Brick by Brick

Have you ever wondered the difference between financing from a Banker or a Broker? Many Consumers falsely assume that there is little to no difference between the two. Lets start with a Mortgage banker.

Mortgage Bankers:

A Mortgage Banker is a direct lender who loans their own money, more often than not, with the intent to sell your loan to the secondary market. Some Banks retain the right to service the loan, which leads to the perception that they still own your loan. A mortgage banker will present you with only that lender's program of mortgages, so you need to speak with several mortgage bankers to find all of the loan programs and the one that best fits your needs. When choosing a Mortgage Banker, keep in mind that there say is final. If their Bank decides, during the loan process, to not lend you money, then you will need to start your search for another Bank. A denial from one Bank does not necessarily mean a denial from all Banks.

Mortgage Broker

A Mortgage Broker is best described as a middleman. They do not lend their own money, their primary role is to connect the borrower with a lender. Unlike Bankers, Brokers are able to choose from many sources and are able to offer many different loan programs. Many of the lenders a Broker works with are not available to the public. These lenders are called Wholesale Lenders. Wholesale lenders allow Brokers to be competitive in the marketplace. This flexibility to work with many differnent lenders and programs makes it easy for a Broker to transition your loan from one lender to another should any hurdles be encountered.

Outdoors

• If you can afford it consider investing in new landscaping. Curb appeal is the first thing prospective new buyers will see.
• Sweep/shovel sidewalks, mow the lawn, clean gutters, prune the bushes, weed the garden, and clean debris from the yard.
• Clean the windows. This will allow the best possible light to illuminate your home. Studies show that light helps set possitive moods.
• Make sure all of your doorbells & locks are functioning properly. 
• Invest in a new doormat.

Indoors

• Bathrooms and kitchens should be the cleanest rooms of the home. Potpurri in those areas or scented candles are great for making the house smell good. Put out new towels.
• Flowers in the Dining room and kitchen can help spruce up the atmosphere.
• Soft background music can also help set a pleasant stage.
• If you have pets and litter boxes, place them outdoors or in the garage during showings.

Try and be as flexible as you can for showings, Although Sunday Open House are popular, they don't fit everyone's schedule. The more flexible you are, the greater showings you will have and the quicker you will be on your way to sell your home.

For more advice consult with your Realtor. 

Bankruptcy filings are at an all time high. Many consumers have amassed large amounts of debt and have gotten behind in their bill paying ability. Many think that there is no way they could qualify for a home loan, however, this is not necessarily true. A poor credit history, while unfortunate, does not eliminate the possibility of obtaining a mortgage loan. Many people have experienced credit problems over the past several years. In response to the growing number of potential home buyers with credit problems, several lenders have now made available loan programs to assist those individuals with getting back on track with their credit profile. Lenders today have helped thousands of people with credit problems get into a home that they thought they couldn't qualify for.

What bad credit does is impact the rate that you are going to pay and the amount of equity that you will have to have in the property. A few credit blemishes will slightly raise your interest rate over the current rate. Mortgage Professionals are not qualified to advise you on correcting your credit.  A legal professional or someone specializing in that field should handle this. You should request a credit report to better prepare yourself before applying for a mortgage. That way if there are any errors you can work on correcting them prior to completing an application.

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1) Full Representation- an agent owes 100% of their dedication and loyalty to you. They have no other choice but to have YOUR interests at heart.

2) Great Knowledge of the Market - an Agent knows "what is out there" and since they spend most of their time in the field, they can show you any kind of property you like!

3) Negotiating Skills and Contract Knowledge - An Agent is a great negotiator. Their main aim is to get you the best deal out there. Their integrity depends on it!

4) Save Time - Narrow down your search just having a seasoned agent with a vast variety of listings. Give them an overview of your desires and they will start showing you homes in your range and preference.

5) Start Smart - An Agent can help you determine what you can afford and recommend lenders to get you pre-approved. The agent can also negotiate on your behalf when it is to time to make an offer on a home.

