A lot of people don’t realize that it’s a good idea to watch your financial P’s and Q’s before closing your mortgage. Here are five common mistakes to watch out for to avoid any closing crises.

1. Making a big purchase, including furniture
If you’re about to close on a house, it’s not the best time to get a new car, boat or other expensive item. Even furniture or appliances — basically anything you might pay for in installments — is best to delay until after your mortgage is finalized.
Depending on your credit score and history, these transactions can lower your score, which can impact the interest rate and loan amount you receive. This could result in a higher interest rate for the next 15 or 30 years, or even having to come up with a larger down payment.
Bottom line: Wait to purchase a big-ticket item, because “this can ruin their chances of staying qualified for a loan,” says Patricia Martinez-Alvidrez, business development officer for Stewart Title in El Paso, Texas.
2. Opening a new line of credit
It’s not just big purchases that can alter your credit score. Opening a new credit card or closing an existing one can affect your standing, too. In the runup to your mortgage closing, lenders make an assessment of the credit risk they are taking on and go through several steps to assess that risk for each loan applicant.It’s especially important to protect your credit score if it’s low enough that you’re on the margins of qualifying for a mortgage at the start of the process. Any changes in that case can work against you and might make it impossible to finalize the loan.
3. Switching or quitting your job
Another major mistake to make when you’re about to close on a home purchase is changing jobs. This is because mortgage lenders examine your employment history for consistency, and providing additional documentation on employment to a lender can delay the closing.
If you have any control over your job situation, it’s best to stay put until after you close. A borrower who quits their current job might have to wait a couple of weeks before they can attempt to close again.
4. Disrupting the timeline
Closing on a mortgage is time-sensitive. Even if you’ve locked in your rate, that only guarantees things for so long. It’s important to keep on top of the schedule and make sure all of your paperwork is submitted on time. Otherwise, you risk losing the terms you agreed to and could have to start the process over again.
5. Taking out a personal loan
If you get a personal loan or co-sign a loan for someone else, you could also face hiccups before getting to the closing table. In some instances, the lender might turn you down for a loan altogether even if you were previously preapproved.
It depends on how your credit score and debt-to-income (DTI) ratio is impacted. A good DTI, in particular, is a critical factor in mortgage approvals. Lenders consider two types of DTIs:
Front-end DTI: Your monthly mortgage payment, including principal, interest, taxes, insurance and association fees divided by your monthly income
Back-end DTI: The sum of all your monthly debt payments divided by your monthly income
Depending on the amount of the loan payment, your back-end DTI could increase to a percentage that the lender is unwilling to accept. If your credit score is right above the minimum to qualify for a mortgage, a hard inquiry that results from applying for a personal loan could drop it to a point that makes you ineligible. Either way, there’s a chance you’ll be forced to walk away from the deal.

It’s not always smooth sailing when going from the mortgage application process to the closing table. However, there are actions you can steer clear of to minimize roadblocks and ensure your loan closes on time. You also should review your credit report, scores and identify ways to optimize your financial health to give yourself the best chance at securing a mortgage with competitive terms. And definitely give us a call if you’re in your closing and not sure 🙂

Home ownership is part of the American dream and often thought of as a step towards financial stability. For parents, the thought of helping their child set foot on this path can be both appealing and daunting. Here’s an in-depth look at why and how parents can provide that initial boost.

Why Consider Gifting a Down Payment?
In 2022, the National Association of Realtors revealed an intriguing statistic: 22% of first-time homebuyers were aided by gift funds from family or friends. This underscores the trend of families stepping in to aid the next generation in achieving their homeownership dreams.

In today’s environment, skyrocketing rents, expensive homes, and the looming shadow of student debt make saving for a down payment increasingly challenging for many young people. A down payment gift is a direct way to benefit the child without the long-term obligations and risks associated with co-signing.

Things to Consider Before Gifting
1. Your Financial Health: Before jumping in, it’s crucial to analyze your financial situation. Gifting shouldn’t jeopardize your retirement plans or other financial goals.

2. Your Child’s Financial Savvy: Ensure that your child has the financial knowledge and responsibility to manage homeownership.

3. Tax Implications: Thankfully, gifting for down payments often has fewer tax implications. For 2023, parents can gift up to $34,000 to their child without triggering the gift tax.

The How-To of Down Payment Gifting
1. Assess Your Financial Situation: Reflect on what you can afford without affecting your financial health adversely. As Geller advises, always discuss with your child, understand their finances, and know their repayment strategy.

