Give Back to Your Home

With these inexpensive updates, you can increase the resale value of your home and create a space you love even more.

Home Improvement

It is the season for giving thanks, so why not give back to your home. With these inexpensive updates, you can increase the resale value of your home and create a space you love even more.

Break Out the Paint

A little bit of paint can go a long way. While it is expensive to replace kitchen cabinets, sanding and painting them costs much less and can make the room feel brand new. The same goes for other rooms in your home. Just remember that neutral colors are better for resale value because they appeal to the most people. Paint can also refresh your old front door and add a pop of color to your house.

Bathroom Basics

There are plenty of ways to update your bathroom without breaking the bank. Bathtub looking a little worn? Paint it with epoxy. This gives the tub a fresh look and immediately improves the look of your bathroom. You can also replace outdated fixtures such as the sink and bath tub faucets to add a fresh touch. If you have old brass fixtures, a bottle of brass darkening solution can give them an antique look for less than $20.

Shine a Light

Every room in your house can benefit from new light fixtures. The first step is deciding what areas need an upgrade. Take an inventory of your lights and choose which ones to replace based on their positive impact.  A new chandelier above your dining room table adds a focal point to the room, while adding track lighting to a living room creates ambience and focuses attention on the furniture. In the kitchen, adding track lighting to the bottom of the cabinets makes tasks easier and adds a sophisticated finish. Just remember to choose something that reflects your style and matches the other lighting in the house.

Curb Appeal

You don’t have to hire a professional landscaping company to give your outdoor space a fresh look. If you already have patio furniture, buy new all-weather pillows to refresh the space. Brighten up a sidewalk or pathway with wire-free battery powered lights. Not only will it make the path safer, it is warm and welcoming. Other simple landscaping tasks include adding a border or edging material around your garden beds, building a fire pit or planting inexpensive perennials.

No matter what home improvement projects you choose, there is a simple and inexpensive way to make old spaces look new. Not only will you enjoy the updates now, they can also improve the resale value of your home in the future.

Opinions expressed above are the personal opinions of Kenneth Wohl and meant for generic illustration purposes only. For specific questions regarding your personal lending needs, please call RCB Bank at 855-BANK-RCB. With approved credit. Some restrictions apply.  RCB Bank is an Equal Housing Lender and member FDIC. RCB Bank NMLS #798151. Kenneth Wohl NMLS #453934.

Leave a Reply

Related Articles

Understanding Closing Costs

Closing costs can be a surprise, as they are more than most buyers expect, especially first-time homebuyers.

Understanding Closing Costs

Now that you have found the perfect home, it is time to tie up all the loose ends and finalize the sale. Part of this process is to pay your closing costs. Closing costs can be a surprise, as they are more than most buyers expect, especially first-time homebuyers. With a good banker and real estate agent on your side, you can better understand and prepare for these costs. So, what is included in your closing costs?

What’s Included in Closing Costs?

Closing costs can be made up of multiple items. Costs from the lender may include origination fees, points, underwriting, processing, appraisal and a credit report, among other fees. These costs can vary from lender to lender and depend on several factors, but generally cost between $1,000-$6,000. Fees from the title company, such as a closing fee, title insurance, abstracting and the survey, can range between $1,000-$5,000 depending on the title company, state and individual transaction details. There will also be money needed at closing for your prepaid items. These consist of prepaid interest from the day you close through the end of the month, one year of homeowners insurance, as well as reserves deposited into your escrow account for taxes and insurance. Realtor fees are also included in closing costs. The exact amount varies from company to company, but generally they earn about 6%.

Know the Market

In the right market conditions, you may be able to get some or all of your closing costs paid for by the sellers. If homes aren’t selling as quickly or the market is slower, you have a stronger chance of the seller taking on some or all of the closing costs. In a market where houses are selling quickly and there are multiple bids on a property, the chances are slim that a seller will take on closing costs. Certain loan types as well as down payment programs will allow or limit the amount the seller can pay in closing costs.

Homeowner’s Insurance

While your real estate agent or banker may have a company they recommend to use for homeowner’s insurance, you should shop around and compare prices. Often, you can get a better deal or bundle your car and home insurance for savings.

Buying a house is a complicated process, but the more you know about closing costs, how much they cost and whether  you can get any of them paid for by the seller can make the process that much easier.

Opinions expressed above are the personal opinions of Kenneth Wohl and meant for generic illustration purposes only. For specific questions regarding your personal lending needs, please call RCB Bank at 855-BANK-RCB. With approved credit. Some restrictions apply.  RCB Bank is an Equal Housing Lender and member FDIC. RCB Bank NMLS #798151. Kenneth Wohl NMLS #453934.

Leave a Reply

Related Articles

How to Get a Mortgage with Student Loan Debt

Even if you have student loan debt, there are viable paths to homeownership.

door mat with moving boxes

Even if you have student loan debt, there are viable paths to homeownership. The process is easier if you understand debt-to-income ratio, the importance of your credit score and the possibility of refinancing your student loans.

Understand your Debt-to-Income Ratio (DTI)

To determine your debt-to-income ratio your lender divides all your monthly debt payments by your monthly gross income. Debts may include student loans, auto loans, credit card debt, child support payments and your potential mortgage payment. For example, if you make $3,000 per month and owe $1,100 in debt per month, your debt-to-income ratio is roughly 37% ($1,100/$3,000 = 36.667). Depending on the lender, they will likely want to your debts to be less than 45% of your income.

If your student loans are in deferment, the mortgage lender often considers 1% of your total student loans as the monthly payment. However, if you have a document from the student loan lender that indicates you will be on an income-based repayment plan or will pay less than the 1% amount, your mortgage lender may adjust the monthly debt amount.

Increase your Credit Score

Before you apply for a mortgage, you should check your credit score with Equifax, TransUnion and Experian. Generally, if your credit score is below 640, building up your score before you apply for a mortgage can help. One thing that can impact your credit score is your outstanding credit card balance in relation to your card limit – known as credit utilization. When you pay down credit card debt, it helps improve your credit utilization amount. Other ways that may improve your credit score include paying your bills on time, asking for higher credit limits and disputing any inaccuracies in your credit reports.

Refinance Your Student Loans

Another way to lower your DTI ratio is to refinance your student loans and get a lower monthly payment. If you have a strong credit score and meet the refinance qualifications, you may get a lower interest rate on your student loans, which usually means a lower monthly payment. However, you should talk to your mortgage lender before refinancing. Refinancing does appear as new debt on a credit report and may negatively impact your credit score in the short-term.

Even if it takes a little longer than you expected, you may still fulfill your dreams of owning a home. Talk with your lender to find out what you need to do to get started.

I am here to help, even if you are not an RCB Bank customer. Feel free to call me at 405.608.5291 or email me at kwohl@bankrcb.net.

Opinions expressed above are the personal opinions of Kenneth Wohl and meant for generic illustration purposes only. For specific questions regarding your personal lending needs, please call RCB Bank at 855-BANK-RCB. With approved credit. Some restrictions apply.  RCB Bank is an Equal Housing Lender and member FDIC. RCB Bank NMLS #798151. Kenneth Wohl NMLS #453934.

