3 Things You Should Never Hide from Your Mortgage Lender

You’re ready to apply for a mortgage. The process of meeting with a lender and a getting a mortgage can be very complicated, especially for first time homebuyers. To help with this process, here are a few things to consider being up front about from the very start.

Career changes

When handing out large loans, lenders look for employment stability and steady income; most will check your employment history and income throughout the mortgage application process. Therefore, it’s better to be straightforward from the beginning. Failing to do so may jeopardize your eligibility or cause other problems prior to closing.

Other loans

If you have taken out other large loans or made a big purchase before applying for your mortgage, your lender needs to be in the loop. Making these financial decisions will affect your mortgage as it increases your “debt-to-income ratio” or DTI. Having a high DTI will also result in a higher mortgage interest rate, which makes you riskier in the eyes of your lender. So, come clean about that new car or any other significant loans – because it may affect the type of mortgage you qualify for.

Large deposits

When applying for a mortgage, the lender will usually ask for two months’ worth of bank statements. If they notice you’ve made multiple large deposits of over $100 (that are not attributed to income from your job), it’s imperative you provide them with documentation explaining the source of the income. These large deposits can be deemed quite questionable during the underwriting process – so in order to avoid delays, be prepared with all necessary documentation.

Looking to buy a home in the Monmouth or Ocean County area? You saw our last four short financial solutions videos on the benefits of a First Financial mortgage, how First Financial works with our members’ lending needs, personalized service, and personalized loan options. Now check out our final video in this series: creative loan solutions. If you have questions about the mortgage process or don’t know how to get started, we are here for you. Contact the Loan Department at 732-312-1500, Option 4 or learn more about First Financial mortgages on our website.

*Subject to credit approval. A First Financial membership is required to obtain a mortgage and is open to anyone who lives, works, worships, or attends school in Monmouth or Ocean Counties in New Jersey. See Credit Union for details. Federally insured by NCUA.

 Article Source: Wendy Moody for CUInsight.com

5 First Year Homeowner Expenses to Prepare For

Most of us are prepared for costs like homeowner’s insurance, property taxes, and HOA dues. We can work these predictable expenses into our housing budget as we begin to shop around and start the purchasing process. But what about the other things? Many who share their experience and advice, learned the hard way that certain expenses crop up with surprising predictability the first year you own a home. If you’re not prepared, these expenses could create a budgeting crisis, or even worse — a debt crisis.

1. Appliance Repair or Replacement

Your prospective home’s appraisal will bring to light just about every major and minor repair you’ll need to complete within the next 10 years, whether it’s flooring, roofing, siding, plumbing, electrical, or structural issues.

The appraisal also lists the appliances included with your home, and this is something you’ll want to pay special attention to. Take careful note of how old the appliances are and how heavily they’ve been used, so you’ll have a game plan for repairs or replacements. For instance, are you purchasing from a single person who didn’t use the dishwasher much or a family of five who used it daily? Here’s a list of the usual life expectancy for major appliances:

  • Washers, dryers, refrigerators, and dishwashers: 10 to 13 years (depending on prior use)
  • Gas ranges: 15 years
  • Stovetops: 15 to 18 years
  • Microwaves: 9 to 10 years
  • Water heaters: 10 to 20 years (tankless water heaters last longer)
  • Furnaces: 15 to 20 years

2. Cosmetic Upgrades

During your first few walk-throughs, you probably started brainstorming about the fun projects you want to do, like painting and updating light fixtures or window treatments. These types of things don’t seem expensive, but they can quickly add up when you’re doing several of them at once.

Separate what you need to do from what you’d like to do (the torn window blinds versus the ugly shade of purple in the bathroom), and draw up a cost estimate so you can start preparing for these upgrades before you move in.

3. Additional Furnishings

You may plan to use your current furniture, but typically you’ll need additional furniture items for your new home – especially if you’re gaining a guest bedroom or additional bathroom. Budget for this expense as well, and look for deals on swap sites and apps like CraigsList, Let Go or Offer Up.

4. Setting Up Services

This one is easy to take for granted, especially if you plan to keep the same services you’ve been using (at the same prices). Don’t forget that transferring services like telephone, internet, cable TV and satellite to a new location usually requires an installation and/or equipment fee. To save a little money, treat it as a new negotiation: don’t be afraid to ask about promotional deals and negotiate pricing based on the competition.

