Know Your Home Loan » Home Loan Process http://www.knowyourhomeloan.com Your local resource for Home Loans Tue, 07 Sep 2010 20:39:10 +0000 en hourly 1 http://wordpress.org/?v=3.0 Things to Do Before Looking at Homes http://www.knowyourhomeloan.com/things-to-do-before-looking-at-homes/ http://www.knowyourhomeloan.com/things-to-do-before-looking-at-homes/#comments Fri, 20 Aug 2010 15:21:06 +0000 admin http://www.knowyourhomeloan.com/?p=400 There are a number of steps that should be taken BEFORE you look at homes. Taking the these steps will help make your home buying process go smoothly.  

Decide what price range you want to spend on your home. You can usually afford a home that equals your gross income multiplied by 2.5. Remember to add in taxes and insurance to your principal and interest payment. Know what a comfortable monthly mortgage payment is.
Write down your ‘Needs’ for your home. List the features that you want your home to have, then put in order from ‘Most Important’ to ‘Would Be Nice’.

Narrow your desired location to 3 or 4 neighborhoods. Make sure to take schools, future expansion plans, traffic and commute, and safety all into consideration.

Look at your available funds. Do you have enough to cover earnest money, down payment and closing costs? Most loan programs will require 3.5% down-payment at closing. There are down-payment assistance programs available for first time home buyers who qualify. Be sure you ask your loan officer what may be available to you.

Take care of your credit! Make sure to obtain a copy of your credit report, complete with scores.
Get prequalified for your mortgage. Talk to Carrie Guarrero at MN Home Loan Partners to determine whether you will qualify for the mortgage amount needed for you to purchase in your desired price range. It is also important to talk about the different loan options that would fit your situation best.

Gather documents. Put together all the information that your mortgage professional has requested. This is an important piece of the prequalification process. A true prequalification cannot be issued unless you have shown documentation to verify your income, assets and debt.

Don’t forget maintenance and utility costs. Depending on your situation you may also have to incur moving costs as well.

The best thing a first time home buyer can do to prepare themselves for a home search is to attend a HomeStretch class provided numerous times and locations throughout Minnesota. The HomeStretch workshop will help prepare buyers for the realities of owning a home. It will better arm you for the wonderful enjoyment of home ownership.

[contact-form] ]]> http://www.knowyourhomeloan.com/things-to-do-before-looking-at-homes/feed/ 0 The 5 C’s of Credit http://www.knowyourhomeloan.com/the-5-cs-of-credit/ http://www.knowyourhomeloan.com/the-5-cs-of-credit/#comments Wed, 14 Jul 2010 16:57:46 +0000 Carrie http://www.knowyourhomeloan.com/?p=657 Let’s discuss “change” when it comes to getting a mortgage loan; “The more things change, the more they (honestly) remain the same.”  The current dot the “i” and cross the “t” environment (full documentation) looks a lot like it did in prior years.   Having been in the business for over 20 years, I cut my teeth on full-documentation loans, and did loans that way for years.  Thank goodness we did business that way – it helped me to understand full-documentation loans inside and out, which helps my team and I shine in this day-and-age.  

Ever wondered exactly what is behind an underwriting decision?  Or why some borrowers sail through underwriting, while others struggle? What does it take to get a mortgage?   Even in our world where the automated underwriting system dominates, approvals and denials all have lots to do with the 5 C’s of Credit.   Knowing the 5 C’s of credit will help you understand exactly what a lender is looking for.  I was taught to remember the 5 C’s with the fingers on my left hand.  Here’s a run-down and highlights of each “C”:

1.       Capacity – (The thumb – take your thumb and circle it around.  Of all the fingers on the hand, it has the “capacity” to move around the most.)  

 A borrower must demonstrate the financial “capacity” to handle their debt.  Looking at the borrower’s past income and employment history is a key indicator of the ability to handle future debt.  The following items are taken into consideration when analyzing a borrower’s “capacity”:

Stability – Has employment remained stable for two or more years?  Same or related field?  Has income fluctuated, or has it been consistent?

