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Excited About Buying A Home This Year? Here’s What to Watch

by Amy McLeod Group


As we kick off the new year, many families have made resolutions to enter the housing market in 2019. Whether you are thinking of finally ditching your landlord and buying your first home or selling your starter house to move into your forever home, there are two pieces of the real estate puzzle you need to watch carefully: interest rates & inventory.

Interest Rates

Mortgage interest rates had been on the rise for much of 2018, but they made a welcome reversal at the end of the year. According to Freddie Mac’s latest Primary Mortgage Market Survey, rates climbed to 4.94% in November before falling to 4.62% for a 30-year fixed rate mortgage last week. Despite the recent drop, interest rates are projected to reach 5% in 2019.

The interest rate you secure when buying a home not only greatly impacts your monthly housing costs, but also impacts your purchasing power.

Purchasing power, simply put, is the amount of home you can afford to buy for the budget you have available to spend. As rates increase, the price of the house you can afford to buy will decrease if you plan to stay within a certain monthly housing budget.

The chart below shows the impact that rising interest rates would have if you planned to purchase a $400,000 home while keeping your principal and interest payments between $2,020-$2,050 a month.

With each quarter of a percent increase in interest rate, the value of the home you can afford decreases by 2.5% (in this example, $10,000).

Inventory

A ‘normal’ real estate market requires there to be a 6-month supply of homes for sale in order for prices to increase only with inflation. According to the National Association of Realtors (NAR), listing inventory is currently at a 3.9-month supply (still well below the 6-months needed), which has put upward pressure on home prices. Home prices have increased year-over-year for the last 81 straight months.

The inventory of homes for sale in the real estate market had been on a steady decline and experienced year-over-year drops for 36 straight months (from July 2015 to May 2018), but we are starting to see a shift in inventory over the last six months.

The chart below shows the change in housing supply over the last 12 months compared to the previous 12 months. As you can see, since June, inventory levels have started to increase as compared to the same time last year.

This is a trend to watch as we move further into the new year. If we continue to see an increase in homes for sale, we could start moving further away from a seller’s market and closer to a normal market.

Bottom Line

If you are planning to enter the housing market, either as a buyer or a seller, let’s get together to discuss the changes in mortgage interest rates and inventory and what they could mean for you. 971.208.5093 or admin@mgnrealtors.com

By: KCM Crew

4 Huge Mistakes You Might Make Moving From a City to the Suburbs

by Amy McLeod Group


There comes a time in many people’s lives—usually when the words “baby” or “school district” become a regular part of the vocabulary—when people flee the glamorous city to the charming suburbs. Only where, exactly, should you go? How do you find that perfect place where your neighbors seem simpatico rather than psycho?

Alison Bernstein once struggled with these same questions when contemplating moving her own family outside New York City.

“We made the quintessential buyer’s mistake,” says Bernstein. “We picked the perfect town, or so it seemed, based on our checklist. But the problem is, you very seldom know what you should look for, and you don’t consider vital intangibles. So we, like so many people, made a bad decision."

They picked a suburb that, looking back, "was great, but just not a good personality fit for us," she says. In short, it was too big. "I grew up in a small town, and I wanted to recreate that," she explains. "I wanted people to know my name at the local coffee shop. I wanted the pizza place to know my kids, and what they liked. Things that mattered to us—like having our kids get to know others the same age—weren't so easy, since there were so many schools in the district.”

So Bernstein and her family picked up and moved to a smaller town that feels just right, 45 minutes north of the city. She founded Suburban Jungle, a business that matches city clients with the right suburbs and partners with various local agents in every town who have been vetted, selected, and trained to work with their team. She began the advisory firm in New York City, but has since expanded to include Boston, Chicago, Dallas, Los Angeles, San Francisco, and Washington DC, placing thousands of happy families in their new communities.

“I realized the things we had been focused on when we moved weren’t the key elements," she explains. "So my company makes certain that people ask the right questions and make the best decisions for their family.”

Everyone starts out with the same wish list—a great school district, a short commute, low taxes—but there’s a better way to approach your next-home hunt.  Here, Bernstein shares some of the key mistakes parents make when moving to the 'burbs.

