Tag Archives: #Conventional

Things NOT to do before escrow closes

I am going to write another blog about what to expect at your mortgage closing, but I feel it is equally important to point out the things that you should stay clear of before we even get to the closing, because these things could put the whole mortgage at risk!

These are the things you should not do before you close escrow.

Changing Jobs

Lenders prefer a steady and consistent job history, and your whole mortgage to this point has been based on your current income history. Any changes in your employment at this point such as changing jobs, companies or becoming self-employed could spell disaster to your ability to purchase your home. At the very least, it could put the process on hold while the lender re-evaluates your financial position.

Making Big Purchases

Yes, you are getting ready to move into that new home and you need new furniture or appliances or you want to celebrate with a trip to Cancun, or maybe even want a new car to make your commute from your new home more enjoyable. All of this is definitely a bad idea! Your loan is based on something called “debt to income ratio” and it was calculated based on your current debt. Adding any more debt at this point will change that ratio not in your favor! Even buying these things with a cash reserve you have set aside is a bad idea, because you would have had to disclose your savings during the mortgage process and this was all taken into account when you were approved. So for now, do not make any purchases with any type of credit or cash savings. Wait until you have closed escrow and have the keys to your new home.

Paying Your Bills Late

This should be self explanatory, but you don’t want to be late on your car payments or credit card payments now, when your new home hangs in the balance. Be sure to stay current on all debt before and during the escrow process. Of course, you want to continue to stay current and pay off that debt even after you get the keys to your new house!

Opening/Closing New Credit Card Accounts

This is just a bad idea during your escrow. There is nothing to be gained by having more debt and opening new accounts could impact your credit status. The same is true for closing accounts, even though that may seem counter intuitive; closing accounts during the escrow could affect your credit rating. Now, sometimes lenders will ask you to pay off small debts in order to get your debt to income ration down to an acceptable level, but that is a request the lender will make, otherwise, just keep paying your monthly payments as usual.

Being Unreachable

The escrow process only last about 30 days on average, and during this time, your lender should be able to reach you easily. Don’t travel to remote places where you cannot be reached. Don’t get a new cell phone number, unless you give it to your lender first thing. Don’t take extended vacations, or travel to places you may not be able to get back from in time to close escrow. Many times during the closing there are small or large glitches, and the lender needs your attention right away, Not being available could push back the closing date on your new home.

These are just the big ones, and the ones that could impact you the most. Please feel free to contact me any time if there are questions about your closing. It is better to get the answers ahead of time, rather than dealing with a potential issue during the closing process. I am always available to help make this process easy and get you into your new home!

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Understanding Mortgage Insurance Q&A

By: Kathleen Beck, Mortgage Lender

West Coast Mortgage Group

NMLS #243181 | BRE #01058848

Mortgage insurance is an important element of the loan process if you have a low down payment, yet many first time borrowers aren’t very familiar with what it is and how it works. Mortgage insurance helps borrowers lower the risk they are placing on lenders for qualifying them for a loan with a low down payment. There are two types of mortgage insurance, “Borrower Paid” and “Lender Paid.” Understanding the difference between borrower and lender paid, and why utilizing this insurance option could benefit the buyer as well as the lender.

Here are some great questions and answers that I have provided my clients that all borrowers may also find useful.

  • Q – Who needs mortgage insurance?
    • A – Most borrowers making down payments fewer than twenty percent of the purchase price need to obtain mortgage insurance.
  • Q – What is the purpose of mortgage insurance?
    • A – Mortgage insurance lowers the risk the lender making a loan to you holds, so you can qualify for a loan.
  • Q – What is Borrower Paid Mortgage Insurance (BPMI)?
    • A – BPMI is insurance on your loan for the lender when a borrower has a low down payment and a lender is looking for assurance that the loan will be paid in full and on time. If a borrower decided to utilize BPMI, the lender charges a yearly premium paid in monthly installments.
  • Q – What is the average a borrower will pay a lender for their BPMI?
    • A – On average, BPMI premiums costs between 0.3 and 1.15 percent of the total loan amount.
  • Q – What is Lender Paid Mortgage Insurance (LPMI)?
    • A – LPMI is mortgage insurance that the lender pays for the insurance premium instead of the borrower. The cost of the LPMI is reflected in a higher interest to the borrower.
  • Q – Does mortgage insurance increase your monthly payment?
    • A – Mortgage insurance does increases the cost of your loan.
  • Q – Will the mortgage insurance payment be included on my monthly payment statement?
    • A – Yes, mortgage insurance will be included in your total monthly payment.
  • Q – If I default on my payments and the insurance kicks in, what will happen to my credit and my home?
    • A – If you fall behind on your monthly payments, your credit score may suffer and there is a possibility your home could foreclosure.

