Tag Archives: home mortgage info

Eliminate The Deal-Killers!

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Deal-Killers!

In her year-long house hunting adventure, Brooklyn-based realtor.com writer Margaret Heidenry recently likened home shopping to dating. “I toured countless homes, and that first visit is a lot like a first date. It can be going great until you spot your personal deal breaker—like a pack of cigarettes in her purse, or white socks with sandals. Check, please!”

Deal-breaking rooms can appear anywhere in a house, and there might be more than one. Realtors can quickly list the most common offenders that make buyers cringe. Here are a few examples:

Empty rooms with echoing voices rarely entice buyers to ask for a second visit. It’s like realizing you have nothing to talk about on a date. Empty rooms make buyers question their potential uses, even if there’s a closet in the corner. The emptiness highlights flaws—like ceiling stains, windows overlooking brick walls, or peeling floor moldings. The solution? Don’t leave it empty. Stage it as something—a home office, a library, a sitting area, or a guest bedroom. Simply adding an IKEA desk, chair, area rug, lighting, and a potted plant can make a huge difference, encouraging buyers to continue their tour.

Light is essential. No one wants to walk into a dark room. Open the curtains, raise the blinds, add light fixtures—do whatever it takes to make the room feel welcoming, even if it means lightening the paint color. No one cares that it might have been your migraine sanctuary. Just do it. Adding a real plant (not a fake one) also helps, as live plants suggest there’s enough light for them to thrive.

The bathroom from hell is a major turnoff. What qualifies? Carpeted floors. Ew. Or a bathtub hidden behind a tacky shower curtain, preventing buyers from seeing its Psycho-like depths, which might reveal dirty grout, chipped porcelain, pitted fixtures, or a collection of shampoo bottles in pools of water. Realtors agree that, regardless of a house’s size or price, every woman heads straight for the bathroom to inspect the tub. They recommend either refinishing or replacing the tub. And that carpeting? Replace it with tile. Such scenes suggest future expenses to potential buyers.

Kitchens can either sell homes or drive buyers away. They are the heart of the home. Just as your homemade lasagna brings joy, buyers need a similar reaction to your kitchen. Easy fixes include clearing counters of everything, including canister sets, toasters, Nespresso machines, the Vitamix, and cookbooks, to suggest more prep space. Quick solutions with high visual impact include refacing or painting old cabinets or upgrading outdated appliances.

Other rooms and areas can also scare buyers away, such as creepy basements, cluttered entryways, purposeless formal living rooms, overstuffed closets, and Tupperware-filled cupboards.

Ask your Realtor to give you an honest assessment by pretending to be a potential buyer seeing your home for the first time. Then get to work. Be warned, though—by the time you make all these improvements, you might decide not to sell after all. It happens.

Source: TBWS

First-Time Homebuyer Advice

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Best advice I would give to first-time homebuyers
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I was once asked: We’re in the process of hopefully purchasing our first home, and I’m a little lost on everything that is going on. What’s the best advice you would give to first-time homebuyers?

Undoubtedly, your primary step in the home buying journey should involve securing your financing. While I acknowledge that this advice may appear biased, considering my involvement in the mortgage business, it’s a reality that the majority of today’s home buyers rely on mortgages, making this part of the process more intricate than before.

Despite the potential complexity, obtaining a mortgage today is not as insurmountable as some may portray. Recognizing your credit situation is pivotal. Lenders don’t demand perfection, but it’s crucial to be aware of your standing. Check your credit report on platforms like Free Credit Report.Com or Creditkarma for free and promptly address any errors, past-due accounts, or public records.

Collection agencies often settle for amounts less than what is reported. However, exercise caution when settling collections older than two years, as it might impact your credit score. Establishing a relationship with a reliable loan officer early on is crucial. Seek someone responsive, trustworthy, and capable of offering clear guidance.

Initiate the preapproval process with your chosen loan officer by submitting essential documents such as pay stubs, W2s, and bank statements. The Automated Underwriting System (AUS) will swiftly provide initial findings. Aim for “Approve/Eligible” or “Accept” results and inquire about a “TBD Approval” for added strength in your offer to sellers.

I hope you find this information helpful. Best of luck on your home-buying journey!

First Time Homebuyer?

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14 First Time Homebuyer Mistakes to Avoid!

#1. Failing to Budget for a Home Loan

Home ownership is a cheaper alternative to renting in the long run. But in the beginning, it can be much pricier. This is especially true if you intend to get a loan to purchase your dream house.

