Keys to Qualify for a Mortgage

November 22nd, 2014

Keys To Successfully Qualify For A Mortgage

 

Qualifying for a mortgage for either a home purchase or refinance can be an easy process. By honestly answering the following questions, you will be positioning yourself for success, identifying areas (if any) that need additional attention to successfully qualify for a mortgage.

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Please keep in mind that not every item needs to be perfect to be able to achieve success but the overall application has to be acceptable to the lender. A mortgage professional can give you an comprehensive analysis of your circumstances and identify aspects commonly missed to ensure you present the best possible picture of you to your lender.

Do you have steady income for the past 2 years? This can be interpreted differently based on your circumstances, so if you have gone through a tough period, it does not necessarily mean you’ll be rejected. Unemployment income could potentially be used to qualify for a loan. You will be asked to document your income using pay stubs, W2s, 1099, tax returns, etc. for the previous 2 years.

Do you have income for the projected payment? This is a 2 fold question. First, your usable income needs to be calculated based on how you receive it. For example, if you are paid hourly or by a salary -what is your monthly pay? Do you receive other forms of consistent income that you would like to use to qualify – such as social security, child support, 2nd job, retirement, etc.? If you are self- employed, a corporation or receive commission income, what is reported on your tax returns? (An analysis of tax returns with all schedules will determine what income may be used to qualify for a loan).

To qualify for a mortgage, the backend ratio generally cannot exceed a range of 41-50% depending on the mortgage program. The backend ratio is determined as (house payment + debts)/income. Generally speaking, most but not all, of the measured debt is determined by using a tri-merge credit report. However, knowing your individual expenses will go a long way in determining a payment amount that works for your lifestyle and goals.

How is your credit history? Do you have active accounts- car loan, credit cards, etc., how many do you have, when and where were they started, and what are the current balances? Have you made your payments on time? Reporting late payments will not necessarily result in a denial of your loan application. Knowing when they happened and if there were extenuating circumstance can affect qualification. Something to keep in mind is that it is possible to dispute inaccurate information and you should do so with all 3 major credit reporting agencies if you determine discrepancies or inaccurate information in your credit reports.

Do you have any collections, judgments, or bankruptcies on your credit report? These are not an automatic disqualification either. These items are sometimes viewed differently by different loan programs. By knowing the status of these items (open, closed, discharged, etc.) and what date they were reported to the credit agencies will determine what steps need to be taken to qualify for a mortgage. Depending on the mortgage loan program, there are items that may need to be paid at or prior to closing on a mortgage or a specific time must have elapsed before qualifying for a particular type of mortgage. Even then, depending on the program, you may still qualify for your loan but may be charged slightly higher interest rates on your loan.

Do you have a good credit score? You do not have to have a perfect score. What is considered an acceptable credit scores varies base on the lender’s requirements and on the mortgage program requirements. Acceptable credit scores can change from lenders quickly, so if you consider your credit score to be low, it might not be for a particular lender. Generally speaking, the higher the credit score the more options are available to you and this is where a mortgage professional can help you find the best match

Where have you lived for the last 2 years? Lenders are required to document where you have lived for the last two years, if you rented and to document rental payment history. Having the appropriate contact information will make the loan process go smoothly.

Do you have enough money? There are expenses associated with every purchase that need to be planned for. Depending on the program these may include: down payments, closing costs and, prepayments of escrows. Depending on the program, the funds required need to come from an acceptable source. These can include such things as checking accounts, saving accounts, retirement accounts, gifts, grants, down payment or closing cost assistance programs, and seller concessions.

 

By Bruce Fong

 

Watch your Holiday Spending

November 13th, 2014
handing money over
PM Images—Getty Images

This time of year can be brutal on your credit score

Now that the holiday shopping season is here (what, you didn’t know Halloween is the new Black Friday?), companies are pulling out all the stops to get us to spend. But watch out: There are some fairly common holiday spending behaviors that can do a number on your credit score. Here’s what the experts say you need to avoid.

Maxing out your cards. In truth, getting anywhere near your credit limit is a bad idea. “Your credit card utilization rate accounts for nearly a third of your credit score,” says Charles Tran, founder of CreditDonkey.com. This percentage of the credit you’ve used compared to how much you have available should be at 30% or less, and if you’re actively trying to raise your score, you should aim for as little as 10%.

