Lee Morof's Real Estate Blog

A poor credit history is a reality for many people, but it can be particularly daunting when it comes to investing in a house. Fortunately, simply because you or yours have experienced bad credit doesn’t mean that you should be penalized in the future. If your spouse has struggled with bad credit in the past but you’re both preparing to move forward and invest in a home, here are some tips for getting it together financially.

Face The Music

Many people who have bad credit are too scared to take a look at their credit report and broach it honestly, but it’s important to come to terms with the problem so that it can be fixed. Instead of ignoring it, get a copy of the credit report and review it for any errors so that you can update these if needed and be aware of the issues impacting your credit score. While there may not be any inaccuracies on the report, knowing what you’re dealing with will give you a point to start from.

Make Your Payments

At some point, most people have missed a credit card or bill payment, but the first step involved in improving your finances and your credit is ensuring your spouse is paying their bills on time. While this won’t require paying the complete balance each month, it’s important to pay the minimum balance before the due date, and stick with it! It may seem like a small step, but over time it will improve credit and say a lot to mortgage lenders!

Save Up For Down Payment

20% is the amount that’s often suggested when it comes to a down payment, but if your spouse has terrible credit, it may be worth your while to save up more. It goes without saying that having good credit for both yourself and your spouse is important in getting approved for a mortgage, but by having extra for your down payment and paying your bills on time, you may be successful at convincing lenders you’re a solid bet.

It can be a lot more difficult to get your mortgage approved if your spouse has bad credit, but there are steps you can take to improve your financial outlook and give lenders a better impression. If you’re planning on investing in a home in the near future, contact your local real estate professionals for more information.

Finding the right home and the right mortgage can take a lot of time and energy, so it’s important to consider whether you’ll be prepared for approval before diving into the process. Whether you’ve had some financial setbacks or you just want to have an idea ahead of time, here are some ways to quickly determine if you’ll be pre-approved for a mortgage.

Do You Have A Down Payment?

You may have heard that the ideal down payment amount is 20% of the cost of the home, but this doesn’t mean you have to have this amount. However, it is important that you have a significant chunk of change put away so that it can signal to the lender that you’re financially sound and will be able to come up with your monthly payment. A down payment will not only minimize the amount of money you owe the lender each month, it will also show that you know how to save and can be trusted with a significant financial investment.

Determine Your Credit History

Many potential homebuyers have financial hiccups in their history, but it’s how they’re dealt with that determines the future. While you may have considerable issues getting a mortgage approved if you’re not paying your minimum payments on time and have debt, by making this change, you can have a positive impact on your credit history in a matter of months. You may also want to get a copy of your credit report to ensure there are no errors that have adversely impacted your score.

Do You Have A Solid Employment History?

It’s very important to have a solid work history in the event that you’re applying for a mortgage, as this will signal to the lender that you have the funds to make your monthly payment. Keep in mind that it’s good to have at least 2 years of solid employment under your belt, and you’ll need to provide paystubs. If you’re self-employed or your recent job opportunities have been sporadic, this can cause issues with getting pre-approved.

It can take a lot of time to find the right house and the right lender, but if you have a solid history of employment and a sizeable down payment you’re well on your way to pre-approval. If you’re preparing for purchasing a home and would like to learn more, contact your trusted real estate professional for more information.

When you’re delving into the market in the hopes of finding your dream home, it’s likely you’ll come across the term debt-to-income ratio. This may not seem important at first, but your DTI is the key to determining the amount of money you can put into your home and just how much you should spend on a monthly basis. If you’re curious about what this means for you, here’s how to calculate it and how it can impact your mortgage.

What’s Your DTI Ratio?

One of the best ways to determine whether or not a home is affordable for you is to first calculate your DTI ratio. To get this amount, add up all of your monthly payments including any credit card, loan and mortgage payments, and divide this amount by your gross monthly income. The amount you get is your DTI percentage and this will help to determine how much your monthly payment should be.

What Does Your DTI Mean?

Your DTI percentage helps to determine the amount of house you can afford on a monthly basis, and this is why it can be such a good way to help you find the right home. While a DTI of 25% or less is ideal, a DTI that rises above 43% may be hard to get financing for since there will be little room for error. When it comes to a higher debt load, approval may come down to what your credit history says about your financial health.

