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Posts tagged ‘mortgage’

Saving for a Downpayment

Is it time to buy?

With interest rates down and inventory up, there’s little doubt that you’re probably  taking a good, long look at investing in a home of your own as many others are doing. Home ownership brings many benefits so if the only thing keeping you back is a down payment, then today is the day you can get started!

It’s not always easy to save the necessary funds  just get into a house of your own. Here are some simple things you can put into your action plan for saving that down payment money in less time.

Set a Deadline

Setting a deadline can be a powerful motivator to accomplishing great goals, and buying a home is a pretty big goal! So pick a date – one year from today, three years from today, maybe on your 30th birthday. Once you know where you are, it will make setting a timeline easier.

Pay off Debt

If you have any outstanding debt – college loans, credit cards – then your first step is to pay down or pay off as much as you can. Not only will this repair your credit score, but it will also let you save even more money for your downpayment. Take the highest interest rate one first, get it paid off, and then get to work on the next one.

How much do you need?

The bigger your downpayment, the smaller your monthly payment will be. This is a great time to sit down with a mortgage loan officer and with a real estate professional to determine your needs and wants. They’ll help you figure out how much house you can afford and what kind of mortgage you qualify for. Different types of mortgages require different downpayments, and this isn’t a step you can skip.

 money in a jarCreate a “Down Payment” account

Ever see those little ceramic pots with “House Fund” or “Vacation Fund” on them, or the piggy banks with the “do not open ‘till holiday shopping time” labels? By opening a savings account just for your future home purchase, you help lessen the likelihood of tapping into that money for other things. Check with your bank or even local credit unions to see if they offer any special interest rates or programs for first time home owners looking to buy.

Automate your savings

You may have heard the expression “Pay Yourself First.” Money you put into your down payment account is money you’re paying yourself, before you buy your morning coffee or hit the mall. Once you’ve figured out how much you can sock away every month, have that amount automatically withdrawn from your account and put into savings before you even see your paycheck! Most employers can do this in a simple step if you are direct depositing your paychecks. Out of sight, out of spending reach.

 Ask about IRAs

If you have IRAs, check to see if yours has any first time home buyer credits. Some will allow you to invest a considerable amount of pre-tax dollars and withdraw without penalty for home purchases and they often provide more return on your investment than a traditional savings account. Check with your IRA provider or financial advisor first.

 Every little bit counts

This is the fun part. Get a money container for your house. You can make it as decorative or as plain as you like. Use anything from a beautiful glass jar (where you can see your results) to a coffee can (where you can hide your treasure). Make a pact with yourself, your spouse or significant other, and even your kids. Each week, put whatever you can in the jar towards your house fund. From leftover change from the store to a couple of dollars here or there – into the jar it goes. In fact, whatever you’d normally spend, save instead, such as forgoing the coffee house vente latte at $6 a pop every day – that would be $42 a week you could put in your jar. Or pack a lunch instead of buying. You could save $5-$10 or more a day.  Make it a fun thing every day and at the end of the week to count up your accomplishment, put it in an envelope with a deposit slip, and put it in your savings. It’s amazing how fast it can add up when you make it a contest or a fun thing for the whole family!

Everything worth having is worth working for.

Saving for a home of your own can be challenging, but it can be exciting too. The feeling of reward and accomplishment is extraordinary. Start with these steps and very soon you too can enjoy the long term benefits of setting down roots and investing in your future.

What Affects Credit Scores?

When you’re applying for a mortgage, your credit score can have a big impact not only on the mortgage rate you get but also on how much you can borrow. One of the critical first steps in buying a home is ensuring that your credit score is as high as possible to allow you the most flexibility, but many people aren’t aware of how credit scores are calculated.

Your credit score is a numeric value that incorporates all of your credit and payment history into a mathematical equation and calculates the probability of repayment of any future loan. The seven factors that are included in this calculation are:

  1. loan repayment behavior
  2. credit score inquiries
  3. delinquency of loans
  4. length of established credit
  5. composition of credit
  6. quantity of credit already available
  7. amount of outstanding loans

Beware of these Mortgage Scams!

When you buy a home with a mortgage, there is a pretty high likelihood that the mortgage company will sell your mortgage to another servicer.  Most loan originators will qualify you and loan you the money, then after the sale is complete they will sell your note to a servicer.  A servicer is a large entity like Fannie Mae or Freddie Mac.  It could also be another lending institution such as Wells Fargo.Mortgage

When your loan originator (the company you got the mortgage from) sells your loan, THEY will inform you who the new loan servicer is. 

