NJ First-Time Home Buyers

Understanding Seller Concessions | Seller Paid Closing Costs | Seller Contributions | Seller Assist

Mon, 06 Jul 2009 13:52:57 -0500

Having the seller pay some or all of your closing costs is common. Some buyers and their real estate agents have a hard time structuring these type of transactions. Below are FAQ's to help you understand the structuring needed for a purchase with seller concessions.

Clarifying Terms

When talking about this topic there will be many phrases thrown around that basically mean the same thing; seller concessions, seller paid closing costs, seller assistance, seller contributions, and more. For our purposes we will use the term seller concessions.

How much can I ask for in seller concessions?

Typically on conventional loans the most a buyer receives in seller concessions is 3% (On a $100,000 purchase, $3,000). Making a larger down payment can raise the amount of concessions allowed from 3% to 6% or even 9%. However you rarely see these high concession amounts because if a buyer is putting, for instance, 25% down on a home, they don't have the seller pay concessions for them. Not only that, but if you need 9% in concessions, something is usually wrong with your financing.

On FHA loans, you can receive up to 6% in concessions. (On $100,000 purchase price, $6,000) Typically the lower the purchase price the higher percentage of seller concessions you will need. It is not typical to have a $300,000 purchase price and need $18,000 in seller concessions. It is much more typical to see, for instance, a $60,000 purchase price and have $3,600 in concessions.

On USDA loans, there is no limit to the allowable seller concessions, other then it has to make sense. A buyer would not typically need a percentage of seller contributions over about 4-5%. There are some examples below of reasons why a high percentage of concessions would be needed.

How do I calculate the seller concessions?

Simply take the purchase price, and multiply it by the percent allowed for the type of loan. For example, a $100,000 purchase price with 3% concessions is $3,000, and 6% concessions is $6,000, etc. On a calculator, you would multiply 100,000 x .03 or .06 respectively.

What can seller concessions cover?

Seller concessions can cover your closing costs which may include mortgage related fees, title company fees, the set-up of an escrow account, your home owner's insurance costs, state taxes or stamps, and more. Many, but not all, home owner's insurance companies will allow you to pay the policy premium at settlement. If that is important to you find out upfront. Seller concessions CAN NOT be used for a down payment.

What is NOT Seller Concessions?

Grants are not seller concessions. Down-payment assistance programs are not seller concessions either.

For first time home buyers, a lender and real estate agent that work together closely can structure an offer to purchase a home where you can utilize both a grant to pay for all of your required downpayment, and seller concessions to cover all of your closing costs. It is not rocket science. You simply have to work with people that know what they are doing.

It is important for your lender and your real estate agent to convey approval terms BEFORE making an offer on a home. Any real estate agent worth your time would have a buyer pre-approved before submitting offers on a home. This being said, it is important that your real estate agent not only knows how much you can afford, but also the terms and conditions of your approval. Some pre-approvals are contingent on seller concessions and/or grants. This needs to be communicated to all parties up-front.

Am I paying more for a home if I use seller concessions?

Some people may look at their purchase of a home in this way; (Using round figures) I can pay $190,000 for a home and pay my own settlement costs of $10,000 I can pay $200,000 for a home and have the seller pay $10,000 of my settlement costs. Viewed this way you are actually financing the costs. You pay interest on $10,000 more, BUT you get to keep $10,000 in your pocket, which more importantly you can keep for a safety net (and earn interest from yourself).

SIDE NOTE: This aspect can not be over-emphasized. If your lender thinks it is "OK" to put you in a home where you have literally a few hundreds dollars in the bank after settlement, you both are setting up for a VERY RISKY situation and one which could go into default very quickly. It is unwise to purchase a home and immediately be poor. It would do all home buyers well to consider this before purchasing a home. Hopefully you will have a lender or real estate agent who would care more about you in this sense then than just getting another paycheck, but don't assume that.

Ways to utilize seller concessions for your benefit

Have some or all of your closing costs paid by the seller.
As a first time home buyer utilize both a grant and seller concessions to cover your closing costs and down payment requirements.
Create a financially safe environment by keeping more money in your pocket after settlement. This aspect is overlooked too often yet is very important to you as a home owner.
Have the seller pay points for you. This will make your monthly mortgage payment lower by giving you a lower interest rate. In some cases this can be the deciding factor on if you qualify to buy a home. This will also lower your debt-to-income ratio, which is one of the major factors a lender looks at when approving a loan.
Avoid private mortgage insurance (PMI). If you are a buyer that has the assets available to make a 20% down payment, but not enough assets to pay closing costs, then have the seller pay your closing costs. This will bring you to the 80% loan-to-value level and allow you to eliminate PMI. (NOTE: This is all negotiated when you make your offer on a home and agree to terms).

