Here is an article you may find helpful.
October 15, 2015
Here is an article you may find helpful.
October 15, 2015
Michael Trickey is author of the best-selling new real estate mortgage book, Finding Home: Everything You Need to Know – And Do – For Home Buying Success. Mike is a CPA, and an expert in residential real estate finance transactions. With 36 years of experience in the field, he can help those in your audience to more responsibly purchase and finance the largest single asset most will buy.
Mike will come on your show or to your event and talk about common challenges first-time homebuyers face and how to overcome them. These include challenges with obtaining a down payment, dealing with high credit card and student loan balances, and where to get the right kind of mortgage loan. He will also discuss the impact of current events, such as recent increases in mortgage loan interest rates, trends toward multigenerational housing, and likely impacts of the new Administration’s housing policies.
Mike wrote Finding Home to help his readers through the entire home buying process. He breaks the myriad of steps into bite-sized tasks. He takes the mystery out of the specialized terms and jargon.
Mike can speak to your audience about:
1. Assessing their readiness, financial foundation, and credit
2. Determining how much they can comfortably afford to pay for a home
3. Budgeting to be a homeowner
4. Finding lenders who offer the mortgage loan programs suited to their situation and needs
5. Getting pre-approved for a mortgage loan
6. Determining their wants and needs in a home
7. Working through where they want to live, from state to city to neighborhood to home
8. Finding good homes for purchase that meet their wants and needs
9. Exploring neighborhoods and homes
10. Working with a realtor
11. Preparing and negotiating a contract
12. Getting their mortgage loan
13. Inspections and pre-closing preparations
14. Closing on their home
15. Things to do before moving
16. Moving in and securing their home
Please send inquiries to:
Michael W. Trickey, CPA
553 Capital Drive, Lake Zurich, IL 60047
twitter.com @trickeytweet, facebook.com/MichaelTrickeyAuthor
Join me at the Fox Lake, Illinois Public Library on Tuesday, 10-24-2017 at 7:00 pm. I will be giving a seminar on how to buy your first home. We will go through a brief exercise to help you figure out your wants and needs, where you want to live, and how much you can afford. I hope to see you there!
By Ilyce Glink| July 20th, 2017
Buying a home can be stressful, especially if it’s your first home purchase. CPA Michael Trickey, managing director of The Berkshire Group in Lake Zurich, Illinois, hopes his new book, Finding Home: Everything You Need to Know – and Do – For Home Buying Success, will help first time homebuyers navigate the complicated homebuying process.
Below is a Q&A with Trickey about the book.
• Tell me about “Finding Home” – what sets it apart from other homebuying books?
Finding Home brings the homebuying process to life by following a young couple (Jack and Eva) through all the steps of finding and buying the right home for them. Throughout the book, Jack and Eva interact with family and friends, asking and answering the same types of questions first time homebuyers will have in their searches. This conversational style provides a comfortable way of learning the vocabulary and key concepts necessary for successful homebuying.
Along the way, checklists, questionnaires and forms are filled in for the young couple, providing the reader with examples and ideas. Blank versions of the checklists, questionnaires and forms are available for download at the Finding Home’s companion website, www.findinghomebook.com.
Finding Home is segmented into five main sections:
1. Qualifying yourself;
2. Knowing your priorities;
3. Understanding mortgage loans;
4. Finding the right location and home for you;
5. Buying the home.
• What makes the homebuying process so intimidating?
The homebuying process has many steps unfamiliar to new homebuyers.
1. There is specialized jargon to learn.
2. Buying a home requires commitment of time and money, and intent to remain in one place. There is a fear of making a costly mistake.
3. Buyers need to depend on help, advice and services from many people they’ve never met before. It is unclear who to trust.
4. There is uncertainty about how much the buyer can afford, and homes they want may seem beyond their reach.
5. Even a good bid might be rejected as someone else could offer a better price or more favorable terms.
6. Most new buyers need to qualify for a mortgage loan. There are many forms and documents to complete and provide.
7. Timelines can be frustrating. The buyer will be evaluated according to lender’s criteria, and they may be denied.
• What causes the most confusion for homebuyers?
