Tag: mortgage

Mortgage-Shopping Mistakes to Avoid

When it comes to something as important and expensive as your home, it is in your best interest to avoid any potential mistakes. 

Buying a home is one of the biggest decisions you will make in your entire life, and it is also the largest investment you will make. With something this important, a simple mistake may prove to be extremely costly. Getting a mortgage is more than just getting approved and signing on the many dotted lines that freckle mortgage contracts. So whether this is your first or your eleventh home, here are the most common mortgage mistakes you need avoid when it comes to buying a new home.

  1. Not checking your credit before applying. 
    Not checking your credit before you see a lender is not unlike going to a job interview for a position for which you know nothing about. Lenders comb through your credit and make decisions based on how creditworthy you appear to be. Saying you don’t know anything about your credit can be the nail in the coffin you don’t want.
  2. Skipping the pre-approval process. 
    The pre-approval process essentially approves you for a home within a certain price range without actually selecting a home. During this process, you will go through all the tedious paperwork with a lender and get an idea of what types of homes you should be looking into.
  3. Signing loan documents you don’t fully understand.
    Even if there’s one legal word you do not understand, you should not sign any document. That word may seem harmless but could put you into a heap of trouble. Your agent needs to be able to tell you every little nuance about the contract before you sign it.

Your mortgage process needs to be error-free. Contact Dean Rathbun when it comes time to finding the perfect plan of action to buy your home. We are happy to help you!

Mortgage Issue: What to Do If Your Partner Has Bad Credit

If your partner has bad credit and the two of you have decided to buy a home, it may be possible, but may not be the best course of action for your first big purchase together. 

In terms of credit score, you are the Eddie van Halen of the world: you pay all of your bills on time, you work hard to earn more and so you earn more, thus, save more. A true rock star! Your partner? Eh. Not so much. Maybe they were too lax on their bills and debt earlier in life and now suffer those consequences. What’s a serious couple to do in this situation?

Understand why the credit score is low

Before you plead to your lender for that mortgage approval, you have to understand why your partner’s score is terrible. Buying a home should not be done simply because society demands it, it should be done because you and your partner want it. Once you understand why it is bad, you can work on fixing it. Once

Take the mortgage under your name

If you truly want a house now, you can always apply for the loan under your name only. Before you take this route, make sure that your finances and budget are ready for this commitment. Thinking of worst-case scenarios are often avoided by most people, but it is important to remember that it is your name on the dotted line and will be responsible for getting the bank its money back.

Before you and your partner commit to any of these options, you have to be one-hundred percent sure that this is the best course of action right now. 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 Improve Your Credit Report

Your credit report can have a big say on what you can and can’t purchase in our market, so if your credit report is not good is there a chance you can improve it?
(Yes, rest assured.)

You regularly have to clean your room, closet, garage in order for everything to be in its proper place and be neat and organized. Similarly, every now and then, you must clean your credit report. Your credit history is the foundation upon which your entire financial life is centered. The information in this report is what companies like FICO use to generate a credit score which governs everything from how much interest you pay for a loan –or if you can even get a loan to start with– all the way down to your insurance rates. If your credit report is not as clean as you would like, here are a few tips on how you can improve your credit report.

Where to find your credit report

Federal law entitles you to a free copy of your credit report every 12 months. You can get them from the three major agencies: Experian, Equifax, and TransUnion.

Identification basics

One of the most important parts of your credit score is the identification of your name, current address, and Social Security number. Make sure that everything on there matches you.

Look at the report for discrepancies

You have to make sure there are no errors in your report and dispute any accounts that you do not recognize. Any negative information can have severe consequences.

Your credit report can affect your mortgage application process, which may be bad if you have bad credit. Contact Dean Rathbun when it comes time to finding the perfect plan of action to buy your home. We are happy to help you!

Why Is It So Tough to Get a Mortgage?

Mortgages are tough to get in order to protect our economy, so how can you increase your chances of getting one? 

Homebuyers today are stuck between a rock and a hard place. Rents are on the rise and home prices are shooting up, too. But everyone has probably told you that it is better to buy than waste your money on rent. The catch? You have to get a mortgage.

At the height of the housing boom in 2007, an astonishing 8.1 million mortgages were issued. But thanks to low regulations and greedy bankers/politicians, we all know how that turned out. Lenders got burned. And then lenders got strict in order to (hopefully) prevent a future recession.

More regulation more work (for lenders)

After the housing bubble burst, the federal government was forced to enact strict new rules and regulations to ensure that faulty mortgages (and Wall Street) don’t crash the world economy again.

