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Consider A Few Things Before Buying Something AS-IS

March 9, 2023 by chorton Leave a Comment

You might come across listings that advertise a property as-is if you are looking for a new house. It’s an option for sellers who want to sell quickly.

The homes are often less expensive than comparable properties for buyers.

There are many benefits to buying a home in its current condition, especially in this competitive housing market. However, it is important to fully understand the implications.

Sellers list their house as-is and will not make repairs or modifications before they close on the property. Sellers cannot guarantee that everything will be in good condition or working order. A Seller’s Disclosure is not required.

It’s your responsibility to repair any problems that you find after you purchase a property advertised as “as-is”.

A seller selling as-is must still meet minimum disclosure standards in each state and federal. These standards will inform you about lead paint conditions.

A home being listed as-is does not necessarily mean that it is inoperable. A home can still be listed as-is, even if it has minor or major problems.

This could happen when a seller is in financial distress or if they are in a hurry and don’t have time to wait for contractors to complete even minor cosmetic work.

It’s possible that the home is no longer livable in its current condition. Your lender might not be happy with you making the necessary repairs.

Certain livability requirements are required for many types of loans. These minimum property requirements are also known as MPRs. These MPRs will be assessed by appraisers.

Conventional loans are not guaranteed or insured by the federal government. Fannie Mae, Freddie Mac and many other conventional loans conform to these criteria. Fannie Mae or Freddie Mac homes can be bought if they have minor problems. The house must be safe and any structural problems should be normal wear and tear.

You might still be eligible for a conforming loan for as-is property if you have plumbing leaks, interior damage, or missing light fixtures.

The MPRs for government-backed loans like VA loans are more stringent than other types.

An inspection is required if you are interested in purchasing a home as it stands. An inspector will help you to understand the problems and let you know how much it might cost to fix them.

A inspection is not required for an appraisal.

A lender will usually require an appraisal to determine the property’s value. You might choose to have a home inspection.

Sellers can refuse to inspect a property as-is. This is a red flag.

A home being sold “as-is” does not necessarily mean that it is complete. A seller could list a property as is but refer to only certain parts. Broken pools and sheds are often partial features that can be added as-is.

Ask the seller what they mean by “as-is.”

You don’t have to waive your right for disclosures when buying an “as-is” home. You must be aware that the sellers are bound by federal and state regulations regarding disclosures about any issues in the house.

Each state has its own disclosure laws. Some states, for example, have water damage disclosure regulations.

You may be able sue a seller if they fail to inform you about a problem in your state.

Lead paint is the only federal disclosure requirement. The seller must disclose if the home was built prior to 1978.

If you are considering buying a home as is, a good agent can help. An agent who is knowledgeable about disclosure laws can help you understand what the implications are for buying as-is.

These can make you more confident about your purchase decision, or help you decide when it’s best to not buy.

Original Blog: https://realtytimes.com/consumeradvice/buyersadvice/item/1044463-what-does-as-is-mean-for-buyers?rtmpage=

What Happens After A Pre-Approval And Can You Still Be Denied?

March 2, 2023 by chorton Leave a Comment

Pre-approval is essential when you are ready to purchase a home. Talk to a lender, who will review your situation and give you a preapproval letter. This letter will help you determine your monthly budget and what amount of payment you can afford.

Before approving your mortgage, lenders will consider several factors.

Pre-qualification and pre-approval are not the same thing, although they are sometimes used interchangeably.

A pre-qualification is a detailed overview of your financial situation. It focuses primarily on your income and your debts. The lender will then provide you with an estimate of the loan amount.

The lender won’t verify any information that you provide. A pre-qualification can help you determine your budget and help you start looking for houses. However, it does not carry any weight once you make an offer.

You provide financial information to a lender to pre-qualify. However, you will actually fill out your mortgage application to get pre-approved.

Your Social Security number is required. The lender will then conduct a hard credit assessment. Your lender will request that you list all assets, liabilities, income, employment, and bank account information.

The primary goal of a lender during pre-approval is to make sure you can repay the loan.

The information is used by the lender to calculate your LTV or DTI ratios. These information are used by the lender to determine the right type of loan and the interest rate.

After an appraisal has been completed and the loan applied to a property, your final loan approval will be granted.

Pre-approved means that your loan file is sent to an underwriter. An underwriter will also verify your documentation in relation to your application. They will verify that you meet the requirements of a loan program.

