Lehigh Valley Mortgage & Real Estate: 5 Factors That Decide Your Credit Score

Lehigh Valley Mortgage & Real Estate: 5 Factors That Decide Your Credit Score

Credit scores range between 200 and 800, with scores above 620 considered desirable for obtaining a mortgage. The following factors affect your score:

1. Your payment history. Did you pay your credit card obligations on time? If they were late, then how late? Bankruptcy filing, liens, and collection activity also impact your history.

2. How much you owe? If you owe a great deal of money on numerous accounts, it can indicate that you are overextended. However, it’s a good thing if you have a good proportion of balances to total credit limits.

3. The length of your credit history. In general, the longer you have had accounts opened, the better. The average consumer’s oldest obligation is 14 years old, indicating that he or she has been managing credit for some time, according to Fair Isaac Corp., and only one in 20 consumers have credit histories shorter than 2 years.

4. How much new credit you have. New credit, either installment payments or new credit cards, are considered more risky, even if you pay them promptly.

5. The types of credit you use. Generally, it’s desirable to have more than one type of credit — installment loans, credit cards, and a mortgage, for example.

For more on evaluating your credit go to www.MyFico.com

Reprinted from REALTOR® magazine (REALTOR.org/realtormag) with permission of the NATIONAL ASSOCIATION OF REALTORS®. Copyright 2008. All rights reserved.

Lehigh Valley Mortgage and Real Estate: Specialty Mortgages: Risk and Rewards

Lehigh Valley Mortgage and Real Estate: Specialty Mortgages: Risks and Rewards

In high-priced housing markets, it can be difficult to afford a home. That’s why a growing number of home buyers are forgoing traditional fixed-rate mortgages and standard adjustable-rate mortgages and instead opting for a specialty mortgage that lets them “stretch” their income so they can qualify for a larger loan.

But before you choose one of these mortgages, make sure you understand the risks and how they work.

Specialty mortgages often begin with a low introductory interest rate or payment plan — a “teaser”— but the monthly mortgage payments are likely to increase a lot in the future. Some are “low documentation” mortgages that come with easier standards for qualifying, but also higher interest rates or higher fees. Some lenders will loan you 100 percent or more of the home’s value, but these mortgages can present a big financial risk if the value of the house drops.

Specialty Mortgages Can:

•    Pose a greater risk that you won’t be able to afford the mortgage payment in the future, compared to fixed rate mortgages and traditional adjustable rate mortgages.
•    Have monthly payments that increase by as much as 50 percent or more when the introductory period ends.
•    Cause your loan balance (the amount you still owe) to get larger each month instead of smaller.

Common Types of Specialty Mortgages:

•    Interest-Only Mortgages: Your monthly mortgage payment only covers the interest you owe on the loan for the first 5 to 10 years of the loan, and you pay nothing to reduce the total amount you borrowed (this is called the “principal”). After the interest-only period, you start paying higher monthly payments that cover both the interest and principal that must be repaid over the remaining term of the loan.

•    Negative Amortization Mortgages: Your monthly payment is less than the amount of interest you owe on the loan. The unpaid interest gets added to the loan’s principal amount, causing the total amount you owe to increase each month instead of getting smaller.

•    Option Payment ARM Mortgages: You have the option to make different types of monthly payments with this mortgage. For example, you may make a minimum payment that is less than the amount needed to cover the interest and increases the total amount of your loan; an interest-only payment, or payments calculated to pay off the loan over either 30 years or 15 years.

•    40-Year Mortgages: You pay off your loan over 40 years, instead of the usual 30 years. While this reduces your monthly payment and helps you qualify to buy a home, you pay off the balance of your loan much more slowly and end up paying much more interest.

Questions to Consider Before Choosing a Specialty Mortgage:

•    How much can my monthly payments increase and how soon can these increases happen?
•    Do I expect my income to increase or do I expect to move before my payments go up?
•    Will I be able to afford the mortgage when the payments increase?
•    Am I paying down my loan balance each month, or is it staying the same or even increasing?
•    Will I have to pay a penalty if I refinance my mortgage or sell my house?
•    What is my goal in buying this property? Am I considering a riskier mortgage to buy a more expensive house than I can realistically afford?

