Credit ratings are generated by three credit agencies (Experian, Equifax, and Transunion). They each use a differing methods to calculate a numerical credit score that reflects your credit history. The higher the score, the less risky you are as a borrower. Specific activities can have a adverse influence on your rating and could possibly cause you to get denied for a home loan. Below are advice for potential MA home buyers on credit activities to avoid before buying a home.

Credit Activities To Avoid Before Buying A Home

Delinquent Behavior

Missing payments demonstrate poor credit habits and consequently reduce your score. How many payments you have missed (30, 60, or 90+ days) and how many times you are late also play a role. Delinquencies remain on your credit report for a very long time.

Collection Accounts

If you are really behind on payments and a lender has given up on their own attempts to obtain anything from you, they may move your debt to a collection company. This appears on your credit report. The information will stay on your credit file even after you pay off the debt.

Lender Charge-off

If a creditor is unable to collect the complete balance that you owe to them, they may “charge-off” the uncollected amount. This may apply if you entirely neglect to pay or if you settle for a lower amount. Charge-offs appear on your credit file for 7 years. Future creditors will view this item and debate how likely you are to continue with that behavior.

Matters of Public Record

Bankruptcy, tax liens, judgments, foreclosures, and other similar matters are part public record. Regardless of whether you settle those accounts, the initial reporting stays on your credit score. Particular things appear for seven to ten years whereas others (such as liens) remain forever. Obviously, it is critical not to let issues get this far.

Advice For Potential MA Home Buyers

All of the credit activities to avoid before buying a home noted above make you a risky borrower and may cause higher mortgage rates or completely stop you from getting loans. Demonstrate responsible behavior and it will save time, money, and disappointment when it is time to buy real estate. These are the best advice for potential MA home buyers. this includes only a few common credit mistakes. Speak with a credit professional for information on your particular situation.

When looking for mortgages, you will come across information on interest rate and APR. These are usually misinterpreted as being synonymous, but they represent different things. It is helpful for borrowers to analyze both. Below are details on the difference between interest rate and APR for MA home loans.

Interest Rate and APR

Interest rates apply to monthly mortgage payments over the life of a loan. This is typically the figure promoted by mortgage companies. It does not include the initial cost of financing. Fees may vary between loan programs and financing companies. For example, there can be points for one loan but not another. Other costs that may be included are origination and services charges.. The APR combines the interest rate and certain closing costs, so it is a better estimation of overall expense.

How to Use APR Information

When assessing a range of loan programs from the same or different lenders, the APR offers an easy comparison. You can be presented with one loan with high fees and another with low fees and a separate interest rate for each. The actual expense includes both the up-front expenses plus what you pay over time. The APR may therefore assist with the analysis.

APR Disclaimer

There are some things that borrowers should keep in mind when it comes to APR figures. It is compiled based on the life of a mortgage. If you pay off your loan sooner, the actual APR may be more. Also, one mortgage that appears to have a lower APR than another may end up being higher if the number of years were adjusted. The best APR is not necessarily the better option. Because most home buyers do not retain their mortgage for its entire term, this can be important.

Additionally, some APR estimates are not exact. For instance, the interest rate on an adjustable rate mortgage will alter but the amount cannot be predicted. The APR on these loans are calculated using the beginning rate.

Help With The Difference Between Interest Rate And APR For MA Home Loans

To perform a good comparison of your APRs, it is essential to ask for quotes within a short time frame (on same day if feasible) as interest rates are continually changing. Also keep in mind that your actual rate is not determined unless you lock in. Always review the interest rate and APR together to better understand the mortgage and associated costs. An experienced loan officer can provide further guidance on the difference between interest rate and APR for MA home loans.

Once you have selected a listing broker for your home, you will be shown a listing agreement. Prior to signing this paperwork, it is important to understand what it is comprised of. The MA listing agreement provisions in this blog will make you a well informed seller.

Real Estate Compensation

Commission is usually specified as a percentage of the selling price. It is a violation of anti-trust laws for real estate brokers to state that a rate is set across the industry. Each company sets its own fees and, similar to everything else in real estate, it can be negotiable. It is important to assess the expertise and value provided by individual brokers and companies when comparing their fees. Simply selecting one with the lowest rate may not necessarily be in your best interest.