Leave a Reply

Related Articles

How to Get a Mortgage when you are Self-Employed

Just because you're self-employed doesn't mean you can't get a mortgage.

Do not assume that just because you are self-employed you can’t get a mortgage. While there are different requirements, you can still work with your lender to buy the home of your dreams.

First Steps

A good way to prepare for the mortgage application is to improve your credit score. Paying off consumer or credit card debt should be a top priority. Banks also like when people who are self-employed have cash reserves to pay the mortgage for six to 12 months. A larger down payment of 10-20% may also offer lenders assurance when applying for a mortgage.

Documentation

Your biggest hurdle to getting a loan when self-employed may be income verification. Since your tax return likely has significant deductions, it may not show the amount of income needed to qualify for a mortgage, you will need additional documentation to show your banker. Your banker may ask for proof of any debts or assets you own, your business taxes for the last two years, earnings statements, savings and retirement balances and profit and loss statements may be required when you apply. Many lenders may also want to see that you have been in business for two years or more and have a low debt-to-income ratio.

Ways to Plan Ahead

  • Remember to keep your business and personal finances separate. This will make it easier for the lender to evaluate your liabilities and examine your business profit and loss.
  • If you have trouble getting a mortgage on your own, a co-borrower may improve your chances for approval.
  • Do not be afraid to call and ask your mortgage lender questions about how to make the process easier. Even if you are not initially prepared to get a mortgage, they can talk you through the process and make suggestions as you prepare to buy.

If you are self-employed, getting a mortgage may be a challenge. This does not mean you cannot get a mortgage, it simply means you may need to prepare differently to buy a home.

I am here to help, even if you are not an RCB Bank customer. Feel free to call me at 405.742.4871 or email me at jpenny@bankrcb.net.

Opinions expressed above are the personal opinions of Alex Penny and meant for generic illustration purposes only. For specific questions regarding your personal lending needs, please call RCB Bank at 855-BANK-RCB. With approved credit. Some restrictions apply.  RCB Bank is an Equal Housing Lender and member FDIC. RCB Bank NMLS #798151. Alex Penny NMLS #1535836.

Leave a Reply

Related Articles

Buying a Foreclosed Property

If you are considering buying a foreclosed property, it is good to familiarize yourself with the process.

If you are considering buying a foreclosed property, it is good to familiarize yourself with the process. There are typically three times during this process when it is possible to buy the property: pre-foreclosure, at auction and after the foreclosure.

What is foreclosure?

A foreclosure is the process where a bank or financial institution takes ownership of a property due to a variety of reasons, but most commonly because of lack of payments on a loan.

Buying pre-foreclosure

It is possible to buy a home before the foreclosure is finalized and the homeowner has vacated the property. The bank is not involved in the sale yet and allows investors to make the homeowners an offer on the home. The benefit is that the buyer can inspect the home and get relevant details before purchasing. The seller also gets a chance to sell the home quickly and without it affecting their credit rating as much. If the sellers do accept your proposal, be prepared to close quickly. You must complete the sale before the lender puts the home up for auction.

Buying at Auction

Once the legal process is complete, the foreclosed property is sold at a public auction to the highest bidder. This process is completed in-person or online, and you are required to register if you want to bid. If you win the bid, you generally have to pay in full immediately after the auction. The bidding generally opens with an automatic starting price of the amount owed on the property.

To buy a foreclosure at auction, there are some things to keep in mind:

  1. Do your research — When you buy a foreclosure at auction, you do not receive any guarantee that the property is free of liens or encumbrances. This means you could potentially buy a property that has claims against the property, such as a tax debt. Do a title search on the property you are interested in to make sure you can afford any additional costs. Title searches can be done at the county courthouse, or a title company can run a title for you for a fee.
  2. Condition – Since the property belongs to the homeowners up to the point of foreclosure, you are not likely to get a chance to see inside the property. Look closely at any available pictures and drive by the property to inspect the exterior before the auction.

Buying post-foreclosure

Post foreclosures or real estate owned properties are those that did not sell at auction. To try and cover their loss and fees, banks will sell the properties through real estate agencies. The properties are generally sold “as is” and may need repairs. This makes the home inspection essential since you will pay for any repairs. It is also smart to get an appraisal to ensure the bank price is fair.

Buying a foreclosure requires a little more research and knowledge of the process, but armed with that knowledge you can often get a great deal on your next home. Connect with a local RCB Bank lender to get answers to your lending questions. Give us a call or visit our online Mortgage Center.

Opinions expressed above are the personal opinions of Kenneth Wohl and meant for generic illustration purposes only. RCB Bank is an Equal Housing Lender and member FDIC. RCB Bank NMLS #798151. Kenneth Wohl NMLS #453934.

Leave a Reply

Related Articles

3 Ways Your Mortgage Rate is Determined

Understanding how these three factors can help you better understand mortgage interest rates and the home buying process.

Interest rates for a mortgage are not as simple as you might think. There are ways to impact your interest rate such as a good credit score, money for a down payment or a shorter loan term. However, there are factors that depend on the current market and are simply out of your control.  When a loan is fixed, or doesn’t adjust, for 15 – 30 years, a lot of factors are considered and priced into the interest rate. Some factors that may impact your rates include inflation, the Federal Reserve and the value of Mortgage Backed Securities.

Inflation

Inflation has a large but somewhat predictable impact on mortgage interest rates. Banks have to price in the interest rate for inflation so they can make money over the life of the loan. When inflation is rising, so are mortgage rates. If the value of the dollar is lower, it decreases the buying power of the dollar. Rates then go up to compensate for that difference. Inflation has been low for the last decade and has caused mortgage rates to be historically low. In times that the inflation rate is lower, you will typically see interest rates lower.

The Federal Reserve

The second thing to remember is that the Federal Reserve does not set mortgage rates. The Federal Reserve, commonly referred to as “The Fed” raises and cuts short-term treasury rates based on changes in the economy. These rates impact the rate indexes used by some to price credit card interest rates, some car loans and lines of credit. Mortgage rates are also generally impacted by the economic market and the Fed’s fiscal policy.

Mortgage-Backed Securities

Mortgage-Backed Securities are also a factor in determining mortgage interest rates. Mortgage-Backed Securities are a bundle of loans grouped together and sold from the bank that originated them. Banks sell loans for a profit and use that money to make new loans. Once the loans are sold, investors buy and sell them on the open market. What investors are willing to pay for these Mortgage-Backed Securities impacts mortgage rates. When a lot of Mortgage-Backed Securities are purchased, mortgage interest rates are typically lower. When demand is lower due to other investment opportunities, mortgage interest rates may rise.

Understanding how these three factors can help you better understand mortgage interest rates and the home buying process. The more knowledge you have about the mortgage process, available loan options and your individual qualifications, the more satisfying your homebuying experience will be. Connect with a local RCB Bank lender to get answers to your lending questions. Give us a call or visit our online Mortgage Center.

