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How Do Interest Rates Affect My Purchase Power?
How Do Interest Rates Affect My Purchase Power? 1024 536 patrickgardner
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Nothing affects a home’s affordability more than interest rates. After all, we live with the monthly payment, not the amount of the loan. The higher your mortgage rate is, the higher your monthly payments are going to be.

Buying power, simply put, is the amount of home you can afford to buy for the budget you have available to spend. As rates increase, the price of the house you can afford to buy will decrease if you plan to stay within a certain monthly housing budget.

The chart below shows the impact that rising interest rates would have if you planned to purchase a home within the national median price range while keeping your principal and interest payments between $1,850-$1,900 a month.

Buyers Purchasing Power
4.75 $2,086 $2,034 $1,982 $1,930 $1,878
4.50 $2,026 $1,976 $1,926 $1,874 $1,824
4.25 $1,968 $1,919 $1,869 $1,820 $1,771
4.00 $1,910 $1,862 $1,814 $,766 $1,719
3.75 $1,852 $1,806 $1,760 $1,714 $1,667
$400,000 $390,000 $380,000 $370,000 $360,000
-2.5% -5% -7.5% -10%

With each quarter of a percent increase in interest rate, the value of the home you can afford decreases by 2.5% (in this example, $10,000).

Act Now! Rates are at historical lows to help make the home you want accessible.

 

Principal and interest payments rounded to the nearest dollar amount. The information shown above is for demonstrative purposes only and does not include any additional fees like property tax, insurance, mortgage insurance, or HOA dues. This is an advertisement and not a guarantee of lending.

Is a Mortgage Pre-Approval Necessary?
Is a Mortgage Pre-Approval Necessary? 1024 536 nathanburch
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Do you need a mortgage pre-approval letter to make an offer on a house? You know you need to get your ducks in a row before looking at homes, but does that include securing a pre-approval letter from a lender?

The truth is, getting pre-approved can actually improve your chances of falling into the sellers’ good graces, so you want to get it done as soon as possible in the home-buying process.

So how organized do your financials need to be before you start looking? Let’s take a look, starting with clarifying what a pre-approval letter actually is.

What is a pre-approval letter?

Mortgage pre-approval is assurance from a lender to provide you with financing to buy a home up to a certain loan amount. It’s a letter from your lender, written on the lender’s letterhead, stating that you are approved for a loan of a specific dollar amount.

To get approved, your lender will collect paperwork from you that will include pay stubs, federal tax returns, W2s, investment accounts, and residential history. Once your complete financial story is analyzed, the lender will decide whether or not to issue you a pre-approval letter.

Do you need a pre-approval letter to see a house?

Real estate agents prefer showing homes to buyers with a pre-approval letter, because it shows the buyer is financially capable of purchasing. Agents want to know if you can really buy a home, a pre-approval letter isn’t mandatory to tour a home.

All agents are allowed to show you homes, even if you do not have a pre-approval letter. It just might not be in their best interest, so don’t be surprised if you get some push-back if you say you don’t have pre-approval.

How a pre-approval letter benefits you.

If you don’t take the time to get pre-approval, it’s not just the real estate agent’s time you’re wasting—it’s possibly yours as well. There is no sense in wasting your own time and that of an agent to see homes until you are ready to purchase.

Getting a pre-approval letter should be one of your first steps in the home-buying process. Then when you see something you like, you can act on it. As a buyer, that ability to act quickly gives you an edge over people who don’t have certification from a mortgage lender.

How to get a pre-approval letter.

Serious about getting serious? Here’s how to get started. 

  • Fill out an application. This can be done in person, online or over the phone.
  • The lender runs a credit check to get your FICO score.
  • It also determines your expenses and income by looking at your financial portfolio.
  • They then determines if you qualify for a loan, and if so, what kind and for how much.
  • Finally, the lender puts this in writing as the pre-approval letter.
Things to Remember
Things to Remember 1024 536 nathanburch

 

The are many factors that can change your ability to qualify for a mortgage. It’s important to follow these guidelines until your loan is closed.

