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What Do Lenders Look At When You Apply for a Mortgage?

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While this is a bit of a broad question, most banks and mortgage lenders are looking for the same basic thing, your ability to repay the home loan.

After all, as long as you make your mortgage payments on time each month, there isn’t much else for them to worry about.  You hold up your end of the bargain and they’ll be more than happy to extend financing.

Pinpoint Potential Red Flags Before the Lender Does

Think of a home loan application like a job interview. You want to put your best foot forward. This means taking a hard look at yourself and determining what your weaknesses and strengths are. This is exactly what a lender will do.

So before your loan application is actually submitted to a bank or mortgage lender, it is imperative to ensure that every possible red flag has been addressed.

Typically, borrowers know what these issues are, but if you don’t, consider shortcomings in asset, income, employment and/or credit departments.

Ultimately, you want your loan application to be as strong as possible and to make sense so approval will be the only option; underwriters tend to love common sense. As long as it makes sense, they can approve it knowing they won’t get any flak for letting a bad loan slip through the cracks.

Don´t forget that one of the biggest things lenders are concerned about is credit. It’s key to know where you stand before looking to purchase or refinance.

Source: thetruthaboutmortgage.com

Your Loan in the Valley

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4 reasons you will fail as a real estate agent

MadRealtor

Success requires a particular mindset especially when life and clients throw you a curve ball.

  1. You won’t prospect.

Prospecting conjures up big-time fear in most people’s minds. We’ve been conditioned to associate the word “no” with rejection, failure and pain.

So you have subconsciously learned to associate “no” with not getting what you want. It’s normal — don’t feel badly about it — BUT you have to start getting back on track and reassociating “no” with what you want.

Real estate is a numbers game — no matter how you slice or dice it. I hear a lot of real estate agents say they aren’t in sales, that they just want to help people. There’s nothing wrong with that, but if you want to increase your business and help lots and lots of people, you have to work through the numbers.

If you are going to have success in real estate, you have to prospect. There are about a million ways to prospect in real estate.

  1. You won’t follow up.

Follow-up is everything in real estate. How many times have you talked to somebody for the first time and they say, “Yes, I want to buy or sell a home immediately! Where do I sign up?”

Yeah, almost never.

You can’t build a lasting, concrete, sustainable business that way.

Many agents give lip service to follow-up and tell people they’ll call when they are supposed to, but lack the decision to set up a follow-up task to do so. It fascinates me how many people I see in the business world (not just real estate) that say they are going to call me at such and such a date , or do something for me, only to find out it doesn’t get done! It’s actually more normal than abnormal, and that’s not OK.

If you want to last in real estate, simply be a person of your word. Everyone admires someone who does what they say they’ll do.

  1. You’ll let one bad experience throw you into a downward spiral.

This one is huge!!! As humans, we tend to enjoy drama. All you have to do is turn on TV and find all of the great reality TV shows out there (sense the sarcasm) and you know what I’m talking about. We love to wallow in how bad a situation is and give it all of our time and energy.

Stop it!

We know it’s hard but you have to train yourself to do it. Otherwise, you’ll end up broke, depressed and unhappy.

So what do you do when something bad happens in your business, like you lose an escrow, a client you thought was solid says they are going to work with another agent, you get a letter from the local department of real estate, a client yells at you? Is your stomach turning yet?

Here’s the secret: Keep moving. Deal with the situation and do the best you can to remedy, and if you have given everything you can into turning it around or finding a solution, move on and do something else productive. Don’t let it suck you down to the bottomless pit of anxiety. That isn’t going to help you get what you want. A good word to describe this is to compartmentalize your thoughts and actions. It’s crucial for your business success (and life success, really). What we mean by this is don’t let the bad feelings you have from one problem bleed over into other parts of your life.

  1. You’ll think the business is too hard, when the truth is you just haven’t made the decision to be great yet.

We’re sure we might get some backlash on this, but we believe it’s important to speak the truth. Real estate is not a complicated business. You find people who want to move from one place to another, and assist them in that process. Simple. We didn’t say it was easy — it’s just not complicated. If you talk to (the right) people, be genuine in your approach and have a proactive plan of follow-up, you’re going to do well. You just will. Source: inman.com by Matthew Coates

Your Loan in the Valley

Do you have an active-duty military or veteran client?

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Benefits of using the VA loan privileges

– Buy a home with no down payment – a benefit almost no other loan can offer.

