Buck's Blog

What is Loan to Value (LTV)?

Tue, 12 Apr 2016 08:58:21 -0700

The mortgage world is full of industry-specific lingo. One commonly used acronym is LTV or Loan to Value. This term is often used in the home buying or refinancing process to describe the loan amount as a percentage of the purchase price or value of the property. For example, an $80,000 loan on a $100,000 property equals an 80% LTV.You can also think of LTV as the inverse of your down payment. If you put 20% down on a home, your LTV will be 80%. The LTV may be slightly higher if costs, such as upfront mortgage insurance or other funding fees, are added to the loan amount.Your LTV ratio is important because it will be evaluated during the underwriting of your loan. In general, if you have a lower LTV ratio, you will qualify for a lower mortgage rate than if you have a higher LTV ratio. This is because lower LTV ratios are considered less risky since you would have more equity in your home, therefore you are less likely to default on your mortgage.Your LTV ratio will also determine whether you have to pay private mortgage insurance, or PMI. For conventional loans, if you want to avoid paying private mortgage insurance, you will need to make a down payment of at least 20 percent of the value of the home. Buck Seymour Loan Officer 1st Advantage Mortgage, a Draper and Kramer company Company NMLS: 2551 Loan Officer NMLS: 250024 609-467-6024 (office) 609-377-7069 (Mobile) 630-261-3886 (E-Fax) Web: www.1amllc.com/seymour Like me on Facebook: https://www.facebook.com/mortgageinsider/

5 Ways to Increase Your Home’s Appeal for less than $1000

Fri, 25 Mar 2016 02:07:49 -0700

The condition of your home can make a huge difference when you’re putting your house on the market. While some projects are likely to break the bank, there are a number of strategic, budget-friendly upgrades you can easily make. Some may just be small changes, but they can make a huge difference in the value of your home. Put yourself in the shoes of a buyer and see how many of these upgrades would make you move forward or pass on a home purchase. 1. Clean your waterMost home owners who steer clear of tap water by buying water bottles or filter pitchers to get clean water. Save them a step by installing a water filtration system on your kitchen faucet. It could be a helpful selling point. 2. Customize your thermostatBy installing a programmable thermostat, it can help save some cash every month. Technology is more advanced and a lot of programmable thermostats can be adjusted using your smartphone or computer. This forward-thinking upgrade will be appreciated by future home buyers. 3. Give your fixtures a makeoverOld-fashioned wood finishes and hardware in your kitchen and bathroom can make your home look dated. By simply giving the cabinets a fresh coat of paint or changing out the handles your space will appear much more modern. 4. Make your bathtub shineSurpass home buyers dreams by reglazing your bathtub. This project can be completed in a day and can make a big difference to potential buyers. 5. Increase curb appealEncourage people to come into your home by updating your front door. Whether you choose to merely repaint or completely replace, this simple project will make your home more appealing. And while you’re at it, make sure your front landscape is maintained. Depending on the time of year, consider adding a few new shrubs or flowers to add to your home’s charm. Buck Seymour Loan Officer 1st Advantage Mortgage, a Draper and Kramer company Company NMLS: 2551 Loan Officer NMLS: 250024 609-467-6024 (office) 609-377-7069 (Mobile) 630-261-3886 (E-Fax) Web: www.1amllc.com/seymour Like me on Facebook: https://www.facebook.com/mortgageinsider/