Be sure you work with a REALTOR® and lender who can discuss different options and address your questions and concerns!

Learn about the NATIONAL ASSOCIATION OF REALTORS® Housing Opportunity Program at http://www.REALTOR.org/housingopportunity. For more information on predatory mortgage lending practices, visit the Center for Responsible Lending at http://www.responsiblelending.org.

Reprinted from REALTOR® magazine (REALTOR.org/realtormag) with permission of the NATIONAL ASSOCIATION OF REALTORS®. Copyright 2008. All rights reserved.

Lehigh Valley Homes and Real Estate: 5 Property Tax Questions You Need to Ask

Lehigh Valley Homes and Real Estate: 5 Property Tax Questions You Need to Ask

1. What is the assessed value of the property? Note that assessed value is generally less than market value. Ask to see a recent copy of the seller’s tax bill to help you determine this information.

2. How often are properties reassessed, and when was the last reassessment done? In general, taxes jump most significantly when a property is reassessed.

3. Will the sale of the property trigger a tax increase? The assessed value of the property may increase based on the amount you pay for the property. And in some areas, such as California, taxes may be frozen until resale. In Lehigh and Northampton County areas, Re-assessments are NOT triggers by the sale of a property.

4. Is the amount of taxes paid comparable to other properties in the area? If not, it might be possible to appeal the tax assessment and lower the rate.

5. Does the current tax bill reflect any special exemptions that I might not qualify for?

Reprinted from REALTOR® magazine (REALTOR.org/realtormag) with permission of the NATIONAL ASSOCIATION OF REALTORS®. Copyright 2008. All rights reserved.

Lehigh Valley Real Estate & Homes – Common TOP 5 First-Time Home Buyer Mistakes

Lehigh Valley Real Estate & Homes – Common First-Time Home Buyer Mistakes

1. They don’t ask enough questions of their lender and end up missing out on the best deal.

2. They don’t act quickly enough to make a decision and someone else buys the house.

3. They don’t find the right agent who’s willing to help them through the homebuying process.

4. They don’t do enough to make their offer look appealing to a seller.

5. They don’t think about resale before they buy. The average first-time buyer only stays in a home for four years.

Source: Real Estate Checklists and Systems, http://www.realestatechecklists.com

Reprinted from REALTOR® magazine (REALTOR.org/realtormag) with permission of the NATIONAL ASSOCIATION OF REALTORS®. Copyright 2008. All rights reserved.

 

Lehigh Valley Homes & Real Estate – Tips for Home Buying – Out of Pocket Expenses, What to Expect.

Lehigh Valley Homes & Real Estate: Tips for Home Buying – Out of Pocket Expenses when Buying a Home – What to Expect?

 

 So, what should you expect when Buying a Home in the Lehigh Valley?

Depending on What “Type” of Home you purchase will depend on the out of pocket expenses you may have as well as if your plan on getting a loan or paying cash. But, in most cases there are “standard” out of pocket expenses you will have and I will even give you the time frame as to when you will need this CASH on hand. 

Note: A good Rule of Thumb on Closing Costs if you are getting a loan is 6% of the purchase price – $100,000.00 home price would be $6000.00 in closing costs.

Standard out of Pocket Expenses for the purchase of a Residential Home

1) Making your offer – Your Good Faith Deposit – This Should be as much money as you can put down – nothing less than $1000.00.  Unless you are working with a Down Payment and Closing Cost Assistance Program like the Lehigh Valley HOOP Program or PHFA. This is proof that you do not have lots of money saved or in the bank and the seller understands the lower down money with your offer.

Once your Home Offer has been accepted and signed by the Seller

2) Home Inspection Fee within 5 days of your offer getting signed, in my opinion – Nothing less than $350.00 up to $600.00 (if the home has well and septic and is vacate…this will increase the cost up to and including $600.00) If the homes you are looking at have Public water and sewer and you get a Home Inspection and Termite..You are looking at about $350.00 to $400.00. Depends on what Home Inspection Company you use.

