Our friends Tom Rosser and Kaitlin Dion at Gateway Mortgage Group have some tricks up their sleeve that are helpful to everyone involved in the home buying process. Read these tips before you think about buying a home:
1. Save for a down payment: 20% down is ideal, but it is not required. However, the greater the down payment on a Conventional loan, the lower the interest rate and monthly PMI you will pay. We also work with multiple down payment assistance programs.
2. Watch your credit profile: Unfortunately, credit repair does not happen overnight. If you have any late payments, collections, or any accounts in dispute that need to be resolved, the sooner you handle these, the better. This will help make your pre-approval and loan process as smooth as possible.
3. Ask for a pre-approval letter: Know what you are qualified for and what monthly payment youare comfortable with before you start home shopping. We can help you go through a quick loan application and provide a pre-qualification letter in minutes so you can start looking for your dream home!
4. Know your loan options: There are several different loan options, all with different guidelines, requirements and benefits. It’s best to set up a meeting with your lender to discuss your unique situation and see what loan option best fits your needs at the beginning of the process.
5. Review your budget: Your monthly mortgage payment is just one of the new fees you will be taking on as a homeowner. Be sure to ask your lender about property taxes, homeowner’s insurance and any other monthly fees included in your payment to budget for.
6. Meet with a realtor: We can’t stress this enough! Working with a local expert, who will take care of the contract, negotiations, and any other paperwork for you is a must, and makes the process so much smoother as a home buyer.
7. Don’t forget about closing costs: When budgeting to buy a home, don’t forget to include closing costs in addition to the down payment. It is also an option to ask for the seller to pay a portion or all of your closing costs when negotiating – call your lender to get closing cost estimates before starting your home search.
8. Work on your savings: The mortgage loan process can seem never-ending when it comes to documentation. Be sure that you have your savings in place prior to application, as any large deposits will be questioned. If you keep your savings in a coffee can in your closet, be sure to deposit it a few months prior, so it is considered “seasoned savings”.
9. No major changes: No new debts, credit inquiries, job changes, etc. will make for a smoother process for you, and less documentation.
10. Gather and save your personal documents: When you apply for a mortgage, it is best to have the following handy (at minimum): Recent bank statements, pay stubs, W2s, and tax returns. And it helps to promptly respond to your lenders needs in order to avoid any delays or rushes when it comes to closing. Their job is to help make the process as smooth as possible for you, with your help, of course!
About Gateway Mortgage Group: Founded in February 2000, and headquartered in Tulsa, Gateway Mortgage Group has become one of the largest privately held mortgage companies in the country. In July 2010, Gateway Mortgage Group decided to move all mortgage servicing in-house and we now service more than $10 billion in residential mortgages. In short this simply means mortgage loan customers will work with Gateway until the time their loan is paid off. One of our greatest responsibilities is to not only empower the American Dream of home ownership but to also make a positive impact on local communities and those less fortunate. Click here to apply, or call us at 405.751.3800 with any questions, or for a quick pre-approval!
Gateway Mortgage Group has been recognized as:
The Fastest Growing Private Companies in America in 2006, 2007, 2013 and 2014 by Inc. 5000
Top 100 Financial Services Companies: 2013, 2014 by Inc. 5000
Top Work Places: 2013, 2014 by The Oklahoman
Gateway Mortgage Group
1973 W 33rd St #110
Edmond, OK 73013
There is so much to do in April around the Metro! We’ve put together some fun events going on during the second part of the month that we hope is helpful to you and your family!
April 15-18: Oklahoma City Dodgers vs. Nashville Sounds at 7:05pm. The Dodgers home games are held at the Chickasaw Bricktown Ballpark.
April 15: Oklahoma City Literary Festival. Located at the Downtown Oklahoma City Literary Festival. At this family-friendly and free event enjoy a variety of talks, readings, performances, workshops, master classes and even a book fair. Authors and artists will be leading workshops and readings on a broad spectrum of literature topics including poetry, fiction and storytelling. All events at OKC LitFest are free and open to the public, but workshop seating is limited, so signing up in advance is encouraged.
April 19-22: Oklahoma City Dodgers vs. Memphis Redbirds at 7:05pm. The Dodgers home games are held at the Chickasaw Bricktown Ballpark.
April 16: Heard on Hurd. Live music, food trucks and shopping in downtown Edmond from 6-9pm every third Saturday of the month. Come out and join the fun! Check out their facebook page for more info.
April 19: OU Sooners vs. OSU Cowboys baseball game is being held at the Sooners home field, Mitchell Park, in Norman at 6pm. Don’t miss this exciting game!
