Posts Tagged: ‘First Time Home Buyer’

Purchasing A Home With A Friend

August 5, 2021 Posted by Andre Hemmersbach

A few times a year I have clients who are thinking about buying a property with an unmarried “significant other” or friend. The idea sounds great and does have significant benefits. It is important, however, to consider both the pros and the cons of making the decision to co-purchase a property. The major benefits of buying a house with a friend are obvious:

Pros:

  • A bigger down payment is available to purchase the property and
  • You have someone to share the mortgage and other monthly expenses or
  • Help is available with property maintenance and repair work and
  • There may be extra income to help you qualify for a larger mortgage.

And I’m sure you can come up with a few additional advantages.

Cons:

  • If your co-borrower is not financially strong or has credit issues getting a loan could be be more difficult or
  • The promissory note you sign (mortgage) is written as a joint and several liability, meaning that if your co-borrower does not or cannot pay it becomes your sole responsibility or
  • You and your partner may a have different ideas on how much to spend or how to improve the property or
  • When one partner wants to sell and the other does not, how do you resolve the issue or
  • What happens to the ownership with the untimely death of a partner.

The examples of problems that could arise are only limited to your imagination on relationship variables and are not as clear as the benefits. If things go bad, your situation could leave you with some lasting complications.

Buying a property with a partner may or may not be the best decision you ever made in purchasing a home. My advice to all clients, including couples who are going to purchase prior to getting married, is to pay an attorney a small sum of money for an agreement that spells out the terms of the partnership. This is the best investment you can make in your partnership!

Please call me for a free consultation to discuss your home financing goals.

Buyers Market Coming Soon

August 20, 2018 Posted by Andre Hemmersbach

Are we on the cusp of a change in the Real Estate market? The last 4 years have seen incredible increases in real estate values mainly due to an imbalance between supply and demand. Buyers (demand) have outstripped listing inventory (supply) month after month and year after year. In the last few weeks, I have had a number of conversations with Realtors who have told me that things seem to be slowing down. Multiple offers scenarios, while still happening, are being joined by less buyers and some properties that are not priced correctly are not getting any action. The truth will be revealed at the end of August and September (see chart below).

Price vs Listing Chart

Price vs Listing

 

The end of summer traditionally has a pretty sharp drop off in the number of properties for sale. If at the end of August and September that seasonal adjustment does not happen with its normal veracity, we could be seeing a future with buyers having a bit more room for negotiations.

I have been helping clients finance their real estate for the last 30 years. Call me for a free consultation.

Lenders Only Look At Four Things Before Approving Your Home Loan.

April 20, 2015 Posted by Andre Hemmersbach

Getting a home loan is not as tough as rumor has it! The mortgage approval process simply boils down to the four basic items explained in the following few paragraphs. First time home buyers and even repeat purchasers need not be bewildered by the formulas and methods used by lenders, you just need someone to hold your hand and an expert that knows the home loan rules!

Lenders are looking for what I call the four “C”s and once you understand the concept of these basic requirements everything else starts to make sense.

  • Cash – Lenders look for “skin-in-the-game” as a way to make sure that you have a financial incentive to continue to make the mortgage payment when things get tough. The larger your down payment or equity the less they have to worry about the borrower walking away from the home loan. Minimum down payment requirements range from as little as 0% to as much as 35%

    You will need a home loan to enjoy this light filled room

    Get a home loan and then sit back and enjoy

  • Capacity – Another way of saying income. The lender wants to make sure that the borrowers have sufficient stable income to handle the mortgage, property taxes, insurance and other debts. Key words in the previous statement are SUFFICIENT and STABLE. Lenders will use a combination of pay stubs, W-2 and other documents and compare those to the only reliable source available in our financial system to prove their legitimacy….the IRS and your tax returns. The minimum requirements for income vary widely by program; lender and other factors so make sure you are working with someone that understands the rules.
  • Credit – Simply put – how have you handled other financial promises of repayment in the past? Nowadays it is easy for a lender to figure this out with a copy of your credit report and a number called a credit score. A credit score is numerical representation of your credit risk. Over 700 is good below 620 not so good. By the way there are easy ways to increase your credit score. (Call me to discuss)
  • Collateral – The property you wish to purchase. Lenders are looking for collateral (their security) to be in good shape and free of any health and safety issues. Why not a complete “fixer upper” see the cash bullet above. The lender wishes to protect a borrower from any unforeseen repairs that the borrower cannot afford. Besides the last thing a lender wants to do is to have to fix up a property after having to foreclose on a home loan.

I have been helping people finance their real estate for over 25 years. Whether you are a seasoned real estate investor or first time home buyer my experience and knowledge will insure that your home loan goes smoothly! I would be happy to meet with you for a free consultation to discuss your plans to purchase a home.

Home Affordability Via Loan Rates

April 9, 2015 Posted by Andre Hemmersbach

Interest rates are the key factor in home affordability, not the home sales price. Home buyers mistakenly think that high real estate prices are keeping them from affording a mortgage payment, however, the biggest variable in home buyers affording a home are mortgage interest rates. (See chart below)

Given an annual income of $70,000 between a husband and wife, at the industry standard of 38% debt-to-income (DTI) ratio a couple could afford a mortgage loan of $525,700 at a rate of 3%. For every 1% increase in mortgage rates the borrower’s affordability drops another 10%. If rates were to merely raise 3% a borrower could not afford more than a home loan of $369,700.

Chart

Rate Affordability Chart

 

Please call me for a free consultation to see what size home loan you qualify for.

 

Big Rate Drop Thanks To Oil Prices

January 8, 2015 Posted by Andre Hemmersbach

Big Rate Drop Lower Gas Prices

Lower Gas Prices Big Rate Drop

 

Look at the big rate drop that the mortgage market has served up if you thought that the good news was the $25 you were saving at the pumps. Lower oil prices are deflationary and that has been great news for the big rate drop in the mortgage rates over the last 3 weeks. Coupled with weak economic news out of Europe and another Greek Currency hiccup the change in oil prices have really moved the home loan rates in the right direction is you are looking for a home loan to purchase a home or are currently in a mortgage over 4.25%.

Rates on a 30 year fixed rate have dropped to below 3.625% on the very best borrower profiles (APR 3.689). Many of my clients are also considering a term reduction to really kick up the savings. Refinancing from a 4.25%, 30 year fixed rate taken out last year to a new 20 year fixed rate at 3.375% will save a borrower over $131,000 in interest over those 20 years.

If you would like to see if a refinance would make financial sense, please call me I would be happy to perform a free review your current mortgage through my proprietary mortgage calculator.