Buyers are often confused about the amount of money they will need before and at the time they close on their home, especially if they are financing the purchase of their home. Lenders require homebuyers to put some of their own money towards the purchase price as a downpayment. The lender may charge points and/or fees. Depending on the day of the month on which the loan closes, the buyer may have to prepay interest to the lender for the remaining days in the month. There are also fees for appraisals, inspections, title insurance, document preparation, and a host of other items.
Even if the homebuyer is not using a mortgage loan to finance the purchase of their home, they will still have closing costs in excess of the downpayment. These include the fees for appraisals, inspections, title insurance, document preparation, and a host of other items.
• What is the biggest mistake homebuyers make? How can they avoid it?
The biggest mistake homebuyers make is jumping in without being adequately prepared. Buying a home requires preparation, knowledge, reliance on professionals, and time. Homebuyers can avoid many mistakes by educating themselves before they begin the process. Investing time reading books, articles, blogs, and other sources of information will pay dividends many times over in savings of time, money, anxiety and frustration.
Common mistakes made due to lack of preparation include:
1. Borrowing more money than the buyer can afford;
2. Failing to consider closing costs;
3. Buying a home in a neighborhood that does not meet the buyer’s needs and wants;
4. Obtaining a loan with terms that can lead to significant payment shock;
5. Providing partially filled-in forms to mortgage brokers or lenders, who say they will fill in the blanks for the buyer;
6. Not checking out and comparing loan programs and terms offered by multiple lenders.
• The housing market is very competitive for buyers right now, what can they do to make sure they get their dream home?
Buyers need to figure out, and prioritize, what they really want and need in a home, and the general location of the home. Then they need to figure out what they can comfortably afford to pay, both upfront and on a monthly basis.
Knowing those parameters is the starting point for their home search. It helps them to focus their efforts, and maximizes their chance for success. They will be able to more effectively use online search tools and set preferences and filters to help locate homes in desired locations that fit their parameters. They can then research and walk the neighborhoods to gain a feel for each one. By doing this type of preparation, buyers can be ready to jump on affordable homes for sale, that best meet their needs and fit their budget.
• What do homebuyers worry about that isn’t such a big deal?
Homebuyers should not worry about purely cosmetic features of a home that can easily be changed. If the home otherwise fits their needs and wants, they should factor in the cost of making cosmetic changes, but not let those items prevent them from moving forward on a transaction. It is amazing how much simple changes to paint, flooring, fixtures, cabinets, countertops, and landscaping can impact a home’s look and feel.
Cosmetic features outside of your control, such as a next door neighbor’s ugly, ill-maintained house or trashed yard is a big deal, however, and should factor into decision-making.
• What’s the one thing you want people to take away from reading “Finding Home”?
The homebuying process may seem intimidating, but it does not have to be so. Just prepare yourself before you begin, and don’t get discouraged if you encounter set-backs. You can find and buy an affordable home that has what you want and need, in a location that is right for you. If you have questions, check out the FAQs on my website www.findinghomebook.com. If you do not see the answer there, please send me an email at email@example.com.
5 mortgages that require no down payment or a small down payment
By Holden Lewis • Bankrate.com
Homebuyers with little money for a down payment are finding more home loans available for a low down payment or even no down payment.
Following are a few options for borrowers seeking low-down-payment and zero-down-payment home mortgages.
No down payment: VA loan
The Department of Veterans Affairs, or VA, guarantees purchase mortgages with no required down payment for qualified veterans, active-duty service members and certain members of the National Guard and Reserves. Private lenders originate VA loans, which the VA guarantees. There is no mortgage insurance. The borrower pays a funding fee, which can be rolled into the loan amount.
For purchase and construction loans, the VA funding fee varies, depending on the size of the down payment, whether the borrower served or serves in the regular military or in the Reserves or National Guard, and whether it’s the veteran’s first VA loan or a subsequent loan. The funding fee can be as low as 1.25 percent or as high as 3.3 percent.
