Many times, so many of us think things are common knowledge, but instead they are just a mere misrepresentation of the truth. Like when we were little and grandma would tell us that if you keep crossing your eyes like that they will get stuck. However, as we get old and wiser we realize this not to be true. This could be the same for a lot of things we hear through the grapevine about buying a home, just because someone says it to be true doesn’t always make it so. Here is a little breakdown of a few of those home buying myths that we have either heard from a friend of a friend, or those close to you that might not be an expert.
Prequalified Means an Automatic Loan: One of the first few steps to purchasing a new home is getting prequalified from a bank, as this point you have given them a brief description of your income, debt, and finances. Once you decide on a home, the heavy lifting takes place. There is a list of documents they will need to look closer into regarding the money side of things. Than there are several things such as the appraisal and inspection that could throw things off course. Being prepared and organized will help make the whole process go so much smoother.
Your Accepted Offer Is Set in Stone: You have found a home, put in an offer, and the seller has accepted your offer. Congratulations, but it’s not set in stone yet. Once the inspection happens, there may be house related issues. You may be able to trim off hundreds or even thousands from the price to take care it, or include these things getting fixed before the closing.
Skip the Buyer’s Agent and Go Straight to the Internet: This is something that has become popular in the last several years, but may not be the best way to go. Though this may be an option for few, going with a real estate agent is usually the better option. They do more than just show you homes, they also give you a lot of important information as well as guidance through the negations. Like having a loan officer to help you with getting the mortgage, it’s better to have an agent to help with the buying process.
Start Looking for Homes in the Spring: Yes, buying and selling a home in the spring is the most opportune time for many people. Weather plays a big part in this. Fall and winter may also be a great time to house hunt, since there is less traffic so you may have more bargaining power; this in turn will save you money.
A House Inspection Is Optional: I know with your big purchase that you are looking for ways to cut cost, but this is one mistake that could cost you hundreds or thousands in the long run. This is a vital part to purchasing a new home. Don’t rush this. If you do, this could leave you with a laundry list of things wrong with your new home and you footing the bill.
Buy the Worst House in the Best Neighborhood: There are certain circumstances that this could work, but a few questions to ask yourself are: how long can you live with a renovation, is the cost worth it to make it livable, and are the things that make it the worst major, like being next to a loud business or a busy road. So, weigh out your options and decide if the it’s worth it in the long haul.
Choose Only a 30-Year Fixed Mortgage: With the trend of buying a house with Millennials starting to increase, the trend of 30-year mortgages is decreasing. I’m sure your parents had one, and may have lived in it long enough to pay it off. Just keep in mind that there are other options that might better your investment. You could end up paying more for your 30-year mortgage than you would for a 15-year mortgage, borrowing the same amount of money but taking twice as long to pay it off. There is no right or wrong answer here, just keep an open mind.
Always Make a 20 Percent Down Payment: Obviously the more you put down the better off you will be, but this doesn’t mean it’s your only option. To avoid having you pay a private mortgage insurance, yes, the 20% down would be your only route. If you qualify, there are government loans that can go as low as 3.5% down, or programs that can assist with the down payment.
Buyers Without Kids Don’t Need to Pay Attention to the Schools: The biggest thing to think about here is not whether you want to have kids someday, but If you plan to sell your house in the future. Homes in neighborhoods with a well sought-after school district can get a premium payout when selling. So, a little research will pay off big!
The only upfront cost is your down payment: Inspection, insurance, appraisal, taxes, and several other fees are just the beginning of the upfront cost of buying a home. Closing costs alone can range from 3%-6% of the purchase price. Having an extra chunk saved up will help you in overall process, ensuring you’re not stuck at the end.
The ones that have the best home buying experience are the ones that go into it being prepared and organized, as well as a clear understanding of what you are comfortable with. Working with peoples that are experience and educated and can help separate myth from truth, and can make buying a new home a lot smoother. If you think this is you give, us a call at (802) 863-2020 or visit us on our website to start the application process. We look forward to hearing from you!
