Buyer Pitfalls To Avoid Prior To Closing On A Home

1)      CREDIT INQUIRIES - Please do not allow your credit to be pulled during the loan process. Your scores are reduced when pulled multiple times and can adversely affect your scores and could affect your loan approval or interest rate.  A credit comparison report will be pulled at funding and any variances will need to be addressed and could put your funding at risk.

2)      MAJOR CREDIT PURCHASES – Do not make any major purchases on credit without contacting me first.  This includes major purchases such as a car, or furniture, etc. which you may want for your new house.  These will affect your debt ratios and your credit scores and possibly your approval.

3)      MONTHLY PAYMENTS – Make all of your monthly obligation payments ON TIME. Your credit will be pulled again prior to closing, and any late-payments, collections or charge-offs could adversely affect your loan, even up to the day of closing/funding.

4)      BANK STATEMENTS & OVERDRAFTS – Do not have any NSF charges on your bank statements between now and closing.  Copies of your bank statements could be obtained prior to closing.  Overdraft charges will signal the underwriter that you are unable to maintain monthly financial responsibility, unless the charges were due to extreme circumstances beyond your control. Please keep all bank statements (Savings, checking, assets, etc) from now until closing.

5)      EMPLOYMENT – If your employment situation should change, or you are thinking about changing your employment situation, call me immediately.  Income and employment are primary factors in final loan approval.

6)      TAX RETURNS – Up to three years of tax returns will be verified using a third party service.  All taxes liabilities owed to the IRS on the returns must be paid and supported via cancelled checks or bank statements.  It is imperative that you let us know if you have not filed a tax return, filed a return late or filed an extension anytime during the last three years.

7)         ASSETS- Any large deposits or withdrawals on your bank account will need to be sourced from  

        beginning to end. If you are going to make a large deposit please get with me for the exact  

        Requirements for documentation so that it will not affect your loan approval.

IF YOU ARE INTERESTED IN PURCHASING A NEW HOME IN THE DFW AREA PLEASE CONTACT TEAMDECLL.  YOUR REAL ESTATE EXPERTS!

9200 Aristocrat Lane of Frisco is a GREAT West Frisco Location-Easy access to Tolls, Shopping & more!  Soaring Clng & Rich Oak accents on Stairs greet guests.  Large Dining Room boasts Crown Molding.  Spacious FamilyRoom offers Brick Fire Place with GasLogs.  Large Archway defines Open Kitchen with 42in Cabinets & Gas Cooktop.  The first Floor boasts Study with Crown Molding & Master Suite with His-Her Sinks, Separate Shower & Walkin Closet. The Large GameRoom & 4 Bedrooms on 2nd!  Covered Patio overlooks HUGE Yard! Room for Pets, Pool, & Play! 

Award Winning Frisco ISD schools for this home are Carroll Elementary, Cobb Middle, and Wakeland High School.

If you are interested in homes for sale in Frisco, homes for sale in Plano, homes for sale in Allen and homes for sale in McKinney are TEAMDECELL is who you need to call.  TEAMDECELL sells homes in the Frisco, Plano, Allen, and McKinney Area primarily.  They are your home experts and offer excellent customer service. 214-975-3210

Home Buyers beware of making any large purchases or applying for any types of credit prior to closing on you home.  AFTER closing, buy what you wish!  Lenders are now requiring a 2nd credit report to be pulled with in 24 hours of closing.  If a home buyer has applied for credit to purchase new furniture, for example, this could throw your ratios off, and changed your credit score.  The lender could then possible decline to give you a loan, and you were perparaing to move the following day.

Now after you have closed, the skys are the limit.  Once the lender gives you the loan he won’t take it away.  Buy what you want.

This is another instance of the continued tightening of the belt by lenders.  Loans are becoming increasingly harder to get, so buyers need to be very wise.  Before you do anything contact us and we can guide you through this ever changing process.  Don’t let a mistake cost you the purchase of your next home.

If you are interested in purchasing or selling a home in the Frisco, Plano, Allen, or McKinney area’s please contact TEAMDECELL!

 Here we go again with additional changes in the already trouble world of Mortgage.  It seems that the only thing that is certain is that the mortgage industry is going to continue to change.  If you are considering the sale and purchase of a home it is crucial to speak with a LOCAL Lender that can walk you thru this very complicated process. 

I say LOCAL because many consumers have used mortgage institutions over the internet only to find that the loan does not close or the fees have drastically changed.  Work with your Realtor because they will usually have a recomendation of someone that they already have a relationship with.

TEAM DECELL is your neighborhood experts.  We assist clients in buying or selling their home in Frisco, Plano, McKinney, Allen and the Surrounding Area. We also have relationships with Lenders that have a proven track record and can get the job done in a painless and timely manner.  Don’t let the inexperience of others spoil your Home Purchase.  We have a team of experts that will take care of your needs.  Below are the upcoming changes.