5. Re-keying All the Locks

Last, but not least, it’s always a good idea to re-key your home. Why? Unless your house is a new build, there have been multiple owners or even renters who could possess duplicate sets of keys to your house. This isn’t a major expense. Still, it could run as much as several hundred dollars depending on the number of doors and locks you have, so the expense will need to be budgeted to avoid charging up your credit card.

Handling These Expenses

Besides the previous advice, here are three more tips for preparing and handling these first-year home expenses:

  • Buy less house than you can afford to leave some wiggle room for these expenses in the housing category of your budget.
  • If time is on your side, save more than you think you’ll need for first-year expenses.
  • Prioritize these extra expenses and complete them slowly. After all, you plan on being in this house for awhile, right?

Looking to buy a home in the Monmouth or Ocean County area? You saw our last three short financial solutions videos on the benefits of a First Financial mortgage, how First Financial works with our members’ lending needs, and personalized service. Now check out video #4: personalized loan options. If you have questions about the mortgage process or don’t know how to get started, we are here for you. Contact the Loan Department at 732-312-1500, Option 4 or learn more about First Financial mortgages on our website.

*Subject to credit approval. A First Financial membership is required to obtain a mortgage and is open to anyone who lives, works, worships, or attends school in Monmouth or Ocean Counties in New Jersey. See Credit Union for details. Federally insured by NCUA.

 Article Source: Jessica Sommerfield for moneyning.com

5 Tips for Homebuyers in a Seller’s Market

Just because it’s a seller’s market doesn’t mean buyers can’t get their dream home. It may just take a mix of pre-planning, patience, and timing.

Here are few ways buyers can fast track their way into a new home:

Have your own real estate agent.

It may be tempting to think you can get a better deal working with the listing agent. That’s not necessarily true. Neutrality among listing agents means they can’t help one side over the other. So who is there to help you?

Set a realistic budget.

When you set a budget, make sure you include more expenses than just the monthly mortgage payment, down payment, and closing costs. Have you planned for utilities, insurance, Homeowner’s Association fees, lawn care, pest control, and more? Can you still fund your emergency savings account, college for the kids, and retirement?

Figure out what you want vs. need.

Do you want to be in a specific school district? Do you need a big backyard? It may mean compromising on other home wants such as hardwood floors or stainless steel appliances, which could be addressed later. What are you willing to compromise on? Having a clear idea will help in the homebuying process.

Get preapproved.

Want to show sellers you are a serious, qualified buyer? Take the extra step to be preapproved. A preapproval letter shows a buyer’s creditworthiness and ability to get a loan by the lender. But don’t stop there. Once preapproved, buyers should shop around to find the best deal. Don’t be afraid to review the different offers and negotiate with lenders to get the one that works with your budget.

Make a fair bid.

When there is a shortage of inventory, don’t miss out on your dream home because you failed to make a strong opening offer. If you find a home you love in the right location and price range, don’t wait to make an offer or try to lowball sellers. Buyers should be ready to submit a fair offer quickly, or they may risk missing out on the home altogether.

Looking to buy a home in the Monmouth or Ocean County area? You saw our last two short financial solutions videos on the benefits of a First Financial mortgage and how First Financial works with our members’ lending needs, now check out video #3: personalized service. If you have questions about the mortgage process or don’t know how to get started, we are here for you. Contact the Loan Department at 732-312-1500, Option 4 or learn more about First Financial mortgages on our website.

*Subject to credit approval. A First Financial membership is required to obtain a mortgage and is open to anyone who lives, works, worships, or attends school in Monmouth or Ocean Counties in New Jersey. See Credit Union for details. Federally insured by NCUA.

 Article Source: Myriam DiGiovanni for financialfeed.com

 

Are You Ready to Buy a Home?

The transition from renter to homebuyer is a big one. Owning your own home gives you assurance that your monthly housing costs won’t go up, (assuming you get a fixed-rate mortgage), and that your rent won’t get jacked up when you are least expecting it.

Home ownership also comes with added responsibility. When something breaks in your rental unit, it’s a quick call to the landlord to get it fixed. Homeowners are always on the hook for both making and financing any repairs.

It’s a big financial leap to becoming a homeowner. Experts recommend asking yourself these questions before you start out on the house hunt:

Do you know how much you can afford?