3) Appraisal Fee – This must be paid at your application appointment within the first 10 days of your offer getting accepted. This can cost on Average of $475.00.  This is one major reason why you should have your home inspection done within the first 5 days.  This way if you find out something that is major on the inspection and the seller will not negotiate with you..You are not wasting another 475.00 on an appraisal. Verify with your Mortgage Company

4) First Full year from Homeowners Insurance – This must be paid at least 2 weeks prior to settlement day.  Settlement is Typically 30 to 45 days from the time your offer get’s signed.  But, if you are purchasing a Foreclosure, then typically it may take 60 days to close. Short Sales are another story. Estimate Annual Cost: Average $700.00 per yr but depends on coverage.

5) That’s it – Then you will bring the rest of the Down Payment for your Loan that you will be getting to settlement.  Example: FHA Loan requires you put 3.5% down – $100,000.00 purchase price you would need a total of $3500.00 – $2000.00 down when you make your offer and then the remaining $1000.00 and ALL closing costs the day of settlement.  NOTE: Rule of Thumb for closing costs are 6% of the purchase price. But, it will depend on the home purchase price and the property taxes for the home…so, you need to get an estimate on each home that interests your before you count on anything. This will come from your Real Estate Agent & Mortgage Officer.

If you are interested in getting a FREE Home Buing Estimate tailored to your needs…just contact me via click, call or text.

You will get the following answers.

1)  Estimate on your Downpayment FOR different types of loans
2) Est closing costs
3) Est property taxes based on the Home type and area you plan to purchase in
4) The monthly payment…for the loan only and also including the taxes and insurance.
5) If you need to sell first – I can work up your net proceeds based on your Estimated Home Value too

You can not make GOOD decisions WITHOUT GOOD information.

Let me guide you.

When it comes to CASH out of Pocket there should be NO Surprises

 

Lehigh Valley Real Estate FREE ONLINE WORKSHOPS for Home Buyers and Seller’s

Lehigh Valley Real Estate Home Buying & Selling FREE ONLINE Workshops – LIVE Chat for Questions and Answers during all Workshops


Online Workshop Topics

10 Secrets to Sell Your Home Fast…Even in a Down Market!

Thursday 09:00 PM  click here to join now

20 Things You Must Know Before Buying a Home

Tuesday 09:00 PM  click here to join now

25 Things You Must Know Before Applying for a Mortgage

Thursday 09:00 PM  click here to join now

5 Ninja Strategies to Help You Negotiate Like a Pro!

Wednesday 12:00 PM  click here to join now

8 Big Insider Secrets to Building Your Credit Score Fast!

Thursday 09:00 PM  click here to join now

Divorcing and Home Ownership: How To Avoid The Nine Biggest Mistakes

Tuesday 09:00 PM  click here to join now

The Best Kept Mortgage Secret: USDA Guaranteed!

Tuesday 09:00 PM  click here to join now

The Insiders Guide to Reverse Mortgages!

Wednesday 12:00 PM  click here to join now

Zero Down! Fact or Fiction? The Truth About VA Loans!

Tuesday 09:00 PM  click here to join now

Here you will find a growing library of workshops that you may view completely free of charge which will provide valuable information that you will need as you prepare for your home purchase.

There is nothing being sold here so view them all at your earliest  convenience.

A New Loan to Purchase Foreclosures – HomePath Mortgage

Lehigh  Valley Home Buyer Loans for TODAY not YESTERDAY. A NEW Loan to Buy  Foreclosures!  MAY 1ST 2010 Deadline – Use with The Home Buyer Federal Tax Credit.

THIS LOAN IS OPEN TO OCCUPIED Home Buyers and Investors!  Holly COW – Investors normally needs to put down 20%, right!!!! come on people…this is GREAT!

WOW! There is a new Mortgage Loan in town.  He is only staying local for Home Purchases that close on or before May 1, 2010.  BUT, That’s okay because to use the Tax Credit you need to be under agreement by April 30, 2010.  So, all agreements should be locked in with your Mortgage Lender by April 30th….Let’s take a look at how much money YOU WILL BE SAVING!!!!!

