October 18th, 2014 by Gary Mawson Jr.
This is the process of buying a home here in NJ. Having a great agent to help navigate all of this is going to make your life easier and this is what an agent is getting paid to do. Real estate agents dont just simply find a home for a buyer there is so much more!
- This is when you call a mortgage banker to find out how much you can afford to borrow from the bank in order to purchase a home
- what you will need to get started – Last 2 years of w2’s, last 2 months of bank statements, and 1 month of paystubs. This is the basic stuff to get started, you may be asked for more information and if you are self employed there will be more to get started)
- The initial offer is the beginning of negotiations and can either be countered, accepted or rejected by the seller
- Upon acceptance of an offer which must be signed by both buyer and seller the contract is submitted to your attorney and the sellers attorney. (Known as attorney review period)
- Your initial deposit will be due to the attorney’s trust account
- Your contract is not legally binding until the attorney review process is concluded. It typically takes three business days in order to conclude the attorney review process, but can take longer if things are not agreed upon.
- During attorney review the home can still legally be shown, and another offer can be negotiated and accepted during this process. (Some agents will not show during this period)
- Upon conclusion of attorney review the home cannot be shown anymore, and your second deposit will be due
- Contract typically states that you have fourteen days in order to complete the home inspection. (this can change during the attorney review period based on the attorneys, but will be outlined before the attorney review process is over)
- A termite inspection will also be done at this point to make sure that there is no termite damage in the home too.
- Once completed you can either submit for things to be repaired or negotiate a lesser price for the home based on the findings of the home inspector.
- All of these negotiations will take place through the attorneys and will be signed off by you and the seller once an acceptable outcome is reached.
- The appraisal is ordered through the bank and this is typically why you have to pay for an application fee when your loan goes into process
- The appraisals are usually appraised for the value of the purchase price. The home may be worth a bit more at the time of closing based on the other comps, but a home is ultimately worth what someone is willing to pay for.
- Once completed this will be turned back into the bank so that the loan can be approved. At this point you are almost done, but you are not completely out of the woods.
- Once the appraisal is turned in they should issue a commitment or loan approval for the buyer of the property. There are typically some items that they still need but it is usually in reference to title and closing documents. They may ask for some items from you, if there are any unusual findings but is unlikely.
- Title is ordered through the attorney once all of this has been completed.
- Title makes sure that there are no liens on the property and can tell us if there are any easements on the property as well.
- Closing will typically happen within ten days of the agreed upon closing date as stated in the contract.
- Upon closing you will need certified check for the remaining deposit on the loan.
Real Estate Terms
- Loan to Value – how much money you are financing compared to the value or purchase price of the home.
- debt to income ratios – how much monthly debt you are obligated to pay each month as compared to your monthly income.
- Pre-Foreclosure – The bank has filed foreclosure papers to begin taking back the note on the home.
- REO or Bank Owned Homes homes that have already gone through the foreclosure process.
- Short Sale – Home that is currently on the market and is in pre-foreclosure where the owner owes more than what is owed to the bank.
- HUD homes – this is the same as a bank owned, but it was a financed through a government program (FHA or VA) so it is government owned instead.
April 6th, 2014 by Gary Mawson Jr.
There is a lack of inventory currently on the market. If you have thought about selling your home than look no further. We specialize in selling homes and would love to work with you too. There has never been a better time to sell your home than NOW! Many buyers are taking advantage of the low interest rates and moving into a larger family home, or are looking to retire to the beach in their dream location. If you are one of these than dont wait.
Yes values are going up in the area! If you are looking to move up into a bigger home and you are thinking of waiting until your homes value increases, than keep this in mind!
If your home is going up in value than the home that you are looking to buy is doing the same. If you are going to spend more money on a new home than your current home is worth you will be actually be behind in the long run! Interest rates are also going to go up and for each percentage point that it goes up you are losing about 10% in buying power.
Here is an example. to stick with round numbers and keeping it easy lets say your current home is worth 200K, and the home that you want to buy is worth 400K! Both homes appreciate by 10%. Your home now sells for 220K and the new home is 440K. That is a 20,000 difference in price. If the interest rates continue to go up, you will actually spend far more money on the same home than if you were to sell TODAY, and buy that new home for you and your family.
Call TODAY for a FREE market analysis of your homes value!!!!!!!!!
February 26th, 2014 by Gary Mawson Jr.
One of the most important thing to do prior to shopping for a home is to know how much you can afford to borrow from your bank or local lender. It is as simple as calling the mortgage lender and going over a few questions to get a preliminary idea of how much money you can actually borrow.
Things that you will need to get started
- Last 2 years of tax returns!
- 2 months of bank statements
- 1 month of paystubs
These are the basics that you will need to get started. If you are self employed or get 1099 income than there are going to be other things that you will in fact need to get to the mortgage lender. Know before you go though! If you get these simple documents together that most people have handy or can get within a matter of a few minutes at the computer can save you a lot of time while searching for a property. They can also give you helpful tips on what you need to pay down or do so that you can raise that number if you need to afford a bit more.
You can get your pre-approval from a lot of different places. Most people start at their bank, but there are 100’s of lenders out there that can help you obtain the same goal which is to purchase a home. If you are already working with a realtor you can ask them for a referral, they often work with several lenders that they know and trust that will get the job done quickly and effectively. Another great referral source is your accountant or even financial planner. These are all people who are out to help you achieve your goals and can assist in guiding you in the right direction. Talking to your accountant and financial planner are often good too so that you can plan for interest payments for deductions or stay liquid in the event something major happens in your life.
