Tony Burns Mortgage

Why ‘Comps’ are a Homeowner’s Best Friend

by Tony Burns on 12/11/11

Whether you are buying or selling a home or other type of real estate, chances are you will hear a lot about “comps” so it might come in handy to understand what they really are and why they matter.
Comps are comparisons between your property and other similar properties. Age, location, amenities, and the general condition of the home are all used to compare your property against others in the same general vicinity in order to establish a price or fair market value.
Do Not Make This Mistake
Many sellers mistakenly look at the asking price of homes in the immediate vicinity when trying to establish a listing price, but that is often a major mistake. Actual sales data is a much more reliable indicator of value, since some sellers can be overly optimistic when it comes to setting an asking price.
Buyers also benefit from obtaining accurate comp data in order to determine what amenities, upgrades, and other items are included. Even homes that superficially look exactly the same in terms of square footage or floor plans may have substantial upgrades or extras that dramatically impact the price of the home.
Get the Most Accurate Data
Insist upon accurate and up-to-date comps when buying or selling a home, and do not confuse true comps with estimates or other inaccurate sources of data. Many popular websites use estimates based upon self-reported data or generalized insurance replacement rates.  While these may be useful for rough guidelines, they may cost you tens of thousands of dollars when buying or selling a home.
Work with an agent who provides the latest information specific for the area you are considering.
Age, condition, maintenance, upgrades, amenities, landscaping, appliances, energy efficiency, attractiveness, and even whether or not you have a corner lot can make a tremendous difference in the desirability and price of a home.
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Now Might Be the Best Time Ever to Buy a Home- 5 Reasons Why You Should Look at Home Ownership

by Tony Burns on 12/05/11

As the news about the economy doesn't seem to improve, you may be thinking that right now is a good time to hold on to all of your money and keep it in a safe place.  However, if you have a stable income and a good credit score right now might be the best time ever to buy a home for a place to build memories, and a place for investment.  Today we're going to talk about why buying a home is a good thing, and why you shouldn't be scared to do so.

 
The first thing you need to do is make sure that you have a stable income.  The banks still have plenty of money to lend regardless of what you may have heard.  However, they want to make sure they lend it to the right people.  If you've been with the same employer six months or more the banks will see you as lower risk, which means that you will get a lower interest rate.

 
The next thing the banks require is a good credit score.  While what's considered a good credit score depends on who's talking, most would say that you need a credit score of 640 or higher to still be considered for some of the stronger rates.  Speaking of interest rates, you can now get a 30-year mortgage for a rate of around 4.00% to 4.50% which is better than it's ever been.  The lowest rate seen before the housing bubble was a couple of percent higher than this.

 
The next point is pretty obvious, but you'll be able to afford a nicer home for a lot less.  Depending on where you want to live, there are great deals out there and there will be for years.  In places where the rise and fall of home prices aren't as drastic, you'll find fewer bargains on homes.  However, if you're looking to relocate to sunny Miami or Phoenix, or Vegas, you'll be shocked at the number of homes you can get, even for under $150,000 that were built during the housing bubble.

 
There is always going to be demand.  As the housing bubble mess continues to clear up, things will only get better.  Over the next 40-50 years America is expected to grow by another 100 million people.  This will mean that these people will need a place to live.  If you've been sitting on your home for 5 or more years you might be impressed with the amount you'll be able to profit from your investment after everything clears up.

 
The last reason now might be the best time ever to buy a home is the low down payment to buy a house.  Before you may have needed up to 20% down to get into a home.  However, lenders have realized that even though there is a crisis and homes are cheaper, there still aren't a lot of people who can afford to put that much down.  Luckily for you, there are plenty of lenders that now require that you only put as little as 3% down.  With the lower housing prices, the lower down payments, the extremely low interest rates, you'll now be able to have a nicer, larger home for a lot less and you'll be able to save money while doing so…
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Buying vs. Renting- Making a Sound Decision

by Tony Burns on 11/15/11

Making the Best Choice
The distinct difference in buying and renting is ownership. Whether it's a car or a home, the same theory applies- when you own something it is yours and when you rent it belongs to someone else. When deciding whether to buy or rent a home you must consider three things:
1. Affordability
2. Location
3. Responsibility
 
