Get Your Mortgage Process Moving Full Steam Ahead!

You’ve found the home of your dreams, and put in an offer that was accepted by the seller. Congratulations! But now comes another challenge – getting approved for a mortgage to finance your new place. The process doesn’t have to be a daunting one, especially if you make some good choices and work with a good lender.

Take the following advice to ensure your mortgage process doesn’t hit any speed bumps.

Include Every Bitty Piece of Documentation

Before approving you for a mortgage loan, your lender is going to need a few pertinent documents to get an accurate sense of your financial profile. So make sure that you provide details of your finances in the form of pay stubs, tax returns, asset account statements, business financial statements (if you’re self-employed), and a paper trail for deposits and withdrawals over $1,000.

Even if a single page of any document is missing, it can put a wrench in the mortgage approval process.

Share All Home Offer Details With the Lender

Don’t hide anything from your lender if it can help move the mortgage approval process along. The offer that you draft up on a house will need specific milestone dates, such as how many days you have to get approved for a loan, and how many days it takes to close it.

Missing these dates in the purchase contract can put you in a risky position of losing your deposit. Your lender absolutely needs these critical pieces of information in order to execute the mortgage process, so do them – and yourself – a favor and make sure these pieces of information are included in your contract.

Be Realistic About Mortgage Rates

The interest rate attached to the mortgage loan you need to finance your new home will have a huge impact on how much you’ll be paying every month towards your mortgage. After a seller accepts your offer, you’re in a contract and are now ready to lock in a specific rate on your mortgage loan. You’ve got to be in contract first before locking in your mortgage because the rate lock runs with both the borrower and the property.

What does this really mean for you? While you’re in contract, the length of time of the rate lock will affect the rate – a shorter lock (such as 30 days) has a lower rate than a longer one (such as 90 days).

Make sure to ask your lender to quote any rate locks according to your closing timeline. Timing is everything when it comes to rate locks. Keeping tabs on the market is helpful to give you an idea of the rate range you might end up with. But at the end of the day, you’ll be locking in at a rate at the market levels when you enter into your contract.

Understand the Difference Between Pre-Approval and Approval

It’s typically recommended to get pre-approved for a mortgage before taking the first step towards looking for a new home. This gives you a clear idea of what you can afford so you can narrow your choices when house-hunting.

But there’s a difference between a pre-approval and an actual approval. You shouldn’t always assume that you’ll be approved for a mortgage just because you took the step to get pre-approved. A “pre-approval” simply means that your lender considers you to have a healthy financial profile.

But you still need to get the underwriting approved by getting a commitment to a mortgage loan in writing. Once your file and purchase agreement are sent over to an underwriter, the loan will (hopefully) arrive.

 

Avoid ‘Bad Behavior’ When it Comes to Financial Decisions Made During the Mortgage Process

There are certain things you should absolutely avoid doing between the date you apply for a mortgage, and the date of your actual funding. For instance, you’d be well-advised not to open new credit cards, even if the rate incentive is pretty tempting. You also should wait to buy a new vehicle or trade up to a larger lease, as this will just be added to your debt. And do NOT forget to pay your bills – this is an act that should always be avoided, regardless if you’re in the middle of a mortgage approval process or not.

There are bunch of things you can do to prevent any curveballs being thrown into your mortgage approval process. Your lender and real estate agent will be able to guide you throughout the journey to make sure you do everything right. Take their advice into serious consideration in order to boost your chances of having ‘APPROVED’ stamped on your mortgage loan application.

Up the Odds of Having Your Remodeling Job Approved by the Review Board

Thinking of doing a little remodeling or renovating on your home? Before you pick up that hammer, you’ll need to run your plans by your local architectural review board (ARB) first.

You might think of an ARB as nothing more than a pain in the behind; after all, they could easily shut down your plans if they don’t approve.

But in reality, ARBs serve a very important purpose in upholding a specific character to the neighborhood. Without them, your next-door-neighbor could realistically paint their house neon pink and add 5 stories to it.

Review boards are not trying to work against you; rather, they’re protecting your investment. But while they’re doing that, there are things you should consider to boost the odds of having your plans approved by your local ARB.

