Friday, July 29, 2016

You Still Have Options if Your Home Refinancing Application was Denied!

There are many reasons to refinance your mortgage. Making home improvements? Want to take advantage of lower rates, or did you just get a raise and want to pay it off faster with a shorter term loan?  These are all great reasons to refinance, unfortunately, there are also many reasons why some lenders will deny a refinancing application.  It can seem illogical, I mean, you already HAVE a mortgage right?! But don't fret! Even if you were denied, you still have options!



5 Reasons Your Mortgage Refinancing Application was Denied - and What It Will Cost You
By: Barbara Friedberg

Even if you're denied, you have options.

As interest rates continue to touch on historic lows, you might want to refinance. A mortgage refinance can get you a lower monthly mortgage payment, a shorter loan term or cash back. All of these alternatives can save you money.

Mortgage rates have been low for so long that you might not remember the days when rates were higher. In 1981, home mortgage rates peaked at 16.63% APR, according to Freddie Mac. Average rates gradually fell, but were still 9.25% APR in 1991.

In contrast with those sky-high rates, home mortgage interest rates in recent years have been low. Since 2010, they have been below 5% APR. Anyone who took out a mortgage prior to 2010 might want to consider a home loan refinance.


Benefits of Refinancing Your Mortgage

Deciding to refinance a mortgage offers several potential benefits:


  • You can lower the interest rate. Doing so should reduce your monthly payment amount.
  • You can shorten the loan term. For example, you can switch from a 30-year, fixed-rate loan to a 15-year, fixed-rate loan to save money on total interest payments.
  • You can create more certainty. If you currently have a mortgage with a variable interest rate, you can switch to the certainty of a fixed interest rate.
  • You can take out a loan. If you have equity in your home, you might refinance the mortgage and take out some of the equity to use for home remodeling or other purposes.

Contacting a bank or mortgage lender is the simplest way to apply for a mortgage refinance. Look to an accredited mortgage professional certified by the Mortgage Bankers Association for help refinancing your mortgage. Additionally, you can check out your state’s low mortgage rate lenders on GOBankingRates and use lenders’ online mortgage refinancing calculators to see how much money you might save by refinancing.

Despite your best efforts, it is possible your mortgage refinancing application will be denied. By understanding why your application was denied and exploring options from various lenders, you can take steps to refinance successfully after you’ve addressed financial concerns, chosen a new lender, or both.

Why Lenders Deny a Mortgage Refinancing Application

Lenders might deny your mortgage refinancing application for many reasons, including the following:


  • Your mortgage is underwater. An underwater mortgage is one in which you owe more money than the house is worth. Home prices fell during the recent recession’s “mortgage meltdown,” and many mortgage holders were left with mortgage debt greater than the value of their homes.
  • Your income is too low or unstable. If your income does not meet a certain level, a lender might be hesitant to grant you a loan.
  • Your credit score and credit history are weak. If you have negative marks on your credit report, such as missed payments or other credit flaws, a lender might deny your request to refinance.
  • Your debt-to-income ratio does not meet the lender’s criteria. Each lender has specific requirements. For example, consider a lender that requires a 40 percent debt-to-income ratio. If you earn $5,000 per month and owe $2,500 in debt payments per month, your 50 percent debt-to-income ratio will not meet that lender’s requirement.
  • Your home’s appraisal value is too low. For example, you might want to refinance a home you bought for $400,000 with a $320,000 mortgage. If the home is appraised at $375,000, you might only be allowed to refinance 80 percent of the home’s value, or $300,000.

Read More: How to Refinance If Your Home Appraisal Value Is Too Low

Mortgage Refinancing Options When Your Application Is Denied

Do not despair if a lender denies your application to refinance a mortgage. You might fear that you will be stuck making large mortgage payments with higher interest rates indefinitely, but you likely have more options.