The scam begins when the new home owner gets something in the mail from an institution other than the loan originator saying they are now servicing the mortgage and to send all your payments to them.  If an unknowing homeowner were to follow these instructions they would make monthly payments yet they would be defaulting on their loan.  

The ONLY time you should ever change who you’re paying for the mortgage, is when you’re notified by the servicer or loan originator you have been paying to.  Again, your originator will inform you of who the new servicer is going to be and where to direct payments.

If you’re not sure about this, contact your Real Estate agent or your Mortgage rep to confirm.

New Homeowners – Have you gotten this Deed Scam in the mail?

Warning – New Homeowners! Beware of this potential scam!

Once a home sells, the sale information becomes public record and is printed as a public notice in one or more newspapers, as well as being listed online.  This is where the scammers get their information.

Some recent home purchasers have been victims of a new Deed Scam Here’s how the scam works, so you’ll know what to look out for.

A homeowner gets an official looking document telling them why they need a “certified” copy of their deed and how to get one.  Usually the homeowner will be asked to send anywhere from $60 to $100 to a company and their deed will be mailed to them within 21 days.  The document looks similar to the one pictured here.Image

The truth is that homeowners will receive one official copy of their deed soon after closing. If you need a second copy, you can get it by contacting the county clerk and requesting a copy.  In most cases there will be a very small fee from the county.  For example in Union County, the fee is $8 for the first page and $2 for each additional page – usually less than $20 total.

So beware those official looking documents that you get in the mail.  If you receive an offer for an official deed and if you’re not sure if it’s legitimate, call your real estate agent!


In the next few days we’ll let you know about potential mortgage scams that are aimed at new homeowners.

How much Equity do you have in your Clark, NJ, home?

As you prepare to make your New Year’s Resolutions and start thinking about your taxes, a firm reveiw of your financial situation makes sense. If you’re like many people, your home is your biggest asset. Here’s how to calculate how much equity you have in your home:

                              Market Value of your home

                            – Mortgage Debt Owed         


We can help you determine the market value of your home with a free Comparative Market Analysis in which we will compare your home to others like it in your neighborhood that have sold in recent months. Call us today!


For more information on Clark and Clark Real Estate:

Buying a Home? How a Government Shutdown could affect you

Mortgage rates dropped a tiny bit last week, and prospective home buyers are crawling through the woodwork to take advantage of low prices and low rates.

If you don’t have the 20% necessary for a conventional loan, you are probably considering a government backed loan like an FHA.  Under a FHA (Federal Housing Administration) loan, you only need 3.5% of the purchase price as a downpayment and can borrow the remaining 96.5%. You can even get the 3.5% as a gift. FHA secures the loan so lenders love it. Of course, you’re doing this with an approved lender and working with a Realtor that you can trust.

So what happens if the government has a shutdown? First of all, of course, all government employees have a day (or days) off without pay. National Parks and all “non-essential” Federal offices are closed. But how does a shutdown affect the home buyer?

FHA loans must be approved by the Federal Government. If the government shuts down, FHA loan processors will be out on furlough. If your loan is not already approved, the process will be halted until the office reopens.

How much more are you paying for a house this year?

Picture this.

August, 2012. You found your perfect home. It’s got everything you want, you’re pre-approved for the price, and you love it.


But you’re scared. You’ve heard that interest rates and home prices are at an all-time low, and you think they might still go lower. So you pass on the dream home.

Fast forward to August 2013. Another perfect home. Everything you want, pre-approved for the price, you love it.


How much more are you going to pay today for the home you could have bought last year? Ignoring the fact that home prices have gone up over the past year, we still have to figure out how the change in mortgage rates have affected your buying power.

In August of 2012, a 30 year fixed rate mortgage cost 2.74%. For a $300,000 loan, that’s a principal and interest payment of $1223.14 and a total payment over the life of the loan of $440,330.40.

Now it’s August 2013, a 30 year fixed rate mortgage costs 4.58%. A $300,000 loan results in a principal and interest payment of $1534.35 and a total payment of $552,366.00 over the life of the loan.

No one knows what the mortgage rates will be. But imagine what you would have done with the extra $110,000 you would have saved if you had bought the home last year.

