What is a Home Warranty?

Homeownership can come with many costs in addition to your monthly mortgage payment and utilities. Maintenance is one of them. If you don’t want to have to worry about footing the bill for a big, unexpected repair, one of the things you can do is get a home warranty.

If you’ve never heard of a home warranty before, keep reading. We’ll explain to you what this warranty is, how it works, and how you may be able to save money on some of the biggest costs of owning a home.

Armed with this knowledge, you should have a better idea of whether or not getting a home warranty might be something to consider in the future.

What is a home warranty?

Put simply, a home warranty is an annual service contract. It protects your home’s systems and appliances if they break down. Whether you just need a repair or a full replacement, a warranty should cover the cost of the parts, meaning that your bill will be significantly smaller than it would be otherwise.

How does a home warranty work?

If you have a home warranty, the first thing that you should do when something breaks is called the company. Typically, one of their representatives will be able to tell you whether or not the repair is covered under your specific warranty.

If the repair is covered, the warranty company will help you schedule a service call with a pre-screened professional. The professional will then come out to your house and make the repair or replacement as needed. In return, all you will have to do is pay for the service call. The home warranty will cover the cost of any replacement parts.

What types of repairs are usually covered by a home warranty?

It’s important to note that every warranty company is different, so their coverage will be different as well. However, that said, most home warranties will cover the home’s systems and all your major appliances, including:

  • Appliances
  • Refrigerator
  • Dishwasher
  • Stove (Gas or electric)
  • Microwave
  • Clothes’ washer
  • Clothes’ dryer
  • Garage door opener
  • Trash compactor
  • Systems
  • The heating system and ductwork
  • Air conditioning system and ductwork
  • Plumbing
  • Water heater
  • Garbage disposal
  • Smoke detectors
  • Central vacuum
  • Ceiling fans
  • Doorbell

In addition, many home warranties also offer the option for you to add on additional services for things like septic pumps, well pumps, or pool equipment. Meanwhile, others give you the option to extend coverage to a separate guest house or in-law suite.

If you have specific questions about what the warranty covers, your best bet is to call a home warranty company and to ask to speak to a representative. They will be able to tell you about the specific coverage limits of their policies and any optional, add-on services that they offer.

Is a home warranty right for me?

Ultimately, as the homeowner, you’re the only one who can decide whether or not a home warranty is right for you. However, if your home systems and appliances are older, it may be worth investigating. While this is an extra annual cost, it can save you from having to worry about an unexpected maintenance expense cropping up at the worst possible time.

Additionally, if you’re thinking of selling your home shortly, you may want to think about getting one of these for the future buyer. Often, advertising one can be a bonus for your listing in a competitive market.

Buying a house from a family member, what you need to know!

Did you know that buying a home is frequently ranked one of the most stressful events in a persons’ life? Whether it’s making a big decision, such as finding the perfect home that checks off all your boxes, or something as simple as forwarding your mail to a new address, the whole process can feel overwhelming at times.

There are obvious ways to make the entire process smoother, like working with an educated lender that you trust and creating a budget that allows for a mortgage payment. On the other hand, some ways may seem to lessen the stress but can actually cause more in the end.

Let’s talk about buying from a family member.

Potential Red Flags

You know the house is in good condition, you’re tired of searching for a different property, and your Uncle Charlie swears he will give you a great deal… do you take it? There are plenty of benefits to buying from a family member. However, if you do decide to pursue a family-tied transaction, it’s crucial that you set clear expectations and put them in writing with either a purchase contract (similar to the format realtors use in the area you live) or “escrow instructions.” These instructions are similar to a purchase contract prepared in a for-sale-by-owner when a realtor is not involved.

Settling to the Benefit of One Party

Deciding on a price that both parties are happy with will likely be the most complicated and tricky parts of the transaction. One party might want a good deal on the home, and the other party may have to settle on a higher selling price. It’s essential that a clear price range is set from the beginning of the homebuying process.

Real estate agents will often perform a comparative market analysis for their clients to determine a price to list when selling a home. Although this is just an estimate, it’s still helpful in determining a reasonable selling price. So, if you don’t have an agent involved in the transaction, you may want to take advantage of various online tools to determine the home’s current value.

Homebuying Tip: If you find that each online calculator gives a slightly different number, don’t be surprised. The algorithms used to produce these estimates factor in other homes in the neighborhood, current home condition, location, recent sales on homes similar to yours, and more. Adding or subtracting even just one factor in the estimate could drastically alter the final number. Ideally, homebuyers should reference multiple online tools to determine a more accurate average.

