Tag Archives: #lending

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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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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Colder Months Equal Better Home Prices for Buyers

As the temperature drops and we all brace for the winter, there are major advantages to finding the home of your dreams during the cold season.

During the warmer seasons there tends to be an increase in inventory on the market but with that increase comes a hefty increase in price and contract competition. More buyers are looking and when it comes time to put an offer in, chances are you are not the only buyer interested.

Research has found that by home hunting during the colder months, buyers are more likely to find that prices have dropped and competition has also lowered.

  • Sale prices decrease in the autumn months
  • In the 50 metro areas, home sale prices dropped 2.96% on average (that’s a drop of $8,300 on the median home)
  • Home sale prices are usually lowest in winter

When discussing winter buyers, Jonathan Smoke, Chief Economist of Realtor.com outlined “You have 50%-60% more inventory relative to the number of buyers, so there’s basically more options per buyer, and that translates into less competition.”

We found that NerdWallet backed up Smoke’s statements with data on how home prices usually bottom out in the winter months, providing an opportunity to save money.

The main advantages of less competition translates into lower home prices allowing buyers the opportunity for a lower down payment. During traditional market peak months, there tends to be more inventory on the market but with that inventory, buyers pay a higher premium.

We find that buying a home really depends on when you as a buyer are comfortable and prepared and that time is different for every buyer. When the numbers are crunched, winter statistically is the best opportunity for buyers as competition tends to fall away.

The best thing for all interested in purchasing a home is to connect with an experienced Loan Officer and discuss the home buying process. Every buyer has different needs and sitting down and discussing your home buying goals are is the best first step.

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Avoid These Mortgage Mistakes

Buying a home is an exciting process. If done following my simple process, you could save time and money and potentially avoid some serious mistakes along the way.

Shopping For Your Home Before Shopping For Your Mortgage

This is often times the easiest thing for home buyers to miss. It is so easy to start viewing homes and make an estimated guess on what you can afford. This is actually the biggest time waster when it comes to home buying.

I always recommend to get pre-approved before looking. Don’t waste one minute of your time shopping for a home that is outside your price range. Not only does it waste your valuable time but it also can be an emotional process if you get attached to property outside your price range. I always advice my clients to start working with me three to six months before they start the  home buying process.  This will give us time to check your credit and put together a game plan if you need to improve your credit like paying down the right debt and removing possible errors on your credit report.

 Make sure you consider ALL your spending habits

When I work with borrowers, we review their credit report and their spending habits, including their disposable income (i.e. hobbies, habits and other items that will affect your bottom line when being lent to). Things such as golfing on weekends, shopping at the outlets, everything comes into play when deciding your mortgage affordability.

You don’t want to eliminate all the fun you have when you are looking to buy a home but I always recommend digging into spending and making decisions on which items will potentially make it more difficult to make your mortgage payments and also which items are important to your quality of life.

Failing to Review Disclosures and Other Important Documents Completely

I am always available to my clients to review documents and disclosures that may seem complicated or confusing to them as it may be their first time in the home buying process. Every time new disclosures are released it is vital that you review them in depth and feel comfortable with any changes that may be taking place. It literally can cost you money when you don’t review them completely and see minor changes that will ultimately be brought up at closing but could be better understood earlier the process.

Since 2015 there are two primary documents you want to make sure you pay close attention to.

  1. Loan Estimate

What to look for:

  • The total cost of the loan or the APR.
  • Cash to close.
  • Loan terms
  • Mortgage rate
  • Monthly payment
  1. Closing Disclosure

What to look for:

  • Did you receive the Closing Disclosure three days prior to close?
  • Does the Closing Disclosure match the loan estimate?
  • Are the interest rate and the APR the same?

When I am working with my borrowers it is vital that they understand each step of the process and also avoid making these mistakes. If you are interested in learning more about the mortgage process or are thinking about buying a home and want to make sure you don’t waste your valuable time, give me a call to discuss your mortgage needs.

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Is there a Rate-Master?

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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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Ready for Summer?

Is your house?

summer-copy

Clean the walkway
Pressure-wash the walkway, then replace damaged pavers or bricks, or just flip them over. If any pavers are sticking up too high, raise them, remove a little dirt, and drop them back in place. On concrete walkways fill in cracks with a masonry crack filler that matches the color of your concrete.