If you do acquire a loan, remember that you will be making monthly mortgage payments for a number of years.

Therefore, it is important to budget for a home loan, beforehand. You need to determine whether your income can accommodate an extra expense or not.

If you are unable to afford making monthly payments on your home loan, it would be a mistake to try to own a house at this time.

#2. Ignoring Your Credit Score

If you thought that finishing school meant being done with competitive scoring, think again!

Apparently, your creditworthiness can be summarized in just 3 digits. Those three numerals will draw the line between owning a house and renting one.

Even if you have an impeccable sense of financial responsibility right now, your credit past can haunt you.

You could have a hard time getting a home loan if your past record shows problems with payments, or if there’s an error in your credit report.

If you go ahead and apply for a mortgage loan without checking your credit score, you could end up paying a lot more than you expected.

It’s best to perform a credit check beforehand.  This way, you will be allowed to get loans without being obligated to pay hefty amounts in interest.

#3. Disregarding Housing Marketing Trends

Just like other financial markets, the housing market fluctuates from time to time. Sometimes it favors the buyers, and sometimes it favors the sellers.

There are a number of factors that affect housing marketing trends. This includes the ratio between supply and demand, interest rates and the overall condition of the economy.

It’s also imperative that you consider how the housing market changes in your ideal location, as home prices vary from one location to another.

If you disregard housing marketing trends when hunting for a house for sale, you might end up signing for a deal that favors the seller.

#4. Lack of a Preapproved Home Loan

Some people are anxious to shop for a house and want to do it quickly, before they are financially able to afford it.

If you have already started talking to sellers before having a hard talk with home loan lenders, you are making a mistake. In fact, not many sellers will want to work with you if you promise them a certain amount and then can’t fulfill that promise.

To avoid any disappointments, it’s wise to have your home loan pre-approved first, then go ahead and look for a house to buy.

#5. Overlooking the Home Resale Value

Another huge mistake you can make when buying a house is not considering the fact that you may need to resell the house you intend to buy.

There are lots of unexpected changes that can occur, such as job transfers, financial problems, or falling in love with another bigger or prettier house.

When this happens, you might find the need to sell your house, obviously at a profit. You should never overlook the resale value of the home you intend to purchase.

What you need to do is to ask yourself several questions such as: Will it be easy to sell this house? Will buyers be interested in buying it? Will this house fetch me a good amount if I decide to buy another one? Is it situated in a preferred neighborhood?

#6. Trusting an Unprepared Agent, not getting a Good One

Involving an agent is highly recommended in the home buying process.

There are pros and cons to dealing with real estate agents. A real estate agent can take a huge burden off your shoulders when it comes to looking for the right house.

An unprepared agent can cost you money and set the deal back.

Also, if you talk to the seller’s agent, he will be representing the seller and he may not be truthful about the negative aspects of the house.

If you trust this kind of agent blindly, you may have regrets later on. Make sure your agent is prepared and well versed.

#7. Settling on a Verbal Agreement

Double crosses are bound to happen when agreements are made verbally. It would be difficult for you to prove in court that a promise was made or a handshake was made.

Therefore, it’s best that you and the seller get everything down in writing to avoid future miscommunications.

This way, you will have something to present in court should the seller fail to keep their word.

#8. Disregarding Hidden Costs

This is another common mistake that many first-time homebuyers often make.

If you neglect to prepare for hidden fees, you might be in for a big surprise. Closing costs are a good example of hidden fees, which usually include a number of fees that cover final housekeeping matters.

Before signing the homebuyer’s agreement, it would be wise on your part to determine what hidden fees are there.

#9. Ignoring Professional Home Inspection

You will be making a costly mistake if you rely on the seller to inform you about the house problems you should expect.

Before you make any payment towards the purchase of the house, it’s imperative that you first hire a professional home inspector to ascertain that the house is in good condition.

#10. Following your “Love-at-First-Sight” Gut

Not everyone or everything that you fall in love with at first sight ends up being your one true love. A house may appear to be everything you ever dreamed of, but it might not live up to your expectations.

Before following a dream house blindly, be sure to check it out thoroughly. Make sure it has all the right qualities that make it a perfect home for you and your loved ones.

#11. Being Indecisive

As unwise as it is to rush into making a purchase, it is equally dumb to take too long without making up your mind. If you take too long to make a decision, another home buyer will take advantage of your indecisiveness and buy your dream house.

