Gold Star Mortgage Financial

In the last part of our series on mortgage insurance, we look at options for payment. We’re wrapping up our series about mortgage insurance today with one final topic. Jen Sopinski from National MI joins us again to answer this question: How do you pay for mortgage insurance? There are two ways to pay. One is a monthly insurance payment, which is rolled into the monthly mortgage payment itself. The second is a single premium payment, which is essentially a lump sum up front. The most popular way is the monthly mortgage insurance payment because some borrowers don’t have that lump sum available to spend. The monthly payment is a more convenient way for them to pay. “The most popular way is the monthly mortgage insurance payment.” There’s actually a third way, called lender-paid PMI. Talk to your mortgage advisor to go through the details of the program because, in some cases, it causes your interest rate to increase. Feel free to reach out to us with any questions you may have. Also, get in touch if you’re looking to buy or sell a home or need further real estate information. We look forward to hearing from you.

Jen Sopinski joined me recently to talk about mortgage insurance and how you can get rid of it. According to her, there are a few different ways to go about it. I was recently joined by my friend Jen Sopinksi from National MI to answer a few questions about how homeowners can get rid of private mortgage insurance. There are two different ways to cancel. Mortgage insurance will automatically cancel at 78% loan-to-value. Your borrower can also request a cancellation at 80% loan-to-value. Both of these numbers are based on the original value of the home when you bought it. If the property has appreciated since you’ve bought it, you can also have mortgage insurance dropped based on its current value. The loan needs to have been serviced for at least two years and then you can request a drop in mortgage insurance at 78% loan to value. If it’s more than five years, you can request at 80% loan to value. It’s always wise to accomplish this through whoever is servicing the loan. “Mortgage insurance will automatically cancel at 78% loan-to-value.” There’s also a third way that you can drop your mortgage insurance. With our clients who are paying mortgage insurance, we will track the market and once we know they have enough equity to drop the mortgage insurance, we can help them refinance into a loan that doesn’t have mortgage insurance. It helps us stay in touch and save our clients some money in the process. If you have any questions for Jen about mortgage insurance, you can reach out to her at (510) 788-8618 or send her an email to Jen.Sopinksi@nationalami.com. If you have any other questions for us, don’t hesitate to give us a call or send us an email anytime. We look forward to hearing from you soon.

Today Jen Sopinski from National MI is here to help us answer some questions about mortgage insurance. Today begins the launch of a whole new series all about mortgage insurance (MI). To help us kick off the series and answer some important questions, we brought in mortgage insurance queen Jen Sopinski from National MI. What is mortgage insurance? There’s a common misconception that people have that you still need 20% down to purchase a home—that’s simply not correct. Mortgage insurance allows anyone putting less than 20% down to still be able to buy property. What does MI cover, and who does it protect? Mortgage insurance covers the mortgage as well as whoever is servicing that loan (i.e., the lender). If the consumer goes through default, the lender is protected throughout that process. “It’s a common misconception that you need 20% down to purchase a home” If you have further questions for Jen about mortgage insurance, you can visit National MI’s website here, email her at Jen.Sopinski@NationalMI.com, or give her a call at (510) 788-8618. For any questions that we at Gold Star Mortgage Financial can answer, feel free to reach out to us. We hope to hear from you soon!

How is our FastPASS program doing? Let's find out. Today I want to give you a quick update about our FastPASS program. We introduced the FastPASS program about two years ago, and during that time, we have seen some great results. Our first year of running the program, we saw our clients’ first offer win 80% of the time. So far this year, buyers using FastPASS have had almost a 100% success rate, with only three offers lost (two of which were to other offers that were severely overbid, which made it hard to compete). “When we go through the program with you, you are able to write shorter offers with no finance contingencies which puts you in a great place to compete with cash offers.” Our FastPASS program, for those unaware, is used the same as cash. It’s a fully underwritten loan with all the conditions signed off by the underwriter before you submit an offer to a buyer. The only items remaining on your approval are the preliminary appraisal, signed disclosures, and a signed purchase contract. When we go through the program with you, you are able to write shorter offers with no finance contingencies, which puts you in a great place to compete with cash offers and other offers as well. If you would like more information about our FastPASS program, please feel free to reach out to us. We look forward to speaking with you soon.

If you’re in the process of buying a new home, you can’t access that home until after escrow closes and the keys are handed over to you. As a homebuyer, how soon can you access your new property once you’re under contract? Tom Ralston of Lyon Real Estate gets asked this question sometimes by buyers who are in escrow because they want to start making upgrades to their new home. According to him, if you’re still in escrow, you can’t access the property yet because you don’t own it yet.  Accessing a property before you own it can cause insurance liability issues. If you moved your furniture into the home’s garage prior to getting the keys and a fire broke out, for example, your insurance wouldn’t cover the loss because technically the seller still owned the house while the fire occurred.   If you’re in the process of buying a home and you plan on making upgrades to it, what Tom and Cindy can do is take you to that home and meet with a vendor so you can take the appropriate measurements and make other preparations for when the keys are handed over to you and you officially own it.  “Accessing a property before you own it can cause liability problems.” Typically, we see a confirmation of recording (or confirmation that the buyer is now the new owner) sometime in the afternoon. How long you have to wait after this happens to get the keys to the home depends on your schedule. Tom and Cindy work around their clients’ schedules, but they usually try to get them their keys on the same day while it’s still daylight so they can start moving in. In fact, the exact time of the exchange is written into the contract, and Tom and Cindy’s preferred time is usually 3 p.m.  If you have any more questions for Tom or Cindy, you can find their contact information listed in the video above. As always, if you have any other questions for us, don’t hesitate to call or email us anytime. We’d be happy to help you.

