With chilly breezes and colorful leaves upon us, it’s time to welcome fall and the holiday season into our homes once again. Here are some tips to make sure your home is ready for the colder days ahead:

• Prep your outdoor plumbing by draining faucets and covering them with faucet covers. It’s also a good idea to figure out how to turn off the water going to your home in case a pipe bursts–teach everyone else how to do it as well!
• Clean the gutters! This allows water to properly move away from your home. Direct water flow away from your home using a downspout extension.
• If you have a chimney and haven’t gotten it cleaned in awhile, make sure to hire a chimney sweep to keep those cozy fires burning well.
• Call an arborist to check up on the trees surrounding your home. They can let you know if any are rotten or damaged, allowing you to take the necessary measures to get things sorted out before winter hits.
• Get your furnace and boilers checked out so you’re not left with a broken furnace mid-winter.

TRID: Changes in the mortgage process to make your life a little bit easier

Recent changes in the mortgage process aim to simplify the process altogether. The new disclosure rules require lenders to provide just two forms to home buyers during the lending process, the Loan Estimate and Closing Disclosure forms, instead of four. These new disclosure rules will certainly affect all those involved in the process, the buyers, sellers, as well as real estate agents.

What does it mean for buyers?

At the onset of the lending process, lenders have to provide potential home buyers a Loan Estimate form within three days of a submitted application. This form details the terms of a potential loan including: amount, interest rate and whether the figures can change after closing. The clearly detailed terms allows buyers to shop around—it’s a lot easier to compare loans from different lenders to find the best rates and terms.

Near the end of the process, lenders must provide the Closing Disclosure form at least three days before the closing date. This document allows the buyer to make sure the loan terms haven’t changed. The first page of the Closing Disclosure mimics the Loan Estimate form to make it easier to verify that the loan amount, interest rates, monthly payments and other costs haven’t changed since that initial estimate.

Resident mortgage expert Brent Lucas from Guild gives us a more detailed and insightful look into these new disclosure rules below. Scroll down to read more!

 

 

It just got a little easier to navigate the complicated mortgage process.

New disclosure rules went into effect in the mortgage world on Saturday, October 3rd that require lenders to provide home buyers two new forms that clearly detail their loan terms. For consumers, it should be viewed as an improvement on a what is typically complicated and intimidating process that affects the biggest investment of their life.

The rule, formally known as the TILA-RESPA Integrated Disclosure (TRID) rule, reduces what used to be four forms from two different government agencies to two forms: the Loan Estimate and Closing Disclosure. TILA is an acronym which stands for Truth-in-Lending Act, and RESPA is an acronym which stands for Real Estate Settlement Procedures Act. The TILA requires lenders to disclose APR for a loan. RESPA requires lenders to issue a Good Faith Estimate.

Many people believe mortgage loan documents, especially the ones discussing closing costs and loan terms, were too complicated under the old system. TRID aims to simplify.

It is also important to note that because of these changes, everyone involved in the home buying process — from home sellers and home buyers, to appraisers, lenders, title agents, and, of course, real estate agents — will notice TRID’s effect in the form of new timelines, new forms and new processes required to get a home to closing.

Here’s what buyers can expect:

Lenders have to provide potential home buyers a Loan Estimate form within three days of a submitted application.

The three-page form details the terms of a potential loan including: amount, interest rate and whether the figures can change after closing. Clearly breaking out these figures should make it easier to compare loans from different lenders (yes, you should shop around) to find the best rate and terms. Be sure to pay attention to whether the interest rate is fixed or adjustable, has points or no points and any potential future penalties you could face.

No more surprises:

Lenders must provide the Closing Disclosure form at least three days before the closing date to allow the buyer to make sure the loan terms haven’t changed. The first page of the Closing Disclosure mimics the Loan Estimate form to make it easier to verify that the loan amount, interest rates, monthly payments and other costs haven’t changed since that initial estimate.

Because borrowers must have the Closing Disclosure three days before closing, the transaction can’t change at the last minute. If changes ARE made that could impact your annual percentage rate (APR) then an additional three business days could be required for review of the revised CD. These new requirements could take some time for lenders to adjust to and will very likely cause some delays in closings. The best way to help speed the process and minimize any potential delays would be to make sure any inspections, repairs and contingencies are taken care of earlier in the process.

If you have any questions about these new changes, please feel free to contact me or your M agent.

Brent Lucas of Guild Mortgage, M Realty’s featured partner, prepared this helpful guide to boosting your credit score.

We all know that having a good credit score is important to our financial well-being and can open doors, such as allowing us to borrow money at favorable rates for homes, cars or college tuition for our children.