First, find out why your mortgage application was denied. The law requires the lender to explain why your application was denied. You might want to correct the problem that triggered the denial first. Or, try another refinancing solution, such as one of the following:


  • Apply with a different lender. Not all lenders are the same, and underwriting guidelines vary from lender to lender. If you are turned down by one lender, try another one.
  • Apply with your current lender. If you looked first applied for refinancing with a new lender and were turned down, consider turning back to the lender behind your current mortgage. Check your lender’s mortgage refinancing rates to find out how much money you might save. Your current lender might be anxious to retain your business.
  • Investigate FHA programs. The Federal Housing Authority helps borrowers by offering affordable lending solutions. FHA loans include refinance loans and cash-out loans for consumers. The FHA Short Refinance loan can assist consumers with negative-equity mortgages.
  • Consider the Home Affordable Refinance Program. Established by the FHA, this government program is designed to help consumers with underwater mortgages. If your loan is owned by Fannie Mae or Freddie Mac and you are current on your mortgage payments, you might be eligible for a HARP loan.The HARP program expires on Dec. 31, 2016.
  • Improve your credit score. Ultimately, lenders want low-risk borrowers who have good credit scores. If your credit score is low, raising it might improve your refinancing opportunity. First, get a free copy of your credit report and dispute any errors. Next, reduce your existing debt levels and set up payment reminders to pay your bills on time.


What the Application Denial Could Cost You

If your mortgage refinance application is denied, you could lose out on some fees and potentially a significant amount of time. When you plan to refinance, try to budget a realistic range of time for the process and savings for mortgage refinance fees in case you are denied so that you can minimize the impact of a denial. Otherwise, your attempts to refinance could be further delayed as you save up to restart the process.

Several mortgage refinance fees aren’t assessed unless the loan is approved — and some might even be waived during loan closing negotiations — but you might still be responsible for paying an application fee even if your application is denied. This fee can range from about $50 to $500, depending on the lender and loan.

Other fees to prepare for in case your loan is approved include but are not limited to:


  • Loan origination fees
  • Property appraisal fees
  • Miscellaneous service fees for credit checks, document processing, underwriting, etc.
  • Discount points, or prepaid interest
  • Title fees and insurance
  • Taxes

The biggest cost of an application denial, however, might end up being the amount of time you invested in the process. The more prepared you are with all of the necessary documents to include with your application, the better your chances of making the process more efficient. If you leave information out, you risk having to spend several additional days corresponding with your loan processor to complete the application.

The entire refinancing process can take 30 to 90 days, depending on the lender, your application and you. Whether your application is denied early on during the application review or the loan falls through later on during loan processing and underwriting, you could end up losing several weeks of time.

Be Persistent If Your First Mortgage Refinancing Application Is Denied

Ultimately, if your mortgage refinancing application is denied, you have options. Take a step-by-step approach to find out why the application was denied. Then, map out a plan to better your loan qualifications, improve your credit profile and apply for a different mortgage refinancing solution. With added effort, you can improve your chances of getting approved for a mortgage refinance loan.

To view the originial article, click here.

Tuesday, July 26, 2016

Mortgage rates are rising but it's still a good time to buy

Rates are finally on the rise after months of delay, however, they're still at an all time low!  Rates are lower now, in 2016, than they were at this time last year.  If you're on the fence about shopping for a home, or refinancing your mortgage now is still a great time!


Mortgage rates are rising but it's still a good time to buy
By Lorainne Woellert

Mortgage rates rose for the second week, averaging 3.45 percent for a 30-year, fixed-rate loan, up from 3.42 percent the week before. A year ago, rates averaged 4.04 percent, according to Freddie Mac’s weekly survey.

Despite the uptick, rates have held below 4 percent since December, tying a 29-week run of cheap borrowing we had from November 2014 to June 2015.

During that sprint, the cost of a 30-year loan averaged 3.77 percent. This time, it’s held to 3.64 percent.


What’s going on?
Mortgages got dramatically cheaper after Britain voted to exit the European Union last month. The Brexit brouhaha has since calmed down and Treasury bonds, which signal the direction of mortgage rates, have bounced from a 227-year-low.

Home loans are still cheap by any standard, though. That’s good news particularly for young and first-time buyers, who tend to be more sensitive to cost.

In a Redfin survey, 47 percent of buyers said they’d look for a less expensive house if rates rose by a point or more. Among respondents 34 and younger, more than half said they’d shop for something cheaper. Five percent of millennials said they’d give up looking altogether.

Rates are lower now than they were in May, when the survey was taken. That’s one reason June was one of the most competitive months on record for home sales, according to Redfin data.

Mortgage rates will tick up and down week to week, but they’ll stay low for the foreseeable future.

“We don’t expect any significant movement in mortgage rates in the near term,” Freddie Mac chief economist Sean Becketti said. “This summer remains an auspicious time to buy a home or to refinance an existing mortgage.”


Find the original article on Business Insider.