Disregarding Property Condition

What is the current condition of the home? In most cases, if a house is ready for the market, most of the basic repairs are made. (Think of these as leaky faucets, chipping paint, or a broken door hinge.) However, significant repairs or renovations, such as a crack in the foundation, maybe needed within the next few years. Even a well-maintained home could have major structural issues. That’s why it’s imperative to conduct a full home inspection prior to executing a purchase agreement. A home inspector will identify these issues and provide an unbiased, objective opinion on the structure of the house. It’s better to address any potential problems with the home beforehand to alleviate conflict or roadblocks further into the process.

Not Having Adequate Representation

One cost-benefit of buying from a family member is avoiding the cost of a real estate agent and handling the transaction on your own, instead. On the other hand, when you choose not to work with an agent, you also lose the advice and representation of a seasoned professional. Using incorrect paperwork can lead to lead to legal issues and misrepresentation later on down the road.

Another alternative to using an agent is to hire a Real Estate Attorney to draft the legally binding paperwork. This option, however, still leaves the buyer and seller to handle the title and escrow process on their own. In most cases, utilizing a real estate agent is well worth the time and money spent.

Some Restrictions May Increase

Depending on the type of loan you’re approved for and the lender you borrow from, different restrictions will apply. It’s best to ask your lender at the start of the process what potential roadblocks you may face.

Possible Benefits 

There are plenty of benefits to buying from family that may make all your troubles worthwhile.

Low or No Down Payment 

In addition to buying a home from a family member, did you know that relatives are allowed to gift equity as a down payment? Suppose you’re buying a house from your now empty-nester parents but want to put down more than you can afford. That’s where gift funds come in! Eliminating the traditional 15 to 20 percent down payment cost could save you thousands of dollars in the end. Here are a few rules you should be aware of for gifts of equity.

FHA Loans

FHA loans are often a popular choice for homebuyers because of the flexibility they provide for lower credit scores, gifted down payments, and the ability to get approval with more debt (DTI) compared to your income than conventional loan programs. FHA loans also allow your entire down payment to come from gift funds. However, one thing to keep in mind is that gift funds can only be used on primary residences.

Homes sold between family members can have a down payment as low as 3.5% as long as one of the following conditions are met:

  • The home was owned by the family member as a principal residence
  • The family member purchasing the home occupied the property as a primary residence as a tenant and can prove they paid rent for six months, as well as provide a copy of a lease

If these conditions can’t be met, then the minimum down payment will need to be 15%. This can be covered by the gift of equity or a combination of equity and your own funds. Regardless of how the down payment is split, a gift letter will need to be provided.

Conventional Loans

Conventional loans have more stringent credit score and DTI requirements but still provide the opportunity to utilize gift funds. Fannie Mae has slightly different requirements than Freddie Mac when it comes to family-to-family purchases.

Fannie Mae gift of equity requirements: Fannie Mae allows gifts of equity to cover the full down payment on a home, provided the borrower meets the other requirements. You aren’t required to contribute your own money, but you will need a gift letter from the family member confirming no repayment is expected.

Freddie Mac gift of equity requirements: Freddie Mac allows for a gift of equity from a family member to cover the full down payment without any cash from you as the buyer.

Lower Closing Costs & Flexible Closings

Because there’s no need for a real estate agent to be involved in the closing, this could save you and your family member around 5% of the sales price in an average transaction. Keep in mind that you’ll need to know if you’re inheriting any title issues. And as we mentioned before, you lose the expertise of a professional.

A family-to-family transaction can also be much more flexible when it comes to the closing and moving dates. You can buy and move with ease because you know (and can coordinate) with your family.

Ready to talk to your home loan experts? Click on www.thepoldergroup.com to get started.

LENDER OR A BANK FOR MY HOME LOAN?

Buying a home is one of the most important purchases you’ll ever make, so it’s best to stay informed of all the options available to you. Although both mortgage lenders and banks can help you get the funds you need to buy, there are pros and cons to each choice.

Traditionally, mortgage lenders have more options for homebuyers than banks.

Depending on your current financial profile, you may qualify for more than one type of loan. However, you’ll find a good fit for you based on your long-term goals, housing needs, current standings.

