Archive for the 'Mortgages and Lending' Category
An underlying mortgage is a loan to a cooperative apartment entity which uses its property as collateral. It’s called “underlying” because it comes before (or under) any personal loans which individual shareholders have taken out to purchase their apartments. To be specific, co-op shareholders do not actually own their individual apartments. Rather- they are owned by the cooperative- which then leases the space to the shareholders.
Not all buildings have underlying mortgages, but the majority do. Even if a co-op can afford to pay off the underlying mortgage, many take out loans for the benefit their shareholders get from the interest payments.
Since the entire property co-op is owned by the corporation, it appears on the tax rolls Read the rest of this entry »
Despite recent grumblings about lack of inventory and lackluster numbers, there is a bright spot on the horizon. Dave Jacobin, long time lender, and on my list of favorites, is here to tell us a little bit about the new loan limits:
Great News! FHA loan limits have gone back to $729,750 in High Cost Areas (that’s our DC marketplace). This is good news for local homebuyers.
Features of FHA financing include (but are not limited to) the following;
- Only 3.5% down payment required
- Down Payment and closing cost can come from a gift from a relative
- The Seller may contribute up to 6% of the Sales Price towards closing costs and pre-paids
- Higher qualifying ratios vs. conventional allowed
- Please note the increase in Read the rest of this entry »
A lot of people are refinancing these days. Mortgage rates are, once again, at historic lows. But what are some of the tax consequences of re-financing? Here’s a simple primer:
A point = 1% value of the loan. So, if you are taking a loan on a house for $600,000, a point will = $6,000. 1-1/4 points = $7,500, etc. In general, each point purchased reduces your mortgage rate by roughly 1/4%. Banks will generally allow you to buy up to 3 points on a loan (it’s like pre-paying interest). The longer you plan to spend in your house, the more points make sense – assuming you have the cash to pay for them!
Unlike points paid at the time of purchase (which can be deducted in full), points paid for a refinanced loan must be deducted equally over the life of a loan… not all at once. This also goes for investment Read the rest of this entry »
Buyer beware. When moving, stuff tends to get thrown into boxes… and not always in the most organized way. It’s really important to set aside some key paperwork and documentation before you start packing to move. Banks have a way of requesting last minute hard copies of your dry cleaning receipts (kidding) before the loan is actually funded. You don’t want to discover this fact after your filing cabinet is sitting in storage, or worse, at the bottom of 60 boxes in the garage.
To play it safe, here’s a list of docs you should set aside before you move (it comes from Freddie Mac). If there is more than one loan applicant, the information applies to all. Some of it is pretty obvious, some of it not so obvious:
- Social security numbers and birth date.
- Income verification (two last pay stubs with year-to-date earnings). If you are in the military, this includes all allowances.
- Tax information (W-2′s and tax returns for the past two years).
- Employment verification (company name, address, telephone # and e-mail).
- Assets (2 recent statements for bank/checking, 401K, IRA, CD’s, stocks and bonds).
- Personal property information (cars, furniture, jewelery, life insurance, etc.).
- Credit information (a list of credit cards, loans, etc.).
- Current housing info (a recent mortgage statement or bill or a rental agreement).
- New home information (a copy of your purchase contract, receipt for earnest money deposit, and listing information).
- Gift letter (if applicable) stating the amount and that the money does not have to be repaid.
- Self-employment information (profit and loss statements, balance sheets, etc.).
- Divorce/separation paperwork, including alimony payments, history of child support, etc.
- Medical records (good to have them handy in case of an emergency)
- School Records for each of your children
The last two items don’t play into the financing angle, but are good to have on hand none-the-less. Put the originals in a safe place where your movers won’t grab it by accident. And if you’re really organized (good god, I’m not) scan the documents and save on a DVD, or send yourself an e-mail… just in case your lender wants something.