Your lender will verify your eligibility for a home loan by underwriting. An underwriter is responsible for ensuring that a property meets the loan requirements. The ultimate decision-maker, the underwriter, must follow certain guidelines but has some flexibility in other areas.

Although underwriting timelines may vary, approval of an initial file can usually be granted within 72 hours. Rarely, however, underwriting approval can take up to a month.

Your financial situation is examined by underwriters. After reviewing your file, they will issue conditional approval. The underwriter will approve you if you meet the conditions.

Underwriting can deny a mortgage, although it is rare.

An underwriter can deny you a loan if there are several reasons.

If you are declined in underwriting, your loan officer should explain why. It’s possible to appeal their decision, but it is not final until you receive a denial notice.

You can always check with other lenders if you’re turned down by underwriting. One lender may turn you down, but that doesn’t necessarily mean they will all give you the same answer. Some lenders offer manual underwriting options that allow them to approve loans, while others don’t.

Avoiding being denied underwriting is as simple as clearing up your finances. Also, make sure that you don’t borrow more than you can afford. Also, ensure that your loan application is accurate and complete. So that there are no surprises during underwriting, you want the lender to have a complete picture.

Original Blog: https://realtytimes.com/archives/item/1044797-can-a-mortgage-be-denied-after-pre-approval?rtmpage=

Hybrid Loan

January 26, 2023 by chorton Leave a Comment

I will be the first person to admit that the mortgage and real estate industries have their own word salad. Different words and terms can mean different things depending on their context. This is true for the mortgage industry as well. The term hybrid is still very much in use, but it can cause confusion for some as it relates specifically to getting a mortgage.

What is a hybrid? A hybrid is an amalgamation of several characteristics into one entity. Hybrids are found in automobiles. Food and agriculture also have hybrids. Any industry can boast a hybrid. Hybrids are also common in the mortgage industry.

As we have said in the column, home loan terms can be divided into two categories: adjustable and fixed. Fixed loans have an interest rate that is fixed and does not change over the term of the loan. A variable loan allows the monthly payment to be adjusted based on previously agreed terms. A variable rate mortgage or ARM is one where the monthly payment can be adjusted based on previously established terms.

An ARM must adhere to certain rules. Paying attention to the basic index within which the ARM is tied is important. Then there’s also the margin. The margin determines the amount of adjustment time that the new rate is allowed to change. There are also rate caps that limit the rate’s ability to change when adjustments are due. Hybrids weren’t mentioned, however. If hybrids are a “thing”, where does that leave the mortgage business?

An ARM is a hybrid that has its base in a hybrid. Why the hybrid label? When rates were relatively high, hybrids were a popular option. The hybrid rate starts at slightly less than similar ARMs.

A hybrid loan has an initial period during which the loan is locked for a set period. The rate for a 5/1 hybrid is five-year fixed, and the one indicates when adjustment can be made after that initial period of five years. The rate could change after five years, but only once every year. These loans often use caps to limit how much the rate may change after each adjustment, which is usually five years.

Why would someone choose a hybrid? The initial rate will be lower than current market fixed rates. Many people may be aware that they will likely move before the five-year term ends. Personally, I prefer stability and security from a fixed. However, hybrids can be useful in certain niche situations.

Original Blog: https://realtytimes.com/archives/item/1046345-here-s-one-for-ya-hybrid-loan?rtmpage=

Starter Home… What Does That Mean?

January 17, 2023 by chorton Leave a Comment

It is common to hear the term “starter home” quite often. But, as a buyer, you might wonder what that actually means.

You need to understand the basics of buying a home, as well as whether you should invest in your forever home.

You can choose to buy a starter home as a single-family or multi-family home, or even a condo. The average buyer will be able to afford a starter home, but they are likely to outgrow it. The cost of a starter home will be lower relative to the local market.

These homes can be small or large, and may also be older. These homes can also be brand new, but they are still designed to satisfy the needs of entry-level buyers.

While there aren’t all the features that you might want, you can see how a starter home would suit your needs in the short-term.

It is possible that you will stay in your starter house for life. On the other hand you might decide to move on to a better home or a more expensive one.

A forever home can be larger than a regular home, but it may also have more outside space or be updated. Some of the most desirable features in a forever home are those that make it attractive and competitive. For example, it might have a large, private yard or be located in a great school area.