Listing brokers commonly split a certain portion of the fee with buyer agents. The fraction offered is displayed in the MLS system. Higher amounts can sometimes encourage buyer agents to promote your home and, likewise, low rates may discourage them. This is particularly true when the number of homes to select from is high. If the co-broke commission is not listed, you may ask for the figure.

Finally, the agreement also mentions when the listing commissions are actually earned. It is important to read this language carefully. Your contractual obligation to your listing agent is different from that to any buyers. Therefore, it is not necessarily based on a closing.

Listing Services

You must enable your broker to manage specific tasks. The most obvious one is to submit the details of your listing into the local MLS (multiple listing service). This service shares the listing to all real estate professionals and to a variety of authorized websites. By expanding the exposure of the information, you will increase the chances of it being sold and for a better amount. Adding signs, installing a lock box, and performing open houses are other services that you may be asked to authorize in the listing agreement.

Legal Duties

Real estate professionals are not strictly salespeople. They are in fact agents in the legal sense and have special obligations under the law. These are referred to as fiduciary duties and include care, lawful obedience, accounting, confidentiality, diligence, disclosure, and loyalty. Basically, your real estate broker must work for you and look out for your interests. There can be instances where a broker also represents an individual wanting to purchase your listing. The paperwork will specify how this shall be handled, such as required disclosures, and what services will be given to each party. Make sure that you completely understand the potential scenarios and agree with the terms.

MA Listing Agreement Provisions

The MA listing agreement provisions in this article include only the most common components of listing agreements but may not include all language in your specific agreement. As with any kind of agreement, review the complete document, ask questions about things that are confusing, and seek additional help if you require legal advice.

FHA is a mortgage where private mortgage insurance is subsidized by the Federal government. Most major mortgage companies offer the program. Although it is commonly used by first time buyers, it is not limited to them. This blog offers MA FHA Mortgage Overview and pre-approval guidance to help you decide whether it is a mortgage that you should consider.

Benefits Of FHA Loans

There are several important benefits of FHA loans. The minimum down payment for FHA mortgages is 3 percent, which aids buyers who do not have a lot of funds saved. They also allow borrowers to use gift money for the down payment and closing fees. An additional benefit is the simplified refinancing process. It allows a refinance to a lower payment without needing a new appraisal, which is helpful if loan rates and home values both drop. The mortgages may also be assumed, meaning that it may be transferred to a borrower (if they qualify). This can help if interest rates are high. Finally, FHA does not penalize buyers for FICO scores. Although home buyers must still have satisfactory credit, higher interest rates do not result from lower scores.

Disadvantages Of FHA Financing

There are disadvantages of FHA financing to note. FHA mortgage insurance (MI) is often more than a conventional loan. There is an up-front fee at closing and a repeating fee due each month until the loan reaches 80 percent of the purchase price or current appraised value (borrowers must request the removal of PMI or wait for the legally required lower threshold for it to be automatically removed). For condo purchases, the complex must satisfy specific criteria such as minimum reserve funds and sufficient owner occupancy percentages. Most converted duplexes may be difficult to get approved. Single family real estate must also meet certain requirements geared towards safety.

FHA Pre-approval Guidance

Prior to applying for a pre-approval, pull your credit score and correct any mistakes. Also gather important financial documentation such as bank accounts, tax forms from past years, recent pay stubs, and investment account statements. Underwtiters will routinely ask for a copy of these items. Consult with a loan officer to obtain potential monthly payments (based on a specific purchase price and your credit qualifications) and closing fees prior to advancing too far in the process.

MA FHA Mortgage Overview

FHA makes buying a home possible for certain buyers who may otherwise not qualify for financing. It may also make refinancing or listing a home less complicated if rates dramatically change. However, it does have higher fees and property requirements, so not every buyer is able to or may wish to select an FHA loan. Consult with an FHA loan professional to better evaluate this program.

When you are qualified for a home loan, it is based on a specific monthly payment. The interest rate is estimated (as well as other figures such as property taxes and homeowners insurance). Interest rate fluctuations affect MA home loan pre-approvals because it impacts the principal and interest portion of the total payment. It is useful for buyers to understand this because an increase or decrease in rates can affect purchase price limits.

Interest Rate Fluctuations

Interest rates may change on a daily basis. At certain times, they can even do so many times on the same day. As a buyer, you will not know what your particular interest rate is until you identify a home, have an estimated settlement date, and lock in the interest rate. Thus, there is some uncertainty, particularly for price sensitive borrowers. It is useful to find out what interest rate was originally used to determine the pre-approval and to keep your pre-approval up-to-date. During times when interest rates are constantly or dramatically moving, speak to your loan officer before preparing an offer on a property to verify that you still qualify to purchase it.