Interest rates are (perhaps) low (for lenders)

While low-interest rates are good for home buyers and remain near historic lows, it is not so good for lenders. With lower rates, the lenders are making less money per loan. Lender costs have gone up and their ability to make the money they were making in 2007 continues to be limited by the (necessary) low-interest rates.

Buyers need excellent credit

Mortgages are difficult to acquire because homeowners now need excellent credit in order to best guarantee that mortgages will not default–as they did in the years leading up to 2008. That means they look down upon applicants with less-than-stellar credit.
In order to get the mortgage you want, you have to take a look at your credit and build it up.

Mortgages can be tough to get, but with the right tools and preparation, it can be done. 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 Do People Save Enough for a Down Payment?

Saving up for a down payment can be tricky – we’re here to help with these useful tips.

20 percent of the total home price is a rather large quantity. If the home costs just $100,000 you are expected to put down $20,000. Your mortgage finances the remaining 80 percent, but that’s still quite a bit of dough you have to hand over–it almost hurts. Many of us don’t even have that much saved up for retirement, so how is it possible to acquire that much money in order to finance a down payment?

Although 20% down is recommended, loans with 1% down and even 3% down can be made.  There are many alternative types of programs available. Contact  today to learn more.

How You Can Save for a Down Payment

Have to Start Somewhere 

Small contributions to your savings account can add up over time. If you want to save for your down payment, you need to adjust your budget and divert that extra cash to your down payment savings account. Adjust your budget according to how fast you want to purchase your home.

Calculate How Much You Need

You can start saving for a down payment without knowing the exact amount you will need, but eventually, you will have to figure out how much cash you will have to put together.  Consider the price of the home you can likely afford, and aim for 20 percent of that numerical value.

Invest, Don’t Save

If you don’t plan on buying a home for the next five years or so, you need to consider making your money make money for you. For example, let’s say you invested $1,000 in a brokerage account right now with the intention of buying a home in 7 years. If you were to contribute $500 a month for those seven years and earn an average of 6 percent, you would have enough for a rather impressive down payment. (How much? $51,866.66 to be exact.)

When it comes to saving for a down payment or any other home-buying-related issue, we can help. 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 Sanity-Saving Homebuyer Checklist

The home-buying process can be a stressful and insane process if you do not know what to do, but with a bit of help, you can save your sanity.

To Start

Before you hit the real estate market and those open houses, you need to select and sign on with an agent to begin the pre-qualification and pre-approved portion of the mortgage process. Then you can go to the streets and search for the perfect home of your financial dreams.

Negotiate, Inspect, Repair

The fun begins when your offer is accepted. Find and hire a home inspector whom you trust, and consider any additional inspections if the home in question is rather old. Otherwise, you run the risk of overlooking some potential issues. Remember to be present during the home inspection so you can ask questions and see potential problems for yourself.

Contact your lender to lock in your interest rate, or be ready for some unpleasant surprises when closing time comes.

When the inspections are complete, be prepared to ask the homeowner to make some repairs. Make sure to talk with your real estate agent to see which ones the owners should make and which ones you should leave alone.

The Close

On the eve of the closing date, an escrow officer or closing attorney calculates the final costs and credits for the buyer and seller. On the big day, you’ll sign a gigantic stack of documents, hand over a cashier’s check for the down payment closing costs, and acquire the keys to your new place. Once everything is signed and ready to go, the next step for you is to move in!

The process of buying a home can be a stressful one, but if you have the right real estate agent and know-how, it can become much easier. 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 Turn Home Equity into Retirement Savings

Your home equity can be a major source of cash flow, but do you know how to access and tap into it?

Many retirees are homeowners, and of those with more than $100,000 in savings, roughly 90 percent of them, own a house–according to the LIMRA Secure Retirement Institute. But even those with fewer savings still own a home–70 percent.

The ability to have access to that equity can save a retiree from running out of money or being forced to sell stocks, bonds, and other investments when the market is not so great. Equity can really improve a retiree’s cash flow, especially those individuals who depend on taking out of their savings because they do not have a pension. But, here are two ways to turn home equity into retirement savings.

  1. Sell Your Home and Downgrade
    If the only reason you kept your big home was to house your big family, and they’ve all moved out and it’s now just you and your spouse, you could sell your home and move into a less expensive one. It will cut utilities, taxes, insurance, and maintenance, plus, working under the assumption that your home value increased, you will have the extra money from your sold home which could last you decades.
  2. Borrow Against Equity
    A home equity line of credit (HELOC) can pay to remodel your home or can cover the home-improvement costs of stopping work and selling the house. The best time to do this would be a year or two before you retire, as long as you can pay it back before it becomes burdensome.