Mortgage rates are rising but it's still a good time to buy

Rates are finally on the rise after months of delay, however, they're still at an all time low!  Rates are lower now, in 2016, than they were at this time last year.  If you're on the fence about shopping for a home, or refinancing your mortgage now is still a great time!


Mortgage rates are rising but it's still a good time to buy
By Lorainne Woellert

Mortgage rates rose for the second week, averaging 3.45 percent for a 30-year, fixed-rate loan, up from 3.42 percent the week before. A year ago, rates averaged 4.04 percent, according to Freddie Mac’s weekly survey.

Despite the uptick, rates have held below 4 percent since December, tying a 29-week run of cheap borrowing we had from November 2014 to June 2015.

During that sprint, the cost of a 30-year loan averaged 3.77 percent. This time, it’s held to 3.64 percent.


What’s going on?
Mortgages got dramatically cheaper after Britain voted to exit the European Union last month. The Brexit brouhaha has since calmed down and Treasury bonds, which signal the direction of mortgage rates, have bounced from a 227-year-low.

Home loans are still cheap by any standard, though. That’s good news particularly for young and first-time buyers, who tend to be more sensitive to cost.

In a Redfin survey, 47 percent of buyers said they’d look for a less expensive house if rates rose by a point or more. Among respondents 34 and younger, more than half said they’d shop for something cheaper. Five percent of millennials said they’d give up looking altogether.

Rates are lower now than they were in May, when the survey was taken. That’s one reason June was one of the most competitive months on record for home sales, according to Redfin data.

Mortgage rates will tick up and down week to week, but they’ll stay low for the foreseeable future.

“We don’t expect any significant movement in mortgage rates in the near term,” Freddie Mac chief economist Sean Becketti said. “This summer remains an auspicious time to buy a home or to refinance an existing mortgage.”


Find the original article on Business Insider.


Friday, July 22, 2016

RMBA July Social Success!







One more RMBA Social Success! I love being the Social Chair for this great group of people who work hard and like to play hard, too! Looking forward to the next great event.

Wednesday, July 20, 2016

Frequently Used Mortgage Terms You Need to Know

If you're a first-time homebuyer, (or maybe just haven't applied for a mortgage in a while!) there's a lot an individual needs to know!  Today's consumer likes to be informed before asking experts, and rightfully so!  If you're just delving into mortgage shopping, here is some basic vocabulary to know so all of the helpful information that's available makes just a little more sense!



All the Frequently Used Mortgage Terms You Need to Know
By Angela Colley from Realtor.com

Adjustable-Rate Mortgage (ARM): A mortgage loan with an interest rate subject to change over the term of the loan. The interest rate is tied to the performance of a specified market rate.

Amortization: The paying down of principal over time. In a typical mortgage loan, the principal is scheduled to be paid off, or fully amortized, over the term of the loan.

Average Hourly Earnings: A monthly reading by the Bureau of Labor Statistics of the earnings of hourly plant and non-supervisory workers in the private sector.

Basis Point: One one-hundredth of a percentage point. For example, if mortgage rates fall from 7.50% to 7.47%, then they’ve declined three basis points. A full percentage point is 100 basis points.

Cash-Out Refi: A refinancing of a mortgage in which the new principal (the borrowed amount) exceeds the outstanding principal of the original loan by at least 5%. In other words, the homeowner is taking equity out of the home.

Conforming Mortgage Loan: Any mortgage loan at or below the amount Fannie Mae and Freddie Mac can purchase and/or securitize in the secondary mortgage market.

Construction Loan: A temporary loan used to pay for the building of a house.

Consumer Confidence Index: A measure of confidence households have in the economy. Released monthly by the Conference Board.

Consumer Price Index (CPI): A measurement of the average change in prices paid by consumers for a fixed-market basket of a wide variety of goods and services to determine the underlying rate of inflation. The broadest, and most quoted, CPI figure reflects the average change in the prices paid by urban consumers (about 80% of the U.S. population). The so-called “core CPI” excludes the volatile food and energy sectors.

Conventional Mortgage Loan: Any mortgage loan not guaranteed or insured by the government (typically through FHA or VA programs).

Credit Report: A report of borrowing and repayment history for an individual.

Credit Score: A three-digit number based on an individual’s credit report used to indicate credit risk.

Employment (Payroll): The number of non-farm employees on the payrolls of more than 500 private and public industries, issued monthly by the Bureau of Labor Statistics.

