Monthly Archives: February 2015

Tips for Discussing a Mortgage with Your Spouse

If you’re applying for a mortgage with your spouse for the first time, a number of important financial discussions can come up that are potentially complicated to navigate. Understanding the elements that you’re going to need to be comfortable talking about and potentially exploring in detail with your partner – especially if you haven’t had in-depth financial conversations before – is important. Here’s a closer look at what topics should be openly talked over before the application process to avoid any surprises.

Discussing Mortgage With SpouseYour income

How much you make at your job, individually and in terms of a combined household income, plays a role in how much house you can afford. Have you had an open discussion with your partner or spouse that includes how much you make, what deductions you get, and what your take-home pay is each pay period? Understanding how much income you have to work with is an essential component of determining which properties you should consider.
 
Your debt

Do you have debts such as student loans, a car payment, and unpaid credit card balances? If so, a portion of your income each month will be dedicated to paying off these debts. These facts are relevant even beyond that. Financial institutions consider your debt to income ratio when approving mortgages. Even if you have good credit, high levels of debt could lead to an application denial. Determine your combined debt levels and whether those need to be addressed before you start the application process.

Credit score

Your credit score is a composite of your total past credit activity. Scores range from 350 to 850. The higher your score, the better your credit. Higher credit scores increase your chance of getting a financing application approved and also have an impact on your interest rate. When two people are buying a house together, one low score can have a big effect on the mortgage rate offered.

Past credit problems
 
If your credit score is lower than ideal, chances are that there are specific problems that contributed to the issue. Whether it was a job loss or medical issue or simply poor spending habits, be clear with your spouse on the situation. Did you declare bankruptcy, have a house go into foreclosure, or have accounts go into collections? These situations can impact your ability to get a mortgage at all, or significantly increase the interest rate. Good communication with your spouse and with your bank can help clarify past credit problems and show the steps that have been taken to rebuild can improve your chances of successful funding.

Are you ready to apply for a mortgage in Las Vegas? Contact Sydnee Johnson today to discuss your financial situation and learn more about your mortgage and financing options.

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Planning for the Financial Demands of Buying a House in Las Vegas

Planning for the financial demands of buying a house takes some strategy and awareness. Many first-time homebuyers or individuals that have been out of real estate for a while think in terms of how their rent translates to a mortgage payment. If their current rent is $1000 per month, they often consider a similar amount as the threshold for their monthly mortgage payments. But the bigger financial picture of owning a home has additional costs and potential financial benefits that need to be weighed as part of the total picture. Here are some factors to bear in mind when planning your finances around a home purchase.
 
Planning to Buy A HouseUpfront costs

One of the areas that’s essential to budget for are upfront costs. These typically fall into three areas. The first major cost is the down payment. Typically, funders demand at least 5% down. Certain programs may allow buyers to purchase with as little as 3% down. Industry experts agree, however, that 20% is ideal for financial stability and eliminating monthly fees such as private mortgage insurance. Closing costs and loan fees represent the other area, and can be anywhere from 3 – 10% of the mortgage’s total. Having these funds in order before you purchase your home helps eliminate stress and concerns.

Monthly costs

A separate area that buyers need to consider is the monthly fees associated with their loan. Monthly costs will include the mortgage payment, taxes, and any private or government mortgage premiums. Homeowner’s insurance and any supplemental insurance policies, such as flood insurance, also need to be considered. Finally, there are monthly or seasonal maintenance costs and utilities that should to be budgeted for, unless you handle these yourself – including snow removal, landscaping, trash services, water bills, and heating/cooling costs. It’s also wise to have additional funds on hand in the case of needed repairs or other financial surprises.

The financial benefits of owning a home

Of course, it’s not all bad news when you’re planning for your home’s financial needs. While owning a home does require some capital, it yields significant financial benefits. One of the most important is building equity. Instead of paying rent to another person, you’re establishing a financial foundation that you’ll theoretically be able to cash out if you ever sell your home. Another benefit that’s less well-know are the tax benefits; many home owners are able to write off certain costs associated with closing their loan during the purchase year. Subsequently, mortgage interest can often be deducted each year. Capturing the tax benefits of home ownership varies depending on your individual tax situation. Consult an expert for more information.

Are you a Las Vegas buyer who is considering purchasing a home? Contact Sydnee Johnson today to arrange for a personalized financing consultation and to learn more about planning for the financial demands of buying a home.