The Amount Of Home You Can Afford

It’s easy to be convinced that your dream home is for you, and worth the splurge, but investing in too much home on a consistent basis can lead to future financial difficulties. If you’re set on a home that has a high monthly payment, you may want to hold off until you’ve saved a larger down payment or revamp your budget so that you can make the investment work for you. It may also be worth continuing the housing search so that you have more flexibility to invest in education, travel or other things down the road.

Your DTI ratio may be unfamiliar now, but this can be a great save when it comes to determining how much home you can afford and what will stretch your limits.

If you’ve decided to invest and have finally found your ideal home, it’s probably an exciting time for you and your family. But before the deal is sealed, there will be a closing meeting so that all of the loose ends can be tied up. If you want to be ready for closing and are curious what the final meeting will entail, here are a few things to be prepared for.

The Last Walk Through

The initial home inspection may have already occurred prior to your closing meeting, but a final walk through should also be granted in the event that anything has happened to the house since it occurred. If problems have been made note of and a price or repair has been negotiated, you won’t need to worry, but the final walk through is a good opportunity to cover off any additional maintenance issues.

Discussion Of The Details

It’s a good idea to bring any paperwork you have regarding your mortgage along to the closing meeting as this will enable you to follow up on any outstanding questions and go through the specifics of the home sale. In all likelihood, you’ll be going through items like the closing costs, escrow payments, the settlement costs related to the home sale and the deed of trust to secure your mortgage, so ensure you understand all of the documents and are prepared to sign on the dotted line.

All The Appropriate Parties

You may expect the closing meeting to be rather informal after the offer has been accepted, but there are many parties that will be present in order to transfer the ownership of your new home. In addition to the home seller, yourself and your respective real estate agents, there will also be any attorneys present, a closing agent, and the lender. While it can be overwhelming to have so many people present, it is generally a formality so that the proceedings can take place without a hitch.

If you’ve determined that the home you’ve made an offer on is right for you, the closing meeting will likely be a seamless experience. However, it’s important to ensure you’ve done your final walk through and looked over all the applicable documents to avoid any issues related to the purchase of your home.

You may be so busy with determining your debt-to-income ratio and deciding what kind of offer to make that closing costs have gotten lost in the mix, but it’s important to remember that finalizing your mortgage will cost you extra. While there’s no way to get around paying money to solidify your mortgage, there are a few steps you can take in order to make it more economical for you.

Shop Around For A Lender

Many people go with the lender that is offered to them, but it’s a good idea to do the research so you can find the deal that’s right for you. Instead of sticking with one option, look into the closing costs for a handful of well-reviewed lenders that have been on the market for at least a few years. While it takes more than a list of fees to make the right decision, it will give you a good sense of the true cost of your mortgage and can help you make a more informed choice.

Be Prepared To Negotiate

There are people who are comfortable with negotiation and those who are not, but if you want a better deal it’s worth discussing it with your lender. While there are a number of third-party fees that are non-negotiable, many of the fees that lenders charge can be so you’ll want to get a list of what they charge and what they might be willing to budge on. It’s unlikely you’ll get everything you ask for, but it doesn’t hurt to ask in the event that it leads to substantial savings.

Review Your Loan Estimate

You have the ability to call off your mortgage at any time up until you’ve signed on the dotted line, so ensure you’ve read through the paperwork and understand your closing costs clearly. If there’s anything you’re uncertain about or any cost you weren’t made aware of, it’s imperative to address it with the lender before signing. This will be the last chance you’ll have to negotiate and go over everything so the lender may be a little more flexible on any final hesitation.

There are a number of costs associated with home ownership, but it’s important not to forget about the final closing costs as these can greatly impact the total cost of your home. If you’re currently getting prepared to purchase a home, contact your local real estate professional for more information.

If you’re familiar with the real estate market, you’ve likely heard the term ‘refinancing’ and may be wondering what this can mean for your mortgage and your financial well-being. While refinancing can be a great benefit for those who are looking for a lower interest rate or a different mortgage type, here are the details on what it can offer and whether or not it will work for you.

