Two approvals take place when you apply for a loan. Lenders review both your credit and income, and the collateral. The collateral must be sufficient for the loan to be approved. What if the collateral is a condominium? When the collateral is a condominium, there is increased scrutiny by the lender. This is due to the fact that a condo typically has shared walls, ceilings, or floors, and there is more risk to the lender because the loan is somewhat dependent on the status of the units surrounding the condo. Thus, lenders will ask questions of the Homeowners Association (“HOA”)...
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WHAT DOES THE CLOSING DISCLOSURE CONTAIN?
The CD also contains the loan amount, interest rate, monthly payment, and amount due at closing. The Closing Disclosure (“CD”) is the latest version of the costs and prepaid expenses on the loan. The numbers on the CD are intended to be the final figures for closing. The CD must be acknowledged (typically by email) by the borrower at least 3 days prior to the date the loan documents are signed; this gives the borrower time to review the numbers prior to going to the signing, and to eliminate surprises at closing. If you have questions on a CD you...
May 10, 2022May 10, 2022
THE MARKET’S REACTION/OVER REACTION TO INFLATION
Actually, the market reacts to two inputs for inflation: the economic numbers themselves, primarily CPI and PPI, and also the Fed’s actions, either reactive or proactive, to the inflation metrics. Current Market Drivers The US labor market is tight and supply chains stay stressed. The Russian-Ukraine war exasperates commodity pricing. The financial system stressed from sanctions against Russia. US inflation setting records. March CPI over 8%; PPI over 11% The Fed under pressure: QE has turned to QT. The inverted yield curve persists with the different debt markets responding in an asynchronous fashion. Results: volatility. But to...
April 29, 2022April 29, 2022
WHY USE A RESIDENTIAL LOAN TO FINANCE A BUSINESS?
How can you use a residential loan to finance a business? And, why would you? Business loans tend to have higher rates and costs than residential loans, and may be adjustable. The residential loan can be fixed. For instance, if you have equity in your home, or other residential properties, you could refinance and take cash out of one of these properties to purchase the business or investment. The lien would be on your residential property, but the loan terms may be more favorable than the commercial loan. We had a scenario where a client was looking...
April 27, 2022April 28, 2022
PROPERTY VALUATIONS CAN BE MISLEADING
An appraisal is typically required when applying for a mortgage. Many people will look to the price per square foot when valuing a home, however, this valuation could be misleading. If you are purchasing a home, the lender will base the loan amount off of the lesser of the sales price or the appraised value. Appraisers look to comparable sales in the neighborhood when valuing a property; they do not focus on the price per square foot alone. Example: If you are purchasing a 2-car garage 2,000 square foot home for $400,000, appraisers will look for other sales of 2-car...
April 23, 2022April 23, 2022
STEPS TO GET STARTED
Are you considering homeownership? Are you wondering how to begin the process? Here are some steps to get started: • First and foremost, check your credit. It’s best to know your score in advance to get a good loan. Student loans, car loans, and credit cards are all items that are considered in determining your credit score, make sure you pay these each month when they become due (for credit cards, maintain a balance no higher than 30% of the credit limit, this will help your credit score). • Save for a down payment: There are many loan products out...
April 21, 2022April 21, 2022
ARE YOU GRADUATING?
Are you graduating from college? Are you thinking about becoming a homeowner? Many graduates feel they may not qualify to purchase a home. College education is more expensive than ever and many students leave school with substantial student loan debt. Let’s take a look at how lenders consider student loan debt when underwriting a mortgage application. If the monthly payment for the student loan appears on the credit report, it will be used in calculating the debt-to-income ratio. If the credit report does not reflect the correct monthly payment, the undewriter may use the monthly payment that is on the...
April 19, 2022April 19, 2022
SHOULD YOU CONTINUE TO RENT OR COMMIT TO BUYING A HOME?
Nowadays many people question whether they should continue to rent or commit to buying a home? Will the mortgage payment be less than the rent payment? Most people do a financial analysis to see if this makes sense. Whether yes or no, they should consider that the principal portion of the mortgage payment is used to build equity in the home, while the rent payment will go to the landlord and will not be used to build any equity for themselves. Over time, hopefully, they will build equity in their home so that they can either sell and make a...
April 14, 2022April 15, 2022
WAYS TO OVERCOME DEFICIENCIES
Did you know that if a home has water spots on ceiling tiles, broken windows, is missing a stove, or missing cabinets or countertops, the lender may not lend on the property? There may be ways to overcome these deficiencies and still get a loan on the property. There are many properties that are very well priced, but they are in disrepair or missing pertinent household items. If this is the case with your property, make sure you work with your lender. This post will discuss some of these options. One way is for the parties to negotiate the repair...
April 12, 2022April 12, 2022
COMMERCIAL BRIDGE LOANS
One of the loan types that has come into demand recently is a bridge loan. They’re typically used in situations where there’s stress in the situation resulting in a bargain element in the pricing, and time is a material factor. (Our current environment is causing a lot of this.) We have a fair amount of discussion about the terms and conditions of these loans, a lot of it dispelling misinformation floating around the market. We continually get calls & emails from lenders looking for deals to fund. This is normal – the pulse of our business. We can arrange funding...
April 10, 2022April 10, 2022