Avoid co-signing on someone else’s loan.
A new survey shows that 38% of co-signers lost money because the borrower did not make payments (or make them on time). 28% experienced a decrease in their credit score. And 26% said that their relationship with the borrower disintegrated.
In addition, credit bureaus will add the debt (of the co-signed loan) to your credit report and, in some instances, will count the debt against you if you are applying for a mortgage, a refinance or other types of loans.
Before you agree to co-sign on a loan, consider these other options first.
Co-signing on a car loan. Think about helping your child or relatives with a larger down payment instead of co-signing for a loan. If you help with a down payment and require that the loan be paid back to you, have the person sign a promissory note and make payments to you to pay off the down payment amount.
If you really do HAVE to co-sign on a car loan, make sure that you are also on the title of the car.
Co-signing on student loans. On federally guaranteed student loans, co-signers aren’t usually required. Make sure that your child maxes out their government student loans BEFORE turning to private ones.
In regard to student loans from banks or credit unions, check to see if there is a clause that releases the co-signer after the primary borrower makes a certain number of payments on time.
And, if you HAVE to co-sign student loans, have an agreement beforehand that your child will refinance (to remove your name) when they get a job.
Leasing an apartment. First-time renters often have trouble leasing an apartment without a co-signer. For a small fee, renters can hire a co-signer through LeaseLock.com or Co-signing.com.
If you have to co-sign, rent payments are generally not reported to the credit bureaus, so it won’t affect your credit score. However, if the renter defaults, the lease is a legal agreement, which could result in a judgment—which would have a huge effect on your credit score.
So, if you are planning to apply for a loan in the near future, do the math and make sure that you can still qualify with the additional “debt” that you become responsible for. Make sure that you also check your credit report every few months to make sure the primary borrower is making the payments on time.
There is an exception to this rule. If the borrower has been making the payments for 6 months to a year and have been making them on time, a lender may ask you for proof (usually cancelled checks or bank statements from the borrower) that the payments have been made by them and not you. They have the option of NOT counting the payment when qualifying you for a loan.
Are you thinking of buying or selling a home?
Have you had a bad (or oh-so) experience in working with a real estate agent in the past?
Have you ever recommended a real estate agent that you have worked with to family or friends?
The National Association of Realtors Survey of Home Buyers and Sellers in 2016 says that while 73% were “satisfied” with the real estate agent they worked with, almost 50% did NOT recommend them.
Working with a real estate agent is a two-way street. They are expected to provide certain services when you are buying or selling. But what about your responsibilities? What should you do to make sure that your experience is an awesome one for you too?
If you are thinking of buying or selling a home, please contact me so I can recommend to you a couple of great real estate agents.
I recently read an article by an appraiser — with the bottom line being “a good landscape can add value to your home, and if you are planning on selling it can reduce the number of days the home is on the market.”
It’s called “curb appeal” and it’s the way your home makes a “first impression.” While landscaping usually refers to trees, shrubs and flowers, it also includes yard decorations, fire pits, patios, decks, ponds, swimming pools and outdoor lighting.
An Appraiser usually takes the following into consideration when determining the overall value of the home:
If you’d like to spruce up your landscaping, consider hiring a professional.
They will let you know which plants to replace, which ones to trim or the best ones to add. It’s a small price to pay to increase the value of your home.
What is a comparative market analysis?
A CMA is an evaluation of recently sold homes that are within the area or location of the home that may be bought or sold. It’s usually performed by a real estate agent who has access to homes listed for sale or homes that have sold through their local MLS (Multiple Listing Service). It is not an appraisal.
What is an appraisal?
It is an estimate of the home’s market value by a licensed appraiser. A licensed appraiser has hundreds of hours of education training and has to serve an apprenticeship in order to become licensed. Real estate agents cannot perform an appraisal.
Appraisers use recent sales of homes that have sold in a certain radius around the home they are appraising. Appraisals are required by a lender to make sure that the home is worth more than the dollar amount of the mortgage loan.
If you want to purchase a home and it appraises for less than the sales price, the seller may lower the sales price or you have the option to increase your down payment, depending upon the lender requirements. The seller also has the option to cancel the deal — which means you may have to look for another home to buy.
If you are refinancing, an appraisal is almost always required too. If the value is less than your mortgage amount, you can cancel your refinance or put additional down to lower your original loan amount. Again, the lender will advise you of the dollar amount needed.
Appraisals are not an exact science — that’s why they may differ.
Changes in the market conditions (like a large company in the area closing their doors) can dramatically affect property values.