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1) In today's market there are a record number of new and existing homes for sale. The supply out weighs the demand. Certainly, you can make an offer that is a little below the asking price. It is a great time to get more for your dollar.

2) You'll pay less tax. You can deduct the interest you pay on your mortgage from your total income. The value of this tax break depends on several factors like your persoanl tax bracket, the size of your mortgage, the rate of interest you pay on it and how long you've held the mortgage. As a rule the newer the mortgage, the greater the amount of interest you pay monthly and the bigger the tax break.

3) You'll be buying a piece of real property rather than putting money in your landlord's pocket. Even if the house you purcahse did not appreciate in price, you would be able to sell it and recoup some of the money you put into it.

4) Interest rates are still very low historically. This makes it inexpensive to have a mortgage. The lower the interest rate, the less you actually pay for your home.

5) In time, you'll be able to use the equity in your home for low cost loans for other purposes. Because they are secured, home equity loans and lines generally carry a lower interest rate than other types of consumer loans, such as auto loans. The interest is tax deductable, as well.

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First time Home buyer in Framingham MA? Then I'm sure you have a lot of questions. What should I do first? What do I need to be prepared for? What questions should I ask my Realtor or Broker? Do I need both? The process of buying your first home can be quite overwhelming. That is why it is important to know the basics and educate yourself on what lies ahead.

Lesson 1. How much should you save for a down payment.

The most important thing to consider before beginning a home search is how much do you have saved for a down payment? The minimum down payment required is currently 3.5% for FHA loans and 5% for conventional loans. Under FHA guidelines the down payment can be in the form of a gift. This is not the case for conventional loans, the 5% must be of your own money. The smaller down payment and gift rule is one of the reasons why many First Time Home Buyers in Framingham MA go the route of FHA loans. {Keep in mind all loan programs where less than 20% is put down will require an additional mortgage insurance payment. Be sure to talk to your Mortgage Professional to know what to expect in those regards.}

Based on the Median home sale prices in Framingham, MA of $266,000 over the prior quarter, I would suggest not beginning a serious home search until you have saved $12,500-$15000 or expect to receive a gift or combination of gift and savings that total $12,500-15,000. I know what you are all thinking, 3.5% of $266,000 is only $9,310. Why do I need to save the additional money? 

Lesson 2  Other costs you need to be prepared for paying.

Besides your down payment you can expect to pay Closing Costs and Escrows. Closing costs are the costs associated with closing your loan. They include attorney fees, an appraisal fee, Lender fees, title insurance, recording charges with the state and banking or broker processing fees, among some others. When all is said and done your closing costs will total between $3000 on the low and $5,000 on the high. In many instances these costs can be financed or paid by the seller. Ask your Realtor or Mortgage Professional for further explanation.

Escrows are accounts your lender sets up to pay your home owners/hazard insurance and property taxes. Depending on when these payments are due, you should account for pre-paying 15 months of hazard insurance or roughly $1125 and 3 months of property taxes, $965.*    *(Based on Framingham,MA 2010 tax rate of $14.52 and median home price $266,000)

So now you should see a clearer picture developing of how much money you will truly need to be a serious home shopper. A home priced at $266,000 will require a 3.5% down payment of $9310, average closing costs of $4000 and escrows of $2000. 

Lesson 3 Contact a Realtor

What kind of home can I expect for $266,000 in Framingham,MA or the surrounding community? I recommend contacting a local Realtor and getting put on an email alert program. Email alerts is a program many Realtors provide to prospective new home buyers. This program sends email listings of new homes as they hit the market. You choose what listings you receive based on the search criteria you provide to the Realtor. For example, "All 3 bedroom homes in Framingham,MA and Natick,MA that are between $225k and $266k."  You will then begin to see if the home you desire is available in your price range. If not, then you can adjust your sights accordingly. Start receiving email alerts now by checking out the Power of Two.

Lesson 4   Pre-Approvals.