Are you preparing to list your home but not sure what all you need to do first? Today we are continuing our “Ask a Realtor” series with Desiree Pointer and Nichole Moody of Realty One. They are rock stars in our industry and definitely know how to serve their clients. This is why I have them here now to answer questions for you. One common question we receive is “What do I need to know before I list?” Since there is not a lot of inventory, sellers are hesitant about putting their home on the market. However, there are ways that you can secure a buyer while still looking for your new home. Desiree tells me that people have successfully put their home on the market and secured a buyer by adding a contingency to find a replacement property. This gives you time to find the property you want without the stress. If for some reason you do not find the home you are looking for, you are able to cancel the transaction and stay in your house. In a seller’s market, the ball is in the seller’s court because typically you have a list of other potential buyers. This means that if one buyer does not agree to your terms, you have backup buyers that will definitely say yes. Nicole tells us that you can add value to your home before you put it on the market by making it look its best. They start with a general cleanup. She tells us that since you are moving anyway, you should start by packing all of the things that are not used on a daily basis. “A fresh coat of paint is inexpensive and it makes it look fresh and clean to potential buyers.” After that, clean your house. There are things that you may not notice as a seller that buyers do notice. Everything in the home needs to be cleaned including your blinds, windows, baseboards, etc. You should also change your air filter. With regards to remodeling, you may want to repaint if your paint is very specific to you. A fresh coat of paint is inexpensive and it makes it look fresh and clean to potential buyers. You do not necessarily have to put a ton of money into your home to get value added. If you have any additional questions for Desiree or Nichole, you can reach them by phone or email. To reach Desiree, you can call (916) 259-3377 or email her at greatlincolnhome@gmail.com. And, to reach Nichole, you can call (916) 524-7804 or email her at nichole@agentmoody.com. As always, if you have any additional questions for me, you can always call or email. I look forward to speaking with you soon.

Tom and Cindy Ralston join me today to talk about veteran buyers and VA loans. In the latest episode of my “Ask a Realtor” series, I invited Tom and Cindy Ralston back from Lyon Real Estate to talk about veteran buyers. When one of my clients makes an offer on a house they want, the first thing that I do is pick up the phone and call the listing agent. I want the listing agent to know about the strength of the buyer’s loan and their ability to close. With VA buyer’s specifically, I sometimes get  push back from the listing agent because there are some fees that the buyer is not allowed to pay. To overcome that push back, Cindy tells me that she encourages a larger earnest money deposit. Instead of a 1% earnest money deposit, they encourage you to put down 3%. They also told me that they want to work with a lender who can do the underwriting upfront and guarantee that there are no loan contingencies. This is sometimes called a “fast pass” and can help veteran buyers greatly. Even with no finance contingencies and a shorter close, there can still be some hesitance from the listing agent because of the unknown costs that can arise from a veteran buyer being unable to pay for fees. There is a rather long list of things that a veteran cannot pay for with regards to fees. Termite inspections and pest reports are common issues. While a veteran buyer cannot pay for the initial termite inspection which costs about $100, they are allowed to pay for any repairs that may be discovered from it. There are plenty of other things that a veteran can pay for including the appraisal. If a buyer wants to come in with a $0 down payment, we can get around some of the fees by using lender credit to pay for some of those items so that a seller does not have to pay for all of them. “Even with no finance contingencies and a shorter close, there can still be some hesitance from the listing agent because of the unknown costs that can arise from a veteran buyer being unable to pay for fees.” Lyon Real Estate has certified both Tom and Cindy to be part of the MOM program. Also called the Military on the Move program, it means a lot to Tom to be a part of it since he is an Air Force veteran and likes to give back. What happens with the MOM program is that Tom and Cindy give part of their commission back to the veteran. The nicest part of the program, though, is that if they have previously used their VA loan for a rental and are no longer eligible, MOM will still cover them. In fact, it can be used with an FHA or conventional loan as long as the person receiving the money is active or non-active military. To be eligible for this program, you do have to be lender approved. You may even be eligible if you are a family member to a veteran that needs assistance. To find out your eligibility, you can check with Tom or Cindy. If you have any additional questions or want to learn more about the MOM program, please feel free to contact Cindy at (916) 715-6899 or cralston@golyon.com or Tom at (916) 489-1090 or tralston@golygon.com. And, as always, if you have any mortgage questions, please contact me by phone or email. I look forward to speaking with you soon.

How can contingencies protect a buyer’s earnest deposit? Today we’ll be addressing this question in the latest installment of our “Ask a Realtor” series. Welcome back to our “Ask a Realtor” series. For today’s installment, we’ve brought on Tom and Cindy Ralston from Lyon Real Estate to discuss their experience in the industry. To start off, we asked them to address an important question: “How can earnest money deposits be protected with contingencies?” Before answering this question, it’s important to note that there are three common contingencies we often observe in contracts: the buyer inspection contingency, the appraisal contingency, and the loan contingency. These contingencies all help protect the earnest deposit. They ensure that if anything happens to jeopardize the deal, the buyer can still back out and have their deposit refunded. Now let’s take a closer look at each of these contingencies, individually. We’ll discuss the buyer inspection contingency first. In most transactions, buyers have 17 days to complete any inspections on the home. This usually involves ordering a general home inspection, as well as any specialized inspections like termite or roof inspections. Buyers have the opportunity during this period to have nearly any aspect of the property inspected. “Contingencies ensure that if anything happens to jeopardize the deal, the buyer can still back out and have their deposit refunded.” Next, there’s the matter of the appraisal contingency. The appraisal period usually lasts between 17 and 21 days, which is a similar time frame to loan or finance contingencies. While inspections verify quality, appraisals verify value. If an issue arises during any of these processes, the buyer may cancel the contract. And assuming the cancellation is fair and doesn’t breach the terms of the contract, the buyer will be able to get their earnest money back. If you have any other questions for either of today’s special guests, you can reach them by phone or email. You can give Tom a call at (916) 849-1090 or email him at tralston@golyon.com. Or you can call Cindy at (916) 715-6899, or send her an email at cralston@golyon.com. And, as always, if you have any other questions or would like more information from us, feel free to give us a call or send us an email. We look forward to hearing from you soon.