April 19-24: Festival of the Arts is held at Bicentennial Park with free admission. Come check out work of art by over 140 different artists and enjoy a variety of cultural foods including Indian tacos, Brazilian food and Mexican cuisine. Doors open at 11am and close at 9pm.
April 21-23: Norman Music Festival is held annually, featuring over 100 bands on multiple stages. This festival celebrates everything from euphoric indie pop to classic folk rock. Admission is free and open to the public and will take place on the 100, 200 and 300 blocks of historic Downtown E. Main Street.
April 23: Hot Rod Cookout & Concert is hosted by Street Kings Motor Club and held in Guthrie for all car and motorcycle enthusiasts! Free hot dogs, hamburgers, chips and sodas will be available to the first 500 guest who enter! Free admission. Located at 4514 S Division.
April 24: Oklahoma City Memorial Marathon annually honors the memory of live lost by each person in the Oklahoma City bombing and celebrates new life and the freedom that each person deserves. The race starts at 6:30 and you must register to be in the marathon if you are interested. For more details, click here here.
April 30: Pop Up Shops in the Park is held in Edmond at Hafer Park where over 100 vendors will be present for you to shop through local gifts and crafts, grub at food trucks and enjoy local music! There will be inflatables for kids, an arcade bus and a petting zoo. Starts at 9am until 4pm.
We hope this list of events was helpful and you found something exciting to do before April ends! What are some fun things you’ve already done this month?
Oil has been trading in the 30’s for quite some time and even dipped into the 20’s last week. This will most certainly lead to a slow down in the upper end of the real estate market. That makes this a good time to think about purchasing your FIRST home. Homes with lower asking prices are still moving according to The RED Team!
We’ve all been reading and hearing about Millennials and starting this year they make up the largest percentage of the US workforce.
The top line represents the % of 25-39 year olds who want to buy and the bottom line represents the % who will likely always rent. As you can see, Home Ownership is still firmly implanted as a goal among Millennials!!
|Last Week||4.00||Dow Industrials||16,002||Oil (WTI)||30.71|
Today’s Topic: Property Flipping
This only applies to buyers using the FHA loan.
Here is the current rule:
If a property is re-sold 90 days or fewer following the date of acquisition by the seller, the property is not eligible for an FHA insured mortgage. (Note: resale date is the date of the contract. So you can write or have a contract written on day 91.)
§ Properties acquired by government entities.
§ Properties acquired by an employer or relocation agency.
§ Sales by financial institutions.
Two appraisals are required when:
FHA reserves the right to require additional documentation from the lender to support the resale value if:
Today’s Topic: Escrow Account
As we move into the middle of the year escrow account set up amounts are starting to rise. This is because taxes are due in December. The account has to have the funds to make that payment. A July closing with a September 1st payment escrow account on a typical $200,000 purchase will require a $1,700 opening balance. With an existing home the buyer will receive a tax credit of around $1,300 for the seller’s portion of this year’s taxes leaving the buyer responsible for the difference.
The challenge comes with new construction. The lot value only tax credit from the builder will be very low making the buyer responsible for almost all of the $1,700. An August closing moves that number to $2,050 and a September closing moves it to $2,400. Add another full year of insurance and daily interest and you have over $5,000 in escrow costs.
Sometimes the buyer needs that money for down payment or other closing costs or a down payment threshold (10% vs 5%) or one time PMI. My general rule on new construction is to escrow for the full value unless that money is critical for some other purpose. I then spend a lot of time explaining and documenting how starting the escrow account based on lot value taxes works. I even tell them to set a calendar reminder for January to adjust their mortgage payment. We also include documents in their closing packet.
In other news – rates are creeping up.
|Last Week||3.990||Dow Industrials||17,849||Oil (WTI)||59.13|
|Taylor OrtizFairway Mortgage
Sr. Loan Officer2575 Kelley Pointe Parkway, Suite 180Edmond, OK 73013
NMLS ID 449866
Funds for Closing
As a part of every loan we have to verify the borrower has the funds for closing. Very often the borrower’s plans and the lenders requirements don’t match. The sooner buyers know the lender requirements the better. It could save some processing headaches or a denied loan. Here then are some things to keep in mind when consulting your buyers.
- Lenders now ask for 60 days or two bank statements. Any non-payroll deposits will need to be documented. It is amazing how many people wait until the last minute to deposit cash, gift $, etc.
- Government loans allow the down payment to be a gift from a family member, employer or the government like DPA programs.
- Conventional Same as Government. Borrower can receive a gift from a family member with zero minimum requirement.
- Business assets can be a challenge. Most underwriters ask for a CPA letter that says a withdrawal from the business account won’t harm the business. CPA’s stopped giving those and now it’s a struggle.
