Financing

WHAT’S THE POINT OF ESCROW?

March 7, 2018 by Beatrice Bloom

Princeton Town Topics – Let’s Talk Real Estate – March 7, 2018

WHAT’S THE POINT OF ESCROW?

Paying a monthly mortgage payment is a reality for most homeowners. But what does that payment include? Principal and interest, yes – but it may also include escrow. Escrow is a kind of holding fund required by your lender, with funds used to pay your taxes and homeowner’s insurance. Some types of mortgages, like FHA loans, require escrow accounts. Other lenders require escrow when your down payment is below 20 percent of the home’s value (in addition to requiring private mortgage insurance or PMI).

What’s the point of escrow? Like PMI, escrow provides the lender with some assurance that required fees – taxes and insurance – are being paid, which in turn assures the home won’t go up for tax sale or be left unprotected in the event of an insurance-covered event. To some degree, having an escrow account can provide the homeowner with the peace of mind of knowing these costs will be paid from their escrow account. The trade-off: The funds in your escrow account aren’t available for investing. Like PMI, you’ll probably be able to stop escrow payments once you reach that magical 80 percent LTV figure (FHA loans are an exception). Keep an eye on your balance so you know when you can cancel and begin paying those costs directly.

WHAT IS PMI?

February 14, 2018 by Beatrice Bloom

Princeton Town Topics – Let’s Talk Real Estate – February 14, 2108

WHAT IS PMI?

The spring buying season is around the corner, and if you’re shopping around, you’ve probably heard a lot about private mortgage insurance (or PMI) – and you may be wondering what it is. The answer, fortunately, is simple: PMI is a type of insurance that’s required if your down payment is less than 20 percent of the home’s price. It’s intended to provide some protection to the mortgage company in case you wind up defaulting on your mortgage and your home goes into foreclosure.

How much will your insurance cost? It varies based on the amount of your down payment and your credit score. Most insurance ranges from about 0.3 percent to 1.5 percent of your original mortgage, payable each year.

The good news is, you can drop PMI once your remaining mortgage balance equals 80 percent. In fact, your lender is required to automatically drop PMI once the balance reaches 78 percent of your original mortgage amount. The exception: FHA loans where insurance is required; for these loans, you’ll pay the insurance for the life of the mortgage – it cannot be canceled once your balance drops below 80 percent of your home’s value. Something to remember when shopping for your next home loan.

SMART FINANCIAL MOVES FOR 2018 BUYERS

January 31, 2018 by Beatrice Bloom

Princeton Town Topics – Let’s Talk Real Estate – January 31, 2018

SMART FINANCIAL MOVES FOR 2018 BUYERS

In the market for a new home this year? Here are six steps to take now to make sure your finances are in good order:

Order copies of your credit report. Look them over carefully and report any errors immediately so they can be corrected.
Don’t apply for new credit or loans. Doing so could cause your credit score to drop or have a negative bearing on how a mortgage lender views you as a prospective borrower.
Check your debt-to-income ratio. Pay down credit cards as much as you can, but don’t empty your savings entirely.
Arrange for your down payment. Having an adequate down payment means you can avoid PMI, and it can also help in the mortgage approval process.
Be realistic about how much home you can afford. Selling price is just one factor; don’t forget recurring costs like insurance and property taxes.
Have an idea of what your closing costs might be. When you sign the contract for your new home, you can expect to pay somewhere between 2 percent and 5 percent of the home’s cost in fees.

Doing your financial homework means you’ll be in a better position to make an offer – and it also helps avoid unpleasant surprises down the road.

WHAT ARE SELLER CONCESSIONS?

November 29, 2017 by Beatrice Bloom

Princeton Town Topics – Let’s Talk Real Estate – November 29, 2017

WHAT ARE SELLER CONCESSIONS?

For a buyer, closing costs can be hefty, and you might be tempted to take out some of the “sting” by offering a lower price on the home of your dreams. But offering a lower price is just one way to give yourself some financial breathing room at the closing table. Asking for seller concessions is another.

Seller concessions can include just about any costs a seller is willing to give back to you. It can include repair costs for issues uncovered during the home inspection, and it can also include closing costs that are normally covered by the buyer. In fact, while a seller can’t contribute to the buyer’s down payment, it’s perfectly OK – and increasingly more common – to ask for concessions to cover closing fees.

For the seller, offering a concession means the buyer will effectively be able to roll their closing costs into their mortgage, and that can make your home much more attractive than a similar home that offers no concessions. In fact, if you want a fast sale or the market is slow, offering a buyer’s concession can be a smart way to attract more buyers, receive a better price and get to the closing table faster.

FED SET TO RAISE RATES: LOCK IN YOUR MORTGAGE NOW

November 1, 2017 by Beatrice Bloom

Princeton Town Topics – Let’s Talk Real Estate – November 1, 2017

FED SET TO RAISE RATES: LOCK IN YOUR MORTGAGE NOW

For years, we’ve enjoyed historically low mortgage rates that have made it easier for many people to buy a new home. But finance and economy experts say that when the Federal Reserve meets in December, they’re poised to raise interest rates for the third time this year. That means if you’re planning on buying a home, now is the time to get your finances in order and put in your mortgage application.

You also have a little time to clean up your credit to make sure you get the absolute best rates. Start the process today by requesting your credit reports from all three major bureaus — visit www.annualcreditreport.com to request them for free (once every 12 months). Next, start loan shopping. You can find plenty of websites with mortgage rates listed for major lenders nationwide, but don’t overlook your own personal bank and credit union. Even a half a percent can make a big difference; comparing a $400K mortgage at 4% and 4.5%, that half percent could wind up costing you about $42,000 over 30 years. Once you find a loan you like, lock it in — then get started on the search for your ideal home.

EQUIFAX BREACH: WILL FREEZING YOUR CREDIT AFFECT YOUR MORTGAGE APPLICATION?

October 4, 2017 by Beatrice Bloom

Princeton Town Topics – Let’s Talk Real Estate – October 4, 2017

EQUIFAX BREACH: WILL FREEZING YOUR CREDIT AFFECT YOUR MORTGAGE APPLICATION?

The Equifax credit breach left more than 140 million consumers wondering if they’re the next target for identity thieves, but fortunately, you can exercise some damage control by freezing your credit report. The only problem is, if you’re applying for a mortgage, you need to time the freeze so it won’t cause problems.

Lenders use your credit information to decide if they’ll offer you a mortgage and what rate you’ll receive. If your reports are frozen, the lender won’t be able to see your information. On the other hand, if you delay in freezing your reports and you are targeted by identity thieves who wind up opening new accounts in your name, your credit can take a major hit that may take months to clear up.

What to do? If you’re planning on applying for a mortgage, talk to your lender about your concerns ahead of time. They should be able to provide you with a rough timeline of when you can safely freeze your reports without interfering with their due diligence. Once the process is complete, you can contact the three bureaus and freeze your reports. To find out more about freezing your reports in NJ, visit this site.

Financing

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