And, it doesn’t take into account things like “pricing it below market” in order to sell quickly.
The CMA will give you a “good” idea of the value of homes, but an appraisal is the document needed by lenders to ensure that there is adequate collateral for the mortgage loan.
Quick note from Lear Financial Group:
I know it is 2016 and lending has changed a lot over the last few years but there are a few things you still need to know when getting a mortgage.
1) Yes, we ask for a lot of stuff.... 2) The reason we ask for so much stuff is to prove that you are who you say you are, you work where you say you work, you have the money that you say you have, and that your past is what you said it was. 3) Why don't we just trust you? Because like a good relationship gone bad, we trusted in the past and that didn't turn out so well. (See 2008 for reference.) 4) Yes, we do this to everyone. Yes, I think you are special but in the lending game, you are no more special than anyone else and we scrutinize you all the same. 5) Why do we care so much? Well, we are lending you money. With commas. Thousands and thousands of dollars. Hundreds upon hundreds of thousands of dollars even.
So, to summarize. We need a lot. We ask a lot. But we also lend a lot. And LOVE doing so.
Question for you - if you had billions to lend - what would you require in order to lend enough money for someone to buy or refinance a home? Wouldn't you want to insure you would be repaid? I would like to think so.
We are an extension of your team when it comes to getting you in the house or refinancing to take advantage of better terms. You're the main player. We are just helping navigate the plays to get across the goal line.
Lear Financial Group
Have you ever walked into a home (either a brand new one or one that’s been around for 25 years or more) and said to yourself, “I wonder what the builder was thinking when they built this house?”
Maybe you are thinking of finally building your dream home. Or considering downsizing the one you currently own. Or need to remodel the one you currently live in.
Here are 8 things to keep in mind:
1. Have a vision of what you want your home to look like. The floor plan is just the first step in the process. There a hundreds of thousands of decisions you will need to make. Take just the bathroom – what color tile? What pattern? Will the cabinets match? Faucets? Countertops? The floor? And that’s just one bathroom!
2. Find the right people – By people, I mean an architect, a builder, sub-contractors, suppliers. Are they licensed and bonded? More importantly, can you get along with them? Do they offer suggestions? Are they difficult to deal with?
3. Visit the construction site often – Be sure that the home/remodeling is being built to your expectations. Ask questions. Make suggestions. Visiting your home every other day is recommended.
4. Building too big of a home – Don’t think about what size you need right now—but what you will need 7 to 10 years from now. A well-designed 3,000 sq. ft. home may work just as well as an ill-designed 5,000 sq. ft. home.
5. Work that you can do to reduce costs – Ask the builder what sweat equity he/she will allow you to do to help reduce costs. Painting the walls or staining the trim. Maybe you have a friend who is a licensed electrician who would charge you less.
6. Think about the upgrades – When a builder provides you with a price to build your home/remodeling, it’s usually based on “medium grade” materials. Take kitchen cabinets for example. What type, color and grade are included? Or should you pay $8,000 extra for solid maple cabinets instead? It depends on your budget and if you can find something that you like in the medium grade so you can use the money for something else. Other than you loving maple wood, there is very little resale value in upgraded cabinets when it comes time to sell. Consider only adding your MUST HAVE upgrades.
7. Think about selling your home in the future – Even if you never plan to sell your home, your descendants may have to do so. Build your home so it’s not a nightmare to sell.
8. Think about monthly mortgage payments – When you have been pre-approved for your mortgage amount there are a few things to consider.
Not only does the exterior of your home add value to your home, but it’s also the first picture potential home buyers see when you list your home for sale.
I wanted to share with you few ways to enhance the curb appeal of your home with some elbow grease, and without spending a lot of money.
Sometimes it’s obvious that you need to dedicate a weekend to cleaning up the exterior of your home.
But, to do the “deep cleaning,” you may want to rent a power washer that can clean the sidewalks and the siding of the home to remove the dirt and dust.
Next, focus on the windows. Clean them inside and out. You don’t have to buy expensive glass cleaner liquid, just use a mix of diluted detergent and vinegar in warm water. (Google to find several low-cost window cleaning solutions that you can make at home.) Instead of paper towels, use newspapers to dry the windows.
Instead of painting the entire exterior of your home, focus on the trim, shutters and doors. Focus on accent colors that will make your windows and doors “pop.”
No need to replace it (unless you really hate it). You may want to repaint it. If it’s a wooden door, you may want to consider stripping off the old finish, staining it with a wood stain color and sealing it with a clear finish.
Consider adding molding around the door frame to make the front door seem bigger.