Conclusion

Seller concessions are an important part of home financing. Used correctly, seller concessions can save a buyer money, allow more financing options, and create a financially safe environment. Consider these important aspects prior to making an offer on a home and you will be much better off, both at settlement and in the long term.

If you have any questions about seller concessions or any other mortgage/real estate topic(s), feel free to contact Steve Kappre directly.

Steve Kappre is a Mortgage Planner with Treasury Mortgage. Steve specializes in;

• All areas concerning First-Time Home Buyer Mortgages, grants, down payment assistance, police and fire loans, rehab loans, and more.

• Reverse Mortgages

• Equity Management strategies for high-end homes and high net worth individuals.

Contact Steve Kappre directly at 856-419-3561 or at www.stevekappre.com

Zero Down Mortgage Loans for Cape May County, NJ

Sun, 22 Nov 2009 18:25:22 -0600

Zero Down Mortgage Loans in Cape May County, NJ

Although many 100% financing options have recently been taken away from the home buyer's mortgage options, one of the best zero down mortgages ever is still around and going strong; The USDA mortgage program.

Not only does this 100% mortgage require no down payment, but the seller can pay all of the buyer's closing costs, which will allow a home buyer to get into a home with very little money out of pocket.

This 100% financing program is a 30-year fixed loan that has no monthly mortgage insurance. You do not have to put 20% down to avoid that expensive mortgage insurance with this loan. And interest rates for the USDA mortgage program are comparable to FHA or conventional mortgages.

There are a few limitations; The location of the home you are buying will have to be in an eligible area. If you are buying a home in Cape May County, NJ, many of the locations within the county are approved for 100% financing. (see map - lighter area).

A USDA mortgage is also income restricted, however it does have fairly high income limitations, and the majority of home buyers will find that they qualify.

If a USDA loan does not work for your particular situation, there are other options including first time home buyer grants and assistance programs (both state and county programs), FHA/VA loans, FHA 203K Renovation / Purchase loans and other options. For more information, to be pre-approved, or to have any questions answered, contact Steve Kappre (below).

See also some other counties offering 100% Financing:

100% Mortgage Financing in Cumberland County, NJ

100% Financing in Salem County, NJ

100% Mortgage Financing in Gloucester County, NJ | USDA

Steve Kappre is a Mortgage Planner with Treasury Mortgage, a subsidiary of Aurora Financial Group. For more info check out:

NJ First Time Home Buyer Mortgages, grants, down payment assistance, and more
NJ Reverse Mortgages
All aspects of purchase and refinance mortgages up to and over 100% of the home's value
Home renovation loans for refinance or purchase
Conventional, FHA, USDA, VA, HMFA, PHFA, Police and Fire, Live Where You Work, and more

Contact Steve Kappre directly: 856-419-3561 | Subscribe to Steve's blog via e-mail

100% Mortgage Financing in Cumberland County, NJ

Sat, 21 Nov 2009 17:31:17 -0600

100% Financing in Cumberland County, NJ

Did you think 100% financing and zero-down loans were a thing of the past? Think again. One of the best mortgage programs available today is the USDA mortgage program. This mortgage option is still somewhat unknown despite it's popularity in this current market.

Not only is there no required down payment, but the seller can pay all of the buyer's closing costs, which will allow a home buyer to get into a home with very little money out of pocket.

Sleep well with the safety of a 30-year fixed loan that has no monthly mortgage insurance. Interest rates for the USDA mortgage program are comparable to FHA or conventional mortgages. There are a few limitations; The location of the home you are buying will have to be in an eligible area. If you are buying a home in Cumberland County, NJ, many of the locations within the county are approved for 100% financing. (see map).

A USDA mortgage is income restricted, however it does have fairly high income limitations, and the majority of home buyers will find that they qualify.

If a USDA loan does not work for your particular situation, there are other options including first time home buyer grants and assistance programs (both state and county programs), FHA/VA loans, FHA 203K Renovation / Purchase loans and other options. For more information, to be pre-approved, or to have any questions answered, contact Steve Kappre (below).

