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Understanding Mortgages

Who should I talk to first when buying a home

Who should I talk to first when buying a home?

You've decided to enter the housing market. Now what? Well, if you're like most people, aside from looking at what houses are available for purchase on various listing websites, you probably think talking to a real estate agent is the first person with whom to speak. You shouldn't have a problem finding one, as there are over 1.1 million of them in the U.S., according to the National Association of Realtors®.

While a real estate agent will certainly help you locate your forever or for-the-time-being home, listing agents actually aren't the first people to go to. Your best bet in the early going are loan officers. But what, exactly, are loan officers. More to the point, what makes them a go-to source starting out?

What does a loan officer do?

Loan officers perform many different functions in the mortgage realm. For the sake of simplicity, they serve as the gateway to obtaining a home loan.

When you meet with a loan officer, he or she will go over various personal details that will tell them whether you're a good candidate to buy a house. Some of these items they'll look through are pretty basic: whether you're gainfully employed, what you earn per year in salary, what kinds of assets you have available, and so on.

Loan officers will also run a credit check to get a determination of your credit score. The credit scoring bureaus - TransUnion, Experian and Equifax - use slightly different scoring metrics, but they all work from the fundamental premise of gauging how consistent you are about making your payments on time. The higher your score, the better chances you have not only of being approved for a loan, but securing one at a lower rate of interest compared to someone with a low score.

In short, loan officers help you get the proverbial ball rolling as it pertains to home financing.

Who employs loan officers?

Much like real estate agents, loan officers work for various entities. As noted by the Bureau of Labor Statistics, there are approximately 318,600 loan officers to choose from throughout the U.S., 80 percent of whom are employed by "credit intermediaries." That's an umbrella term for credit unions, mortgage companies and commercial banks.

It's fitting that loan officers work for credit intermediaries, because loan officers serve as the middleman. These individuals talk to loan applicants like you to gather and evaluate the personal information you provide, who then get in touch with management to make a decision on mortgage approval.

Consumer loan officers - the kind that you'll meet - specialize in loans for individual borrowers, but there are other varieties, such as commercial loan officers. They primarily deal with business owners interested in obtaining property for business purposes.

What makes loan officers truly significant?

Aside from explaining the details of what you need to apply for a mortgage, loan officers can give you a better sense of how much house you can afford. Home values go up and down, largely depending on supply, demand and what other properties in the area sell for. Loan officers help you determine the types of houses that fall in your budget, ensuring you don't settle on a place that you can't afford.

Additionally, loan officers can supply you with something that can provide you with an advantage: a prequalification letter. The current housing market favors sellers, meaning more people are looking to buy a house than sell. As a result, the market is highly competitive.

With a prequalification letter, though, your odds of getting the house you want improve because sellers know you have the means with which to buy. With due diligence - like meeting with a loan officer first - you're one step ahead of the game compared to people who met with a real estate agent at the outset.

Choices are a great thing to have when you're looking to buy a house. Loan officers provide them and, at the same time, help to narrow the market down so you avoid wasting time. So, what are you waiting for? Enter the market today by meeting with a reputable lender.

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Helpful Tips

3 home renovation suggestion this year

3 home renovation suggestions to consider this year

Whether you're a brand-new homeowner or have longed to have a place to call your own, you've probably thought about various home renovation ideas at one point or another. Refurbishing your home can provide a lot of pizzazz to your cozy confines and better yet, increase its resale value should you ever decide to list it.

Perhaps the most difficult aspect of renovating, even more than what it takes to actually do it, is knowing where to begin. With so many options available, coming to a final decision can be daunting. But it doesn't have to be, so long as you have a general idea of which room - or rooms - in your residence could use a good pick-me-up.

Family painting together

Here are three of the more popular projects homeowners choose to take on:

1. Kitchen

The most trafficked room of the house, the kitchen is the gathering place for conversations, meal planning, dining and snacking. In 2017, according to figures compiled by Houzz, the kitchen was the most frequently chosen room to remodel - and it paid off, quite literally. Roughly 80 percent of renovating homeowners acknowledged that the refurbishing of their kitchens increased the value of their properties, the Houzz survey revealed.