There are multiple loan options available to borrowers with low down payments. I enjoy working with my clients to help them find the down payment and loan that best fits their financial needs and I always recommend that they ask questions and maintain communication throughout the lifecycle of their loan. The last tip I would like to leave you with is, once the loan is paid down some, you may be eligible to cancel your mortgage insurance. If you are able to cancel, you won’t have to continuing to pay the monthly insurance expense.

#Mortgage #MortgageInsurance #LPMI #BPMI #LenderPaidMortgageInsurance #BorrowerPaidMortgageInsurance #Market #RealEstate #Lending #HomeOwnership #Jumbo #FHA #VA #Conventional #Sacramento #BayArea #HomeBuyer #CreditScore #DownPayment #KathleenBeck #TrustedMortgageLender

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2017 Increasing Loan Limits

With so many changes taking place as we transition into this New Year, the Federal Housing Administration (FHA), Fannie Mae, Freddie Mac and VA increased loan limits for the first time since 2006! Two large changes that have helped create this shift are the steady rise in property values and the housing market continuing to recover. The new limits will be considered for borrowers looking for lending on or after January 1, 2017, and will remain in place through the end of the year.

The maximum loan limits have increased across the board, mainly being seen through one-unit properties as well as in high cost areas and FHA-insured Home Equity Conversion Mortgages (or reverse mortgages).

Maximum loan limits:

  • One-Unit Properties – Increase from $417,000 to $424,100(Sacramento Tri-County area).
  • High-Cost Areas – Increase from $625,500 to $636,150.
  • FHA-Insured Home Equity Conversion Mortgages (or reverse mortgages) – Increased to $636,150.

These increases mark a rising confidence in borrowers ability to repay their loans and have lead to more options for buyers when it comes time to choose a home due to a wider variety of financial lending options.

It is important to understand that lenders still work diligently to get borrowers approved and the documentation requirements have not changed. These increasing lending limits have allowed me to create a competitive landscape for my clients, focused on providing more financial lending options.

For more information regarding these lending limits shifting and the requirements for buyers to make a home purchase, I am always available to help my clients, friends and family and look forward to the new opportunities these increased loan limits will create for buyers in 2017.

#Mortgages #LoanLimit #Market #RealEstate #Lending #HomeOwnership #Jumbo #FHA #VA #Conventional #Refinance #Millennials #BabyBoomers #2017 #Sacramento #BayArea #HomeBuyer #CreditScore #KathleenBeck #TrustedMortgageLender

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Four Trends Will Shape the Housing Market in 2017

By: Kathleen Beck, Mortgage Lender

CA BRE #01058848  |  NMLS #243181

It doesn’t take much reflecting on 2016 to understand that 2017 will find creative ways to surprise us. Knowing the complexity of the market I want to break down what we can expect to see shape our buyers market for 2017 and also combine that with what Realtor.com annual market study to draw a picture of the key housing trends to come.

According to Jonathon Smoke, Chief Economists of Realtor.com, “The pace of growth is still strong and, for pricing, still represents an above-average level of appreciation.”

Key 2017 Predictions:

The West Will Lead the Way

Realtor.com expects metropolitan markets in the West to see price increase of up to 5.8% and sales increase of 4.7%. The Western markets also are dominating the 2017 Realtor.com Top Housing Markets, including Sacramento, Los Angeles, Tuscan and Portland.

Millennials and Baby-Boomers Will Move Markets

Both millennials and baby boomers are approaching life stages that naturally motivate people to change their living experiences such as, getting married, buying a home, having children, empty nesting and retiring. Jonathon Smoke predicts that millennials will make up 33% of buyers in 2017.