Since market trends change from time to time, you could also find out that the house you took too long to buy has a new (and higher) price tag attached to it.

#12. Relying on Online Services Only

Now that many services are obtainable at the click of the mouse, most people have become too dependent on them. It’s true that loans can be obtained online and houses can be bought online as well. But failure to establish personal touch with lenders or home sellers could present a huge and costly misunderstanding in future.

#13. Forgetting the Costs Associated with Owning a Home

Just like a car, a home requires money to maintain. The pain of parting with your hard-earned cash will not end on the day you finish your last mortgage payment.

You have to brace yourself for other costs for maintaining a safe, secure, and environmentally friendly home. You have to also be ready to meet certain costs such as association fees, insurance, taxes, utilities, maintenance and major/minor repairs.

#14. Entering into Multiple Agreements

While it’s a smart thing to compare different houses before buying, you might end up biting off a lot more than you can chew.

This is especially true if you meet up with sellers and make offers or promises that you don’t intend to honor.

Before entering into any agreement with a seller or an agent, it’s imperative you ensure that you are ready to honor your end of the deal.

If you can avoid the above mentioned mistakes that are commonly made by first-time buyers, you will be more like a pro homebuyer instead of a rookie.

Avoiding these mistakes can help you make the right choices when it comes to finding a home you and your family can take pride in. Keeping in mind the resale value will also help you avoid problems moving on in the future. 

Be a pro!

cash back refinance

Cash out and rate-and-term will save you money

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How can a cash out refinance save me money?

There are 2 categories of refinance

1.“rate-and-term” 

2.“cash out”

Both will save you money

rate-and-term

The First type, rate-and-term, replaces your existing loan with one that has a better rate and/or terms. You might replace an ARM or balloon loan with a fixed-rate loan, for example. Or you may decide to lower your rate AND shorten your term. Some borrowers have been able to refinance from a 30-year loan into a 15 or 20-year loan, reducing the term, without appreciably raising their payments.

A borrower does not receive any significant amount of cash in a rate-and-term refinance; lenders generally consider that any cash proceeds above $2,000 pushes the loan into a cash out category.

There are always certain costs involved in any mortgage transaction; there will always be fees for title, escrow, underwriting and document preparation, for example. Borrowers can add these fees to their new loan to avoid having to pay them in cash. Financing these items is not considered cash out.

When you are deciding whether to do a rate-and-term refinance, you should evaluate it in two primary ways: first, how long will it take to recover the cost of doing the loan? For example, if the closing costs amount to $3,000 and the reduction in rate gives a saving of $1,500 per year in the first year.” For most people, this time frame is more than satisfactory, but you should make your own decision. The second criterion is net savings over some time, say five years, ten years or more. 

Homeowners with adjustable rate mortgages (ARMs) may decide to refinance into a fixed rate loan, even though their rate may initially be higher, they might feel more secure knowing that their rate will never change. This is more of a defensive strategy to guard against the possibility of a higher rate in the future, but it may not “save money.”

cash out

The other type of refinance, a “cash out,” the borrower receives cash of more than $2,000 at closing. This is accomplished by getting a new loan that is larger than the balance of the old one plus closing costs. Borrowers can use that money for anything. Homeowners have used cash out refinances to pay off consumer debt, like car loans, student loans, and credit cards. Using home equity to pay off credit cards can drop the payment dramatically! But paying down installment loans can create a false economy. A $30,000 car loan with an interest rate of 6% will have a payment of $500. Paying off that loan with the proceeds of a home refinance will effectively drop the payment to $150. It does NOT make sense to finance a car for 30 years. 

Contact Us. We can help you get pre-approved for a mortgage and determine how much house you can buy this next time around.  Rainbow Mortgage, Inc. is a broker so we have access to many different lenders and their loan programs which translates into more options for you!

 

2018 Financial Resolutions

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It’s not too late to start your 2018 Resolutions!

More than 25% of people who make a New Year’s Resolution include a financial goal on their list.  Here are the four most common finance-related New Year’s Resolutions, and how you can easily follow them throughout the entire year!