Income type – What is the nature of the borrower’s income – wages, commission, bonuses, self-employment income, or other?  What is the frequency?  Is it paid on a regular recurring basis, or is it seasonal?  Does any bonus or commission have history?  If from a source other than traditional employment, has there been a history and will it continue at least three years?

Income amount – Is it adequate to cover the proposed new debt?  Any patterns of decreasing or declining income?

Debt – Are the borrower’s debt ratios at an acceptable level?  Is the borrower too leveraged?  Does a payment shock exist?

2.       Capital – (The pointer finger – hold it up like “I’m number one” – think about when you see the winner of the US Open or another sporting event .  When you’re #1 and you have just won something, there’s likely a large payout of cold, hard cash, right?  Capital is all about cash, liquidity, etc.)

The “capital” that the borrower has on hand for down payment, closing costs, and/or reserves will impact the product choice.  In reviewing “capital,” the underwriter would consider the following:

Ownership – Does the borrower have full or limited access to the disclosed capital/liquid assets?  If not, what portion is available for the loan transaction?  Will any amount be gifted (some products have restrictions on gifted funds)?  Will the seller pay any costs (limits exist)?

Access/Liquidity – Are the funds liquid now, or will they be soon?  Is the borrower fully or partially vested?  Are there penalties for withdrawal?  Will the disbursement process be complete prior to the approval/rate lock expiration?

Questions – There are lots of questions to uncover when reviewing “capital,” including:  “Is it enough to meet the requirements for down payment, closing costs, or reserves?” “Whose is it?” “How much is it?” “When can they access it?” and “How much is left over?”

“Capital” and acceptable liquidity includes cash/brokerage accounts/retirement accounts/cash value of life insurance, etc.  These are generally documented with one to two months of statements (all pages).  Any large deposits are required to be sourced and documented.  Non-cash accounts require of liquidation prior to closing.

3.       Character – (The middle finger – imagine it being held up alone – can you see why this finger is tied to “character”?)

 I was taught early in my career that good credit is not a compensating factor – meaning, that if one wanted a loan, it was expected they should at least have a good credit score.  The borrower’s credit report should meet or exceed the credit guidelines for the product/program they have chosen.  Other evaluations of a credit report include:

The FICO score – Middle of three; lower of two.  Is it within an acceptable range for the loan program?

The mortgage payment history and other accounts – Is the number of late payments at or below the lender’s standard?  Is the borrower too leveraged? 

The number and characteristic of each open trade line – Are there enough traditional credit trade lines (non-traditional credit is not allowed these days)?  What is the depth of the report?

Public records/Bankruptcy/Foreclosure/Short sales/Modifications – Are there any?  Were they disclosed?  What is the status?  How will they affect the underwriting decision?

Inquiries – How many have there been in the past 6 months?  Did they result in new debt?

4.       Collateral – (The ring finger – get it?)

A loan is secured using the subject property as collateral.  Since the property is the lender’s protection against default, it must be structurally sound and functional.  When evaluating the collateral, an underwriter considers:

Features and Functionality – Are the features and style of the home consistent with what is available in the area?  Is the home functional, or has it been rendered obsolete by outdated features and capability?

Condition – Is the home structurally sound and visually appealing?  Is the home inhabitable or is it a dangerous contraption?  Is the home complete and appraised “as is,” or will renovations be required?

Property type/Use – Is it residential, commercial, mixed-use, a condominium, or a PUD?  Is it owner occupied, or is it a rental unit?   Is it vacant or occupied?

Subject Neighborhood – Are comparables readily available or far away?  Are there adequate comparables?  Is the property noted as being in a declining market?  Is there an over-supply of properties?  Is the marketing time over six months?   Any of these could trigger an appraisal review.

5.       Conditions – (The pinky finger – since this “C” represents “external” conditions, remember it by the pinky finger, or the most  “external” finger.)