Opinions expressed above are the personal opinions of Alex Penny and meant for generic illustration purposes only. Qualifications and other restrictions apply for loans with approved credit. RCB Bank is an Equal Housing Lender and member FDIC. RCB Bank NMLS #798151. Alex Penny NMLS #1535836.

Leave a Reply

Related Articles

Three ways to Prepare for the Spring Real Estate Market

Spring clean your finances to help improve your credit or help you get a better interest rate on your mortgage.

Large Home

Spring has historically been the busiest time of year for the real estate market. Maybe it’s the brighter weather, greener earth or the sweet smells of blossoms blooming that stir a desire to move. Whether you are buying or selling your home, there are several ways to spring clean your finances to help improve your credit or help you get a better interest rate on your mortgage.

Consider refinancing your student loan debt.

Student loans can have high interest rates, and are frequently set up on a repayment plan based on your current income. In the case of an income-based plan, you are normally paying interest (and maybe not all the interest you accrue on a monthly basis). Some loan programs require a bank to count a percentage of the student loan balance toward your monthly debt if there is not a scheduled payment showing on your credit report. This percentage is typically more than your required payment, which increases your debt-to-income ratio and can potentially cause you not to qualify. Amortizing your loan and setting a specific repayment time will pay your student loans off over time and may boost your credit as you pay down the balance instead of it increasing due to unpaid interest.

 

Lower your debt-to-income ratio.

Your debt-to-income ratio is an important factor in mortgage qualification. If you have multiple credit cards payments or high interest loans, your monthly payments can be quite high. If you are able to consolidate your credit card debt or loans into one payment and lower your overall monthly cost, then you can lower your debt-to-income ratio as well.

 

Limit credit inquiries.

When you apply for credit, e.g. credit card or loan, the lender generally does a hard inquiry or “hard pull” on your credit. These hard inquiries may hurt your credit score, especially if you allow several of them within a short time span. When you are shopping for a mortgage, the inquiries from banks or mortgage companies made within a 14-day period should only count as one hard hit. This should not affect your credit score dramatically. It is when you are applying for a variety of credit types (car loan, furniture store, credit card, etc.) in a short time that it may hurt your credit score.

In contrast, when you check your own credit score, it is considered a soft inquiry and does not affect your credit score.

There are many ways to improve your credit, but most are going to be situation dependent. A trusted mortgage lender will be able to help you and offer guidance on how to improve your credit score. This may take a few months to a year, or it could be as quick as a few weeks depending on your personal circumstance.

The more knowledge you have about the mortgage process, available loan options and your individual qualifications, the more satisfying your homebuying experience will be. Connect with a local RCB Bank lender to get answers to your lending questions. Give us a call or visit our online Mortgage Center.

Opinions expressed above are the personal opinions of Alex Penny and meant for generic illustration purposes only. Qualifications and other restrictions apply for loans with approved credit. RCB Bank is an Equal Housing Lender and member FDIC. RCB Bank NMLS #798151. Alex Penny NMLS #1535836.

Leave a Reply

Related Articles

Extra Mortgage Payments: The Gift that Keeps on Giving

If you pay just a little extra on your mortgage each month or year, you will owe significantly less over the life of the loan.

Extra Mortgage Payments

A mortgage is one of the most expensive and long-term commitments you will make in your life. So how can you both save money and take years off your loan? It’s actually pretty simple. If you pay just a little extra on your mortgage each month or year, you will owe significantly less over the life of the loan.

Although most borrowers know their home is a valuable asset, they often don’t consider how much interest adds to their overall cost. Your mortgage is amortized, meaning you pay regular installments on principal and interest over the specified period of time. Every time you pay your mortgage, interest costs decrease and the principal increases. If you pay nothing extra on the mortgage, the total amount you owe over the life of the loan will not change. However, pay a little extra and you can take years off your loan and save thousands of dollars in interest.

Let’s look at this closer. If you get a 30-year loan for $250,000 and it accrues 4% interest per year, you will end up paying $179,674 in interest over the life of the loan. This is a big number, but one you can reduce by budgeting some extra money for your mortgage.

Using the example I’ve just described, the monthly mortgage payment is $1193.54 per month. If you can make one extra mortgage payment per year, you can save over $28,000 in interest over the life of the loan! Make it a Christmas present and pay a little at a time or make one lump payment at the end of each year. Paying just a little extra on your mortgage is the gift that keeps giving.

The more knowledge you have about the mortgage process, available loan options and your individual qualifications, the more satisfying your homebuying experience will be. Connect with a local RCB Bank lender to get answers to your lending questions. Give us a call or visit our online Mortgage Center.

Opinions expressed above are the personal opinions of the author and meant for generic illustration purposes only.  The monthly payment calculation expressed above is not for any specific loan type and is meant for generic illustration purposes only. For specific questions regarding your personal lending needs, please call RCB Bank at 855-BANK-RCB. With approved credit. Some restrictions apply. Equal Housing Lender, Member FDIC. RCB Bank NMLS #798151. Kenneth Wohl NMLS #453934.

Leave a Reply

Related Articles

VA Loan Offers More Than $0 Down

To all United States service members, veterans and spouses, thank you for your service and sacrifice to our nation.

If you are preparing to buy or refinance a home, take a look at your VA Loan option, which offers lower out-of-pocket financing than traditional lending options. Here are five benefits of VA Loans.

No. 1. 100% Financing

The U.S. Department of Veteran Affairs (VA) guarantees this loan, allowing you  to finance the entire purchase price of the home. Nearly all conventional and FHA loans require the loan-to-value to be below 100%.

No. 2. No Monthly Mortgage Insurance Costs

Most loans with less than a 20% down payment require you to pay for a mortgage insurance premium (for FHA loans) and private mortgage insurance, commonly referred to as PMI, for conventional loans.

While there is no monthly mortgage insurance, there is a one-time funding fee, which ranges from 1.5% – 3.3%, based on your eligibility and down payment. You may also be exempt from the funding fee if you were awarded a service-related disability.

You are also able to roll your funding fee into the loan to help keep your out-of-pocket expenses lower at closing.

No. 3. More Flexible Underwriting Standards

A VA Loan is the only loan that does not require student loans deferred over  one year to be included in the debt–to-income ratio, which is used by lenders to determine how much you can afford to borrow. Also, a VA loan allows for higher debt ratios than other loans like FHA, conventional and rural development.

No. 4. You Can Have Two VA Home Loans at a Time

VA does allow you to purchase another home if you are choosing to move prior to selling your current VA-financed home. It depends on how much entitlement you have left from the previous purchase and the loan limits in the area where you are buying your new home. Your mortgage lender can help you calculate your entitlement and qualification.

No. 5. VA Jumbo Option Available 

In most counties today, the maximum loan limit for conforming conventional and VA loans is $484,350. However, there are certain counties where the VA maximum loan limit exceeds $484,350; these loans are known was VA Jumbo loans. These amounts are current as of the time of writing this article. Most Jumbo loans require 20% down payment; however, VA loans do not. Depending on your eligibility, you may be able to pay a 10% or less down payment.

You can learn more about eligibility requirements at www.benefits.va.gov. Search VA home loans.