In our latest installment of “Ask a Realtor,” Desiree Pointer and Nichole Moody talk about why we’re seeing so many Bay Area residents move into Placer County. What is behind the current purchasing trend in Placer County? In this edition of “Ask a Realtor,” we’ve brought in Desiree Pointer and Nichole Moody of Realty ONE Group Complete to answer that question. According to Desiree, this trend is happening because Placer County has a lot to offer Bay Area residents. They can afford more for their money, the schools are great, there’s a high quality of medical care, etc. There are also different types of neighborhoods to choose from, whether that means more adult-oriented or family friendly. How is this exodus impacting current homeowners in Placer County? According to Nichole, it hasn’t made that big of an impact on home prices. Inventory is low and we’re still in a seller’s market. It’s the area itself that’s driving the exodus. During all of last year, home values increased by 8% to 9% before rates changed. A lot of people assumed this would reduce home values, but it didn’t. After the first quarter of this year, home values had still risen about 5%. Given our market’s recent history and the number of people who are moving here rather than moving away, Nichole predicts that our market will stay on a steady course throughout the rest of 2018 and stay at a 5% appreciate rate. We typically see the most activity in our market during the months of May, June, and July, so both Desiree and Nichole usually advise homebuyers to list their homes during this time period. The fact that the school year ends during this window plays a big part in its spike in activity. “Desiree and Nichole usually advise homebuyers to list their homes during May, June, and July.” If you have any more market questions for Desiree or Nichole or you need help buying or selling a home in our area, here is their contact information: Desiree: (916) 259-3377 or greatlincolnhome@gmail.com Nichole: (916) 524-7804 or nichole@agentmoody.com As always, if you have any questions for us or you’re looking to get financing, don’t hesitate to shoot us an email or give us a call. We’d be glad to help you.

Competition is hot among buyers in today’s market. Today we’d like to share a few tips on how to beat out other buyers by making a strong, stand-out offer.   Today we’re continuing our “Ask a Realtor” series with a look at the question, “What should buyers do to make their offers more attractive?” To help cover this question, Jenna Meyerstein from Haney Garcia is joining us for today’s installment.  Jenna’s first point was that in today’s hot seller’s market, multiple offer situations are incredibly common. It’s not out of the ordinary for a single listing to see more than a dozen offers. This is especially true for homes that are priced correctly.  And, according to Jenna, one of the key elements to beating out the competition as a buyer is having a strong agent working on your behalf. If your agent can develop a sturdy rapport with the listing agent, you are already set up for a higher chance of success than other buyers. The right agent will also be proactive in negotiating and reaching out to other professionals as a representative of their clients’ best interests.  The goal in a multiple offer situation is to stand out. If a listing truly resonates with you as a buyer, Jenna recommends expressing this explicitly to the seller in the form of a letter. Attaching this personal touch to your offer can go a long way in setting yourself apart from the competition.  “One of the key elements to beating out the competition as a buyer is having a strong agent working on your behalf.” For some sellers, it isn’t about the price. Many sellers want to know that the buyer of their property will love the home as much as they have. On top of that, sellers want to know that they can expect a smooth transaction. This is why, if you are able, it’s a good idea to present an offer with as few contingencies and as short a closing period as possible.  Speaking of contingencies, here at Gold Star Mortgage we have a program called “Fast Pass,” which allows people thinking of buying in the next 30 to 120 days to get a full underwriting in that time. This program allows buyers to submit stronger offers when it comes time to strike a deal.  If you have any additional questions for Jenna, feel free to give her a call at (916) 532-7867 or send her an email at jenna@jenna4homes.com. And, as always, if you have any other questions or would like more information from us here at Gold Star, please reach out by phone or email. We look forward to hearing from you soon.