See also:

100% Financing in Salem County, NJ

100% Mortgage Financing in Gloucester County, NJ | USDA

Steve Kappre is a Mortgage Planner with Treasury Mortgage, a subsidiary of Aurora Financial Group. For more info check out:

NJ First Time Home Buyer Mortgages, grants, down payment assistance, and more
NJ Reverse Mortgages
All aspects of purchase and refinance mortgages up to and over 100% of the home's value
Home renovation loans for refinance or purchase
Conventional, FHA, USDA, VA, HMFA, PHFA, Police and Fire, Live Where You Work, and more

Contact Steve Kappre directly: 856-419-3561 | Subscribe to Steve's blog via e-mail

100% Financing in Salem County, NJ

Tue, 10 Nov 2009 21:52:08 -0600

100% Financing in Salem County, NJ

Are you looking to purchase a home in South Jersey? One of the best mortgage programs available today is the USDA mortgage program. This mortgage loan is still somewhat unknown despite its popularity in this current market. A USDA mortgage allows a home buyer to purchase a home with zero money down. Not only is there no required down payment, but the seller can pay all of the buyers closing costs, which will allow a home buyer to get into a home with very little out of pocket.

A USDA mortgage is a 30-year fixed loan that has no monthly mortgage insurance. Interest rates for the USDA mortgage program are comparable to FHA or conventional mortgages. There are a few limitations; The location of the home you are buying will have to be in an eligible area. If you are buying a home in Salem County, NJ it is already in a designated USDA area.

A USDA mortgage is income restricted, however it does have fairly high income limitations, and the majority of home buyers will find that they qualify for this option.

If a USDA loan will not work for your particular situation, there are other options including first time home buyer grants and assistance programs (both state and county programs), FHA loans, and other options. For more information, to be pre-approved, or to have any questions answered, contact Steve Kappre (below).

Steve Kappre is a Mortgage Planner with Treasury Mortgage, a subsidiary of Aurora Financial Group. For more info check out:

NJ First Time Home Buyer Mortgages, grants, down payment assistance, and more
NJ Reverse Mortgages
All aspects of purchase and refinance mortgages up to and over 100% of the home's value
Home renovation loans for refinance or purchase
Conventional, FHA, USDA, VA, HMFA, PHFA, Police and Fire, Live Where You Work, and more

Contact Steve Kappre directly: 856-419-3561 | Subscribe to Steve's blog via e-mail

100% Mortgage Financing in Gloucester County, NJ | USDA

Sun, 08 Nov 2009 21:36:52 -0600

100% Mortgage Financing in Gloucester County, NJ | USDA

Whether you are a first time home buyer in Gloucester County, NJ or a move-up home buyer, one of the best mortgage programs going right now is the USDA loan option that allows 100% financing. Unlike many of the risky loans that were available several years ago, this 100% financing loan is a 30-year fixed loan that has no monthly mortgage insurance cost.

Interest rates for this USDA mortgage program are comparable to FHA or conventional mortgages. The location of the home you are buying will have to be in an eligible area. Roughly half of Gloucester County, NJ is available for 100% financing (All of Salem County, NJ is eligible).

This mortgage option is income restricted, but has very flexible (high) limitations, and the majority of home buyers will find that they qualify for this option. For more information, to be pre-approved, or to have any questions answered, contact Steve Kappre.

Steve Kappre is a Mortgage Planner with Treasury Mortgage, a subsidiary of Aurora Financial Group. For more info check out:

NJ First Time Home Buyer Mortgages, grants, down payment assistance, and more
NJ Reverse Mortgages
All aspects of purchase and refinance mortgages up to and over 100% of the home's value
Home renovation loans for refinance or purchase
Conventional, FHA, USDA, VA, HMFA, PHFA, Police and Fire, Live Where You Work, and more

Contact Steve Kappre directly: 856-419-3561 | Subscribe to Steve's blog via e-mail

Do You Have an October/November Settlement in NJ? Don't Be Caught Off Guard!

Wed, 28 Oct 2009 11:49:57 -0500

Do You Have an October/November Settlement in NJ? Don't Be Caught Off Guard!

A quick reminder to real estate professionals and consumers alike: This time of year in New Jersey many property taxes are "updated", potentially causing the 2008 tax estimate that is showing on the MLS to be inaccurate. Sometimes the change is so small a buyer doesn't even notice. Sometimes a property's taxes could go up by $1,000 or more per year. It depends on the home you are buying.

Do not listen to rumors or leave it to chance.

Have your real estate agent and title company do all the homework they can to find out what those taxes will be at the settlement table. Over the last month, I've seen no less than 4 closings where taxes where higher at settlement. In one case it was rather upsetting to the buyer who was already doing a 2/1 buydown so that she could afford the payment. On another occasion the buyer's taxes were about $90 more a month. That is a BIG DEAL on a $165,000 purchase!!