2. Time the Gift Right: Transfer the gift at least two months before your child’s mortgage application. This “seasoning” period ensures the funds are seen as part of your child’s legitimate assets.

3. Draft a Gift Letter: This letter, addressed to the lender, confirms the nature of the gift. It should detail the amount, purpose, and assure that repayment isn’t expected.

Alternative Ways to Assist
1. Direct Home Purchase: Consider buying the home and having your child repay you. But always consult a real estate attorney before embarking on such agreements.

2. Co-signing or Becoming a Co-borrower: These are valid options but come with their own sets of responsibilities and risks. For instance, as a co-signer, you don’t have ownership, but you are liable for payments if your child defaults.

3. Home Search Assistance: Being a pillar of support during their home search can make the process smoother for your child.

4. Renting Options: Letting your child live with you at discounted rates or for free can help them accumulate savings faster.

In conclusion, gifting a down payment can be a significant step towards ensuring your child’s financial future. You can schedule a meeting with us on our website and we can review your situation and what best makes sense for you. If done right, it can be a win-win situation, paving the way for the next generation’s financial success.

The dream of owning a home is a cherished one for many individuals and families across the United States. However, the soaring median existing-home price of around $400,000 can often make it seem like an unattainable goal, especially when faced with the prospect of a substantial down payment. Traditional mortgage loans typically require a 20 percent down payment, equating to a significant sum, but there is good news – down payment assistance (DPA) programs exist to help prospective homeowners bridge the financial gap. In this blog post, we will explore what DPA programs are, how they work, and the steps to access this valuable assistance.

What is a Down Payment Assistance (DPA) Program?

Down payment assistance programs are financial tools designed to provide aspiring homebuyers with the necessary funds to contribute towards the purchase of a home. In addition to assisting with down payments, some programs also extend their support to cover closing costs, which can amount to approximately 2 percent to 5 percent of the loan principal. This additional help can be particularly beneficial for individuals who have allocated their savings primarily for a down payment.

DPA programs are available across the country, with the majority of options offered at the local level through state, county, and city government initiatives. These programs can take the form of loans, grants, or matched savings, each with its unique set of eligibility criteria and repayment terms.

Down Payment Assistance Eligibility Requirements

While eligibility criteria may vary among different DPA programs, the vast majority of assistance is aimed at first-time homebuyers. However, “first-timer” does not exclusively refer to someone purchasing their first home; it can also encompass individuals who have not owned a home in the last three years. Additionally, many programs exclude owners of rental or investment properties, emphasizing that the home should be your primary residence. Some programs may permit the purchase of duplexes or small multi-family properties if you intend to reside in one of the units.

Types of Down Payment Assistance Loans and Programs

Grants: Grants are a type of DPA that offers a one-time cash sum, often as a no-interest second loan. These funds can be used to cover part or all of the down payment or closing costs. The best part is that grants do not need to be repaid and are typically tailored for low- or moderate-income borrowers. Various grant programs are accessible through banks and state and local governments.
Forgivable Loans: Forgivable loans function like loans but can effectively become grants if certain conditions are met. Typically, this type of loan is forgiven after a specific period, provided that you continue to own the home and stay current on your mortgage payments. If you sell your home or move before the specified period, you may be required to repay a portion of the funds. Forgivable loans are often administered through state housing finance agencies.
Low-Interest Loans: Low-interest loans operate as second mortgages with interest rates below market rates. Unlike grants or forgivable loans, these loans must be repaid, usually over a few years. This means that you will have additional monthly payments in addition to your regular mortgage. You can find low-interest loans through various mortgage lenders.
Deferred-Payment Loans: Deferred-payment loans typically do not accrue interest, and you are only responsible for repaying the principal amount borrowed. However, these loans are not forgiven and must be repaid in full when you sell your home or refinance your mortgage. State and local homebuyer assistance programs often offer deferred-payment loans.
Individual Development Accounts (IDAs): IDAs, also known as matched-savings accounts, are special savings accounts where your contributions are matched by either private or public funding sources. These programs typically have income caps and employment requirements, and participants often need to complete financial literacy training. IDAs are usually available at the state level or through private nonprofits and can be used for down payments and closing costs.
Lender-Specific Down Payment Assistance Programs: Some mortgage lenders offer their own DPA programs. For example, Chase offers assistance ranging from $2,500 to $5,000 in many states, which can be used for closing costs and down payment needs. Eligibility for these programs may have specific requirements, such as obtaining a 30-year fixed-rate loan, living in the home as your primary residence, and attending a homebuyer education course.
How to Access Down Payment Assistance