What does the home buying process look like? I’ve brought in one of our Realtor partners to explain it from start to finish. If you’re a buyer, what can you expect from the home buying process? Here’s what the process looks like from start to finish, according to Jenna Meyerstein of the Haney Garcia Realty Group. Whenever Jenna starts working with a new client, she typically finds out their interests, discusses what their home buying plans are, and determines what kind of mortgage payment they’re comfortable with. Then, she sends them to a lender such as us to get pre-approved. This helps you get a better idea of your budget and narrows down your shopping price. Next, she’ll email the buyer a list of homes on the MLS to further narrow their search criteria. She’ll also ask other Realtors and brokers if they have any pocket listings outside the MLS that the buyer might be interested in. Anytime a new home pops up on the market that fits their criteria, they’re the first to be notified. This further helps her understand what you’re looking for before you actually go out and start visiting these homes. Once you find a home you like, it’s time to submit an offer for it. Jenna and her clients decide what price to offer based on other comparable homes in the area. Other factors go into this decision as well, including how long the home has been on the market, what kind of area it’s in, the inspection time frame, etc. You’ll also need a loan approval and an earnest money deposit when submitting an offer. An earnest money deposit is typically between 1% and 2% of the offered purchase price. This deposit is put into an escrow account. The earnest money deposit is an act of good faith from the buyer that shows they’re committed to moving forward with the purchase. “It’s important to get a good idea of your budget and your shopping price when buying a home.” Jenna and her buyers typically look to shorten the contingencies when making an offer. There are three contingencies in a home purchase: the inspection contingency, the loan contingency, and the appraisal contingency. These are in place so that if you find out something’s wrong with the property, you can back out of the contract and get your deposit back. If you decide to move forward with the purchase, your earnest money deposit is then used toward your total funds for closing. After all the contingencies have been released and all the conditions have been cleared, the loan documents are ordered and then signed at a title and escrow company. If you’re a first-time homebuyer, you’ll have to review all of these documents, but it usually doesn’t take more than an hour. This usually takes place two or three days after the closing. On the day of closing, you’ll receive notification from the title company that you’re “released to record,” which means they have all the documents from the lender and they’re waiting for the green light from the bank. Once Jenna gets the notification that you’re “on record,” you receive the keys to your new house. If you have any additional home buying questions for Jenna, you can call her at (916) 532-7867. As always, if you have any financing questions or there’s anything we can help you with, don’t hesitate to reach out to us. We’d be happy to help you.

If you’re a first-time homebuyer, the best thing you can do to find the right insurance for your home is talk to a licensed insurance professional. If you’re a first-time homebuyer shopping for insurance, what can you do to find the coverage that’s right for you? First, if you don’t understand the types of coverage that come with a homeowners policy, talk to a licensed professional who you trust. You buy insurance for the things that ruin your life—not the things that ruin your day. Buying a home is likely the largest and most important purchase you’ll make in your lifetime, and it’s where your family will live, so make sure you protect it by talking to someone who can help you protect it. “You buy insurance for the things that ruin your life—not the things that ruin your day.” This advice applies to the mortgage world as well. You can do your own research online, but by talking to an actual mortgage planner, you can have someone talk you through the entire process and avoid any unwanted surprises. If you have any more insurance questions or you’re looking for a type of coverage that best fits your needs, you can give Mike a call at (916) 520-6786. If you have any other mortgage questions for us, don’t hesitate to reach out to us. We’d love to speak with you.

What is the difference between coverage for a primary residence and a rental property? Mike Reilly from Farmers Insurance is here to fill you in. I’m back with Mike Reilly from Farmers Insurance to talk about the difference between getting coverage for your primary residence versus rental properties. From a coverage standpoint, the key difference is really just a matter of the contents. As a landlord, you’re not necessarily going to be covering your tenant’s clothing, TVs, sofas, or similar items. From a cost standpoint, it’s very similar to a homeowners policy because we’re covering the dollar amount. For those who own a rental property, you should have very high limits of liability. In California, you don’t need to be a millionaire to get sued like one. Not to mention that tenants and their guests sometimes do silly things. At the end of the day, you own the property and are responsible for what happens. “In California, you don’t need to be a millionaire to get sued like one.” What are some of the differences between a single-family and a condo? The difference is that when it’s a condo, you’re insuring from the walls in. You’re not necessarily insuring the entire structure. It’s really more of a policy that covers personal contents as well as improvements to the unit. If you’re looking to get more information about insurance, I highly recommend that you reach out to Mike Reilly with Farmers Insurance. For any other questions, feel free to contact us here at Gold Star Mortgage Financial.

Today, we’ll be giving you a year-end review of 2017. It was a great year. Today, we wanted to do something a little different by giving you a year-end review for 2017. Bernie did have a recurrence of her thyroid cancer last year, so she was out all of December and a little bit at the beginning of the year. The good news is that the surgery was a huge success. Another huge thing for her was that she registered my daughter for kindergarten a lot sooner than expected. “2017 was a blast!” Gene took a trip to New York with his wife. He kicked and screamed before heading out there because he said he wanted nothing to do with the place. After the trip, he realized that he actually loved New York and would definitely go back. He also made a trip to Jamaica and the Dominican Republic. 2017 was a blast! We made it to the top 10 at the President’s Club; I was shocked we made it that far, but we couldn’t have done it without all of you. Thank you for supporting us! It is an honor to serve you. Best of luck to you all in 2018! As always, if you have any questions or real estate needs, don’t hesitate to reach out to us. We’d be glad to help you.

Today, Mike Reilly from Farmers Insurance is here to ask a common question we hear in the mortgage business. Today, I have Mike Reilly from Farmers Insurance with me to touch on a common question that comes up often in the mortgage business: “Why is the amount of coverage on my homeowners policy different from the purchase price or the value of the home?” California is a unique marketplace. The difference in the numbers comes from something that’s pretty simple. The home’s value and the materials needed to build it are two different stories, and location is also a driving factor. If I had a four-bedroom home in San Francisco, it might be worth $2 million, but if I moved to that same home somewhere in the Central Valley, it might be worth $500,000. “The home’s value and the materials needed to build it are two different stories.” The difference is only in where the home is located; it takes the same amount of lumber, the same number of roof tiles, and so on. The reconstruction cost is oftentimes different than the market value because we don’t insure the dirt that the home sits on. If anyone has any questions specific to their situation, feel free to reach out to Mike at Farmers Insurance. And if you have any other real estate questions or you’re thinking about buying or selling a home, don’t hesitate to reach out to us as well. We’d be glad to help you.