I am soooooo excited!

If you get an FHA Loan – 3.5% Down – This is the most common loan because it has the least restrictions, you can purchase a home anywhere in the Lehigh Valley OR EVEN PA FOR THAT MATTER.

Now with FHA – These loans have special Appraisals that cost you about $400 to 475.00 to get them and they will NOT allow you to buy a home that has chipping or pealing paint in a home that was built prior to 1978…if you are at a price range of 200,000.00 and under there is a really good chance you will be purchasing a home built prior to 1978….if you live in the Lehigh Valley Area.

WITH the NEW Temporary Fannie Mae HomePath Mortgage Program – You can purchase a Fannie Mae owned FORECLOSURE, with 3% down which can save you bucks on the downpayment (100,000.00 loan for FHA $3500.00 down – Same loan with 3% down is only $3000.00) So, you say what the heck?…$500.00 is NOT that much money? Yes, IT IS! With this $500.00 instead of using it for down payment it can be used for De-winterizing the property, Turning the Utilities on for the Home Inspecton and ordering the CO inspection. These are the major reasons why Home Buyer’s can not afford to purchase a Foreclosed Home due to these extra out of pocket expenses.  PLUS…THAT’S NOT IT! Fannie Mae will also give YOU 3.5% toward your down payment and closing costs!  Holly COW! on a $100,000.00 purchase the bank will give you $3,500.00 toward your down payment and closing costs or this money can but used to purchase appliances for your new home…one of the items that are usually missing from a Foreclosed Property! yeah, the previous seller usually takes the appliances with them, wouldn’t you?. Well, this can cost a New Home owner $3500.00 or more and HERE it is being paid for YOU! Awesome deal!!!!

So, now on a $100,000.00 property that is $4000.00 in cash that a Home Buyer can get on a Foreclosed Home….Let’s Review, FHA Loan gives you NOTHING and MAKES you put down an extra 5% and you can not even purchase many foreclosures due to the chipping and pealing paint!

NOW, Let’s see what local lenders are going to get on board with helping offer this program to home buyers.

So, Far I noticed on the following Mortgage Lender List of our Lehigh Valley Popular Direct Lenders so far…showing on the Fannie Mae Website is Wells Fargo- who are the other players?

Okay, so HERE are some links to help
Fannie Mae News Release Article 1-29-10
HomePath Financing Program Info

Don’t Forgot…Learn BEFORE you Buy your next home!
www.LehighValleyRealEstate.TV

Buying a Home – Out of Pocket Expenses, What to Expect.

Lehigh Valley Homes & Real Estate: Out of Pocket Expenses when Buying a Home – What to Expect?

When it comes to CASH out of Pocket there should be NO Surprises!

So, what should you expect when Buying a Home in the Lehigh Valley?

Depending on What “Type” of Home you purchase will depend on the out of pocket expenses you may have. But, in most cases there are “standard” out of pocket expenses you will have and I will even give you the time frame as to when you will need this CASH on hand.

Standard out of Pocket Expenses for the purchase of a Residential Home

1) Making your offer in the Lehigh Valley – Your Good Faith Deposit – This Should be as much money as you can put down – nothing less than $1000.00.  Unless you are working with a Down Payment and Closing Cost Assistance Program like the Lehigh Valley HOOP Program or PHFA. This is proof that you do not have lots of money saved or in the bank and the seller understands the lower down money with your offer.

Once your Home Offer has been accepted and signed by the Seller

2) Home Inspection Fee in the Lehigh Valley – within 5 days of your offer getting signed, in my opinion – Nothing less than $350.00 up to $600.00 (if the home has well and septic and is vacate…this will increase the cost up to and including $600.00) If the homes you are looking at have Public water and sewer and you get a Home Inspection and Termite..You are looking at about $350.00 to $400.00. Depends on what Home Inspection Company you use.