This holds true even if you don’t revolve a balance, Tran says. “Even if you religiously pay off your credit card balance in full, the snapshot that the credit report captures might show a high balance, which has a negative impact,” he says.

Loading up a low-limit card. This is a corollary to not maxing out your cards because your credit is scored based on both your per-card as well as aggregate limits, explains John Ulzheimer, credit expert at CreditSesame.com. “The closer your balance is to your credit limit, the lower your credit scores,” he says. If you put $1,000 on a card with a $1,500 limit, that looks much worse than putting the same amount on a card with a $15,000 limit, he says, even though the amount you’re spending and the total amount of credit you have available hasn’t changed.

Ulzheimer notes this is even more important if you plan to pay off your holiday purchases over a number of months, because this maximizes the amount of time you’ll have a harmfully high ratio on the card.

Opening a slew of store cards. Yes, we know — you’ll get 10% or 15% off, or maybe you’ll even be able to jump that insane line on Black Friday. Opening a bunch of store credit cards is still a bad idea. Every time you apply for credit, your score takes a (small) ding, so making your way through the mall filling out applications can cumulatively have a noticeable effect on your credit score.

Closing a bunch of cards. “It can… be damaging to panic and close credit cards because you’re afraid of overspending for the holidays,” warns Bankrate.com analyst Jeanine Skowronski. If you know you can’t handle the temptation, then go ahead and close cards, but this should be a last resort because it can hurt your score because closing a card takes that credit away from your utilization calculation, she says.

Similarly, a lot of people think they’ll sign up for a store card just to get the one-time discount, pay it off and then cancel it. This is really a double-whammy for your score because you ding your credit profile twice, once when you open the card and again when you close it.

Taking the deferred-interest bait. “One marketing strategy that can get folks in trouble is the delayed interest offer,” says Beverly Harzog, consumer credit expert and author of “Confessions of a Credit Junkie.” Not paying by the end of the grace period or even missing a payment could trigger retroactive interest on your purchase, often at sky-high retail card rates. “You’ll owe the interest that would have been charged during that time period,” Harzog says. Not only does this make that purchase ultimately more expensive, it also increases the likelihood you’ll need to revolve that debt, which hurts your utilization.

by Martha White

Home Warranty Conference Information

October 22nd, 2014

Recap from the 2014 International Housing and Home Warranty Conference | 2-10 HBW

October 17, 2014

By

Alison Short, CPCU, Senior Vice President of New Home Operations for 2-10 Home Buyers Warranty® (2-10 HBW), recently presented at the International Housing and Home Warranty Conference in Vancouver, British Columbia.

The conference included 188 delegates from over 11 countries, including Japan, South Africa and the United Kingdom, amongst others.

Ms. Short presented in three sessions during the conference, which focused on warranty claims best practices, a look forward to “green” building and challenges with soil stabilization.

“In this industry, we’re all aware of how crucial it is to understand our options for risk management,” said Ms. Short. “The long-standing reputation of 2-10 Home Buyers Warranty within the warranty industry is rooted in educating home builders and keeping them on top of the risks they face.”

In addition to Ms. Short’s presentation topics, other sessions at the conference included warranty building sciences, social housing & government and legal issues facing the global housing markets.

“The conference is a fascinating opportunity to share best practices and gain insight into critical issues each country is currently facing in the housing industry,” stated Lewis Sidnick of the U.K.’s National House and Building Council. Mr. Sidnick, along with Deborah Malone, COO of the U.S. National Association of Home Builders, presented a session entitled “The Credit Crunch – Consequences to Housing Supply and Government Response”. Ms. Malone remarked, “The conference provides a unique snapshot into the broader industry and to recognize the similarities of the need to provide safe and affordable housing.”

In closing remarks, Keith Hanson, Chair of the Canadian Home Warranty Council noted, “2-10 HBW’s participation in the conference was essential because of its broad based appeal as the largest provider of home warranties in the U.S. market. The presentations provided by Ms. Short reflect a solid base of knowledge and understanding of best practices and key issues facing the home warranty industry. 2-10 HBW is a highly recognized organization and people respect what you have to say.”

Prevent Home Fires

October 20th, 2014
How to Prevent Home Fires
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You can vastly cut down deadly fire risks by exercising good safety habits and simple prevention steps. This article lists the “Big 7” most common causes of preventable fires and tells you the simple things you can and should do to keep them from starting. Prevention costs little or nothing.