Accessing DPA programs often involves exploring local resources and organizations. Here are some avenues to consider:

State Housing Finance Authority: Many state housing finance authorities (HFAs) offer homebuying assistance and education programs. Check with your state’s HFA for information on available DPA programs.
City and County Government Programs: Numerous counties and cities offer DPA programs as part of their efforts to promote homeownership, especially for first-time buyers. Visit your municipality’s website or consult your loan officer to learn more about local DPA programs in your area.
U.S. Department of Housing and Urban Development (HUD): HUD provides a wealth of information on local homebuying programs by state. Each state also has HUD-approved counselors who can guide you through the homebuying process and help you find financial assistance options.
Conclusion

Owning a home remains a significant milestone for many individuals and families, and down payment assistance programs play a crucial role in turning this dream into a reality. With various types of assistance available, aspiring homeowners can find a program that suits their unique financial situation and eligibility criteria. By exploring local and state resources and leveraging the support provided by DPA programs, more people can achieve the goal of homeownership, even in a challenging real estate market.

As we’ve seen large storms hit both coasts recently, it’s a good idea to use the old Boy Scout motto and “be prepared.” We are going to review general steps to take to prepare for something we of course never happens. Natural disasters, from hurricanes to earthquakes, wield a devastating power that leaves homeowners and entire communities grappling with significant property damage and high repair costs.

The Financial Impact of Natural Disasters on Homes
In 2022, the Insurance Information Institute documented nearly $100 billion in insured losses stemming from natural disasters. Here’s a breakdown of the data:

Severe storms: These accounted for over $29 billion.
Earthquakes: About $14.7 billion per year, as per a joint study between the USGS and FEMA.
Floods: 15 instances in 2022 led to $3.3 billion in losses.
Wildfires: Resulting in a staggering $8.9 billion from 26 separate events.
Hurricanes: Three events led to a total loss of $53.2 billion.
Winter storms: Produced $4.1 billion in damages from 13 occurrences.
How Can Homeowners Prepare?
1. Reinforce Vulnerable Areas
Install wind-resistant doors and storm-proof shutters.
Use plywood to board up windows and doors when a storm approaches.
2. Know Your Utilities
Identify where water, gas, and electrical lines are and know how to shut them off.
3. Water Diversion
Use sandbags around entryways and flood-prone zones.
4. Secure Loose Items
Ensure outdoor furniture is tied down.
Move grills, tools, toys, and other items inside.
5. Tree Maintenance
Trim trees regularly to prevent overhanging branches from causing damage.
6. Furniture Safety
In earthquake-prone areas, attach heavy furniture to walls.
7. Landscaping Smartly
Choose fire-retardant plants like Rockrose and aloe, and avoid flammable trees like pines.
8. Guard Against Pipe Bursts
Wrap vulnerable pipes to protect them during extreme cold.
9. Have an Emergency Plan
Assemble an emergency kit with food, water, medications, chargers, and other necessities.
Keep both digital and physical copies of important documents, including evacuation routes and insurance policies.
What Does Home Insurance Typically Cover?
A standard homeowner’s insurance policy covers damage due to:

Thunderstorms
Hurricanes
Tornados
Wildfires
Blizzards
However, it’s essential to note that standard policies usually exclude flood or earthquake damage. Those living in vulnerable zones should consider supplemental policies to stay covered.

In conclusion, while the unpredictable force of nature cannot be avoided, homeowners can adopt a proactive stance. By understanding your insurance policy and taking preventive measures, you can shield yourself from the worst financial aftershocks of natural disasters.