Interest Rate Fluctuations Affect MA Home Loan Pre-approvals

Mortgage payments normally include principal, interest, property taxes, hazard insurance, and mortgage insurance (if the down payment is less than 20%). For the purposes of this example, we will only cover the principal and interest component. Assume that a buyer qualifies for a $300,000 property based on a thirty year home loan, 3.5% down payment, and 5% interest rate. The principal and interest portion of the payment is roughly $1554. If the interest rate increases by half a percent, that same home buyer will then qualify for only $283,638. That is a reduction of over $16,000 in the purchase price, which will be a smaller home. On the other hand, if interest rates reduce by 0.5%, the price limit improves to $317,843. The figures below illustrate the impact of other increments for this same buyer using a monthly principal and interest payment of $1554:

Knowing Your True Price Limit

You should ask your lender regarding the maximum payment amount for which you qualify. Using this information, you can better determine the feasibility of properties before making an offer. Keep in mind that there are several calculations for the total figure: interest rate, property taxes, property insurance, and mortgage insurance. If you plan to purchase a home close to the qualification limit, then it is very important to watch interest rates. Your loan consultant and real estate broker can assist you with these calculations and provide other information on how interest rate fluctuations affect MA home loan pre-approvals.

Borrowers with VA mortgages have the option to easily refinance to a better interest rate through a special program. This is often referred to IRRRL which stands for Interest Rate Reduction Refinancing Loan. Any VA approved lender can provide this option. Below is an introduction to streamline refinancing VA loan programs in MA.

Benefits of VA Streamline Refinancing

The VA does not require an appraisal, a credit check, or closing costs (except for a funding fee) on a refinance. These are critical in declining markets. However, specific lenders may include an appraisal or credit check as part of their company risk assessment. Closing costs are almost always assessed by mortgage companies, but the types and sum will differ from one mortgage company to another. VA guidelines allow their funding fee and any lender closing costs to be included in the loan amount so that borrowers can refinance without spending any money out of pocket. There is also an option to roll in the expense of energy improvements on the home.

Qualifying for a Refinance

For streamline refinancing with the program, the current loan must be a VA mortgage. The interest rate on the new loan must also be lower than that of the current mortgage (the one exception to this rule is when refinancing from an ARM to a fixed rate mortgage). Veterans may not receive any cash from the loan proceeds and no other mortgage, other than the original VA loan, may be included in the new loan. Veterans must also verify that they used the property at some point as a primary residence. More qualification criteria can apply based on individual mortgage companies.

Help with Streamline Refinancing VA Loan Programs In MA

Homeowners with VA loans can use their existing loan company or use a different one. Many financing companies are VA approved and can help with streamline refinancing. The above details are shared only as an overview. This information is considered accurate but is not guaranteed. It was prepared based on information available at the time the article was written and is subject to change without notice. Always speak with a local loan officer for up-to-date information and help. To be directed to a local bank providing streamline refinancing VA loan programs in MA, contact Peter DaMore at Law Offices of Peter T. DaMore Jr. at 781-229-7900 or pdamore@ptdlaw.com.

An article on July was the best month for Mass. home sales since 2006, the Warren Group says was written by Boston Globe on August 29, 2013. More good news regarding Massachusetts Housing…..

Excerpt of “July Was The Best Month For Mass. Home Sales Since 2006, The Warren Group Says”

The number of Massachusetts single-family homes sold in July was up
more than 18 percent on a year-to-year comparison basis as the Bay
State had its best month for sales volume since June 2006, the
Warren Group said Thursday.

Condominium sales in the state were also up sharply. Meanwhile, the
median price of a single-family home rose 10 percent in July,
increasing to $349,000, said the Warren Group, a Boston company
that tracks local real estate activity.

Click here to read the full article.

For questions on this topic, contact Peter DaMore, Attorney at Law Offices of Peter T. DaMore Jr. at 781-229-7900 or pdamore@ptdlaw.com.

Reverse mortgages could be beneficial in certain circumstances. It is important to get all the facts before getting a reverse mortgage. This blog offers details on reverse mortgages for MA homes.