So if you are in New Jersey and are settling on your new home in October or thereafter, be forewarned.

Feel free to contact Steve with any questions (see below).

Steve Kappre is a Mortgage Planner with Treasury Mortgage, a subsidiary of Aurora Financial Group. For more info check out:

NJ First Time Home Buyer Mortgages, grants, down payment assistance, and more
NJ Reverse Mortgages
All aspects of purchase and refinance mortgages, up to and over 100%
Home renovation loans for refinance or purchase
Conventional, FHA, USDA, VA, HMFA, PHFA, Police and Fire, Live Where You Work, and more

Contact Steve Kappre directly: 856-419-3561 | Subscribe to Steve's blog via e-mail

Open Letter to First Time Home Buyers

Thu, 06 Aug 2009 09:53:50 -0500

Just a reminder to you potential first time buyers considering taking advantage of the $8,000 tax credit ... time is runing out. You must settle before December 1st (so you must settle on November 30th or before). Now lets be realistic. I've closed loans in 2 weeks from start to finish - but as pointed out below, you should allow AT LEAST 45 days to settle since there are too many variables - home repairs take time, appraisals can take time, and this isn't considering the TIME IT TAKES to FIND a home and agree to terms.

Via Erik Hitzelberger, --Louisville-Bullitt County Real Estate (RE/MAX Alliance - Louisville REALTOR-Luxury Homes):

Dear Procrastinating First Time Home Buyers:

I know you. I've seen you in the mall on December 23rd. I've watched you race through town en route to the airport; screeching up to the terminal just in time to prevent your mom from giving up and getting in the cab. I even saw you run over the neighbor's cat on your way to the post office on April 15th. (Actually, disregard that last one. I'm sure it was just a large stick). You excel when the stakes are high. You thrive on knowing you'll succeed where mere mortals would stumble. Your methods are a bit unorthodox, but you always come through at the buzzer. In most circles, I would be you.

The significant difference here is that I own a house. For better or worse, I don't have a stake in the $8000 tax credit game. You do though. You have the opportunity to change your life for the better and you plan to do so. Tomorrow.

My only concern is that tomorrow may not be when you think it is. By now, you know the tax credit expires December 1st. As this is month's away, I'm sure you've given little thought to actually looking for a house. There are far more pressing deadlines to be dealt with. I know you are busy, so I won't take up much more of your time. But, you need to know...

December 1st is the wrong date.

To be eligible for the credit, you have to take possession by December 1st. When everything was working well, it took around 30 days to close a loan. These days, things don't work well very often and it's not going to get better once you and your brethren leave the couch. Underwriters are scarce and banks aren't about to staff up for the onslaught knowing there is a going to be a huge void immediately afterwards. It will take at least 45 days to close. With that in mind,

October 16th is the real drop-dead date.

Reset your internal clock.

NOW!!
You'll Miss the $8000 Tax Credit After

I'd tell you to start now, so you can take advantage of the best deals, but it would be a waste of breath. So, I'll just say,"Call me when you are ready."

Sincerely,

Erik

* * * * *

Erik Hitzelberger is a licensed REALTOR with RE/MAX Alliance in Louisville. If you need a Louisville Real Estate agent please email me or call 502.921.3989.

I specialize in the following areas of the Metro Louisville Area: Prospect, Middletown, Jeffersontown (J-Town), Fern Creek, Okolona, Shepherdsville, Mt Washington, Hillview, Brooks and Pewee Valley. Click the following links to learn more about Louisville and Bullitt County Real Estate or to Search for Louisville Homes

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How to Have a Seller Pay Your Closing Costs While Using a First Time Home Buyer Mortgage Program to Cover Your Down Payment

Wed, 21 Oct 2009 20:40:17 -0500

How to Have a Seller Pay Your Closing Cost While Using a First Time Home Buyer Mortgage Program to Cover Your Down Payment

Being a first time home buyer can certainly be a confusing situation. If you do not work with a Realtor and loan officer that know the business well, the complexities of buying a home can whirlwind out of control. As a first time buyer using first time home buyer mortgage options, these situations must be handled even more delicately. This article will focus on how to get the seller to pay the closing costs associated with the purchase of a home, and how to utilize local state or county first time home buyer grant/assistance programs to cover your required down payment needed to purchase a home.