3) Appraisal Fee in the Lehigh Valley – This must be paid at your application appointment within the first 10 days of your offer getting accepted. This can cost on Average of $475.00.  This is one major reason why you should have your home inspection done within the first 5 days.  This way if you find out something that is major on the inspection and the seller will not negotiate with you..You are not wasting another 475.00 on an appraisal. Verify with your Mortgage Company

4) First Full year from Homeowners Insurance in the Lehigh Valley – This must be paid at least 2 weeks prior to settlement day.  Settlement is Typically 30 to 45 days from the time your offer get’s signed.  But, if you are purchasing a Foreclosure, then typically it may take 60 days to close. Short Sales are another story. Estimate Annual Cost: Average $700.00 per yr but depends on coverage.

5) That’s it – Then you will bring the rest of the Down Payment for your Loan that you will be getting to settlement.  Example: FHA Loan requires you put 3.5% down – $100,000.00 purchase price you would need a total of $3500.00 – $2000.00 down when you make your offer and then the remaining $1000.00 and ALL closing costs the day of settlement.  NOTE: Rule of Thumb for closing costs are 6% of the purchase price. But, it will depend on the home purchase price and the property taxes for the home…so, you need to get an estimate on each home that interests your before you count on anything. This will come from your Real Estate Agent & Mortgage Officer.

The Home Inspection: 4 Things Buyers and Sellers should Know

Lehigh Valley Homes & Real Estate – The Home Inspection 4 Things Buyers and Sellers should know – When selling a home in Allentown, Bethlehem, Easton or the surrounding area..you should be prepared when it comes to the home inspection.

Tips for Lehigh Valley Buyers and Sellers about the Home Inspection.

This information will apply to you ONLY If you plan on working with a Real Estate Agent to buy and or sell a home in the Lehigh Valley PA area.  If you plan on selling your home as a For Sale By Owner..this may not apply to you. This ONLY applied to those who will be using the PA State regulated Residential Standard Agreement of sale for the Sale of Real Estate.

These Tips will help Buyer’s Make stronger offers that will stand up against other competing offers and give Seller’s ideas of key areas that they should consider with negotiating the offer they get on their home. In my opinion these Tips are beneficial for the buyer and the seller.

1) Buyers & Sellers – You have two options when negotiating the Home Inspection condition of the agreement of sale.

OPTION 1: Says “Mr. Seller I am a smart buyer and I am going to get a home inspection and no matter what the home inspection report says, I have the right to walk away and get my deposit money back”

OPTION 2: Says “Mr. Seller I am a smart buyer and I am going to get a home inspection and no matter what the home inspection report says, I will be forced to negotiate with you first BEFORE I walk away and get my deposit money back”

MY Opinion: Option 2 keeps everyone communicating and while the intentions of both sides is for the buyer to buy and the seller to sell…this is just a much better way to sign an agreement of sale with a home inspection condition in my eye’s.

2) Buyer’s & Seller’s – When the offer is being negotiated be familar with the Home Inspection Exclusion Clause area of the Agreement of Sale…you should be keeping in mind if the home is being listed and sold with the roof needing to be replaced as an example or the buyer knows that the Furnance is at it’s end of life and they plan on replacing it and this is the reason for their offer at lower than current market value…items that are not being considered to be conditioned on the home inspection should be written as an exclusion in the home inspection condition section.  This is really important when negotiating…because if a seller is going to give a buyer a large discount due to replacing the roof or doing any major mechanical items…then the buyer comes back and says..after the home inspection..well, the inspector says the roof needs to be replace…anything that is NOT in writing is NOT in writing.  Keeps everyone honest and also makes a buyer’s offer stronger against other competing offers…because very few people use the exclusion field of the Agreement of Sale.  I have beat many competing offers due to adding exclusions to this area.

3) Buyer’s & Seller’s – You should know that there are a few different types of inspections that will be conducted the home for the buyer during the execution of the agreement of sale. Which can cause reasons for re-negotiations 2 to 3 times over before settlement. There may will be the following inspections on the home depending on the Home Buyers Type of Mortgage, The inspection conditions requested by the buyer, Home Insurance Company selected, the Muncipality the home is located in.