What Mortgage Documents Are You Signing? Part 2

The last blog post explored the key documentation that buyers could expect to see during the mortgage application and approval process. Once you’ve identified the right property for you and been approved for a mortgage, there are a number of other documents that you’ll need to sign at closing. While each mortgage or lender may include slightly different documentation, here’s a closer look at the core documents that buyers will see and sign on the day of their closing.

Signing Mortgage DocumentsHUD-1 Settlement Statement

One of the key documents that your lender will provide you with is a HUD-1 Settlement Statement. This document specifically outlines the fees and closing costs associated with your loan. On average, buyers can expect closing fees to range from 3 to 7 percent of the loan’s total. Ask your lender for a HUD-1 Settlement that lists the time and date of closing, as well as the closing costs. This information may be useful when filing your taxes.

The Mortgage Note

During the final closing meeting, you’ll be presented with the mortgage note. During this meeting, all the paperwork is signed which provides you with legal ownership of your home. The Mortgage Note (sometimes just called The Note) is an agreement stating you’ll repay the mortgage according to the negotiated terms and it also outlines what happens if you default on the loan.

The Deed of Trust/Mortgage

The Deed of Trust/Mortgage is a legal document whereby the borrower transfers the title to the property to a third party as security for the lender. Once the loan is paid in full, the trustee transfers title back to the borrower. Essentially, this document confirms that the house is collateral for the funds that are being loaned to you; should you fail to repay your loan, it gives the lender the right to foreclose on the property or sell it to pay off the debt. The Deed of Trust also states that you’ll maintain a homeowner’s insurance policy and keep the house in good condition.

Deed, Affidavits, and Declarations
 
During the closing, the seller will sign the deed and transfer ownership of the house to all the buyers. While the deed will be held in trust until you’ve paid off the loan, you’ll receive a copy for your files. You’ll also be asked to sign affidavits and in some cases declarations, stating that the information you’ve provided is correct, that you’ll be living in the house, and that any repairs noted were made before closing.

Are you a home buyer in Las Vegas that’s considering financing a home? Contact Sydnee Johnson today to learn more about your options and to discuss any questions you might have, including what mortgage documents you need to sign.

What Mortgage Documents Are You Signing? Part 1

As your home’s closing date approaches, you may be wondering what mortgage documents you will need to sign. In the first of a two-part series, here is a closer look at the key documents any home buyer can expect to review and sign throughout the application process and during the closing phase. Finalizing your mortgage and signing all the paperwork is the last step before you officially own your dream home. But the financing process is so paper intensive – from application to close – that many prospective buyers feel slightly overwhelmed as if they’re adrift in a sea of paperwork. Here’s a closer look at some of the key documents that you need to be aware of throughout the mortgage process.

Signing Mortgage DocumentsUniversal Residential Loan Application

The Universal Residential Loan Application is the preliminary document that interested buyers file when applying for a mortgage. Your loan application contains a wide variety of information about you, including your basic contact information, your finances, and information about your loan. The application will be supplemented by secondary documentation related to your income and employment, financial assets, expenses and liabilities. Your lender will also need the details of the property that you hope to purchase. In combination with your credit report, this information is used to determine if you’re eligible for financing.

Pre-Approval Letter

After you’ve submitted an application, a lender that gives you a preliminary approval will provide you with a pre-approval letter. This letter serves as a conditional commitment to give you a loan up to a specific maximum. The pre-approval letter will help you during the search and offer process, and assist you in determining how much house you can afford. Once you’re ready to move ahead with your actual mortgage, you’ll be required to resubmit your application noting any changes and providing any additional documentation needed.

Good Faith Estimate

A Good Faith Estimate provides a detailed overview of the costs associated with your loan. It breaks down the component parts of the loan. It details other costs that will need to be paid, such as home appraisal fees, title search fees, and the expenses associated with pulling your credit report. It will also outline what funds you need to have on hand during the close, to cover the down payment and any additional closing costs.

Truth-in-Lending Form

The Truth-in-Lending document is a legally required statement that outlines the total costs of your loan. It gives information on your principal total, financing charges, a payment schedule, and your annual percentage rate (APR) – including interest rates, points, fees, and any other charges.

Are you a home buyer in Las Vegas that’s considering financing a purchase? Contact Sydnee Johnson today to learn more about your options and to discuss any questions you might have, including what mortgage documents you need to sign.

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