Acquiring A Lower Interest Rate

The most common reason people consider refinancing their home is to take advantage of a lowered interest rate. While it might seem like a minimal savings each month, a lower interest rate can add up to considerable savings over time and help you pay off your home loan more quickly. It’s just important to ensure that you’re aware of all the associated costs with refinancing before pursuing this option.

Limiting Your Loan Term

Refinancing also offers homeowners the opportunity to change the term of their loan, which can offer improved financial stability much sooner than expected. Many homeowners may avoid this option because it can bump up their monthly payment, but the difference in cost can be relatively insignificant while still offering financial freedom in less time.

Changing Your Mortgage Type

There are benefits and drawbacks of adjustable-rate and fixed-rate mortgages, and that’s why many people make the decision to refinance and opt out of their rate profile. While fixed-rate mortgages offer stability since you’ll know what you’re paying, an adjustable-rate will move with the market and can actually mean more savings at the end of the day. The option that will work best for you is dependent upon how comfortable you feel with the market.

Consolidating Your Debt

For homeowners who have a high debt load, refinancing can be a means of paying less in order to pay down debt at a more rapid rate. However, it’s important before choosing this option to determine a budget plan you can stick with, as refinancing to consolidate your debt does not necessarily mean you’ll be successful at paying it down. Ensure you weigh your options and potential savings carefully before making a decision.

Refinancing may seem like a good financial decision, but there are costs that go along with this mortgage option so it’s important to crunch the numbers to ensure it will work in your favor. If you’re currently considering refinancing, contact your trusted real estate professionals for more information.

There are so many details involved in the mortgage process that you may not be aware of what pre-approval is if you’ve just entered the market. However, pre-approval assesses your ability to make monthly mortgage payments and can be an important first step in the home-buying process. If you’re currently contemplating a home purchase, here’s why you may want to consider pre-approval first.

Improved Agent Attention

Real estate agents may be reluctant to spend the time or put significant effort into a homebuyer that has not been pre-approved for a mortgage. While a good real estate agent will assist you in finding a home that’s right for you, if you haven’t gone through the necessary process of determining if you’ll be approved, they may think it’s not worth their time to show you houses you may not be eligible to buy.

A Benefit For Home Sellers

In the event that you happen to come across a home that you want to purchase and make an offer prior to pre-approval, there’s a chance the buyer will not waste their time considering it. Because the pre-approval process can determine errors in your credit history and there’s a wait involved, many home sellers will not want to be held up by this process to sell their home. As a pre-approval can reveal errors and bump up your credit score, it can also be of greater benefit for you to have an accurate number going into the home purchase.

Determines Your Financial Health

While a pre-approval is not a sure sign that your mortgage application will be approved, it can provide a detailed look at your financial health. This means that if you happen to have a less flattering credit history than expected, you can go back to the drawing board, saving more money and making payments, to try and bump up your credit. While this isn’t necessarily enticing for the person who is ready to buy, it can be a benefit for the type of home you’ll be approved for.

It’s common to want to get out into the market and find the perfect house at the right price, but pre-approval is an important process that will help you determine the house you can afford. If you’re currently on the market for a new home, contact your trusted real estate professionals for more information.

When you’ve been in your home for a while and have established a certain amount of equity, it can be a good feeling to know that you have an investment you can count on. However, with changing weather patterns you may be afraid of a natural disaster striking and what it could mean for your financial well-being. If you’re curious about how this can impact your mortgage, here are a few things to consider.

Determine Your Protection

The thought of having your home adversely impacted by a natural disaster is bad, but it can be even worse if the proper precautions haven’t been taken to insure your house against its wrath. While there are certain calamities that will be less likely in your area and may be difficult to get insurance for, if you live in an area prone to floods or earthquakes, you should have protection against their occurrence. In all likelihood, if you’ve taken the proper precautions when taking on home insurance, your home should be prepared for what nature unleashes.