However, the definition of a forever home can be subjective. Some people may find that the home is where they can imagine raising a family. Others might prefer a fixer-upper in a great location that is in need of some TLC, but is still a permanent home.

While a forever home does not have to be extravagant, it is more spacious than a starter house.

There are pros and cons to both a starter or forever home if you are at the point of deciding whether it is worth your time.

A starter home is typically less expensive so that you can save more money for your down payment. This will allow you to start building equity faster. You’ll spend more time renting than you do investing in equity if you wait until you can afford a forever house. Once you are ready to purchase your forever home, the equity that you have will be able to use it as a financing source.

A starter home has the downside that it will likely be outgrown as you move on to a new phase of your life. A starter home may not be sufficient for your needs if you get married or have children.

You can either rent or sell your starter home if you decide to move. You will need to find a new home, apply for a mortgage and pay the closing costs.

There are many benefits to moving from the starter home to your forever home. You can feel secure knowing that you will be able to live in your home for the long-term without worrying about moving or selling.

It is possible to take your time and adjust slowly.

A forever home is more expensive. This means that you will need to save more money and delay building equity.

It is important to only spend what you can afford when buying a house. It is a good rule of thumb to not spend more than 28% on housing costs. Not only should you not pay 36% for debt, but also other loans and credit card debt.

It can be a wise move to buy a home that will last forever. If you sell your home too quickly after purchasing it, you might have to pay capital gains tax if its value increases. If you file your taxes separately, you can get a $250,000 exclusion and $500,000 if you are married filing jointly to capital gains on real property. If you have owned the property for less than 2 years, this exclusion is removed.

Before you purchase a home, consider the long-term potential value. It is important to find properties that are well-respected and have a high potential for resale, regardless of their price. You have to realize that sometimes what seems forever now may not be forever.

Original Blog: https://realtytimes.com/archives/item/1043899-what-should-you-know-about-buying-a-starter-home?rtmpage=

Cash Out Refinance or Home Equity Loan

January 12, 2023 by chorton Leave a Comment

You may be able to get cash if you have substantial home equity.

A cash-out refinance or a home equity loan let you borrow against the equity in your home, with your home as collateral. A cash out refinance replaces your current mortgage with a new one. A home equity loans are additional loans that you take out over your mortgage. Consider the pros and cons of each option before deciding which home equity product is best for you.

Both a home equity loan or a cash-out refinance mortgage can be used to fund similar projects, such as home improvements and paying off high-interest debt. Both loans use your property as collateral. If you default on one of them, it could be foreclosed.

Although cash-out mortgage refinances serve the same purpose as home equity loans, there are important differences. Cash-out refinance refers to taking out a loan in order to pay off your remaining mortgage balance. This will effectively replace your mortgage with a new loan. A home equity loan, which is a second mortgage, comes with its own terms and interest rate.

A cash out refinance repays the principal balance of your first mortgage loan and provides a new loan to pay for it. The amount of the newly refinanced loan is the balance due on your first mortgage and the amount that you are “cashing out” with the equity.

The interest rate for cash-out refinancing might be higher than the current one. The loan term can generally last up to 30 year.

Certain lenders and federal programs might have lower requirements for cash-out refinancing . In the event of default, the refinancing lender will assume the first mortgage in a cash-out refi. Lenders might offer lower rates than what you would get with a home equity loan because they have easier access to your house as collateral.

Home equity loans are often used to finance large-ticket items, home improvements or consolidate high-interest debt.

This is a second mortgage against your house that has its own terms and interest rates. It’s separate from your original mortgage. Refinance using a home equity loan means you borrow against your home’s equity, which is the difference between your home’s market value and your mortgage debt. You can borrow up to 85 per cent of the equity in your home. Your income, credit history, and other financial factors will also affect your loan amount.

Home equity loan rates might be higher than other options for refinancing. However, the differences can vary from one bank to another and over time. The repayment term for home equity loans can be up to 30 year.

Lenders may not charge origination fees. This results in closing costs that are lower or even zero. In contrast to some cash-out refinance loans, home equity loans don’t require mortgage insurance.

This scenario is where refinancing with cash-out refinance loans can be cheaper, despite the higher loan amount and closing costs. Because the cash-out refinance rate is much lower than that of a home equity loan, this is why.