– Refinance up to 120% of your home’s value.

– Take advantage of your VA loan benefits even if you’ve used them in the past.

 

VA loan features

– 30-, 20- & 15-year fixed-rate and 5-year ARM loans available.

– Jumbo VA loans available up to $1,500,000.

– Buy a home with no money down.

– Refinance up to 120% of your primary home’s value.

– VA Streamline refinance – available for veterans currently in VA loans – has reduced funding fees and minimal documentation.

– No monthly PMI (Private Mortgage Insurance).

 

How VA loans work

– Credit scores as low as 620 may qualify for VA loans.

– Use your Basic Allowance for Housing toward your monthly mortgage costs.

– Prepay your mortgage at any time without penalties.

– Roll the funding fee into the loan amount to limit closing costs.

Your Loan in the Valley

How Interest Rate News Affects You

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It’s a good idea to keep an eye on interest rates, no matter where you are in the loan process. Here’s why.

If you haven’t applied for a mortgage yet.
Watching interest rate trends before you apply will help you determine what kind of loan to get. If rates are rising, you may want to stick with a fixed-rate mortgage to lock in a lower rate for the life of a loan. If rates are falling, an adjustable-rate mortgage might be the way to go. If you don’t plan to be in the house for an extended length of time, a hybrid ARM could be an option for you. These loans have a fixed rate for a period of time before converting into an adjustable-rate, usually after 1, 3, 5 or 7 years.

If you have applied, but haven’t closed.
Since it can take up to four weeks from application to closing, watch interest rates closely. If rates are rising, you may want to “lock-in”, and have the lender guarantee that day’s rate for your loan. If rates are falling, you may want to hold off locking in for as long as possible. Some lenders will even allow you to “float down” your rate if you’ve already locked, allowing you to take a lower rate if rates fall. (There may be a fee for this service.)

If you have an adjustable rate mortgage.
If rates are rising and your adjustable-rate mortgage is about to reset, crunch the numbers and see how much your payment is likely to go up. If you are going to feel the pinch, consider refinancing into a fixed rate mortgage.

If you have a fixed rate mortgage.
Just because you got a fixed-rate mortgage doesn’t mean you should fix it and forget it. When interest rates fall, you could save yourself significant amounts on your monthly payment by refinancing. Use our refinance calculator to ensure that the savings exceed the cost to refinance. Source: getsmart.com

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Common Ways to Hold Title to California Real Estate

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There are numerous ways to hold title to California real property.  The best method depends on many factors.  You should consult with your legal, financial and tax advisors before deciding on how to buy, hold and ultimately sell your California real estate.

This web page will give you a quick and concise overview of the most common ways to hold title to real property in California.  California real estate can be held by individuals as sole owners or as co-owners.  Co-ownership of California real estate involves two or more individuals or entities acquiring and holding title together.

Sole Ownership by Person or Entity

A Single Person

An individual who is not and has never been legally married.  Example: Maria Perez Rodriguez, a single woman.

An Unmarried Person

An individual, who having been married at one time is now legally divorced, or an individual, having been in a registered domestic partnership at one time, that has been legally dissolved.  Example: Maria Perez Rodriguez, an unmarried woman.

A Married Person or Registered Domestic Partner as their Sole and Separate Property

When a married person or registered domestic partner desires to purchase and hold title to California real estate in his or her name alone.  The spouse or registered domestic partner must generally consent to this by executing and recorded a Quit Claim Deed.  Example: Mary Jane Smith, a married woman, as her sole and separate property or Maria Perez Rodriguez, a registered domestic partner, as her sole and separate property.

A Legal Entity

An entity such as a general partnership, limited partnership, limited liability company, corporation, or other such legal entity.  Example: Local Management Corporation, a California corporation.

Co-Ownership by Person or Entity

Community Property

The California Civil Code defines community property as property purchased either by a husband and wife (or registered domestic partners) together or by a husband or wife (or registered domestic partners) individually.  Real estate acquired and held by a married person is deemed to be community property of the husband and wife unless otherwise stated.

The husband and wife (or registered domestic partners) both have the right to dispose of one-half of the community property under community property law.  The one-half of the community property will automatically go to the surviving spouse if the deceased spouse did not otherwise disposed of the community property to someone besides his or her spouse.  Example: Alberto Barros and Maria Perez Rodriguez, as husband and wife as community property.