Contact Your Insurance Company

Whether you’re certain that your home is covered in the event of a natural disaster or not, it’s important to contact your insurance company as soon as disaster occurs so that you can make the necessary claim. This means that you’ll need to be able to explain what happened, the extent of the damage and provide photographic evidence of your claim so that you have the evidence to back it up. Once the worst has occurred, you’ll want to file a claim with the company as soon as you can to ensure you’ll get back what you’ve invested.

What Does Homeowner’s Insurance Cover?

Generally speaking, there are a number of natural disasters that are included under homeowner’s insurance including tornadoes, hurricanes and wildfires. Insurance for disasters like earthquakes, floods and tsunamis can be purchased separately, while the occurrence of landslides and avalanches may be covered separately. It’s important when purchasing a home that you are covered against natural disasters that can occur in the area so your biggest investment is not at risk.The occurrence of a natural disaster is stressful enough without having to worry about the possibility of your insurance not covering the damage.

With so many mortgage products available on the market, it can be hard to know which ones will serve you best as a homeowner. As a result, there are many mistruths surrounding the reverse mortgage products. If you’ve heard of this homeownership option and are wondering what it can do for you, let’s clear away some of the misconceptions.

You Must Own Your Home

It can certainly be helpful to own your home outright if you’re looking into a reverse mortgage, but it’s not actually necessary. Instead, it’s important for you to have a high amount of equity in your home so that lenders can be sure that you’re a solid financial bet. While the balance you should have on your home varies based on a number of conditions, it’s important to talk to your lender for the specific details involved.

Few Conditions Apply

You may have heard that any homeowner who acquires a reverse mortgage must be 62 years of age or older, but because a reverse mortgage is a mortgage product, there are a number of requirements involved in order to apply. In addition to having enough equity in your home, it must be your primary residence and you will have to prove that you can pay the property taxes, insurance charges and any maintenance costs consistently.

Home Ownership Is Relinquished

Due to the nature of reverse mortgages, many people believe that this type of loan gives the bank ownership of your home. However, the homeowner retains ownership because they are borrowing money against the value of the equity in their home. This means that as long as the payments on the home are maintained, the home will continue to belong to the homeowner.

Expensive Loan Fees

While reverse mortgages can come with more expensive rates because the monthly payments are deferred, it’s important to talk to a mortgage lender about these details to determine what they’ll mean for you. The associated fees will depend on the price of your home, your loan type and your interest rate, so you’ll need to be aware of what the costs are to you before moving forward.

There is a lot of information out there regarding reverse mortgages, but it’s important to do the research so you can be aware of how this product can benefit you. If you’re currently considering this type of mortgage, contact your trusted real estate professionals for more information.

The post-election period is often one of uncertainty, and the time since the 2016 election has been no different with regards to market force and the financial world. With a new administration taking office, there are many questions regarding how Donald Trump’s presidency will impact the market and your mortgage. If you’re wondering what the predictions are for the coming year, here are a few things the experts are considering.

An Increase In Rates

Due to an expected hike in rates by the Federal Reserve, it’s unlikely that potential homebuyers will be able to get the low interest rates of previous years. While higher rates are likely, the proposed tax plan and budget of Donald Trump may lead to increased inflation and could also have an impact on rates down the road. The low rates of previous years certainly made homeownership a more feasible option, but it’s still a good time to get into a home before they rise even more.

Less Red Tape

The money invested into regulations is something that Donald Trump was highly critical of in the run up to the election, and this may mean many opportunities for home ownership that did not exist before. While a poor credit history can make or break a mortgage application, in a time of loosening regulations there will likely be more available mortgage products for those who have a less than stellar financial situation.

Privatizing Loan Programs

There is the possibility that government-sponsored home loan organizations like Freddie Mac and Fannie Mae will come under new ownership. While this may provide an opportunity for potential homeowners, because the risk will be taken on by private owners – and not the government – this may lead to higher rates. As Jordan Levin of the California Association of Realtors says, “I can say with a pretty good level of confidence that it will increase the cost of borrowing because there’s going to be more risk from those pools being borne by the private sector and they’re going to want to be compensated for that additional risk that they’re bearing.”

While the economic policy of the coming years has yet to take shape, the mortgage rates are on the rise and the regulations surrounding home ownership are likely to loosen.