2. Bathroom

Ask any real estate agent, and they'll acknowledge just how invaluable would-be buyers consider the bathroom. Given how frequently people opt to modernize it, that certainly seems to be the case, as in 2017, more than a quarter of homeowners who remodeled chose the guest bathroom.

Perhaps the only room of the house that gets more use, outside of the kitchen, is the bathroom, which may explain why nearly 40 percent of Americans who renovate it do so to upgrade drab, worn-out surfaces, be it the floor, tub, vanity or all three according to the National Association of Realtors' 2017 Remodeling Impact Report.

3. Home security and automation systems

Automation has made homes more secure and enjoyable, thanks to systems synced to interior lighting and setting alarms. In 2017, home security installations accounted for 15 percent of interior renovation projects, a dramatic uptick from 10 percent during the previous year, according to the Houzz poll.

By doing some self-reflection and running the numbers so you can properly budget, you'll come to a decision on the renovation project that feels right.

 

Click here to learn more about Renovation Mortgage Loans at Residential Mortgage Services


Things to Consider

Should you buy a flipped house?

Should you buy a flipped house?

If you ever watch home improvement shows, you've definitely seen "flipped" houses. From HGTV's "Flip or Flop" to A&E's "Flip This House," there are many shows that have featured the ups and downs of the tasks involved in restoring homes. The trials and travails can make for enjoyable reality show entertainment.

But have you ever thought about actually buying a home that's been flipped?

Home flipping - and buying - is as popular as ever. Last year, for example, nearly 208,000 single-family houses and condominiums were flipped, the largest amount in more than a decade, according to ATTOM Data Solutions. Sales for these residences are booming nationwide - particularly in Pennsylvania, Ohio, Baltimore, Tennessee, Nevada, Alabama and Arizona.

ATTOM Data Solutions Senior Vice President Daren Blomquist said there's been a surge in home flipping, especially in the last three years, as lenders are more willing to provide the appropriate financing for those doing the renovations and buyers take advantage of the newly installed furnishings and accouterments.

The question is: Should you? Here are a few tips that can help you decide if it's the right move for you:

Do your research on flipped houses for sale

Just as every person has a story, every house has a history, especially properties that require fixing up. As noted by the Washington Post, the longer a house has been around, the more owners have likely lived within its confines.

Talk with your real estate agent about where you can go to obtain details about the flipped home's background. You'll be able to figure out key aspects about the house that can provide more context about how extensive upgrades have been over the years and the makeup of its foundation.

For instance, colonial homes were often built on fieldstone, which may be more vulnerable to rodent infestation or crumbling.

Know who completed the home upgrades

No two properties are built the same - nor are the people that did the renovating. If a flipped home experienced prior renovations, those can affect the nature of the latest ones.

When a flipped property is up for sale, check with your agent to see if he or she can find contact information about who completed the upgrades. This will help you get a sense of their expertise and whether all of the appropriate permits were signed and submitted.

Also, be aware that the point person for renovations may have hired a contractor to do them, which entails more research into the builder's qualifications and due diligence regarding the firm being licensed to operate within the state.

Ensure property has a certificate of occupancy

As its name suggests, a certificate of occupancy is a document that certifies the flipped property is safe to inhabit. These are made available after a property has gone through a series of inspections by licensed professionals. It's a series because they may involve more than one if the property has received more than one renovation.

As noted by Realtor.com, it's usually the seller's responsibility to ensure that the inspection has been done, but it's good idea to mention this to your agent so you have it for your records.

Other "to-do" items to check off your list include requesting an updated disclosure statement from whoever is selling the property and obtaining warranties from any interior or exterior installations.

Buying a flipped house may be best move you'll ever make, but it could be a mistake if you don't know what you're getting into. By doing your due diligence, you'll make the move that's right for your family.


Understanding Mortgages

Home sales are down. What that means for you

Home sales are down: What that means for you

If you're considering buying a new house, you've probably noticed the pace of people purchasing homes continues to rise in many areas nationwide. But, if you take a more recent look at the data, the trend has shifted a bit in many regions.