Who may inspect the home which can cause a reason for future negotiations due to repair requests

1) The local municipality for a CO resale inspection
2) The Typical Home Inspector
3) The Mortgage Appraiser – Could be for FHA or Conventional apprasial
4) The Septic Inspector (unless it’s public water)
5) A Water Test if it’s well water (unless it’s public water)
6) A Radon Inspector
7) The Homeowners Insurance Company
8) A Termite Inspection

All Inspections must be conducted within 15 days ACCEPT the appraisal. The appraisal needs to be completed prior to the Mortgage approval Date which is another deadline within the Agreement of Sale.

4) Buyers & Sellers – The Typical Home Inspection time Frame and Who should Attend? A Home Inspection for a home that is 2000 sq ft takes about 3 hours.  Seller’s you really should not be home – Buyer’s you should be there …not only to learn about your new home, but to make sure the inspector is doing what he is suppose to be doing and I even believe the Buyer Agent should also be present just in case there are issues …so everyone can get a visual of the problem and negotiations can be conducted in a clearer and more professional manner.

What is a Buyers Agent?

Lehigh Valley Real Estate & Homes – What is a Buyers Agent? Okay, so we have Real Estate Agents – Some are called Seller’s Agents and Some are Called Buyer’s Agents, What is the Difference and why should I care?

In the State of PA you can have many different relationships with a Licensed Real Estate Agent.

I am going to talk to you about working with a Lehigh Valley Real Estate Agent for the purpose of selling or buying a Residential home in Allentown, Bethlehem, Easton or a 35 mile radius of this within PA (not including New Jersey)

The Real Estate Agent and WHO they represent in a Transaction (think of it like a Doctor or Attorney relationship)

The Seller – When a Real Estate Agent helps a Seller sell their home and they place a FOR SALE sign in the front yard.  This Real Estate Agent is know as the Listing Agent and/or Seller’s Agent.  Their job is to represent the seller in selling their home, make sure they work on behalf of the seller to negotiate and protect the best interest of the seller at all times.  Main Objective to get the most money and best conditions for the seller when a buyer makes an offer on their home.  Usually, this is the Real Estate Agent you are meeting at the Open house BUT not always…many times other Real Estate Agents help the listing agent by hold open houses for them.

The Buyer – When a Real Estate Agent helps a Buyer – Buy a home – meaning help the buyer with searching for a home – finding a mortgage on a home and evaluating current market value for the home they are interested in making an offer on…The Agent’s main objective is to represent the buyer in purchasing a home, make sure they work on behalf of the buyer to negotiate and protect the best interest of the buyer at all times. This Real Estate Agent is known as a Buyer’s Agent.

A word of Caution – It is not in the best interest of a buyer to call a FOR SALE sign and request that the seller’s agent show them the home.  There are complicated reasons why….but one really good and simple reason is the seller’s agent works for the seller NOT the BUYER.  You need your own agent to show you the property AND this agent should be someone you have interviewed or researched as the home you are interested in looking at may be your dream home and since this is one of the most important decisions in your life…don’t just pick an agent out of a hat.  This person is just as important as choosing your doctor or attorney…trust me.  Do you research and compare agents…do a search on google and see what comes up.

Side Note: A Real Estate Agent “Buyer Agent” can show you any home that is listed for sale in the state of PA.  Although most work in certain territories…as an example I primarily work in the Lehigh Valley area which includes Lehigh & Northampton counties  But, from time to time I also cover just over the lines of Bucks, Berks, Monroe, and Carbon county too.

A surprising Fact – How much do you pay to have a Buyer Agent?: When a Home Buyer requests the assistance of a Buyer Agent to purchase a home that is listed on the Lehigh Valley MLS – The Buyer pays nothing for this Buyer Agent to help them through out the home buying process.  which is typically 3 to 6 months from the time you start looking for a home to the time you go to settlement on a home.  Depending on your needs of course.  Once a Listing is added to the Lehigh Valley MLS this actually makes a contract between the Listing/Seller’s Agent and ALL of the Buyer Agents in the Lehigh Valley that when the Buyer Agent helps sell the property by helping their buyer purchase the home listed by the seller’s agent…the seller’s agent will share the commission paid to them by the seller at settlement. Pretty cool huh?!