First-Time Home Buyer Expense Checklist

Buying your first home is one of life's major events. It's easy to get caught up in the euphoria of the decision and overlook the reality that it costs a significant amount of money not only to buy a home, but to keep it and maintain it.  Think about
Maintenance- Insurance- Property Tax- Earnest Money- Down Payment- Closing Cost.  Contact me and I’ll sent you a worksheet to help you figure it all out.!   neal.paskvan@bairdwarner.com 
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First-Time Homebuyer's Guide | AOL Real Estate

 

Mike Valdez fits the profile of a savvy first-time homebuyer perfectly. A 34-year-old financial analyst from New Rochelle, N.Y., he and his family had grown sick of living the renter's life. So two years ago he decided to test the market and find a townhouse for his growing family. But despite his financial aptitude, he quickly ran into a setback.
"We found a place we liked and ran the numbers," he says, but the young couple soon discovered that they had underestimated the burden of their college debt. They were forced to back out.

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6 - Don'ts After You Apply For A Mortgage

 

Some of the Things You Think May Help You,

May Actually Hurt You in this Day and Age. 

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I learned a long time ago that “common sense is NOT common practice“. This is especially the case during the emotional time that surrounds buying a home, when people tend to do some non-commonsensical things. Here are a few that I’ve seen over the years that have delayed (and even killed) deals:
 

1. Don’t deposit cash into your bank accounts. Lenders need to source your money and cash is not really traceable. Small, explainable deposits are fine, but getting $10,000 from your parents as a gift in cash is not. Discuss the proper way to track your assets with your loan officer.
2. Don’t make any large purchases like a new car or a bunch of new furniture. New debt comes with it, including new monthly obligations. New obligations create new qualifications. People with new debt have higher ratios…higher ratios make for riskier loans…and sometimes qualified borrowers are no longer qualifying.
3. Don’t co-sign other loans for anyone. When you co-sign, you are obligated. With that obligation comes higher ratios, as well. Even if you swear you won’t be making the payments, the lender will be counting the payment against you.
4. Don’t change bank accounts. Remember, lenders need to source and track assets. That task is significantly easier when there is a consistency of accounts. Frankly, before you even transfer money between accounts, talk to your loan officer.
5. Don’t apply for new credit. It doesn’t matter whether it’s a new credit card or a new car, when you have your credit report run by organizations in multiple financial channels (mortgage, credit card, auto, etc.), your FICO score will be affected. Lower credit scores can determine your interest rate and maybe even your eligibility for approval.
6. Don’t close any credit accounts. Many clients have erroneously believed that having less available credit makes them less risky and more approvable. Wrong. A major component of your score is your length and depth credit history (as opposed to just your payment history) and your total usage of credit as a percentage of available credit. Closing accounts has a negative impact on both those determinants of your score.

The best advice is to fully disclose and discuss your plans with your loan officer before you do anything financial in nature. Any blip in income, assets, or credit should be reviewed and executed in a way to keep your application in the most positive light.

Credits- Dean Hartman- The KCM Crew- Neal Paskvan

If you need some advice about this subject or anything else Real Estate… feel free to contact me.  
All my Best,  Neal Paskvan- Baird Warner- Downers Grove-   630-964-1855   neal.paskvan@bairdwarner.com

The 4 C’s of Mortgage Underwriting

With Spring upon us, and new buyers out looking for houses, I thought today might be a good time to review the basics of what lenders look for as they decide to approve (or deny) mortgage applications. For at least 25 years, I have heard them called “The 4 C’s of Underwriting”- Capacity, Credit, Cash, and Collateral. Guidelines and risk tolerances change, but the core criteria do not.

CAPACITY

CAPACITY is the analysis of comparing a borrower’s income to their proposed debt. It considers the borrower’s ability to repay the mortgage. Lenders look at two calculations (we call ratios). The first is your Housing Ratio. It simply is the percentage of your proposed total mortgage payment (principal & interest, real estate taxes, homeowner’s insurance and, if applicable, flood insurance and mortgage insurance – like PMI or the FHA MIP) divided by your monthly, pre-tax income. A solid Housing Ratio (often called the front end ratio) would be 28% or less; although, at times loans are approved at a significantly higher number. That’s because your front end ratio is looked at in conjunction with your back end ratio.

The back end ratio (referred to as your Debt Ratio) starts with that mortgage payment calculation from the Housing Ratio and adds to it your recurring debts that would show up on your credit report (auto loans, student loans, minimum credit card payments, etc.) without taking into consideration some other debts (phone bills, utility bills, cable TV). A good back ratio would be 40% or less. However, loans sometimes are granted with higher debt ratios. Understand that every application is different. Income can be impacted by overtime, night differential, bonuses, job history, unreimbursed expenses, commission, as well as other factors. Similarly, how your debts are considered can vary. Consult an experienced loan officer to determine how the underwriter will calculate your numbers.

CREDIT

CREDIT is the statistical prediction of a borrower’s future payment likelihood. By reviewing the past factors (payment history, total debt compared to total available debt, the types of monies: revolving credit vs. installment debt outstanding) a credit score is assigned each borrower which reflects the anticipated repayment. The higher your score, the lower the risk to the lender which usually results in better loan terms for the borrower. Your loan officer will look to run your credit early on to see what challenges may (or may not) present themselves.