Community Property with Rights of Survivorship

Community property of a husband and wife (or registered domestic partners) when expressly declared in the transfer document to be community property with rights of survivorship, shall, upon the death of one of the spouses (or registered domestic partners), pass to the survivor without going through probate.  Example: Alberto Barros and Maria Perez Rodriguez, as husband and wife as community property with Rights of Survivorship.

Joint Tenancy

Joint Tenancy is defined in the California Civil Code as a joint interest owned by two or more persons in equal shares.  The joint tenancy is generally created by a single will or transfer that expressly declares the interest to be joint tenancy.

The primary benefit of joint tenancy is the right of survivorship.  Title to the real estate will immediately vest in the surviving joint tenant upon the death of a joint tenant without the need to go through probate.  Example: Alberto Barros and Maria Perez Rodriguez, as husband and wife as joint tenants.

Tenancy-In-Common or “TIC”

Individuals or entities can acquire an undivided percentage interest in a specific real property with each tenant-in-common owner holding a different percentage ownership in the real property.  There is no right of survivorship, and a tenant-in-common interest will not by-pass probate unless held in a Title Holding Trust, Grantor Trust or other method that would by-pass probate.  Example: Maria Perez Rodriguez, a single woman, as to an undivided 25% interest, as tenants-in-common.

Tenancy-In-Partnership

Title held by partners in a partnership.  Ownership interest is in relationship to the interests of each partner in the partnership.  The partners each of equal right of possession, but only for partnership purposes.

Title Holding Trust or “THT”

Real estate in California can be purchased and held by, and ultimately disposed of through, a Title Holding Trust or Land Trust.  Legal and equitable title to the California real estate is bought and held by the Trustee of the Title Holding Trust.  The Title Holding Trust holds the real property on behalf of the Beneficiary of the trust.  The Beneficiary retains complete control over the trust and has complete power of direction over the trust.  The Trustee can not act without specific written authorization and direction from the Beneficiary(ies).   Example: Exeter Fiduciary Services, LLC, as Trustee, of THT Trust No. XX XXXX.

Registered Domestic Partners

Registered domestic partners are those individuals that have registered with the California Secretary of State’s Domestic Partners Registry.  Ownership and managerial interests are generally equal.  Title is vested in the “community” with each interest being separate but management is unified.  The registered domestic partners each have equal management and control.  Conveyance of real estate requires written consent of both partners.

The above is a concise summary of some of the more common ways to acquire, hold and dispose of real estate in California.  It is provided for informational purposes only and should not be relied upon for legal, financial or tax advice.  There are significant legal and tax implications depending on how you choose to hold title to your real property.  You should consult with your legal, financial or tax advisors before making a decison on how you will hold title to California real estate.

Homebuyer Tax Deductions: The Ten Commandments

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It’s human nature to want to amass as many tax deductions as you can when you purchase a home. Many taxpayers, though, are too aggressive, confusing personal property and investment property tax rules. They wind up trying to take deductions they are not entitled to, risking fines and penalties (and perhaps missing other tax breaks).

It is vital to understand your personal residence tax deductions, including what you can and cannot deduct on your personal home.

Taxes on Your Personal Residence

Unlike rental property purchases, you cannot deduct the purchase price of your personal residence in any way whatsoever. The IRS considers personal residences to be personal property and not a business expense. Nor can you deduct the cost of repairs, maintenance or renovations on your personal residence. Before we get into the nuts and bolts, let’s deal with the “Thou Shalt Nots.”

Nondeductible Expenses for Personal Residences

I.  Thou shalt not deduct insurance premiums on a personal residence.

II.  Thou shalt not deduct for repairs and maintenance costs.

III.  Thou shalt not take depreciation on personal residences, for thou already hast a capital gains exemption.

IV.  The laborer is worth his wages. But thou shalt not deduct the wages paid to thy maidservant, nor thy manservant, nor thy cook, carpenter, or layer of tiles; for thy home is not a business investment, but for thine own use.

V. Thou shalt not deduct closing or settlement costs, nor appraisal costs, nor stamp fees and document fees. It is an abomination. But amounts thou payest as advance payments on interest – these thou shalt deduct gradually over the life of the loan.

VI.  Thou shalt not deduct utilities, gas, cable, or electricity, except if thou engage in a trade or business from thy home, in proportion to thy square cubits.

VII.  Thou shalt not deduct special assessments on a property, except if the tax applies to all properties, uniformly, in the jurisdiction.