According to the latest figures from the National Association of Realtors, existing sales have fallen for three consecutive months. The most recent evidence was in June 2018, when transactions dropped approximately 0.6 percent from May and 2.2 percent on a year-over-year basis.

The same was true among pending home sales, a statistic that measures contract signings which have decreased for six months in a row, NAR revealed, sliding 2.5 percent on an annual basis.

Even newly constructed single-family property buys dipped in summer's opening month. As noted by the U.S. Department of Housing and Urban Development, new-home sales plunged nearly 5.5 percent in June to a seasonally adjusted annual rate of 631,000 units.

So, what does this all mean for you? If you're a first-time homebuyer aiming to land a residence at a price you can afford, here's what you may be able to expect should the trend continue:

Home prices poised to pull back

Perhaps the only thing more certain than Americans buying homes is the upward trajectory of asking prices. The median for existing homes climbed yet again in June, marking the 76th straight month they've done so on an annual basis, NAR reported. However, with home sales down virtually across the board, the direction of home values may follow suit. What's been preventing this from happening sooner is supply not being replenished at a fast enough clip.

But the inventory situation appears to be improving, based on the most up to date numbers from the NAR. At the conclusion of June, unsold properties totaled around 1.9 million, the equivalent of a 4.3-month supply, according to NAR. This means it would take right around a quarter of the year for inventory to run dry were no other properties to enter listings. The most noteworthy aspect of these numbers is 1.9 million. Up 0.5 percent from a year ago, it's the first time in three years that inventory rose compared to 12 months earlier.

Listings to remain 'active' for longer

Twenty-six days: That's how long it takes before a for-sale house is snatched up by a prospective buyer, according to NAR's latest figures, down from 28 days compared to last June. In fact, more than half of the houses that sold then were on the market for a month or less. That houses are claimed so quickly can be extremely frustrating, but if the sales slowdown persists, those for-sale signs should hang around for lengthier stretches.

Waiting until winter may be wise

When is the best time to buy a house? That's a question all prospective buyers asks themselves at some point. Generally speaking, it's the summertime, when more listings become available with kids out of school and the weather pleasant. However, if you're looking to buy at a low price, it may behoove you to wait until the temperatures plunge. Real estate professionals note that buying in the winter can really pay off - literally - because if sellers haven't had luck, they'll be more inclined to sell for less than their initial price point. And if the sales dip continues, that's a scenario you're bound to happen upon.

The housing market is a roll of the dice - you never know what's going to happen from one moment to the next. But if you play your cards right, slumping sales can work to your benefit.


Understanding Mortgages

3 mortgage mistakes you want to avoid

3 mortgage mistakes you want to avoid

Applying for a mortgage could be a lot easier than you think. If you're fully employed and have a history of paying off your bills on time, chances are good you'll be approved.

Having said that, there are definitely some mortgage mistakes you'll want to avoid, especially if this is your first time in the market. Here are a few of them:

1. Failing to check your credit report

The credit score found in your credit report serves as a quick means for your lender to establish how responsible you are with finances. While traditionally quite accurate, they're not error-free. In other words, there could be inaccuracies on your report that adversely affect your score. That's why you should make sure to check your report from all three bureaus before applying to ensure everything is as it should be. You can file a complaint if something appears off.

2. Applying for new credit

While there's nothing necessarily wrong with opening a new credit card, doing so shortly before you apply for a mortgage isn't a good idea, financial experts warn. As noted by FICO, taking out additional credit triggers what's known as a hard inquiry. As opposed to a soft inquiry, where you take a look at your credit report, a hard inquiry authorizes the lender to examine your credit because you're looking to obtain additional capital. This process in and of itself causes your score to dip. The impact is usually small, but the difference may be enough to raise your interest rate or trigger a loan denial.

3. Having little money saved

While a steady income stream is important, it's not always sufficient when it comes to purchasing a home. Buying a house often (but not always) requires a down payment, and if you don't have enough to make one, getting a new house might become a bit tougher.

Knowledge is your biggest advocate when you're looking to buy. So long as you're prepared and do your research, the mortgage approval process can be like a walk in the park.


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