How an Early Mortgage Preapproval can Affect Your Credit Score

Fri, 18 Mar 2016 22:05:10 -0700

While you’re shopping for the home of your dreams, you may come to realize the process might take longer than expected. It’s important to know that getting a preapproval requires a “hard pull” on your credit, and too many hard pulls can impact your ability to score the best loan terms once you are officially able to move forward with a mortgage for the home of your dreams. To avoid this credit stress, follow these tips to lessen the risk and protect one of your most important assets, your credit. Get prequalified and then get preapprovedBefore you start looking at homes you cannot comfortably afford, it’s important to get prequalified. It’s pretty straightforward: find a trusted lender and ask them to look at your current financial situation to determine your overall financial picture based on information you provide. There is no hard pull necessary on your credit to obtain a prequalification. Once you understand what you can actually afford, you’ll be ready to start looking at houses and can move forward with the preapproval process. Shop lenders within a certain time frameIt’s important to shop around for a preapproval just like you would for the right car loan. According to FICO, the best time frame to keep inquiries contained is anywhere from 14 days, for older scoring models, to 45 days, on the newest scoring models. All inquiries during this time frame would be treated as just one inquiry to help protect the risk of a potential credit score drop. Know how long your credit reports lastCredit reports are typically valid for 120 days after they are pulled. If you do not close on your home within that time period, the report will need to be pulled again which could have a significant impact on the interest rate and loan program you were initially quoted. Don’t discount the benefits of being preparedWhile you should always be mindful of your credit, you should also be aware of how beneficial it is to obtain a preapproval and be prepared to land the home of your dreams. You should start shopping for homes long before the point of when you ‘need’ a home so that you will have a lender and real estate agent hired in advance of purchasing a property. Buck Seymour Loan Officer 1st Advantage Mortgage, a Draper and Kramer company Company NMLS: 2551 Loan Officer NMLS: 250024 609-467-6024 (office) 609-377-7069 (Mobile) 630-261-3886 (E-Fax) Web: www.1amllc.com/seymour Like me on Facebook: https://www.facebook.com/mortgageinsider/

Pay Off Your Mortgage Faster

Wed, 24 Feb 2016 15:23:01 -0800

Paying off your mortgage may seem like a daunting task, but did you know there are things you can do to help pay it off faster? Finding a way to make just one extra payment each year can shave off years of interest payments, putting dollars back in your pocket. In order to find the money to make an extra annual payment, you need to establish your motivation and a method. First, you need the motivation to understand the long-term impact of one extra payment. To put this into better perspective, use my mortgage calculators to understand why making an extra payment can benefit your savings.For example, let’s say you begin paying back a $150,000 mortgage with a 4% interest rate. Following a standard 30-year payment schedule, you can expect to pay off your mortgage by February 2045. But if you were to match and contribute one additional $712 payment each year, you could expect to pay off your mortgage in February 2041. That shaves a full four years off the total repayment time!Next, you’ll need to create a method to pinpoint ways to save by following these three steps: 1. Review your current budgetTake a look at your monthly transactions, including credit statements, savings, debt and total expenses to get a better understanding of your financial picture. Once you understand your current saving and spending habits, you’ll be able to gain insight into how you can adjust those habits to contribute more to your mortgage. 2. Set a reasonable goalIn order to stay on track with your savings plan, start by setting an attainable goal. For example, if you know you can save $10 a month, start there. Put that extra $10 into your mortgage payment for one month. Once you’ve reached that goal, try bumping it up. Continue making incremental increases until you’ve reached your sweet spot. Remember, you’ll have more success if you start small and adjust, rather than starting too big and giving up shortly thereafter. 3. Automate extra savingsThere will always be temptation to divert extra savings to another area, but to help avoid this, you can automate extra savings into your mortgage payment. One way to do this is to contact your bank to set up an automatic transfer of a set amount from your paycheck into a savings plan.Finally, follow-up by checking your finances regularly. Even after you’ve completed these steps to ramp up your payment, it’s still important to continue evaluating your success to keep your long-term goals in the forefront of your mind. For example, set a regular “money date” to review your numbers, or schedule a weekly lunch devoted to analyzing your finances. Buck Seymour Loan Officer 1st Advantage Mortgage, a Draper and Kramer company Company NMLS: 2551 Loan Officer NMLS: 250024 609-467-6024 (office) 609-377-7069 (Mobile) 630-261-3886 (E-Fax) Web: www.1amllc.com/seymour Like me on Facebook: https://www.facebook.com/mortgageinsider/

