting for anyone, but it is notoriously hellish if you’re self-employed. While being your own boss has plenty of benefits, it can also bring periods of no work and unstable income. As a result, it can be hard to prove to a mortgage lender that you can pay back a loan for a home. The key to making it all easier is to plan ahead.

Make sure you can verify your income.

Lenders want to know how much money you earn before they decide whether or not to give you a loan. It makes sense – they want to know you’ll be able to pay them back. When you’re self-employed, you’ll have to hand over your last two tax returns. To do this, you’ll fill out IRS 4506-T, giving the lender access to your tax records. Lenders may also ask for your business license.

Be aware of large deposits.

If you’re self-employed, your income may be irregular and unstable at times. When you have a large, irregular deposit during the mortgage process, it can be a problem. The deposit often has to be part of the borrower’s regular income, matching ‘common or usual activity’ in your account. Be prepared for this, as you may need to provide even more documentation.

Improve your credit score.

A good credit score is important for anyone applying for a mortgage, but it can be especially important for those who are self-employed. Typically, lenders like to see scores of 740, and higher. To keep your credit in check, don’t take out new loans or add more debt to your credit card, keep accounts in good standing open, and pay accounts on time.

When you need help obtaining a smart mortgage for your needs, contact Dean Rathbun. We can help you determine the right plan of action for your real estate needs.

What to Look for When Choosing a Loan

Are you shopping for a loan? Here’s what you should note.

Are you toying with the idea of becoming a homeowner? Perhaps you’re steadily saving for a down payment or you’re already looking into home loans. Before you do start comparing loans, there are a few things you need to keep an eye out for to make sure you’re getting the best deal possible for you.

APR

It’s important to get a loan with a good APR (Annual Percentage Rate), especially if you’re looking for a longer repayment term. The longer you take to pay back a loan, the more interest you’re going to have to pay. Your credit score will largely impact how good of a rate you end up getting. Be sure to read the fine print, too, as lenders may lure you in with a great APR, but then pile on fees and charges.

No Repayment Penalty

If you believe you can repay your loan before the period ends, you’ll want to look for loan with no repayment penalty. If you don’t have a flexible payment option with your loan, early re-payments (or paying off your entire loan before the loan term is up) may result in a penalty fee.

Hidden Fees

Loans can often come with hidden fees, such as origination fees (fees for taking out the loan), loan application fees or disbursement fees (charges when you have received the loan). If you aren’t aware of the extra fees that you’re locked into paying, your loan may be a lot more expensive than you had desired.

Of course, with any form of borrowing, it’s crucial that you can afford it and make the required payments. Contact Dean Rathbun when it comes time to finding the perfect plan of action to buy your home. We are happy to help you.

How to Protect Yourself When Buying a Home

Tips to help you stay safe when purchasing a property.  

Owning a home is the American dream, but for some people, the financial aspect is a daunting process. There is a lot to consider when purchasing a home, from the mortgage, to finding the right property, to predicting that you’ll have stable finances for years to come. Fortunately, there are some ways in which you can protect yourself when buying a home.

Research and understand the buying process.

Buying a home is such a unique investment. In fact, purchasing a home isn’t like any other purchase. Whether you’re planning to make the house your forever home or use real estate as an investment, you need to know how to buy. Along with securing a good real estate agent, you should know the process of home buying and the responsibilities that lie with you.

Perfect your credit score.

These three little numbers make a huge impact on your mortgage, so it’s worth taking the time to perfect your credit score. Having a good credit score could increase your chances of qualifying for the best mortgage rates. Work on paying all bills on time, not taking on any more debt, and paying off debts as much as you can afford.

Know before you sign.

Always ensure that you know what you’re signing. Understand all the terms of your loan – is it a fixed rate, adjustable rate, balloon rate, etc.? These terms all mean different things so it’s well worth to take the time to read through the papers before you agree to anything. If a deal sounds too good to be true, it probably is.

Work with the right professionals.

Working with the right mortgage corporation can help ease the process of buying your dream home. From start to finish, professionals can ensure that you understand all of your contracts and can help you get the best rate on your home loan.

When in doubt, ask a professional for advice. Contact Dean Rathbun when it comes time to finding the perfect plan of action to buy your home. We are happy to help you.

How to Save Money for a Down Payment on a Home

With the rising cost of renting, you may consider saving up for your own mortgage.

Whether you have been considering the idea of getting a foot on the property ladder or if you check the new home listings daily, you’ll know that buying your own home is a big move. Not only is it a chance to put shelves where you want in a room, but it’s also a great way to get started in the property market. The catch is that you should have enough saved up to afford a sizable down payment on the home of your choice.

Saving up for a down payment to buy your first house can seem pretty daunting, especially if you’ve never had more than a few thousand dollars in the bank at any given time. Setting aside five figures or more may seem impossible – but it’s not! If you go about it the right way, it can be quite simple.

Set a Savings Plan

Once you know how much you need to save, the next step is to figure out how much you can set aside each month. For example, if you plan to save $45,000 for a down payment, setting a time frame of five years to save $45,000 means you’ll need to save about $9,000 per year, or $750 per month, to make it happen.

Look at your total monthly earnings and outgoings so that you can set up a budget – and stick to it! Find out where you’re splurging every month and aim to cut back, whether this means you eat fewer meals in restaurants, cancel your TV subscription, or pause your housecleaning services.