Spruce up the front door
Probe the weather stripping around the door with a screwdriver and caulk any post-winter gaps before tightening hinges that may have come loose due to shifts in temperature.

 

Prep the windows
Caulk any gaps in the framing and check that the mechanics are working by opening and closing each window a few times. Fill up two buckets: one with 1 cup of vinegar, 1 cup of ammonia, and 1 gallon of hot water; the other with warm water. Wash windows with the vinegar-ammonia solution first, then with water only. Dry with a squeegee.
Quick tip: Wash windows on a cloudy day. The sun may dry the solution too soon, leaving streaks.

 

Reinforce the fence posts
Replace warped or rotten pickets or posts, then give posts a good yank to make sure they’re sturdy in the ground.

 

Redo the driveway
Sweep away debris, patch cracks, then use a squeegee to apply a sealer. For blacktop or asphalt, try Black Jack Blacktop Ultra-Maxx 1000 Driveway Filler and Sealer ($34 for 4?3/4 gallons). For concrete, try Quikrete Concrete Crack Seal ($10 for a quart, both acehardware.com for stores).

 

Tidy up the flower beds
Clear out weeds and use a spade to redefine bed edges. Till the top inch or two of soil if it’s tightly packed, being careful not to disturb any bulbs below. Apply 2 to 3 inches of mulch.

 

Fill in the grass
Remove leaves and twigs and de-thatch dead grass with a metal rake. Ask for help choosing the right seed at a garden center, then apply it to bald patches or anywhere you want a thicker lawn.
Quick tip: Weed-killing fertilizer will work fastest if applied right before it rains.

 

Fix the sprinkler
Check for any winter damage, including broken heads and cracked pipes, by running your sprinkler one zone at a time. Any bubbling or geyser-like area needs a new head.

 

De-gunk the birdbath
Empty the bath and fill it with warm water and ¼ cup of chlorine bleach. (Bleach is safe if you rinse thoroughly, but you can also swap it for 1 cup of white vinegar.) Cover the bath with a tarp or plastic bag, and let the solution soak for 30 minutes before scrubbing and rinsing.

 

Hose down the air-conditioning condenser
Shut down the power on the electric panel, then clear away any leaves or branches lodged in the unit. Wash down all the coils with a garden hose. If you find any chewed wires, call a pro to repair them.

 

Clear out the gutters
Clean leaves and debris from your gutters. The next time it rains, stand outside and look for breaks or leaks in your gutters and downspouts.

 

Repair the siding
If your house has wood siding or shingles, inspect for post-winter rot, repair the damaged areas, then touch up any faded stain or chipped paint. A nylon scrub brush and all-purpose cleaner should eliminate dirt and mold on engineered wood, vinyl, or aluminum siding.

 

Inspect the roof
Grab a pair of binoculars and look at your roof from across the street. Locate curling, cracked, or missing shingles. Also look out for damaged metal flashing around the chimney, pipes, and skylights. Get in touch with a roofer for fixes.

 

Clean the deck
Use a deck brush or power washer plus a deck-cleaning solution (like Cabot Ready to Use wood cleaner pump spray, $12 a gallon, acehardware.com) to remove mold, dirt, and mildew. If the finish is worn, let the wood dry for a few days, then reseal it.

 

Wash the cushions
Most outdoor fabrics are safe to throw in a warm wash. Air-dry, then put the cover back on the insert while it’s still slightly damp to keep it smooth. If the fabric isn’t removable, clean it using a soft scrub brush, dish detergent, and warm water.

 

Scrub down the gas grill
Heat the grill for 10 minutes at a high temperature so it’s easier to scrape off gunk inside the cook box. Disconnect the gas line and let the grill cool before removing and washing the grates, burners, and drip tray in warm, soapy water. Wipe down the grill’s exterior before putting everything back together.   Tip: To check the grill’s propane level, feel the outside of the tank. The area with fuel will be cooler than the empty portion.

Call Kathleen
She will help you refinance to build a pool, get a whole house fan or move to a more energy efficient home!

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