1. Focusing on the house rather than the whole neighborhood

When picking a new home, most people (understandably!) focus on the property itself—how many bedrooms, bathrooms, how big is the lot? After all, who can resist poring over floor plans and listing photos of sun-flooded kitchens? But no house is an island: It’s part of a community, as you will be, too. To make sure you fit in, get a feel for the community and whether it offers the lifestyle and kinds of neighbors you are looking for.

Bernstein's advice: "Don’t just visit the well-known towns—what we call the brand-name towns that most people aspire to. Just because a lot of people have heard of a town doesn’t mean it’s right for you." She recommends taking as much time as you can to hang out in different ’hoods.

Try on a couple of towns—check out their cafés, their parks. Are the playgrounds full or empty on a Saturday afternoon? Are the kids there with parents or au pairs?

"Have dinner in the town. See what the people are like, what the mood is like," Bernstein suggests. Think about whether this feels comfortable and a good fit. It's only when you settle on a place that does that you are ready to start comparing whether you like a bungalow better than a Colonial.

2. Finding a 'good school district' that's not a good fit for your kids

Let’s be real: Education is one of the top motivators for a move to the ’burbs, Bernstein says, "Everyone talks about wanting a 'good school district,' but the key thing here is, what does that mean for your family? A school that ranks well on standardized tests may be a pressure-cooker that your child won’t thrive in, or it may not have much of an arts program."

Getting hung up on class size is another rookie move. While no one wants their child in a class of 50, also look at the total school enrollment. Would your child do well in a school that typically has a total of 1,000 kids per grade, even if the class size is acceptable? Do you want a district with one elementary school (small-town living) or are you looking for something with several elementary schools and possibly some specialized schools attuned to your child’s interests and talents?

Here’s another tip from Bernstein: As you narrow your choices, "go to a local school at the a.m. drop-off time and take a look. Who is dropping off the kids—nannies? Moms and dads en route to the train station? Yoga-pants-wearing at-home parents? This will also help you see if this community reflects the lifestyle you are seeking."

3. Thinking about commute time rather than quality

Before decamping for the ’burbs, most people lock in on a commute time—say, "I won’t be on the train for more than 40 minutes each way." But that can cause you to overlook a lot of the intangibles, says Bernstein. "Ask yourself, Would you rather be on a packed, standing-room-only local train for 40 minutes a day … or, what if you could be seated on an express train for 45 minutes a day?"

You won’t be able to really evaluate the commute unless you, well, commute. Bernstein suggest you do just that, at rush hour, and see what you are getting yourself into. Sure, it takes time, but can help you avoid locking into a “dream house” that comes with a surprise commute from hell twice daily. (Note: A little research will also yield info on a train line’s “on-time” record—another good bit of data to know.)

While you are doing a dry-run commute, scope out the parking situation, too. Many “hot” towns have packed parking lots with waiting lists and with prized parking permits costing thousands a year. Call the town office and inquire about the details, so you’re prepared.
Bernstein has another great tip for sussing out towns based on commutes.

"Pull out an area map and scan it carefully," she suggests. "There are wonderful small towns—hidden jewels, even—that don’t have their own train station." These villages tend to be overlooked by people moving to the suburbs, but are worth your attention. (Ask your real estate agent for help with this, too.) You might be able to move to one of these places and walk or drive three minutes to a neighboring town’s train station.

4. Assuming you'll easily find child care nearby

Most people moving out of the city do so for the sake of children (current or future), but you can’t assume the child care options are the same in the suburbs as in an urban setting. If you are a two-career couple, see what options exist nearby.

"Few suburbs are truly walkable. If you need day care, how far a drive would that be, and how long would it take during the a.m. rush hour?" asks Bernstein. What time at the end of day do they close, and what happens if you are running late? Is the town one that has a strong au pair network, or are most moms home with their kids? This info doesn’t just let you envision your daily schedule—it will tell you a lot about the community and whether it will be a good fit for your family.

Thinking about making a move? The McLeod Group Network is here to help! 971.208.5093 or admin@mgnrealtors.com

By: Realtor.com, Janet Siroto

3 Things You'd Better Know Before Applying for a Mortgage—or Else

by Amy McLeod Group


Unless you’re sitting on a ton of cold, hard cash, you’re going to need a mortgage to buy a home.