This week we saw the release of Consumer Price Index (CPI) for June 2023, which recorded a rise of 0.2 percent, a slight increase from May’s 0.1 percent, according to the U.S. Bureau of Labor Statistics. Year-over-year, the all-items index experienced a 3.0 percent hike, a decrease from May’s 4.0 percent, indicating a sustained deceleration in inflation for the past 12 months. With the inflation rate now standing just one percentage point above the Federal Open Market Committee’s 2 percent goal, the inflation scenario, particularly its impact on the housing market, demands a closer look.
The slowing of inflation, however, does not translate equally into the housing sector. The Bureau’s data highlight the ‘shelter’ category, encompassing housing costs, as the most significant contributor to the CPI’s all-items increase. However, he also hints at potential stabilization in rents and home prices, a necessary step in addressing the critical issue of housing affordability in the nation.
Encouraging data from CoreLogic suggest a slowdown in the home price growth rate, while Fannie Mae’s Home Purchase Sentiment Index shows a meager increase, pointing to a potentially less heated market. However, with current high mortgage rates, potential home buyers might still hesitate. Lawrence Yun, Chief Economist at the National Association of Realtors, offers some optimism, “Low inflation means low mortgage rates. Therefore, decelerating consumer prices could steadily lift home sales and increase home production in a few months.”
If you are considering making a move, schedule a consultation with us on our website and we can recommend options based on your unique needs.

There are numerous benefits to being self-employed – you’re your own boss. However, when it comes to securing a mortgage, the process deviates slightly from traditional mortgages. It often involves additional requirements and more administrative procedures. Here are some tips to help you get organized and approved if you’re self-employed.

Apply for a mortgage when your income is high. We understand this is easier said than done, but lenders will focus most on your income from the last two years. If your income fluctuates, it’s best to apply in a high-income year. This strategy can help you qualify for a larger loan amount and a lower interest rate.

Lower your DTI. Your debt-to-income ratio is one of the critical factors in getting approved. Therefore, it’s beneficial to pay down both business and personal debts. Also, avoid opening new lines of credit a few months before applying.

Don’t mix business and personal finances. Keep your business and personal finances separate by maintaining distinct bank and credit card accounts for business and personal use. This separation helps lenders easily discern business income and expenses and demonstrates that you are managing your business professionally.

Please feel free to give us a call or contact us through our pre-qualification app, and we can determine which product best suits your needs. You may be a candidate for a Qualified Mortgage (QM) or a non-QM lender. Either way, we can review and help you get started!

We saw more activity in the market as rates dropped in a volatile business environment. Applications were up 7% and Freddie Mac reported the average rate on the average 30-year fixed mortgage was 6.60% this fell to 6.60% this week down from last weeks rate of 6.73%.

In statement by Freddie Mac’s Chief Economist Sam Khater, he said “turbulence in the financial markets is putting significant downward pressure on rates, which should benefit borrowers in the short-term.”
And he continued, “our research concludes that homebuyers can potentially save $600 to $1,200 annually by taking the time to shop among multiple lenders.”
Check with us about your options as the market is in a period of volatility. You can use our quick analysis our website and we will auto-schedule a review of your options.

With recent market volatility we have good news for some new home buyers. Starting in March, those who are receiving FHA financing and paying mortgage insurance will see the monthly fee reduced from 0.85% to 0.55%. This is expected to affect 850,000 borrowers this year and result in an average savings of $800 annually. The savings will vary based on the loan amount, for example a person with a $500,000 FHA loan would save $1,500 annually.
If you are in the market for a new home, fill out our quick home qualifier on our website and we can help determine what loan best fits your needs and let you know how much you can pre-qualify for.

Economic reports last week gave signs that inflation may finally be slowing down. As a result, mortgage rates dropped significantly, Freddie Mac reported, the 30-year fixed-rate dropped to an average of 6.61% down from 7.08% the week before. This was the largest weekly drop in over 40 years, since 1981.
Freddie Mac economist Sam Khater noted, “while the decline in mortgage rates is welcome news, inflation remains elevated, there is still a long road ahead for the housing market.”
If you are considering buying, please contact us regarding pre-qualifying or a rate lock. Fill out our quick pre-qual app on our website to get started.

As we continue to see low inventory in the housing market and high rent prices, many home owners are adding ADUs (which stands for Accessory Dwelling Units).
ADUs often called granny flats, are guest houses or rooms added to garages to create rental income for home owners. Home owners typically add ADUs to increase cash flow, as well as looking for their property value to appreciate. Whether ADUs are right for you, depends on a number of factors. ADUs often costs at least $100,000 to build so being in a high rent market helps to offset the initial investment. You’ll also need to make sure local ordinances allow them and what the regulations are.
The old real estate adage about location stays true for ADUs as well. If you are in an area where rents are high or a popular vacation destination, then ADUs can make sense. Again you’ll need to check the local zoning and if you build one you will also need to have updated insurance to cover the ADU. Check with us to learn more and to see what financing terms you qualify for.