Why Do Architectural Review Boards Exist?

Many neighborhoods have certain restrictions that homes in the area need to comply with. Your home plays a role in the overall look of your area – along with the rest of the houses on the block – which means you’re not really allowed to do whatever you want to your house without permission first. Instead, the alterations you want to make on your house need to coincide with the restrictions that the ARB in your area has specified.

Many home owners might react negatively to this concept at first, but there’s a method to this madness: having these rules in place helps to retain a specific character to the community, which is probably part of what drew you to the neighborhood in the first place.

It’s this unique character of the neighborhood that needs to be protected, which is why the Architectural Review Board exists.

Architectural Review Boards May Vary in Control, But All Still Serve the Same Purpose

ARBs will VARY in the amount of control and restrictions that they place on home owners within the respective communities. While some might be super strict, others might be a lot more lax.

Review boards that control historic neighborhoods tend to be much more prohibitive in what they’ll allow home owners to do to their properties. This is because they’re trying to ensure that the historic significance of each property and the area as a whole are preserved.

Such is not the case in less historic neighborhoods, where conserving the history is not really a big deal. What’s of greater importance is the character of the neighborhood.

In new subdivisions, builders will start off with a certain view for the area, which usually includes things like the color of brick, the architectural style of the homes, and even the types of materials used on the homes’ exterior.

The ARB’s job is to make sure that these areas maintain the character that they were initially intended to.

 

Make the Most of Your Design Review

When it comes to boosting the odds of getting your remodeling or renovation job approved by your local ARB, getting them involved early on in the process is important. Ideally, they should be notified while you’re still thinking about what you want to do to your home. This way, if your plan does not get approved, you won’t be wasting any time or money on the design and plan.

Make sure that you read the design guidelines of the ARB in full detail, and address the character of the neighborhood in your plans i order to boost your chances of getting your design through. You might want to consider requesting a design review, which will focus on any potential areas of concern. During this informal review, you’ll be able discover what the board LIKES, and what they don’t. You can also use this as an opportunity to negotiate with the board before committing your design to final drawings.

Your documents must be complete, and leave no question unanswered. The more detailed your submitted design project is, the fewer items the board will question. In addition, consider making some changes to your design in order to comply with the board. Making even the smallest tweaks can mean the difference between design approval and starting from square one.

While it might seem like a nuisance to have to abide by the rules of your local planning department, think about the flip side: your neighborhood’s unique character is being preserved.

 

Sure, these review boards can easily shut you down if your design doesn’t meet the criteria established, but they are likely to approve your plans if they follow the stipulations established. Get some input from your local realtor to get a clear idea if what you propose to do to your home has any chance of holding water at the board.

5 Types of Investment Properties to Scope Out To Boost Your Profitability

Real estate investing – it’s one of the best, most proven ways to develop wealth over the long haul. But not all properties will necessarily provide you with the return on investment that you’re hoping for. The best way to boost your profits is to make sure to minimize the amount of risk that you face with the properties you buy.

Here are 5 lower-risk real estate properties to look for when you’ve got a hankering for a solid investment.

1. Properties in Averaged-Priced Neighborhoods

When it comes to real estate, it’s all about location. This is no secret. But properties that are located in the most desirable areas (think downtown cores, by the beach, near million-dollar homes, etc) are ones you probably want to avoid, as they typically come with negative cash flows because of the immense amount of money needed to upkeep such properties.

But you also want to steer clear of areas that are as undesirable as they get (think high crime rate, poor maintenance of properties, lack of amenities, and so on). What you want to focus on are properties that are located in areas that are moderately priced, thereby offering positive cash flows. After all, its the bottom line that matters after you’ve deducted your expenses from your rent.

You definitely do not want to be in the red when it’s all said and done. Calculate your potential cash flow by using conservative numbers for both rent and expenses when estimating what type of profits (or lack thereof) stand to be made with a certain property in a specific neighborhood.

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2. Condominium Complexes With Healthy HOAs

Many investors look to common interest developments as their source of investment properties, and for good reason. They’re typically much more affordable, tend to be located close to amenities, and require minimal maintenance. However, these types of properties could be littered with landlines if you don’t pick the right one.