Employment Cost Index: A quarterly index used to gauge the change in the cost of civilian labor that includes salaried workers.

Existing Home Sales: Based on the number of closings during a particular month. Because of the one-to-two month period between a signed purchase contract and a closing, existing home sales are more influenced by mortgage rates a month or two earlier than the prevailing mortgage rate during the month of closing.

Fannie Mae and Freddie Mac: The nation’s two federally chartered and stockholder-owned mortgage finance companies. Forbidden by their charters from originating loans (that is, from providing mortgage loans on a retail basis), these two Government-Sponsored Enterprises (GSEs) purchase and/or securitize mortgage loans made by others. Due to their directive to serve low-, moderate-, and middle-income families, the GSEs have loan limits on the purchase or securitization of mortgages.

Federal Funds Rate: The rate banks charge each other on overnight loans made between them. These loans are generally made so banks can cover their daily cash flow and reserve requirements. The federal government doesn’t actually set the fed funds rate, which is determined by supply and demand of the funds. Instead, it sets a target rate and affects the supply of funds through its own purchases or sales of securities.

Federal Open Market Committee (FOMC): The arm of the Federal Reserve that sets monetary policy, the FOMC is scheduled to meet eight times a year. The 12 members of the FOMC include the seven governors of the Federal Reserve System, the president of the New York Federal Reserve Bank, and, on a rotating basis, four of the presidents from 11 other regional Federal Reserve Banks.

Fixed-Rate Mortgage (FRM): A mortgage loan with an interest rate that does not change over the term of the loan.

Gross Domestic Product (GDP): The value of all the final goods and services produced in the U.S. over a particular period. Available quarterly from the Bureau of Economic Analysis.

Home Equity: The difference between the current value of the house and the amount of money owed on the mortgage.

Home Equity Line of Credit: An open credit line secured by the equity in your home.

Home Equity Loan: A loan that is secured by a home and limited to one lump-sum amount.

Home Improvement Loan: Money lent to a property owner for home repairs and remodeling.

Home Loan: Money provided by a bank or lending institution to pay for a home.

Homeownership Rate: The number of households residing in their own home divided by the total number of households in the U.S. The U.S. Census Bureau releases an estimate of homeownership rate based on a quarterly survey.

House Price Index: A quarterly measure of the change in single-family house prices released by the Office of Federal Housing Enterprise Oversight. The HPI is a repeat sales index, meaning it measures average price changes in repeat sales or refinancings on the same properties, and it is based on mortgages purchased or securitized by Fannie Mae and Freddie Mac. Homes with mortgages above the Fannie/Freddie conforming loan limit and homes insured or guaranteed by the FHA, VA or other federal government entity are not included in the sampling.

Housing Starts: The Census Bureau’s monthly count of the number of private residential structures on which construction has started or permits have been issued.

Interest Rate: A measure of the cost of borrowing.

Jumbo Mortgage Loan: A mortgage loan for an amount exceeding the Fannie Mae and Freddie Mac loan limit. Because the two agencies can’t purchase the loan from the lender, jumbo loans carry higher interest rate.

Loan-To-Value Ratio (LTV): In a mortgage loan, the amount borrowed relative to the value of the property. An LTV of 80% means the mortgage loan is for 80% of the value of the property, with the borrower making a 20% down payment.

Mean Home Price (of New or Existing Homes Sold): The mathematical average of the prices of all homes sold in the period, typically monthly. The mean price of homes sold generally runs higher than the median price due to the number of very high-priced homes.

Median Home Price (of New or Existing Homes Sold): The median price of all the homes sold within a 30-day period. Median home prices are generally a better indicator of home price trends than average home prices.

Mortgage: A loan lent for the purpose of buying real estate and secured by the real estate.

Mortgage Application Index (Purchase): An index published weekly by the Mortgage Bankers Association of America which gauges the number of applications submitted for the purchase of a home. The survey covers about 40% of all retail residential mortgage transactions.

Mortgage Application Index (Refinance): An index published weekly by the Mortgage Bankers Association of America which gauges the number of applications submitted for the refinancing of a home. The survey covers about 40% of all retail residential mortgage transactions.

Mortgage Broker: A person or company that acts as a mediator between borrowers and lenders.

Mortgage Calculator: An online form that calculates how much a borrower will pay each month for a home loan.

Mortgage Quote: An interest rate offered on a home loan.

Mortgage Rate: The amount of interest charged on money lent for the purchase of a home.