An underwriter looks at the many documents in the loan file to determine if there are any disclosed or undisclosed factors that might adversely affect the borrower or subject property.  A few considerations include:

  • Employment at a place that has had a public announcement of shutting down.
  • A recently awarded divorce settlement where the borrower has to payout significant proceeds or will have a high alimony/support payment.
  • A lawsuit
  • An adverse change in the industry that the borrower is employed in
  • An adverse change in the area where the subject property is located

MAKING DECISIONS BASED UPON THE 5 C’S – Pretty simple: If there’s an area(s) that is weak, and if it can be compensated by one or more of the other areas that are strong…you likely have yourself a loan.  However, if all areas are marginal, with no compensating factors…you may not.

Carrie Guarrero with MN Home Loan Partners, is Vice President and Regional Manager and located in the Cornerstone Mortgage Company Burnsville office. Carrie is an expert in first time home buyer loans, specializing in down payment and closing cost assistance programs. To learn more about the programs Carrie has to offer, contact us.
]]> http://www.knowyourhomeloan.com/the-5-cs-of-credit/feed/ 1 Fannie Mae Suggestions Before Buying A Home http://www.knowyourhomeloan.com/fannie-mae-suggestions-before-buying-a-home/ http://www.knowyourhomeloan.com/fannie-mae-suggestions-before-buying-a-home/#comments Thu, 08 Jul 2010 19:57:21 +0000 admin http://www.knowyourhomeloan.com/?p=600 Actions to Take Before Buying a Home Today
As the housing downturn has shown home ownership is about more than buying a home :  you have to make sure you can keep the home for as long as you plan to live in it. If you’re thinking about buying your first home, these five steps can help ensure you get the right house and the affordable financing that helps make home ownership a long-term success:
1.  Get Educated: A little mortgage know-how goes a long way toward ensuring you get an affordable mortgage.  Before you hire an agent or find a lender get educated on the loan process and key factors that make a loan affordable.  You’ll  want to know about loan types ( fixed-rate mortgages, adjustable-rate mortgages, FHA and VA loans ) and the full range of line items that contribute to the total cost of securing the loan, including discount points, appraisals, and real estate agent commissions.
If you would like more in-depth information, the Department of Housing and Urban Development (HUD) can put you in touch with the nearest housing counseling professional in your area. Visit www.HUD.gov for more information. You can also check with local government, neighborhood associations and neighborhood bank branch offices for information sessions on home buying as well as home buyer-education programs.
2. Get Your Finances in Order: Given today’s stronger lending guidelines, it’s more important than ever to get your finances in order.  First, get a copy of your credit report, which usually includes your credit score. If your credit score is low (anything below 620), take the time to improve it. (If you need help from a trusted credit repair specialist, contact us and we can give you a name.)  If you find errors on the report, take the time to correct them.  This may put your home buying plans on hold (creditors typically look for a two-year history of consistent, on-time bill payment to establish good credit), but it could result in a better loan and more affordable rates.
3. Establish a Budget: Before you start searching for your home, make sure you know how much home you can afford.  Lenders will evaluate all your debts and take into account your full financial situation when qualifying you for a mortgage.  A key factor is how much income you bring in versus how much you will pay out each month.  Here’s a good guideline to check where you are:
  • Your housing expense (the mortgage payments on the house you are buying) should generally not exceed 28 to 33 percent of your total monthly gross income.
  • All revolving debt (including car payments, credit card payments and your mortgage payment) should not exceed 36 to 40 percent of your total monthly gross income.
It’s always helpful to create a monthly budget, itemizing all your recurring expenses, including estimated maintenance costs, taxes, utility bills, and condo or homeowners’ association dues.  Then, test your budget.  If you can pay all these debts and continue to add to savings, you may be ready to buy a home.  If not, you may have to revise your plans.
4.  Start Saving: Having savings in reserve helps ensure you can afford the upfront costs of home ownership.  Upfront costs of home ownership include:
  • Down Payment – Most first time home buyers can use a minimum down loan program which requires 3.5% of the purchase price in down payment. Keep in mind, a lower down payment means you’ll have to qualify for a higher loan amount and pay for mortgage insurance – adding to your monthly mortgage payment. Don’t forget to ask your lender about additional down payment and closing cost assistance program availability.
  • Deposit – One to two percent of the purchase price, typically. In Minnesota real estate, it is called earnest money, a deposit shows the seller you’re serious about buying the home. If your offer is accepted, the  earnest money will be applied towards the down payment. If your offer is rejected, the earnest money will be returned to you.
  • Closing Costs – Three to five percent of the purchase price, on average.  These costs include all fees required to execute the sale, including attorney fees, title insurance, appraisals, and points.
5.  Get Pre-Approved: In today’s competitive market, home buyers should get pre-approved for a mortgage before they begin their house hunt.  To be pre-approved for a loan, your lender will gather information about your job, assets, income, and debts and then determine how much financing you’re qualified to receive. If you are pre-approved, you will receive a pre-approval letter from the lender.  When you’re ready to make an offer on a home, this pre-approval letter will tell the seller you’re a serious and qualified buyer.  It will also give you an edge over competing buyers who are not pre-approved.
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]]> http://www.knowyourhomeloan.com/fannie-mae-suggestions-before-buying-a-home/feed/ 0 Need Money to Buy Your First Home? http://www.knowyourhomeloan.com/need-money-to-buy-your-first-home/ http://www.knowyourhomeloan.com/need-money-to-buy-your-first-home/#comments Wed, 16 Jun 2010 07:41:56 +0000 admin http://www.knowyourhomeloan.com/?p=551 I’m going to say it again, because its important to hear. THERE IS STILL MONEY AVAILABLE TO HELP YOU GET INTO YOUR FIRST HOME! I can’t stress this enough, there are programs available to help you get down payment and closing cost assistance. Actually, lots of programs! Lets take a look at the information for first time homebuyers looking to purchase real estate in Dakota County:

First Time Homebuyer Program

Whether you are buying an existing home or building a new one, the Dakota County CDA’s First Time Homebuyer Program provides a financial resource to make your purchase successful.

Current interest rate: 4.99%

Program Eligibility

  • Must be first time homeowners meaning homebuyer has not owned their primary residence in the last three years.
  • Available for properties include existing single family homes, townhomes, condominiums or duplexes in Dakota County.
  • Available for new construction in Apple Valley, Burnsville, Eagan, Empire Township, Farmington, Hastings, Inver Grove Heights, Lakeville, Mendota Heights, Rosemount, South St. Paul, Sunfish Lake and West St. Paul.
  • Homebuyers must occupy the home as their primary residence after purchase.
  • Minimum credit score of 620.

Income Limits

  • Max income to qualify for 1 or 2 person households: $84,000
  • Max income to qualify for 3 or more person households: $92,400

Maximum Purchase Prices

  • $276,683 for single family homes, townhomes or condominiums
  • $389,205 for duplexes (not eligible for additional Downpayment Assistance)

Eligible Financing

  • The First Time Homebuyer Program may only be used with 30-year amortizing fixed-rate FHA or VA mortgage loans.

Fees & Requirements

  • An application fee of $225 is paid at closing. Mortgage lenders may also charge a $150 transfer fee as part of closing costs.
  • Home Stretch Homebuyer Education certificate required prior to loan closing.

To apply, contact Carrie Guarrero. Carrie has all the necessary paperwork to qualify homebuyers for the First Time Homebuyer Program and Downpayment Assistance.

Questions? Call 952.808.0042.

Downpayment & Closing Cost Assistance
Homebuyers accessing the Dakota County CDA First Time Homebuyer Program can also apply for downpayment and closing cost assistance loans up of up to $10,000 depending on household income.

Loan Terms

  • Zero percent interest
  • No monthly payments
  • Loan must be repaid when the primary mortgage is paid off, the home is no longer the primary residence, or when the home is sold or refinanced.
  • Borrower must contribute a minimum of $750 of their own funds toward the purchase of the home.
  • Home must meet the minimum housing standards for FHA or VA mortgages.