When it comes to obtaining a VA Loan, you want to work with a qualified VA mortgage lender.  RCB Bank is proud to offer a VA loan benefit to our active duty service members and veterans. We can help you determine your eligibility and what you qualify for. Plus, once you start the loan process, we’re here to walk you through start to finish.

Connect with a local RCB Bank lender to get answers to your lending questions. Give us a call or visit our online Mortgage Center.

Opinions expressed above are the personal opinions of the author and meant for generic illustration purposes only.  For specific questions regarding your personal lending needs, please call RCB Bank at 855-BANK-RCB. With approved credit. Some restrictions apply. Equal Housing Lender, Member FDIC. RCB Bank NMLS #798151. Kenneth Wohl NMLS #453934.

Leave a Reply

Related Articles

The Truth on Three Spooky Mortgage Myths

With Halloween around the corner, here are three spooky myths about getting a mortgage.

mortgage myths

There is a lot of incorrect information out there that may persuade you not to pursue getting a home. Before you run in fear, talk to a lender first about your concerns, so we can help you know what is truth or myth.

Myth #1: You have to have a 20% down payment in order to get a mortgage – WRONG.

There are many down payment options. For instance, if you are a veteran, or buying in a rural location, you could potentially get into your new home with little to no down payment.

Several first-time homebuyer loan options start with a 3% down payment, and Federal Housing Administration (FHA) offers financing options starting with a 3.5% down payment.

With all of these down payment options, homeownership may be more BOOlievable than you think.

Myth #2: Being Pre-Qualified is the same as being Pre-Approved – WRONG.

Pre-qualification is based on un-verified information. This is an initial look at your application to make sure there are no major red flags that may prevent you from getting a mortgage. For example, a pre-qualification may use an estimate of your credit score and compare your income with your debts to see if you can support a mortgage payment. The pre-qualification process is quick and is based on information you provide to your lender. A pre-approval is a more extensive process where the lender uses verified information (e.g., your credit report and pay stubs) to determine which mortgage you actually qualify for.

Without a pre-qualification or pre-approval, home shopping may become a frightfully batty experience.

Myth #3: Shopping around for lenders will hurt your credit – WRONG.

Multiple inquiries can hurt your credit, but FICO allows for rate shopping by grouping all similar inquiries made within a 30-day timeframe as one hard-hit. This allows you to shop around as long as it is within 30 calendar days.

When shopping lenders, be sure to ask what fees they charge, what the interest rate and annual percentage rate (APR) are, and if you aren’t putting 20% down, what is the cost for private mortgage insurance (PMI).

Don’t be spooked by misinformation about mortgages. Talk to a lender and get the truth. I’m here to help you have a FANGtastic homebuying experience, even if you are not an RCB Bank customer. Connect with a local RCB Bank lender to get answers to your lending questions. Give us a call or visit our online Mortgage Center.

Opinions expressed above are the personal opinions of the author and meant for generic illustration purposes only. For specific questions regarding your personal lending needs, please call RCB Bank at 855-BANK-RCB. With approved credit. Some restrictions apply. Equal Housing Lender, Member FDIC. RCB Bank NMLS #798151. Alex Penny NMLS #1535836.
Leave a Reply

Related Articles

Home Appraisal Guide

One of the most important aspects of getting a mortgage is the appraisal.

Mortgage appraisal— a professional opinion of a property’s market value, determined by a licensed appraiser.

An appraiser will visit the property and examine the interior and exterior of the property. They will take pictures, measure rooms, note upgrades and examine other aspects of the house for functionality. Once they finish looking at the property, they will research similar homes through various assessor databases and local real estate portals.

Appraisal guidelines protect consumers. Lenders are required to give you copies of all appraisal reports and other written valuations. If you have questions, talk to your lender. Open and honest communication will help you better understand the mortgage process.

May I choose my appraiser?

No. Your lender must request the order. Lenders, realtors and appraisers must follow Appraiser Independence requirements to ensure the appraisal is fair. You can read the guidelines on Fannie Mae’s website, fanniemae.com.

Why are appraisals important?

An appraisal is important because it provides you with valuable information about the property so, as a buyer, you do not pay more than the home is actually worth. It can also play a big role in determining the amount of money you may borrow when purchasing or refinancing your home.

I got a home inspection; do I still need an appraisal?

Yes. The home inspection does not replace an appraisal and vice versa. A home inspection is an in-depth, objective examination of the physical structure and major components of a home. A home inspector will not determine the value of the home; they help you assess potential risks that may affect your investment.

How long before I receive my appraisal?

Appraisals can take anywhere from a few days to a few weeks to complete due to many variables that may affect the time frame. For instance, during the peak of real estate season, it may take longer due to the backlog of requests. Rural, luxury or complex properties also take more time to complete based upon availability of comparable sales data.

We are to here to help, even if you are not an RCB Bank customer. Connect with a local RCB Bank lender to get answers to your lending questions.

Invest in yourself. RCBbank.com/GetFit

Opinions expressed above are the personal opinions of the author and meant for generic illustration purposes only. For specific questions regarding your personal lending needs, please call RCB Bank at 855-BANK-RCB, With approved credit. Some restrictions apply. RCB Bank is an Equal Housing Lender and Member FDIC. RCB Bank NMLS #798151. Kenneth Wohl NMLS #453934.

Leave a Reply

Related Articles

3 Ways to Finance Vacation Property

With loan rates still low, now may be time to buy

Vacation home lake front mountains

When I take a family vacation, I typically rent a home versus a hotel for the home-like atmosphere and amenities. This has me wondering why I don’t invest in my own vacation property. With mortgage rates still near historic lows, now may be the time to buy property in your favorite vacation destination.

Since government loan programs (FHA, VA, USDA) are not available for second home financing, let’s look at other options for financing vacation property.

Cash-Out Refinance

Cash-out refinance involves refinancing your primary residence mortgage and receiving cash for the remaining equity. You need sufficient equity in your home for this to be an option. For example, if you owe $100,000 on your home worth $500,000, you may be able to cash out up to 80% loan-to-value (LTV), which would be $400,000 minus the $100,000 you owe. This leaves you with $300,000 in cash to purchase your vacation property. You can choose term options from 10-30 years fixed or adjustable, plus you’ll have one monthly payment, not two.

Home Equity Line of Credit (HELOC)

HELOC involves attaching your loan to your primary residence. Typically, this loan will not pay off your current mortgage, but be a second lien adding to your monthly expense on top of your current mortgage. Depending on the lender, this loan may go to a LTV higher than 80%, which helps if you need more funds than what 80% will allow. The drawback is this type of loan is typically adjustable and at a higher rate than today’s conforming loans.

Conventional Financing

Conventional Financing obtains a loan on your vacation property, not your current primary as discussed in the prior two options. The loan process is similar to purchasing a primary residence with small differences in minimum down payment and reserve requirement. Second homes require at least 10% down. The lender will need to verify you have sufficient funds for closing and between 2-6 months’ worth of reserves to cover both your primary and second home loan payments.