Unfortunately, you can’t just show up at a bank with a checkbook and a smile and get approved for a home loan—you need to qualify for a mortgage, which requires some careful planning.

So, how do you please the lending gods? It starts with arming yourself with the right knowledge about the home loan application process.

Here are three things you need to know before applying for a mortgage.

1. What is a good credit score

Ah, the all-mighty credit score. This powerful three-digit number is a key factor in whether you get approved for a mortgage. When you apply for a loan, lenders will check your score to assess whether you’re a low- or high-risk borrower. The higher your score, the better you look on paper—and the better your odds of landing a great loan. If you have a low credit score, though, you may have difficulty getting a mortgage.

So, what’s considered a good credit score in the mortgage realm? While a number of credit scores exist, the most widely used credit score is the FICO score. A perfect score is 850. However, generally a score of 760 or higher is considered excellent, meaning it will help you qualify for the best interest rate and loan terms, says Richard Redmond, mortgage broker at All California Mortgage in Larkspur and author of “Mortgages: The Insider’s Guide.”

A good credit score is 700 to 759; a fair score is 650 to 699. If you have multiple blemishes on your credit history (e.g., late credit card payments, unpaid medical bills), your score could fall below 650, in which case you’ll likely get turned down for a conventional home loan—and will need to mend your credit in order to get approved (unless you qualify for a Federal Housing Administration loan, which requires only a 580 minimum credit score).

Before meeting with a mortgage lender, Beverly Harzog, consumer credit expert and author of “The Debt Escape Plan,” recommends obtaining your credit report. You’re entitled to a free copy of your full report at AnnualCreditReport.com. Though the report does not include your score—for that, you’ll have to pay a small fee—just perusing your report will give you a ballpark idea of how you're doing by laying out any problems such as late or missing payments.

2. What down payment you need

What’s an acceptable down payment on a house? In a recent NerdWallet study, 44% of respondents said they believe you need to put 20% (or more) down to buy a home. So, if you do the math, you'd have to plunk down $50,000 on a $250,000 house. Of course, that’s a big chunk of change for many home buyers.

The good news? That 20% figure is common, but it's not set in stone. It’s the gold standard because when you put 20% down, you won't have to pay private mortgage insurance, which can add several hundred dollars a month to your house payments. Another advantage of putting down 20% upfront is that that's often the magic number you need to get a more favorable interest rate.

But, if you’re unable to make a 20% down payment, there are many lenders that will allow you to put down less cash. And there are a number of loan products that you might qualify for that require less money down. FHA loans require as little as 3.5% down. The U.S. Department of Veterans Affairs loan program gives active or retired military personnel the opportunity to purchase a home with a $0 down payment and no mortgage insurance premium. Same with USDA loans (federally backed by the U.S. Department of Agriculture Rural Development).

Another option worth pursuing is qualifying for down payment assistance. There are 2,290 programs across the country that offer financial assistance, kicking in an average of $17,766, according to one study. (You can find programs in your area on the National Council of State Housing Agencies website.)

There are some cases, though, where you’ll have to put more than 20% down to qualify for a mortgage. A jumbo loan is a mortgage that's above the limits for government-sponsored loans. In most parts of the country, that means loans over $417,000; in areas where the cost of living is extremely high (e.g., Manhattan and San Francisco), the threshold jumps to $625,000. Since larger loans require the lender to take on more risk, jumbo loans typically require home buyers to make a bigger down payment—up to 30% for some lenders.

3. What is your DTI ratio

To get approved for a mortgage, you need a solid debt-to-income ratio. This DTI figure compares your outstanding debts (on student loans, credit cards, car loans, and more) with your income.

For example, if you make $6,000 a month but pay $500 to debts, you’d divide $500 by $6,000 to get a DTI ratio of 0.083, or 8.3%. However, that's your DTI ratio without a monthly mortgage payment. If you factor in a monthly mortgage payment of, say, $1,000 per month, your DTI ratio increases to 25%.

Lenders like this number to be low, because evidence from studies of mortgage loans shows that borrowers with a higher DTI ratio are more likely to run into trouble making monthly payments, according to the Consumer Financial Protection Bureau.

For a conventional loan, most mortgage lenders require a borrower’s DTI to be no more than 36% (although some lenders will accept up to 43%), says Ray Rodriguez, regional mortgage sales manager at TD Bank.