Why Lenders Care About Large Deposits
Greetings from the Vermont Mortgage Company! Today, we are going to dive into something that can be both good and bad – Sufficient funds for buying a house. Specifically, where said money has come from. As important as it is to have the appropriate funds you also need to be prepared to show where the money is coming from. Large sums of money coming out of nowhere can seem suspicious. If this occurs, it could slow down your mortgage process and potentially bring it to a halt.
First, some background: About 10 years ago it was rather easy to get a loan. Having enough money and making large deposits was a quick fix. However, ever since the housing crash, many safeguards have been set up, to ensure such a thing doesn’t happen again. This means that several Anti-Money Laundering Laws have been put into place. We won’t go into large detail on what these laws are, but we can give you the info you need to make your loan process easier.
Not all deposits are created equal. Making sure your bank accounts are in order is a good first step to beginning a home buying journey. Remember, as we said in a previous blog: make sure your bank accounts and deposits are collected and filed properly. Having access to several months of bank statements and deposits are essential for a loan. But what we are looking at is the deposits unrelated to your job. Perhaps you sold your car online? Maybe your sister paid you back that $1000 she needed last year? Or you just decided to deposit all that money you kept under your mattress for a rainy day. Whatever the case, this is what can put you in a sticky situation when getting approved for your loan.
The Anti-Money Laundering Laws are there to ensure, among other things, the validity of the money and where it came from. Therefore, if you suddenly come into a substantial amount of money, it can be seen as suspicious. Even a few hundred can set off red flags. To avoid this, make sure you have any documentation necessary to show where it came from. Bill of sales, checks, even something as simple as a letter from a friend or relative stating where the money came from and why, anything that can show the money has a source. Yes, it does seem like an inconvenience, but it is there for a reason. The next time you need to make large deposits, ensure it is properly documented.
If you would like to learn more about the Anti-Money Laundering laws, feel free to check out FINRA website. There you can learn more and ensure you are prepared for anything.
On our end, we will be working hard for you to ensure you get the mortgage you need. Be sure to call us at 802-863-2020, or check out our website to begin the process! We look forward to hearing from you. Until then, we hope you have a lovely week!
Dropping in Value – What Can Depreciate Your Home
The Vermont Mortgage Company team hopes you are enjoying your week on this fine Friday. As always, we want to show how much we appreciate you. This week, we are showing our appreciation by showing you what can depreciate your home! You may not know it, but there are many things in your house that could be lowering its value. Knowing what could be negatively affecting your home can help you prepare to sell. So what does depreciate homes?
Simplicity over trendy – Lots of things can be distracting. Having bright colors or overly flamboyant choices of decor can detract a potential buyers interest. Simplicity and modern looking decoration is the safest way to go. Avoid busy patterns, ornate furniture, and anything too gaudy.
Go for the wood – As we have noted previously, hard wood floors are the way to go. Having nicely polished hardwood floors are much more preferred to a carpet, and are always likely to give you a return on your money. If you are thinking of moving soon, think about ripping up any wall to wall carpeting you may have.
Taking a dip – While having a pool can be seen as a luxury, think twice about putting one in. Installing one could potentially depreciate your home. Unlike hardwood floors, pools won’t give you a positive return. Thousands spent on a pool will not mean thousands coming back to you. If you have a renovation budget, maybe forget the pool and go for something safer, such as upgrading fixtures in your kitchen or bathroom.
Climate control – This is another big investment, but one that will pay off for you. Ensuring your house is energy efficient and eco-friendly is very important for potential buyers. Ensuring you have good heating and cooling systems, and a secure house so no hot or cold air escapes, is very important in the housing world today. Instead of staying cool in the pool, get a nice air conditioner instead! Your house will thank you.