What key factors determine the cost of your home insurance policy, and is there anything you can do to lower it? Mike Reilly from Farmers Insurance explains today. Today, Mike Reilly from Farmers Insurance is here to answer a few important questions. When we do an initial consultation with our clients, I like to go over the key factors that drive the interest rate you will get, such as your credit score and down payment. There are similar things on the insurance side that can cause a change in your price policy. Mike says that one of them is the size of your home. Your home insurance policy is really insuring the value to rebuild your home should there be a total loss for some reason. So, if your home burns down, what will it cost to build up again? Your insurance company will look at things like the square footage of the home and the complexity of the construction as well. Another key factor is the fireline score. That can come into play in our area because of the nice foothills and such. The more rural the area and the farther away from the fire department you are, the higher the risk for a fire is, and that could drive up the premium. “The farther your property is from a fire department, the higher the risk of fire is.” So, is there anything you can do to drive the price down a bit? The answer is yes. One of the most common things you can do is bundle your policies. If an insurance company has your home, car, and life policy, the company will give you a discount for that. It’s like buying in bulk. If you have a clean driving record, that will help you too. You can also look at the amount of coinsurance. The higher the deductible is, the lower the premium will be. However, Mike says that you have to be comfortable with the amount of money you might have to come up with out of pocket should there be a total loss. If you have any other questions for Mike, you can reach him at (916) 520-6786. As always, if you have any questions for us, just give us a call or send us an email. We would be happy to help you!

There are different proofs of income we can use to qualify you for a mortgage if your job or situation doesn’t allow you to prove a documented employment history of at least two years. When qualifying for a mortgage, the single biggest factor lenders look for is a documented employment history of at least two years. If you’re a recently graduated college student and you’re worried you won’t qualify because you don’t have a long enough employment documentation history, the good news is we can use your diploma, your transcripts, or an offer letter from your new employer to structure your loan and position you for a pre-approval. All we’d need in this case is a pay stub from your first two weeks of employment as a prior funding condition and another pay stub as a post-funding condition. So basically, we’d need 30 days’ worth of income to confirm you took the job. “The single biggest factor lenders look for is an employment history of at least two years.” Another instance where we typically see this perceived lack-of-documentation issue come into play is with school teachers. Oftentimes, teachers move from one district to another at the end of the school year. This means if they’re trying to buy a house in July but the school year doesn’t start until August, technically they’re not employed. In this case, we can use the teacher’s offer letter or signed contract with the new school to close the loan. Once the school year starts, we can then collect your pay stubs. If the job you have or the job you’re taking is commission-based or the majority of the income is bonus-based, in order to use those incomes, we’ll need to see a two-year history of the same employer providing the commission or bonus. If that commission or bonus is 25% of your gross base, we’ll also need two years’ worth of tax returns just to confirm that there are no write-offs for unreimbursed expenses. If you have any more questions eligible income and what you need to qualify for a mortgage, don’t hesitate to call or email us anytime. We’d be glad to help you.

Today, we’re talking about the subject of financial gifts. We’ll go over when and how they can be applied toward your home purchase. How can gift funds be used toward the purchase of your home? Well, especially when someone is buying their first home, it’s common for them to receive financial assistance from a close friend or family member. Depending on the type of loan program you’re using, the requirements for gift fund documentation will vary. Any conventional financing will require you to provide a gift letter and proof that the funds have been delivered to the title company. Our team has a standard gift letter form that we can send out to you. Once the person donating the financial gift to you has signed this letter, they can simply wire their funds a day or two before closing. The one stipulation of gift funds used toward a conventional loan is that the gift must come from a family member. “The use of financial gifts from family toward the purchase of a home is common for many first-time buyers.” Now, if you’re doing government financing like an FHA or VA loan, the requirements are a little more document-heavy. A gift can come from a family member or a friend with a closely-documented interest in you, the buyer. If the relationship can be documented, they will still need a gift letter and the ability to give the gift. Usually this proof comes in the form of their most recent bank statement. If the gift funds are wired directly to the title company, this is all the documentation you’ll need. However, if the gift comes in the form of the check, further documentation will be required. If you have any other questions or would like more information, feel free to give us a call or send us an email. We look forward to hearing from you soon.

When obtaining a mortgage, there are certain do’s and don’ts you need to follow to ensure that everything goes smoothly. Do: Continue to work and make sure you have access to all of your pay stubs and bank statements. Keep up-to-date documentation in case your mortgage advisor coordinator requests that kind of information. Stay well within your budget. If you have your approval up to $450,000 in a seller’s market, make sure you’re looking at homes in the $430,000 to $440,000 price range so you give your agent some wiggle room to negotiate upward. Don’t: Be late on your mortgage payments. Spend your down payment money. When you’re trying to qualify for a home, the lender is qualifying you based on a snapshot of the financial picture they see. If there’s a change in the amount of cash you have because you spent some of your down payment, that can negatively affect your approval. Move money back and forth between accounts or make large cash deposits without first checking with your lender. This won’t blow up your loan transaction, but it will add to the amount of paperwork you have to do. Open any new accounts or buy any new appliances on finance until your loan is completely done. Taking on any new debt is another thing that could have a negative impact on your pre-approval. “Your mortgage is like a puzzle.” Basically, your mortgage is like a puzzle. Your advisor has already put the pieces together, but if you start changing those pieces, the outcome will be completely different. If you’d like more information, we have a full list of mortgage do’s and don’ts that you can download in PDF form here. If you have any more questions about this topic or you’re looking to buy, sell, or get financing for a home, don’t hesitate to reach out to us. We’d be happy to help you.