Mortgage Lenders

A mortgage lender is a bank or financial company that lends money to borrowers to purchase a home. A mortgage lender or bank can be both the loan provider and the servicer of the mortgage. Despite funding the loan initially, the lender will often sell your loan to a larger financial institution, which is typically why lenders can offer lower interest rates than banks.

The good news is consumers have government-mandated protections relating to the servicing of home loans. These protections also cover loan transfers from one servicer to another, so this shouldn’t be a concerning factor when deciding between a bank or a mortgage lender.

In some cases, borrowers may also find that a mortgage lender will be less strictly regulated than a bank and more forgiving of less than perfect credit. This is not always the case, so it’s best to speak with a financial advisor and weigh all options carefully.

Borrowers also could choose a local mortgage company that can help guide them through the home loan process from start to finish. Mortgage lenders must pass several mortgage-related courses and exams, which helps them develop a deep level of knowledge in the industry.

Mortgage Lender Pros

  • Possibility for lower interest rates
  • Diverse loan options
  • Potentially faster closing time
  • In-depth knowledge about the process
  • Can meet with local advisors

Mortgage Lender Cons

  • The lender may only provide online services if there is no physical location near you
  • Your servicer may change after closing

Banks

If you have an existing relationship with your current bank, this may be the more “comfortable” choice. On the other hand, the most comfortable choice may not be the best choice for your long-term goals. The difference in loan type and length could end up saving you thousands of dollars over the life of your loan.

However, some banks offer special benefits or discounts for existing banking customers that choose to apply for a home loan with them. The offers often include special savings or checking accounts, credit cards, and other products. The best way to learn more about this is to reach out to a representative at your bank. (They may also have insight on upcoming promotions to take advantage of.)

One major downside of a bank loan is that they often come with stricter lending guidelines. Not to say that a mortgage lender would have lower standards, but your loan may take longer to close if you’ve had a major financial event, such as a foreclosure or bankruptcy.

Bank Pros

  • Existing relationship
  • May offer special rates

Bank Cons

  • Less mortgage lending experience
  • Possibly longer closing time
  • Stricter lending standards

Interested in learning more? Contact a Mortgage Advisor for a complimentary consultation!

QUESTIONS YOU SHOULD ASK YOUR MORTGAGE ADVISOR

When it comes time to apply for a home loan, your Mortgage Advisor will cover the basics with you. This will typically include your interest rate, which loan solutions you qualify for, etc. However, there are a few important questions you can ask your lender to let them know what you need further clarification on.

What is my interest rate?

Rates are currently lower today than they’ve been in over 50 years, which is great news for homebuyers and those looking to refinance to a lower rate. However, there is no guarantee what your rate will be until your financial situation has been thoroughly evaluated. Multiple factors affect your rate, including:

  • Credit score
  • Property type and location of the home
  • Loan term
  • Interest rate type (fixed or adjustable)
  • Home price and loan amount

What are my loan options?

Depending on where you stand financially, you may qualify for multiple loans. Each loan will have different minimum down payment and credit score requirements. Your mortgage will also differ by the type of rate (fixed or adjustable.) Ask your advisor to walk you through all of your options and explain what the long-term of each loan will look like.

If you have circumstances that prevent you from falling within the traditional mortgage parameters, your loan options might change. For example, if you’re self-employed, your bank statements would be evaluated, rather than your tax returns.

Will I have to pay Mortgage Insurance (MI)?

If you put down less than 20% of the purchase price of the home, you will most likely have to pay Mortgage Insurance. MI is also typically required on FHA and USDA* loans. This helps offset the risk the lender would normally assume on a low down payment transaction.

What additional costs will I pay at closing?

Closing costs vary from loan-to-loan because many fees are based on the exact amount of money borrowed. The more you borrow, in general, the higher your costs. However, it is a general rule that closing costs run between 2-5% of the sale of the home.

Even though they’re called “closing costs,” you may be asked to pay some fees as the loan process progresses, like home inspections and appraisals. While your estimated closing costs will be included in the loan estimate, many of the fees listed can change along the way.

Does my partner have to be on the mortgage?

The short answer is no. Having a spouse as a co-borrower on a mortgage can often increase your odds for qualification if they have a good credit score, employment history, and income. In some cases, one spouse may have credit issues or complex income, which could work against you when applying for a mortgage. In that case, it may be more beneficial to have only one borrower on the loan.

