If you are a first-time homebuyer, be sure you are comfortable with your new payment. Lenders may pre-qualify you for a higher loan amount and monthly payment than you want to spend. Don’t fall into the trap of going for the higher payment just because the lender says you can qualify for the mortgage. In determining your qualification, lenders do not take into account your cell phone bill, streaming services, internet, electric and utility bills. You will have to pay these in addition to your monthly mortgage payment. The monthly mortgage payment includes principal, interest, taxes, insurance, and mortgage insurance...
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CLE by the Sea
What a great conference! It was a pleasure to attend and speak on real estate finance at the Real Property Section of the State Bar of Arizona CLE by the Sea in Coronado, California. The faculty was excellent and shared a wealth of knowledge and information. They covered topics including: up-to-date AZ real estate market statistics, land use regulations, short-term rentals, title insurance, commingled real estate financing and investment, bankruptcy, receivership, HOA, alternative dispute resolution, water law, alternative energy, and real estate transactions on tribal lands. Whew! Thanks to Tricia Schafer, Esq. and David Iskowitz, Esq. for co-chairing and putting...
FIRST-TIME HOMEBUYER VIDEO SERIES – CREDIT
Credit is a big factor considered by lenders when applying for a mortgage. The better the credit score, the better the interest rate, the lower the mortgage insurance, and the lower the payment. One quick tip to get a good credit score is to keep your credit card balances low. Although there is no magic percentage of the credit limit you should maintain, try to keep balances less than 50% of the credit limit during the entire billing period, and 30% of credit limit seems to be a good rule of thumb. Many people think their credit may not be...
State Bar of Arizona – CLE by the Sea
I am honored to be speaking on real estate finance at the State Bar of Arizona CLE by the Sea conference July 9-11 at the Hotel del Coronado in California. I will be discussing residential and commercial real estate finance. If you would like to learn more about it, or attend, click here: https://www.azbar.org/for-lawyers/cle/cle-by-the-sea/ Hope to see you there!
THE SCARIEST TERM IN YOUR NEW COMMERCIAL MORTGAGE
We’ve written before about lenders raising the bar, or tightening, lending terms and conditions. One of the terms that’s started showing up in the covenants is “full recourse only”. Everything beyond the value of the property is now on the line. This was a somewhat common term in the 70’s and early ‘80s going through and coming out of the stagflation period at the time. But this had largely vanished from CRE loans when markets were relatively stable. (This term has been maintained in SBA loans from at least 2000, re-named as a “personal guarantee”.) A June brief...
FIRST-TIME HOMEBUYER VIDEO SERIES – DOWN PAYMENT ASSISTANCE
You may have heard of loans where you don’t have to put any money down, where the county or another entity will make the down payment for you. These are known as down payment assistance (DPA) programs. The down payment assistance can take many forms, such as a loan that will have to be paid back, or a grant that does not need to be paid back. Even though it sounds great that you don’t have to put any money down, many times the loans have higher rates and costs than if you did make a down payment. ...
FIRST-TIME HOMEBUYER VIDEO SERIES – FHA V. CONVENTIONAL LOANS
There are a couple of different types of loans that are popular for first-time homebuyers. A conventional loan requires a minimum 3% down payment, and has monthly mortgage insurance. The mortgage insurance can be removed from the payment when you have 20% equity in the home. A FHA loan requires a minimum 3.5% down payment, and has 2 types of mortgage insurance: up-front mortgage insurance which is a lump sum that is added to the loan amount, and a monthly amount that is included in your monthly mortgage payment. Typically, if you have a great credit score, the conventional...
FIRST-TIME HOMEBUYER VIDEO SERIES – CLOSING COSTS AND PREPAID EXPENSES
When you purchase a home with a mortgage, closing costs and prepaid expenses are due at closing, in addition to the down payment. Closing costs include items such as underwriting fees, processing fees, appraisal, credit report, title insurance, title escrow, and recording fees. These are the costs that are paid to obtain the loan. Prepaid expenses include one year’s homeowner’s insurance premium, a number of pro-rated months of homeowner’s insurance and real estate tax payments to fund an escrow account, and a certain number of days of interest for the loan. If you are purchasing a home that is located...
FIRST-TIME HOMEBUYER VIDEO SERIES – THE MORTGAGE PAYMENT – PITIMI
The monthly mortgage payment includes the following items, known by the acronym PITIMI: P = principal I = interest T = taxes (real estate) I = insurance (homeowners) MI = mortgage insurance The principal and interest is what you pay back to the lender. These are the monthly payments to the lender based on what you borrowed. The taxes and insurance are pro-rated amounts that are collected monthly by the lender. The lender will pay these bills when they become due from the monthly payments they collect. Mortgage insurance is collected by the lender if you put...
TITLE THEFT – WHAT YOU CAN DO
There has been an increase in title theft cases lately. Title theft is where someone forges your signature and transfers your title to someone else in exchange for money. In other words, they sell your house from under you. County recorders may not catch the forgery. Recorders will check the name of the grantor against the name of the property owner, but generally do not analyze signatures on documents or call homeowners directly to determine whether the deed is fraudulent. This can make title theft hard to detect, unless a homeowner notices the fraudulent document and acts quickly. ...