Most importantly, have a realistic and cohesive house to put on the market. Things like extensive landscaping can actually depreciate your home value, as it can be seen as a huge burden to a potential buyer. Knowing they’d have to fork out lots of money regularly to have a nice lawn is not an appealing scenario. Similarly, having updated appliances in a kitchen from the 1970’s will look out of place. If you plan on making improvements to specific areas, ensure everything works with it. Stainless steel appliances and granite counter tops aren’t an automatic boost if the rest of the house doesn’t work with it. Much like a piece of art, everything must come together beautifully to fight depreciation.
While you make art of your home, we have perfected the art of mortgages! For your next mortgage, make sure you contact us to get the process started. We are here for you at 802-863-2020, on our website, and on our social media pages. We look forward to hearing from you!
Lawyer Up – What a Lawyer can do and Why you Need One
It’s that time once again folks! The Vermont Mortgage Company hopes everyone’s week has been stellar. In previous blogs we have talked about who should be on your team when going through the mortgage process, such as mortgage brokers and realtors. Today, we will explore another person you want in your corner: a good lawyer. The lawyers can provide specific services that others may not, and can save you much hassle when it comes to law or administrative related tasks. So what can they do for you?
Firstly, lawyers are able to help you when it comes to negotiating. While price may be at the forefront of your mind, there are many other items that ought to be considered. Lawyers are able to ensure that items in the contract are all in order, covering many of your bases. This can range from terms of payment to contingency clauses. Many of these things can slip the mind of a buyer who is trying to juggle many things at once. Delegating responsibility can save a lot of time, as well as the peace of mind that it will be done the first time around.
Not only can a lawyer help with the legal aspects of the process, they can also offer advice on how to proceed when certain situations arise. Should an inspection or survey be required, a lawyer can help you find someone reputable to perform them. They can also advise you on how to move ahead, should anything arise during such inspections.
Important documents also fall under the expertise of the lawyer. The Purchasing Contract, arguably the most important document in the process, will be reviewed by the lawyer before you become legally bound. Titles of the houses in question will also be inspected, ensuring there are no problems there. Should anything be found, the problems will be remedied instantly. This would be preferable than having a snag arise, slowing the process down by weeks, or any kind of ugly legal battle that could ensue after the fact.
Finally, when the time comes for the house it be sold, they will be there to represent you. They can notify you of what should be brought to the closing, and can ensure the process goes smoothly. The last thing we would want is for a problem to come up right before the closing!
Nothing is foolproof, so covering your bases during a long process is your best bet. There are many things that can go wrong, so having an expert in the room can make the difference between getting your dream house today, or having to wait because one document had an error. At the Vermont Mortgage Company, we have many lawyers we can personally vouch for! When you choose to start the process, we will be able to point you in the right direction of who could help you best. If you have any questions, or would like help finding the best lawyer for the job, we are here for you! Call us at 802-863-2020, or visit us online.
Ahead of the Competition – How to Win in a Sellers Market
Greetings from all of us here at your local Vermont Mortgage Specialists! We hope you’ve had a lovely week, and are as excited as we are for the weekend. With work out-of-the-way, many will take to the streets to once again search for a dream house to move in to. We wish you the best of luck! This week’s blog is more geared towards those who may be having a bit of trouble getting their offers accepted. As we all know, it is currently a seller’s market, meaning housing inventory is tight. Any house will probably have a good few offers, so you need to stand out! But that doesn’t necessarily mean having the highest offer…
While this may be old news to many of our veteran readers, we cannot stress this enough: get pre-approved! Going through the legwork of being pre-approved for a mortgage shows the sellers that you are considered more trustworthy in the eyes of the bank. This tool is more powerful than just a higher offer, as it gives the sellers confidence that they aren’t gambling with the funds for their new home. This is where they created memories for years, and they want to make sure they sell to the right buyer. As always, we are here to pre-approve you when you want to start your journey!