Mortgage Refinancing: The process of taking out a new mortgage with different terms or interest rates. The proceeds are used to pay off the original loan on the same property.

New Home Sales: A survey of builders nationwide by the Census Bureau to determine the number of contracts signed for new home.

Producer Price Index (PPI): A measurement of the average change in the selling prices of goods and services sold by domestic producers and an indicator of inflation. Released monthly by the Bureau of Labor Statistics.

Second Mortgage: A mortgage on real estate which has already been pledged as collateral against another mortgage. Typically used to draw cash from a home for other purposes.

Securitization: The pooling of mortgage loans into a mortgage-backed security. The principal and interest payments from the individual mortgages are paid out to the holders of the MBS security.

Underwriting: The determination of the risk a lender would assume if a particular mortgage loan application is approved.

Unemployment Rate: The percentage of the labor force out of work. To be considered a member of the labor force, an individual must either be employed or actively looking for employment, released by the Bureau of Labor Statistics.

Thursday, July 14, 2016

Thou Shalt Not Break These 10 Mortgage Commandments!

PLEASE READ AND FOLLOW THESE 10 MORTGAGE COMMANDMENTS!


#1)
Thou shalt NOT change jobs, become self-employed or quit your job.
The reason that this is so important is if you would happen to change your job there is usually a certain amount of time that you would have to wait before you would be able to close. FHA for instance requires that you have been at your current job for 1 month prior to closing. If you happen to quit your job and become self- employed then in order to be able to use your income we would at least need 1 year of personal tax returns with your new position and most loan programs require two years. If you decide to quit your job before closing and the lender will be using your income for qualifying it may cause your loan to be denied. Before any of this takes place please contact your mortgage consultant and explain to them what you are planning on doing when it comes to your job.
#2)
Thou shalt NOT co-sign a loan for anyone.
During the loan process, any changes to your credit report or status could negatively affect your ability to close your loan on time or at all. Co-signing any type of car loan, student loans, or other loans would result in inquiries into your credit and additional financial responsibilities. All of these could result in loan closing delays or denials. If this situation applies to you, please contact your Mortgage Planner.
#3)
Thou shalt NOT buy a Vehicle (or you may be living in it)!
Applying for credit to purchase a vehicle will be recorded as an inquiry into your credit by credit bureaus. This may decrease your credit score or decrease the amount of money that you may qualify for when purchasing a home. It is very important to avoid applying for these types of loan throughout the loan process. If this situation applies to you, please contact your Mortgage Planner.
#4)
Thou shall NOT use charge cards excessively or make late payments on ANY of your accounts.
Excessive use of credit cards can have 2 negative effects on your credit rating. One, inquires will be recorded by credit bureaus and could decrease your credit score. Two, balances on credit cards exceeding 35% will affect your debt to income ratio and could decrease your credit score. Also, late payments of any sort can decrease your credit score, increase your home loan interest rate, delay loan closing, or cause loan denial. If this situation applies to you, please contact your Mortgage Planner.
#5)
Thou shalt NOT spend money you have set aside for closing.
Most conventional loans require 2 months of reserve money to be verified in your available financial accounts. Once it has been verified for use at close, spending these reserve funds may result in loan closing delays or even loan denial. If this situation applies to you, please contact your Mortgage Planner.
#6)
Thou shalt NOT omit debts or liabilities from loan application.
Please be very honest and clear about ALL of your debts or liabilities early in the loan application process. Having the right information will allow your Mortgage Planner to provide you the best qualifying loan value. Unrecorded debts or liabilities that are found later in the process may affect the amount of money you qualify for in addition to causing delays or even denials of your home loan. If this situation applies to you, please contact your Mortgage Planner.
#7)
Thou shalt NOT buy furniture, appliances, or household items before closing.
Although many people are anxious to furnish their new home, during the loan process is NOT the right time. Large purchases causing deductions in your banking accounts or additional debt on credit cards can negatively affect your loan process resulting delays or even denials. If this situation applies to you, please contact your Mortgage Planner.
#8)
Thou shalt NOT originate any inquiries into your credit.
As mentioned before, multiple inquiries into your credit may result in decreasing your credit score. As this applies to vehicles, furniture, appliances, and household items; it also applies to ANY credit checks. Applying for additional lines of could negatively affect your ability to qualify for a home loan. If this situation applies to you, please contact your Mortgage Planner.
#9)
Thou shalt NOT make large deposits without first checking with your mortgage consultant.
Abnormal deposits or large deposits into checking, savings, or any financial account beyond normal payroll deposits must have money sources verified by Underwriting. Making these deposits could result in loan processing delays or even denials. If this situation applies to you, please contact your mortgage planner.
#10)
Thou shalt NOT change bank statements.
Because the loan process requires a 2 month history of reserve funds, opening new financial accounts near a closing date may void the history. New bank accounts will not have the 2 month history available and cannot be used. This may result in loan closing delays or denials. If this situation applies to you, please contact your Mortgage Planner.