CASH

CASH is a review of your asset picture after you close. There are really two components – cash in the deal and cash in reserves. Simply put, the bigger your down payment (the more of your own money at risk) the stronger the loan application. At the same time, the more money you have in reserve after closing the less likely you are to default. Two borrowers with the same profile as far as income ratios and credit scores have different risk levels if one has $50,000 in the bank after closing and the other has $50. There is logic here. The source of your assets will be examined. Is it savings? Was it a gift? Was it a one-time settlement/lottery victory/bonus? Discuss how much money you have and its origins with your loan officer.

COLLATERAL

COLLATERAL refers to the appraisal of your home. It considers many factors – sales of comparable homes, location of the home, size of the home, condition of the home, cost to rebuild the home, and even rental income options. Understand the lender does not want to foreclose (they aren’t in the real estate business), but they do need to have something to secure the loan against, in case of default. In today’s market, appraisers tend to be conservative in their evaluations. Appraisals are really the only one of the 4 C’s that can’t be determined ahead of time in most cases.

Now, each of the 4 C’s are important, but it’s really the combination of them that is key. Strong income ratios and a large down payment with strong reserves can offset some credit issues. Similarly, long and strong credit histories help higher ratios….and good credit and income can overcome lesser down payments. Talk openly and freely with your loan officer. They are on your side, advocating for you and looking to structure your file as favorably as possible.

If You need some more help on this or any other Real Estate subject, feel free to contact me and I'll put you in touch with my entire Real Estate Team of Professionals!

Neal Paskvan-Baird and Warner      neal.paskvan@bairdwarner.com

DOWNERS GROVE Homes On Average 12,551 Homes Sell Every Day in the U.S.

 

Here is a Breakdown of who the Buyers are.

The Facts Show  If you are FIRST TIME BUYER, Investor or CASH buyer, your investment will pay off.

If your Goal is to find a place of your own, and make it your Home, a Home where you can live the lifestyle you want to live, Now, may be the right time to take the first step.

Contact me if you would like to explore the the possibilities of having a home of your own. No cost consultation.

Neal Paskvan- DOWNRES GROVE Homes for Sale-Baird and Warner   neal.paskvan@bairdwarner.com

 

 

*No one telling you where to park of if you can have a pet.  No more waiting for the the washer and dryer to be available.. No more  concerns about who may is moving into the space  above or below or next to you. No one telling you when to turn the music down and well you get the idea.

Buyers, sellers continue to butt heads on home prices

Most Americans feel now is a good time to buy a home, but those who want to sell are having difficulty finding buyers at desired prices, causing seller sentiment to fall to record lows.

Currently, about 20% of all homeowners with mortgages nationally are underwater. In some particularly hard-hit markets, as many as half of all homeowners with mortgages are underwater. Those are the same places with the highest incidence of delinquent mortgages and foreclosures.
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Dupage County Health Department > News

FOLLOW THESE PRECAUTIONS FOR FURNACE AND FIREPLACE SAFETY

Mon January 9, 2012

DUPAGE COUNTY- People rely on their furnaces and fireplaces to function properly year after year, often not remembering proper maintenance or cleaning. This is a dangerous practice resulting in thousands of injuries and deaths among Americans. The DuPage County Health Department recommends the following precautions to keep your family safe this winter:

Furnaces:

• Change or clean your furnace filter regularly.
• Have a professional check your furnace to be sure it is in good repair. Some furnace services can check to see if the furnace gets enough fresh air. Many homes are over-insulated and lack intake-air piping. This causes the furnace to burn improperly and can reduce the oxygen in your home to a dangerously low level.
• Move all materials that burn easily away from the furnace, including old rags, sawdust, wood scraps and flammable liquids such as gasoline and kerosene. (Because vapors from flammable liquids ignite easily, store these liquids in tightly capped containers.)
• Have a professional inspect your chimney and flue at least once a year and clean them if necessary. Carbon monoxide levels can become dangerous if smoke cannot escape from blocked flues or chimneys. Also, soot in flues and chimneys is highly combustible and can easily ignite, sending a ball of fire from the furnace or fireplace into the house.

Fireplaces:

• If you have a fireplace, be sure it was made to be used and is not just for decoration.
• Only burn materials designed for a fireplace. Coal and charcoal release carbon monoxide, and some products emit deadly gases. If using artificial logs, burn just one at a time. They may produce more heat than the fireplace can withstand.
• Always use a fireplace screen to prevent hot embers from popping out into the room.
• Do not go to bed or leave the house until you are sure the fire is completely out. Securely shut the fireplace screen or doors.
• Put ashes in a metal container and empty it after each time you clean the fireplace.
• Install smoke and carbon monoxide detectors on every level of the home. Test the alarms periodically and change the batteries at least once per year.

For more information on the DuPage County Health Department, follow us on Twitter @DuPageHD or become a fan on Facebook

…And the Changes Keep Coming

 

With an election year right around the corner, it seems obvious that the world is full of flip-floppers, so why should housing and mortgage policy-makers be any different?

• Remember when the Federal Government was trying to ease its way out of being the dominant provider of mortgage financing (and trying to move people more into the private sector and Private Mortgage Insurance)?
• Remember the days when government insured financing (through FHA loans) was capped at 85% of their conventional counterparts (from Fannie Mae and Freddie Mac)?
• Then, the government recently decided to LOWER the conforming loan limits in high cost areas from $729,750 back to $625,500. The logic was sound. Home values have declined, therefore, so should conforming loan limits.

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