Maximum Loan Amounts & Income Limits

  • 10% of the first mortgage amount up to $10,000 for households with incomes at or below 50% of the area median income.
  • 5% of the first mortgage amount up to $7,500 for households with incomes between 51% and 80% of the area median income.
  • 2.5% of the base mortgage amount for households with incomes between 81% and the First Time Homebuyer Program income limits.
Household Size
10% Income Limit
5% Income Limit
2.5% Income Limit
1
$29,400
$45,100
$84,000
2
$33,600
$51,550
$84,000
3
$37,800
$58,000
$92,400
4
$42,000
$64,400
$92,400
5
$45,400
$69,600
$92,400
6
$48,750
$74,750
$92,400
7
$52,100
$79,900
$92,400
8
$55,450
$85,050
$92,400

Questions? Call 952.808.0042

The most important piece to remember here is that if you are a first time homebuyer and you are looking for your first home in Dakota County, whether that is Burnsville, Lakeville, Eagan, Apple Valley or anywhere else in Dakota County, you need to see if you qualify for the down payment and closing cost assistance. Don’t forget that the low interest rate mortgage is available in conjunction with the up to $10,000 down payment and closing cost assistance funds! To see if you qualify, get started by clicking here.

[contact-form] ]]> http://www.knowyourhomeloan.com/need-money-to-buy-your-first-home/feed/ 0 Pain In The Assets! http://www.knowyourhomeloan.com/pain-in-the-assets/ http://www.knowyourhomeloan.com/pain-in-the-assets/#comments Fri, 28 May 2010 16:32:57 +0000 admin http://www.knowyourhomeloan.com/?p=449 Is this how you feel about the process of obtaining a mortgage?????

I would be exaggerating if I said that it is much like this problem above, although not by much! In today’s nervous mortgage underwriting world, things are much more difficult than they were 5 years ago. Luckily, the experts at MN Home Loan Partners can help you navigate through the mortgage pre-qualification maze! For the sake of this blog post, we will focus mainly on assets and how those play into your mortgage prequalification.

While we can address both personal assets and gift funds from family members,  the first and foremost concern of any mortgage lender/underwriter is:  “Can this borrower afford this home?”

The general rule-of-thumb to determine if you have enough money to come to closing is by reviewing a minimum of 60 days of bank activity and verifying that your average balance is in the neighborhood of your current balance.  When there is a large discrepancy between those two numbers we investigate and try to find the source of the additional funds present in your bank account. Typically the only acceptable source of funds is your “own” money.  What does that mean you ask?  That means funds from your job.  Not funds from a credit card advance, not a loan from your significant other, not a loan from a bank, not money someone “paid you back”, etc…..  Just the money that you earn.

There are loan programs that allow your family to give you gift funds to use at closing.  But those gifts need to be verified. We must verify the entire transaction.  That means starting with proof that the giftor has the ability to give you that gift, by getting a statement proving the funds are there.  Next showing the funds leaving that account, then show the funds going into your account.  Or better yet, just getting then in the form of a cashier’s check that can be brought to closing with you. The great news is that it’s still acceptable for your mom, dad, cousin, best friend, clergy member or even a life-long neighbor to give you money for down-payment! BUT…we need to prove a few things. FHA requires that we track every deposit to make sure the seller, or agents or any interested parties are not giving you the funds to purchase the property that you are buying.

 So what happens when you get a birthday card from Mom and it has a $100 check in it?  Normally you would deposit this in your bank and go shopping!  Not true during the processing of your loan file.  Cash is not acceptable at all! Don’t deposit it during the loan process, or even 60 days prior. The time just before you get preapproved and leading up to closing you must keep your bank account free of any non-payroll deposits unless addressed by your Mortgage Professional BEFORE you make the deposit.  This will save everyone time and paperwork!

Now here are some general tips to make your loan process go more smoothly:

We need ALL pages of ALL accounts you’re providing to us (many banks have a blank page at the end of the statements that say: “This Page Left Blank Intentionally”…. yes, we need that too).

Cash to close funds should be verifiable in your account at least 1 week prior to closing.

Don’t transfer money back and forth between accounts.

Keep track of every deposit you make if it’s not an automatic payroll deposit. Keep copies of checks and deposit slips for any deposits that you do make.

If you plan on liquidating any funds from any investments (stocks, Roth IRA, 401k, etc), please let your loan officer know so they can advise you on what we need.