Do

  • Pay all your monthly bills on time
  • Keep track of all your bank deposits and statements
  • Find and organize documents such as W-2s, tax returns and other statements related to investments and/or other finances
  • Get pre-approved before you start looking for your new home
  • Leverage our easy to Mortgage Application platform, Elevate to make the entire process easy and contact us with any and all questions

Don’t

  • Apply for new credit cards, loans or purchase offers
  • Deposit or withdraw large amounts of cash without speaking to your Loan Officer
  • Change jobs, your pay structure or employment status
  • Charge current credit accounts/cards to the maximum
  • Make large purchases such as cars, appliances or furniture
  • Take debt consolidation action or pay off collections or charge-offs

Any changes to your current financials could affect your current financial picture. We are always here to provide guidance and advice as you begin your home buying journey.

Conforming & VA Loan Limit Changes for 2020
Conforming & VA Loan Limit Changes for 2020 admin
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FHFA Announced Increase in Conforming Loan Limits for 2020

The Federal Housing Finance Agency announced that it is raising the conforming loan limits for Fannie Mae and Freddie Mac to more than $510,000.

In most of the U.S., the 2020 maximum conforming loan limit will be raised to $510,400, up from 2019’s level to $484,350.

Median home values generally increased in high-cost areas in 2019, driving up the maximum loan limits in many areas. The new ceiling loan limit for one-unit properties in most high-cost areas will be $765,600 — or 150% of $510,400.

For a map showing the 2020 maximum loan limits across the U.S., click here

Government backed loans typically follow suit and will match the new conforming loan limits but no formal announcement has been made.

Vellum is immediately accepting mortgage applications with the new loan limits.

VA Loan Limits to be Lifted in 2020

Earlier this year, the President signed a bill into law that allows the Department of Veterans Affairs to back loans that exceed the conforming loan limit. The bill, H.R. 299, enables homebuyers using a VA loan to borrow above the 2019 limit of $484,350 for most counties, without any down payment.

In addition to alleviating limits for veterans looking to purchase a home, H.R. 299 temporarily increases rates for certain loans by 0.15-0.30%, the VA said. The slight bump in loan fees is intended to help finance health care costs for veterans who are suffering the effects of Agent Orange exposure as a result of their service.

Additional changes to the VA’s loan guaranty program include the elimination of funding fee differences for borrowers who are veterans versus those who are members of the Reserve. It also removes the loan limit for the Native American Direct Loan Program, exempts Purple Heart recipients from paying loan fees and authorizes VA-designated appraisers to rely on third parties for appraisal-related information.

VA loan limit will be lifted for loans that are guaranteed on or after January 1, 2020.

Verified by Vellum, Your Client’s First Step
Verified by Vellum, Your Client’s First Step 1024 536 nathanburch

A fully underwritten Verified Pre-Approval by Vellum streamlines the homebuying process and allows your clients to shop with confidence. We are excited to share in the homebuying experience.

  • Gain Confidence & Feel Secure

    Be able to submit an offer with confidence knowing it provides proof of the ability to obtain financing.

  • Enjoy a Faster Closing Period

    Close in as few as 8 days. A quick closing can sometimes be the difference in your clients offer being selected.

  • Save Your Clients Money

    Strengthen the buyers ability to negotiate. With no concerns about a clients ability to purchase the home, your clients offer will stand out amongst the others.

  • Experience Matters

    With a deep understanding of local real estate and mortgage options we provide the best custom solutions for your clients specific financial story.

Get Your Clients Started Out on the Right Foot with a Verified Pre-Approval

Happy Veterans Day
Happy Veterans Day. Thank You for Your Service.
Happy Veterans Day. Thank You for Your Service. 1024 536 admin
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$500.00 Lender Credit for Veterans1

You served our country. Now it’s time for us to serve you. We are proud to offer a $500.00 lender credit at settlement to any qualified Veteran, active duty U.S. Military member, Reservists and National Guard member who locks a loan with Vellum Mortgage during the months of November and December 2019.

About the VA Home Loan
The VA home loan helps Service members, Veterans, and eligible surviving spouses achieve the American dream of homeownership. The VA home loan typically requires no downpayment mortgage with no mortgage insurance required. With a VA loan you can buy or build a home, or refinance an existing home mortgage.

If you’re thinking about buying a home or refinancing, contact me for more information. We look forward to serving you!