 
 
Considering the above, will give you better insight on what choice is suitable for you.
What is the Best Choice Financially?
It is important to determine whether you will be able to afford to buy a home, condo, or any other property or if it would be more realistic to simply rent.  Sometimes our eyes can be a bit larger than our wallet, and we may not take into consideration the financial aspect of owning a property.  Sure, you may be able to qualify for a home loan, but this does not necessarily mean that you are financially stable enough to own a home or other property.  Before jumping into anything, take your financial situation into consideration.  Is your job stable? This question doesn't necessarily mean how long have you been there, because as we've seen in the past few years- senior employees can be laid off just as any other.  However, determine your job's outlook in a realistic way, this is to be sure that when you buy, you don't end up homeless due to nonpayment on your home loan. Nobody wants to live well, and suddenly lose it because of a layoff. 
Once you determine your job forecast, consider the cost. Renting can be a bit less expensive, simply because you won't be responsible for things like maintenance, water bills, and even utilities if it comes in your apartment's lease.  When renting all you have to concern yourself with is coming home, paying rent, keeping the noise down and your apartment cleaned- if you wish.
 
 
 
Which Choice Puts You in Your Ideal Location?
Sometimes we have in mind where we want to live, even if we can't afford it.  Riding through different areas on the way to work, and play can often give us an idea of which locations we will attempt to live on our next move.  Unfortunately, some of these areas can be a bit too expensive for our wallets, and we are left with neighborhoods we'd listed way down the line on our list of “areas” I most want to live in”.  This can be the difference in renting and buying.  When searching for an apartment to rent, you may be able to find one in the areas you prefer to live in.  Sure, it may cost an extra hundred or so dollars- but it will be one of your top picks.  In contrast, when you are looking to buy in a certain area, there is no "deal” or "sale" unless of course the realtor decides to give you a lower price, while lowering his commission.  If you choose to buy in some of the best available locations, you will more than likely pay market value, unless you're lucky enough to meet a private owner who wishes to rid themselves of the property- highly unlikely.  In this case renting would be ideal because it's more of a individual decision on the owner of the property what they'd like to charge for rent.  Who knows, perhaps you can rent in your "perfect area”, work a few more years, save and then buy.  There are also rent to own properties, but this is really up to the owners.  Luck sometimes must play a role in searching for these properties, but when you find the one of your liking- it's best to grab it.
 
 
 
Can You Handle the Extra Nine to Five?
Are you ready to be responsible? Of course you say yes, because you already are! However, when owning a property, responsibility can take on a total new meaning.  Choosing to buy a home or any property will call for maintenance, repairs, paying utilities and more. Okay, this may sound a bit more overwhelming than it actually is - no, the world won't cave in at once and you probably won't have a big flood and a disastrous plumbing job to do at the same time. But, you will be responsible for everything which needs to be taken care of. With renting, again- simply come home, kick your shoes off and make sure the rent is paid.  It's really up to you whether you would prefer owning or renting a home, as both has its own advantages.  The most important thing is to have a place you can call home.
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That First Home Mortgage Should Not Break the Bank

by Tony Burns on 10/18/11

That First Home Mortgage Should Not Break the Bank
 

 
Picture a typical first time home buyer: renting for years and putting a little money away, most people looking for their first home mortgage likely don't have a large savings account. They probably have some debt on credit cards, store credit, student loans or a car loan. Now, they're tired of living in a Renters Nightmare and want to get a home they call their own. Hopefully this first time home buyer looks into how much home they can afford with a mortgage pre-approval before finding their dream house.
 

 
If this is you, you're on an exciting journey. Home ownership is part of the American dream, and the recent housing market woes haven't changed that. The good news is that it's a buyer's market right now with home prices and mortgage interest rates very low right now. So getting that first mortgage loan should not break the bank for first time home buyers. Here's a look at several loan options for your first home.
 