Replace your house numbers to make them more noticeable — which may cost you about $5 per number.
Add a wreath or hang seasonal decorations on or near your door to give it that homey feeling.
Update Outside Light Fixtures
You could clean the glass and remove the bugs that accumulate there. But another option is to replace the light fixtures — especially if the metal is pitted and dull.
You can usually find sconces for around $20 each at home centers or online.
However, make sure that the new fixtures have the same mounting system or you’ll spend $$ hiring an electrician.
If you don’t want to replace them, buy some spray paint and paint them black, aluminum, gold or an accent color. A can of spray paint is about $10.
If you have a front porch and want to use some patio furniture, it’s best to minimize the amount you place there. Too much furniture makes it look crowded. You may want to replace faded cushions or pillows with colorful ones that accent your house.
Some additional updates…
While these suggestions may cost you a little more money, here are some other updates to consider:
There are a lot of misconceptions about what information (about you) becomes part of your credit report.
Some of it is “urban legend” — passed on from person to person — but not necessarily true. So here are 7 of them that I’d like to clear up for you.
Also, by knowing your credit score, by knowing what’s in your credit file, you can avoid working with unscrupulous lenders who tell you that your credit score is “low” in an attempt to charge you a higher interest rate or unfavorable terms.
You decide it’s about time that you sell your current home.
You raised your family there. You remember the friends, the parties, the conversations, the memories. The truth is that when it comes to selling your home, it’s a financial decision AND an emotional one, too.
However, when it comes to cashing in on your most valuable asset, there are emotional pitfalls that you may want to avoid.
While I totally understand the emotional attachment that you may have to your home, think about it this way—when you buy your next home, you’ll be making new memories, too!
Oh, and one last thing — before you accept ANY offer on your home, be sure to call Lear Financial Group at 214-869-7339 be pre-approved beforehand because it could be a disaster if you sell your home — and are not able to be approved to buy another one.
I’m positive that you know how important it is to have a high credit score when buying a home. But keeping that credit score high is just as important, because it can impact the price you pay for things that you may not be aware of.
Refinancing Your Home: If interest rates suddenly drop, you may not be able to take advantage of the payment savings if your credit score has dropped significantly.
If you have an FHA loan, the government has lowered the mortgage insurance premiums (MIP) and you could possible save some money by refinancing your loan now.
Credit Cards: If your credit card company provides you with a credit score posted on your monthly statement, there is a twofold reason for that. First, they want you to know what it is to help you maintain a higher credit score. Secondly, it helps THEM keep track of decreasing credit scores too. When you read the fine print, you’ll discover that they have the right to increase your interest rate if your credit score decreases to a certain level —or if you’ve missed a few payments.
Auto Loans: The rates and payments you see on TV are reserved for those who have the highest credit scores. The auto industry says that less than 20% of car buyers qualify for the lowest payment and terms.
Auto and Life Insurance Policies: You guessed it. The premium you pay is also based on your credit score. They may use a different credit scoring system than the one used when you purchased your home. But they usually get their information from the major credit bureaus too.
Cell Phone Companies: Every time you sign up for a new contract, cell phone companies will run a credit report. They want to make sure that you will pay your bill. You may not qualify for some of the promotions they run due to a lower credit score.
Utility Companies: They will check your credit, and while the rates you pay will be the same as everyone else, you may have to pay a higher deposit.
If you’d like to learn about different ways to increase your credit score, please reply to this email so we can set up a time to talk, or call me with your questions.
Lear Financial Group LLC.
You go to the checkout line and I’m sure the sales clerk has asked you, “debit or credit?”
Using a credit card has its advantages over using a debit card. One is that if you have a “rewards” card, you built up points for future use. Another is that it’s easier to “dispute” a credit card charge and have it removed from your bill — versus a debit card where the money is already taken out of your account.
However, I recently read an article where the author stated that there are five things that you should NEVER put on your debit card, and I wanted to share that with you.
Have you ever had problems getting your money back after using a debit card?
Have you ever wondered if the extra principal payment you made was properly applied to your mortgage loan balance? How about your escrow account – how was that dollar amount figured? Or do you think you were erroneously charged a late fee?
The Consumer Finance Protection Bureau has recently issued rules requiring the company where you made your mortgage payment to respond to your inquiry within a certain amount of time.
But they also suggest certain things you should do if you have questions about your current mortgage. Regardless if you phone or send a letter, here is the information the servicing company will need from you before they are required to respond:
Here’s what to expect from the servicing company when you make an inquiry:
If your loan has been transferred to another mortgage servicing company, you have a time limit of 12 months to inquire about errors. After the one-year time period, they are not required to investigate your inquiry.