For first-time purchasers making no down payment, the funding fee is 2.15 percent for members or veterans of the regulator military, and 2.4 percent for those who qualify through service in the Reserves or National Guard.
No down payment: Navy Federal
Navy Federal Credit Union, the nation’s largest in assets and membership, offers 100 percent financing to qualified members who buy primary homes. Navy Federal eligibility is restricted to members of the military, some civilian employees of the military and U.S. Department of Defense, and family members.
The credit union’s zero-down program is similar to the VA’s. One difference is cost: Navy Federal’s funding fee of 1.75 percent is less than the VA’s funding fees.
No down payment: USDA
The (Department of Agriculture, or) USDA’s Rural Development mortgage guarantee program is so popular that it has been known to run out of money before the end of the fiscal year.
Some borrowers are surprised to find that Rural Development loans aren’t confined to farmland.
The USDA has maps on its website that highlight eligible areas. In addition to geographical limits, the USDA program has restrictions on household income, and it is intended for first-time buyers, although there are exceptions.
The USDA mortgage comes from a bank, and there is no mortgage insurance. Instead, the USDA levies a 1 percent upfront guarantee fee, which can be rolled into the loan amount, and an annual guarantee fee of 0.35 percent of the loan balance.
Low down payment: Mortgage insurance
Qualified borrowers can make down payments as low as 3 percent with private mortgage insurance, or PMI. For most borrowers, PMI costs less than Federal Housing Administration mortgage insurance. But PMI has stricter credit requirements.
PMI has another edge over FHA: Once your mortgage balance is under 80 percent of the home’s value, you can cancel PMI. You can’t get rid of FHA insurance unless you refinance into a non-FHA loan.
Low down payment: FHA
With a minimum down payment of 3.5 percent, the FHA is the low-down-payment option that’s available to people with imperfect credit histories.
The FHA charges an upfront premium of 1.75 percent of the mortgage amount. On a 30-year loan with the minimum down payment, there’s an annual premium of 0.8 percent of the mortgage amount, or $800 a year for each $100,000 borrowed — $66.67 a month for a $100,000 loan.
August 10, 2017
Buying your very first home can be overwhelming. There’s all the financial jargon and the mountainous mortgage paperwork, not to mention the dollar amounts that can make you dizzy.
Money issues often stand in the way of homeownership. A survey by rental service Apartment List found that 80 percent of millennial renters want to buy a home, but most say they can’t afford to.
What you may not realize is that many first-time homebuyer programs and grants offer financial help, and you may be eligible for various types of assistance.
Here are nine first-time homebuyer programs and grants designed to help you land a great mortgage and get a place of your own.
1. FHA loan
In an FHA loan, the Federal Housing Administration insures the mortgage. The FHA is an agency within the U.S. Department of Housing and Urban Development (HUD).
The FHA’s backing offers lenders a layer of protection, meaning that your lender won’t experience a loss if you default on the mortgage.
FHA loans typically come with competitive interest rates, smaller down payments and lower closing costs than conventional loans.
If you have a credit score of 580 or higher, you could be eligible for a mortgage with a down payment as low as 3.5 percent of the purchase price. If your credit score is lower than 580, you still might qualify for an FHA mortgage, but the down payment would be at least 10 percent of the purchase amount.
2. USDA loan
While not well known, the U.S. Department of Agriculture (USDA) has a homebuyer assistance program.
While the program focuses on homes in certain rural areas, you don’t need to buy or run a farm to be eligible.
The USDA guarantees the home loan. There may be no down payment required, and the loan payments are fixed.
Applicants with a credit score of 640 or higher typically get streamlined processing. With a credit score below 640, you still can qualify for a USDA loan, but the lender will ask for extra documentation about your payment history.
Keep in mind that there are income limitations, which can vary by region.
3. VA loan
The U.S. Department of Veterans Affairs (VA) helps active-duty military members, veterans and surviving spouses buy homes.
The VA guarantees part of the loan, making it possible for lenders to offer some special features. VA loans come with competitive interest rates and require no down payment. You aren’t required to pay for private mortgage insurance (PMI), and a minimum credit score isn’t needed for eligibility.