Although today’s lending environment is much more hesitant and apprehensive, it has become that way for a reason. These tightened standards are designed to keep the bad guys from doing bad things. Since we only work with the good guys, verifying information is simply part of the way of doing things. If you follow these tidbits of advice, your loan process won’t be a pain in your assets. :-)

]]> http://www.knowyourhomeloan.com/pain-in-the-assets/feed/ 2 Pre-Approval Process http://www.knowyourhomeloan.com/pre-approval-process/ http://www.knowyourhomeloan.com/pre-approval-process/#comments Mon, 17 May 2010 15:22:36 +0000 admin http://www.knowyourhomeloan.com/?p=419 If you are a first-time homebuyer or haven’t bought a home in a while, this guide will offer valuable information about buying a home.

Gather the information you will need to qualify for a home mortgage

Before you can buy a home, you will need to secure financing. Be ready to provide a mortgage lender with the following information:

Income and Employment

  • What is your current income?
  • Are you employed?
  • Do you have a history of steady employment?

Down Payment

Your lender will ask how much money you have available for a down payment. A down payment of 20 percent or more of the home purchase price demonstrates your commitment to long-term homeownership and provides you with immediate equity in a new home. Since 20 percent down on a home isn’t realistic for many homebuyers, especially first time homebuyers, most FHA loans will require a minimum of 3.5 percent down payment. There are programs available for down payment assistance and closing cost assistance for those who qualify.

Credit History

Your lender will review your credit history — how well you’ve paid your bills in the past — by reviewing your credit report. The lender will consider how much you owe on credit cards, car payments, student loans and other debt. The lender will also review your ability to pay property taxes and other expenses of homeownership.

Escrow Accounts

Your lender may suggest that you set up an escrow account. With an escrow account, you pay a fixed amount each month in addition to your mortgage payment to an account maintained by the lender. The lender then draws on that account to pay property taxes and homeowners insurance as those bills become due. Escrow accounts ensure that money will be available for these payments.
Learn more about Escrows

Call MN Home Loan Partners of Cornerstone Mortgage to get preapproved for a mortgage loan

The lender you choose will review your financial information and explain the preapproval process. While preapproval is not a mortgage commitment or guarantee, it will provide guidance on what you can afford to spend on your new home. Having a preapproval letter to show to a seller demonstrates that you are a serious buyer. When you are ready to buy, it will shorten the time it takes your lender to complete the mortgage application process.

Make sure your lender explains all loan fees — the up-front costs of originating, processing and closing the loan. Carrie Guarrero with MN Home Loan Partners will walk through all the information with you.

Select your new home

With your mortgage preapproval in place, you are ready to begin your search. You can check online and your local newspaper for homes for sale in your area.  A real estate professional can help you find a home that meets your needs and your budget. A licensed agent has access to the Multiple Listings Service (MLS) which generally offers the most comprehensive list of homes for sale.  If you haven’t already chosen a Realtor, contact us and we can recommend an amazing agent to assist in your property search.

]]> http://www.knowyourhomeloan.com/pre-approval-process/feed/ 2 10 Things NOT To Do When Purchasing a Home http://www.knowyourhomeloan.com/10-things-not-to-do-when-purchasing-a-home/ http://www.knowyourhomeloan.com/10-things-not-to-do-when-purchasing-a-home/#comments Thu, 06 May 2010 21:20:22 +0000 admin http://www.knowyourhomeloan.com/?p=402 There are dozens of lists of things that you should do when purchasing a home, but here is the best list of what NOT to do when you are in the home buying process.

1. Do not look for a home without being preapproved. (This is like shopping for a car without a driver’s license. You need to know what you qualify for before going out looking.)

2. Do not suddenly pay off debts or collections or close accounts. (It can actually hurt you if you close certain accounts, for example, most lenders wil want you to have 3 open credit lines that show a minimum of 24 months history.)

3. Do not apply for new credit cards. (New inquiries may affect your credit rating, plus opening new credit will change your debt-to-income ratios.)