Take the time to calculate how much home you can afford to buy. This isn’t the time to ballpark numbers. Overcommitting to a mortgage payment can leave you house poor, meaning there’s very little money leftover at the end of the month for other things.

Add up all your spending, including current rent, food, transportation and discretionary expenses like travel, eating out and entertainment. Don’t forget to include debt like student loans and car payments. Once you know how much you have coming in and going out each month, determine a number you can afford to spend on housing.

Generally, personal finance experts recommend aiming to spend around 28% of your monthly income on housing. Getting preapproved for a loan will also help give you a sense of your housing budget. But note that just because a bank agreed to give you a loan, doesn’t mean you have to (or should) spend that much.

Do you have a down payment?

You don’t need a 20% down payment to get a mortgage loan. But putting more down can work in your favor. It can help you get better loan rates, beat out the competition in hot housing markets, and will lower the amount of interest you pay over the life of the loan.

You can get a mortgage with as little as a 3.5% down, but anything less than 20% means paying private mortgage insurance (PMI), which will increase your monthly payment.

Working to save for a large down payment shows financial responsibility and gets you used to living on a strict budget.

Will you have money left over after closing?

Your bank account shouldn’t be zero after closing. You should still have an emergency savings fund that will cover around three to six months of living expenses, on hand.

In addition to the emergency fund, it is recommended that you have six to nine months of mortgage expenses available. First-time homebuyers are typically looking at older homes because of their lower price point, and they require more work. You should have a back-up fund in savings, in case the A/C or heater goes.

Is your credit in good shape?

You want to get your credit score as high as possible when shopping for a mortgage. The higher the score, the better the lending terms and rates.

A credit score of 750 and up is generally considered excellent and will make you the most attractive borrower.

Have you paid down other debt?

Your debt-to-income ratio plays a major role in the health of your finances.

You can calculate your debt-to-income ratio by adding up all your monthly debt payments and dividing it by your gross monthly income.

The general rule of thumb is your debt should not exceed 43% of your available credit, in order to take out a mortgage.

Where do you see yourself in five years?

If you don’t plan on staying in an area for more than a couple of years, buying a house might not make financial sense.

The huge upfront investment including the price of the home, plus the added expenses like taxes, closing costs, and escrow fees, might take a while to pay off.  Be ready to make a long term commitment to a home and area, if you are taking out a mortgage.

Looking to buy a home in the Monmouth or Ocean County area? You saw our previous short video on the benefits of a First Financial mortgage last time, now check out part 2: how First Financial works with all our individual members’ lending needs. If you have questions about the mortgage process or don’t know how to get started, we are here for you. Contact the Loan Department at 732-312-1500, Option 4 or learn more about First Financial mortgages on our website.

*Subject to credit approval. A First Financial membership is required to obtain a mortgage and is open to anyone who lives, works, worships, or attends school in Monmouth or Ocean Counties in New Jersey. See Credit Union for details. Federally insured by NCUA.

 Article Source: Kathryn Vasel for Money.cnn.com

 

It Might Be Time to Adjust Your Home Buying Strategy

You’ve done your research, you’ve prepared your budget, and you’re ready to start your housing search. From the number of bedrooms and bathrooms to the optimum square footage—you know what you’re looking for. But did you know that if your search is too narrowly focused on what you want, you’re hurting your chances of finding the right house at the right price? In a tight housing market, knowing what the seller wants can be a valuable secret to homebuying success.

Apply some high-stakes strategy.

Know what the seller wants. Sounds simple, right? The problem is that most sellers (likely at the advice of their listing agent) rarely tip their hand—at least not on purpose. Like a high-stakes poker game, the winner isn’t always the person holding the best cards. Sometimes a winning housing search requires you to look for a seller’s “tell”—subtle signs that suggest they’re eager to unload the property quickly.

In her Huffington Post article, reporter Ann Brennhoff shares tips for situational house hunting. Based on her suggestions, a discerning eye for detail can help you gauge a seller’s motivation by decoding domestic clues hidden in plain sight. Whether a young family has outgrown their starter home or a retired couple needs to downsize to a more manageable residence, the details of each situation may provide the insights you need to make a successful offer. But if you only focus on your personal checklist, you could walk right by without even noticing.

Flexibility can help you find hidden gems.