Think about it this way – you’re not just buying your unit; you’re buying into a much larger body – the homeowners association (HOA). If this entity is in some sort of financial or legal trouble, it’ll be the owners – including you – who will be flipping the bill. You’d be well-advised to scope the place out before you buy into it.

Check into the health of the HOA, and make sure it’s got enough money in the pot to cover expenses, has no pending lawsuits to deal with, and has plenty of insurance to bail it out of hot water.

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3. Properties That Already Come With Good Tenants

If the investment property you come across already has long-term tenants that have been paying on time and are taking good care of the property, that’s a bonus. There’s really nothing better than buying an investment property already equipped with an awesome tenant. You don’t have to market the place for rent, nor do you have to get the property ready for showings. Just make sure that you have a gander at the tenant’s current lease and credit application before you agree to buy the property.

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4. Properties in Neighborhoods With Low Vacancy Rates

Watch out for areas with really high vacancy rates. That’s an indication that the turnover rate for renters is high, and so is the competition among landlords.

If you buy into a neighborhood with a high rate of vacancy, it could take forever for you to find a tenant to rent the place out, which will just cost you money covering the costs while the place is empty. Think really hard about buying a property in an area that is notorious for having a bunch of unoccupied units at any given time.

5. Properties That Are in Decent Shape

Unless you’re planning on fixing and flipping a property for a profit, you want to make sure the unit you’re buying is in decent shape. You don’t want to buy a property that requires extensive renovations before renting it out. The more money you spend on reno’s, the longer it’ll take for you to recoup that money from rent checks. More money dumped into a property translates into lower investment returns. Forget about the fixer uppers and focus on properties that are in as good a shape as possible.

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Along with real estate investing comes a certain amount of risk. But it can also bring a fantastic opportunity to make sizeable profits and a passive income stream to help you build your nest egg. Buying properties that have as many healthy qualities as possible, and skipping the ones that display one red flag after the next, can help put you in a better position to make some cash while protecting your capital.

5 Problems Your Home Inspector Might Not Catch

You’ve found your dream home, put in an offer that the seller couldn’t refuse, and sealed the deal. But before you head out to buy new furniture, there’s still one little task that needs to be completed: the home inspection.

Realtors will typically advise their clients to include this clause in a purchase agreement in order to help uncover any problems with the home that they might not have noticed when they first saw it. Yet as helpful as home inspections are, there are a number of things that might not necessarily be revealed during a standard inspection.

It’s important to understand that a few things might not be caught, including the following.

 

1. Structural Problems

A skilled home inspector should easily be able to tell if the roof on a home is sagging. He or she may also be able to spot cracks in the foundation in an unfinished basement. Just about every roof will have its inconsistencies, and many concrete foundations will have minor, insignificant cracks. But when it comes to identifying the extent of potential problems, as well as the potential cost of repair, this is where the home inspector’s job ends.

Home inspectors are trained to spot issues that the average home owner might not be able to spot. They’ll crawl into attics and stick their fingers into wall insulation to uncover any issues. But they’re not licensed structural engineers. If there is something outside of the home inspector’s scope, they’ll refer you to someone else.

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2. Electrical Issues

Think of a home inspection as nothing more than a ‘visual inspection’ when it comes to possible electrical problems. As far as electrical wiring goes, home inspectors aren’t always able to identify the exact source of the issue should a problem be suspected. Sure, they’ll be able to spot something if it looks off, such as a receptacle not having a proper ground, but they won’t exactly be able to determine what is causing the problem, or where. An electrician will have to come into the picture in order to take over where the home inspector left off in this case.

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3. Blocked Sewers

Not every problem with a home is going to rear its ugly head during a home inspection. Issues may not even show up until well after you’ve moved into the house. A blocked or damaged sewer line is unfortunately one of these issues that can be placed under this category.

A home inspector will do things such as run water through the sinks, tubs and toilets, but they’re only there for a couple of hours. This short time period might not be enough for the issue to be exposed.

Inspectors can skillfully estimate the age of pipes and drains, and even make sure there are no trees in the line of the sewer pipe that might cause a problem. But when it comes to in-depth sewer pipe scoping, that nasty job is left to sewer line expert.