4. Do not change jobs or change your pay structure at current job. (With increasingly tougher underwriting guidelines for mortgages, you may have trouble qualifying if you change lines of work or go from a W2 position to commission, etc)

5. Do not consolidate bills (Consolidation can affect your monthly payment amounts, closing accounts to consolidate may cost you good credit lines with positive history)

6. Do not make non-payroll related deposits into your bank account without keeping copies of checks being deposited. (Mortgage underwriters want to see where the money is coming from. They will want to know that any extra money is not a result of a new loan that will change your monthly obligations)

7. Do not pack the documents needed during the loan and home buying process. These include W-2 forms, tax returns, bank statements, pay stubs, etc. (You will need to provide original documentation at time of pre-approval, but will need to provide updated documentation as the loan progresses toward closing)

8. Do not choose a mortgage without researching all the different options. (MANY first time home-buyers are not aware of all the program options available such as Dakota County Bond or Minnesota Housing programs)

9. Do not shop for, lease or purchase a car or other type of vehicle. (This will increase your monthly obligations and will reduce the amount of mortgage you qualify for)

10. Do not incur more debt by making large purchases such as appliances. (Any large purchases will increase your minimum monthly payments and lower what you can afford in a monthly mortgage payment)

By following the advice of MN Home Loan Partners, you will be on your way to obtaining the best terms and interest rates possible – as well as a smooth, on-time closing. If you must take one of these actions listed above, it is wise to discuss this with your loan officer.

]]> http://www.knowyourhomeloan.com/10-things-not-to-do-when-purchasing-a-home/feed/ 1 How Much Home Can You Afford? http://www.knowyourhomeloan.com/how-much-home-can-you-afford/ http://www.knowyourhomeloan.com/how-much-home-can-you-afford/#comments Fri, 23 Apr 2010 20:28:27 +0000 admin http://www.knowyourhomeloan.com/?p=348 We all know that getting prequalified for a mortgage before shopping for a home is an essential part of the process. But are you thinking about home expenses when you are figuring out what monthly mortgage amount you are comfortable with?
Not only do you have to add property taxes and homeowners insurance to your monthly payment, but you need to be thinking about repairs, utilities, maintenance and improvements. I encourage the first time home buyers I work with to attend a Home Stretch workshop offered through The MN Home Ownership Center. The information they provide is priceless and can save you a major headache down the road. One of the most important steps to becoming a successful homeowner is efficient and effective money management. Understanding finances and credit is a large segment of what is taught in the Home Stretch workshop.

The old adage goes “Plan on spending 1-2% of your home’s value on a yearly basis for upkeep and future maintenance.” Make sure you are realistic about the home you buy though. If it is an older home, chances are good that it will need more money to maintain it.  The MN Home Ownership Center has put together some amazing statistics and information on how much homeowners are spending on home expenses and breaks down where those dollars are being spent. Check out their blog post today to read more about where the money goes.

As G.I Joe would say, “Knowing is half the battle.”  If you are looking to buy your first home be sure to sign up for the Home Stretch workshop. There is much more than just your monthly mortgage payment that goes into figuring how much home you can afford.

]]> http://www.knowyourhomeloan.com/how-much-home-can-you-afford/feed/ 0 After You Close on Your New Home… http://www.knowyourhomeloan.com/after-you-close-on-your-new-home/ http://www.knowyourhomeloan.com/after-you-close-on-your-new-home/#comments Wed, 14 Apr 2010 19:59:51 +0000 admin http://www.knowyourhomeloan.com/?p=305 You are a first time home-buyer, and you have just closed on your first home, a great piece of Burnsville real estate. Now what?

Homestead Your Property

As your title closer will tell you at the closing table, it is imperative that you go to the county and homestead your property for tax purposes. This is a simple, free process. You basically show up at the county courthouse and bring along your Certificate of Real Estate Value and Deed that you are given by the title closer. It’s that easy. If you don’t homestead your property by December, your property taxes could increase significantly. It is best to homestead your property as soon as you move into your new home, as forgetting and trying to undo the forgetfulness isn’t easy.