If it becomes difficult to make payments on the mortgage, the VA can negotiate with the lender on your behalf.
4. Good Neighbor Next Door
The Good Neighbor Next Door program, sponsored by HUD, provides housing aid for law enforcement officers, firefighters, emergency medical technicians and pre-kindergarten through 12th-grade teachers.
Through this program, you can receive a discount of 50 percent on a home’s listed price in regions known as “revitalization areas.”
Using the program’s website, you can search for properties available in your state. You must commit to living in the home for at least 36 months.
5. Fannie Mae or Freddie Mac
Fannie Mae and Freddie Mac are government-sponsored entities. They work with local lenders to offer mortgage options that benefit low- and moderate-income families.
With the backing of Fannie Mae and Freddie Mac, lenders can offer competitive interest rates and accept down payments as low as 3 percent of the purchase price.
Fannie Mae also provides homeownership education for first-time homebuyers through its “HomePath Ready Buyer” program.
6. Energy-efficient mortgage (EEM)
An energy-efficient, or “green,” mortgage is designed to help you add improvements to your home to make it more environmentally friendly. The federal government supports EEM loans by insuring them through the FHA or VA programs.
The key advantage of this mortgage is that it lets you create an energy-efficient home without having to make a larger down payment. The extra cost is rolled into your primary loan.
Some improvements you can make include installing double-paned windows, new insulation or a modern heating-and-cooling system.
7. FHA Section 203(k)
If you’ve run the numbers to see how much house you can afford and have determined a fixer-upper is best for your budget, the Section 203(k) rehabilitation program may be a good fit.
This type of loan, backed by the FHA, takes into consideration the value of the residence after improvements have been made. It then lets you borrow the funds you’ll need to carry out the project and includes them in your main mortgage.
The down payment for a 203(k) loan can be as low as 3 percent.
8. Native American Direct Loan
Since 1992, the Native American Veteran Direct Loan program has helped Native American veterans and their spouses buy homes on federal trust lands. The VA serves as the lender.
If you’re eligible, you won’t be required to make a down payment or pay for private mortgage insurance (PMI).
This first-time homebuyer loan also offers low closing costs and a 30-year fixed-rate mortgage.
9. Local grants and programs
In addition to the various programs provided by the federal government, many states and cities offer help to first-time homebuyers.
Before buying a home, check your state’s or community’s website for information on housing grants and programs available in your area.
You also might consider contacting a real estate agent or local HUD-approved housing counseling agency to learn more about programs in your area that might apply to your situation.
Amalgamated Bank first to offer homebuyers down payment insurance
Home loan clients provided safety net option
ValueInsured and Amalgamated Bank announced on Wednesday that they are teaming up to provide homebuyers with +Plus, a first-of-its-kind financial product that protects homebuyers’ down payments from decreasing market values, according to a release sent out by the companies.
Although the new program was announced in October of 2015, +Plus is now available for the first time from a major lender through Amalgamated Bank.
The program is available for free through the bank’s First-Time Homebuyer +Plus program, and covers up to 5% of the home’s purchase amount.
There is monthly fee, in some cases, for the service.
The full program and its exceptions are explained here, however ValueInsured gives a basic overview of the program:
“+Plus works like the insurance homebuyers are already paying for at closing, such as private mortgage insurance, which protects the bank. But, with +Plus, the policy protects the homebuyer: If the market falls and the homeowner decides to sell, +Plus will reimburse them up to the full value of their down payment. The average cost for the protection is equivalent to less than a lunch per month.”
Amalgamated Bank believes this new programs will help potential buyers achieve their homeownership goals.
“The idea behind embedding down-payment protection in First-Time Homebuyer +Plus is simply to empower our customers to achieve the American Dream of homeownership,” said Keith Mestrich, Amalgamated Bank president and CEO.
“Working people shouldn’t have to worry about losing the financial control and flexibility that comes with renting when they make the decision to buy,” Mestrich said. “If they need to sell their home, they may be able to do that even if their local housing values are lower than when they purchased.”