Reverse Mortgage Overview

A reverse mortgage is a special type of home loan that allows you to convert a part of the equity in your property into cash. However, unlike traditional equity loans, borrowers are not required to make monthly payments towards the loan. Repayment is delayed until the homeowners no longer use the property as a principal residence or fail to comply with the requirements of the mortgage. The amount paid back includes the equity taken out, interest on the loan, and other applicable fees.

Who Qualifies for Reverse Mortgages

Not every home owner can use a reverse mortgage. You must…

• Be at least 62 years old.
• Own a home that you live in as a primary residence.
• Have a qualifying property type.
• Have equity in the real estate.
• Participate in a reverse mortgage counseling session.

How Much Can You Borrow?

The amount of a reverse mortgage is based on the age of the borrower, the current interest rates, the appraised value of the home, and FHA mortgage insurance limits. Older borrowers are allowed to extract a higher amount equity. Cash can be received as a lump sum, a fixed amount each month, or through a credit line.

Additional Details On Reverse Mortgages For MA Homes

Reverse mortgage programs are completed by most mortgage companies. Closing charges are high, so it should only be used when no other mortgage programs are feasible. Program specifics and fees can differ, so be sure to obtain estimates from a few different mortgage providers before making a decision. The details on reverse mortgages for MA homes provided above is intended simply as an overview. Program terms may vary, so contact reverse mortgage experts for advice based on your situation.

There are a variety of things that you can do to prepare for the mortgage process. A particularly important one is to review your credit reports in advance as those scores affects your mortgage options and interest rate. Below are tips on improving credit before buying real estate in Burlington MA.

Tips On Improving Credit Before Buying Real Estate In Burlington MA

Correcting Discrepancies

Your credit rating affects if you qualify for specific financing options, so obtain your credit rating in advance. There are 3 different credit bureaus (Equifax, Experian, and Transunion). Your rating may be different with each. If there are any errors, it is important to initiate the process of having them corrected immediately as this may take a few months to accomplish.

Increasing Your Score

If your credit score is low, work on elevating it. There are a few ways to accomplish this. If you do not routinely make charges to your credit cards, then they are not submitting information to the credit agencies and are therefore not improving your score. Make routine purchases with your cards and pay the bills consistently. This will help elevate your credit score. If your ongoing balances are high relative to your allowable limits, work on paying off each card. Keep in mind that it is better to have minimum balances across several cards than to have one card close to its limit.

New and Old Accounts

Avoid creating new debt or eliminating accounts. Do not make any big purchases either. These tend to reduce your credit score.

By assessing your credit score, you will have have the time to correct mistakes. Use the basic practices offered in the above Tips On Improving Credit Before Buying Real Estate In Burlington MA Keep in mind that the above are only a few guidelines. For personalized financial assistance, contact a financial advisor.

Individuals selling one property and buying (or building) another may face challenges with coordinating both events, especially in competitive environments. Bridge loans can be a useful solution to this dilemma. The information below on MA bridge loans – how bridge loans work will assist you with understanding this financing alternative.

MA Bridge Loans – How Bridge Loans Work

Many sellers have equity in their existing real estate. There may be a gap in the date those funds are available if a new home must be closed before the old real estate sells. Bridge loans are temporary loans that bridge that gap. It is a substitute for home equity loans (since many lenders do not approve home equity loans for properties on the market).

The underwriting process and criteria for bridge loans will be very different from typical mortgages. Because bridge loans are short-term, they are not normally submitted to the secondary market and therefore need not use the same standards. Minimum credit scores, debt-to-income ratios, and other qualifying factors may range among lenders. During the life of the bridge loan, the homeowner will essentially have two mortgages (one on the hoem listed for sale and one on the new property). Therefore, the borrower must be able to afford both.

Weighing the Pros & Cons of Bridge Loans

Bridge loans allow homeowners to buy and list without the use contingencies on both transactions and scheduling simultaneous closings. This can usually result in additional negotiation ability or facilitate transactions that can otherwise fall apart. It also makes the packing and moving coordination less cumbersome by removing the need for interim storage in same-day closing scenarios. On the other hand, not all borrowers qualify for bridge financing. They also have more fees than home equity financing. Individuals should evaluate these factors with the assistance of both real estate professionals and loan officers.

The First Step

Whether you should obtain a bridge loan is dependent on your financial and real estate goals. A local mortgage company that provides bridge loans can offer more comprehensive information beyond the MA bridge loans – how bridge loans work shown above.