The good news? If you’re above the 36% ceiling, there are ways that you can lower your DTI. The easiest would be to apply for a smaller mortgage—meaning you’ll have to lower your price range. Or, if you’re not willing to budge on price, you can lower your DTI by paying off a large chunk of your debts in a lump sum.

Let The McLeod Group Network help you with all your home-buying needs. 971.208.5093 or admin@mgnrealtors.com.

By: Realtor.com, Daniel Bortz

Where Are Interest Rates Headed in 2019?

by Amy McLeod Group


The interest rate you pay on your home mortgage has a direct impact on your monthly payment. The higher the rate, the greater the payment will be. That is why it is important to know where rates are headed when deciding to start your home search.

Below is a chart created using Freddie Mac’s U.S. Economic & Housing Marketing Outlook. As you can see, interest rates are projected to increase steadily throughout 2019.

How Will This Impact Your Mortgage Payment?

Depending on the amount of the loan that you secure, a half of a percent (.5%) increase in interest rate can increase your monthly mortgage payment significantly. But don’t let the prediction that rates will increase stop you from purchasing your dream home this year!

Let’s take a look at a historical view of interest rates over the last 45 years.

Bottom Line

Be thankful that you can still get a better interest rate than your older brother or sister did ten years ago, a lower rate than your parents did twenty years ago, and a better rate than your grandparents did forty years ago.

Let The McLeod Group Network assist with ALL your Real Estate needs! 971.208.5093 or admin@mgnrealtors.com.

By: KCM Crew

4 Reasons to Buy A Home This Winter!

by Amy McLeod Group


Here are four great reasons to consider buying a home today instead of waiting.

1. Prices Will Continue to Rise

CoreLogic’s latest Home Price Insight report revealed that home prices have appreciated by 5.6% over the last 12 months. The same report predicts that prices will continue to increase at a rate of 4.7% over the next year.

The bottom in home prices has come and gone. Home values will continue to appreciate for years. Waiting no longer makes sense.

2. Mortgage Interest Rates Are Projected to Increase 

Freddie Mac’s Primary Mortgage Market Survey shows that interest rates for a 30-year mortgage have hovered around 4.8%. Most experts predict that rates will rise over the next 12 months. The Mortgage Bankers Association, Fannie Mae, Freddie Mac and the National Association of Realtors are in unison, projecting that rates will increase in 2019.

An increase in rates will impact YOUR monthly mortgage payment. A year from now, your housing expense will increase if a mortgage is necessary to buy your next home.

3. Either Way, You are Paying a Mortgage

There are some renters who have not yet purchased homes because they are uncomfortable taking on the obligation of a mortgage. Everyone should realize that unless you are living with your parents rent-free, you are paying a mortgage – either yours or your landlord’s.

As an owner, your mortgage payment is a form of ‘forced savings’ that allows you to build equity in your home that you can tap into later in life. As a renter, you guarantee your landlord is the person building that equity.

Are you ready to put your housing cost to work for you?

4. It’s Time to Move on With Your Life

The ‘cost’ of a home is determined by two major components: the price of the home and the current mortgage rate. It appears that both are on the rise.

But what if they weren’t? Would you wait?

Look at the actual reason you are buying and decide if it is worth waiting. Whether you want to have a great place for your children to grow up, you want your family to be safer, or you just want to have control over renovations, maybe now is the time to buy.

If the right thing for you and your family is to purchase a home this year, buying sooner rather than later could lead to substantial savings.

Let The McLeod Group Network help you find your newhome! 971.208.5093 or admin@mgnrealtors.com.

By: KCM Crew

Buying a Home? 7 Unsettling Emotions You'll Feel Before the Deal Is Done

by Amy McLeod Group

Buying a home may be a financial transaction, but it's a highly emotional one, too. And while there are highs—like the moments you know you've found The One or you get the keys to your new home—you may also go through periods of high anxiety or hopelessness before you close the deal.

Ask any homeowner about their experiences buying a home, and you’ll hear a similar refrain: Purchasing property is utterly nerve-racking. With so many moving pieces, buying a home can feel like a high-stakes juggling act—only you don’t have time to practice.

As a real estate agent over the past four years, I’ve specialized in working with first-time buyers. Although each home sale is unique, I’ve noticed buyers experience some of the same ups and downs during the home-buying process.