VIII.  Thou shalt not deduct the principal portion of thy personal mortgage payment.

IX.  Thou shalt not deduct fees paid to thy landlord, nor thy property tax collector for services rendered to thee concerning thy personal dwelling. Nay, even unto the trash collection fee.

X.  Thou shalt not deduct amounts you pay for improvements to common areas. Thy payments for sidewalk improvements, building recreation areas and repaving parking lots for thy property complex are thine own.

But enough of the Thou Shalt Nots. What can you deduct? Well, it turns out that there are “Ten Commandments” you can refer to here, as well:

Deductible Expenses for Homebuyers

I.  Thou shalt deduct thine interest payments on home mortgages up to $1 million ($500,000 if married and filing separately), provided that the debt is secured by thine own residence.

II.  Thou shalt deduct any points paid at closing in lieu of interest, reporting the payment on IRS Form 1098 – Mortgage Interest Statement. But thou shalt not deduct all points paid that year, except if thy points are not excessive, points are standard practice in thine area, and the loan is secured by thy primary dwelling.

III.  Thou shalt deduct the interest on home improvement or home equity loans with principal of up to $100,000, provided that the debt is also secured by a lien on thine own home.

IV.  Thou shalt deduct property taxes attributable to the date of sale and after. The seller shall pay property taxes attributable for the year up to the date of sale. Therefore you may not deduct them.

V.  Thou shalt deduct any penalties for prepayment of mortgages, as well as fees for late payments, provided the fees are not connected with any specific service.

VI.  Thou shalt deduct any prepaid interest, except that if the prepayment is for a period of greater than one year, thou must deduct the interest in the year it would have been paid, hadst thou not paid the interest in advance in a prior year. Yea, verily.

VII.  Thou shalt prepare an IRS Form 1098 – Mortgage Interest Statement.

VIII.  Thou shalt deduct premium payments for PMI, or primary insurance, except if your adjusted gross income is above $109,000 for married couples filing joint tax returns, and $54,500 for individual filers.

IX.  Thou shalt deduct thine interest payments, deductible points, sales and property taxes by preparing an IRS Form 1040, Individual Tax Return, and a Schedule A, Miscellaneous Itemized Deductions.

X.  Thou shalt not use a Form 1040EZ for this purpose. It is an abomination.

Capital Gains Tax Exemption

While personal residences don’t qualify for many of the same tax breaks that investment properties qualify for, there is at least one powerful tax advantage to owning your personal home: the capital gains tax exemption. Normally, you have to pay capital gains taxes of between 5 and 15 percent on property you have held for over a year. However, the IRS exempts the first $250,000 of profit on the sale of a qualified personal residence. Married taxpayers can exempt up to $500,000 of profit from capital gains taxes. Special rules apply to active duty military personnel.

Income Limit on Home Mortgage Deduction

If your income is over $100,000 for the year, the IRS may reduce your allowable exemptions. If your adjusted gross income is over $109,000, or $54,500 if you are married and file separately, the IRS disallows your mortgage interest deductions.

Tax Deductions on Multiple Homes

You can deduct home mortgage interest on your primary residence and on one second home. You cannot deduct mortgage interest on other homes, except insofar as that interest is a business expense on rental properties.

There are many additional rules governing the taxation of personal residences not listed here. These are the basics, but the legislative environment is constantly changing. There is no substitute for enlisting the services of a qualified financial or real estate expert.

Source: realestate.com by Jason Van Steenwyk

For more information on deductions available to homebuyers, talk with a Your Loan in the Valley Loan Executive

Your Loan in the Valley 2014

 

Guía de Registro y Emisión de Ofertas HUD

El ser Real Estate require de un sin número de conocimientos para competir en el mercado. Uno de los más importantes es saber manejar el sistema HUD.

Si no tienes idea de lo que estamos hablando o tienes algo de conocimiento en tema, te invitamos a Descargar esta guía que te servirá para Registrarte y Emitir una Oferta en http://www.hud.gov

Una solución fácil y explicada en 14 simples pasos, cortesía de Your Loan in the Valley.