Slowing Down Price Appreciation

Home price increases are forecasted to slow from what was forecasted at 4.9% in 2016 to 3.9%. “Prices are still likely to go up at an above-average pace as long as supply remains so tight,” Smoke says.

Fast Markets with Fewer Homes

The average time it takes a home to move from “listed” to “sold”, is currently 68 days in the top 100 metropolitan areas. That average age of inventory (68 days) is 11 days faster than the national average. The conditions limiting home supply are not expected to change in 2017.

The number one thing I recommend for all my clients is to get your documents in order and lets talk about what the market is doing and when would be best for them to buy. Everyone’s timeline is different and making sure you feel comfortable with both what the market is doing and also what you want your financial future to looks like are always my top two priorities.

#Mortgages #Market #RealEstate #Lending #HomeOwnership #PriceAppreciation #Jumbo #FHA #VA #Conventional #Refinance #Millennials #BabyBoomers #2017 #Sacramento #BayArea #HomeBuyer #CreditScore #KathleenBeck #TrustedMortgageLender

 

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3 New Year Resolutions for Future Homeowners

As the holidays swirl and the New Year is just around the corner, it’s time to start thinking about your new years resolutions. If buying a home is on your list of 2017 goals, it’s the right time to start creating resolutions that direct you to accomplishing that milestone of home ownership.

Here are some great New Years resolutions to focus on in 2017 to help make your goals a reality in the New Year.

Check and Raise Your Credit Score

Being familiar with your credit score and history is one of the biggest factors mortgage brokers and banks will look at when determining whether or not to lend to you. Starting with a free online credit report provider and analyzing your score is the beginning to finding ways to raise your current credit. If your credit score is lower than you’d like don’t panic. It is always a good time to start taking easy steps to improve your credit.

Tips to Raising Your Credit Score:

  • Pay your bills on time
  • Pay credit cards down to 1/3 of the high limit each of your credit cards
  • Pay off your credit balances every month

Organize the Documents Needed to Purchase a Home

Having the documents and forms need to complete the home buying and mortgage process can help your entire transaction run smoother and also help you get a better sense of where you stand in terms of loan qualifications.

Documents to Start Gather:

  • Tax returns for the past two years
  • W-2 income statements
  • Two most recent pay stubs
  • Most recent credit-card statements
  • Most recent bank and investment account statements
  • Divorce decrees and child support documents

Get a Pre-Approval

A pre-approval means a legitimate financial institution has looked into your financial background and determined what you qualify for, letting real estate brokers and sellers know that you’re the real deal. Regardless of where you stand on the map to homeownership, connecting with a trusted mortgage professional should be at the top. Understanding what steps are needed to get you from point A to point B can provide a sense of ease during this process. More importantly, knowing what your home buying budget is changes the entire buying experience and also gives you leverage to move forward if you do walk into the home of your dreams over the weekend.

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10 Rules For Today’s New Home Buyers

Over the past few decades the housing market has gone through a boom and a bust, followed by an insane decade of home-price escalation, wide-scale under-financing, and subprime lending. Today, many homebuyers are stepping into the real estate arena for the first time and they are wondering where they fall in the home buying “market” cycle.

Many clients ask me what advise or “rules” I give buyers based on my experience of the ever-changing market. Here are some rules for homebuyers looking to make the transition to homeowner.

  1. Research and learn about the area the home is in that you are interested in buying. Talk to the neighbors. You’re not just buying a house, you’re buying a neighborhood.
  2. Put down 20% of the purchase price if possible to avoid mortgage insurance.
  3. Keep extensive financial records, and be patient throughout the entire process.
  4. Don’t overpay for a house you can’t really afford expecting the market to appreciate.
  5. Less home can actually mean more money in your pockets.
  6. Actively manage your credit and shoot for a score above 750.
  7. Plan to stay in your home as long as possible.
  8. Budget for all the costs of homeownership not just the monthly mortgage payment. Calculate funds for property taxes, insurance, upkeep, and even emergency home repair)
  9. Feel out your job and the security you have within your role with the company. Also look into your companies industry and make sure you don’t foresee any fluctuation in the market industry that could alter your employment.
  10. Connect with a trusted lender and work patiently and closely with them to ensure your financially side of the transaction is not only inline for the success of your offer, but also for the success of your family’s financial future.