To carry the poker analogy a little further, finding a prime deal in a tight housing market can require you to play the cards you’re dealt. Having a list of preferences is fine, but it’s important to stay open to other options. For example: if you’re looking for a home in a popular suburban area but also demanding several acres of land, you’re probably going to be disappointed. When it comes to house hunting goals, the old song lyrics ring true: “You’ve got to know when to hold ‘em and know when to fold ‘em.”

Locking yourself into a restrictive search process often results in frustration, and frustration doesn’t lead to sound decision making. If you’re willing to expand your search horizons and embrace a spirit of adventure, you may wind up uncovering treasure in places you never expected. What are a few ways to start thinking outside the proverbial box?

Discover the value of sweat equity. If you’re able to find a structurally sound house, foreclosed houses offer an incredible upside for a smaller initial investment. But even if you don’t pursue a bank-owned property, you can adjust your search criteria to look for houses priced roughly 20% lower than your target. This adjustment increases the chances of finding a solid home that merely needs a little TLC. If you’re willing to invest the time and effort, you could be rewarded with significant equity for a fraction of the price.

If you can’t be first, be patient. In a hot housing market, the demand is higher than the supply. The likelihood of you being the first person to make an offer on a property is pretty low. Instead of making a reactive offer that exceeds your budget, you may benefit from shifting your search to homes that have been on the market for an extended period. The longer a house sits for sale, the more flexible the seller tends to be. This willingness to negotiate can increase your chances of finding more house for your money, or purchasing a home below market value.

Help the odds be ever in your favor. When you approach your home search like an investor, you realize it’s a numbers game. Sure, you’ve heard fantastic stories of buyers falling in love with the first house they see and stumbling across an unbelievable deal in the process. Those scenarios are the exception, not the rule. If you want to increase your chances of finding a home that meets your needs at a price you can comfortably afford, the solution is simple – look at more houses.

Poker players who go all-in on every hand rarely win big. The champions play the long game. Successful homebuyers play by the same rules. If you’re willing to pay attention to sellers’ needs, adjust your search criteria, proceed with patience, and expand your search options, you will increase your odds of success dramatically.

Looking to buy a home in the Monmouth or Ocean County area? First Financial can help! Check out this short mortgage video from our financial solutions series, presented by our Lending Manager. If you have questions about the mortgage process or don’t know how to get started, we are here for you. Contact the Loan Department at 732-312-1500, Option 4 or learn more about First Financial mortgages on our website.

 *Subject to credit approval. A First Financial membership is required to obtain a mortgage and is open to anyone who lives, works, worships, or attends school in Monmouth or Ocean Counties in New Jersey. See Credit Union for details. Federally insured by NCUA.

4 Tips for Buying Your First Home

The search for your first home can be stressful. Finding the right one is no cakewalk. You look at dozens of houses and neighborhoods, trying to find the perfect fit. And that’s only half the battle. If you’re looking to buy your first home, here are some tips to help you through the process.

Have a good grasp on your credit: Your credit score is of the utmost importance when trying to buy your first home. It can drastically effect your interest rate and even prevent you from getting the loan altogether. Make sure you credit is in good shape before you start the journey to purchasing your first home.

Figure out how much home you can afford: Imagining yourself in the empty mansion across town is fun, but be realistic. Look at your budget, find out how much extra money you have at the end of each month (add your current rent & utilities to this total), and you’ll have a good idea of what kind of mortgage payment you can handle. If you’re going from an apartment to your new house, remember to factor in the difference in utilities, taxes, insurance and any unexpected expenses that could pop up along the way.

Sort out the needs and wants: It’s good to make a list of the things you NEED to have in your new house, and the things you WANT to have in your new house. When buying your first home, it’s important to remember that you may not necessarily be buying your dream home. You can definitely find a home that meets a lot of the criteria on your checklist, but know you may have to give up a few of your wants in order to find a home that fits your budget.

Find the right realtor: Your realtor’s job is to help you out on this nerve-wracking journey and make the process as easy for you as they can. Pick a realtor who makes you feel comfortable and knows what they’re doing. If they don’t seem to care about meeting your needs, find someone who will.

First Financial offers a number of great mortgage options, including refinancing – click here to learn about our 10, 15, and 30 year mortgage features and see what a good fit for your home is!*

*A First Financial membership is required to obtain a mortgage and is open to anyone who lives, works, worships, or attends school in Monmouth or Ocean Counties. Subject to credit approval. Credit worthiness determines your APR.

Article Source: John Pettit for CUInsight.com