For more information about mortgage servicing rules, visit ConsumerFinance.gov.
What the Qualified
Mortgage Rules Mean to You!
I’m pretty sure
that within the last few months, you’ve either read about or heard the news
about the “qualified mortgage rules” that the Consumer Finance Protection
Bureau (CFPB) has implemented to make sure that home loans (both purchase and
refinance) meet certain criteria.
Even if you are not
in need of a mortgage loan right now, I’d like to share with you 6 things
you’ll need to know about when it’s time for you to obtain a new mortgage.
The whole goal is
to avoid the mortgage crisis that occurred a few years ago. If you are thinking
of buying another home or refinancing, let’s talk—because the rules have
The tips I’m about to share with you are basically for any time of the year—but here are some of the things you can do that will save you money in the long run.
One last thing. When you bought your home, you probably had a home inspection done at that time. You might want to consider paying for another home inspection every couple of years. They are trained experts who can give you feedback on the little things that need to be fixed—before they become big and expensive problems later.
If you are interested, I know several good home inspectors. Please let me know if you’d like a recommendation.
If you’ve been through the process of buying a home, you know how complicated the process can be. If you are buying your first home, well, it can be even more confusing. Here’s a short version of the 7 essential steps involved in buying a home. This does not cover everything, but I’ve created it to give you an overview of what to expect.
Step 1 – Making the offer and negotiating the contract
Step 2 – Getting a mortgage
Step 3 – Inspecting the home
Step 4 – Reviewing the appraisal
Step 5 – Shop for homeowners insurance
Step 6 – Viewing the home before closing
Step 7 – Closing the loan
Following these 10 steps can honestly make or break you when it comes to closing on your mortgage loan!
When most people decide they are ready to buy a home they usually start by surfing a few homes on line or looking up city or neighborhood data or maybe drive around and check out new model homes.
I highly recommend taking a little time so you are prepared to obtain mortgage financing. A few steps ahead of time can save you thousands in interest over the life of the loan and may even be a deal killer if you are not prepared.
Bank Statements-be prepared to explain any large or irregular deposits to your lender:
This is usually pretty easy but will always be asked in today's lending environment.
Do not go out and open up any new accounts or apply for any type of new credit:
In today's lending environment any and all credit inquiries have to be explained to the mortgage lender. There are processes now in place that require the lender to pull credit the day before closing to see if any new accounts have been opened. If there have been you must include those new debts in the debt to income calculation. If you just barely qualified before and there are is a new account opened it could cause your loan to be turned down.
Make sure you don't cosign for any new accounts for a friend or family member:
When you cosign for a car or credit card you are on the hook incase anything happens with that account. You also more than not will have to include this new debt into your debt to income ratio when qualifying for a mortgage loan.
I always counsel my clients on going to www.annualcreditreport.com for a free copy of your credit report. You can also pay a small fee to get your scores. By doing this you can make sure everything is reported accurate on your credit report and handle any issues prior to getting prequalified.
If there are any issues keep in mind it could take anywhere from 30-60 days to get them corrected. You can always fill out the dispute forms but there needs to be a valid reason for the dispute other than I just want it off of my credit report because it's bad! If you are working with a mortgage professional (I highly recommend Lear Financial Group if you are in Texas) he or she can help accelerate the updating process by doing what's called a rapid rescore. Most mortgage professionals work with credit repair companies. Make sure you do some research on any company you are considering using.
If you have any collections on your credit report I would advise having your mortgage advisor call on your behalf to have these paid. Just paying a collection doesn't really help your score too much..but if your lender can negotiate a payment and removal of the item it will greatly help raise your credit score.
There is a pretty quick way to raise your credit scores which is carry no more than a 30% balance of what your high credit is on any account. If you have the means to pay a few or all of your accounts down you can put yourself in the best position to qualify for the most attractive rates offered from mortgage lenders.
I know this can be overwhelming to most people so the easiest way to handle this is to call your mortgage advisor (once again I recommend Lear Financial Group) and tell them you are considering buying a home and want to make sure you have all your ducks in a row when it comes time to qualify for mortgage financing.
I wanted to share this information mainly for consumers out there who may not be aware of this little tip to help pay off their mortgages sooner. When doing a loan for a client here in Texas, I try to go over this information with them and make sure they understand how just a little can cut years off of their loan term.
Have you ever wanted to pay of your mortgage sooner..well here is some information on how to do so.