However, both spouses may have to have their credit checked, so you’ll need to speak with your Mortgage Advisor about this. If you change your mind later on, a non-borrowing spouse can be added to the home’s title, or both spouses could refinance the home, which will allow you to apply again as co-borrowers on the new mortgage.

What Is An Escrow Account?

With an overwhelming amount of new terms and phrases to learn in a short amount of time, it can be hard to keep track of it all. That’s where we come in! Today’s topic: escrow accounts. What are they, and why are they beneficial to homebuyers?

What You Need to Know

An escrow account is typically used for two reasons— to protect a homebuyer’s “good faith” deposit before the transaction closes and afterward, to hold the homeowner’s funds for taxes and insurance. The homebuyer can create an escrow account, but the buyer’s real estate agent will typically be the one to open this account.

HELPFUL INFO: During the homebuying transaction, the account may be managed by a specialized company or agent; your escrow company and title company may be the same.

How it Works

Let’s say you find your dream house and put down an earnest money deposit to let the seller know you’re interested. This deposit doesn’t go straight to the seller’s pockets. Instead, these funds are deposited into an escrow account. When your housing transaction closes, the money is then put toward your down payment and closing costs.

Once you become a homeowner, you will fund the escrow each month as part of your total monthly mortgage payment. When you make a mortgage payment through your loan servicer, the money will be distributed among multiple categories, such as:

  • Principal and interest on your mortgage
  • Property taxes
  • Homeowners insurance
  • Mortgage insurance

Items not covered through your escrow account:

  • Utilities and other bills
  • Necessary home repairs
  • HOA fees

Is an Escrow Account Required?

The short answer is, it depends. Some loans will require an escrow account to be set up as an additional safety net for the lender, such as an FHA loan. Regardless of whether your state, lender, or loan requires an escrow account, it’s beneficial to have one in place.

Making Payments from Year-to-Year

Each year, your bank receives updated information on your property taxes and insurance payments. They will then perform what’s often referred to as an escrow analysis.

Because escrow is collected in advance, your lender might not have enough funds in your account to cover any increase in taxes or insurance, otherwise known as a “shortage.” In this case, you will owe the difference. However, you won’t be held responsible for this payment until the bank sends you a notice stating the amount outstanding.

Once you receive the notice, you can choose to pay the entire shortage as one lump sum, or you can choose to pay the amount over the next year. For example, if the shortage is $500, you will pay 1/12 of this amount each month.

In the Event of a Surplus

If taxes in your area happen to go down or your payments are overestimated, you will have too much money in your escrow account at the end of the year. Your lender will then pay the appropriate amount to the municipality, and the remaining amount goes to you.

Your lender will either send you a check for the surplus amount or give you the option to leave the money in your escrow account in case of a shortage in the upcoming year.

 Budgeting for the Future

Anticipating whether or not you’ll be required to pay more on your escrow account can be hard to keep track of. If you prefer to plan ahead, pay attention to any correspondence from your insurance company or taxing authority throughout the year, and budget accordingly.

 Questions? We can help! Talk to a Mortgage Advisor today for a no-commitment consolation.

Ways To Save For A Down Payment

Saving Money

Saving for a down payment can seem like a daunting, impossible task. This is especially true if you’re already tackling debt and a mountain of bills. However, there are ways to save up for your dream home and still make ends meet. Let’s break it down.

Where should you begin?

Calculate How Much to Save

It’s impossible to save toward a goal that you’re unsure of. Before you plan out a budget, you have to decide how large of a down payment you want to make. This can, of course, be an estimated amount, but you want to make sure the number in your head and the number your finances reflect are similar.

A 20% down payment may be the best option for some homebuyers. However, for other buyers looking to purchase their first home or who need more financial flexibility, a smaller percentage might be more attainable. There are a variety of loan options that require little-to-no down payment at all.

DON’T FORGET: A down payment smaller than 20% will require Mortgage Insurance. MI allows more homebuyers the opportunity to purchase a home sooner than anticipated because it offsets the risk the lender would typically assume on a low down payment transaction. If you’re planning on putting down less than 20%, you will need to factor MI into your monthly payments.

When you have a price range for your dream home and a (realistic) goal for your down payment, use a Mortgage Calculator to estimate what your monthly mortgage payment will be. If the number looks a little higher than you’re hoping for, it may be in your best interest to save toward a more significant down payment.

