There’s one simple rule you need to listen to when you’ve applied for a loan: DO NOT CHANGE YOUR CREDIT PROFILE.

Whether you’re refinancing or purchasing, there is no easier way to cause problems for your mortgage loan officer, your bank, and the approval of your loan than to play with your money too much.

What does this mean?  Some of it is obvious:

-       Continue to pay your bills as normal

-       Do not buy another property

-       Do not hide assets or, especially, debts.  This includes hiding fully paid off properties – make sure you’re upfront about them.

But there’s a lot more to it than that.  Almost everything we do in the modern American world affects our creditworthiness, so here’s a list of other things to keep in mind.

-       Credit cards: Don’t apply for a new one, don’t cancel and old one, and do not increase your credit limits

-       Employment: Don’t change jobs, even for one for more money, without talking to your Loan Officer about it first.  This is especially true if you do not have regular employment (in other words, you’re a “Freelancer,” “Contractor,” “1099 employee,” or some other such description).

-       Co-signing: Just don’t do it.  Whether it’s your kid’s student loan or your mother’s car loan, it’s going to affect your credit profile.  Once you apply for a mortgage, do not do this.

-       Vehicles: Another big “nope.”  Don’t buy a new car, truck, van, boat, airplane, or spaceship.  Don’t do it even if you’re buying in cash.

-       Banks: Don’t change your bank.  Don’t close accounts.  Don’t open accounts.  Don’t move large amounts of money between accounts.

-       Documentation: Document everything you do, especially if it involves large sums of cash.  Keep a list of all of your open bank, credit, loan, etc., accounts.  Document all money going in and out of them.

-       Purchases: Similar to what I said for vehicles, just don’t make large purchases.  Large amounts of cash moving in or out of an account look suspicious and require significant documentation.

-       Down payments, cash at closing, inspection costs, bank costs, etc.: Large amounts of money ARE going to move out of your accounts during the process.  Make sure they relate to the loan, and document both where the money is going to and where it came from.  Do not deposit a large amount of money shortly before closing – the lender will want documentation on where that money came from.  You cannot use someone else’s money for cash at closing without the approval of the lender.  If you’re taking money from your 401k or from investments prior to pay the amount you owe at closing, do it ahead of time and tell your lender about it.

-       Other properties: Disclose them.  Even if they’re completely paid off, your lender needs to know about them.

Purchasing a house – or refinancing your existing one – is one of the largest transactions most people will make in their lives.  Pay attention what you’re doing, and to these rules, and don’t be caught unawares.  If you’re looking for a new bank or loan officer, contact us today for a referral!

It had to end sometime.  This year’s historically low mortgage interest rates, at least for the time being, have come to an end.  Rates have continued to rise for the 3^rd week in the row, now passing 4% (for a conventional 30-year fixed-rate loan) in Connecticut and 3.74% nationally.

What does this mean?  Interest rates below 4% have become very hard to find, but if you asked anyone five years ago about 4% rates, they’d have laughed at you – it wasn’t even imagined!  So rates are still very good, they’re just not at historic lows.  If your rates are higher you should still consider refinancing.  Even a small reduction in your rate can add up to significant amounts over time.

If you are looking to refinance, get your paperwork ready.  You don’t have to submit it immediately – you might want to see what happens to rates over the next couple weeks – but you’ll want to be able to jump on a rate when you’re ready to move.  Remember, you’ll need tax returns, bank statements, information on previous addresses and recent credit inquiries, changes in marital status such as divorces, and more.  It’s a lot of paperwork.  You should be prepared to provide details about everything that has any affect on your money residency.

As mortgage rates rise, mortgage volumes have fallen off.  Both purchase and refinance activity has declined, with refinance activity declining significantly to 74% of total national market volume (as of May 23, 2013).

For More Information:

http://www.washingtonpost.com/blogs/where-we-live/wp/2013/05/23/mortgage-rates-are-trending-upward/

http://www.foxbusiness.com/personal-finance/2013/05/23/mortgage-rates-rise-for-3rd-week-in-row/

Over the past few years we at the Hamad Law Firm, LLC, have watched as the real estate market – both residential and commercial – plummet from its heights to lows we never thought we’d see.  As you might imagine – and might be experiencing – this has scared away prospective property purchasers.  Homes and other buildings have sat on the market for months and years at a time, with buyers and sellers unwilling or unable to agree on a price that satisfies both, as well as any mortgage-holders.  Buyers don’t want to get involved, fearing further drops, and unwilling to pay even what sellers are willing to settle for.  With all of this going on, the market may be starting to turn – and you can get in on it early.

I’m not going to sit here and tell you that buying property right now is a sure thing – it never is.  But if you’re careful, if you study your opportunities, you can buy newer, nicer homes now for less money than ever before possible.  Don’t plan on flipping property (though it can be done), but rather on long-term ownership.  If you’re planning on buying for the long term, todays prices (and more importantly, interest rates), make the real estate market a good place to put your money.

Some points to consider:

First, as mentioned, consider what current interest rates are.  A 30-year fixed-rate mortgage can be had for under 4% right now – with no points.  If you’re looking at an FHA 30-year loan you may be able to reach as low as 3.75%.  A 15-year loan can be had as low as 3.25%.  If you are looking at short term investing, a 5/1 ARM product can be had as low as 2.75%.  At these rates, borrowing money has become so cheap it actually makes up a good portion of the savings on a home.

Consider this: At an interest rate of 6%, a conventional 30-year loan of $300,000 costs a total of over $647,000.  At 4%, this same loan costs about $132,000 less over 30-years – that’s almost half the amount of principal!  In monthly terms, the loan drops from $1798 to $1432, about $368 per month in savings.  That’s the incredible difference between interest rates of a few years ago, to interest rates now.

Now loans HAVE become more difficult to come by.  You do need to be well qualified (especially to get the best rates), and the more money you can bring to closing, the better.  But loans – many of them – are still being closed every day.  You can get loans with low credit scores (at least down to 620) and with almost no money to put down, if necessary.

Second, if you are currently renting a home (or office/business space), you’re paying somebody to, yes, handle things such as repairs for you, but you’re also paying for their profit margins.  With real estate prices so low, why do that?  If you have a steady job and you’re going to be in the same place for a number of years, you can settle yourself into your own home or space.  You no longer have to deal with the whims of a landlord or the risk of price increases.  In fact, rental vacancy rates are very low and going lower right now.  That is to say, so many people are renting rather than buying that it’s relatively hard to find available rentals, and when it is, prices are high and going higher.

Third, the market is weak.  This relates to pricing, which I think we can agree is obvious, but it also relates to the amount of choices you have.  There is a LOT of real estate on the market.  You can skip the real estate that requires fixing up, or has a bad roof, or whatever else.  You can have the place that you love, in the location that you love – not that you have to settle for.

In summary, if you have the ability to purchase real estate – for whatever purpose – now may be the time to do so.  A combination of low prices, low interest rates, and a large amounts of choice, makes this a great time to buy for certain purchasers.  Contact us today if you need help buying or selling a property, or even if you just need advice as to who to talk to in the mortgage market, the Realtor market, or anything else.