Check Your Credit

Your ability to borrow, and the rate you pay, are closely dependent on your credit score. Lenders may be willing to originate a mortgage for you with a smaller down payment if you have a strong credit score. Based on how much you’ve borrowed, your total debt, and any missing payments, your credit score is a financial snapshot. Get a copy of your report and scan it for errors, correcting any immediately. Even though you are on a tight budget, ensure that you still make debt payments on time every month.

Review Interest Rates

Interest rates on your credit cards, savings accounts, and car loans can fluctuate readily. Go through every bill and account and check the interest rate. If you’ve been making full and prompt credit card payments, call up the credit card company and tell them you want a lower rate. You may get a lower interest rate simply by asking!

When you need help obtaining a smart mortgage, contact Dean Rathbun. We can help you determine the right plan of action for your real estate needs.

Questions to Ask When Viewing a Property

These questions allow you better insight into the home you’re viewing.

If you’re looking for a new home, you may have a couple of home viewings booked. As soon as you step into a house, it’s easy to forget everything and soak in the property. However, it’s important to remember that you’re looking for the good and the bad. After all, you want to know what you’re getting into if you decide to buy it. Be sure to ask these questions when you view a property.

How long has it been on the market?

You should know how long the property has been on the market. If it’s a new listing, don’t expect sellers to make a bargain with you. However, if it’s been sitting on the market for some time, the seller may be willing to negotiate their asking price. It’s also worth noting if a good-looking home in a good location hasn’t sold in some time, there could be an issue that you aren’t aware of.

Are there any repairs needed?

This is always important to ask! Look past the beautiful kitchen and crown moldings to assess the overall condition of the home. The sellers will disclose all of the known issues about the home after you’ve reached an agreement on the price and terms of your offer. They may disclose these issues in advance. Either way, it’s best to know what work is needed on the home before you get in too deep.

What are the boundaries of the property?

You may fall in love with the backyard, and you may be disappointed to realize that part of it is the neighbors’. Don’t land yourself in a boundary dispute. Ensure that you know what would belong to you.

What is the age of the roof?

Putting on a new roof is expensive. Depending on the type of roof, it could last from 15 to 50 years. In general, asphalt shingles last 20 years, wood shingle roofs last between 20 and 40 years, and tile roofs can last over 50 years.

Being prepared for a home sale or purchase is critical. Ensure that you know how to handle it by relying on the expertise of a professional mortgage corporation. Contact Dean Rathbun when it comes time to finding the perfect plan of action to buy your home. We are happy to help you.

What You Should Know About Getting Low Mortgage Refinance Rates

When you refinance you’re hoping you get the lowest mortgage refinance rates around, here are a few tips on how to get those rates.

If you’re considering refinancing your mortgage, you are likely on the edge of your seat wondering if you landed the lowest possible mortgage refinance rates. Before you start shopping for the lowest rates, there are some things that you should take care of first. You need to establish your objectives and prepare your financial situation to improve your chances of qualifying for the lowest interest rate possible.

  1. Raising your credit score

A credit score of 740 or higher puts borrowers in the best tier for a conventional loan. Most lenders require a minimum score of 620 to 640, but you’ll pay a higher mortgage rate unless your score is above that magic 740 score.

  1. Save cash for closing costs

Closing costs average about 2 percent of the home’s loan amount. You can save up and pay in cash or you can use your home equity to roll over these costs. Another option that some lenders offer is to pay a higher interest for a “lender credit” to cover these costs. This will help keep your cash to close amount lower.

  1. Lower your debt

One of the reasons that your credit score may be low is because you may have accumulated some debt over the years, and have not been yet paid it down. Lowering your debt is a good sign to lenders that you are taking financial responsibility and could positively affect your credit score.

Don’t let these three factors get in the way of the lowest mortgage refinance rates. Contact Dean Rathbun when it comes time to finding the perfect plan of action to buy your home. We are happy to help you.

The Loans That Can Affect Your Mortgage

If you feel like you’re drowning in debt, remember that not all loans are necessarily a bad thing—you can use them to prove you’re capable of making timely payments.

Different types of debt can actually boost your credit score, but overdoing it can, and will, hurt you. When you’re shopping for a mortgage, your credit score is the talk of the town. It can make or break your application and ultimately determine whether or not you’re going to get the home you’ve always dreamed out. There’s a lot of power within those three digits. The following consumer loans affect your mortgage worthiness in different ways. Here are some steps you can take to improve your credit if you have these loans, so you can qualify the best possible mortgage.

  1. Student Loans

Student loans are unsecured debt, but they won’t harm you if you pay your bills on time. Because they take decades to pay off, student loans can actually help your score. Student loans will figure into your overall debt-to-income ratio, but a large student loan you consistently pay might help you qualify for a mortgage.

  1. Auto Loans

Auto loans are secured debt, because the lender can always repossess the car if you don’t pay. In some cases, auto loans can help your credit score by raising your score since you’ve diversified the types of debt you carry. Because auto loans are easier to acquire than credit cards, mortgage lenders may look favorably on you because you’ve already qualified for a car loan.

  1. Existing Mortgage Loans

Mortgages are the classic example of secured debt because the bank actually owns your house, thus, has the ultimate collateral. When paid on time, mortgages are great for your credit score. A missed payment on previous mortgages, however, will wave a red flag to your potential lenders.

Loans don’t have to be the life-sucking entities you fear! Contact Dean Rathbun when it comes time to finding the perfect plan of action to buy your home. We are happy to help you.