Defining a Second Home

There are specific requirements for defining a second home, e.g., needs to meet minimum distance requirements from your primary residence, or located in a recreational area, such as a lake or ski resort. Fannie Mae’s second home requirements are:

  • Occupied by the borrower for some portion of the year
  • Restricted to one-unit dwellings
  • Suitable for year-round occupancy
  • Borrower must have exclusive control over the property
  • Must not be rental property or timeshare arrangement
  • Cannot be subject to any agreements that give a management firm control over the occupancy of the property

Purchasing a second home in the same city where your child is going to college does not qualify as a second home; it is defined as an investment property, which has stricter guidelines and higher down payment requirements.

Scouting a Second Home

One way to start scouting for a second home is to find a real estate agent who is familiar with your desired location. They can fill you in on weather and traffic patterns, help you evaluate the location and amenities of a property and provide information about comparable sales, resale prospects and long-term property value.

Before you start your search, talk with a lender so you know upfront what you can afford and your specific financing options.

We are to here to help, even if you are not an RCB Bank customer. Connect with a local RCB Bank lender to get answers to your lending questions.

Invest in yourself. RCBbank.com/GetFit

Opinions expressed above are the personal opinions of the author and meant for generic illustration purposes only. With approved credit. Some restrictions apply. RCB Bank is an Equal Housing Lender and member FDIC. RCB Bank NMLS #798151. Kenneth Wohl NMLS #453934.
Leave a Reply

Related Articles

Q&A: Accepting Mortgage Gift Funds

accepting gift funds

Gift Funds 101

If you plan to accept a monetary gift to help you cover homebuying costs, familiarize yourself with how gift funds may be used and who are acceptable donors.

May I use gift funds on all types of purchases?

Borrowers seeking a mortgage to secure a principle residence or second home may use funds received as a personal gift from an acceptable donor. Restrictions vary between loan types as to how gift funds may be used, for down payment, closing costs or reserves subject to minimum borrower contribution requirements. Gifts are not allowed on an investment property.

Who can give a gift?

Gift funds can only come from acceptable donors. A gift can be provided by a relative, fiancé or domestic partner.  A relative is more closely defined as the borrower’s spouse, child, dependent or any other individual who is related to the borrower by blood, marriage, adoption or legal guardianship.

What documentation is required?

Gifts may be evidenced with a gift letter signed by the donor. The gift letter must specify gifted dollar amount, date funds were transferred, donor statement that no repayment is expected and donor identification, including name, phone, address and relationship to the borrower.

How are gift funds verified?

Lenders will gather documentation to confirm sufficient funds are in the donor’s account or have been transferred to the borrower’s account. There are three different ways to verify funds:

  • Copy of the donor’s check and borrower’s deposit slip
  • Copy of the donor’s withdrawal slip and borrower’s deposit slip
  • Lender can document donor gave closing agent the gift funds in the forms of a cashier’s check, certified check or another official check.

Can equity be gifted?

Gifts of equity are allowed by the seller to the buyer on principle residences and second home purchases. The gift represents a portion of the seller’s equity in the property, and is transferred to the buyer as a credit. This still requires a gift letter and the settlement statement listing the gift of equity.

Gift donors also should familiarize themselves with the IRS annual gift tax rules.

Taxes may be owed if the gift amount exceeds the annual exclusion. Please consult with a tax professional.

We are to here to help, even if you are not an RCB Bank customer. Connect with a local RCB Bank lender to get answers to your lending questions.

Invest in yourself. RCBbank.com/GetFit

Opinions expressed above are the personal opinions of April Bow and meant for generic illustration purposes only. RCB Bank is an Equal Housing Lender and member FDIC. RCB Bank NMLS #798151. April Bow NMLS #1446997.
Leave a Reply

Related Articles

Homebuilding Financing Simplified

Building a house is a two-loan process.

First, you need temporary construction financing to cover the building costs. Then, you need permanent financing for your mortgage. Eliminate unnecessary stress by obtaining both loans at one location. Here are three reasons why.

No. 1. Cost Savings

Financing both loans at one place, like a bank, streamlines your loan process. You provide information to one place, which uses it to prepare both loans. You may save on appraisal costs too. By using the same bank for both loans, you may only have to pay for one appraisal and then a less expensive appraisal certificate to certify the construction is complete.

No. 2. Mortgage Pre-Approval

Securing both loans through the same bank may reduce your risk of mortgage delays by allowing you to get pre-approved early for permanent financing. A pre-approval is based on documentation you provide at the time, assuming your situation does not change.

No. 3. Efficiency

During construction, your lender works with the builder or contractor to ensure invoices are paid based on the work done and materials provided. Your lender monitors the progress of the project so payments are only made for work completed.

By financing both loans through the same bank, the lender can schedule closing on your mortgage to occur quickly once the contractor gives the okay to move in.

You can have as much or as little involvement in the construction process as you want. Some customers prefer the builder to work directly with the bank. Others prefer to be hands on.

Find a lender you trust. At RCB Bank, we are flexible and adapt to your needs. We’re reachable, by phone, in person, or at the job site, if necessary. Let us help you save time, money and hassle on your homebuilding project. Connect with a local RCB Bank lender to get answers to your lending questions.

Invest in yourself. RCBbank.com/GetFit

This article is published in Value News, April  2019 Issue, valuenews.com.
Opinions expressed above are the personal opinions of the author and meant for generic illustration purposes only. For specific questions regarding your personal lending needs, please call RCB Bank at 855-BANK-RCB, RCB Bank is an Equal Housing Lender and member FDIC. RCB Bank NMLS #798151. Jake Dwyer NMLS #1413664
Leave a Reply

Related Articles

How to avoid delays in your mortgage process

Get$Fit Tip: Limit financial changes

Proceed with caution Mortgage Matters

Obtaining a mortgage requires a lot of documentation, multiple forms, financial records, third-party paperwork; not to mention multiple layers of inspection to verify your information is accurate. Financial changes during your loan process can invalidate paperwork and delay your loan closing. Here are four ways to avoid delays in the loan process.

No. 1: Inform lender of a job change ASAP.

You submit pay stubs and W2’s to your lender, but, right before closing, your lender may request employment verification from your employer. If your job or income status changes, this can potentially create a holdup in the loan process; or worse, your loan may be denied, even if you were pre-approved. A job change requires updated documentation and approval verification. Some jobs have a probationary period, which too may affect your loan approval process. If you are planning a job change, let your lender know as early as possible as this can also help you avoid delays.

No. 2: Resist increasing debt.

A few days before closing, your lender runs a final credit check to check for new debt. If you open a new credit card, finance new appliances or furniture, buy a car, co-sign on another loan or take on more debt, new documentation is required. Resist the urge to make big purchases during your loan process. New debt may affect your loan qualification.

No. 3: Avoid big financial changes.

Most lenders require up to two months of bank statements for proof of funds used for your home transaction. Changing banks during your loan process may cause a delay in obtaining the necessary statements. Moreover, any large deposits made into your account need explanation. Most loans will allow a gift, but these funds require additional documentation signed by you and the person making the gift.

No. 4: Keep credit card balances low.