Understanding, though, doesn’t always lead to following the best practices and many of us make basic mistakes with our credit that can hurt our scores, according to a recent survey by the National Foundation for Credit Counseling (NFCC).

Fortunately, you can repair and improve your credit score if it has been damaged and the Guild Mortgage home gurus have found expert advice to help. It starts with knowing what you are up against, advises the NFCC. All U.S. consumers are entitled to a free copy of their credit report every year from each of the three credit reporting agencies, and these reports can be obtained at AnnualCreditReport.com. Look at your report and find out if there are any issues that you need to correct, such as late or missed payments.

If you do spot any errors on your credit report, dispute them with the credit reporting agencies, says Forbes.com. The three agencies are Equifax, Experian, and TransUnion, and all three offer online options for disputing erroneous entries on your credit report.

Negotiating with your creditors can also prove beneficial. For example, contact a credit card company and offer to pay your balance in full if they will report your debt as “paid as agreed,” or remove the late payment information from your credit file. Forbes.com advises getting this agreement in writing before you make the payment.

Another important step you can take is to set up automatic payment reminders for your bills, says myfico.com. That’s because payment history is one of the major factors used by the credit agencies in computing your credit score. You can take it a step further and be worry free about missing due dates by setting up automatic payments for your credit card bills, which will be deducted each month from your bank account.

Paying down your debt is also extremely important. Although this can be difficult to do, it is more manageable if you take it on a step-by-step basis. First, stop using your credit cards. Then, come up with a plan to pay the most on cards that charge the highest interest rate. Over time, you will see a marked reduction in your debt, which will make you feel proud of your progress while boosting your credit score.

If you are having trouble getting approved for credit because of your credit history, consider a co-signer for a loan or credit card. You will have to find someone willing to be equally responsible for any late or missed payments, which would damage their credit score as well. But if you use this opportunity responsibly, you can rebuild your credit score while also learning and establishing good credit habits. The biggest step, according to the experts: not borrowing more than you can afford to pay back, and making your payments on time.

Credit limits are also something to manage intelligently. Those who max out their credit cards can hurt their credit score. Keep your credit card balance at or below 35 percent of your credit limit, advises USAToday.com. Consumers with the best credit scores tend to use about 7 percent of their available credit, but 10 to 20 percent is within a safe range, says the website.

Finally, maintaining a diverse mix of different types of credit can boost your score. This could include a mortgage, home equity line of credit, auto loan or credit card. And of course, make the payments on time so you build a positive history!

By following these tips, even if your credit has taken a hit in the past, you can get back on the road to good financial health and use credit effectively.

If you’d like more information about preparing your credit score for home ownership, now is the perfect time to reach out to your favorite real estate agent to be connected with a financial professional like Brent.

Don’t Let Downpayment Size Stop You from Owning Your Home

Brent Lucas of Guild Mortgage, M Realty’s featured partner, offers some industry insight into the modern truth about downpayments…

2015 is projecting to be another strong year for U.S. housing. Home sales are rising, home supply is dropping, and prices are increasing in many of our cities and neighborhoods.

Furthermore, mortgage interest rates are down.

30-year mortgage rates are very near 4% nationwide and have fallen to their lowest levels since early-June 2013. Many lenders are also quoting FHA and VA rates that are as competitive as conventional loans.

Lower mortgage rates yield lower monthly mortgage payments for today’s home buyers. However, for many buyers, it’s not the monthly payment which makes thought of homeownership difficult — it’s the prospect of putting 20% down.

The good news is that, in today’s mortgage market, there are a myriad of mortgage programs requiring little or no money down.

 

Home Buyers Don’t Need To Put 20% Down

Buyers in today’s U.S. housing market don’t need 20 percent down. Many believe they do. This “20 Percent Down” misbelief may have been true at some point in history, but certainly not since the implementation of the FHA Loan, which occurred in 1934.

The likely reason why buyers believe a twenty percent downpayment is required is because, with a conventional mortgage, putting twenty percent down removes the need for private mortgage insurance.

Private mortgage insurance is an insurance policy homeowners are required to pay in order to protect a lender in the event of default. Mortgage insurance costs vary by downpayment and the borrower’s credit score.

Home buyers — especially first-time home buyers — will sometimes delay a purchase because they don’t feel as if they have enough money saved up for downpayment. And, while this should certainly be a consideration in homeownership, it should never be the only consideration.

Home affordability is not about how much money you can put down on a home. Home affordability is about whether you can afford the monthly payments that accompany owning a home.