STEP ONE - LINE UP YOUR FIRST TIME BUYER PROGRAM

Meet with a loan officerto be pre-approved for a first time home buyer mortgage and to confirm the amount of concessions you will need (or, how much you need the seller to pay for you). These options and figures can vary greatly based on the location of the home, the loan programs available, credit profile, the home's taxes, and more. It is vital that you find a loan officer that has a working knowledge of all of the local first time home buyer programs.

It is not uncommon for a loan officer to give inaccurate advice based off of his/her specific bank's limited options. The fact is that most lenders do not offer local first time home buyer financing. Many lenders simply state that, for instance, FHA or USDA loans are first time buyer programs. This is inaccurate, and indeed this can keep some people out of the home buying "game". To complicate matters, even if you find a lender that offers one of this programs, their loan officer(s) may have never worked with this type of program.

So to reiterate, find a local, experienced "first time home buyer" loan officer, and don't be afraid to ASK MANY, MANY QUESTIONS. Any reputable loan officer will be happy to answer all of your questions.

Some first time buyer grant/assistance programs are tied to the actual mortgage - they are a one-in-all financing scenario. Other grant/assistance programs are completely separate from the mortgage approval process. Depending on where you are looking to by, some of these programs may overlap. You may prefer one program above another, or sometimes even use more than one at the same time. Again, another reason to work with a loan officer experienced in helping first time buyers with these types of financing.

STEP TWO - DETERMINE CONCESSIONS

Once the first time home buyer grant/assistance program is determined, the lender can then calculate the amount of seller concessions you will need (the amount the seller will need to pay for you). Let's look at the following example to determine how a lender would determine this.

For our example, we will use the SMART START program currently offered in New Jersey (to participating lenders). With the NJ Smart Start program, a buyer can obtain assistance of up to 4% of the loan amount. In most cases, the buyer will select an FHA mortgage which requires a 3.5% down payment. (in this case, the mortgage is approved together with the assistance program).

Let's break this down:

Home buyer purchases a home for $200,000

FHA down payment requirement is 3.5%, or $7,000

The loan amount after the 3.5% down payment required would be $193,000

The assistance program, in this case, would be 4% of the loan amount, or $7,720

We find that the assistance of $7,720 covers the required down payment of $7,000

The left over assistance money ($720) would be used towards the buyer's closing costs.

Let us assume the buyer's closing costs plus prepaid items come to $6,000

To find out how much you need the seller to pay, you would take $6,000, subtract the positive credit from the assistance program ($720), and that is the amount the buyer would need to request for the seller to pay = $5,280

STEP THREE - START MAKING OFFERS

Meet with a Realtor to discuss your pre-approval and your objectives. Even though many Realtor's are familiar with seller concessions, many are not familiar with home buyer programs such as those mentioned above. To be ultimately successful you will want your loan officer and your Realtor to speak in detail about your specific loan approval and financing terms. As a buyer, do not assume all parties are on the same page. As a buyer, your involvement, even as a first time buyer, is very valuable.

Some Realtors will be priceless when making offers and negotiating for a buyer. Some will have a tendency to make offers based on the pre-approval amount only, not paying attention to the seller concessions desired (or required). Some agents may request the maximum amount of seller concessions allowed with FHA, which is 6%, but this is rarely needed. If not structured correctly, the buyer will potentially lose out on the excess concessions they don't use, meaning that they over pay for the home.

Maybe it goes without saying, but you "Get what you pay for" when you choose a professional to work with. Except in this case, you may pay much more (for a house) and get much less (from the seller). Ask as many questions as possible. It will help you find the right person(s) to work with.

Steve Kappre is a Mortgage Planner with Treasury Mortgage. Steve specializes in;

• All areas concerning NJ First-Time Home Buyer Mortgages, grants, down payment assistance, tax credits, and more.

• Reverse Mortgages

• Equity Management strategies for high-end homes and high net worth individuals.

Contact Steve Kappre directly at 856-419-3561 or at www.stevekappre.com

FHA Loans Need Appraisals, Not Inspections

Tue, 13 Oct 2009 12:45:19 -0500

Helpful information regarding FHA, inspections, FHA appraisals, etc. I get asked this question all the time. This is a brief explanation of the difference between a FHA appraisal, a home inspection, and the "myth" of the standalone FHA inspector. Your Realtor should definitely know the difference as well.

Via Minneapolis Home Inspections - Reuben Saltzman (Structure Tech Home Inspections):

I get a lot of questions about FHA Inspections, and it's about time I sat down and blogged about it. Here are the most common questions I get asked about standard FHA loans. This information does not apply to FHA 203(k) Loans.