I am always available to help interested homebuyers learn more about where they stand financially and how they can transition smoothly into home ownership.

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Millennial Buyers to Transform the 2017 Real Estate Market

Every year realtor.com® does an annual survey of home buyers to compile data on home-buying trends. According to their 2016 findings, more than half of all homes next year will be bought by first-time home buyers, and the survey states most of those buyers will be millennials.

  • In 2016 33% of home buyers were first-time buyers
  • In 2017 52% of home buyers were first-time buyers
  • In 2017 61% of first-time buyers will be under age 35.

Jonathan Smoke, chief economist for realtor.com® said, “This represents an ‘Oh, shift’ moment in housing. With so many first-time buyers in the market, competition will be even fiercer next year for affordable starter homes in the suburbs. Those looking to buy may want to consider a winter home purchase in order to avoid bidding wars and higher prices spurred by a potential increase in millennial buyers.”

Millennial First Time Home Buyer Focus:

  • Safety
  • Privacy
  • More Space
  • Indoor and outdoor space

Millennials’ Top Reasons for Buying:

  • Moving in with a partner
  • Getting married
  • Growing tired of their current living space
  • planning an addition or two to their family

Millennial Buyers Prefer:

  • Single-family homes (39%)
  • Townhomes (34%)
  • Multifamily homes (15%)
  • Condos (10%)

If you are a millennial thinking about buying in the near future, or just someone who wants to beat the millennial rush, we should sit down and talk about what you are looking for and how your financing can be lined up to meet your home buying needs.

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Understanding Mortgage Rate Locks

Mortgage rates locked down / fixed concept

Understanding Mortgage Rates Locks

There is no reason any buyer should settle for anything less than the lowest rate possible. But understanding how rates work and also that sometimes the best price on a loan isn’t always the best rate on a loan. Let’s understand how you can get the best possible overall terms and how that affects your mortgage rate.

Mortgage Rate Locks

A mortgage rate lock occurs when a mortgage lender makes a commitment to honor a specific interest rate for a specific period of time. Mortgage rate locks are stated in 15-day increments with the two most common rate lock periods at 30 days and 45 days. Usually, the longer a lender has to lock your rate the higher your mortgage rate. Rates should be locked for the number of days required to close your purchase or refinance your loan.

Here are important guiding principles when understanding mortgage rate locks.

  • Always get your rate lock agreement in writing
  • Understand your rate lock policy
  • Ask about rate-lock fees

All borrowers needs a rate lock in order to close their loan or refinance.

Mortgage Rate Lock Expiration

When a mortgage rate expires lenders are under no obligation to the original locked rate.

A rate lock extension can be acquired and is exactly what it sounds like, an extension to the original rate lock. The terms of the extension are agreed upon by the lender and the borrower and come at an expense leading to the importance of choosing your rate lock terms wisely.

If mortgage rates rise or drop, you don’t have the ability to get a new rate.

Floating Your Mortgage Rate

Prior to closing, if you chose to float your rate, you are assigned a mortgage rate at the prevailing market rate of that particular day. This can be risky as the unknown and availability of rates can fluctuate.

It is always important to make sure you are working with someone who you trust and is a great communicator. Understanding what rates are available to you and what your home buying or refinancing timeline is can play a huge role in your monthly payments. Ask as many questions as you can and make sure you are confident when you make the decision to lock, extend or float your mortgage rate.

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I hate to keep harping on you, but…

good-news

Get it, HARPing?  Corny, I know but it is exciting news and I really want you to know!  I first told you about the government’s HARP (Home Affordable Refinance Program) and how amazing it is for underwater homeowners.  The program was set to end in December but it has now been extended.

Homeowners who owe more than their home is worth will get another shot at shoring up their finances under a new streamlined refinance option announced today.

The Federal Housing Finance Agency said today that Fannie Mae and Freddie Mac will be offering a new refinance plan beginning in October 2017.

It was also announced that HARP is being extended until Sept. 30, 2017. We had been expecting the Home Affordable Refinance Program to expire in December.

The eligibility criteria with HARP is that the loan had to be originated before June 1, 2009, to qualify. But there is no such cutoff date under the new refinance option that begins later next year. Other main differences: The new option is expected to be more sustainable going forward, and homeowners can use it to refinance more than once.