A large portion of your credit score reflects your credit utilization. Keeping credit card balances under 20 percent of your available balance helps your credit score. When it comes to your mortgage, your credit score helps determine both your interest rate and mortgage insurance (if required). A higher credit score helps you qualify for better rates, saving you money over the life of your loan.

Before you make major financial changes, talk to your lender first. This will help you avoid delays or setbacks during your mortgage process.

We are here to help even if you’re not an RCB Bank customer. Connect with a local RCB Bank lender to get answers to your lending questions.

Invest in yourself. RCBbank.com/GetFit

This article is published in Value News, November 2018 Issue, valuenews.com.
Opinions expressed above are the personal opinions of Kenneth Wohl and meant for generic illustration purposes only. For specific questions regarding your personal lending needs, please call RCB Bank at 855-BANK-RCB, RCB Bank is an Equal Housing Lender and member FDIC. RCB Bank NMLS #798151. Kenneth Wohl NMLS #453934
Leave a Reply

Related Articles

Ways to save at closing

Get$Fit Tip: Compare lender fees for better savings.

Woman dreaming about house holding piggy bank.

Did you know closing costs vary between lenders? If you want to save the most money on your closing costs, it pays to shop around. Here’s why.

Interest rates are restricted by market conditions. Your options are limited.

Buyers often shop interest rates, choosing the lowest rate possible to help their overall savings over the life of the loan. Yet, rates change daily, sometimes more than once per day depending on different economic factors.

When comparing lenders’ rates for secondary market financing, all lenders base their rates off the same market trading; therefore, all quotes should be similar, typically within .125 percent, .250 percent at most.

Lender fees vary from lender to lender giving you more options to lower your costs.

Lender origination charges, application fees, processing and underwriting fees can vary significantly between lenders. The best way to compare lenders is to request Loan Estimates. Their fees will be listed under Closing Cost Details on page 2, section A.

You can also cut costs by comparing homeowner’s insurance coverage and premiums.

Oftentimes, the largest expense on your Closing Disclosure is homeowner’s insurance, another expense that varies between companies.

Generally, you will need 14 months of homeowner’s insurance set aside in your escrow account paid at closing. If you choose a policy that charges $1,800 annually versus a $2,500 annual policy, you can save $800 at closing.

Know where your money is going.

Ask your lender plenty of questions. A good lender can answer all your questions and make you feel comfortable about your spending decisions. Buying a house is one of the most expensive things you will buy. Why spend more than you have to?

Talk to a lender to explore your options. Lenders at RCB Bank are happy to help answer questions even if you are not a customer. Give us a call or visit our online Mortgage Center.

Invest in yourself. RCBbank.com/GetFit

Opinions expressed above are the personal opinions of Alex Penny and meant for generic illustration purposes only. For specific questions regarding your personal lending needs, please call RCB Bank at 855-BANK-RCB, RCB Bank is an Equal Housing Lender and member FDIC. RCB Bank NMLS #798151. Alex Penny NMLS #1535836.
Leave a Reply

Related Articles

Financing options for new home construction

Get$Fit Tip: Plan short-term and long-term financing before you build.

home under constrcution

When it comes to financing the construction of a new home, you have two options.

1. Let a builder finance construction.

Common with larger building companies. The builder may ask you to put down a deposit while the company carries the cost of the construction. You get to choose floor plans, paint colors, fixtures and so on.

When construction is complete, you will obtain a typical mortgage, as if you purchased an existing home. Construction costs are built into the purchase price.

2. You finance construction.

Typical with smaller building companies or individual builders. You may choose to the carry the construction loan yourself. This type of financing is usually offered only at your local or regional banks and credit unions.

Your lender will determine the value of your home during your loan application by ordering an appraisal on the building and design specs.

Construction loans are short-term loans, generally 12-18 months. Costs vary by lender, so do your homework.

The majority of lenders will finance up to 80 percent of the property’s value.

Once approved, your loan is a closed line of credit. You can withdraw from the account as certain construction stages are completed. For example, after you acquire the land, you will need to pay for dirt work, then the foundation, the framework and so on.

Your lender will likely prepare a payment plan – a draw schedule – to guide the disbursement of funds through each stage. Periodically, the bank will send someone to check on the progress and verify draw schedule and budget.

Plan before you build.

Cost overruns

There will always be cost overruns or change orders. You may decide to add a larger patio or extra lighting. These items seem small individually, but they add up quickly. When planning your budget, conservatively allow for a 10 percent overage.

Variable monthly payments

Construction loans are short-term loans with adjustable interest rates. Think of it like a credit card payment. You pay the interest each month on the amount you borrowed. Prepare for payment fluctuation.

Permanent financing

Make sure you are qualified for permanent financing before taking out a construction loan. Some lenders may do construction loans but not permanent mortgages. Others do both.

Get pre-qualified for your permanent mortgage before you build.

Make certain you are pre-qualified for long-term financing before you build to avoid a potential financing nightmare when your new home construction is complete.

Talk to a lender to explore your options. Lenders at RCB Bank are happy to help answer questions even if you are not a customer. Give us a call or visit our online Mortgage Center.

Invest in yourself. RCBbank.com/GetFit

Opinions expressed above are the personal opinions of Alex Penny and meant for generic illustration purposes only. For specific questions regarding your personal lending needs, please call RCB Bank at 855-BANK-RCB, RCB Bank is an Equal Housing Lender and member FDIC. RCB Bank NMLS #798151. Kenneth Wohl NMLS #453934.
Leave a Reply

Related Articles

Rural Development Home Loan Advantage

Get$Fit Tip: Know all your financing options before you start home shopping.

Rural Neighborhood

USDA Rural Loan Requirements

If you feel like homeownership may be out of reach because you don’t have a large down payment, look into the U.S. Department of Agriculture Rural Development loan (RD) program, which provides up to 100 percent financing to qualified households in eligible areas.

Fun fact: Rural America includes 72 percent of the nation’s land mass, according to the USDA RD 2017 Performance Report.

Rural Development Loan Advantages

100% financing

Rural Development loans may only require you to pay closing costs. The majority of other loan programs may require at least 3 percent down.

Lower Interest Rate

Because Rural Development loans are backed by the government, they typically are lower interest rate loans than most conventional loans.

Keep in mind, interest rates vary daily and depend on a number of factors, such as loan amount, credit score and rate lock.

Seller Concessions

Rural Development loans allow the seller to contribute up to 6 percent of your closing costs, which may cover your out of pocket needs entirely.

Mortgage Insurance Reduction

Most loans require mortgage insurance (PMI) if you pay less than a 20 percent down payment. PMI covers the loan in case of default and may require an upfront fee and/or is included in your monthly loan payment. With a Rural Development loan you may be able to finance the upfront portion and receive a discounted rate on the monthly fee.

Talk to a lender to explore your options, and to find out if you qualify for a Rural Development loan.

Lenders at RCB Bank are happy to help answer questions even if you are not a customer. Give us a call or visit our online Mortgage Center.