By the DIY experts of The Family Handyman Magazine

Overview of preventable home fires

Most fires are unexpected because they’re caused by the most ordinary, everyday items that you normally consider safe: a stove burner, a candle, an electric space heater, the water heater, an extension cord, a cigarette. What typically makes them dangerous are mental lapses, poor judgment, hurried actions and simple carelessness. While everyone makes mistakes, you can vastly cut down deadly fire risks by exercising good safety habits and simple prevention steps. In this article, we’ll outline the “Big 7” most common causes of preventable fires and tell you the simple things you can and should do to keep them from starting.

A Word About Smoke Alarms

According to statistics, this year fire will claim the lives of 30 of our readers and the homes of 500 others. Don’t become part of this statistic. Well over 60 percent of house-fire fatalities occur in homes that are missing smoke alarms or have disabled alarms or alarms with dead batteries. Test your smoke alarms every month and replace units that are more than 10 years old.

#1 Fire Source: Stoves and cook tops

The statistics: Cooking fires cause 23% of home fires and 9% of deaths.
The grease in an unattended frying pan catches on fire and ignites nearby combustibles, which in turn ignite curtains, cabinets or anything else in the vicinity.

A true fire story:
WAUSAU, WI—A sleeping 4-year-old girl died of smoke inhalation in a house fire that started about 30 minutes after her mother left her alone to run errands. Apparently, a stove burner was left on under a frying pan containing grease used for frying chicken. She was the only person home at the time of the fire.

On average, every year one out of every eight homes will have a kitchen cooking fire. Cooking fires mostly occur on the cooktop, usually in the first 15 minutes of cooking. A common scenario is an unattended frying pan on a hot burner. If a fire starts, don’t carry the pan outside; slip a lid over the flames from the side to keep from burning your arm. Many grease fires become full-scale house fires when a flaming pan is carried through the house, dripping a flaming grease trail all the way to the door.

Note near stove

Note near stove

Cooking Fires: The Solution
  • Never leave the kitchen while something is cooking on the stove.
  • Keep combustibles at least 3 ft. away from the cooktop. This includes curtains and wall hangings.

Tip: Post a reminder note near the range for a week or two until everyone gets the message.

#2 Fire Source: Heating equipment

The statistics: Heating equipment causes 15% of home fires and 13% of deaths.
Wood stoves and space heaters igniting nearby combustibles are responsible for the lion’s share of heating fires.

A true fire story:
WINSTON-SALEM, NC—An electric space heater caused the death of a 3-month-old infant left at home with her brother and her two sisters early one morning, fire officials said. Manuel, age 11, smelled smoke in an upstairs room and was able to get two of his sisters outside but was unable to rescue his 3-month-old sister, who was asleep in the master bedroom. An electric space heater in the bedroom appears to have ignited a nearby pile of clothes. The mother was driving her husband to work when the fire started. A smoke detector had been installed near the kitchen, but the family took it down because it would go off when they cooked.

Most deaths from heating equipment occur when wood stoves and space heaters are in use and ignite nearby combustibles while everyone’s asleep. Here are other common ways that wood stoves cause fires:

  • If they’re not disposed of properly, embers in discarded ashes smolder for up to two weeks and can ignite other trash.
  • Chimney disrepair and creosote buildup can combine to create a chimney fire that can ignite adjoining wall framing.
  • Sparks or even just heat can ignite combustibles that are located too close to the wood stove.
Maintain a safe zone around heaters

Maintain a safe zone around heaters

Heating Equipment: The Solution
  • Keep space heaters at least 3 ft. away from drapes, bedding and other flammables.
  • Plug space heaters directly into outlets, not into extension cords.
  • Don’t use space heaters while sleeping.
  • Empty wood-stove ashes in a metal container and store them outside away from combustibles for at least a week before dumping them into the trash.
  • Have your chimney inspected and cleaned every year.
  • Keep any and all combustible objects at least 5 ft. away from the stove or fireplace.

Tip: Establish a designated space heater zone in rooms where space heaters are used. The zone should be clear of blowing drapes and at least 5 ft. away from other combustibles.

#3 Fire Source: Electrical equipment

The statistics: Electrical equipment causes 9% of home fires and 10% of deaths.
Overloaded extension cords, hidden electrical shorts, bad connections, and oversized bulbs and fixtures can ignite nearby combustibles and burn down your house.

