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Credit Reporting for Mortgages Changes

by Pat Wattam

It was reported in today's Advocate newspaper that there has been an update on credit reporting for mortgages for home loans.  In the past, whether you paid the minimum monthy payment on your credit card or if you paid it off in full, it was all the same from the credit bureau and to the lender.  In the past, I was told it was best to have a balance that you paid each month to show that you paid timely.  That showed a lender you were able to manage your finances.  Now two of the credit reporting agencies are sending 'trending' data to your loan officer.  This shows if you pay the minimum amount, more than minimum, or pay off in full each month.  Now, your credit score is still the biggest factor in securing a loan; however, if you are borderline on qualifying, and you pay more than the minimum or, even better, pay off your credit card loan in full each month, this may be just the thing for the lender to decide you are a good credit risk.  This trending data line started in September so it's relatively new.  If you are shopping for a home in the next few months, it would be a good idea to pay off as much credit card debt, as always, or increase your payment on every card to show you pay more than minimum.

Speaking of credit cards, in this economy, it would be wize to keep that credit card debt to zero and only use it for emergencies or large purchases - which means you don't use it again until you pay it off.  Carrying a lot of credit card debt does not help you in the long run.  I remember when we decided to go to a 'cash only' basis in order to pay off all the credit cards and not get any new ones that it took a lot of discipline and a lot of delaying purchases that we didn't really need.  Once we got a handle on that (less than 2 years) it's amazing how fast your savings can grow!!!  We pay off all our credit cards at the end of the month.  And, we use credit cards instead of cash to get bonuses.  You have to REALLY be disciplined if you go that direction but if you can, think of all the extras you can get from your credit card companies.  We fly practically free on first class to Europe and fly free when traveling in country too.  There are companies that give you cash back too - which you can use to save up for your new home!!   Just another idea!

As always, if you have any questions, please call the Pat Wattam Team at any time for more advice.  225-298-6900

Pre-qualification vs. Pre-Approval - Baton Rouge Real Estate

by Blake Hanna

Pre-Qualified

Getting pre-qualified is the first step you should take after finding a Realtor you like and trust. It's highly recommended as it's let's you know where you stand financially and if you can in fact obtain financing to buy a home. You supply a bank or lender with your overall financial picture, including your debt, income and assets. After evaluating this information, a lender can give you an idea of the mortgage amount for which you qualify. Pre-qualification can be done over the phone, on the internet, or in person, and there is usually no cost involved. Loan pre-qualification does not include an analysis of your credit report or an in-depth look at your ability to purchase a home.

The initial pre-qualification step allows you to discuss any goals or needs you may have regarding your mortgage with your lender. At this point, a lender can explain your various mortgage options and recommend the type that might be best suited to your situation.

Getting pre-qualified for a loan gives you an idea of how much you might qualify to borrow. You have not actually applied for a loan and the mortgage lender has only your word on your income, assets and liabilities. None of your information has been verified, the loan amount is in no way guaranteed. You may be given a pre-qualification letter that merely states you are likely to be approved for a mortgage.

Pre-Approved

Getting pre-approved is the next step, and it tends to be much more involved. You'll complete an official mortgage application and supply the lender with the necessary documentation to perform an extensive check on your financial background and current credit rating  From this, the lender can tell you the specific mortgage amount for which you are approved. You'll also have a better idea of the interest rate you will be charged on the loan and, in some cases, you might be able to lock in a specific rate.

Getting pre-approved  means that not only have you given the mortgage lender information on your income, assets, and liabilities, but your information has been checked and verified. The mortgage lender may also have pulled your credit report to learn about your credit history and credit-worthiness.

Blake Hanna, Realtor

225-298-6900

[email protected]

The Pat Wattam Team

RE/MAX First

12 Reasons To Use a Realtor

by Blake Hanna

12 Reasons You Should Use a REALTOR

1. Determine Buying Power

2. Home Search Assistance

3. Objective Property Information

4. Price Negoatiation

5. Management of Property Evaluation

6. Identification of Qaulified Lenders and Finacing Options

7. Smooth Closing Process

8. Up-to-date Selling Information

9. Marketing Assistance

10. Connections to Selling Networks

11. Objective Evaluation of Buyer's Proposal

12. Closing Assistance


Blake Hanna, Realtor

The Pat Wattam Team

RE/MAX First

225-298-6903

[email protected]

 

*Source-fsbonightmares.com

What are closing costs?

by Blake Hanna

In addition to the down payment and amount you are financing for the purchase of your home, there are also closing costs.

 

Closing costs are miscellaneous fees that are charged to you by the people involved with the sale of the house. These people typically include the lender and title company.

 

Closing costs will not be a surprise to you at the closing. Your lender will give you a Good Faith Estimate or GFE, which gives a rough estimate of what your closing costs will comprise of and the total.

 

Closing costs on average run about 2-5% the costs of the house.

 

Closing costs can include lender origination fees, discount points, private mortgage insurance, initial interest, lender's title insurance, property taxes, appraisal, attorney fees, title search fees, title insurance and recording fees.  

Blake Hanna, Realtor

225-298-6903

[email protected]

Mortgage Loan Options

by Blake Hanna

This will briefly go over what is required for the loan types as well as why a buyer chooses each one.