Opinions expressed above are the personal opinions of Alex Penny and meant for generic illustration purposes only. For specific questions regarding your personal lending needs, please call RCB Bank at 855-BANK-RCB, RCB Bank is an Equal Housing Lender and member FDIC. RCB Bank NMLS #798151. Alex Penny NMLS #1535836.
Source: USDA, https://www.rd.usda.gov/
Leave a Reply

Related Articles

Guide to defining your second home

Vacation home

When it comes to buying a second home, understanding how to define the property will help you better understand your mortgage options.

Let’s go over the basic home types defined by Fannie Mae.

Principle Residence, a property the borrower occupies as his or her primary residence.

Second Home, a property that must be occupied by the borrower for some part of the year, restricted to residences suitable for year-round occupancy. Borrower must have exclusive control of the property, must not be rental property or timeshare, and cannot be subject to any agreements that give management firm control over the occupancy of the property.

Investment Property, a property owned but not occupied by the borrower.

The property types seem straightforward, but here are a couple examples of when it gets tricky.

College homes

Many parents planning to purchase a home for their kids while they attend college will often apply for a second home mortgage.

If a home is considered as someone’s primary residence, regardless if that person (or student) is obligated or not on the loan, the home cannot be someone else’s secondary. In this case, the college home is an investment property.

Vacation homes

Another area of confusion are timeshares or homes managed by a management group, e.g., rental company. Most often, these do not qualify for conventional financing.

Your vacation home may qualify as a second home if it is in your full control and not generating income.
Remember, second homes are a second residence for the borrower to enjoy or use when not occupying their primary residence.

If you plan to rent the property while you are not using it, it may not qualify as a second home.

If you’re planning to purchase a vacation home or second property speak to a lender before you start the mortgage process.

The more you know about your loan options and your individual qualifications, the more satisfying your homebuying experience is.

Lenders at RCB Bank are happy to help answer questions even if you are not a customer. Give us a call or visit our online Mortgage Center.

Opinions expressed above are the personal opinions of the author and meant for generic illustration purposes only.  RCB Bank is an Equal Housing Lender and member FDIC. RCB Bank NMLS #798151. Kenneth Wohl NMLS #453934. 
Leave a Reply

Related Articles

Benefits of an escrow account

A home ownership payment manager

House and calendar

It should be no surprise that as a homeowner you are responsible for expenses beyond your mortgage payment, such as property taxes, homeowner insurance and mortgage insurance, to name a few.

Benefit #1: Escrow is a personal payment manager

An escrow account is a service provided by your lender to help you manage and budget home-related costs. A benefit of an escrow is you make one monthly payment that includes your mortgage principle and interest, plus a percentage of your insurance and tax expenses. Your lender takes care of paying the various bills due throughout the year.

Most lenders require escrow accounts on mortgages greater than 80 percent loan-to-value and are set up at closing.

Benefit #2: Escrow lets you spread out annual costs over time.

Another benefit of an escrow is you don’t have to stress to come up with large lump sum payments.

How escrow works

Your lender adds up your additional home-related costs outside your mortgage payment – taxes, homeowners insurance, mortgage insurance, flood insurance, etc. – They divide the total cost of these payments by 12 (months) and add it to your monthly mortgage payment.

Generally, a cushion of 1/6 of the total escrow charges is collected at loan closing to account for any unexpected increase in premiums when it’s time for the lender to make the yearly payment.

Your escrow account builds with each monthly payment. Funds are withdrawn from your escrow to pay for bills as they are due.

Can your escrow payment change over time? 

Yes, if there are changes in insurance costs and taxes, your escrow payment will also change.

Annually, your lender will review your escrow. The review looks at updated taxes and insurance costs to ensure the amount paid into the account is enough to cover costs. If costs have decreased, due to a change in insurance for example, there may be an overage and you would be issued a refund. If costs have increased, you will be required to make up the shortfall.

There are usually two ways to cover a shortfall.

1. Pay the shortfall in one lump sum.

Your full payment covers the past payments and brings your account to balance. An increase in monthly payments is necessary to cover the increased costs for future payments.

2. Divide and pay the amount over the next 12 payments.

Paying back your shortage over time will increase your monthly payment more than paying a lump sum because you are paying the shortage plus the increase in costs over the next year.

It’s important to understand, if insurance costs and taxes increase, your monthly payment will also increase going forward.

Get$Fit Tip: Shop around for insurance.

If you want to keep your monthly payment as close as possible to what you pay now, an annual check on your homeowner policy or other insurance plans may help. It is your responsibility to review your policy and shop around for the best deal, not your lender.

Make sure your policy is in line with current market rates and has not increased more than a few percentages, which is typical for some insurance companies. It’s always a good idea to comparison shop and request quotes. If you find a better deal, contact your lender to update your escrow account information.

Opinions expressed above are the personal opinions of Kenneth Wohl and meant for generic illustration purposes only. For specific questions regarding your personal lending needs, please call RCB Bank at 855-BANK-RCB. RCB Bank is an Equal Housing Lender and Member FDIC. RCB Bank NMLS #798151. Kenneth Wohl NMLS #453934.
Leave a Reply

Related Articles

What NOT to do during your mortgage process

Four tips to avoid closing delays

Woman holding hand up

You found your dream home, made an offer and it was accepted. You’re pre-approved for a loan and feeling good. Your mind is now focused on moving. Hold on. A pre-approval is not a loan guarantee. To ensure a smooth mortgage process, avoid these four things during closing.

DO NOT take on new debt.

I realize with a new home comes the desire to purchase new furniture, appliances and sometimes even a shiny new car for the garage. Some stores offer no-money down and zero percent interest credit. It’s tempting to start purchasing.

Taking on new debt may raise your debt ratio (the relationship of income to debt). Banks and mortgage companies weigh this number heavily to determine your credit worthiness. Raising it could cause heartache at the end of your transaction. Loan officers run another credit check a few days before closing to verify no new debt has been obtained.

DO NOT Change Jobs.

The stability of your job and income are essential to your loan approval. Your capability of repayment is ultimately what the lender needs to see. Changing jobs during the purchase process could complicate things. For example, if switching from a W-2 salaried status to a contractor or full commission job would most likely disqualify you (that income typically needs two years of income for calculation). A bank typically needs to see 30 days on the job, at least one pay stub and time to verify employment. Verification of income is sent to the employer to make sure the income matches the paystub and that you are still employed, as well as a verbal verification a day or so before closing.

DO NOT stop paying your bills.

A new home purchase can become expensive when you are out closing costs that aren’t part of your typical monthly obligations. You have additional costs like movers. Even if money gets tight, pay your bills. Remember, loan officers will re-pull credit at the end of the transaction.

DO NOT pack up important papers.

You’re stoked about moving. Maybe you’ve already started packing. Make sure you don’t pack up tax documents, bank statements, paystubs or any other important documents that might be requested by your loan officer. The quicker you can respond to the processing requests of your loan, the quicker it will be approved. Delaying the response can delay closing.

Buying a home is exciting, but until you sign the papers at closing, your mortgage isn’t final. Loan officers issue a pre-qualification based on the documentation you provide. The final approval is issued on documents retrieved between signing the contract and loan closing. The final underwriting decision is made on a final credit review, tax transcripts, verification of employment and verification of deposit, NOT the initial credit, tax returns, paystubs and bank statements.