A true fire story:
FLORIDA—Fire and smoke spread through a single-story home, killing two in a late-night blaze. Investigators determined that an electrical short in a five-outlet power strip overloaded with seven appliances started the fire. Excessive heat melted plastic wires and ignited the carpet and a television stand. Crews doused the flames and removed a 74-year-old man and a 59-year-old woman from the home. The man had already died of smoke inhalation and the woman later succumbed to second- and third-degree burns.

Electricity and heat caused by shorts, overloading or bad connections go hand in hand. The heat generated is often enough to ignite combustibles such as wood framing, rugs or even the insulation around the cord or wire. While a few of the electrical causes are tough to spot, there are telltale clues that can tip you off to dangerous concealed wiring hazards.

  • Electrical cords that are warm to the touch can signal overloading.
  • Charred or plastic burning odors may indicate oversized bulbs and light fixtures.
  • Warm switch or receptacle plate covers may mean a poor electrical connection.
  • Frequently tripping circuit breakers may be caused by a defective breaker or possibly a short in the cables buried in walls or ceilings.
Electrical Fires: The Solution
  • Replace extension cords that are undersized or frayed.
  • Never run extension cords under rugs.
  • Replace undersized cords with larger-gauged ones or plug appliances directly into outlets.
  • Call an electrician to track down hidden problems causing frequently tripping circuit breakers.
  • Call an electrician to open up and troubleshoot electrical boxes that have warm covers.
  • Check all the light bulbs in your home to make sure bulb wattages don’t exceed the fixture’s recommended maximum.

#4 Fire source: Appliances

Appliances (clothes dryers and gas water heaters) cause 7% of home fires and 4% of deaths.
After problems with stoves and heaters, the biggest culprits in appliance fires are lint in dryers and combustibles near gas water heaters.

A true fire story:
PORTSMOUTH, VA—Clothes piled against a water heater started a fire that took the life of a 7-year-old girl. A neighbor who noticed the fire was able to kick in the back door and rescue five of the children ages 2 to 10, but dense smoke made it impossible for him to save the 7-year-old. The mother had gone to the store and left the children in the care of her next-door neighbor, who wasn’t with the children when the fire broke out. A fire department spokesperson said, “There should be plenty of space between a water heater and any other materials,” and “there should never be anything within two feet of any heating appliance.”

Since water heaters are often in the same room as the laundry, clothes tend to get piled up against the water heater near the flame. The problem is worse when that flimsy cover plate falls off the burner access. Dryer vents catch on fire when built-up dust and lint ignite from either the burners or the heating elements and create a fire path to built-up lint within the vent hose. Especially dangerous are dryers that are vented with flexible vinyl hoses. The vinyl then catches on fire and lights anything near it.

Safety zone around gas water heater

Safety zone around gas water heater

Appliances: The Solution
  • Make sure protective water heater combustion chamber covers are in place.
  • Pull the back service panel from the dryer cabinet and clean all the lint from the interior and around the drum.
  • Clean built-up lint from the vent line.
  • Replace vinyl vent lines with smooth-walled metal ducts.

Tip: Mark a “combustible-free” zone 3 ft. away from your water heater with masking tape.

#5 Fire Source: Smoking

Cigarettes cause 5% of home fires and 23% of deaths.
Smoking kills more people than any other cause of fire because the fires usually start when everyone’s asleep.

A true fire story:
MINNESOTA—A man died after he fell asleep while smoking in bed. He awoke to find his bed and clothing in flames. Disoriented, he opened a closet and ignited the clothes hanging inside before struggling through the bedroom door and collapsing on the hallway floor where his clothes lit the carpeting on fire. He was pronounced dead at the scene and the fires were extinguished.

If a cigarette smolders in the bedclothes or drops on the carpet when the smoker falls asleep, the gases from smoldering fabrics will actually lull the smoker into a deeper and deeper sleep. Live butts that fall between cushions or are tossed into trash cans can take hours to ignite, and when they finally do, the household’s in bed, asleep.

Stop smoking in bed

Stop smoking in bed

Smoking: The Solution
  • Don’t smoke in bed.
  • Use large ashtrays on tables.
  • Soak ashtrays under the faucet before throwing cigarette butts in the trash.

Tip: When nagging isn’t doing the trick, it might be time to buy a sign like the one in the photo.

