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

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.

7 Signs You Can’t Afford to Buy a Home

House made of woman hands isolated on dollars background

Making the leap from renting to buying is thrilling and liberating — for many, it signifies the realization of “the American Dream.” Buying a home is also a long-term commitment, and one that requires strong financial standing. If any of these signs strike a chord, you may want to delay taking on a mortgage in the near future.

1. You have a low credit score.

Before considering home ownership, you’ll want to check your credit score, which you can do through free sites like Credit Karma, Credit.com, or Credit Sesame.

“The higher your score, the better the interest rate on your mortgage will be,” writes personal finance expert Ramit Sethi in “I Will Teach You to Be Rich.” Good credit can mean significantly lower monthly payments, so if your score is not great, consider delaying this big purchase until you’ve built up your credit.

2. You have to direct more than 30% of your income toward monthly payments.

Personal finance experts say a good rule of thumb is to make sure the total monthly payment doesn’t consume more than 30% of your take home pay.

“Any more than that, and your finances are going to be tight, leaving you financially vulnerable when something inevitably goes wrong,” write Harold Pollack and Helaine Olen in their book, The Index Card. To be fair, this isn’t always possible. While there are a few exceptions, aim to spend no more than 1/3 of your take home pay on housing.

3. You don’t have a fully funded emergency savings account.

And no, your emergency fund is not your down payment.

As Pollack and Olen write, “We all receive unexpected financial setbacks. Someone gets sick. The insurance company denies a medical claim. A job is suddenly lost. However life intrudes, the bank still expects to receive their monthly mortgage payments. Finance your emergency fund. Then think about purchasing a home. If you don’t have an emergency fund and do own a house, chances are good you will someday find yourself in financial turmoil.”

Certified financial planner Jonathan Meaney recommends having the equivalent of a few years’ worth of living expenses set aside in case there is a job loss or other surprise. “Unlike a rental arrangement with a one or two year contract and known termination clauses, defaulting on a mortgage can do major damage to your credit report,” he tells Business Insider. “In addition, a quick sale is not always possible or equitable for a seller.”

4. You can’t afford a 10% down payment.

Technically, you don’t always have to put any money down when financing a home today, but if you can’t afford to put at least 10% down, you may want to reconsider buying, says Sethi.

Ideally, you’ll be able to put 20% down — anything lower and you will have to pay for private mortgage insurance (PMI), which is a safety net for the bank in case you fail to make your payments. PMI can cost between 0.5% and 1.50% of the mortgage, depending on the size of your down payment and your credit score — that’s an additional $1,000 a year on a $200,000 home.

“The more money you can put down toward the initial purchase of a home, the lower your monthly mortgage payment,” Pollack and Olen explain. “That’s because you will need to borrow less money to finance the home. This can save you tens of thousands of dollars over the life of the loan.”

Need help calculating if you can afford to buy a home or what your monthly payments will be based on what you put down? Check out our free mortgage calculators at firstffcu.com!

5. You plan on moving within the next five years.

“Home ownership, like stock investing, works best as a long term proposition,” Pollack and Olen explain. “It takes at least five years to have a reasonable chance of breaking even on a housing purchase. For the first few years, your mortgage payments mostly pay off the interest and not the principal.”

Sethi recommends staying put for at least 10 years. “The longer you stay in your house, the more you save,” he writes. “If you sell through a traditional realtor, you pay that person a fee — usually 6% of the selling price. Divide that by just a few years, and it hits you a lot harder than if you had held the house for ten or twenty years.” Not to mention, moving costs can be high as well.

6. You’re deep in debt.

“If your debt is high, home ownership is going to be a stretch,” Pollack and Olen write. When you apply for a mortgage, you’ll be asked about everything you owe — from car and student loans to credit card debt. “If the combination of that debt with the amount you want to borrow exceeds 43% of your income, you will have a hard time getting a mortgage,” they explain. “Your debt-to-income ratio will be deemed too high, and mortgage issuers will consider you at high risk for a future default.”

7. You’ve only considered the sticker price.

You have to look at much more than just the sticker price of the home. There are a mountain of hidden costs — from closing fees to taxes, that can add up to more than $9,000 each year, real estate marketplace Zillow estimates. And that number will only jump if you live in a major US city.