Previously, homeowners had no access to the insurance programs that lenders had to protect against market value changes.
“At last, the homebuyer is protected,” ValueInsured CEO Joe Melendez said. “It’s fitting that Amalgamated Bank, which has long stood for innovation and customer empowerment, is the first bank to offer this important new protection directly to homebuyers. It helps keep home buying fair, safe and transparent.”
Millennials are moving, but mortgages don’t follow
Diana Olick | @DianaOlick
It is the No. 1 barrier to entry for young, would-be homebuyers: credit. Millennials are the first generation to come of age in a post-almost-apocalyptic housing market, where lenders, eight years later, are still paying billions in reparations for mortgage misconduct and outright fraud.
Millennial homebuyers are also paying a price.
“The mortgage industry is poised to experience a monumental shift as more millennial homebuyers begin to enter the market,” said Joe Tyrrell, executive vice president of corporate strategy at Ellie Mae, a mortgage software and data company. “There are roughly 87 million would-be homebuyers in the millennial generation and 91 percent of them say they intend to own a home one day. Lenders must prepare today to meet their needs.”
While millennials are waiting longer to get married and have children, factors that are the primary drivers of homeownership, the leading edge is now entering the housing market. Millennials are even starting to move to the suburbs, and in fact, last year marked a turning point, where urban centers reached “peak millennial,” according to a new study from Dowell Myers, a professor of urban planning and demography at the USC Price School of Public Policy.
Millennials are increasingly buying in the suburbs.
Guess who’s moving to the ‘burbs? Millennials
“After more than a decade of growing concentration, we see that the millennial trend of increased downtown living has peaked out and is now beginning a decline,” Myers wrote. “This is a dramatic human interest story with great implications for cities and real estate investments.”
Single-family rentals in the suburbs are more popular and more abundant than ever before, but the majority of millennials say they do eventually want to buy. That means mortgages.
More than one-third of home loans made to millennials since 2014 were Federal Housing Administration loans insured by the federal government, according to Ellie Mae’s new Millennial Tracker. This is far higher than the 22 percent overall share that FHA commands in total mortgage volume today. FHA allows borrowers to make just a 3.5 percent down payment, which is attractive to younger buyers who are cash-strapped to begin with, but additionally burdened by a sky-high rental market.
FHA, however, comes with a price: mortgage insurance premiums.
The additional cost, on top of higher credit score requirements, continue to sideline young buyers. While household formation is growing, only one-third of those new households are owner-occupants. The rest are renters, which is why the homeownership rate in the U.S. is falling again, now down to 63.5 percent, according to the U.S. Census, just one tick higher than its 50-year low.
A real estate agent and a potential home buyer in Coral Gables, Fla.
Homeownership near its lowest in history
“The more the homeownership level drops, the more attention there will be to the question of whether government policy changes implemented in the wake of the financial crisis are keeping people from buying homes,” Jaret Seiberg of Guggenheim Securities wrote in a note last week. “Our view is that government policies are keeping credit conditions unnecessarily tight. So this attention could be a positive in getting regulators to reassess whether they have properly balanced consumer protection and homeownership opportunity.”
Seiberg points specifically to continued pressure from the Justice Department on loan originators, but given that the DOJ is unlikely to back off, he suggests FHA further cut premiums in the fall.
“This could mean eliminating life-of-loan coverage, reducing the upfront premium or cutting the annual premium. That might convince more borrowers to seek FHA loans,” Seiberg added.
Mortgage interest rates are still near historic lows, but home prices are rising far faster than incomes, negating much of the savings from these low rates. The 0.35 percentage point drop in interest rates since the start of 2016 would have saved the average homebuyer $44 per month, but home price increases have cut that to just $18 a month nationally and even more in major cities, according to Black Knight Financial Services.
The highest percentage of closed home loans for millennials are far and away in the Midwest, where home prices are lowest, according to the Ellie Mae tracker. The average FICO score for female loan applicants in March was 724 and for men, 727, both much higher than the national average credit score.