#6 Fire Source: Candles

Candles cause 5% of home fires and 3% of deaths.
Like cooking fires, most candle fires occur when candles burn unattended near combustibles—usually in bedrooms.

A true fire story:
INDIANA—A 23-year-old woman and her two daughters, ages 11 months and 2 years, died when wind from an open window blew curtains across an unattended candle, spreading flames to nearby combustibles. The house had two smoke alarms, one battery operated, the other hard-wired. Both were inoperable. Firefighters found the 11-month-old girl in a crib in the living room, dead from smoke inhalation and burns. Her mother and sister were found next to a bed, dead of smoke inhalation. All three had been napping when the fire broke out.

The recent popularity of candles and the 50 percent surge in candle-initiated fires in the last 10 years is no coincidence. Couple that with burning candles near combustibles or on shaky holders and there’s a huge potential for a catastrophic fire. Using candles safely calls for the utmost in attention and care. They’re simply a high-risk item because you can easily set them near combustibles without noticing, leave them unattended and forget about them entirely. They’ll often get soft and fall out of a holder and ignite nearby combustibles or even ignite an underlying wooden holder or shelf. (It’s wishful thinking, but if I had my way, we’d only burn candles at the dinner table and nowhere else.)

Candles in a tip-proof container

Candles in a tip-proof container

Candles: The Solution
  • Use only tip-proof containers.
  • Burn candles only while you’re awake and in the same room with them.
  • Keep candles at least 3 ft. away from combustibles.
  • Never burn candles that have combustibles (flowers, leaves and potpourri) cast into the wax.

Tip: Go through your candle and candleholder collection and throw away tippy holders and candles with combustibles cast into them.

#7 Fire source: Children playing with fire

Children playing with fire cause 5% of home fires and 8% of deaths.
Not only do children playing with fire start 5 percent of the residential fires; they’re also the most likely ones to die from those fires.

A true fire story:
TENNESSEE—A 2-year-old and his 23-year-old mother died when a fire spread through the house. The children’s 28-year-old father, who rescued his three daughters before reentering the house to search for his wife and son, also died. There were no batteries in the kitchen’s smoke alarm. The fire apparently began in a front bedroom under a bed. They believe that one of the children was playing with a lighter or matches and ignited a foam mattress. Flames then spread to the hallway, living room and kitchen. A padlocked door prevented the victims from leaving the home.

Children will often start fires while hiding in places like closets or under beds, where they’re surrounded by combustibles. Their first reaction is often to hide from you or the fire after it starts. There, they become overcome by smoke and/or make it difficult for firefighters to find them. It’s obvious that you shouldn’t leave matches and lighters lying around, but you also have to be vigilant around burning candles.

Store igniters up high

Store igniters up high

Market News

October 16th, 2014

Urgent Market News  

In the past two weeks, economic events & market news around the world have caused interest rates to hit their lowest levels in more than a year. For those who are thinking about refinancing their present home or purchasing, now is the time to act as there is no way to tell how long today’s low rates will last. The markets are very volatile, so those who hesitate may miss out on a golden opportunity.

Even more good news, some credit standards have loosened and home prices have increased such that some who couldn’t refinance the last time rates hit this level may be able to do so now. Plus, the government program for underwater mortgages (HARP) has been extended and may help you even if your loan balance is more than the value of your home.

As a leading local lender, we have helped thousands achieve their goals in the past few years. This includes those who are looking to..

  • Purchase a new home or investment property;
  • Eliminate costly mortgage insurance;
  • Reduce payments through a lower interest rate;
  • Use your equity to pay off non-deductible consumer debt;
  • Consolidate a first and second mortgage;
  • Move to a 15-year loan to build equity faster.

Now is the time to act. A quick consultation with me can help you determine whether you might benefit from today’s low rates. Even if you have already acted, I would appreciate your help referring others you know who can be taking advantage of this phenomenal news.

 

offered by Bob Fisher

When Selling Your Home

September 3rd, 2014
Three Lists To Make When Selling Your Home
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When you put your property up for sale, you want to make sure that potential buyers get all the information they need on the features of your home and its surrounding area. If, for example, a buyer doesn’t realize there is great shopping just a couple of blocks away, he might cross your property off his shortlist. An effective way to make sure something like that doesn’t happen is to create three lists.

#1: The “I’ll miss it” list.

