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Seaport Real Estate Group Blog

Written by Robert H. Ruth

VA Loans are one of the very best loans available in the marketplace, but unfortunately, they are not as well understood as they should be, so with Veterans Day fast approaching, I thought it would be nice to explain the basics behind the VA loan program.

 Basic Eligibility Guidelines 

You may be eligible for a VA Home Loan if you meet one or more of the following criteria:

  • You served 90 consecutive days of service during wartime, OR
  • You have served 181 days of service during peacetime, OR
  • You have more than 6 years of service in the National Guard or Reserves, OR
  • You are the spouse of a service member who died in the line of duty or as the result of a service-related disability.
  • If you are no
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Written by Robert H. Ruth

Sometimes, during the course of processing a loan application, new information becomes evident that was either not disclosed or not known at the time of loan application. While not always deal breakers, this new information can cause delays in the transaction, anxiety on the part of the homebuyers, and frustration for all the parties involved. Let’s look at a few of these items in greater detail:

 

Changes in Income to Qualify

Knowing the borrower’s income enables a lender to determine whether the borrower has the ability to repay the mortgage. Usually the income is reliable and fairly easy to determine, say a borrower who receives a salary and can easily document their earnings by providing W2’s and most recent

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Written by Robert H. Ruth

Remember when you were a kid, and you got a really bad cold or the flu?  You couldn’t go outside and play with your friends, because if you got sweaty from running around the symptoms could linger, or worse, you might relapse. And then when you did feel better, and were allowed to go outside again, your mom made you wear a coat or a sweater, even though it was warm outside. The reason was that your mom believed you were in a somewhat weaker state and might catch a cold again if you got a chill. So she made you bundle up as a way to protect you from getting sick again. 

I shared this with you because when I first began my career, I wanted to learn how to do VA Loans, and in order to learn the program I sought out the

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Written by Tim Bray

 

I get it..Your Aunt Jenny, Cousin Uma or Brother Sam just received their real estate license and you feel compelled to utilize their services in order to keep the peace within your family tree which happens to be shaped like a wreath.  STOP BEING A PLEASER as it is you who will be adversely affected by the negative outcome of utilizing an agent who is not at the top of his/her game.  Next Step…

You just located a Superstar Agent or team of agents but they are located over 30 miles away from you.

 15 Years ago I would have recommended that you utilize the services of a location specific agent as they really had their finger on the pulse of print advertising. Today print advertising is simply a tool for agents to market

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Written by Robert H. Ruth

Last week, in part 1 of this topic, I explained that the purpose of PMI is to offset the additional risk faced by the lender in giving a loan to a borrower when they purchase a property with less than 20% down.

In that post, I explained the basics of Borrower Paid Mortgage Insurance (BPMI), which is the most widely used type of Private Mortgage Insurance.

  • My comparison showed that the expense of PMI is completely driven by the amount of down payment a borrower can make and their credit score. 
  • I also explained that a borrower would pay the PMI until they reach a 20% equity position based upon the initial amortization schedule of their loan or,
  • The BPMI will terminate automatically when the loan gets to 78%
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Written by Robert H. Ruth


Private mortgage insurance (PMI) is required whenever the borrower’s down payment is less than 20% of the home’s value. This insurance protects the lender in the event the borrower fails to pay the mortgage and defaults on the loan.

  • The industry belief is that a borrower who has more equity invested in their home would be less likely to default on their mortgage since doing so would mean they would lose their equity in the event of a foreclosure. 
  • So the lending industry views a borrower with 20% or more equity as a lower risk than a borrower with less than 20% equity.
  • However, the reality is that there are many borrowers who manage their finances well and have not been able to accumulate the savings for
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By Tim Bray

BE AWARE THAT OFTEN IT DOESN'T MATTER TO THE REAL ESTATE AGENT IF YOUR OVERPRICED LISTING EVER SELLS

Free Advertising for the Agent

Every "For Sale" sign advertises the agent's company and the agent. Many signs contain the agent's Web site and cell phone number. Some even sport a large color photograph of the real estate agent.

Think of it like a giant billboard for the agent.

If the home is located on a major thoroughfare, all the better. Probably thousands of drivers pass the sign each day and will see that agent's name. And after the sign post is in the ground, it's not costing that agent one thin dime to leave it there.

Agents Find Buyers Through Listings

  • Sign Calls
    If a buyer wants to find out the price of a home,
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Written by Robert H. Ruth 

Before I answer this question, let’s do a mortgage reality check…just so you can see how much you actually pay over time on a mortgage loan.

Let’s assume a borrower buys a house for $ 450,000 and puts down 20%, which is $90,000. They finance the remaining $ 360,000 with a 30 year fixed rate loan at 4.00%.  Here is a breakdown of their purchase transaction:

Sales Price

$ 450,000

20% down payment

( 90,000)

Loan Amount

$ 360,000

P/I payment at 4.00% for 30 years

$ 1718.70

What I want you to know is that the total amount you pay back over 30 years is much larger than what you are borrowing, and the total amount of

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PART 2

Written by Robert H. Ruth 

In my last post I announced that the Agencies (Fannie Mae and Freddie Mac) have decided to allow financing on certain transactions without an appraisal being performed to determine the collateral value of the property. This is an interesting development to be sure, but it is not an entirely new concept. This has been allowed on certain refinance transactions for about a year now, and so, based upon the success of the refinance initiative, the Agencies have decided to open the box a bit wider and allow this for a subset of purchase transactions.

To review our posting from last week, this is being done because:

  • FNMA and FHLMC are becoming more comfortable with the idea that their home valuation databases
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Written by Robert H. Ruth 

Yes you read that correctly; no appraisal required on some purchase transactions.  Obviously this is not going to be the case on every loan, but this is a possible game changer in the lending industry.  Let’s examine this development in greater detail in this post.

 

Appraisals are one of the key components of a mortgage loan

  • When a homebuyer goes to a lender for a mortgage the lender wants to make certain that the house is sufficient collateral for the mortgage loan and for this reason an appraisal is done on behalf of the lender.

  • Historically, the lender has relied upon the services of a licensed, professional Real Estate appraiser to perform the appraisal. The appraiser would visit the house to

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