A larger downpayment will result in a smaller loan size and, therefore, a smaller monthly mortgage payment. However, if you’ve depleted your life savings to make the purchase, perhaps the big downpayment was poor planning.

Here are some options for homebuyers to consider if they are wanting to take advantage of today’s home prices and historically low rates but do not have the 20% down:

 

FHA Mortgage : 3.5% Downpayment

The FHA mortgage is somewhat of a misnomer because the FHA doesn’t actually make loans. Rather, the FHA is an insurer of loans.

The FHA publishes a series of standards for the loans it will insure. When a bank underwrites and funds a loan which meets these specific guidelines, the FHA agrees to insure that loan against loss.

FHA mortgage guidelines are famous for their liberal approach to credit scores and downpayments. The FHA will typically insure a home loan for borrowers with low credit scores so long as there’s a reasonable explanation for the low FICO.

The FHA allows a downpayment of just 3.5 percent in all U.S. markets, with the exception of a few housing types.

(See FHA Flyer)

Furthermore, the FHA supports homeowners who have experienced recent short sales, foreclosures or bankruptcies through the agency’s Back To Work Program (http://backtoworkprogram.org); and will reduce its FHA mortgage insurance premiums for first-time buyers via the Homeowner’s Armed with Knowledge (HAWK) program.

The FHA insures loan sizes up to $362,250 in our 3 county area. To look up the FHA loan limits for one or more areas by state or county go to (https://entp.hud.gov/idapp/html/hicostlook.cfm)

 

My Community Mortgage (MCM) : 3% Downpayment

The Conventional 97 program has just NOW become available once again from Fannie Mae. It’s a 3 percent downpayment program and, for many 1st time home buyers, it’s a less-expensive option as compared to an FHA loan. (details will be released on this program this week)

 

VA Loan : No Money Down / 100% Financing

The Veteran’s Loan (VA) is a no-money-down program available to members of the U.S. military and surviving spouses.

Guaranteed by the U.S. Department of Veteran Affairs, VA loans are similar to FHA loans in that the agency guarantees repayment to lenders making loans which means VA mortgage guidelines.

 

VA loan qualifications are straight-forward.

In general, active duty and honorably discharged service personnel are eligible for the VA program. In addition, home buyers who have spent at least 6 years in the Reserves or National Guard are eligible, as are spouses of service members killed in the line of duty.

(See VA Flyer)

 

USDA Mortgage : No Money Down / 100% Financing

No Money Down options exist for non-military borrowers, too. The U.S. Department of Agriculture offers a 100% mortgage. The program is formally known as a Section 502 mortgage, but, more commonly, it’s called a Rural Housing Loan.

The good news about the USDA Rural Housing Loan is that it’s not just a “rural loan” — it’s available to buyers in suburban neighborhoods, too. The USDA’s goal is to reach “low-to-moderate income homebuyers”, wherever they may be.

(See USDA Flyer)

Another key benefit is that USDA mortgage rates are often lower than rates for comparable, low- or no-downpayment mortgages. Financing a home via the USDA can be the lowest cost means of homeownership.

 

National Homebuyers Fund: Downpayment Assistance

The NHF has released a program that provides a 3% or 5% forgivable grant for downpayment assistance

(See NHF Flyer)

 

Home Buyers Get Low Mortgage Rates

Not everyone will be eligible for today’s low-downpayment loans or grants, which is okay. The next-lowest downpayment loan comes from Fannie Mae and Freddie Mac and it requires just five percent down.

If you’d like to know more about current mortgage rate performance, now is the perfect time to reach out to your favorite real estate agent to be connected with a financial professional like Brent.

Brent Lucas of Guild Mortgage, M Realty’s featured partner, offers some industry insight into what drives Mortgage Rates.

“Should I Lock or Float?”

Locking in a good home loan rate weighs heavily on the minds of most homebuyers, and rightly so. Each fraction of a percent could represent huge savings over the life of a loan. Homebuyers are always eager for mortgage rate predictions, even if they know they’re seeking certainty in an arena of constant change.

So… why is it SO hard to nail down home loan rates?

The reality is that many factors influence home loan rates, and these factors are as significant as they are unpredictable. However, an experienced mortgage loan officer can assist you in identifying consistency and repetition in market shifts by watching what happens with the “Big 6” economic indicators (reflected below) and the daily performance of Mortgage Backed Securities (MBS).

 

If you’d like to know more about current mortgage rate performance, now is the perfect time to reach out to your favorite real estate agent to be connected with a financial professional like Brent.