OK, so you have a down payment and you are receiving email alerts from a Realtor, now what? It is time to get Pre-Approved. Pre-Approval is the process of determining the maximum loan you can expect a lender to give you. Before you can make any offer on a home you will need to be Pre-Approved for that offer amount.  Many factors besides down payment, are considered in this process. Can you verify steady income? Do you have good credit? What are your monthly debts, i.e. credit card bills and car payments? I suggest contacting a Mortgage Professional and be prepared to answer these questions. He or she will also ask you to provide your prior 2 years W-2's; Copies of your Bank statements, where you have your down payment; One month's pay stubs/earnings statements; Social security number in order to pull a credit report; 2 years employment history; & 2 years prior living/renting history. After compiling this information he/she will be able to inform you what kind of interest rate is available and how much you can borrow.  He or she will provide you a Pre-Approval letter which you will need in order to begin making offers. 

In many instances I suggest you work with a Mortgage Professional beginning from lesson 1.  The Mortgage professional will educate you about programs available such as the First Time Home Buyer Tax Credit.  They will talk to you about the pros and cons of FHA loans and mortgage insurance. They can do a Pre-Qualification, similar to the Pre-Approval w/o all the documentation requirements, to help you get a feel for the price range of homes you can afford. If there are potential problems that can be fixed they can help you spot them and make suggestions to fix them. In short they can be the tool along the way to answer all of your questions and relieve all of your stress. And when it is time they can refer you to a Realtor and suggest an attorney for the Purchase and Sale. Not to mention when you do get to the Pre-Approval stage and it is time to turn over all your most important financial information; it will be much easier to do this with someone who has gained your trust over the past several months. 

Lesson 5   Something to think about...

In closing I would like to point out one valuable person who I think is often times overlooked in the home buying cycle, the life insurance provider. For most of us our mortgage is the single greatest debt we will take on. If married, do your spouse a favor and at the minimum take out a term life insurance policy on each of you. If something were to happen to either of you, would you be able to handle the mortgage debt by yourself? If not, then contact an insurance provider.

 Best of luck to all my First Time Home Buyers in Framingham MA! Happy House Hunting....

Home Refinance in Framingham,MA 

I want a home refinance in Framingham MA, now what? Do your homework and look for a reputable Mortgage Broker who will look at your financial goals and determine the best mortgage programs available to help you reach those goals. Does your broker provide you with only one option or do they present you with more than one? Refinancing, just like purchasing, has more than one program. Be sure you are presented with at least two options. A good Broker will also provide you with a Total Cost Analysis, TCA, that shows the long term benefits for each of those program options. Be weary of the Loan officer who only shows you the cheapest interest rate or APR. They may be missing a plan that although slightly higher in rate, has better long term benefit to you and your financial goals. Only by viewing a complete TCA will you be able to determine which program is truly the most cost effective for your situation. And only with this information will you be able to determine if a Home refinance is right for you.  After all your best situation may be the situation you are in.

What you will need to get started. In order for any Mortgage Broker to get started you should be prepared with the following minimum information.

-Your current interest Rate.

-The Loan amount for your your most recent mortgage or last home refinance. 

-The approximate start date of that most recent loan. If you are unsure of this detail let your broker know, do not guess. They should be able to access this information via Public Records with your property address.

-If you have any secondary loans on your property or Equity lines, they will need to know about them as well as needing the above information for them.

-A general sense for how your credit history looks. You do not need to know your score, although it will help if you know it.

This should be all that is needed to do a preliminary report to show you if a home refinance could save you money. Please be advised this does not mean you will be approved for a new loan only whether or not there are grounds to continue down the path. Also once potential savings are established then the Broker should dig deeper into the total financial goals. Be careful of anyone who asks you to sign any application or tells you there are fees associated for this information. If you are having trouble finding someone like I describe in the Greater Framingham,MA area. Give me a call and I would be more than happy to do a Total Cost Analysis for you!