Today, we want to dive into how divorce affects you as a buyer, especially when you are receiving alimony and child support or are having to pay it out. From an underwriting standpoint, lenders will want to see that a divorce is finalized. The reason for this is that the marriage settlement typically isn’t fully available until this point. “From an underwriting standpoint, lenders will want to see that a divorce is finalized.” Depending on if you are using government financing or if you are using conventional financing, you could have to wait three to six months before you can use this income to help you qualify. But, this time restriction only qualifies if you are on the receiving end. If you are paying out, there is no time restriction as long as a fully-executed marriage settlement agreement is in place and filed with the courts. If a person is paying child support or alimony, these monthly payments will be counted against them as a liability and could impact buying power. On top of talking to your divorce attorney, you need to connect with your mortgage advisor if you are in this situation. If you have any other questions or would like more information, feel free to give us a call or send us an email. We look forward to hearing from you soon.

Many buyers tend to think that the down payment is the only expense involved in closing. However, this is not the case. There are actually a few different costs you should be prepared for before you reach the closing table. This includes both recurring and nonrecurring closing costs. Nonrecurring closing costs are one-time fees. These generally include lender fees, appraisal fees, as well as title and escrow charges. Recurring charges are paid on a continual basis. This includes homeowners insurance, property taxes, and mortgage interest. You want to make sure that you meet with a quality mortgage advisor who will be able to walk you through what to expect. The key is to remember that your funds to close will be more than just a down payment. You need to budget for nonrecurring and recurring closing costs. “Remember that your funds to close will be more than just a down payment.” Doing this will help you avoid any unwelcome surprises at the closing table. If you have any other questions or would like more information, feel free to give us a call or send me an email. We look forward to hearing from you soon.

Today we’re going to shed a little bit of light on the subject of divorce, and how it can impact your home and your mortgage. A lot of times we see marriage settlement agreements come across that state one spouse is buying the other out and keeping the property. While that’s great for negotiating purposes, a marriage settlement agreement doesn’t relieve your legal liability to the lender if there is a mortgage on your existing property. The only way to do that would be to refinance your property out of one spouse’s name and put it in the other’s. We like to walk our clients through the process step by step to make sure they are making the right decision. We walk through each scenario in our initial consultation. Should we just sell the home and divide the proceeds? Should one spouse buy the other out? We will get all the information together and present it to you so you can make the right informed decision. “We like to walk our clients through all their options.” If you have any questions for us or you’re going through a divorce and would like some real estate advice, give us a call or send us an email. We’re always here to help.

When you purchase a home for less than 20% down, you usually have to pay mortgage insurance with your monthly payment. How can you get rid of your mortgage insurance? It actually depends on what kind of loan you have. If you have a conventional loan, you can reach out to your lender and let them know that you have enough equity in the property to get rid of the mortgage insurance. Depending on the company, they may charge you anywhere from $300 to $500. They will send out a new appraiser to confirm that you do have 20% equity in your home, and then they will remove your mortgage insurance payment. When home values increase and mortgage rates go down, you also have the option to reach out to your mortgage broker and ask about refinancing. If they can cover all the closing costs for you, you’ll save that $300 to $500 and get rid of your mortgage insurance. Not only that, but refinancing can potentially lower your interest rate and your monthly payments even further. Now if you have an FHA mortgage, that is a bit more difficult to analyze.Depending on when you got the FHA loan, you may be required to keep that mortgage insurance for a certain amount of time regardless of how much equity is in the property. It’s always a good idea to reach out to your mortgage company and have them check the market for you to see if there is a chance you can refinance your FHA loan into a conventional loan. Your mortgage company will also let you know if it’s best for you to stick it out and finish those mortgage insurance payments on your FHA loan. If you have any other questions about mortgage insurance or would like to learn more about refinancing, just give us a call or send us an email. We would be happy to help you! “You may be able to refinance, drop your mortgage insurance, and get a lower interest rate!”

If you have a fixed mortgage and your payment changes, it’s probably because you have an impound account and there was a change in your property tax or homeowners insurance bill. Anytime reassessment values go up or any new bonds or levies are voted for within your county, those are collected through your property tax bill. Every month when you pay your mortgage, one-twelfth of your property tax bill is collected and one-twelfth of your homeowners insurance bill is collected. Your mortgage company keeps this in your escrow account and tallies everything they’ve collected. Whenever your property tax bill and homeowners insurance bills are due, the mortgage company pays those out. Usually between February and May, your mortgage company will perform an assessment on how much they’ve collected and paid out. If they’ve collected more than they’ve paid out and there is an overage in the account, they’ll send you an escrow reconciliation via a refund check and adjust your payments lower since they know next year’s bills will likely be lower. For example, let’s say your property tax bill is $100 per month and when the reassessment happens, or any new bonds or levies are issued and collected, that bill increases to $150. Most people assume their mortgage will go up by $50, but what actually happens is your payment goes up by $100 for the first year. The first $50 reimburses your mortgage company for what they fronted for you and the other $50 is collected to ensure that they have enough money going forward to pay your bills next year. That $100 increase should only be for the first year. The following year, it should drop back down to $50 so they’re only collecting what’s due or what they’re paying out. Every year you’ll get an escrow reconciliation. When it does, give your mortgage company a call. They can help walk you through the process and explain the difference in your monthly payment. If you have any other questions about this topic, don’t hesitate to reach out to us. We’d be glad to help you.