Can You Do The FHA Inspection? FHA loans do not require a home inspection, they require an appraisal. The appraiser does this. These are often mistaken for an inspection. Home inspections are still strongly encouraged.

How Can I Pass The FHA Inspection? First, see above. FHA appraisals require the appraiser to look for obvious defects with the house, but the appraiser never requires repair of these items - the underwriter does. Trying to figure out exactly what might require repair is a bit of a guessing game, and often has much more to do with the people doing the appraisal and the underwriting than it does the property itself. Nevertheless, here is a partial list of some common defects that get flagged:

Chipping / Peeling / Flaking Paint

Rotting wood

Electrical outlets or switches that are defective

Plumbing leaks

Non-functional heating plant or AC

Roofs with less than two years of life left

Missing or badly damaged floor coverings

Obvious structural problems

Do I Need A Home Inspection If I'm Getting An FHA Inspection? Again, see above. FHA appraisals are not home inspections, and it's unfortunate that they get confused as such. The FHA appraisal has nothing to do with a home inspection.

Do I Need An FHA Certified Inspector If I'm Getting An FHA Loan? No. The home inspection is completely independent of the FHA loan.

Reuben Saltzman, Structure Tech Home Inspections - Email - Minnesota Home Inspector

Rates - APR - Points - Fees - GFE's: How the Playing Field is Still "Crooked"

Fri, 02 Oct 2009 22:18:23 -0500

Rates - APR - Points - Fees: How the Playing Field is Still "Crooked"

I talked to a client today who was shopping me against some other lenders. I don't blame people, and frankly if I think someone else has a better offer and they are legit, I advise "my client" so and have no hard feelings.

In the scenario today, said client was offered 4.5% with no points. I told him it wasn't possible, but lest I be ignorant, I dropped by this other lender's website. Indeed, the lenders website quoted 4.5% with no points and an APR of 4.878%. The website gave the assumed loan amount and purchase price. So I went and did the math. What did I find out? To make the rate and APR accurate, I had to add 2.25% in points ON TOP OF all of the regular fees (title, appraisal, etc.).

In other words, even though the quote was 4.5% with zero points, the TRUE cost was 4.5%, plus typical closing costs, PLUS 2.25% in additional fees/costs.

Please send me your Goofy Good Fake Faith Estimate!

There are several issues with this scenario

APR is supposed to HELP consumers, not confuse them. Clearly this bank (a large bank at that) is charging hefty fees instead of points. This brings us to our next point ...
Points are tax deductible costs - most other fees are not. Charging high fees in lieu of points is an injustice to the consumer. We see rates quoted with NO POINTS to make them look better to consumers. However the total cost is ultimately higher than a lender that is straight forward, charging the same dollar amount but in the form of points. A loan with the same cost in points (versus fees) is a far better deal, saving a consumer hundreds or thousands in tax deductible costs.
APR is "pliable" - Certain fees are calculated into the APR calculation, others are not. Do not assume lenders don't play with the "names" of fees to artificially lower their APR's. That doesn't seem to be the case in the above example, nonetheless keep this in mind.
Lastly, said bank WOULD NOT give the buyer a good faith estimate without having him apply for a mortgage. OK, not so crazy, but the good faith estimate would not be given for 3 days. And if the bank charged an application fee? That would just be another deceptive way to lure a consumer in and tie them to the bank.

Any lender should be able to offer you a good faith estimate (GFE) in a fairly short amount of time, 24 hours or less, allowing some time for when a lender is very busy. Assuming the lender is honest and accurate with their fees, you should be able to see the true cost of their offered rate. You should be able to see, as in the above scenario, that their rate of 4.5% with no points really has a lender fee of $4,119 (Actual additional cost based on their APR). This same week I had another rate shopper send me a goof good faith estimate with 1% in points and $2,100 in application fees. THIS IS NOT NORMAL or fair to you as a consumer, especially on a purchase loan.

I am not angry for losing business. I am however angry because of the lenders and loan officers that mislead and decieve consumers who are just looking out for themselves by rate shopping. What we often see, is that many consumers that search the world over for the lowest rate, actually end up paying much higher costs via deceptive lenders. Consumers can be blinded by a low rate, not allowing them to see the true cost.

Steve Kappre is a Mortgage Planner with Treasury Mortgage. Steve specializes in;

• All areas concerning NJ First-Time Home Buyer Mortgages, grants, down payment assistance, tax credits, and more.

