When purchasing a home, you will most likely have to put down 3.5% or more as a down payment. Your lender will have to analyze and document the source of your down payment in order for your loan to be approved. Typically, your lender will want to see the previous three months of your statements for your checking and savings accounts, in order to verify the source of your down payment. If your statements have any large or unusual deposits, the lender may ask you to explain what they are and document where they came from.

If you have received any significant amounts of money as a gift, this may cause your lenders to question the deposit, and to verify the source of the deposit. In this case, you will have to provide a gift letter. The donor will have to write a letter to your mortgage company verifying that the funds are just a gift and not a loan. The letter states the following:

• The name, address, and phone number of the donor.
• The donors relationship to you
• The date the funds were transferred
• The exact dollar amount of the gift
• The address of the property purchased
• A statement from the donor that no repayment is required
• The donors signature

The question remains, what constitutes a gift fund? A gift fund typically is any single deposit that exceeds 50% of the total monthly qualifying income. For example, if you make $5,000 a month, your lender would most likely question a deposit over $2,500, and therefore you would have to provide a gift letter. This however is partially up to the lenders discretion. If there are any deposits that seem to be out of the ordinary, your lender may question them regardless of your income.

Many homeowners get help from family and friends in making their down payments. That’s fine, but lenders want to make sure any significant deposits in your account are gifts and not loans. This assures you can afford your mortgage payments and will pay back the loan. So if you are expecting to get significant financial gifts, be prepared to document it properly for your lender. 

There is a myth that sellers should wait until springtime to sell their home. However, that may not be true. While spring is the busiest time for real estate sales, people buy homes 365 days a year. Before you decide what time is best to sell your home, here are some components to consider:

Why You Should Sell Now

Less Competition: Many sellers feel that spring is the best time to sell their home, because typically demand increases during that time of year. However, the choices buyers have will also increase in the spring as more people put their homes on the market. Selling your home now will ensure a fewer number of comparable homes for sale, therefore, the greater the probability that a buyer will look at your home.

Low Rates: As of right now, mortgage rates are low, yet there is an expectation that rates will increase very soon. Taking advantage of selling your home now will allow more buyers to afford your home. In other words, there will be a greater demand for your home. Waiting for the spring market could cost you, as it eliminates many buyers from the real estate marketplace, and less demand means less money.

Quicker Process: One of the most frustrating components for a seller and a buyer has been the length of time it takes from contract to closing. Right now, there are fewer real estate transactions than there will be in the spring. This means fewer loans to process, attorneys have less closings, and home inspectors have less inspections. These factors lead to a quicker transaction and closing, which is less stress on you.

Staging: Some buyers can easily be sold on a home because of the way it is staged. The ambiance of snow outside and the warmth of a home can really go a long way to persuade a buyer. Simple seasonal staging such as the décor or having a scent in the air relevant to the time of year, can mean the difference between a home selling or not.

Why You Should Wait

Simple Inspections: During the winter months, a septic, roof, and other types of inspections can be more difficult. Snow and/or frozen ground can prevent access into the septic tank. Snow can also prevent inspectors from getting on the roof to take a closer look. During warmer months inspections can be more thorough and a lot simpler. 

Better Time To Move: Moving during the warm spring and summer months can be a lot easier than during winter snow. Families also like to move during summer when there is a break in the school calendar. This way, children won’t have to miss any school, and families will be well settled before the school year begins.

Easier Travel: Many buyers stop searching for homes during the winter due to the slick roads and less amounts of daylight. Snowstorms can also put a damper on scheduled appointments because of the horrible travel conditions. Warmer months offer better travel conditions and longer amounts of daylight giving homebuyers more flexibility with time, and appointments won’t have to be cancelled.

Staging: Staging a home during warmer months, can make a home look and feel more appealing. You can open the windows to allow fresh air and sunlight in, which makes a home feel inviting. Buyers will also be able to see the landscapes clearly when flowers are in bloom, the grass is green, and the trees have all their l

When choosing a home loan program, it’s important to work out the features you need from your loan, and how much it will cost you in fees. Selecting the right home loan program for you makes a big difference in your monthly payments and overall cost. To help you understand the types of loans that are available, here is an outline of your options.

Conventional: Conventional mortgages are the most popular type of loan used to purchase or refinance a single-family home. This type of loan is not made or guaranteed by the U.S. Government. To qualify for a conventional mortgage, you typically need a minimum down payment of 5% of the total purchase price of the home, and this typically requires mortgage insurance. However, if you have a down payment of 20% or more, you will not need to pay the additional expense of mortgage insurance.

Government: A government mortgage is a loan that is insured by a department of the U.S. Government, and offers a homebuyer a lower down payment requirement and/or a lower interest rate.

FHA- The Federal Housing Authority insures FHA loans and to qualify for a FHA mortgage, you typically need a minimum down payment of 3.5% of the total purchase price of the home. These loans are designed to help low-to-moderate income homebuyers purchase a home. They offer a low down payment and more flexible guidelines for qualification.

VA- This home loan is guaranteed by the department of Veterans Affairs. If you are serving in the armed forces, or are a veteran, this option would work well for you. With the VA loan, no down payment is required and you will not need to pay the expense of mortgage insurance.

USDA- The United States Department of Agriculture’s rural housing loan program is designed to serve rural residents who have a steady, low or moderate income, and are unable to obtain adequate housing through conventional financing. This loan can be used to build, repair, renovate or relocate a home, or to purchase and prepare sites, including providing water and sewage facilities. In order to be eligible, applicants must purchase a home within the eligible rural areas, and may have an income of up to 115% of the median income for the area. Families must be without adequate housing, but able to afford the mortgage payments, including taxes and insurance. Applicants must also have reasonable credit history. With the USDA loan little to no down payment is required.

