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25

May

Your Mortgage, What To Expect: Property Appraisal

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After your initial document review has been completed and you have been pre-approved, the next step is a property appraisal.

What is a property appraisal and why is it so important?

A major part of the home sale process is the appraisal. No matter how much a seller wants for his home, or how much a buyer is willing to pay for a home, in the end, it all comes down to the appraisal.

A property appraisal is an unbiased estimate of the true (or fair market) value of what a home is worth. All lenders order an appraisal during the mortgage loan process so that there is an objective way to assess the home’s market value and ensure that the amount of money requested by the borrower is appropriate.

While appraisals can vary by state, there are three main parts to a home appraisal:

  1. The inspection – A licensed appraiser comes to the property and inspects it to determine a fair market value
  2. Research on comparables – After the inspection, the appraiser researches similar homes in your area and compares recent sales to determine the market value
  3. Final appraisal report – using the data gathered from the inspection and comparables research, the appraiser issues a final appraisal report

Several determining factors influence an appraisal:

  • The condition of the housing market
  • Property location and neighborhoods
  • Compared value of similar homes
  • Physical condition
  • Amenities
  • Number of bedrooms and bathrooms
  • Age and design
  • Overall appearance, interior, and exterior
  • Energy efficiency and appliances

Before arriving at a final decision, the appraiser must complete a considerable amount of market analysis, in addition to property specific research. There’s also the need to precisely define the purpose of the appraisal. There are, for example, various types of value — including fair market value, insurance value, tax value and value in use.

Ready to get started? Give us a call or fill out an online application: APPLY ONLINE HERE.

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21

May

3 Tips to Improve your Credit Score and Score a Lower Interest Rate

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score interest rateA good credit score translates into lower interest rates. In a mortgage lender’s eyes, the higher your score is, the less risk you are, and the more likely it is you will pay off your debt. For this reason, borrowers with lower scores can end up paying higher interest rates on their loans.

If this is you, don’t panic!

There are some things you can do to adjust your credit score to receive a favorable review from the underwriter. Here are a few suggestions:

#1: Pay your bills on time:

The simplest, and sometimes hardest, thing you can do is pay all your bills on time. Generally, you can improve your scores by making all your payments on time, keeping debt levels low (below 30%, and ideally 10% of available credit), removing errors and limiting credit inquiries.

If you are still treating your personal financing like you are a struggling college student, it is time to start #adulting. If you do, your credit score will start climbing.

 

#2: Keep existing credit card accounts open

Part of your credit score is based on credit history. If you have old credit cards that you don’t use very much, you still have the benefit of the credit history they represent.

Rather than trying to pay off all your credit cards, you can move part of the debt from one card to another to even out the distribution of debt. Try to keep balances as close to zero as possible, and definitely below 30% of the available credit limit when trying to purchase a home. Also, if your credit provider will increase your line of credit, the ratio of debt to available credit is automatically reduced.

#3: Fix errors on your credit report

If you are not already doing so, pull a FREE credit report annually. If items are showing up on your credit report that you know you have already paid, request to have the credit bureau remove them. They are obligated to rectify this within 30 days.

If there are items on your credit report that are less than two years old, send in your payment if possible and mark the back of the check with the following notation: “Accepting this check is evidence that the transaction is complete, and this charge will be deleted from my credit record.” If necessary, the canceled check will be proof that this should be promptly removed from your credit report if it interferes with the closing of your loan.

If you are still not sure of what step to take to secure yourself a low-interest rate, contact our team of mortgage professionals to schedule a time to review your financial situation. The appointment is FREE and no-commitment. 

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30

April

Changing Interest Rates Have A High Impact On Purchasing Power

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buying power header

Purchasing power, simply put, is the amount of home you can afford to buy with the budget you have available to spend. As rates increase, the price of the house you can afford will decrease if you plan to stay within a particular monthly housing budget.

The chart below shows what impact rising interest rates would have if you planned to purchase a home within the local median price range, and intended to keep your principal and interest payments between $1,600-$1,700 a month.

With each quarter of a percent increase in interest rate, the value of the home you can afford decreases by 6.25% (for every $25,000). DOWNLOAD PRINTABLE FILE

Buying Power- FCM_ALL

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18

April

The Myth of Multiple Mortgage Credit Inquiries

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mortgage credit mythDon’t let the fear of multiple credit inquiries keep you from shopping for a mortgage.

Fact: Your credit score plays a significant role in your life. Scores can determine insurance rates, employment, opening a bank account, and borrowing money like mortgage lending.

If you would like a refresher course on how your credit scores work, check out our blog post on credit scores.

Applying for too much new credit in a short period of time can adversely affect your hard-earned score. So it is natural to be nervous about shopping for a mortgage. But the major credit bureaus see the value of comparison shopping – and that’s why they cut homebuyers some slack.

Types of Credit Inquiries

Credit inquiries are broken down into two main groups: hard inquiries and soft inquiries. “Hard inquiries” may affect a credit score, while “soft inquiries” do not affect a score. It is important to understand the difference when applying for new credit.

Soft inquiries (also known as “soft pulls”) typically occur when a person or company pull your credit as part of a background check. Since soft inquiries are not an application for new credit, they won’t affect your credit scores.

Hard inquiries (also known as “hard pulls”) occur when a financial institution, such as a lender or credit card issuer, checks your credit when making a lending decision. Your mortgage consultant will need to take a look at your credit report to complete your pre-approval you to purchase a home. Granting a lender permission to pull your scores – constitutes a hard inquiry and can lower your credit.

The good news is the “hit” to your credit is typically just 3-5 points.

Shop Multiple Lenders, Get One “Ding” On Your Credit Report

The important concept is that — unlike applying for multiple credit cards — when someone applies for several mortgages, they won’t get “dinged” for multiple, consumer-initiated inquiries. This is because when they apply for five credit cards, they’ll likely get the option to use them all five. By contrast, with the mortgage applications, they’ll only get approved once.

As such, the credit bureaus have made it a formal policy to permit “rate shopping.” In fact, it’s encouraged.

Borrowers have the right to shop with as many lenders as they like. The secret though is for a client to do their shopping for a mortgage within a limited 14-45-day time frame. If you time the inquiries correctly, the credit bureaus will acknowledge the first credit pull as a “ding” — remember, only 3-5 points — but will ignore each subsequent check.

No matter how many credit checks you do, the mortgage inquiries will always get lumped into a single credit score “hit.”

So, happy shopping! We would love a chance to work with you. To get started, give us a call or apply online today!

Sources: myFICO.com, www.consumerfinance.gov

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02

April

Things to do BEFORE you buy a home.

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Whether it is your first home or you’re already a homeowner, there are some critical thing you should do before a move to a new place. Here are 13 things that will help make your next move easier. thingstodobeforebuying

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