Chances are, there are things about your home that you’re really going to miss when you move. It may be the spacious living room, ideal for entertaining. Or the nearby park with scenic trails, perfect for walking and biking. Or the large deck that has just the right combination of shade and sun to make spending time on it pleasant.Whatever you’ll miss put it on the list! Chances are, those are features that will also interest buyers.

#2: The “Just the facts” list.

What are the facts about your property that a buyer needs to know in order to consider buying it? This may be a very long list including such items as total square footage, number & size of bedrooms, number of washrooms, property taxes, yard size and more. This list should also include special features such as finished basement, upgraded kitchen features, and local golf course.

#3: The “repairs and improvements” list.

Buyers are interested in the state of repair of your home, and any improvements you have made to it. On this list, include all repairs done during the past three years and, if possible, attach receipts. It’s especially important to include anything that has been replaced, such as a furnace or roof shingles.

If you’ve done any major remodeling or renovations, include the details on those, too.

Want more tips on selling your home quickly and for the best price? Call today.

 

Inspect Your Walls Before You Sell
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Say you’re trying to sell a used car. Imagine that it’s a desirable make and model. The mileage is low. Overall, it’s in great condition except for the body. Unfortunately, there are a few areas where the paint is scratched and there are a couple of dents and rust spots, too.

Are you going to have trouble selling your car?  Potential buyers will have trouble seeing past the condition of the body and appreciating the true value of the vehicle.

The same thing can happen when you’re trying to sell your home.

Everything about it could be wonderful, but if the paint on the walls is faded in spots, and there are dents, scruffs and holes, buyers may notice those things more than the other more important features of your property.

So it’s a good idea to inspect your walls to make sure they look great.

There are numerous products available at your local home improvement center for repairing gouges and holes. It’s a relatively easy do-it-yourself job.

Keep in mind that applying a new coat of paint not only makes the walls look like new, but also brightens up the entire room.

 

Giving Buyers a Grand Entrance
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The front door is usually the first feature of a house that buyers see. How do you ensure it makes a grand first impression? It’s easy.

  • Put on a fresh coat of paint.
  • Replace worn or faded door handles and locks.
  • Install a brass kick plate at the bottom of the door.
  • Clean the exterior door frame. Make it shine.

These may seem like little things. But they can make a big difference to the first impression your house makes on potential buyers.

 

Mortgage Update

August 30th, 2014
John Melnick
Senior Loan Officer NMLS ID #527960
Presidential Mortgage
Phone: 703-460-5510-O  703-303-6434-C
Fax: 703-277-2882
john.melnick@presidential.com

 

 
Presidential Mortgage Update

August 29th, 2014  Happy Labor Day!

Mortgage News You Can Use

 

It is worthwhile to ask prospective home buyers or home sellers if they are Veterans.  Presidential Mortgage is an approved Veterans lender. The 0% down payment option VA loan is available to $692,500 in our area. The funding fee is 2.15% financed in the loan for 0% down, 1.25% 5% down and 1.25% 10% or more down.  If a Veteran is paid a VA disability, the funding fee is waived. This is an excellent low down payment program since conventional options typically require at least 10% down payment over $417,000 loan amount.  The $692,500 limit would apply to most of our area.  This is a link to loan limits by county and state-

http://www.benefits.va.gov/HOMELOANS/documents/docs/2014_county_loan_limits.pdf

Non-conforming loan pricing improves.  Our non-conforming loan pricing now beats agency jumbo conforming by .125% to .25%.  These loan types are above $625,500 to $3,000,000.  Down payments of 20% are ok to $1,000,000 and 25% to $3,000,000.  We have special portfolio non-conforming programs that allow 10% down payment 1st and 2nd trust combinations to $1,500,000 loan amount and 5% down payment to $625,500. I understand the complex financials of many of these clients and can provide a smooth non-conforming experience.

Mortgage rates unchanged for the week at yearly lows

Freddie Mac reported that the average 30 year fixed mortgage was unchanged at 4.10%. This is a low mark for the year.  Next week’s jobs report on Friday will be the most important market mover.  One year ago the average 30 year fixed rate was 4.51%.  The 15 year average was up slightly to 3.25% from 3.23%.  Average rates in the survey have .5-.7 discount points.