• Reverse Mortgages

• Equity Management strategies for high-end homes and high net worth individuals.

Contact Steve Kappre directly at 856-419-3561 or at www.stevekappre.com

The Current Market: Foreclosure/Short Sale Reality

Thu, 08 Oct 2009 08:53:56 -0500

Thanks goes to Texas Realtor Ashley Myers for making me aware of this great video. Since I'm a lender I only deal with a small portion of what you are about to see. If you are a buyer looking to invest in a short sale property or foreclosure, you'll get a good laugh from this while sadly being educated in how things tend to pan out with some of these transactions.

Steve Kappre is a Mortgage Planner with Treasury Mortgage. Steve specializes in;

• All areas concerning NJ First-Time Home Buyer Mortgages, grants, down payment assistance, tax credits, and more.

• Reverse Mortgages

• Equity Management strategies for high-end homes and high net worth individuals.

Contact Steve Kappre directly at 856-419-3561 or at www.stevekappre.com

NJ First Time Home Buyer Seminar: South Jersey - Clearview Adult Community School Class

Fri, 02 Oct 2009 08:07:44 -0500

NJ First Time Home Buyer Seminar: South Jersey - Clearview Adult Community School Class

Are you a first time home buyer in New Jersey? Do you need more information to make an educated decision for buying a home? Buying a home isn't a snap decision, it is a pivitol time in life, and means that making good decisions when buying a home can effect the life of you and your family for many years to come.

Topics Covered:

First Time Home Buyer Grants
Down Payment Assistance
Mortgage Programs: FHA, USDA, Specialty loans
Upfront costs to expect as a buyer
How to read a Good Faith Estimate
The process of buying a home from A-Z
Credit scoring info and tips
Q&A session

Registration required - more information below.

Place and Location

Wednesday, October 14th | 7pm

Clearview High School, 625 Breakneck Road, Mullica Hill, NJ 08062

To Register for this class - View the Class Brochure and Follow the Instructions or contact Steve for help.

Steve Kappre is a Mortgage Planner with Treasury Mortgage. Steve specializes in;

• All areas concerning NJ First-Time Home Buyer Mortgages, grants, down payment assistance, tax credits, and more.

• Reverse Mortgages

• Equity Management strategies for high-end homes and high net worth individuals.

Contact Steve Kappre directly at 856-419-3561 or at www.stevekappre.com

Credit Scoring - Inquiries (6 of 6)

Thu, 30 Oct 2008 08:38:05 -0500

I feel like a broken record, but Inquiries are one of the most misunderstood factors of the credit scoring model. Inquiries count for 10% of your overall credit score. An inquiry is a check on your credit. There are two types of inquiries, soft and hard.

A soft inquiry is one that does not hurt your score. Such examples are job credit checksinsurance checks, or credit card "pre-approved" offers.
A hard inquiry is a credit check that does put a ding on your score. Such an example would be a credit check by a mortgage lender, an auto dealer, or a credit card company in certain situations.

Now to let the cat out of the bag ...

You have 45 days to have a mortgage lender (or auto lender) check your credit and have it only count as one inquiry. This is completely contrary to what many loan officers will tell you. Why is that? First off, many loan officers don't educate themselves as true professionals. But that aside, they don't want you shopping them. So they put fear in your mind that if you check with other lenders and have them run your credit, that "you may not qualify anymore".

Now it is true that multiple credit checks will bring your score down. But that scenario would be when you are doing things like shopping for a car, and opening credit cards, and other credit checks at the same time. The 45-day window is understood in the credit scoring model since it "allows you" to shop for better terms without killing your credit score.

A credit inquiry on average hits your credit score for 5 points, however it can hit it for anywhere from 2 points to 50 points. You heard me right. Why is this? The credit scoring model has 1,000's of profiles that it uses to judge and create a credit score from. Based off of statistics, people who are getting their credit checked very often, are those in financial trouble. Hence having credit checks often can bring your score down as you are viewed as high risk.

Other Notes

Only the first 10 inquiries count each year
After 10 inquiries, they will not affect your credit score
Check out www.annualcreditreport.com to obtain a free copy of your credit report. A PERSONAL check will not affect your score.

The topic of credit scores, the credit scoring model, and credit restoration always have a plethora of myths, misconceptions, and just a ton of questions. As you or someone you know comes across a situation that is confusing, or that you want to be certain that you handle right, just e-mail me. I'll be happy to help out. ~ Steve Kappre

Credit Scoring – What Makes Up My Credit Score?