These days it’s just plain smart to include a financing contingency (in combination with an appraisal contingency) on any real estate offer. Banks have become so rigorous in their vetting process, that even if you have been approved in writing, there is no absolute guarantee that a loan can be secured. What’s that phrase… “it ain’t over until the fat lady sings”? Same goes with real estate. It ain’t sold until it’s SOLD.
While the Regional Contract for Maryland/DC/VA offers up a well balanced approach to purchasing a property, with protections for both buyers and sellers, it falls short in a few areas. One of them is the financing contingency.
There are a couple of examples as to why having a financing contingency in place is a good thing for buyers. There was a recent article in the Post about a couple who were very well qualified to buy a house, found one they fell in love with, and were denied financing on two separate occasions by two different banks because the house was round. You heard me right. The house was round. Both banks feared that the house would be unmarketable because it was different from your average square or rectangular house. On another occasion, a buyer Read the rest of this entry »
If you’ve bought a house before, getting a mortgage might not seem like a big deal. But things have changed over the years, and it’s never safe to assume anything! Here are a few “don’ts” for the list:
- For starters, don’t assume your transaction will resemble your last loan. Banks are asking for more paperwork. They’re also scrutinizing loans quite carefully, so be prepared to dig up and submit the necessary documentation.
- Don’t delay in providing this paperwork. It takes time for underwriting to review it all, so speed is necessary, particularly if you have a financing contingency to satisfy.
- When shopping for a home, and certainly during any “under contract” period, DO NOT switch jobs.
- Don’t make any major purchases (furniture, cars, vacations, etc).
- Don’t forget to pay your bills on time, and don’t increase your Read the rest of this entry »
For starters, you need a down payment. Back in the day (the day being the nutty 2005 market), one could get a loan with no money down. I’m serious. It led to some problems down the road as homeowners abandoned their homes to foreclosure and short sales- largely because they had no stake in the property- and next to no equity. Fast forward to 2010 and the landscape has changed. For a while there, after the stock market crashed, you had to have 20-30% for a down payment unless you were getting FHA financing. Around the start of the year, 80-10-10 loans started making a comeback, allowing for a more reasonable 10% down payment. This is generally the bulk of the money you pay to purchase a house, but it doesn’t stop here. Closing costs must be taken into consideration.
When purchasing a new home, I always advise my first time home buyers (and some 2nd time home buyers, too!) to allow for 2-3% of the Read the rest of this entry »
A lot of people are refinancing right now to take advantage of historically low mortgage rates. You might not realize, however, that there are many ways to pay off your mortgage faster, which could save you big bucks over the years.
- Consider a bi-weekly mortgage payment (vs. the traditional monthly) which allows you to make the equivalent of an extra monthly payment per year, applied to your principal, cutting your interest payments considerably.
- Make sure you choose a loan with a pre-payment option. This allows you to sock away extra money toward the principal when you are feeling flush, thus shortening the loan period.
- Instead of a traditional 30-year mortgage, investigate a 25-year, or even a Read the rest of this entry »
If you are having trouble making your mortgage payments, please check out Know Your Options – a new website from Fanny Mae which helps to educate Sellers in distress. Their aim is to provide resources to help homeowners make educated decisions, and ultimately, to avoid as many foreclosures as possible.
If need be, I can refer you to a qualified and competent attorney specializing in these transactions.
A conforming (up to $417,000) 30-year fixed rate is 4.375% with 0 points.
The same loan, with 1.0 point is at 4.125%.
For loans between $417,000 and $729,000 the 30-year fixed rate is 4.5% with 0 points.
The same loan, with 1.0 point is 4.25%.
A 15-year fixed loan up to $417,000 is at 3.75% with 1/4 a point.
Jumbo loans (anything over $729,000 and under $2,000,000) are available at 5.25% for a 30-year fixed rate with 20% down.
This is pretty spectacular. If you don’t have a preferred banker in mind, please let me refer you to some of my favorites.
Cell 301.758.4894 Office 202.364.1700
Evers & Company Real Estate, Inc. 4400 Jenifer St. NW Chevy Chase, DC 20015
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