 

1. This product or service has not been approved or endorsed by any governmental agency, and this offer is not being made by an agency of the government. Additional qualifying requirements and restrictions apply based on specific loan type. Lender credit offer available for purchase and refinances with submission of DD-214. This advertisement must be referenced at least 7 days prior to closing to receive this promotion. Loan must be locked between November 1, 2019 through December 31, 2019 but the loan may close any time within 90 days of application. The lender credit may not result in cash back to the borrower at closing. This is not a promise to lend. 11/8/2019.

101% Financing, No Mortgage Insurance
101% Financing, No Mortgage Insurance 1024 536 nathanburch
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101% Yours.

Owning a home is the American Dream! Whether you are a first-time buyer or moving up, we’ve made it easier than ever to get into a new home…even helping with closing costs.

We are able to finance 101% of your sales price, meaning you could potentially have no down payment and an extra one percent of the sales price towards your closing costs. All of that and no mortgage insurance.

  • No Mortgage Insurance
  • Credit score as low as 660
  • Financing up to $726,525
  • DO NOT have to be a first-time homebuyer
  • Max 1% contribution (closing costs)
  • Possible financing options up to 105%
Contact us for more information and make your new home 101% Yours!

 

Income limits are specific to the area you are looking to purchase. Must be your primary residence. Program not available in all states. Not all applicants will qualify. 4% of the lessor of the purchase price or appraisal with no dollar cap for down payment and closing cost assistance. Second interest only rate matches the first mortgage rate. Maximum 105% LTV with a 3rd DPA. Terms and conditions apply and requirements can change at any time. This is not a commitment to lend.

Home Equity: What It Is and Why It Matters
Home Equity: What It Is and Why It Matters 150 150 nathanburch
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It is often said that homeownership builds wealth. So, what is home equity, and how can it enhance your net worth?

What is home equity?

Home equity is the current market value of your home, minus what you owe. You’re looking for a positive number. Any gain comes from:

  • Paying down the principal balance on your loan.
  • An increase in market value over time.

How does home equity work?

Building home equity is a bit like investing in a long-term instrument, like bonds. There are some ways to tap it, but wealth is created over years as your share of “free and clear” ownership of the house increases.

As a rule, building home equity is a slow climb, at best. U.S. residential year-over-year home price appreciation averaged 1.89% from 1997 to 2017, adjusted for inflation, according to CoreLogic, the Bureau of Labor Statistics, and the Urban Institute.

However, behind that average are some major year-over-year price swings during the same period, ranging from a gain of 12.6% to a drop of 18.1%, according to the Urban Institute.

When it comes to short-term home appreciation, sometimes it’s more of a bungee jump than a climb.

Why is home equity important?

Home equity can be a long-term strategy for building wealth. Mortgage payments reduce what you owe while your home gains value, so paying on a house has been called “a forced savings account.”

Home equity can be a long-term strategy for building wealth.

This is unlike virtually every other asset purchased with a loan, such as vehicles, which lose value while you pay them off.

A growing number of U.S. homeowners are amassing “impressive stockpiles” of home equity wealth, according to Daren Blomquist, senior vice president at Attom Data Solutions. At the end of the second quarter of 2017, over 14 million U.S. properties were considered “equity rich” — meaning the debt on the property was 50% or less of the home’s current market value. That’s about 24% of all owner-occupied homes with a mortgage.

Building home equity is definitely a long-term proposition. Blomquist says wise words from one of his relatives may state it best. “My wife’s great-grandfather — who bought property in Southern California a long time ago — his advice was, ‘You take care of a piece of real estate for 20 years, it’ll take care of you forever.’”

Source: Nerd Wallet

What is mortgage insurance and how does it work?
What is mortgage insurance and how does it work? 1024 536 patrickgardner
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Mortgage insurance lowers the risk to the lender of making a loan to you, so you can qualify for a loan that you might not otherwise be able to get. 

Typically, borrowers making a down payment of less than 20 percent of the purchase price of the home will need to pay for mortgage insurance. Mortgage insurance is also typically required on FHA and USDA loans. If you are required to pay mortgage insurance, it will be included in your total monthly payment that you make to your lender, your costs at closing, or both.

There are several different kinds of loans available to borrowers with low down payments. Depending on what kind of loan you get, you’ll pay for mortgage insurance in different ways:

Conventional Loan

If you get a conventional loan, your lender may arrange for mortgage insurance with a private company. Private mortgage insurance (PMI) rates vary by down payment amount and credit score but are generally cheaper than FHA rates for borrowers with good credit. Most private mortgage insurance is paid monthly, with little or no initial payment required at closing. Under certain circumstances, you can cancel your PMI.