You’ll have to consider things such as property tax, insurance, utilities, moving costs, renovations, and perhaps the most overlooked expense: maintenance. “The actual purchase price is not the most important cost,” says Alison Bernstein, founder and president of Suburban Jungle Realty Group, an agency that assists suburb-bound movers. “What’s important is how much it’s going to cost to maintain that house,” she tells Business Insider.

Stop into any First Financial branch and we can help you with your home buying journey. We provide great low rates and offer a variety of Mortgage options – to speak with First Financial’s lending department, call us at 732.312.1500 option 4.* 

To receive updates on our low mortgage rates straight to your mobile phone, text FIRSTRATE to 69302 and each time our mortgage rates change, we’ll send you a text message with the new rates.** We’re here to help you achieve your financial dreams!

*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. **Standard text messaging and data rates may apply.

Article Source: Kathleen Elkins for Business Insider, http://www.businessinsider.com/signs-you-cant-afford-to-buy-a-home-2016-4

8 Outside-the-Box Ways to Find a Home

1-waiting-to-buyFinding the perfect home for your needs, wants and budget can be a challenge even when mortgage rates are low and there are plenty of properties for sale. But when fewer homes are on the market, buyers and their real estate agents must find creative ways to maneuver around the competition.

According to the National Association of Realtors, while inventory levels recently rose, the supply of non-distressed homes remains well below normal.

If low inventory makes your search a challenge, you need to be willing to think outside the box.  Here are just a few ways to do so!

#1: Set up an alert system.

“We always set up our buyers with daily automatic emails and text alerts with new listings based on their criteria from the past 24 hours,” says Russ Murray, broker/owner of Buyer’s Resource Real Estate.

“When the market is highly competitive, we’re proactively searching for new listings multiple times a day, and in the process of transitioning to a system that can give us and our clients immediate alerts when a property is listed.”

Make sure your real estate agency has a similar system in place in your area.  If not, you’ll want to specifically search for an agent who can accomplish this for you.

#2: Contact those who bought during the downturn.

Many realtors will search their database for past clients who bought when the market was down in 2008 and 2009, and will call and update them on current market conditions and ask if they’re interested in selling now that prices have increased.

#3: Target rentals.

You or your real estate agent may also contact landlords of rental properties to see if they would be interested in selling. You may never know if you don’t ask!

#4: Write a letter.

Frank Llosa, broker/owner of FranklyRealty.com, says he writes letters to homeowners in specific areas where his buyers want to live.

“About two percent of the homeowners we contact via letter – end up deciding to sell,” he says. Llosa suggests asking neighbors who are walking their dogs about potential sellers too.

“Dog walkers know everything,” he says. “They may have seen a photographer at the house or a landscaper getting a place ready to go on the market.”

#5: “Make Me Move” listings.

Buyers can search by zip code on Zillow.com for “Make Me Move” listings where homeowners who are testing the market put up an above-market price to see if buyers are interested. Llosa recommends contacting those owners to see if their price is firm or they’re willing to negotiate.

#6: Sign up on PreMLS.com.

There may be a social media group in your area for members who share information about listings before they go on the open market.  Look for these types of groups and join them, or have your agent look into a group like this as an additional option to assist you.

Llosa has seen that “some agents let buyers see a home before it goes on the Multiple Listing Service (MLS) and others tend to just alert people so they can see it on the first day.”

#7: FSBOs (For Sale By Owner).

A variety of websites including Zillow.com, ForSalebyOwner.com, iGoFSBO.com and Craigslist, allow you to search by zip code to find for-sale-by-owner homes. ForSalebyOwner.com has an app for smart phone users to search for homes in addition to their website too.

#8: Forget single-family homes.

Look into switching your selection from a single-family home to a townhouse, or look for a home that needs some work.  This may be easier to obtain, and you might even like it better in the long run!  Keep your options open.

If you have any questions about the home buying process, feel free to ask us!  We know it can be an intimidating process at times, and we’re here for you.  To learn more about our 10, 15, or 30 year First Financial Mortgages – click here.* 

You might also want to subscribe to our Mortgage rate text message service, by texting “firstrate” to 69302.  When our Mortgage rates change, you’ll be the first to know**

Click here to view the article source by Michelle Lerner of FOX Business.

* 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. See Credit Union for details.

**Standard text messaging and data rates may apply.

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