I am available this weekend

John Melnick II

Senior Loan Officer

NMLS ID #527960

Presidential Bank Mortgage

Estimating Rehab Costs

August 30th, 2014

Estimating Rehab Costs

Wednesday 0 Comments

 

Before you buy that investment house to wholesale or rehab you need to be able to have a pretty good estimate of what the repairs will cost.  Remember the offer price is the After Repair Value (ARV) minus repairs and other holding costs minus your desired profit.

Most experienced investors can do this as they walk through a house, this speeds up their ability to arrive at an offer price and secure the contract.  The experienced investor has done it often enough to know what a new kitchen, painting, carpeting, widows, new bathrooms, etc. will cost.  A lot of new investors are really confused about how to estimate repairs and rightfully so.  It can be intimidating.

There are online tools to estimate repairs, however, beware that if the tool doesn’t ask for your zip code or at least area of the country, you need to use a different tool.  After all repair costs in a major metropolitan area such as Washington DC or San Francisco can be very different from say rural areas where the cost of living is lower.

When I go to the house to meet with the owner I like to have a clip board and paper with me.  An electronic clip board like an iPad will work too but I like the old school pad of paper, it is faster and as you go and are flipping through sheets of paper while writing stuff down the owner may better understand the amount of work his/her house needs without you saying negative things.  Write down all the things that need to be done room by room.  Remember the exterior of the house, especially the roof because that is a big ticket item.

If the house is rural remember to ask if it has a septic tank and/or well.  Ask if there are any known issues and the last time these were inspected as these are big ticket items too.  You want to have them both inspected prior to final purchase.  You don’t have to have them inspected prior to making your offer, just make the offer contingent upon an acceptable inspection.

I have a friend who is new to the business that takes a contractor with him every time he looks at a property.  This is a good option for the new investor, however, you need to remember that if the property isn’t under contract to you by the time you leave the property, the contractor may go back and put it under contract for themselves.   Also respect the contractor’s time.  They are in business to make a living not just to give bids so eventually you need to give them some work.

I know investors who make offers on homes all over the country.  They either get them so cheap that the cost of repairs won’t kill all their profit or they make offers based on what the owner tells them about a property with a contingency that the information provided is correct.  Once the owner accepts the price and the house is under contract then these investors have contractor’s go in and provide their opinions and prices.  If there is a significant deviation from what the home owner said, the investor will renegotiate the contract price.

If your buying a property from a bank they probably don’t know any of the history or issues with the property.  In these cases you can often hire a local person to go and inspect the home and provide you a report.

Here’s a tidbit for you to consider:  When talking to the owner about an older home, more than 20 years old, and they say everything is in great condition ask them when the last time the kitchen was remodeled.  If it has never been remodeled it may be in great shape but it also may need to be remodeled.

You can also use a local Home Depot or Lowe’s store to get ballpark estimates.  Both of these stores offer installation services for most of the things they sell.  If you have a rough idea of the actual measurements they should be able to provide you with ball park estimates for most major things.

As you get estimates from contractors ask them to break them down, how much will the painting cost, the refinishing of the floors, the kitchen cabinets, etc.  As you do this, if you are working in the same area over and over again, your ability to estimate repair costs will get better and better.  This will allow you to make your offers quicker and get the contract signed.

I like to create a written document that has everything I want done to the property in it and hand that to contractors for them to use to bid on.  I provide them specific instructions on how I would like the bid returned.  For instance I like to get the bid broken out by job components such as floor refinishing, painting, cabinets, etc.  I also suggest being specific about colors of paint to use, cabinets to be installed, etc. This puts me in a better position to be comparing similar bids and helps avoid any misunderstanding about expectations for the expected work.  If I am going to use different contractors for different aspects of the rehab then I just provide them a list for their part of the rehab.

I also ask the contractors to point out to me any items they think need repair that I may have missed.  After all they have done more properties than I have so their experience can be very beneficial.

I always try to get a minimum of 3 bids for any work I want performed.  I don’t always select the lowest bid.  I have had bids come in so low that I knew the contractor would not be able to perform at that bid.  Why would I want to do business with a person who may not be there to finish the job?  I usually select the contractor who was easiest to work with and communicate with, has good references, followed my instructions on bidding, and has a reasonable price.

Please note:  This article provides a starting point for estimating repair costs and I hope it has provided you with some good ideas.  There are whole courses written on this subject.  Also, remember that even the best of estimates can be impacted by things you can’t see when first looking at a property.  For instance, you find termite damage, pipes in the walls that need to be replaced, electrical wiring that needs to be replaced, missed a county/city code that needs to be complied with, etc.  These are risks, don’t let them stop you, the rewards can still be worth it!