Monday, July 11, 2016

3 Mortgage Mistakes You Can Totally Avoid

The biggest mistake a buyer can make now is to not take the steps towards getting a mortgage when they're ready to buy.  There are so many products out there that can fit your financial situation and lots of affordable homes on the market.  Don't give up on the process before you start, apply for a mortgage and you could be a homeowner sooner than you think!


3 Mortgage Mistakes Buyers Keep Making

The mortgage process can be overwhelming to your buyers. David Gunn, mortgage sales effectiveness director for Fifth Third Mortgage, recently shared with HousingWire some of the biggest mistakes buyers make when purchasing a home.

Believing you don't make enough for a down payment.
Low down payment mortgages are becoming more available. The Freddie Mac Home Possible Advantage Mortgage, for example, allows buyers to put down 3 percent on their home purchase. Mortgage lenders can help identify which programs potential buyers can qualify for. "People tell us they can't afford a house because of the down payment," Gunn told HousingWire. "It's the most common barrier to buying a home. But we find that a buyer needs less money than she thinks to get into a home with a monthly payment that meets her budget."

Not having closing time patience.
The timeline for settlement has been growing. Since the Consumer Financial Protection Bureau's Know Before You Owe rule took effect last October, timelines on home closings have lengthened somewhat. The new mortgage disclosure rules can result in three-day delays for reviews if any changes to the mortgage terms arise. "Be patient, and know that all of the changes are made to help you better understand the mortgage terms and help you find the best loan for you," Gunn says.

Sticking to one type of loan.
The 30-year fixed-rate loan -- while the most popular -- doesn't always have to be the go-to. Certain loan types may make more sense, depending on the buyers' situation. "It might be better to get a lower term loan now to build equity, and then move into something bigger in a few years," Gunn says. A lender can take a look at a buyers' financial situation and goals to make a suggestion of whether a longer term or shorter term loan makes the most sense.

This article originally appeared on RealtorMag.com

Wednesday, July 6, 2016

Make Homebuying Easier With 3 Smart Money Moves Now

Getting a mortgage is a whole lot easier than people realize.  Getting the best rates on the other hand, -may be another issue, depending on your credit or downpayment.  While young people are battling the age-old question of whether to rent or buy, debating on career, timing, or otherwise, there are financial moves you can make to be prepared when the day comes that you're ready to buy!


Make Buying A Home Easier With 3 Smart Money Moves Now
By: Deborah Kearns

If you’re fresh out of college and settling in at your first or second job, homeownership might be out of sight, out of mind. But there’s a lot you can do as a renter in your 20s to better position yourself for buying a home when the time is right.

You’ve got plenty of company if you’re asking yourself, “Should I rent or buy a home?“ Fifty-seven percent of millennials rent because they view it as more affordable or because they think they won’t qualify for a mortgage, according to a 2014 Fannie Mae survey. Survey respondents cited poor credit, high down payment costs, a low monthly income and too much existing debt as roadblocks to homeownership.

While you’re in your 20s, follow the steps outlined below to overcome some of these common obstacles to buying a house. And when the time comes to leave your renting days in the dust, you’ll be ready to get your hands on those coveted house keys.


  1. Save as much as you can as early as you can.
  2. Prioritize needs over wants to avoid overspending.
  3. Build your credit with on-time payments and manageable loans.


Save your money early — and regularly
Bob and Erin Sikorski knew buying a home would be a big undertaking, but the young couple was game for the challenge. Erin, now 27, says she and her husband were both taught the value of saving and paying cash for big purchases, even for a car. Early in their 20s, they each saved relentlessly and had a few thousand dollars in the bank before combining savings forces.

“We opened a joint savings account to save up specifically for our down payment and for homeownership costs; we don’t use it for anything else,” Sikorski says.