Once you have begun your journey, move quickly! Again, this is a seller’s market. A house you see on Tuesday could be sold by Saturday. Make sure you have everything in order so you can go into an open house with an offer that is strong. Being able to jump on a house right away can give you a huge lead over those who prefer to mull it over, or chose to do the work AFTER seeing the house. We don’t want you to make a knee-jerk decision that lands you with a house you don’t want, but we caution thinking it over for a few days. The quicker you can come to a decision, the better.
Finally, don’t expect your first offer to be accepted right away. Negotiating isn’t a bad thing, in fact you should expect it! The sellers probably have several offers, and want to make they get the best (and safest) deal for their home. Ensure you have the wiggle room to barter and find a middle ground that works with everyone. Again, ensuring all of your documentation and pre-approval is in order can make these negotiations as short as possible.
Now, all of this is necessary to win in the seller’s market of today, but it is a lot. Therefore, we offer this last nugget of advice: get yourself the best realtor and mortgage team you can find. This is where you do not want to cut corners and save money. Find and assemble the best team you can – this will ensure everything will run as smoothly as possible. There are people who dedicate themselves to this line of work, so why not use them as a resource to make your job that much easier? Who knows, they may even find something special that your competition missed because they didn’t make the same effort?
We are your local mortgage specialists, and will ensure you get the best service possible. While we aren’t realtors, we have a wide network that we can personally vouch for as being the top of their class. We want you to get your dream home, so assemble your dream team to make it happen! Give us a call at 802-863-2020 for pre-approval and realtor suggestions, or find us online!
And as always, happy house hunting!
New Home, New Appliances – Whether you Want Them or Not
Good day from the Vermont Mortgage Company! We hope you’re as ready as we are to tackle this new week. Having been revitalized from the weekend and last weeks holiday. Today we will be looking at what happens after buying a house. You went through the process, paid for the closing, and now have the keys in your hand. Great! But don’t think you’re out of the woods of spending just yet.
Even if it may be your dream house, you may want to add your own flare. Maybe you saw a fancy new stove or refrigerator that would look perfect in the kitchen. Or, chances are you new house may not have one! About a third of all houses come with no fridge, and two thirds may not even have a washer and dryer! These numbers come from a survey done by Home Innovation Research Labs, which shows you may not get all the appliances you expect. Naturally, you would know what is missing when buying the house.
After buying a new home, you can expect to pay a few thousand more dollars the first year. New appliances, tools, furniture, you name it. Especially if you’re coming from an apartment, you will be buying many essentials you may not have needed before. Budgeting and buying what’s most needed first will be essential during your first year in your new home.
Homes that are a few years older may not need as much in terms of new appliance purchases. Instead, you should expect to pool your money elsewhere. Renovations and repairs could eat up most of your savings, from a complete kitchen revamp to having to replace roofs or HVAC units. Even a house that was built in the past 5 years could require some repairs.
While these new expenses may be thought about, they are rarely discussed. Usually, budgets and debt are factored into monthly mortgage payments and closing costs, not life in your home that comes after. Make sure you have a small pool of savings to prepare for emergency costs or renovations. It will be difficult to enjoy your new home without a refrigerator!
However, we must throw in a word of caution: While we know it will be exciting to buy a new set of furniture, it is important to not make any big purchases that could affect your credit profile. Credit is checked right before closing, so any new debt will be seen. While unlikely, it could cause a hiccup right at the end of the process. Waiting a few days after the closing dust settles to see where you are financially, and what needs to be done, can really help you out in the long run.
If you have questions about anything home related, or how to effectively budget your new home, feel free to contact us! Your local mortgage gurus are waiting to answer any and all questions or concerns you may have. As always, we are reachable at 802-863-2020, or on our website.
Overcoming the Hurdle – Getting the Mortgage is now Easier
Good news from your local Vermont mortgage specialists! Thanks to a change in policy, it will now be easier to get a mortgage. This is especially good news for those who have been struggling to get one recently, or ones who are looking to get back into the mortgage market.