Home equity loans have a higher interest rate than cash-out refinancing. While home equity loans are generally cheaper than home equity loans due to lower closing costs, their interest rates can be more costly over time.

A home equity loan is a good option if you have excellent credit and can find a loan with low interest rates or waive closing costs. The cash-out refinance offers a significant advantage, with lower interest rates.

It’s ultimately a personal decision. This will depend on how much equity you have in the home and your credit rating. To determine which option you are most likely to be approved for, it is equally important to review the qualifications for each option.

If you have strong credit and want to draw out large amounts of equity, a home equity loan may be an option. If you are looking to lower your mortgage payments and withdraw funds from your equity, a cash out refinance might be a better option.

Cash-out refinances and home equity loans are two strategic options to access the equity in your home. To determine which approach is best for you, consider your financial situation and goals. To determine which option you are most likely to be approved for, it is equally important to review the qualifications for each option.

If you have good credit and want to draw out large amounts of equity, a home equity loan may be a viable option. A cash out refinance might be a better option if your goal is to lower your mortgage payment and withdraw funds from your equity with one loan product.

Compare offers from different lenders, regardless of the path you choose. You can also request an itemized list of the lending fees from your chosen lender to estimate how much the loan will cost.

Original Blog: https://www.bankrate.com/home-equity/refinance-vs-home-equity-loans/

DEBT-TO-INCOME RATIO- HOW TO CALCULATE YOURS

January 9, 2023 by chorton Leave a Comment

The home-buying process is complex, especially for first-time buyers. The debt to-income ratio is one of the criteria mortgage lenders use when assessing your mortgage application. Your debt-to income ratio is a comparison between how much debt you have (your debt) and how much income you make (your earnings). This number is calculated using your gross income, which is the income before taxes.

Lenders will be more impressed by a lower ratio of debt to income if you have a healthy mix of debt and income. A higher ratio of debt to income means that you have too much debt. This could lead to lenders deeming you a risky borrower. Although the DTI is not the only factor that determines how much you can borrow it is important to understand this before you start the home loan process.

A debt-to income ratio of 20% means that 20% is going towards debt payments. This includes cumulative debt payments. Think credit card payments and car payments.

A The Mortgage reports breakdown shows that a good ratio of debt to income is at least 43%. According to LendingTree, many lenders might want to see a DTI closer to 35%. Depending on which loan you are applying for, a ratio closer to 45% may be acceptable. However, a ratio of 50% or more can cause concern.

Simply put, too much debt relative the income of your household will make it more difficult to get a loan. Many common forms of debt, such as student loans and credit cards, can make it difficult to qualify for home loans.

Lenders want to ensure that borrowers aren’t taking on too much debt. Lenders may decline mortgage applications if you have a high DTI.

It is easy to calculate your DTI. Simply add up your monthly total debt payments and divide that by your gross monthly income.

Let’s suppose you have $1,000 monthly student loan payments, a car payment, and a credit card payment. Your gross monthly income is $5,000. Divide 1,000 (your total debt) by 5,000 (your income), and you get 0.2. This is 20%. In this example, your DTI would be 20%.

You can lower your DTI before you apply for a mortgage if you are concerned that it may stop you from getting the home loan you want. This usually means increasing your income or paying down debt.

A debt consolidation personal loans will help consolidate credit card debt from multiple cards. You can also use this loan to organize all your payments into one monthly payment with a lower interest rate. You can pay off the balance quicker by reducing interest. You might also consider a balance-transfer credit card to transfer your balance to a new card offering a 0% intro rate. You can get a longer period of time without being charged interest and pay off your principal faster.

You should consider all costs associated with buying a home when applying for a mortgage. This includes private mortgage Insurance (PMI) (if your down payment is less than 20%), property taxes, mortgage interest, inspections, appraisals and closing costs.

It’s expensive, no doubt. You can make it more affordable by finding a lender that helps you save. This will help you save money on the initial process.

Lenders want to ensure that you don’t take on too much debt. To calculate how much of your income goes towards debt payments, they use a ratio called the debt-to-income ratio.

The DTI is not the only thing a lender will consider. Don’t be discouraged if your DTI exceeds what most lenders prefer. It is best to calculate your DTI sooner than you think. This will give you enough time to reduce your debt and increase your income, so that you can lower your DTI.

Original Blog: https://www.cnbc.com/select/how-to-calculate-debt-to-income-ratio-for-mortgage/