Determine Your Timeframe 

Depending on the size of your down payment, your annual savings goal will change. It’s also essential to plan for any situations that could cause you to be unable to save toward your down payment goal. Have you considered renovations to your current home? Are you planning on getting married or having kids within this timeframe? What about potential medical costs?

Planning for obstacles will help you determine a realistic amount to save each paycheck and give you peace of mind, as well.

IMPORTANT TIP: Pay attention to interest rates within your savings timeframe as well. Study market trends. If interest rates are traditionally lower in the spring, you might want to push your savings timeline up to get the best rate.

Budget, Budget, Budget

Now that you’ve determined a timeline and savings goal, it’s time to look at where this money will come from. If your savings goal is more ambitious than your current savings habits, changes will have to be made. Whether it’s picking up a side hustle or cutting back on your weekend spending, make clear financial goals for each paycheck.

Get creative when trimming your budget! It’s often the little costs that add up in the end, not the big purchases you planned on. Consider:

  • Skipping the drive-thru and pack your lunch
  • Making coffee at home
  • Using a public park or space to work out (not a gym)
  • Renting a movie instead of going to the theater
  • Working a few extra hours instead of going home early

It may also be necessary to pull your money out of riskier investment vehicles such as stocks or investment trusts. For the time being, you may need to move your money to a traditional savings account separate from your regular accounts.

Don’t Forget About Additional Costs

Don’t let the price tag of a down payment cause you to overlook the smaller, but still costly fees of purchasing a home. You may need to factor in:

  • Mortgage Insurance
  • Appraisal and Inspection Fees
  • Closing Costs

The most important thing to remember when saving is to stick to your goal no matter what. It will pay off in the end!

Whether you’re saving plan starts today, or you’re ready to find your dream home, our Mortgage Advisors are here to help.

5 Tax Breaks for First Time Homeowners

Property Tax Deductions

Property taxes are paid to the state and/or county and are deductible from federal income taxes. These can include real estate taxes as well. Before the TCJA was passed, you could deduct an unlimited amount for these taxes, as long as you could document that the deduction matched the actual amount of the taxes you paid. For tax years 2018 through 2025, the new cap is a maximum deduction of ten thousand dollars.

State Incentives

Each state offers a specific incentive for buying a new house. These are most often in the form of programs for first-time homebuyers and will most likely help you subsidize the down payment on your mortgage. In addition to statewide offers, some states also have targeted funds or special programs aimed at certain geographic or metropolitan areas in the state, so be sure to visit your state’s housing agency website to see if there is additional help available to you.

Tax Credit for Mortgage Credit Certificate Holders

This credit is to help people in lower-income brackets buy a home. Since it’s a tax credit, it’s beneficial because it lowers the overall amount of taxes you owe. In order to qualify for this tax credit, you need to have a state-issued Mortgage Credit Certificate. The amount varies based on financial need and the price of the home. You can claim this mortgage interest credit even if you take the standard deduction, whereas a home mortgage interest deduction can only be taken if you itemize your deductions instead of taking the standard deduction. For example, Pima County offers 20% back! Say you paid $1,000 in interest, you would get a credit back of $2,000!

Tax Credit for Home Improvements

There are certain improvements you can make to your new home that qualify for the Residential Renewable Energy Tax Credit. If you install solar panels or other sources of solar energy, you could qualify for this credit on your tax return.

Penalty-Free IRA Payouts

If you have an IRA or other pre-tax retirement savings accounts, you could withdraw money from those accounts to help you pay for your first house. Typically there are fees for early withdrawals (before the age of 60), but if you are buying your first house, you can deduct up to $10,000 from your traditional IRA without penalty. If you’re married and your spouse also has a traditional IRA, they can also withdraw $10,000 for the same home purchase. Additionally, if you have a Roth IRA, you could withdraw contributions you’ve made without penalties, regardless of your age. If you’ve had your account for at least five years, the withdrawal would also be tax-free. Finally, if you are withdrawing from your retirement accounts in order to purchase a home, you should consider the amount of time it will take to recoup those funds so that you do not negatively impact your future retirement income.

All potential tax benefits should be verified with a professionally licensed tax advisor if you have questions about these or other tax benefits for first-time homebuyers, contact your tax advisor.

If you’d like a referral for a tax advisor or have questions about anything related to the home-buying process

 

How To Find The Right Real Estate Agent For You

Sometimes the most difficult part of buying a home is simply knowing where to start. That’s why it’s crucial to have a team of professionals guiding you every step of the way. Your real estate agent and mortgage lender should be educated, informed, and willing to find the ideal long-term solution that meets your wants and needs.