Dear TZ – What does Amortization mean?


Dear TZ,

My brother in law said I can save a ton of money if I amortize my loan on my house. What does that mean, and does it work?


Borrower BertFile:USCurrency Federal Reserve.jpg

Dear Bert,

Very simply put amoritization is the process that the principal amount of your mortgage decreases over the life of your mortgage.  So each payment that your make, a portion is applied towards the interest on the loand and a portion is appliec to reducing your principal.

So by paying more than the set amount or paying twice a month, you can apply the excess amount to your prinicpal reducing the amount of time it will take to pay of your mortgage. And yes, it does work to decrease the LENGTH of your loan.

An ammortization table shows how your principal is paid off over time.  Your mortgage provider or REALTOR(R) should be able to give you an ammortization table or ammortization calculator to see how your mortgage is ammortizing.

You should definitely talk to your mortgage rep and even your accountant before making any changes as to how you are paying off your mortgage.

Best of luck!

- Wayne and Jean

What is a Short Sale?

What Is A Short Sale – A short sale is when a homeowner sells their home at a price that is below the mortgage on the home. For example, if homeowners owe $200,000 on their existing mortgage but the property’s market value is only $180,000, the sale would be a short sale. The sale can only occur if the lender approves the sale.

Why are there so many short sales now? The average homeowner stays in their home about seven years. Usually, seven years is enough time, especially in vibrant New Jersey, for homes to appreciate in value and usually, after seven years, the market value has increased. For example, a house purchased in 1995 for $250,000 may have sold in 2001 for $375,000, resulting in profit for the homeowner as well as a paid off mortgage. 2011 is a unique year in that housing prices aren’t as high as they were in 2005, and, in most markets, are actually lower. Therefore, a home purchased in 2005 for $250,000 may only be worth $180,000 now.  If the homeowner owes more than the home will sell for, the sale is a short sale.

Short sales are much more common in 2011 because home prices dropped quickly and left many homeowners owing more than the home was worth.

How is a short sale different from a foreclosure? A foreclosure results when the lender demands payment for outstanding debt and the homeowner can’t pay the debt. The lender then has the right to file for foreclosure, which deeds the home to the lender.

After a short sale, the seller’s credit report will show that the mortgage debt was settled for less than full, but the balance of the mortgage is $0. The seller’s FICO credit score is affected by about 50 points.  Late payments, on the other hand, affect your credit score by about 30 points per month. (Source: http://www.manausa.com/short-sale-versus-foreclosure/?awt_l=GyOyF&awt_m=KWxaQpk6kAtOaW)

Typically, sellers who sold short do not need to report this to future mortgage lenders. After a short sale, you may be eligible for a Fanny Mae loan on a primary residence or investment property after only two years.

After a foreclosure, the seller’s credit report will show that the home was sold in foreclosure and that the balance of the mortgage is whatever amount the sale did not net. It is also important to note that foreclosed properties usually sell for about 60% of current market value, according to a May, 2011 report. (Source: http://www.kcmblog.com/2011/10/04/short-sale-vs-foreclosure-a-short-sale-always-wins/)

After a foreclosure, the seller’s FICO credit score is lowered by at least 300 points and stays on his or her record for 10 years. (http://www.manausa.com/short-sale-versus-foreclosure/?awt_l=GyOyF&awt_m=KWxaQpk6kAtOaW)

In almost all instances, a short sale is a better option than a foreclosure.

Applying for a Short Sale – In order to qualify for a short sale, the homeowner must first write a hardship letter explaining why he or she can no longer handle the debt. The lender will require specific details as to why the mortgage is now a hardship, and a smart homeowner will include all relevant reasons.

Some of the major reasons why hardship is usually granted are:

Lenders are also more likely to approve a short sale if the borrower has paid their mortgage on time consistently. Hardship letters should also be brief and to the point. The explanation for the hardship should be specific but not technical. Writing with feeling and emotion may help to persuade the lender to grant hardship. It is also a good idea to include copies of bank statements, tax returns, and any other documentation that may support your claim.

Short sales are unlikely to be approved for these reasons:

It’s not a bad idea to use a sample hardship letter to give you ideas. A good one can be found at http://www.usattorneylegalservices.com/mortgage-hardship-letter.html.

This post is part of an eBook on selling your home that can be obtained for free by emailing TeamZuhl@gmail.com.

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