Turning your home equity into retirement savings is not difficult, especially if you use these great and helpful tips. Contact Dean Rathbun when it comes time to finding the perfect plan of action to buy your home. We are happy to help you.

Mortgage 101 – The Basics

Mortgage is a word that we hear often, but not everyone knows exactly what it means and what it can do. Here’s mortgage 101.

Purchasing a home and finally mastering financial responsibility is a goal that many people have. But making the leap from renter to homeowner is a large step and one that should only be done after careful thought and consideration. You have likely heard of mortgage jargon like “points,” or “preapproval,” or “prequalification,” but what do any of things even mean? Are mortgage lenders trying to make it as confusing as possible? Rest assured they are not, and that’s why they are there–to help you be a successful homeowner. Let’s break down a few concepts with Mortgage 101 – The Basics.

What are points?

Points are the fees the borrower (you) will pay the lender when the deal is closed and is expressed in a percent of the overall loan. For example, on a $200,000 loan, 2 points means a payment of $4,000 since 2 percent of $200,000 is $4,000. The fewer the points doesn’t always mean a cheap amount as it’s based on percentage.

Prequalification?

Before you are preapproved you must first be prequalified. Prequalifying means you have done an initial lender screening. You only give the lender or bank a general picture of your finances like, debt, income, and assets. After the evaluation, the lender will give you a picture of what mortgage you can qualify.

What is preapproval?

Pre-approval means that you have already been approved by a mortgage company to purchase worth a specific amount or less. It gives homeowners proof that you are ready to buy now.

Mortgages may seem like stressful contracts to obtain, but with the right preparation, they don’t have to be! Contact Dean Rathbun when it comes time to finding the perfect plan of action to buy your home. We are happy to help you.

Get a Lower Mortgage Payment

A mortgage is a thing which will cost you a lot of money for many decades.

A mortgage squeezing your budget is something that many people experience at least once in their lifetime. This is part of the reason as to why most lenders will scrutinize over your financial situation and only loan you as much as you can viably afford. But life is unpredictable: layoffs happen, home repairs may be frequent, vehicle damage, illness or injury to you or your family, and any other unforeseen circumstances can take a huge chunk out of your already limited budget. Here are a few ways you can get a lower mortgage payment.

  1. Refinance
    Interest rates are near historic lows and what a low interest means for you is a lower monthly mortgage payment. Even a refinance at 3.5 percent on a 30-year fixed-rate mortgage for $250,000 can save you an extra $125 every month! It’s like getting a raise without having to do all the work. (Note: The refinance does take some work.)
  2. ARM v. Fixed-Rate Mortgage
    While most people settle on a 30-year fixed rate loan, few people ever see it all the way through due to a higher salary, moving, kids, etc. A short-term adjustable rate mortgage (ARM) will have a lower starting rate, so you will save money in those early years. An ARM is usually fixed for about three, five, seven, or ten years. If you are planning to stay less than ten years in your new home there is no reason as to why you would pay extra, so go with the ARM.

Mortgages may seem like stressful contracts to obtain, but with the right preparation, they don’t have to be! 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 Can a Mortgage Lender Help You Buy a Home?

A mortgage lender approved your mortgage which allows you to buy a home, but how else can they help?

In the journey of buying a home, lenders have been given the title of the villain–the antagonist who has all the power and decides whether or not you will receive a mortgage. A reputation from which the collapse of the real estate market and global economy did not help.

This could not be further from the truth because the reality is that lenders help a majority of Americans purchase a home every single day. Even if you are a bit on the lower end of the credit spectrum, they can actually help your loan go through. Here are a few ways in which lenders can help you buy a home.

  1. A lender can help boost your credit score.
    The biggest reason people can’t get a mortgage is because their credit score is too low and risk too high. The good news is that you can be proactive about increasing your credit score. If your lender just denied your application, they may be more than happy to show you the steps required in order to boost your credit score. It’s a simple symbiosis: they help you, and you are more likely to return to them after you have sufficiently raised your score.
  2. A lender can get you pre-approved.
    If you know you’re ready to buy, it is very wise to go to a lender and get pre-approved for a mortgage. Pre-approval is proof to home sellers that you already have approval to purchase a home.

Mortgages may seem like stressful contracts to obtain, but with the right preparation, they don’t have to be! Contact Dean Rathbun when it comes time to finding the perfect plan of action to buy your home. We are happy to help you.