Pay every 2 weeks instead of 1 time per month this will cut down on your interest (APR) as it is configured by your balance monthly times 12 , not 24 so paying 1/2 the first 2 weeks of the month and the other 1/2 the last 2 weeks will cut your interest down and put more of your payment towards principal ,while your payment amount stays the same .
Also by paying any extra amount you find to be (affordable) towards principal cuts your time considerably, use this trick as well as the aforementioned payment terms, and you can cut your mortgage down to zero in 12 to 15 years instead of 30 years. There should be a space on your mortgage statement that asks for an additional principal as well as one for interest and escrow never pay additional interest as this does nothing for your balance where as the additional principal cuts both the amount you owe on the mortgage and cuts down your interest amortization as well. The other advantage is your PMI if any will come off sooner due to additional equity your building if you continue to pay the same as with the PMI instated you will pay off even faster.
I hope this information is helpful and saves you guys some good money and allows you to pay off your loan a little or ALOT sooner. I am always available to help with any mortgage questions.
Recently, I’ve had clients ask me about how to prepay on their mortgage. Of course, if you have an extra $100 per month, you may just want to add that to your monthly payment.
But there’s another way…by rounding up your mortgage payment.
So, let’s say that your mortgage payment is $957. Consider paying $1000 (or $43 more per month).
Here’s the dealio. You probably won’t notice the difference in your day-to-day expenses, but over the lifetime of your loan, the extra money will make a huge difference in decreasing your principal balance and save you interest. Paying an extra $43 per month adds up to $516 per year — which decreases the dollar amount you owe on the loan.
Depending on your interest rate and balance owed, you’ll also save money towards interest payments because the dollar amount of interest that you pay is directly related to your principal balance owed.
There are other ways to prepay your mortgage. You could contribute a lump sum once a year. Or make 13 payments a year (instead of 12).
If you’d like to know the difference that it makes in your mortgage, please let me know and I’ll provide you with an amortization schedule.
Do you remember when you applied for a mortgage loan?
Then after the closing you got a notice to make your mortgage payments to another company?
Well, this company is called a “mortgage servicer,” meaning that they have been assigned to collect your monthly payments and, if you have an escrow account, pay your taxes and insurance.
I wanted you to know that the Consumer Finance Protection Bureau has some new rules when it comes to calling or writing for information about your account.
Prior to this, there were no “rules” and servicers could take their sweet time (even if they answered at all) to answer your questions and make corrections to your account.
Here’s what they must do now — regardless if you write a letter or contact them by phone or email:
If your mortgage servicing company does not follow the above rules and dates, here’s the contact information to complain to the Consumer Finance Protection Bureau.
What Real Estate Agents Need to Know about the Qualified Mortgage Rules!
The Consumer Finance Protection Bureau has created a Qualified Mortgage Rule (QM) which goes hand-in-hand with Ability-to-Repay rules (ATR).
In a nutshell, here’s a simplified explanation of what QM is all about and how it will affect you and your borrowers when applying for a mortgage loan starting January 10, 2014.
The Mandatory Product Features for all Qualified Mortgages (QMs) are as follows:
Points and fees are not supposed to exceed 3% of the loan amount based on the following:
* The 3% limit is for loans that are $100,000 or higher
* $3,000 for a loan amount between $60,000 and $99,999
* 5 percent of the total loan amount between $20,000 and $59,999
* $1,000 for a loan amount between $12,500 and $19,999
* 8 percent of the total loan amount for loans less than $12,500
No risky features are allowed, such as negative amortization, interest-only, or balloon loans
Maximum loan term must be 30 years or less.
The three main categories of a QM loan are as follows:
1. General Definition of QM Loans – any loan that meets the product feature requirements with a debt-to-income ratio of 43% or less
2. Types of QM loans – FHA, VA, Conventional (Fannie & Freddie) and USDA
3. Small Creditor Category of QM loans – If a mortgage company, small community bank or credit union that has less than $2 billion in assets originates 500 or fewer first mortgages per year AND holds the loan in their portfolio, the 43% does not apply, but they must still verify the borrower’s ability to repay the loan.
What does this mean to you and your clients?
* Underwriting will be more strict
* More documentation will be required
* Pre-approvals become MORE important than ever before
* Re-verification of income, credit and assets will be required before closing
Some lenders will be offering Non-Qualifying Mortgage loans, but you can be assured that the lender will make sure that all Ability-To-Repay requirements are met. An example of a Non-QM loan would be a Jumbo Mortgage with Interest Only payments.
What would you like to know about Qualified Mortgages or the Ability-to-Repay Rules?