The countries biggest source of mortgage money, Fannie Mae, has recently announced it will be lifting its Debt to Income ratio ceiling for mortgages, from 45% to 50%. With this, the guidelines for a mortgage will now be looser. So how exactly does it make it easier?
When applying for a mortgage, there are many criteria that the applicant must fulfill to be approved. Commonly known ones are things like a good credit score and money for the down payment. These criteria are put in place to protect the banks from losing money. Good scores mean you are less of a risk to give a mortgage, making you more attractive as a customer.
The Debt to Income (DTI) ratio is also very important as a criteria. The bank will take your monthly income, and compare that to your debts and monthly payments. This could be car payments, credit card debt, or student loans. Once that is all added up, they then take the percentage of how much of your monthly income will be taken out. Naturally, the less your DTI ratio is, the more money you will have to pay the mortgage. The bank will be more confident you will not be late or unable to make your monthly mortgage payments. So if you had $10,000 a month coming in, and $4,000 worth of expenses per month, your DTI would be 40%. Not bad!
So with these looser requirements, it is now easier to get a mortgage. The number one killer of mortgage applications is the DTI ratio, so more people will now be able to get through the application process. This is especially good for younger folks, since student debt has always been a looming problem. The American dream of owning a home seemed out of reach for younger generations and the like, but now it is more likely than ever!
However, just because Fannie Mae has risen the ceiling of DTI, does not mean mortgages are automatically easier. You will still have to fulfill all of the other criteria to get the mortgage you’re looking for, so make sure your credit is high. If you are worried about your eligibility, or have any questions, feel free to contact us! We are always here to help at 802-863-2020, or online.
The Seller’s Tax Prebate – What it is and how it Affects you
Continuing our quest to simplify some of the Mortgage World’s most difficult subjects, this week we are tackling the beast of Tax Prebates. While these are very helpful for those who require assistance to pay taxes, it throws in a whole different curveball when you are selling your house. If you are buying a home, you may be required to bring more money to the closing. Don’t let this catch you off guard! Let this thorough and painstakingly researched guide help you through it.
So, to start with, what is a Tax Prebate? If you reside in your primary residence, (in Vermont, naturally), and you meet certain income restrictions, you may be eligible for the Tax Prebate. If you are accepted, then your taxes for the next tax year from July to June will be reduced by the prebate amount. This has to be done before April 15th, when you file your taxes.
Now, when one decides to sell their house, things get a bit tricky. Here’s why:
The property taxes affected by the Prebate are not based on the property, they are based on the sellers income. When a house is sold, and the seller has a prebate, the new buyer steps into their shoes. This means they enjoy the lower tax for that year, until the following July.
Therefore, the buyers have to reimburse the sellers for the prorated amount of the state payment for the remainder of the year. This can be due at closing, or can be negotiated between both parties.
There is a catch, however: The taxes are due mid April, but the prebate doesn’t take affect until the beginning of July. What happens if the selling of the house happens in between these dates?
Not only will the current tax year have to be prorated, but the upcoming year will have to be prorated as well. Depending on your state and the taxes due, you may need to bring a fair amount of cash to the closing. But the good news is that your taxes will be lower. Think of it as paying up front, instead of monthly increments!
One thing to remember is that legally, both parties can agree to not do the reimbursement, and can instead negotiate something else. Make sure that you and the other party are on the same page, so that there are no nasty surprises.
We hope this provided some clarity. Definitely keep in touch with your mortgage specialist and attorneys so you aren’t smacked with a large closing cost. If you need any assistance or questions answered, give us a call at 802-863-2020! Our website is always open as well!
**Many thanks to our friends at Stark Law, PLLC for helping us with this weeks blog!
The Seller's Tax Prebate – What it is and how it Affects you
Continuing our quest to simplify some of the Mortgage World’s most difficult subjects, this week we are tackling the beast of Tax Prebates. While these are very helpful for those who require assistance to pay taxes, it throws in a whole different curveball when you are selling your house. If you are buying a home, you may be required to bring more money to the closing. Don’t let this catch you off guard! Let this thorough and painstakingly researched guide help you through it.