7 First Time Homebuyer Mistakes to Avoid

Tue, 23 Feb 2016 00:53:22 -0800

If you’re a first-time homebuyer buying a house can be overwhelming. Good news is that you have an agent by your side to guide you through the process. Review and make note of these items to avoid making unneeded mistakes! 1. Getting too emotionally attachedYou’re about to make the biggest purchase of your life. Relax. Find several homes you love so that you’re not too emotionally invested in one. 2. Finding the home yourselfIt’s easy to browse Trulia or Zillow to find homes for sale in your desired location but make sure to keep your agent in the loop. A good real estate agent can give you the inside scoop on what the home looks like, where it’s situated, the Walk Score and the price per square foot in the neighborhood. 3. Not saving enough moneyHaving enough money for a down payment is only the beginning. Transitioning from a renter or your parents’ home to your own home has hidden costs that may be overlooked, such as closing costs and property taxes. You should also have at least three to six months of expenses saved up in an emergency fund for unexpected items that may arise. 4. Not getting preapproved for a loanIf you want your offer to be seriously considered by the seller, you are in a much better position if you obtain preapproval. By providing income and assets in the form of a preapproval letter from a lender, you may have the edge over other bidders who may not have taken that extra step. 5. Not checking the price of homeowners’ insuranceMake sure you can afford to insure the home you want to buy. Some factors may increase your insurance, so be sure to talk to a knowledgeable insurance agent before deciding on a home. 6. Not checking your credit scoreUnknown errors, such as showing you have late payments when you don’t, could negatively affect your credit score. Be sure to check your credit at least three months prior to house hunting. If there’s an error, contact the credit bureau to get it resolved. 7. Not getting a home inspectionAll homes need inspections, even brand-new ones. Don’t skip this step because you’re emotionally attached and want the home no matter what it takes. If the home has issues, you can ask the seller to fix them or lower the asking price. The reality is that the buyers who ask for more often get more. So don’t be afraid to speak up and get outstanding issues fixed before you sign your settlement papers. Buck Seymour Loan Officer 1st Advantage Mortgage, a Draper and Kramer company Company NMLS: 2551 Loan Officer NMLS: 250024 609-467-6024 (office) 609-377-7069 (Mobile) 630-261-3886 (E-Fax) Web: www.1amllc.com/seymour Like me on Facebook: https://www.facebook.com/mortgageinsider/

4 Unique Home Financing Options

Tue, 23 Feb 2016 00:35:22 -0800

With all the different home financing options available, it can be difficult to decide which loan type is right for you. You may qualify for something better than you originally thought! VA loansVeterans Affairs loans are for military service members and their families. To obtain a VA loan, you must be able to prove your eligibility, plan to purchase an eligible property, plan to move in within 60 days and meet the minimum requirements for income and credit score. There are additional qualifications, so be sure to contact me to learn more.VA loans have a lot of advantages, including no down payment, no need for private mortgage insurance, higher limits allowed for debt-to-income ratios, more flexibility if you’ve had previous financial hardships or bankruptcy and there’s no penalty for paying off your loan early. On the flipside, VA loans typically require a VA funding fee and sellers do not have to accept VA loans if they don’t want to, especially with short sales and foreclosures. USDA/RHS loansThe United States Department of Agriculture (USDA)’s Rural Housing Service (RHS) offers loans for single-family homes to people living in rural areas with low to moderate incomes. To qualify, you must agree to purchase within a specific area, be a U.S. citizen, have a monthly house payment that equals 29 percent or less of your monthly income, be able to meet the minimum credit score requirements and your income cannot exceed a certain level, which is determined by your specific area.Benefits of USDA loans include no down payment requirement, no penalty for paying off your loan early, no restrictions on lot size and modular and manufactured homes could also be eligible. Disadvantages include restrictions on location and income and the purchase requirement of private mortgage insurance if you don’t make a down payment. First-time homebuyer loansIf you have not owned a home for at least three years, you may qualify for a first-time homebuyer loan. One of the most popular first time buyer loans is an FHA loan, backed by the Federal Housing Administration. FHA loans require a minimum credit score of 620, a down payment of 3.5 percent and a debt-to-income ratio that doesn’t exceed 41 to 43 percent of your gross monthly income.Advantages of FHA loans include a smaller down payment requirement, low closing costs, down payments can be gifted from qualified sources and lower credit scores are accepted. Physician loansThese loans are available for newly licensed medical doctors, residents and fellows that are hampered by heavy student loan debt and little savings. Requirements for physician loans vary between lenders, but many require an employment contract as proof of loan repayment and also a loan-payment-to-income ratio equal to or less than 38 percent.Physician loans come with their own advantages, including low down payment options, no down payment required, no private mortgage insurance requirement, more flexible repayment terms, and student loans can be omitted from your total monthly debt if they’re deferred for at least 12 months at the time of closing. However, to receive full financing, many lenders will require a minimum credit score of 700. Furthermore, a down payment could be required if the house is in a declining market. Physician loans are not always available in every state, and they sometimes carry a higher interest. Buck Seymour Loan Officer 1st Advantage Mortgage, a Draper and Kramer company Company NMLS: 2551 Loan Officer NMLS: 250024 609-467-6024 (office) 609-377-7069 (Mobile) 630-261-3886 (E-Fax) Web: www.1amllc.com/seymour Like me on Facebook: https://www.facebook.com/mortgageinsider/