 

Coventional Loan

  • Requires a 20% down payment
  • Fixed Rate - Your interest rate stays the same for the life of the loan
  • Avoids PMI(private mortgage insurance-annual premium paid monthly)
  • Requires 3.5% down payment
  • Requires PMI
  • Lower down payment and lower credit score required
  • No down payment required
  • Eligible applicants are veterans, active duty personnel, reservists/National Guard Members.
  • No PMI
  • Right to prepay without penatly
  • No down payment required
  • Some limits on income
  • Eligible for designated rural areas. 
225-298-6903

What is a Buyer Counseling Interview?

by Pat Wattam

Have you ever wondered what the first step in finding a home is?  Or, how you even go about finding the perfect house?  Is there anyway to know what to expect when buying a home?  When Roger and I purchased our first home, years ago in Nashville, TN, we had a great agent.  After finding us the right house in ONE day, then the nickle and diming started.  We needed $50 for loan application, we needed $50 for something else - and back then you didn't have home inspections.  So, as I built my real estate business here in Baton Rouge, I wanted to make sure my clients didn't have these little surprises - because the little $50 here and there would be $300 here and there today!!  

In addition, we worried until the day of closing if we would qualify for the house and really close.  It was pretty nerve wrecking.  It's hard to make moving plans if you aren't sure your loan will go through.

In case you haven't figured it out yet, I'm not much on surprises for myself and sure don't want BAD surprises for my clients.  So my team and I do Buyer Consultations for our new clients.  Let's get REALLY pre-qualified - pull that credit and make sure there aren't any hidden issues there.  I can remember years ago when I went with a client to meet with a lender prior to writing an offer, we found out when credit was pulled, that his divorce from 10 years earlier had not been recorded and his ex wife's debts were still showing up on his credie.  It took about two months to find the original judge and get that corrected.  Bizarre!  But things happen so it was better to know this up front.  In fact, we went ahead and got them fully approved, pending an appraisal, so that we knew when we wrote an offer it would go through.  Things are a little different today in mortgage lending, but you go through desk top underwriting (mortgage slang for really getting approved) prior to shopping for a house and know that you are going to close.  No more stress.

We also walk you through the whole home buying process and give you a booklet we have put togehter on the most asked questions about buying a house.  Then, while shopping for a home with us, we cover the items in the booklet again so that when you write an offer, you are a well educated buyer.  The buyer counseling interview also gives you a chance to interview us to make sure that we are a good fit for you too!  Isn't that worth 45 minutes of your time?  

So, if you are in a Market for a house, give us a call today to set up your Buyer Consultation!  You'll be very glad you did! 225-298-6900.

A Few Reasons Why You Should Buy Instead of Rent

by Pat Wattam

1. Savings and Equity

When you are renting a home, you pay your monthly rent check and that money is gone forever. When buying a home, every mortgage payment you make builds equity in your home and gets you closer to full ownership.

 2. Interest Rates

With interest rates still low, now is a great time to buy and take advantage of the rates before they rise.

 3. Tax Breaks

Everyone dreads tax season. The homeowner can deduct the real estate property tax, some or all of the interest on the mortgage, and the cost of insurance for the property.

 4. Stability

A homeowner pays the same every month/year when they have a fixed rate mortgage, giving the owner a sense of stability. A renter may be faced with rent increases with the cost of living. Owning a home gives you stability in that your payment will not change regardless of the increase of cost of living.

 5. Freedom

Unlike renters, homeowners have the right to make structural and aesthetic changes to their home and yard as they want.

 6. Pride!

There is nothing like the feeling of owning your own home. You worked hard to get there so take pride in the accomplishment.

Mortgage Interest Deduction Clarification

by Pat Wattam

 

MID Limited per Residence

A recent U.S. Tax Court ruling clarified the IRS position that the $1.1 million limit for mortgage interest deduction applies per residence and not per taxpayer as some high-priced homeowners were hoping.

 

A married homeowner filing jointly can have fullly deductible interest on a mortgage of up to $1,000,000 of acquisition debt and up to an additional $100,000 of home equity debt. If the married couple files separately, each party is limited to deducting the interest on half of those maximum amounts.

The court case came about when two unmarried individuals who owned a home together as joint tenants felt that they were entitled to deduct the interest on $1.1 million of debt each. IRS did not agree with their understanding and neither did the Tax Court. The Court ruled that the limits apply per residence, not per taxpayer even if a home is co-owned by unmarried taxpayers.

The result for the taxpayers in this case was that their deduction was cut in half resulting in much more income tax due. While this situation only affects a few taxpayers, homeowners in this position should have a discussion with their tax professional.

Mortgage Interest Rates at All Time Low!

by The Pat Wattam Team

With mortgage interest rates at an all time low, at least since I have been in real estate, now truly is the time to buy a home, move up to your dream home, refinance your home, or buy that investment property!!   A 30 year fixed rate home mortgage is running about 4.25%.  On a $200,000 loan, that would be a principle and interest of approximately $893.88 - compare that to $1104.01 with a 5.5% rate!  That's a savings of over $100 a month!!  Or, think of it this way, you can buy a home that costs $5000 more!! 

Of course, home mortgages are credit score driven and the higher your credit score the more options you have open to you.  The 15 year interest rate is the one that got me really excited....it's at 3.75% which is terribly exciting when you think only 7 years ago the 15 year rate was 5.25%.

Not sure where to start? Give the Pat Wattam Team a call and we'll help you sort out how to take advantate of this Market.  With more homes to choose from, we know you can find something that will make you want to take advantage of this great real estate market!

Displaying blog entries 1-9 of 9

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Photo of Pat Wattam Real Estate
Pat Wattam
RE/MAX First, Independently Owned and Operated
4750 Sherwood Common
Baton Rouge LA 70816
Office Direct: 225-298-6900
Office Main: 225-291-1234
Fax: 225-295-1234

RE/MAX First
Each Office Independently Owned and Operated
Main: 225-291-1234

Licensed by the Louisiana Real Estate Commission