 

4. Leaks

Leaks can seemingly show up out of the blue. They might not be there one day, but then show up the next. This is why leaks are a toughie for home inspectors. Many times vacant homes have plumbing that hasn’t been used in a while. If there were leaks, they would have all dried up by the time a home inspection was conducted. A couple of days after you move it and start using the taps, all of a sudden these leaks become apparent. Even the most experienced inspector may miss a potential leakage spot while conducting an inspection.

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5. Faulty HVAC Equipment

Just like sewer lines and leaks, problems with the HVAC equipment may not be there one day then show up the next. When an inspector checks out the air conditioner and finds that the temperatures are within acceptable ranges, the system can seem like it’s functioning fine. But once the summer hits and the temperatures go through the roof, the A/C will be under a lot of pressure to work hard, which is usually the time for it to fail if it’s faulty.

If the inspector has a hint that there may be a problem with the HVAC equipment, a specialized contractor can look into the job. It typically costs anywhere from $3,000 to $5,000 to hire these contractors, who will need a few days to complete their inspection.

 

The Bottom Line

Having a home inspected before you finalize a deal is important to help uncover any possible issues with the home that’ll wind up costing you a lot of money and plenty of headaches. But at the end of the day, inspectors are not miracle workers. There are a bunch of things that homeowners think they can do, but can’t. It’s important to be realistic about what the entire scope of home inspector’s job is, and at what point a specialist will need to be called in.

3 Things to Consider Before Switching Your Carpet for Hardwood

In many homes, hardwood has replaced carpet as the primary flooring type, especially in rooms like living rooms and kitchens. New homebuilders are aware of the trend and have shifted their design choices accordingly. However, many older homes still have carpeting throughout, leaving homeowners with a dilemma. Should they remove the carpet and replace it with hardwood or leave it as it is?

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Hardwood flooring has several benefits over carpeting, but there are some disadvantages, as well. Before making the decision to replace carpeting throughout your house, there are three questions you should ask yourself.

Will You Be Selling Soon?

Today’s home shoppers are likely viewing a large number of homes with beautiful hardwood floors throughout. This has upped the game for sellers of older homes, who are now required to compete with brand new homes in the same price range. While hardwood flooring is the top request of homebuyers, this may not translate to every room. Some consumers have stated a preference for carpeting in bedrooms, which allows them to step onto a soft surface when they get out of bed in the morning. Hardwoods in areas like kitchens and bathrooms can also turn some buyers away, since these areas are prone to spills and moisture. For that reason, some homeowners choose instead to install tile or laminate flooring in these rooms.

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Do You Have Allergies?

Carpet has gotten a bad rap for its supposed contribution to allergies and asthma. However, a 15-year study in Sweden determined no correlation between the two. In fact, the study pointed out that when carpet use declined in the country, allergies increased by 30 percent. Some postulate that carpet acts as a filter, trapping allergens that might have otherwise been floating freely in the air. If carpet is cleaned regularly, it may be a better option for families that are concerned about air quality. When handled by a qualified professional, even the most deeply-embedded particles can be removed, keeping the home free of allergens.

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Are You Prepared for Maintenance?

Whether you find hardwood maintenance easier than carpet depends largely on your preference for sweeping versus vacuuming. Carpets should be cleaned at least once every one to two years—more frequently if your household has pets. Hardwood flooring removes the need for this type of cleaning, but don’t assume wood-based flooring doesn’t have its own maintenance requirements. At least once a year, homeowners should use a wood-cleaning product to deep clean floors and remove any dirt and grime that builds up. Many experts recommend also using area rugs throughout the home to reduce dirt and protect wood from furniture marks. Just like carpet, these area rugs will need to be vacuumed and deep cleaned on a regular basis to remove embedded dirt.

Hardwood floors can up your home’s value by meeting customer demand. But consider the maintenance requirements of this type of flooring before making the commitment. If you don’t plan to sell your home soon, it may be best to leave the carpet in place until you prepare to sell, especially if you enjoy the feeling of carpet beneath your feet.