Here are seven things only home buyers understand.

1. Online photos can be deceiving

Odds are good you’ll be spending a huge chunk of time looking at properties online, but listing photos can be misleading. Professional photographers and listing agents alike are capable of disguising flaws of all shapes and sizes. The only way to truly know what a house looks like is to see it in person.

2. Open houses are fun—until they're not

Going to open houses gives you the opportunity to see properties without having to deal with the hassle of coordinating showings. However, it’s easy to get worn out. If you’re serious about buying a home, you’re attending open houses every weekend—which can get quite cumbersome, especially if you'd prefer to be out brunching with friends or attending Junior's soccer matches. The important thing to remember is that your house hunt won't last forever, in spite of how it may feel in the thick of things (see our next point).

3. Buying a home can feel like a never-ending slog

Finding a great home—one that meets your needs and (hopefully) checks off a lot of your “wants”—takes time. With all of my past clients, I showed each of them at least five properties before we made an offer on a home. (One buyer looked at probably close to 30 homes before we found The One.)

The lesson: You have to be patient, because it could take a while for you to find a house that you love.

4. Anxiously waiting to hear back on an offer

No one likes playing the waiting game after submitting an offer on a home but, unfortunately, this is simply part of the home-buying process. Whether or not you're going up against other offers, the seller needs time to review each bid carefully. Furthermore, each state has its own legal contract that home buyers must use when making an offer on a property, and some jurisdictions require you to submit a mound of paperwork.

Once you’ve submitted an offer, though, the best thing you can do is wait. To minimize the pain though, I typically recommend home buyers attach an addendum stating that their offer expires in 24 hours. I do this for two reasons: It prevents the seller from being able to use your offer to shop around for a better one, and it gives you an exit strategy if you decide you want to walk away and look for another home.

5. Disclosures and home inspections? Terrifying

Unless you’re buying a brand-new house, the seller is required to provide you with property disclosures about the home’s condition. These documents can be a bit unsettling, as can a home inspection.

But don't fret: These documents err on the side of too much detail, and often make a problem seem far worse than it really is. Make sure to talk them over with your real estate agent so you know what the repair work will truly entail.

6. The disappointment of not getting everything you want

If you’re buying a house, you'd better be prepared to negotiate. When you submit a lowball offer on a property, you should expect the seller to make a counteroffer. Both parties may have to make concessions in order to agree on a sales price.

request for home repairs is another big point of contention. Home inspectors are trained to find every single flaw with a house, no matter how big or small. If the inspection reveals a major issue (e.g., a cracked foundation), that should absolutely be something you discuss with the sellers to see who will pay for repairs. However, you shouldn’t nickel-and-dime the sellers by asking them to fix every minor thing that’s wrong with the house; if you do, the deal could fall through.

Note: I always recommend including a home inspection contingency when making an offer on a property, unless the house is a short sale or it’s being sold as is, in which case you don’t typically have room to ask for repairs. A typical home inspection costs $300 to $500.

7. Getting a hand cramp at closing from signing all those forms

At settlement, home buyers sign a lot of paperwork to make the sale official—meaning your hand will definitely be sore by the time you’re finished writing your John Hancock on the last document. But trust me, it's all par for the course—and well worth it, as I've seen time and again home buyers' eyes light up once they're handed the keys.

Let's get together and find your new home! McLeod Group Network will be there every step of the way. 971.208.5093 or admin@mgnrealtors.com.

By: Realtor.com, Daniel Bortz 

2 Myths Holding Back Home Buyers

by Amy McLeod Group

Urban Institute recently released a report entitled, “Barriers to Accessing Homeownership: Down Payment, Credit, and Affordability,” which revealed that,

“Consumers often think they need to put more money down to purchase a home than is actually required. In a 2017 survey, 68% of renters cited saving for a down payment as an obstacle to homeownership. Thirty-nine percent of renters believe that more than 20% is needed for a down payment and many renters are unaware of low–down payment programs.”

Myth #1: “I Need a 20% Down Payment”

Buyers often overestimate the down payment funds needed to qualify for a home loan. According to the same report:

“Most potential homebuyers are largely unaware that there are low-down payment and no-down payment assistance programs available at the local, state, and federal levels to help eligible borrowers secure an affordable down payment.”  