More than 300,000 homeowners across the U.S. are still eligible to refinance under HARP.
Call me today to find out if you qualify.  I love to help!

new publicity shot kathleen beckKathleen Beck, Mortgage Lender
916.722.0395 direct
Kathleen@BeckHomeLoanPro.com / http://www.BeckHomeLoanPro.com
West Coast Mortgage Group
CA BRE# 01058848 / NMLS#243181

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Is there a Rate-Master?

iStock_falling-rates-houses_XSmall-300x219

How in the world are interest rates calculated?  Is there a Rates Boss that gets to decide whether they go up or down?  Not quite!  Here is a little insight into how mortgage interest rates are formed.

Mortgage interest rates have a very significant impact on the overall long-term cost of purchasing a home through financing. On the one hand, mortgage borrowers are seeking the lowest possible rates, but on the other hand, mortgage lenders have to manage their risk through the interest rates they charge. The lowest mortgage interest rates are only available to borrowers with the most solid finances and sterling credit histories.

While the financial health of borrowers affects the specific interest rates they can obtain, the general level of mortgage interest rates is influenced by a number of critical economic factors, as well as government financial policy. The factors that influence mortgage rates all represent basic rules of supply and demand in one form or another.

1) Inflation

The gradual upward movement of prices due to inflation is an important factor in the overall economy and a critical factor for mortgage lenders. Inflation erodes the purchasing power of dollars over time. Mortgage lenders generally have to maintain interest rates at a level that is at least sufficient to overcome the erosion of purchasing power through inflation to ensure that their interest returns represent a real net profit. For example, if mortgage rates are at 5%, but the level of annual inflation is at 2%, then the lender’s real return on a loan in terms of the purchasing power of the dollars they received in repayment is only 3%. Therefore, mortgage lenders carefully monitor the rate of inflation and adjust rates accordingly.

2) The Level of Economic Growth

Mortgage rates are also influenced by economic growth indicators such as gross domestic product (GDP) and the employment rate. Higher economic growth levels generally produce higher incomes and higher levels of consumer spending, including more consumers looking to obtain mortgage loans for home purchases. The upswing in overall demand for mortgages tends to propel mortgage rates higher, since there is only a certain supply of money that lenders have available to lend out. Naturally, the opposite effect results from a weakening economy. Employment and wages decline, leading to decreased demand for home loans, which in turn puts downward pressure on the interest rates offered by mortgage lenders.

3) Federal Reserve Monetary Policy

The monetary policy pursued by the Federal Reserve Bank is one of the most important factors influencing both the economy generally and interest rates specifically, including mortgage rates. The Federal Reserve does not set the specific interest rates in the mortgage market, but its actions in establishing the Fed Funds rate and adjusting the money supply upward or downward have a significant impact on the interest rates available to the borrowing public. Generally, increases in the money supply put downward pressure on rates, while tightening the money supply pressures rates upward.

4) The Bond Market

Banks and other investment firms market mortgage-backed securities (MBSs) as investment products. The yields available from these debt securities must be sufficiently high to attract buyers. Part of this equation is the fact that government and corporate bonds offer competing long-term fixed income investments. The yields available on these competing investment products affect the yields that are offered on MBSs. The overall condition of the larger bond market therefore indirectly affects the mortgage rates that lenders charge, since the lenders must generate sufficient yields for MBSs to make them competitive in the total debt security market.

One frequently used government bond benchmark that mortgage lenders often peg their interest rates to is the 10-Year Treasury bond yield. Typically, the average spread for MBSs above the 10-year Treasury bond yield is approximately 1.7%. MBS sellers must offer higher yields because repayment is not 100% guaranteed as it is with government bonds.

5) Housing Market Conditions

Trends and conditions in the housing market also affect mortgage rates. When fewer homes are being built or offered for resale, the decline in homes being purchased leads to a decline in the demand for mortgages and pressures interest rates downward. A recent trend that has also applied downward pressure to rates is an increasing number of consumers opting to rent rather than buy a home. Such changes in the availability of homes and consumer demand affect the levels at which mortgage lenders set loan rates.

Call me with any questions or to find out what current rates are!

 

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Original post:http://www.investopedia.com/articles/wealth-management/120115/most-important-factors-affect-mortgage-rates.asp

 

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