1. Mortgage insurance premium (MIP)  increased to build up capital reserves and bring back private lending.
   1. FHA will raise the up-front MIP to 2.25% and request legislative authority to increase the maximum annual MIP that the FHA can charge.
   2. If this authority is granted, then the second step will be to shift some of the premium increase from the up-front MIP to the annual MIP.
   3. This will allow for capital reserves to increase with less impact to the consumer, because the annual MIP is paid over the life of the loan instead of at the time of closing
   4. The initial up-front increase is included in a Mortgagee Letter to be released tomorrow, January 21st, and will go into effect in the spring.

1. Update the combination of FICO scores and down payments for new borrowers.
   1. New borrowers will now be required to have a minimum FICO score of 580 to qualify for FHA’s 3.5% down payment program. New borrowers with less than a 580 FICO score will be required to put down at least 10%.
   2. This allows FHA to better balance its risk and continue to provide access for those borrowers who have historically performed well.
   3. This change will be posted in the Federal Register in February and, after a notice and comment period, would go into effect in the early summer.

1. Reduce allowable seller concessions from 6% to 3%
   1. The current level exposes the FHA to excess risk by creating incentives to inflate appraised value. This change will bring FHA into conformity with industry standards on seller concessions.
   2. This change will be posted in the Federal Register in February, and after a notice and comment period, would go into effect in the early summer.

1. Increase enforcement on FHA lenders
   1. Publicly report lender performance rankings to complement currently available Neighborhood Watch data - Will be available on the HUD website on February 1.
   2. Enhance monitoring of lender performance and compliance with FHA guidelines and standards.
   3. Implement statutory authority through regulation of section 256 of the National Housing Act to enforce indemnification provisions for lenders using delegated insuring process
   4. HUD is pursuing legislative authority to increase enforcement on FHA lenders.

How Lenders Evaluate a Buyer’s Credit in Today’s Market

When a lender evaluates a home buyer’s creditworthiness, they consider several factors about the buyer’s past credit-usage behaviors. These behaviors have been systematized into what is called a “Tri-Merged Residential Credit Report” (T.M.R.C.R.) and is quantified with a scoring system called F.I.C.O. (Fair Issac Company). The score is essentially a merger of reports from three major credit repositories known as:

·        Experion/T.R.W.

·        Equifax

·        Transunion

While F.H.A. and V.A. are not officially F.I.C.O. driven in their credit-approval processing, many lenders are still giving heavy weighting to the scores on these loans. Conventional (F.N.M.A. & F.H.M.L.C.) lenders have been using this scoring system for years.

Listed below is how the F.I.C.O. scores are generally interpreted:

·        Scores range from 300 to 850.

·        Score under 600 - will most likely need to use loan programs that are not F.I.C.O. driven. Represents extreme concern for underwriting and may result in additional fees, higher rates and/or points, additional down payment required, or even non-approval.

·        Score 600 - 620: The underwriter will need to carefully review the application and may result in more fees, points and/or lower loan-to-value ratio.

·        Score 620 - 660: This is considered a cautious risk although the buyer does stand a good chance of getting the loan provided he/she can explain any derogatory notations (i.e. late payments) in a plausible manner.

·        Score 660 - 680: This is a standard automated approval score.

·        Score 680 - 699: This is considered a very good risk by the lender.

·        Score 700 - 719: This is considered an excellent risk by a lender and is pretty much a “slam dunk” for approval.

·        Score 720 & above: This is considered “Accept Plus” for automated underwriting.

To determine the borrower’s credit score, most lenders apportion weights as indicated to the following factors:

·        Timely payments - 35%

·        Total debt - 30%

·        Length of credit history - 15%

·        New credit inquiries - 10%

·        Amount/type of credit - 10%

A buyer/borrower can get a free copy of their credit report from each repository by mail or online at: www.myFICO.com. They are entitled to one free credit report from each agency once a year. Consumers should review their credit reports once a year, as they often have inaccuracies and old derogatory notations that should be removed from the report.

Methods that a borrower may use to improve their credit score:

·        Dispute incorrect information by directly contacting the credit reporting agency.

·        If the borrower/buyer has any past-due debt, they can contact the creditor directly and settle the debt. Creditors are often willing to settle past-due debt for less than what is owed and sometimes are even willing to remove the derogatory notation about the debt. If the debt has been sold to a collection agency, the borrower would have to contact the agency.

·        Pay down credit card balances, if possible, to less than 1/3 of the available limit.  At least a minimum of 50% of the limit.

·        Work to show that they have maintained 12 consecutive months of timely payments on ALL of their financial obligations. If they have gone into foreclosure and/or bankruptcy, this will take longer; perhaps three to four years.