Lately, I’ve fielded a lot of questions about how estate planning can help protect one’s family, so today, I’ve invited Adam Shiells from Shiells and Hammer to help me explain. As Adam says, “protecting your assets is protecting your family.” We don’t normally think of it that way, but it really makes sense when you think of a word like your “legacy.” You raise your kids and protect them so they can become productive adults, and you also acquire and protect your assets. Those two come together when you pass in the hope that the next generation can do a little bit better, and it continues on that upward path for many generations to come. A good estate plan is part of that process by ensuring that your assets make it to your successive generations. Think of it like this: When your kids are young, you’ll ask someone to care for your children should anything happen to you. Nobody ever puts that in writing, though. With Adam, estate planning includes guardianship designation. Another thing to think about is that it’s hard to know if kids will be responsible enough at age 18 to manage everything you’ve acquired in your life. Estate planning with Adam often also includes a ‘continuing trust,’ which lasts well beyond age 18 for them. You can name somebody who is older and more experienced with finances to manage the wealth on their behalf and make payments for things like health needs, school, or real estate, to name a few. All those expenses can be handled from the trust, but the kid won’t be able to put their hands directly on the money until they reach an age you’re comfortable with it. Now, these are just two examples of how estate planning can help you protect your family and your legacy. If you’d like to learn more about estate planning, you can reach Adam at 916.917.5914 or email him at ashiells@shiellsandhammer.com. As always, don’t hesitate to give me a call or send me an email with any other questions about buying a home, selling a home, or securing financing. I’m always here to help.

We oftentimes run into clients who don’t have an estate plan in place and aren’t aware of the risks of not having a living trust. We’ve brought in Adam Shiells, with Shiells and Hammer, to help explain. If you don’t have an estate plan in place, you open up yourself and your family up to a lot of risk if something bad happens to you. If you don’t end up making one and something happens, California has a plan for you. However, it’s like picking a suit off a shelf. The suit is cut, sewn, and tailored to fit a lot of people just OK, but it doesn’t fit anybody great. If you can get to an attorney and make an estate plan, there are a lot of things they can do to custom-tailor that suit and help it fit you much better. Maybe you want to leave money to a charity or you have a family member with extensive medical bills. Estate planning isn’t just about what happens if you die. It also covers you in the event of an emergency and gives you the power to decide who will make decisions for you. If you’re proactive about planning things up front, the process is much smoother and easier for your loved ones in the event of a tragedy. The bottom line is that if you don’t have a living trust or estate plan set up already, you need to do so soon. If you need to talk to Adam about getting one set up, give him a call at (916) 917-5914. If you have any other questions, don’t hesitate to give us a call or send us an email. We would love to hear from you.

One of the most common questions we get is, “When do I need a living trust?” To answer that question, I brought in Adam Shiells, an estate planning attorney at Shiells and Hammer. Most people think that estate planning is only important when you get older in life. While estate planning does become more important as you grow older, your age does not matter as much as the gross value of your assets. To calculate the gross value, Adam adds up all of the assets that you have accumulated but none of the debts or liabilities. So, the value of your house would be included, but not your mortgage. Your car would be included, but not the car loan. If your gross value is more than $150,000, then you should look into some estate planning. Why? If you are over that number in California, then you are at risk for probate. Probate is a court-supervised process that is very expensive and time-consuming, so you don’t want to have to worry about that. Now, when you purchase real estate in California, then the gross value of your assets is probably more than $150,000. If you own property, then you should probably get in touch with an attorney. If you would like to contact Adam with any questions or to start estate planning, you can reach him at AShiells@ShiellsandHammer.com or 916-917-5914. As always, if you have any real estate questions for me, give me a call or send me an email. I would be happy to help you!

Today I wanted to discuss a hot topic in the world of financing: supplemental tax. You can see what I call my ‘pizza chart’ that my clients see during their initial consultation in the video above. We typically estimate that about 1.25% of a home’s sale price will go toward the property tax. For a $400,000 house, for example, you’d be looking at $5,000 a year. Now, the county operates on a fiscal year which begins July 1st and ends June 30th. Your property tax bill comes once a year sometime in October, and with it, you’ll find two coupons: a first and second installment. The first installment is due November 1st, delinquent by December 10th. It will cover you from July 31st all the way through December 31st. The second installment is due February 1st, delinquent by April 10th. It will cover you from January 1st all the way to June 30th. I tell my clients they can use this chart and remember their property taxes with the anagram “No Darn Fooling Around” to keep track of the months they’re due. So say you bought a house and closed in February. Your two installments will be $2,500. Let’s also say that when the sellers originally bought the house, their tax rate was just $2,000, which would be paid in two $1,000 installments. When you closed, the escrow company deducted the seller’s prorated share from their proceeds of the second installment, and they also had you pay your portion of the second installment. If you paid that installment back to the sellers but paid based on their tax rate of $1,000, you might think you scored a discount. Unfortunately, that’s not the case. Six to eight months after you close escrow, the county will send you what’s called the supplemental tax bill. You can see in the video above why we call this the ‘pizza crust.’ The purpose of the supplemental tax is to capture the difference between the seller’s tax rate and your tax rate. In our example, that’s about $1,500, so you’ll get a supplemental bill of about $1,500 six to eight months after we close. They’ll cut that into two coupons that you’ll have to pay. I hope this clears up any confusion you’ve had about property and supplemental tax. If you have any questions I might be able to help with, don’t hesitate to give me a call or send me an email. I’d be happy to help!