6 Reasons Why a Mortgage Refinance Could Work For You

If you’ve built up a certain amount of equity in your home, you might be eligible to refinance your mortgage. Refinancing basically involves getting a new mortgage to replace the original one. The first loan is paid off, then a second loan is created, usually at a much lower interest rate.

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Refinancing isn’t for everyone, nor can just anyone even be eligible for it. But for many homeowners, refinancing can be an ideal opportunity to save money and pay off debt faster.

Here are 6 reasons why you might want to consider refinancing your mortgage.

1. Take Advantage of a Lower Interest Rate

The main reason to refinance your mortgage – and the most obvious one – is to take advantage of a lower interest rate. It’s been years now that interest rates have been hovering at record lows, so now’s as good a time as ever to tap into these reduced rates to save a bundle by the end of your amortization period. You can get a 30-year mortgage at just over 3% right now, and an even lower rate with a 15-year loan.

If you locked in at a high rate when you first got approved for your mortgage, now might be a prime time to consider refinancing. You could literally be saving thousands upon thousands of dollars just by spending a few hours to fill out some paperwork and hand in the necessary documents to your lender.

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2. Shorten Your Mortgage Loan Term

The longer your mortgage term and amortization period, the more money you’l be dishing out in interest at the end of the day. By refinancing at today’s low interest rates, you just might find that a 20-year loan is not that much more expensive than a 30-year loan.

Get in touch with a mortgage broker, or find an online mortgage calculator to plug in some numbers to see just what the difference would be. If the estimate you get is feasible for you, consider getting in touch with a mortgage specialist who can help you iron out all the details to get you refinanced, and shorten your loan period.

3. Cash Out Your Home Equity

Let’s face it – everyone’s got a huge expense that they face on occasion. Tuition fees, emergency medical expenses, home renovations, investment property purchases and starting a new business are all examples of expenses that require a huge stack of Benjamins up front. Not everyone has that kind of liquid cash laying around, but many do have the money in their home’s equity.

The longer your home has been appreciating in value and the more money you’ve been paying towards your principle will add to your home’s equity. It might make sense in certain scenarios to cash out on this equity to pay for some of life’s more costly expenses. It mainly depends on what you’re trying to do, and if you are the type of person who is able to manage debt responsibly.

4. Consolidate Your Debt

If you’re like most Americans, you’ve probably got a variety of bills to manage and pay every month. And some may not necessarily be due at the same time each month, making it more challenging to remember to pay your bills. Miss a payment, and not only will you be charged a late fee, but your credit score will also be affected. Not only that, but some of your bills are probably attached to a sky-high interest rate. Credit cards in particular are known to charge borrowers exorbitant rates, some as high as 20%.

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By consolidating your debts and using your home equity to secure a loan, you can take advantage of a lower interest rate by using the equity you’ve built in your home as security. This will give you the convenience of having to only worry about one consolidated payment instead of several bills. You’ll also end up paying less in the long run thanks to the lower interest rate that typically comes with this set-up.

5. Cash Out to Purchase Investment Property

A trend that has been emerging among home owners lately is taking money out of home equity to buy investment properties. Refinancing your mortgage to buy other real estate can help you build wealth through investments you otherwise wouldn’t have been able to afford to make.

Of course, these types of endeavors require careful considerations, including tax or mortgage underwriting issues. Speaking with a mortgage broker or real estate agent will help you figure out if this is something you can swing without exposing yourself to a high amount of risk.

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6. Ditch the Adjustable-Rate and Lock Into a Fixed One

If your current mortgage has an adjustable rate, you might want to consider refinancing to lock into a fixed one instead. Interest rates might be super low right now, but they won’t necessarily stay that way.

Locking into a fixed-rate mortgage at a low rate can help protect you from any crazy fluctuations in interest rates which will cost you dearly in the long run. Not only that, but it’s a lot easier to plan and budget for fixed payments compared to volatile ones.

Refinancing can be the ideal solution for you, but you definitely need to carefully consider all angles before you take the plunge. Weigh out the pros and cons of your specific financial position and make a decision that will address your best interests. Take the time to sit down with a mortgage specialist to iron out all the nitty gritty to see if refinancing is right for you.