For more information about finding a loan program that is right for you, feel free to discuss your options with one of our loan experts. The key is finding the right home loan for your unique situation. You can choose from different terms, different types of mortgages and loans that give you the extra funds to improve your new home after you purchase it. 

When shopping for a home, very few people will compromise on location. Have you heard Real Estate Agents and Brokers refer to the saying, “The three most important aspects of real estate are: location, location, location”? That’s because it is vital to ensure a property is in the most desirable location for the type of property it is.

Resale value is one of the main reasons location is so important. After a few years you may want to sell your home for an even better one, and location will play a crucial role in determining the sale price. If your home’s location is not appealing to potential buyers, your home will probably take a long time to sell, while a good location will ensure your investment will be safe and profitable. With the help of loans like the Norcom Dream Home Loan, you can make improvements to the house like getting new appliances in the kitchen, or get a new roof.  You can even go to extremes and knock the whole house down and build a new one, however, you cannot change its location.

So the question remains: What determines if a property is in a desirable location? An appealing location will have several components, one of which is the neighborhood. If the neighborhood is unpleasant with noisy and problematic neighbors, then most people will not want to live there. The design of the neighborhood is also relevant. Is it near a busy street, or are the houses too close together? According to the 2014 profile of home buyers and sellers by The National Association of Realtors, only 5% of all home buyers are willing to compromise on the quality of the neighborhood. The distance to the job is another component that determines a desirable location. The extra hassle of spending extra hours and gas money commuting to a job everyday multiplied by the amount of years you’ll spend in the home is not worth it. This correlates with the convenience to friends, family, shopping, and schools. 70% of buyers said commuting costs are somewhat to very important according to the 2014 profile from the National Association of Realtors. The same survey also concluded that 14% of buyers would compromise on the distance from their job, while 7% would compromise on the distance from friends or family, and only 2% would compromise on the distance from school. The quality of the school district plays an important role in location. Only 4% of buyers are willing to compromise on the quality of the schools. Another component that makes a location desirable is the overall affordability of homes within a neighborhood. A homeowner’s budget is a very relevant part of the home buying process, and some may choose to live in a less convenient location because of price. Such a compromise might be necessary due to the price of the land; more desirable areas are naturally more expensive. However, 23% of buyers are willing to compromise on the price of a home, while others are less likely to compromise on location.

Overall, buying a home is a very large investment, so you want to make a well-informed decision. Having a responsible and reliable real estate agent will help advise you on the pros and cons of any home you are considering buying. Just remember, location, location, location.

Your credit is a very important factor when it comes to your finances. Lenders and other institutions use credit scores to determine the risk of lending money to a given borrower. Insurance companies, landlords, and employers may also look at your credit score to see how financially responsible you are. A credit score is very much like a score you would get on a test. You receive points for everything positive and points taken away for anything negative. Most credit scores range between 300 and 850, and just like a test score, the higher the score the better. While its important to know what helps to build a good credit score, you also have to know what hurts your credit score.

Negative Affects on Your Credit

Payment History: There are many factors that can negatively affect your credit score; your payment history is one of them. Have you paid your bills late or missed payments? If you have, how late were you? The later you are with your payments, the worse it is for your credit score. Also, any charge offs, debt settlements, foreclosures, bankruptcies, wage attachments, suits, liens, or judgments against you are some of the worst things to have on your credit report.

High Credit Card Balance: Using more than 80 percent of your total amount of available credit is another factor that lowers your credit score. Having a high credit card balance or maxing out your credit cards increase your credit utilization (the ratio of your credit card balances to credit limits listed on your credit report) and decreases your credit score.

Requests for New Lines of Credit: If you have recently opened several new accounts, you could be a greater credit risk. People tend to open new lines of credit when they are experiencing cash flow problems or are planning to take on a lot of new debt.

Closing Unused Credit Cards: The unused credit accounts are contributing to the amount of credit you have available. You will want to show that you are not using all your available credit. Once you close out those credit accounts, you will suddenly have less credit available.

A Greater Number of Inquiries: This may indicate you are struggling financially or you may have a lot of debt because the more you apply for credit cards or loans, the more the credit card report inquiries will show up on your credit report. Some companies may check your credit score before you sign up for their services, which may also increase your number of inquiries. For example, if you switch cell phone providers, your new carrier will check your credit to see if you are financially responsible, so switching cell phone providers frequently can increase your number of inquiries and also increase your credit score.

Positive Affects on Your Credit

Paying Bills on Time and in Full: Have you paid your bills on time for each and every account on your credit report? The longer you pay your bills on time, the more your score should increase. All of your bills can affect your credit score, your car bills, cell phone bills, mortgage, cable, etc. If you stop paying your bill, the company can take you to court to collect their money through a debt settlement, which in turn would look very bad on your credit.

Using Less of Your Available Credit: Use 25 percent or less of your available credit. For example, you should carry a balance of no more than $2,500 if your credit limit is $10,000.

Paying Off Debt: This is a lot easier said than done, but the more you pay your debt back, the more your credit score will increase.

Steady Employment: People who have steady employment are viewed as being better at paying their bills on time.

The bottom line is that your credit score is important for getting approved for a loan and also getting the best interest rates available. It plays an important role in your finances, and as long as you are being responsible with your money, your credit score will reflect it.