During our initial consultations, we often get asked by homebuyers about the options available if the appraisal comes in under value. If that happens, there are actually a few things you can do. The first option would be to challenge the appraisal. We’ll reach out to the listing agent and the buyer’s agent to see if they can provide us with some comparables that better support a higher value. We would then forward those to the appraiser and see if they are willing to make any adjustments. This process can take a few days. If the appraiser comes back and the value hasn’t changed, it’s time to move on to option two, renegotiating. At this point, your buyer’s agent would reach out to the listing agent and let them know that you want to pay fair market value. Then, it’s just a matter of time to see if the listing agent can get the sellers to lower their price. If the seller won’t drop the price, your third option is to determine how much you want the home. If you really love and want the home, you would need to come up with cash to make up the difference. Your loan-to-value ratio would be based on the lower appraised value and you would pay the difference between the appraised value and the purchase price in cash. The last option is to walk away. We don’t want you paying more than your fair share, and if you don’t want to pay the difference, you can just walk away. If you have any questions about this topic, or if you have any other real estate-related questions, please feel free to give us a call or send us an email. We look forward to hearing from you!

What is an initial consultation? What do Realtors like us cover during it? The purpose of an initial consultation is to get to know our clients a little more and give them a chance to learn a little more about us. During this consultation, we try to figure out what your goals are, help you identify what your budget is, and then do a total cost analysis. In this analysis, we provide you with both a five-year and 10-year projection to ensure the program we’re putting you on fits your goals. After that, we’ll talk about all the fees associated with the transaction, who pays them, and why they pay them. We’ll also discuss conferring with an insurance agent so that you have adequate coverage on the property you want to buy. Many times, people assume that the lowest premium represents their best option, and sometimes, that’s not the case. Other items discussed during this consultation include prepaid interest, the myth of the free mortgage, property taxes, and supplemental taxes. By the time we’re done with the consultation, you’ll have a better sense of the entire process from start to finish. With the proper education, you’ll be able to make the right decision for you and your family. If you have any questions about this topic or are looking to buy, sell, or get financing, please don’t hesitate to give us a call. We’d love to help!

I’m often asked about skipping a mortgage payment when refinancing. Can it be done? What it really pertains to is pre-paid mortgage interest. Unlike rent, which is paid forward, mortgage interest is collected in arrears. When you pay your rent on the first of the month, you’re allowed to live in the property for the next 30 days. With a mortgage payment, a lender can’t collect interest unless they’ve actually earned it. Say, for example, you’re closing a refinance on November 15th. Part of the payoff from your existing lender will include mortgage interest that they’ve earned from November 1st through the 15th. Your new lender, on the other hand, won’t have enough time between November 15th and December 1st to set up your account and get a new mortgage statement out to you. Instead, they’ll pre-collect that interest from November 15th through the end of the month. Your next mortgage payment would then be due on January 1st and would cover all of the mortgage insurance from December 1st through the 31st. So while you’re ‘skipping’ a mortgage payment on December 1st, you’re actually just paying it late (or early) depending on the date of closing. Hopefully, this clears the air about the idea of a skipped mortgage payment when refinancing. If you have any more questions I can answer, don’t hesitate to give me call or send me an email anytime. I’d be happy to help you!

One question we often hear from our clients is, “How can I get a competitive edge when buying in a seller’s market?” There are a few things we generally recommend: 1. Set up an initial consultation with us. Buying a home is one of the biggest investments you will make in your life. If you have people like us who want to advise you in the buying process, you should listen. We will teach you how to shop lenders, determine all the fees associated with the transaction, and set a realistic budget based on what you can afford. 2. Apply for a fast-pass approval. The fast pass-approval is a great tool to have when competing against other buyers. Once we figure out how much you qualify for, we will submit for a fully underwritten approval letter. Once we have that fast-pass approval, everything else is simple. Once you find a home, you’ll just need a preliminary title report, appraisal, signed disclosures, and a signed contract. This approval also allows you to come in with no finance contingencies, which can make your offer look more impressive to the sellers. 3. Let us reach out to your agent. We want to help play a proactive role in your home search. Once your buyer’s agent presents the offer, we will reach out to the listing agent of the home and brag about you some more. Those are just three ways we can help our clients out in a seller’s market. If you’d like to learn more or want us to review your personal situation, give us a call or send us an email. We look forward to hearing from you.

Why would someone want to refinance their home? There are two main reasons. The first is to improve their cash flow. The second is to pay their house off faster.Unfortunately, it’s usually limited to either one or the other. Refinancing on behalf of cash flow is more frequent, and it’s something we see a lot with first-time home buyers who are only planning on staying in their home for five to seven years. Refinancing to pay off your house faster is a strategy we sometimes use with clients, too. For example, let’s say you’re at a 4.5% interest rate today and then six months down the line the interest rate drops to 4%. Some clients would be hesitant to take advantage of this change because they’re afraid that they’re going to reset the clock on their mortgage. My advice to them would be to refinance to the lower interest rate but continue to make the same payment they’re making at 4.5%. That difference in payment should allow you to shave an extra three to four years off the lifetime of your loan. If you can use lender credit to cover your closing costs, you can continue to use this strategy over and over, as long as rates continue to drop. If you’re looking to buy, sell, or refinance, feel free to give us a call or send us an email for a complimentary consultation. We hope to hear from you soon!