These numbers do not differ much between non-owners and homeowners. For example, “30% of homeowners and 39% of renters believe that you need more than 20 percent for a down payment.”

While many believe that they need at least 20% down to buy their dream homes, they do not realize that there are programs available which allow them to put down as little as 3%. Many renters may actually be able to enter the housing market sooner than they ever imagined with programs that have emerged allowing less cash out of pocket.

Myth #2: “I Need a 780 FICO® Score or Higher to Buy”

Similar to the down payment, many either don’t know or are misinformed about what FICO® score is necessary to qualify.

Many Americans believe a ‘good’ credit score is 780 or higher.

To help debunk this myth, let’s take a look at Ellie Mae’s latest Origination Insight Report, which focuses on recently closed (approved) loans.

As you can see in the chart above, 51.7% of approved mortgages had a credit score of 600-749.

Bottom Line

Whether buying your first home or moving up to your dream home, knowing your options will make the mortgage process easier.

Let's get together and see if your dream home may already be within your reach. 971.208.5093 or admin@mgnrealtors.com.

By: KCM Crew

Taking Fear Out of the Mortgage Process

by Amy McLeod Group

A considerable number of potential buyers shy away from jumping into the real estate market due to their uncertainties about the buying process. A specific cause for concern tends to be mortgage qualification.

For many, the mortgage process can be scary, but it doesn’t have to be!

In order to qualify in today’s market, you’ll need a down payment (the average down payment on all loans last year was 5%, with many buyers putting down 3% or less), a stable income, and good credit history.

Throughout the entire home buying process, you will interact with many different professionals who will all perform necessary roles. These professionals are also valuable resources for you.

Once you’re ready to apply, here are 5 easy steps that Freddie Mac suggests to follow:

  1. Find out your current credit history & score – even if you don’t have perfect credit, you may already qualify for a loan. The average FICO Score® of all closed loans in September was 731, according to Ellie Mae.
  2. Start gathering all of your documentation – income verification (such as W-2 forms or tax returns), credit history, and assets (such as bank statements to verify your savings).
  3. Contact a professional – your real estate agent will be able to recommend a loan officer who can help you develop a spending plan, as well as help you determine how much home you can afford.
  4. Consult with your lender – he or she will review your income, expenses, and financial goals in order to determine the type and amount of mortgage you qualify for.
  5. Talk to your lender about pre-approval – a pre-approval letter provides an estimate of what you might be able to borrow (provided your financial status doesn’t change) and demonstrates to home sellers that you are serious about buying!

Bottom Line

Do your research, reach out to professionals, stick to your budget, and be sure that you are ready to take on the financial responsibilities of becoming a homeowner.

Let The McLeod Group Network assist you with all your home-buying needs! 971.208.5093 or admin@mgnrealtors.com.

By: KCM Crew

4 Reasons Why Fall Is A Great Time to Buy A Home!

by Amy McLeod Group

Here are four great reasons to consider buying a home today instead of waiting.

1. Prices Will Continue to Rise

CoreLogic’s latest Home Price Insights report reveals that home prices have appreciated by 6.2% over the last 12 months. The same report predicts that prices will continue to increase at a rate of 5.1% over the next year.

Home values will continue to appreciate for years. Waiting no longer makes sense.

2. Mortgage Interest Rates Are Projected to Increase

Freddie Mac’s Primary Mortgage Market Survey shows that interest rates for a 30-year mortgage have already increased by half of a percentage point, to around 4.5% in 2018. Most experts predict that rates will rise over the next 12 months. The Mortgage Bankers Association, Fannie Mae, Freddie Mac and the National Association of Realtors are in unison, projecting that rates will increase by half a percentage point to around 5.1% by this time next year.

An increase in rates will impact your monthly mortgage payment. A year from now, your housing expense will increase if a mortgage is necessary to buy your next home.

3. Either Way, You Are Paying a Mortgage

There are some renters who have not yet purchased homes because they are uncomfortable taking on the obligation of a mortgage. Everyone should realize that unless you are living with your parents rent-free, you are paying a mortgage – either yours or your landlord’s.