So, to start with, what is a Tax Prebate? If you reside in your primary residence, (in Vermont, naturally), and you meet certain income restrictions, you may be eligible for the Tax Prebate. If you are accepted, then your taxes for the next tax year from July to June will be reduced by the prebate amount. This has to be done before April 15th, when you file your taxes.
Now, when one decides to sell their house, things get a bit tricky. Here’s why:
The property taxes affected by the Prebate are not based on the property, they are based on the sellers income. When a house is sold, and the seller has a prebate, the new buyer steps into their shoes. This means they enjoy the lower tax for that year, until the following July.
Therefore, the buyers have to reimburse the sellers for the prorated amount of the state payment for the remainder of the year. This can be due at closing, or can be negotiated between both parties.
There is a catch, however: The taxes are due mid April, but the prebate doesn’t take affect until the beginning of July. What happens if the selling of the house happens in between these dates?
Not only will the current tax year have to be prorated, but the upcoming year will have to be prorated as well. Depending on your state and the taxes due, you may need to bring a fair amount of cash to the closing. But the good news is that your taxes will be lower. Think of it as paying up front, instead of monthly increments!
One thing to remember is that legally, both parties can agree to not do the reimbursement, and can instead negotiate something else. Make sure that you and the other party are on the same page, so that there are no nasty surprises.
We hope this provided some clarity. Definitely keep in touch with your mortgage specialist and attorneys so you aren’t smacked with a large closing cost. If you need any assistance or questions answered, give us a call at 802-863-2020! Our website is always open as well!
**Many thanks to our friends at Stark Law, PLLC for helping us with this weeks blog!
The Value of Your Home – How it’s Calculated and how to Improve it
Greetings from the Vermont Mortgage Company! As always, we hope you’ve had a pleasant weekend and were able to enjoy the gorgeous weather on Easter Sunday!
Our homes are probably the most valuable things we own. But how is that value calculated? There are a lot of factors, some of which you may not consider when buying a home. In this blog we’ll delve into how your value is calculated, and what factors greatly increase your home appreciation.
To begin, one must find out what a house is worth. Often a home buyer will use an appraisal to determine how much a house is worth. This is to determine that the value of the house matches the loan amount. A qualified appraiser will visit the home and look at a number of things:
-Size, age, and condition of the house
-Other features
-Location
-Value compared to nearby houses
-Possible areas in need of renovation
After this is determined, you will have an official value of the home. But even though you’re still in the process of buying the home, you should also keep in mind something else: maximizing appreciation for when you come to sell the house. This is an important thing to keep in mind for the future.
Again, there are several factors that pertain to appreciation. There are also many things that one can take into account in order to make sure you have the most house appreciation when the time comes to sell. Currently in the market, these are the highest appreciating assets for a property:
-Smaller houses: For baby boomers and millennials alike, smaller houses are becoming more popular. These appreciate the most over time, compared to large houses. 1 or 2 bedrooms and a 2 car garage are also the golden amount for better appreciation.
-Open Floor Plan: Buyers are loving more open homes. High ceilings, large windows and more space are highly sought after nowadays.
-Modern Design: Simple modern designs are now the most popular and highest appreciating architectural style. Styles like Victorian or Colonial may still be popular with the history buffs, but won’t see as much.
-Proximity: Houses that are closest to public transport hubs such as train stations and bus stops appreciate highly, as many new home buyers are more likely to take public transport than cars. Being closer to good schools also helps with appreciation.
-Location: Probably one of the most important aspects of a home is the location and view. The views with the most appreciation are parks, as many home buyers like being near communal spaces. Luckily for Vermonters, views of a lake and mountains also appreciate a lot.
We hope this blog has been informative to those thinking of starting the home buying/selling process! We want to make sure you get the most value from your most prized possession! If you have any questions about these, or want to get the process started, give us a ring at 802-863-2020, or visit our website!