So, where do you begin? Should you get a loan? Talk with an agent? Let’s break it down.

Start with a Lender

The first step toward owning the home of your dreams is knowing exactly what you can afford. This is why you should meet with a lender before doing anything else. Having a good idea of what homes are within your budget will save you time, and possibly money, in the end.

Not to mention, having an approval letter from a lender can increase your bargaining and buying power when it comes time to make an offer, especially in bigger cities and booming markets.

Do Your Research

If your lender is local, they’ll most likely have a list of recommended real estate agents in your area. The Polder Group only works with all the top agents in Arizona and can give you the best recommendation for your needs.

When searching, it’s important to know the difference between a real estate agent and a Realtor. (That’s right— there’s a difference.) You’ve most likely heard these two terms used interchangeably, but there are actually distinctive requirements for each role.

A real estate agent is a professional who has obtained a real estate license to assist in the buying and selling of properties. In some cases, agents will have a specific focus, either listing or buying.

A Realtor, on the other hand, is a real estate agent who is also an active member of the National Association of Realtors (NAR).  Agents within this organization are required to adhere to an extensive Code of Ethics, which can be an attractive quality to buyers who want to know the agent they’re working with has their best interest in mind.

Interview Your Agents

Once you’ve found a few agents that meet your basic standards, it’s a good idea to interview them. This is your opportunity to learn more about the agent’s style, personality, and willingness to work with you.

You’ll want to hit on these topics while interviewing potential agents:

How long have you been in the business? A young agent could have more time to focus on your transaction, but most real estate agents learn as they go. A seasoned agent will have experience more speedbumps and will know how to avoid them.

 

What is your intended strategy to buy/sell my house? As a buyer, you need to know how willing your agent is to spend time searching for a home that meets your needs. As the seller, it wouldn’t hurt to know ahead of time what their average listing price to sales price ratio is. Does their selling strategy support your financial needs, and if not, do you need to reconsider?

Can you provide a list of references? Any agent worth their salt will have a long list of references willing to speak on behalf of them.

How much do you charge? Most real estate agent fees are negotiable. According to The Balance, agents will typically charge from 1% to 6% to represent one side of a transaction, either the seller or the buyer. A listing agent might charge 3.5% for herself and another 3.5% for the buyer’s agent, for a total of 7%. Percentages will vary. Keep in mind, a top agent might charge more for their services.

Trust Yourself

At the end of the day, you should go with an agent that you trust and know will help you in any way possible. But don’t forget to:

  • Review your contract
  • Double-check any references
  • Take time to consider all options

Ready to begin the journey to homeownership? Contact The Polder Group Today and let us help you get started on the best foot possible

Mortgage Process Paperwork

At The Polder Group, we find that borrowers often comment about the amount of paperwork mandated for mortgage loan applications. Many buyers are told that the process was much less complicated fifteen or twenty years ago.

There are two main reasons for the change: government guidelines, and the fact that banks do not want to be in the real estate business.

Turning Problems into Solutions

During the run-up to the housing crisis, many people “qualified” for mortgages they could never payback. This led to millions of families losing their homes, and something the government wants to make sure won’t ever happen again.

As a result of that foreclosure crisis, banks were forced to take on the responsibility of liquidating millions of foreclosed homes and negotiating millions of short sales. Just like the government, they don’t want more foreclosures. The combination of those factors spurred the banks to tighten up their lending practices.

Consider this scenario: If you loan your friend $20 to cover dinner, you expect them to eventually pay you back. There’s no paperwork, and you know they’re good for the money. On the other hand, loaning a friend $5,000 to buy a car is something entirely different. It’s not quite the same easy transaction as a bar tab.

Now imagine you have to loan your friend $500,000 to buy a home! You can see why all lenders, including PG at Summit Funding, want to make sure the property is valued correctly, the seller is the legal owner, and the buyers earn what they say they earn.

Paperwork You’ll Need

What kind of paperwork will you expect to see throughout the process? Things usually start with the loan application. Underwriting your loan requires documents and signatures, and you may be required to produce, in hard copy or electronically:

Tax Returns

Pay Stubs

W-2s (or other proof of income)

Bank Statements (and other assets)

Credit History

Gift Letters

Photo ID

Renting History

When your loan closes, you’ll also be asked to sign the loan documents, and vouch that you have received the loan and title documents.