As an owner, your mortgage payment is a form of ‘forced savings’ that allows you to build equity in your home which you can then tap into later in life. As a renter, you guarantee your landlord is the person building that equity.

Are you ready to put your housing cost to work for you?

4. It’s Time to Move on with Your Life

The ‘cost’ of a home is determined by two major components: the price of the home and the current mortgage rate. It appears that both are on the rise.

But what if they weren’t? Would you wait?

Look at the actual reason you are buying and decide if it is worth waiting. Whether you want to have a great place for your children to grow up, you want your family to be safer, or you just want to have control over renovations, maybe now is the time to buy.

If the right thing for you and your family is to purchase a home this year, buying sooner rather than later could lead to substantial savings.

Contact the professionals on the McLeod Group Network to start the search for your new home! 971.208.5093 or admin@mgnrealtors.com.

By: KCM Crew

Oops! 5 Mortgage Moves You May Not Realize You Need to Do

by Amy McLeod Group

Getting a mortgage is easy, right? You’ve seen the TV commercials and the billboard ads touting promises like, “Get approved for a mortgage today!” Well, sorry to break the news, but the reality is that obtaining a home loan isn’t just one mouse click or phone call away.

There are a number of hoops to jump through and hurdles to cross before a mortgage lender will issue you a loan. To switch metaphors, it's less of a sprint, more of a triathlon—and it’s easy to overlook an important stage or two as you move toward the finish line.

Curious what home buyers often miss, much to their chagrin? Here are five essential steps that many people don't realize are needed for a mortgage.

1. Get pre-approved

In any highly competitive housing market, it's akin to self-sabotage not to get pre-approved before making an offer on a house.

Pre-approval is a commitment from a lender to provide you with a home loan of up to a certain amount. This will set your home-buying budget, and also show sellers that you’re serious about buying when it comes time to put in an offer. In fact, many sellers will accept offers only from pre-approved buyers, says Ray Rodriguez, New York City regional mortgage sales manager at TD Bank.

Mortgage pre-qualification should not be confused with pre-approval. Pre-qualification is based solely on verbal information you give a lender about your income and savings—meaning that it shows how much you could theoretically borrow. But make no mistake, it's no guarantee. Pre-approval, on the other hand, means the lender has already done its due diligence and is willing to loan you the money.

How to do it: To get pre-approved, you’ll have to provide a mortgage lender with a good amount of paperwork. For the typical home buyer, this includes the following:

  • Pay stubs from the past 30 days showing your year-to-date income
  • Two years of federal tax returns
  • Two years of W-2 forms from your employer
  • 60 days or a quarterly statement of all of your asset accounts, which include your checking and savings, as well as any investment accounts, such as CDs, IRAs, and other stocks or bonds
  • Any other current real estate holdings
  • Residential history for the past two years, including landlord contact information if you rented
  • Proof of funds for the down payment, such as a bank account statement. (If the cash is a gift from your parents, you need to provide a letter that clearly states that the money is a gift and not a loan.)

2. Ace the home appraisal

Lenders require a home appraisal before they’ll issue a loan, because the home you’re buying is going to serve as collateral. If you can’t make your mortgage payments, the lender will have to foreclose upon your home, and then sell the property to recoup its costs. Which is why it wants to make sure the property is worth the amount of money you’re paying for it.

If the home’s appraised value is the same as what you've agreed to pay, you’ve passed the appraisal. If the appraisal comes in at a figure higher than what you're paying, you’re golden—in fact, you’ve gained instant equity! But, if the appraisal comes in lower than what you've agreed to pay, you have a problem.

How to do it: A lender won't loan more than a home's appraised value, which could leave you, the borrower, to cover the difference, says Chris Dossman, a real estate agent with Century 21 Scheetz in Indianapolis. But if you’re unwilling or able to do that, you have a few options:

  1. Negotiate with the seller. For the appraisal to pass, the seller may agree to lower the sales price. Of course, this might require some negotiating by your real estate agent with the sellers agent.
  2. Appeal the appraisal. Sometimes called a rebuttal of value, an appeal involves your loan officer and agent working together to find better comparable market data to justify a higher valuation. If you file an appeal, the appraiser will review the information and then make a judgment call on whether or not to adjust the info.
  3. Order a second appraisal. If you believe the initial appraisal is significantly off base, for whatever reasonmaybe the appraiser overlooked a good comp or wasnt familiar with the local housing marketyou can order a second appraisal. Youll have to pony up for the expense, and appraisals can range between a few hundred dollars and $1,000, depending on the area.
  4. Walk away. This is a total bummer, but it may not be worth overpaying for a home, says Dossman.