Be sure to remember that most of you are NOT credit experts and should always condition any advice you give buyers/borrowers by suggesting that they seek the assistance of a qualified credit counselor or Mortgage Professional. Brian McCauley with Waterford Financial in West Frisco will be happy to assist you with all your needs call him at 214-975-3218.  However, these are the basic rules when a lending underwriter is deciding whether or not to approve a loan.

For assistance with all your home buying needs contact TEAM DECELL.

The declining home values that are plaguing homeowners are just one of the factors creating an opportunity for prospective home buyers.

Standard & Poor’s latest Case-Shiller index, which tracks home prices across 20 major U.S. cities, reported that values dropped 19% in January from a year earlier.  Although the 19% drop does not accurately reflect the market condition in the DFW area which includes Frisco, TX.

Those depressed values, combined with near-record-low mortgage rates and government incentives (an $8,000 first-time home buyers’ tax credit included in the stimulus bill), are luring more first-time home buyers into the market. Indeed, a recent Century 21 Real Estate survey found that more than three-quarters (78%) of potential first-time home buyers say now is a good time to buy.

If you agree, be aware that buying a home comes with plenty of potential missteps. Here are 10 all-too-common mistakes first-timers make.

1. Not knowing how much house you can afford.

Many novice home buyers spend a lot of time researching homes - comparing kitchen layouts and backyard square footage - but very little time researching their financing options. One of the first things buyers should do is talk to a qualified lender and get preapproved for a mortgage, says Claire Clark, senior vice president of business development at Prudential California Realty. Without first figuring out how much house you can afford, you risk falling in love with one you can’t.

2. Assuming foreclosures are great deals.

Just because the previous owner owed $450,000 on a house before the bank took it over doesn’t mean it’s worth that much now. Values have slipped significantly, says Jay Michael, partner at Estate Property Group, a Chicago real estate brokerage, so you may not be getting the bargain you think with a foreclosure. Also, most homes owned by lenders or banks have been sitting vacant for months and may have been vandalized. That could require extensive renovation or repair. Weigh the costs of fixing up the property against the savings you’ll likely reap by buying a lower-priced foreclosed home.

3. Letting your true feelings show.

No matter how much you’ve fallen in love with a house, don’t let the seller’s agent in on it. Otherwise, they will gain the upper hand in negotiations.

4. Failing to find a good buyer’s agent.

Landing a mortgage is tough these days. So buyers should rely heavily on knowledgeable agents to help them get their finances in order, says Michael. After all, buyer’s agents have a fiduciary responsibility to the buyer exclusively — and should be looking out for their best interests. Consider using an agent recommended by a relative or friend. Interview each candidate about their experience, if they’ve worked with first-time buyers before and what kind of service you’ll get from them.

5. Underestimating the costs of owning a home.

Whether it’s a rusty pipe or a leaky roof, things go wrong and need to be fixed. Many home buyers don’t anticipate the additional costs for repair and maintenance, or for an increase in utility costs, says Erin Baehr, CFP and president of Baehr Family Financial. Consider the age of your new home and how well it’s been treated by the previous owners in your budget. Be prepared to set aside a small percentage (1% at most) of the home’s purchase price annually for repairs and upkeep.

6. Failing to budget for property taxes.

Property taxes - and the likelihood that they’ll climb over the course of your time in the house - should be factored into any home-buying budget, says Baehr. To get an idea of how much you’ll be paying, call the local assessor’s office or talk to people in the neighborhood.

7. Assuming your first offer will get accepted.

As home prices get even more affordable, competition is bound to heat up. “You can’t assume you’ll walk in there, make the offer and get it,” says Clark. Try not to get discouraged if you lose out on the first - or second - house you make an offer on.

8. Skipping the inspection.

Before signing anything, hire a professional inspector, says Justin Lopatin, a mortgage planner with American Street Mortgage Company. The seller isn’t likely to tell you there’s mold or the walls are poorly insulated. Lopatin advises buyers to find and hire their own inspector - independently of the realtor - to ensure there’s no conflict of interest. (You can find inspection companies in the phone book, or by doing a simple web search with your zip code.)

9. Doing too much too fast.

Some buyers want to make the house their own right away, says Baehr. They overextend themselves on credit to do so, and assume the improvement will pay for itself by increasing the home’s value. But that’s not always the case - especially in today’s market. Instead, buyers need to exhibit patience and make changes over time.

10. Failing to include a contingency clause in the contract.

A mortgage financing contingency clause protects you if, say, you lose your job and the loan falls through or the appraisal price comes in under the purchase price. Should one of these events occur, the buyer gets back the money he used to secure the property. Without the clause, he can lose that money and still be obligated to buy the house, says Lopatin.

For more Information call TEAM DECELL, 214-975-3210