The good news is that stricter paperwork means lenders, feel more comfortable offering low mortgage interest rates. People who bought homes fifteen or twenty years ago experienced a simpler mortgage application process but also paid a higher interest rate. The average 30-year fixed-rate mortgage was 8.12 percent in the 1990s and 6.29 percent in the 2000s.

Important Documents to Save

The busyness of life can quickly cause things in our lives to pile up— especially when it comes to mail, statements, and other important documentation. Although it may be tempting to just throw all of this clutter out, there are important mortgage documents you should hold on to, rather than toss out.

Mortgage Statements

A mortgage statement is a document prepared by your mortgage holder. It’s then provided to you with the current status of your loan. You’ll receive these on a monthly basis after you close your loan. You’ll want to hold on to these statements for the life of the loan, at the very least.

Deed

Your deed is the document you need to prove you have a claim to your property. It’s recommended that you keep this document for as long as you own your home. Even though most municipalities keep online land records with a virtual deed, you should still hold on to your personal paper copy in case you need to quickly prove ownership of your home.

Purchase Contract & Seller Disclosures

A real estate purchase contract is a binding agreement between two parties for the transfer of a home or other property. Equally important is the seller disclosure, which is a set of documents completed by the seller of the home that lists any known issues with the property during the time of ownership.

Both of these documents provide the new owner with written evidence of the home’s condition in case a problem is discovered that was not originally disclosed by the seller. Keep these documents for as long as you own your home.

Home Warranty

In the unfortunate event that you need to replace or repair a portion of your house, the home warranty will include all the information you need. This form can be thought of as a written record of protection. Keep this document for as long as you own your home.

Final Settlement Statement

After closing a buyer (and seller) will receive a copy of their final settlement statement. It’s a good idea to keep this document since it lists out the distribution of all the fees and who paid for what, as well as confirms the official settlement date.

 

Do you still have questions about getting a mortgage? Contact The Polder Group at Summit Funding To Learn More.

Unmarried Home Purchase: What You Need To Know

It’s common for unmarried couples to want to buy a home. Married or not, it is possible. Buying a home is one of the most significant financial decisions of your life, so it’s important to understand the details of buying a house as a couple.

Here are four things you should plan for when buying a home as an unmarried couple:

Thoroughly Discuss Your Finances

It’s very beneficial for couples to discuss each other’s financial situations in detail. Before meeting with a lender or realtor, it’s imperative that you review each other’s credit score, income, debts, and financial history. Most differences between your finances can be accommodated, so it’s important to know the details of each other’s finances in case any surprises arise. This step will prevent any conflict during or after the mortgage process.

Determine Your Costs and How to Split Them

It’s essential to have a system in place to split bills and other expenses. This is even more critical when buying a home. First, figure out how to divide the down payment and closing costs when purchasing the home. Then, discuss and decide how to handle the monthly mortgage payments, utilities, and other costs associated with owning a home (emergency repairs, maintenance, taxes, etc.).

You may want to work this out together with a real estate attorney and get the details in writing to keep things on record. If you don’t already have a joint bank account, it may be a good idea to at least create one for funding the home while keeping your other funds separate.

Understand Your Ownership Options

You may not have known that there are options for the purchase of your home. Deciding on which ownership option suits you may be one of the most important decisions in the process. Your home’s title can be configured in a few different ways, depending on which state you live in:

Joint Tenancy: You both equally own the property. Common between husbands and wives, joint tenancy allows one of you to inherit the property if something should happen to the other.

Tenancy in Common: You both own a specific percentage of the property. For example, you may own 40% of the property while your significant other owns the other 60%. If something happens to one of you, the ownership will transfer to whoever is denoted in a living will or trust. If there is no will or trust, ownership goes to the next of kin and not your significant other.

Sole Ownership: Some couples may find that it’s better just one of you to have full ownership of the home. If you have better credit than your significant other or are in a better place financially, this may work for you.

Create a Backup Plan

Sometimes things don’t work out as planned and, legally speaking, there are no protections in place for unmarried couples who co-own a home. We recommend creating a partnership agreement. Similar to a prenuptial agreement this will detail what happens to the home if you two split up. Written contracts are the best way to plan so we recommend you take any chance you get to draw up your agreements in writing.

Do you have questions or would you like to sit down for a complimentary no-obligation consultation? We are your Home Loan Experts, at your services. Give us a call 520-495-0222.