 

1) Monitor Your Credit Score

Don’t put yourself in a situation where you apply for a loan and have to hope your credit score is good enough. Monitoring your credit score is easy to do and should be done every few months. Keeping an eye on your credit is not only beneficial when applying for a home mortgage loan or credit card, but you’ll also be able to see if there are any fraudulent accounts opened in your name. Federal law allows you to get a FREE copy of your credit report every 12 months from each credit reporting company to determine if the information on your credit report is accurate and up to date. You can check your credit for free at www.annualcreditreport.com.

2) Track Your Expenses

The best way to manage your money is to know exactly where it is going. You can start tracking your expenses by writing down where you’re spending your money. You may be surprised to find out how much you’re actually spending, and how those Target runs and extra items at the grocery store really do add up. Once you see your spending habits, you’ll be able to find areas you can cut back and set a realistic budget.

3) Cash Diet

 After the holidays, you and your bank account may be feeling a little sluggish. If you’re like me, you’ve indulged in too many cookies and drinks and swiped your card too many times over the last few months. Consider helping your waistline and your budget by going on a cash diet by only paying with cash. When physically handing over cash, you’re seeing the money leaving your possession at that very moment. Unlike when you swipe your card, you generally won’t experience the same feeling until you check your bank statement to see all of the transactions at which point it’s too late.

4) Save

I am fairly sure that there isn’t a single person who hasn’t thought “I wish I would have saved more” at one time in their life. It is never too late to start saving, and it’s ok to start small. The easiest way to start is to set up automatic transfers from your checking account to your savings account every month. Setting a goal will also help you save. It’s great to say, “I’ll save more” but setting a specific goal will make it easier for you to see your progress and achieve your goal.

 

If your New Year’s Resolution is to save for your next home, ask our Twin Cities mortgage team about our low-down home mortgage payment options. You may only have to save 1% of the home’s value to be approved for a home loan! Rainbow Mortgage Inc. is one of the few independent home mortgage companies in Minnesota to offer this unique program. Learn more about our 1% Down Payment program and start your 2018 New Year’s Resolution today!       

Rainbow Mortgage Inc.

3300 Edinborough Way #550

Edina, MN 55435

 NMLS# 345827 || 952-405-2090|| www.rainbowmortgageinc.com|| dave@rainbowmortgageinc.com

Three Credit Mistakes to Avoid When Going Through Divorce

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Is your divorce affecting your credit score? Divorce is a challenging time. Between parenting plans, splitting of assets, who gets the dog. Many divorcing couples overlook is the effects of their divorce on their credit score. Simple things can reduce your score overnight by over 100 points or more if you are not careful.

3 Mistakes to avoid while going through divorce

  1. Stop paying your bills

    The number one category for credit scoring is how well you pay your bills. Payment history makes up 30% of the credit score. Many times when couples split up before the divorce is final or they ever meet with an attorney, they will stop making payments on their credit accounts. If you stop paying credit cards, car loans or mortgages it will adversely affect your credit score and can prevent you from refinancing your home, purchasing a new one, renting or even buying a new car.

    A better plan is to freeze all revolving accounts so additional debt cannot be added to the family budget. You must continue to make the minimum monthly payments on the credit cards. Make your payments as usual on your auto loans and home loans.

    These simple steps will protect your credit score for future use and limit the amount of debt the family will have post decree.

  2. Over Charging/Going over the Limit on your credit cards

    Another large part of the credit score is your available credit.  If you go over the limit, I have seen scores drop over 125 points in one day by just adding $200.00 of debt.  The $200.00 in debt put two credit cards over the limit causing the client to go from a 667 credit score to a 542 credit score, that changed their loan from approved to denied.

    Over charging or going over the limit can happen when one of the spouses moves out and uses joint accounts to furnish the new residence or it can occur if you are using your credit card to pay your attorney fees with credit cards.

    Yes, $200.00 severly impacted the Credit Score from 667 to ↓ 542 

  3. A better plan is for each spouse to get their own credit upon one or the other moving out so that all expenses are traceable to each party.  As mentioned, it’s advised to freeze the account so that no additional debt can be incurred.

    Finally, if you cannot get a new card and you are getting close to a limit, call the credit card company to increase your credit limit.  Credit card companies are more likely to increase credit lines if you are abiding by your contract limits, once you go over the limit they are less likely to assist you. 

  4. Closing Accounts

    When couples are faced with divorce, they want to protect themselves from further loss.  Couples either on their own or at the advice of their attorney close all the credit accounts. If it’s due to circumstances surrounding the divorce, closing the accounts may be advisable.  However, if we can do this collaborativelyContinue reading→