- Stocks and bonds. We have to paper trail the conversion/sale to a cash account including copies of the bonds.
- Borrowers can borrow from an asset for the funds for closing. If the loan isn’t on the credit report we would have to add the payment into their ratios:
o Land / Home
o Cattle J (it is Oklahoma after all!)
o 401k / IRA (Traditional IRA lets you take a distribution for a first time home buyer without penalty. Taxes, of course, would
- Borrowers can sell an asset. This is tough to paper trail. We have to determine the value of the asset and document the sale.
- Unacceptable sources of funds for down payment include cash, unsecured loans (no asset involved – ie Credit Card).
- Lease to purchase equity. Also difficult to document. Money paid to the owner/lessor that is in excess of the market rent can then be counted as funds into a mortgage transaction and used for down payment. An appraisal to determine the market rent would have to be ordered.
|Last Week||3.875||Dow Industrials||18,272||Oil (WTI)||59.69|
Sr. Loan Officer
2575 Kelley Pointe Parkway, Suite 180
Edmond, OK 73013
NMLS ID 449866
Today’s Topic: Private Mortgage Insurance
We’re only talking about conventional (Fannie/Freddie) loans here. With these loans the PMI is provided by private companies. They have names like Radian and United Guarantee. These companies have their own guidelines that can sometimes slow down or stop a loan. You may have had a deal killed or a closing delayed by PMI underwriting. Some of the questions borrowers have about PMI:
- What is it? It provides protection for the lender in the event the loan defaults. It does nothing for the borrower.
- When does a loan have it? Conventional loans with a loan to value (LTV) of more than 80% will have PMI.
- How do I avoid it? Two ways 1) put 20% down 2) do combo loan – 80% first and then a 2nd loan for the difference. This was a very common thing prior to 2008. After that lots of lenders exited the second mortgage business and PMI rates became more competitive so today there is not as big a benefit but we still do them. One can also pay it one time but you didn’t really avoid it – you just pay it up front.
- How long does it stay on the loan?
- When you pay the loan down to 78% of the contract price it automatically comes off. If you call them at 80% they will take it off.
- If the home increases in value and you think your LTV is 80% then you can request removal. There is no guarantee they will remove it. They are not bound by any regs here.
- Can they keep the PMI in place past 78%? Yes – they don’t have to remove the PMI if:
- Borrower has late payments.
- Values in the market have decreased.
- The equity is subject is to a subordinate lien. (2nd)
- Home is no longer a primary residence.
- Gray Area? For as long as I’ve been in mortgage I’ve heard from other loan officers and PMI representatives that you cannot get the PMI removed in the first two years. This doesn’t appear to be anyone’s rule but I suspect it’s true. I also suspect that the sooner you try to get PMI removed the harder it is. With this in mind when someone plans on paying the loan down in the first months or years after the purchase I suggest they do a combo loan (1st and 2nd) then they can just pay off the 2nd any time and not haggle with their PMI company.
Info provide by Tom Davies
|Last Week||4.00||Dow Jones Industrials||17,958||Oil||65.84|
Mortgage Loan Officer
Today’s Topic: Benefits of Home Ownership
Anyone reading this is probably on board with the benefits of owning a home. I won’t speak to the improved quality of life home ownership provides but rather my area of expertise – the net tangible financial benefits. Owning a home can provide those benefits in three ways:
Equity from monthly payments
o On a 30 year loan your payments generate 2% – 5% equity per year. After 5 years in the house your payments will have paid down the note by about 10%
o On a 15 year loan your payments generate 5% – 9% equity per year. After 5 years the note will have been paid down 27%
Equity from appreciation
o I’ve looked at several neighborhoods around the metro and there can be some pretty dramatic ups and downs from year to year but over time (10-20 years) you can expect a 2.5 – 3% increase in home value per year. The time frame I looked at includes the “Great Recession”
o When you buy a home you can deduct:
- Property Taxes
- Mortgage Insurance (income limits apply)
o You do, however, have to have enough deductions to itemize. When you itemize you can also count other deductions (state taxes, charitable giving for example)
I tell my clients that you have to live somewhere. When you pay rent you’re paying someone else’s mortgage. When you own a home on a 30 year loan you can expect to add about 5% per year of the home’s price/value to your balance sheet. So for every $100,000 of home you own 5 years will add about $25,000. Home ownership is the #1 wealth builder in the country!!
(Provided by Tom Davies and Taylor Ortiz)
|Last Week||4.125||Dow Jones Industrials||16,380||Oil||82.75|
Mortgage Loan Officer for Edmond Mortgage
2575 S Kelley Pointe Parkway Suite #180, Edmond, OK 73013