For two years, they each deposited $500 a month into a joint savings account for a total of $1,000 a month going toward their future home purchase. They also avoided big purchases and credit cards like the plague. When it came time to get married, they asked guests to contribute to their down payment fund instead of buying wedding gifts, which helped boost their savings even more, Sikorski says.

Their discipline paid off in 2014. A few months after tying the knot, they bought their first home for $255,000 in Castle Rock, Colorado, a growing bedroom community 30 miles south of Denver. With a little help from a relative and their measured approach to saving money, they were able to put a full 20% down and get a 30-year conventional mortgage.

Mortgage pros like Brian McFedries endorse this savings approach wholeheartedly. McFedries, a loan officer with Smart Choice Realty Solutions in San Diego, California, recommends socking away as much as you can per paycheck in a savings account. Whether it’s 3%, 5% or 10% of your income, those savings will add up over time, McFedries says.

Prioritize needs over wants
Jessica Humphrey always put her needs over more extravagant wants, even as her friends blew their paychecks on designer clothes and new cars. Humphrey, now 35, drove the same car for more than 10 years to avoid having car payments.

In her 20s, she longed to go on adventurous vacations but knew the costs of doing so would delay her dream of homeownership. She found a way around that roadblock by becoming a sales consultant for the Scentsy candle-warmer company in addition to running a pizzeria full time in Wartburg, Tennessee. Humphrey became a leading seller and earned incentive vacations, which helped quell her travel bug and cost little to no extra money.

Humphrey recalls once salivating over a Michael Kors handbag at a time when she was saving to buy a home that needed repairs. Despite the bag’s allure, Humphrey put off the purchase until she had enough money saved for a down payment and to address certain repairs on the historic home. Using a cash-only system, she says, helped her conquer the temptation of the handbag and other impulse purchases over the years.

“When I have cash in hand, there is a number on that piece of paper I’m handing over and I know how long it took me to make that amount,” Humphrey says. “I have self-control when I can see cash and relate it to man hours rather than simply swiping a card.”

Sikorski and her husband have made a habit of living frugally, she says, and are accustomed to delayed gratification when it comes to purchases. Their motto: Unless you can pay for an item in full, don’t buy it. By fighting the temptation to spend, you’ll build your nest egg for a healthy down payment, closing costs and that elusive emergency fund for unexpected, yet inevitable, house repairs.

Build your credit wisely
While it’s true you need a credit history to qualify for a home loan, that doesn’t mean you should max out credit cards while in your 20s. Instead, use them responsibly and wisely to build your credit score over time.

Traditional lines of credit — student loans, an auto loan or credit cards — need to be tempered with an understanding of how revolving debt affects your credit score, McFedries says.

“Having a high debt-to-income ratio is one of the red flags mortgage lenders look for when evaluating your credit,” McFedries says. “It’s better to have, say, a $5,000 credit account and owe $1,000 on it instead of a $1,000 card and owe $800 on it because of how it will impact DTI and your ability to qualify for a loan.”

The first step to building a healthy credit profile is knowing your credit score and keeping tabs on it in case errors should appear, says Jeremy Schachter, a mortgage broker with Pinnacle Capital Mortgage in Phoenix, Arizona. He says some young homebuyers come in to apply for a loan and are completely clueless about their credit scores.

Making a plan of action to pay down debts early on and raise your credit score — before you’re ready to buy a house — will increase your chances of getting the best loan and interest rates possible when the time comes, Schachter says.

Making on-time monthly payments on your student loans, rent, utilities and credit cards can start boosting your score in as little as six months.

Next steps to buying a home
Do you have homeownership on the brain? Sit down with a mortgage broker to get an answer to the question “How much house can I afford?“ and figure out what steps you can take now to make it happen. Part of a mortgage broker’s job is to help you assess your overall financial picture and identify specific ways to make the path to homeownership as smooth as possible.

To view the original article, click here.

Friday, July 1, 2016

A Taste of Virginia Festival at Innsbrook



Looking for something to do this weekend?  There's a brand new festival in town and no, it's not in Shockoe Bottom, or Church Hill, or Carytown - Innsbrook is getting in on the festival action!  They're bringing "A Taste of Virginia" to this weekend's holiday festivities featuring craft beer from Ardent, Hardywood, and Legend, among others and beautiful food!  Enjoy the live music and the 20-minute firework display that's been planned!  Best of all is that the proceeds from this event will go to benefit Feedmore Central Virginia Food Bank!

For more information on this event, click here!