3. Keep your credit score stable while under contract

Depending on the loan program, lender, and applicant’s specific credit history, the minimum credit score necessary to buy a home varies. The minimum requirement could be as low as 580 for a Federal Housing Administration (FHA) loan, or as high as 660 for a conventional loan, says Theresa Williams-Barrett, vice president of consumer lending and loan administration for Affinity Federal Credit Union. However, lenders vary in their requirements.

The caveat, though, is that your credit score must remain stable while you’re under contract on a house. Why? Because the lender’s final clearance and a loan commitment are subject to a last-minute credit check (and other verifications) shortly before closing.

How to do it: To avoid jeopardizing your final loan approval, follow these guidelines:

  • Dont open new credit accounts. Applying for a new credit card can ding your score, says Beverly Harzog, a consumer credit expert and author of The Debt Escape Plan, because it results in a hard inquiry on your credit report. Buying a car, boat, or any other large purchase that has to be financed can also dock your score.
  • Dont close old credit accounts. Closing an old account can hurt your debt-to-credit utilization ratioa term for how much debt youve accumulated on your credit card accounts, divided by the credit limit on the sum of your accounts. This ratio comprises 30% of your credit score. By closing a credit card account, you reduce your available creditmaking it more difficult to keep your debt-to-credit utilization ratio below 30% (the recommended percentage).
  • Dont miss a credit payment. Even one late payment can cause as much as a 90- to 110-point drop on a FICO score of 780 or higher, according to Credit.com.

4. Review the closing disclosure form

Lenders must provide borrowers with a closing disclosure, or CD, at least three business days before closing. Essentially, the CD is the official follow-up to a more preliminary document you received when you first applied for your loan, called the loan estimate, or LE (also known as a good-faith estimate).

The LE outlined the approximate fees you would be expected to pay if you move forward with a lender to close on a home. But your closing disclosure is the real deal—it outlines exactly what fees you’re going to pay at settlement. You have to scrutinize it carefully, especially considering that a recent survey of real estate agents by the National Association of Realtors® found that half of agents have detected errors on CDs.

How to do it: Ask your real estate agent to sit down with you and compare the CD and LE. Here's a list of things to triple-check:

  • The spelling of your name
  • Loan term (15 years? 30 years? Something different?)
  • Loan type (a fixed-rate or adjustable-rate mortgage)
  • Interest rate
  • Cash to close amount (down payment and closing costs)
  • Closing costs (fees paid to third parties)
  • Loan amount
  • Estimated total monthly payment
  • Estimated taxes, insurance, and other payments

5. Pass the underwriting process

Before your lender issues final loan approval, your mortgage has to go through the underwriting process. Underwriters are like real estate detectives. It’s their job to make sure you have represented yourself and your finances truthfully, and that you haven’t made any false or misleading claims on your loan application.

Underwriters will pull your credit score from the three major credit bureaus—Experian, Equifax, and TransUnion—to make sure it hasn’t changed since you were pre-approved. They will also review the appraisal of your prospective home to make sure its value matches the size of the loan you are requesting, and check that you haven't taken on any new debts.

Many underwriters will also contact your employer to verify the job and salary that you listed on your loan application. This sounds like a basic step, but you’d be surprised how many people lie on their mortgage application.

How to do it: This one’s pretty simple. Assuming you’ve been diligent about keeping your credit score, job status, and debts stable, you’ll pass with flying colors. If the underwriter has a question, don’t panic—the best thing you can do is respond with prompt and complete information. Your agent is also there to help you troubleshoot any issues.

Let the professionals on The McLeod Group Network help guide you through the home-buying process. 971.208.5093 or admin@mgnrealtors.com.

By: Daniel Bortz, Realtor.com

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The McLeod Group Network
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971-208-5093
Fax: 971-599-5229

**Disclaimer: Amy McLeod, and her team, do not initiate, process, or service mortgages.  And provide this information only as a service.  You should confirm information here with your Licensed Mortgage Lender.