 

Real Estate Investing Association

This letter is sent on behalf of Silver Leaf Investing, LLC and Driscoll Enterprises, Inc.and is for educational purposes only.

Veteran Website Resources

August 18th, 2014

Veteran Website Resources

 

As an added benefit of working with Veterans, I like to help keep them informed as to other assistance websites.  Here is a great list that I found on #SilentSoldier where I also market to help our service members when they return home.

Burial and Memorial Benefits – www.cem.va.gov

Caregiver Support – www.caregiver.va.gov

CHAMPVA – www.va.gov/hac/forbeneficiaries/forbeneficiaries.asp

eBenefits – www.ebenefits.va.gov/ebenefits-portal/ebenefits.portal

Education Benefits – www.benefits.va.gov/gibilhomeless,

Environmental Exposures – www.publichealth.va.gov/exposures

Health Care Eligibility – www.va.gov/healthbenefits

Homeless Veterans – www.va.gov/homeless

Home Loan Guaranty – www.benefits.va.gov/homeloans

Life Insurance – www.benefits.va.gov/insurance

Memorial Certificate Program – www.cem.va.gov/pmc.asp

Mental Health – www.mentalhealth.va.gov

My HealtheVet – www.myhealth.va.gov

National Resource Directory – www.nrd.gov

Prosthetics – www.prosthetics.va.gov

Records – www.archives.gov/st-louis/military-personnel

Returning Service-Members – www.oefoif.va.gov

State Departments of Veterans Affairs – www.va.gov/statedva.htm

Women Veterans – www.womenshealth.va.gov

VA Vet Centers – www.vetcenter.va.gov

VA Home Page – www.va.gov

VA Benefit Payment Rates – www.benefits.va.gov/compensation


Back To School Organizational Tips

August 9th, 2014
Back to School Home Organizing Tips
The lazy, crazy days of summer are on the wane. Are you ready to get the kids back to school? Here are some ideas to get you reorganized and re-energized for the new academic year.Ease into your schedule — Practice earlier bedtimes and getting up to an alarm the week before they’re required. Create a morning checklist, written on a fun chalkboard or colorful poster in your child’s room so they know what is expected every morning; this is especially helpful for dawdlers and daydreamers. Can’t get by without TV in the morning? Set a requirement that everyone must be dressed and done with breakfast by the time the show’s over.Plan to plan — Put up a big, easy-to-read calendar for major activities where everyone can see it. Paper is great, but a peel-and-stick dry-erase wall decal is a fun and fashionable choice, plus it’s easy to move and doesn’t leave holes in the wall. The modern family can also set up their phones to share calendars and set reminders electronically.

Make a practice run — If the kids are just starting kindergarten or starting a new school, or you’ve finally set up that carpool you’ve been meaning to organize, make sure you get your timing down with a dry run out to the campus and then off to work or wherever you need to be. Remember to allow for more traffic and longer wait times once the buses and school commuters are back on the road as well.

Check in for a check-up — Is everyone up to date on shots? Do you need signed sports physicals and releases? Don’t leave them till the last minute or your little athlete could start the season benched.

Conquer the kitchen – The start of the school year is a great time to kick off menu planning. You can do your prep on Sunday as a family to make after school events and homework run more smoothly and not interfere with dinner. Another simple yet effective tip: Make lunches –theirs and yours – the night before.

Nighttime setups — While you’re packing up those lunches, why not organize a few more chores the night before to make the morning just a little less hectic? Set out the next day’s outfit, from underwear to outerwear. Pack up bags and backpacks and ensure homework makes it back to school. You can even put breakfast dishes on the table to save a few precious moments in the morning.

Create Homework Central — It doesn’t matter if kiddo likes to work in his room alone or at the kitchen table where he can see what’s going on. A tub filled with homework tools and supplies can be easily moved, sorted and restocked. Get a list from your kids’ teachers to know what is important to have on hand.

There’s always a bit of mayhem associated with school mornings, but if you start the new school year with these time-saving organizational tips, you can cut back on the craziness and keep control over your time and home!

Contributed by S. Theruvath

 

And If you are in need of assistance finding your next home of choice, contact me today!  Interest rates are still reasonable and home prices are too!