 
 Rural Development Loan- If you're tired of renting but don't have a down payment saved up, the USDA is here to help. The Rural Development mortgage loan (or RD Loan) is a 100% financing option. Eligible properties will be outside of city limits, but that doesn't mean "way out in the country." Look into property eligibility maps for areas near you. You may be surprised at what the USDA considers "rural."
 
 VA (Veterans) Loan- While only veterans of the US military are eligible for this mortgage option, it's another 100% financing program. Plenty of veterans who joined the military at age 18 and are now in their 20's will be ready to become a first time home buyer. If this is you, consider the VA mortgage loan.
 
 FHA- The FHA mortgage option is great with a low down payment requirement of about 3% - which means for a house priced at $80,000 (not a bad price for a first home) the buyer needs $2,400 for the down payment and borrow $77,600 for the house.
 
Side note for FHA - Newlyweds have a bridal registry with FHA so cash gifts can go towards the down payment!
 
HomePath®Financing- HomePath is the option for Fannie Mae-owned homes. Fannie Mae wants to see these homes off the foreclosure market and in the hands of responsible homeowners. Benefits include a low down payment, seller concessions (paid by Fannie Mae) and a no-mortgage-insurance option (talk to a mortgage consultant about loans with no mortgage insurance).
 
The FHA 203k- Buying a first home has historically meant buying a fixer-upper and putting some sweat-equity into it over the years. With todays market full of good deals on homes that need some TLC, the 203k mortgage program can roll the cost of most repairs or home improvements into the cost of the mortgage. With the approximate cost of $6 a month for every $1,000 of work, it's an affordable option. This option uses the FHA 203k mortgage program to help first time home buyers turn that first home into a dream home.
 
You’re Takeaway
 
Your first home mortgage should not break the bank. A first time home buyer has several options for getting out of a rental and into a home. Talk to a mortgage consultant about these options, and figure out what works best for you!
 

 
Before you talk to someone, download my free eBook, "Get Mortgage Ready Kit." You'll find detailed information in there about mortgage loan programs, mortgage terms and more real estate terms. And it's free!
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Has mortgage underwriting become tougher?

by Tony Burns on 08/22/11

Yes, mortgage underwriting has become a lot harder. Honestly, it wasn’t that long ago a person that could fog a mirror could obtain mortgage financing if they really wanted to buy a house. Over time investors became greedy and the lending guidelines were so loose that a lending and housing crisis was surely inevitable. Times have certainly changed today. Long gone are the days of “stated income and assets” and 69% Debt Ratios.  Trust has been thrown out the window and over documentation is the direction of the future.
As a loan originator, my main priority is to find the perfect mortgage program for each borrower. Everyone has a different situation so the mortgage advice we give will vary from borrower to borrower. We do our best to explain the details of the loan collect the necessary documentation at application and explain the mortgage process and timeline. What’s starting to become more and more common is for an underwriter to ask for something else, something we didn’t think they would need, something we thought wouldn’t be an issue. In today’s environment, it’s an issue.
If you’re thinking about applying for a mortgage get your ducks in a row ahead of time. Gather up your last two years complete tax returns with all attachments. Get your last few paystubs and make sure there’s at least thirty days of pay included in the YTD column. If you’re currently renting let your landlord know they will probably need to confirm your payment history in writing. If you are renting from a private investor, collect the past twelve months cancelled rent checks. Make sure that any money you are planning on using in the transaction is currently in your bank account, not under your pillow or in a safe. Lenders love a good money trail and any large deposits inside of 30-60 days will throw up a red flag. A good money trail is very important as many times cash deposits will make it hard to use your account. Make sure you have a valid Driver’s License or state I.D. and look for that Social Security Card.
Getting pre-approved is always recommended, even if you have excellent credit and money down. This will allow your lender an opportunity to get everything ahead of time in case there is something that may be needed so it doesn’t slow down the purchase transaction.
So, is strict underwriting a good thing? Absolutely! Investors want to make sure they are getting a return on their investment and the only way we can keep interest rates at a respectable level moving forward it to ensure that each borrower is capable of handing their new debts like it or not.
Interest rates are low, home prices are low, and good finance options are still available. It’s definitely time to buy a home, just be prepared to jump through a few hoops to make your dreams a reality!
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