Loan officers are here to make this process as smooth and as simple as possible. Be open with your loan officer and make sure they completely understand your situation and that one of the above doesn’t become a gotcha moment.

Lenders at RCB Bank are happy to help answer questions even if you are not a customer. Give us a call or visit our online Mortgage Center.

Opinions expressed above are the personal opinions of the author and meant for generic illustration purposes only.  RCB Bank is an Equal Housing Lender and member FDIC. RCB Bank NMLS #798151. Kenneth Wohl NMLS #453934. 
Leave a Reply

Related Articles

Talking Mortgage

Talking Mortgage graphic

Lending officers have their own language. We try not to use unfamiliar jargon when working with customers, but “talking mortgage” is second nature to us. Let me clarify some lingo my customers have called me out on.

1003

Your loan application. Pronounced ten-o-three. This is a uniform document all lenders use as their mortgage application.

LTV

Loan-to-value. This is a ratio of what you owe on your home versus what it is worth. In a home purchase transaction, this is also your loan balance versus your purchase price. The industry uses the lower ratio — appraised or purchase price — as the value of the home. Therefore, your purchase LTV may be higher than your actual LTV if your appraisal comes in higher than your purchase price.

CLTV

Combined loan-to-value. This is like your LTV, but includes the overall loan amount versus the overall value when combining a first and second mortgage.

DTI

Debt-to-income ratio. Also known as back-end ratio. A percentage of a consumer’s monthly gross income that goes toward paying debts.

Front-end ratio

Mortgage-to-income ratio. Indicates which portion of an individual’s income is used to make mortgage payments. It is computed by dividing your projected monthly mortgage payment by your monthly gross income. Front-end and back-end ratios are used by lenders to determine how much you can afford to borrow.

PMI

Private mortgage insurance. Commonly referred to as MI or mortgage insurance.  This is required on loans for which the buyer makes less than a 20 percent down payment or has less than 20 percent equity on a refinance. This insurance policy protects the lender in case the borrower ends up in foreclosure.

CD

Closing disclosure. A required disclosure given to all borrowers on mortgage loans three days prior to closing. This is a five-page document that details loan terms, payments, fees and other costs.

LE

Loan estimate. This document mirrors the closing disclosure, but is issued at the beginning of the loan application. Since the two documents look alike, it is easy to compare fees, costs and changes from start to finish.

Hazard Insurance

Homeowners insurance.

 

When it is time to buy or refinance a home, talk to a local lender first. The more you know about the mortgage process, available loan options and your individual qualifications, the more satisfying your homebuying experience is.

Lenders at RCB Bank are happy to help answer questions even if you are not a customer. Give us a call or visit our online Mortgage Center.

Opinions expressed above are the personal opinions of Kenneth Wohl and meant for generic illustration purposes only.  For specific questions regarding your personal lending needs, please call RCB Bank at 855-BANK-RCB, RCB Bank is an Equal Housing Lender and member FDIC. RCB Bank NMLS #798151. Kenneth Wohl NMLS #453934.
Leave a Reply

Related Articles

Homebuying Property Inspection Waiver

What you need to know

Large Home

Appraisals are a necessary part of the homebuying process, and for years, they were required to obtain mortgage financing on all new purchases or refinances.

Now, in some cases, the Federal National Mortgage Association, known as Fannie Mae, may waive an appraisal for eligible transactions.

Not all homes qualify.

In fact, Fannie Mae states that the majority of transactions will not receive a Property Inspection Waiver (PIW), meaning an appraisal is required to establish the market value.

Minimum standards for a PIW include one unit properties at or below 80-percent loan-to-value for principal residences and second homes.
Fannie Mae uses a database of more than 26 million appraisal reports as well as a proprietary analytics system to determine if the current market value of a property is acceptable or should be confirmed. For example, properties located in disaster-impacted areas will require new appraisals.

If your property receives the inspection waiver, you still have a choice to order your own appraisal.

Appraisals are important.

An appraisal verifies the value of the property you are purchasing. It helps you and your lender ensure you are not overpaying based on current market conditions.

A PIW, in my opinion, will best serve refinances. There are limitations for refinances too. Not all will qualify.

Do your homework.

A PIW may shorten your mortgage process by eliminating the need to schedule an appraisal, which will lead to a reduction in loan origination costs.

It’s important to be informed and get all the facts regarding your mortgage financing options.

I can help answer your questions, even if you are not an RCB Bank customer. Give me call at 405.608.5291 or email me at kwohl@bankrcb.net.

Opinions expressed above are the personal opinions of the author and meant for generic illustration purposes only. For specific questions regarding your personal lending needs, please call RCB Bank at 855-BANK-RCB, RCB Bank is an Equal Housing Lender and Member FDIC. RCB Bank NMLS #798151.
Source: Fannie Mae Property Inspection Waiver Fact Sheet
Leave a Reply

Related Articles

How new tax law affects mortgage deductions

W-4 tax sheet with money and house on it

You’ve likely heard about the new tax plan and the changes coming to our tax code. I am not a certified public accountant (CPA) and cannot speak to how this may directly affect you individually, but I can share how the changes may affect your mortgage tax deduction.

One benefit of home ownership is being able to deduct your property taxes and mortgage interest on your income taxes.

For example, let us say you buy a home for $275,000 and the taxable value of the home is 1.25 percent of the sales price. On a mortgage at 80 percent loan-to-value accruing interest at 4 percent, you can expect to pay around $8,700 in interest and $3,400 in taxes, a total of $12,100, the first year. This amount will decrease each year as you pay down your principal.

Under the current tax code, the standard deduction is $6,350 for single filers and $12,700 for married filing jointly. If you had no other deductions, it would benefit you to itemize if you were single but not if you were married filing jointly.

The proposed tax plan will increase the standard deduction for single filers to $12,500 and married filing jointly to $24,000.

Using our example, the $12,100 mortgage deduction falls below the standard deduction for both single and married filing jointly.

Owning a home is an American dream for many people, and there are benefits to home ownership other than a tax break. Before you decide to purchase, be sure to look at the full picture of ownership.

With many current deductions and potential phase-outs of those deductions if the new tax proposal passes, it’s important to do your homework. Talk with your CPA and ask them to show you a future tax plan based on the proposed law.

When you decide to buy or refinance, first talk to a local lender. The more knowledge you have about the mortgage process, available loan options and your individual qualifications, the more satisfying your home buying experience will be.

Lenders at RCB Bank are happy to help answer questions even if you are not a customer. Give us a call or visit our online Mortgage Center.

Opinions expressed above are the personal opinions of Kenneth Wohl and meant for generic illustration purposes only.  For specific questions regarding your personal lending needs, please call RCB Bank at 855-BANK-RCB, RCB Bank is an Equal Housing Lender and member FDIC. RCB Bank NMLS #798151. Kenneth Wohl NMLS #453934.
Sources: taxpolicycenter.org and irs.gov
Leave a Reply

Related Articles