 

Seeking the inside scoop on all things financial, we reached out to M Realty’s preferred lending partner, Guild Mortgage’s Brent Lucas, to get the details on loan recasting:

Refinancing your home loan can be expensive. Depending on your situation, recasting your loan lowers your monthly payments while offering several advantages.

When to Recast

When there are multiple offers on a home, contingent offers (where the offer is contingent on the sale of the buyers’ current home) are weaker than traditional offers. Buyers in this situation will often raise their contingent offers by several thousand dollars to make it more attractive.

If the buyers instead took out a separate loan for their new home, they could make a stronger offer without raising it substantially. Then they could sell their original home and recast the loan on their new home with a substantial lump sum payment. In this case, they would have saved potential thousands of dollars by not making a contingent offer and avoided additional thousands in refinancing costs.

In Conclusion

While not perfect in every situation, it’s important to know the advantages of loan recasting when making decisions as a home owner. Used strategically, recasting your loan instead of refinancing can save you thousands.

If you’d like to know more about the specific eligibility requirements for loan recasting, now is the perfect time to reach out to your favorite real estate agent to be connected with a financial professional like Brent.

Offering a special glimpse into the financial realm, M Realty’s preferred lending partner, Guild Mortgage’s Brent Lucas provided this illuminating chart and information showing the impact of mortgage rates on actual buying power.

Mortgage Rates Drive Home Affordability and Buying Power
“How much home can I afford?” It’s among the most common questions asked by a home buyer and the starting point for nearly every home search in the country.

Changing mortgage rates do more to influence home affordability than changing home prices.

If that seems strange to you, think back to the last two years. Quarter-after-quarter, home affordability stuck near all-time highs even as home values have recovered from “the bottom.” Home affordability didn’t improve because home prices were lower — it improved because mortgage rates were at their lowest.

Each time rates ticked lower, a buyer’s purchasing power increased. When mortgage rates reached their lowest in November of 2012 (3.35%), affordability had peaked.

Lately, however, the trend has reversed. Mortgage rates have pushed past 4 percent and the answer to “how much home can I afford” has changed as well.

Take, for example, the hypothetical home buyer in Portland who was pre-approved in May 2013 for a maximum $475,000 loan amount, assuming 20 percent down. While she’s been shopping, U.S. Mortgage rates have been on the rise. Unfortunately, with each 0.125 percentage point increase to rate, her maximum purchase price has dropped $7,200. Today, that same buyer can afford a home for $424,326.

Do You Know Your Buying Power Now?
Mortgage rates have had some ups and downs over the past few months. Today’s home buyers — pre-approved or not — should consider a re-pre-approval; a re-verification of terms and a re-qualification for a mortgage.

Interest rates and purchasing power affect home prices, too. Lower rates allow buyers to offer higher prices for homes. When affordability drops because rates rise, the number of buyers who can afford higher prices drops too, which of course reduces demand. When demand drops, there is less competition for homes. It is competition for homes that is driving prices up in the current market. In the past, when the competition for homes decreases, prices have “softened”, meaning the steep increases slowed, flattened, or even dropped some.

Ask me if you’d like to be professionally connected to helpful financial tools like Brent’s. You can interact with his mortgage calculator at  LucasLendingGroup.com. 

If you haven’t done your taxes yet, it’s not because you’ve been procrastinating. You were strategically waiting to make sure you leveraged maximum return value from your property by embracing this helpful list. Whether you already own a home or are planning on one in the future, these thrilling tax tips can mean money in your pocket.

#1 – Mortgage Interest Deductions: In most cases, the vast majority of mortgage payments for the first ten years are covering interest. What’s fantastic about interest payments? They’re tax deductible. If the conditions are right, you might just be able to jump down into that lower tax bracket.

#2 – Property Tax Deductions: Don’t forget that your property taxes likely qualify as deductions as well! These can be easily overlooked if your taxes and insurance are already included in your monthly mortgage payment.

#3 – Capital Gain Exclusions: Did you sell your house for a profit this year? It’s possible you could shelter $250,000 to $500,000 of profit as a capital gain exclusion. If you’d like to learn more, here’s a helpful article.

Friendly Disclaimer: This information is provided as a helpful starting point. If you require tax advice, please contact a tax attorney or CPA.

If you find yourself talking to a tax professional to help you accurately prepare your taxes to your best advantage, here are some other potentially lucrative topics to bring up:

Home Improvement Loan Interest Deduction
Private Mortgage Insurance (PMI) Deduction
Mortgage Points/Origination Deduction
Energy Efficiency Upgrades/Repairs Deduction
Real Estate Selling Cost Deduction
Home Office Deduction
Loan Forgiveness Deduction