Federal Housing Administration (FHA) Loan

If you get a Federal Housing Administration (FHA) loan, your mortgage insurance premiums are paid to the Federal Housing Administration (FHA). FHA mortgage insurance is required for all FHA loans. It costs the same no matter your credit score, with only a slight increase in price for down payments less than five percent. FHA mortgage insurance includes both an upfront cost, paid as part of your closing costs, and a monthly cost, included in your monthly payment.

If you don’t have enough cash on hand to pay the upfront fee, you are allowed to roll the fee into your mortgage instead of paying it out of pocket.  If you do this, your loan amount and the overall cost of your loan will increase.

US Department of Agriculture (USDA) Loan

If you get a US Department of Agriculture (USDA) loan, the program is similar to the Federal Housing Administration, but typically cheaper. You’ll pay for the insurance both at closing and as part of your monthly payment. Like with FHA loans, you can roll the upfront portion of the insurance premium into your mortgage instead of paying it out of pocket, doing so increases both your loan amount and your overall costs.

Department of Veterans’ Affairs (VA) Loan

If you get a Department of Veterans’ Affairs (VA)-backed loan, the VA guarantee replaces mortgage insurance, and functions similarly. With VA-backed loans, which are loans intended to help service members, veterans, and their families, there is no monthly mortgage insurance premium. 

Second Mortgage

When using a second “piggyback” mortgage,the loans are structured differently.  For example, the same borrower might pay for the home with: a 10 percent down payment, 80 percent main mortgage, and a 10 percent “piggyback” second mortgage. In this scenario, the borrower is still borrowing 90 percent of the value of the home, but the main mortgage is only 80 percent.  The “piggyback” second mortgage typically carries a higher interest rate, which is also often adjustable. 

Contact us if you have any questions or your like to know what you what your financial situation looks like!

Source: Consumer Financial Protection Bureau (CFPB)

5 Reasons to Buy a Home This Fall
5 Reasons to Buy a Home This Fall 1024 683 jaycurley

Reasons to Buy a Home This Fall

Real estate markets ebb and flow just like the seasons. The spring market starts hopping when the sun comes out, flowers bloom and winter is over. Conversely, fall signals the beginning of a slower market, which could be good for buyers.

If you’re in the market for a home, here are some reasons why fall can be a great time to buy.

Leftover spring inventory may result in deals

Home sellers tend to go on the market for the first time in the spring. They often list their homes too high out of the gate, which could mean that a series of price reductions follow during the spring and the summer months.

These sellers have fewer chances to capture buyers after Labor Day. By October, buyers are likely to find desperate sellers and prices that may, in fact, be below a home’s true market value.

Fewer buyers are competing

Families who want to be in a new home by the beginning of the school season are no longer shopping at this point. These families have exited the market, which means less competition. That translates into more opportunities for buyers.

Taking out an entire segment of the housing market provides millennial, single, and baby boomer buyers some breathing room. You’ll likely notice fewer buyers at open houses, which could signal a great opportunity to make an offer.

Motivated sellers want to close by the end of the year

While a home is where an owner lives and makes memories, it is also an investment — and one with tax consequences. A home seller may want to take advantage of a gain or loss during this tax year.

Buyers might find homeowners looking to make deals so they can close before December 31st and get that tax benefit. Ask why the seller is selling, and look for listings that offer incentives to close before the end of the year.

Homes for sale near the holidays signal a motivated seller

As the holidays approach, the last thing a homeowner wants is for their sale to be dragging on and interrupting their parties and events.

If a home has not sold by November, and it’s still sitting on the market, that homeowner is likely motivated to be done with the disruptions caused by their home being listed for sale.

Many homes don’t show as well once the landscaping fades

The best time to do a property inspection is in the rain and snow, because the home will be truly exposed for buyers. The same holds true for fall, when flowers die, trees start to shed their leaves, and beautiful landscapes are no longer so lovely.

Scratching the surface of the pretty spring home season and fall reveals home flaws, making it a great time to see each home’s true colors. It’s better to see the home’s flaws before making the offer, instead of being surprised months after you close.

Source: Zillow

The post 5 Reasons to Buy a Home This Fall appeared first on Vellum Mortgage.

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