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DESCARGA LA GUIA DANDO CLICK AQUI>>

Si estas buscando más información acerca de éste y otros temas, no dudes en comunicarte con us especialista de Your Loan in the Valle. 818 810 4646
http://www.yourloaninthevalley.com

Your Loan in the Valley 2014

WHAT YOU SHOULD KNOW ABOUT MORTGAGE LOAN QUALIFICATION

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Before house-hunting ever begins, it is good to know just how much house the borrower can afford. By planning ahead, time will be saved in the long run and applying for loans that may be turned down and bidding on properties that cannot be obtained are avoided. Know what banks are the best ones to determine individual eligibility is very helpful information needed before even looking for a home.

a. How Much House Can I Afford?

The old formula that was used to determine how much a borrower could afford was about three times the gross annual income. However, this formula has proven to not always be reliable. It is safer and more realistic to look at the individual budget and figure out how much money there is to spare and what the monthly payments on a new house will be. When figuring out what kind of mortgage payment one can afford, other factors such as taxes maintenance, insurance, and other expenses should be factored. Usually, lenders want borrowers having monthly payments exceeding more than 28% to 44% of the borrower’s monthly income. For those who have excellent credit, the lender may allow the payments to exceed 44%. To aid in this determination, banks have mortgage calculators on their websites to assist in determining the mortgage payment that one can afford.

b. Check Your Credit History Thoroughly

Lenders like to look at credit histories through a request to credit bureaus to make the borrower’s credit file available. This allows the lender to make a more informed decision regarding loan prequalification. Through the credit report, lenders acquire the borrower’s credit score, also called the FICO score and this information can be acquired from the major credit bureaus TransUnion, Experiean, and Equifax. The FICO score represents the statistical summary of data contained within the credit report. It includes bill payment history and the number of outstanding debts in comparison to the borrower’s income.

The higher the borrower’s credit score, the easier it is to obtain a loan or to pre-qualify for a mortgage. If the borrower routinely pays bills late, then a lower credit score is expected. A lower score may persuade the lender to reject the application, require a large down payment, or assess a high interest rate in order to reduce the risk they are taking on the borrower.

c. Mortgage Loan Preapproval and Loan Prequalification

After basic calculations have been done and a financial statement has been completed, the borrower can ask the lender for a prequalification letter. What the prequalification letter states is that loan approval is likely based on credit history and income. Prequalifying lets the borrower know exactly how much can be borrowed and how much will be needed for a down payment.

However, prequalification may not be sufficient in some situations. The borrower wants to be preapproved because it means that a specific loan amount is guaranteed. It is more binding and it means the lender has already performed a credit check and evaluated the financial situation, rather than rely on the borrowers own statements like what is done in prequalification. Preapproval means the lender will actually loan the money after an appraisal of the property and a purchase contract and title report has been drawn up.

d. How Lenders Determine How Much Mortgage You Qualify For

There are two simple ratios that lenders use to determine how much to pre-approve a borrower for. Here’s how these ratios are calculated:

Ratio #1: Total monthly housing costs compared to total monthly income

  • The borrower should write down, before deductions, the total gross amount received per month.
  • The number in step 1 should be multiplied by .28. This is what most lenders will use as a guide to what the total housing costs are for the borrower. Depending on the percentage, a higher percentage may be used.

Ratio #2: Debt to income

  • The borrower writes down all monthly payments that extend beyond 11 months into the future. These can be installment loans, car loans, credit card payments, etc.
  • The resulting number in the first step should be multiplied by .35. Total monthly debt should not exceed the resulting number.

e. Credit and Mortgage Loan Qualification

When qualifying for a mortgage, credit plays a very important role. Here are questions a lender will more than likely ask:

  • Is the credit score of the borrower considered to be good?
  • Does the borrower have bankruptcy, late payments, or collections? If so, is there an explanation?
  • Are there excessive monthly payments?
  • Are credit cards maxed out?

The answers to these questions can make a determination as far as the eligibility of a mortgage loan goes.

f. Collateral and Mortgage Loan Qualification

If the loan would exceed the amount the property is worth, the lender will not loan the money. If the appraisal shows the property is worth less than the offer, the terms can sometimes be negotiated with the seller and the real estate agent representing the seller.

Sometimes a borrower may even pay the difference between the loan and the sales price if they agree to purchase the home at the price that was originally offered to them. To do such a thing, the borrower needs to have disposable cash and should ask the question of whether or not the property is likely to hold its value. The borrower must also consider the type of loan they qualify for. If the borrower would need to move suddenly and the loan is larger than the value of the property, the loan can be a very difficult thing to pay off.

Source: mortgagecalculator.org

Your Loan in the Valley