Your first mortgage payment

More often than not, your mortgage loan will be sold from the company that you received your mortgage from, to a secondary market investor. This is important to you as you will need to pay your monthly mortgage payment to whoever is currently servicing or owns your mortgage. Do not be alarmed when you get a letter after closing stating that ABC Mortgage has sold your loan and to start making payments to XYZ Mortgage. You will also get a letter from XYZ Mortgage, letting you know how to contact them and where to send your payments. This will probably happen a number of times throughout the life of the loan. Lately, we have seen loans being sold to different companies a number of times before the first payment is even made. Just make sure that you are contacted by the company that HAD your mortgage and verify that it was sold before you start sending mortgage payments to unconfirmed places. :-)

Utilities and Mail

Chances are  you have already arranged for utility services on your new home; most people will have them lined up for the day of or the day after closing. If you haven’t, you will need to contact all the local utility providers and get your account set up. The best place to look in Burnsville is to check out the Burnsville City Website. Most other cities in Dakota County and Scott County also have utility information provided on their sites. You can contact the United States Postal Service to get your mailing address switched, and don’t forget to contact each of your individual banks, employers, creditors, subscriptions and other service providers.

Important Title Information

When you purchase your home, you will be put on the title of the property. All property title records are kept in the county in which the home is located. So, if you buy a home in Burnsville, your property title is kept on record in Dakota County. Please be aware that the recording process is just that, a process…. it doesn’t happen overnight. It can take months for your name to show up in title to your property. If you are anxiously awaiting to see your name pop up on the county website as homeowner, pull up a chair. I know that mine took 6 months to show the change. If you are purchasing a bank owned property or Torrens property, it will take even longer.

Many first time home-buyers have questions after closing. Every transaction is different, so don’t be afraid to call your loan officer or title company for guidance.

]]> http://www.knowyourhomeloan.com/after-you-close-on-your-new-home/feed/ 1 203k Loan Process Getting Tough? http://www.knowyourhomeloan.com/203k-loan-process-getting-tough/ http://www.knowyourhomeloan.com/203k-loan-process-getting-tough/#comments Wed, 24 Mar 2010 14:11:41 +0000 Nichole http://www.knowyourhomeloan.com/?p=233 No, But that doesn’t mean people won’t make it harder than they need to!

In Tuesday’s Star Tribune, they feature a story about a local couple who have had serious issues with the increasingly popular 203k loan program. A 203k loan allows homebuyers to buy real estate that is in less than stellar condition. Many foreclosures that have been damaged by time or neglect are candidates for the 203k loan program.

First of all, not all lenders are created equal. The 203k loan program does have very specific requirements to make the process go smoothly. Some lenders have perfected this process, most of them have not. I am proud to say that we have Elizabeth Vaughan here at Cornerstone Mortgage. Elizabeth is the master of 203k loans!

I asked Elizabeth about the article from yesterday’s paper, and am happy to report that what the Minneapolis couple experienced may not have happened if they used an experienced loan officer like those here at Cornerstone Mortgage Company. I asked Elizabeth, “Have you experienced the same problems, that contractors are being refused payment due to a back up in the banks processing?” Elizabeth responded, “Certain banks are bogged down yes, but our normal turn time when doing a 203k loan including inspection, once a draw request have been made is 5-7 days. We at Cornerstone have a staff dedicated to FHA 203k loans for underwriting and the draw process.”

When asked about the contractor the homeowner chooses to complete the repairs/rehab, does that choice affect the loan process? Elizabeth answered emphatically. “Yes! The contractor needs to be licensed and pre-approved with Cornerstone Mortgage Company. The paperwork for the 203k loan is very specific in its format and how it is presented to underwriting. At Cornerstone Mortgage, we educate Realtors, buyers and contractors so that we can have a smooth transaction. We also use 203k consultants on rehabs that are more complex, relieving some of the pressure from the homebuyer as well as the contractor.”

The FHA 203k loan program allows homebuyers to repair aspects of the home after closing, holding the funds designated for the repair at closing, in escrow until the contractor is finished, the property inspected and the payment released to contractor. This loan program truly does offer options to homebuyers who would not be able to afford the repairs out of pocket.

To request more information on the 203k loan process, click here.

Would you like to learn more about how to qualify for a mortgage? Contact Carrie Guarrero Today!

Carrie Guarrero is producing Regional Manager and Vice President of Cornerstone Mortgage Company in Burnsville, Minnesota. If you are looking for Burnsville real estate, contact Carrie first!

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