Credit Scoring – Payment History (2 of 6)

Credit Scoring – Balances (3 of 6)

Credit Scoring – History (4 of 6)

Credit Scoring – Mix of Accounts (5 of 6)

Credit Scoring - Inquiries

Credit Scoring - Mix of Accounts (5 of 6)

Sun, 26 Oct 2008 14:33:58 -0500

One of the 5 main catagories in the credit scoring model is the mix of credit accounts. The mix refers to different accounts such as mortgages, auto loans, installment loans, and credit cards. A person's mix of accounts represents 10% of their overall score.

It is preferable to have a mix of accounts such as installment loans and 3-5 credit cards.

Having more than 3-5 credit cards is fine. Technically you could have as many as you want. One thing you have to keep in mind though with having so many cards is the effect it has on your credit history and inquiries (see post 4 and 6 of this series for more information). If you constantly have new credit cards, and your older cards are inactive, then your history is shallow and this could lower your score.

Having a major credit card like a VISA or MasterCard is better for your credit then, for instance, a department store card like a Target or Home Depot card. Why is that? The credit scoring model takes into account 1,000's of consumer profiles. Although such stores offer special incentives like 0% financing for 12 months, in the past stats have shown that individuals that utilize such a card are consumers that weren't able to obtain a major credit card. Likewise a consumer with only an HSBC card for instance, may not have as high a rating as someone with a major credit card. This is because such a company has lax guidelines in comparison (and higher rates) and is often associated with consumers that carry more risk.

In my personal opinon, from what I have seen, I see nothing wrong with taking advantage of 0% financing options. However, one major issue that arises is that many such financing options carry all of that interest and if the loan isn't paid off in the "12 months", and you find yourself at 12 months and one day, then you get smashed with a year's worth of interest. TOO LATE!! And certainly too bad. I've seen them add several $1,000 to accounts.

One other tip ... a Home Equity Line of Credit (HELOC) should be greater then $40,000 or it may report as a revolving account versus a mortgage. This is important because as mentioned in the article, "Credit Scoring - Balances", even though the HELOC is a mortgage, if it is maxed out and viewed as a revolving account (i.e., credit card), then your balance ratio being so high could lower your credit score.

There is one more article in this series. I hope that you have found these articles helpful, and as always, if you have any questions, or would like your own credit reviewed to maximize your credit score, don't hesitate to contact me. Making little changes and working together over time will save $1,000's, even $10,000's. ~ Steve Kappre

Credit Scoring – What Makes Up My Credit Score? (1 of 6)

Credit Scoring – Payment History (2 of 6)

Credit Scoring – Balances (3 of 6)

Credit Scoring – History (4 of 6)

Credit Scoring - Mix of Accounts (5 of 6)

Credit Scoring - History (4 of 6)

Sat, 25 Oct 2008 15:54:24 -0500

Your credit history accounts for 15% of your total credit score. History does not refer to payment history. History is the evaluation of the timeframe that your accounts have been open and active, as in how many months or years.

Longer Credit History = Higher Credit Score

Long Credit History Paid As Agreed=Positive Impact To Credit Score

TIPS

Why you should never close a credit account ...

Never close a credit account, especially if it has a long payment history. This can negatively impact your credit score because the history aspect of your credit profile will be made shorter.

Authorized User Accounts

A fairly well known "trick" to raise a credit score is to become an authorized user on an existing account. Some laugh at me when I say this in my credit seminars, because their first thought is, "Why would I give someone with bad credit or no credit my credit card?" Well the fact is you don't give them your credit card. You add them as an authorized user, and when the card comes in the mail, it comes to the account holder. Adding someone as an authorized user benefits them a few ways;

It gives the authorized user "instant history" as spoken about above
It gives the authorized user higher credit limits on their credit profile (see Credit Scoring - Balances)
It gives them great payment history.

The above three benefits are assuming the authorized user is added to an account with a long history, a high credit limit, and the account is paid on time. Adding someone to a "bad" account wouldn't make sense.

Be sure to catch all the credit scoring articles in this series. Keep in mind, credit reports can be complex and confusing. Please contact me if you have specific questions. While I applaud the effort people make to maximize their credit score, we must be certain we are taking the right steps and don't end up creating more harm than good. ~ Steve Kappre

Credit Scoring – What Makes Up My Credit Score? (1 of 6)

Credit Scoring – Payment History (2 of 6)

Credit Scoring – Balances (3 of 6)

Credit Scoring – History (4 of 6)