So it is important to know before you go buy a home what you can qualify for so that you know that it is a realistic dream to buy the home that you want in the area that you want!
February 21st, 2014 by Gary Mawson Jr.
If you would like a more detailed market analysis of your homes value please click on the photo below to fill out a few short questions about your home.
February 17th, 2014 by Gary Mawson Jr.
There are a lot of great things happening in the area, and new business’ coming are always a great sign for recovery. There are lots of new homes being built and there around town by builders and new buyers in the area. So one of the new exciting things that is coming is a new brewery.
Beach Haus Brewery is taking over the space that was previously occupied by the iconic Freedmans Bakery. This is a fresh new change to the downtown section of Main Street in Belmar which features new luxury rentals and several new retail spaces. This addition is sure to bring some more people to the area and will help the other restaraunts and business’ with new patrons that may not have normally come to town. From a real estate standpoint having new stores, restaraunts and attractions will help draw in more people that may be interested in buying homes in the area to take advantage of what I feel is an up and coming town.
You can see the change in the air. The boardwalk was rebuilt better than before with new sidewalks and palm trees lining the streets on Ocean Ave. The main attraction to town got a facelift, and now the addition of a brewery will give summer beach goers an alternative on those rainy days!
February 4th, 2014 by Gary Mawson Jr.
When I started writing mortgages all of the mortgage loan officers had an HP mortgage calculator. I was not fortunate enough to have one, so I had to go with an alternative way of calculating what the payment was. So I turned to the computer to help me out. When I started all of the interest rates were above 6%, so when I was looking at a price per $1000 chart I quickly realized that 6%=$6.00/$1000. So simply put if you have a home that you were going to mortgage 100K, you would have a principal and interest payment of $600. Pretty easy right?
So how do I calculate the rest of the interest rates? This is very easy too but may require some quick notes in the beginning. For each 1/8(.125) of a point it equates to .08 cents in payment per $1000. So an example is if the rate was 5.875% for the same 100K mortgage than the payment would be based $592 per month. ($5.92 x100K). So from there you can simply take that and apply .08 for each number and figure it out. Since the mortgage rates go in one eigth increments, it is easy to figure out. See chart below as example all are per $1000 mortgaged.
6% – $6.00
5.875% – $5.92
5.75% – $5.84
5.625% – $5.76
You got the trend now?
So what if my interest rate is 5%?
simple…. you know that there are 8 parts, so you simply multiply 8 by .08 cents which .64 cents. Than subtract that from $6.00 to come to $5.36/$1000.
This is how you can quickly figure out mortgage calculations on the go with a simple calculator. I kept round numbers, but you can figure out all of the results simply by following this diagram and just memorizing that 6% =$6.00, and that each 1/8=$.08!
Please note: This is not an exact science to coming up with the mortgage calculations, but it will get you within a couple dollars every time.
Let me know if you have any questions or feel free to comment.
January 29th, 2014 by Gary Mawson Jr.
When you are getting ready to purchase a home the first thing that you have to do is get a pre-approval letter from your local bank or mortgage lender. This can be accomplished simply by picking up a phone and calling your local lender. There is no need for you to go and visit them in person. So the first thing that will happen is the mortgage lender will take what is known as the 1003 form (simply put a mortgage application). This consists of your name, address, SSN, Date of Birth, employer info, and bank information. Don’t be shy on this, they are going to get the information either way because they are going to ask for verification of all of this. They will than take this information and run a credit report on you, with your permission of course.
Your credit report will tell your story. It really has a lot of pertinent information for the mortgage lender to make a preliminary decision on whether or not you can truly qualify for a mortgage. If you have never seen a credit you can request a free copy of your credit report by clicking here. Your report will show all of your current debt as well as past accounts in the last seven years that may be inactive or closed. Your score is determined by your length of credit and good standing (this is very basic explanation). All of your creditors such as credit cards, car loans, student loans, etc… report what the credit limit is, how much is owed and also what your minimum monthly payments are. They use these numbers in conjunction with what your income is to determine what is known as the debt to income ratios are.
Your debt to income ratio will greatly determine what you can afford. The guideline for this is 25% front end ratio, which is the payment of what the mrotgage would cost you compared to your monthly gross income (before tax payments). The back end ratio is 36%, which is the mortgage payment with all of your debts included compared to your monthly debt. Although some lenders have flexibility on both of these numbers with exceptions, these are what the guidelines are for debt to income ratios.
Once they determine what you can afford than they will ask you for a series of documents. Last two years of w2’s and tax returns (this will determine an exact salary number), 2 months of bank statements (this is where your down payment money will come from), and 1 month of your most recent paystubs (verifies that you still make what you did the previous year. After all of this is compiled the bank may ask you for additional information as they deem necessary. If you are self employed be ready to supply much more paperwork in addition to all of this. For instance they are certainly going to ask you for your schedule C.
So some common things that you should avoid doing are making large purchases. If you are planning on buying or trading in your car, contact your mortgage rep first to make sure how it can affect your mortgage. Any large deposits that you make from two months prior to application to the end will have to be accounted for, where it came from and shown. This would include if you get bonuses that vary from month to month.
I understand that this is a lot of information, but this is more so that you can be prepared and informed as you navigate through the process of purchasing a home. If you are still confused we can help make this process less stressful for you.
January 29th, 2014 by Gary Mawson Jr.
Condos and town-homes are a great way to enter the home ownership club without breaking the bank. Most first time home buyers looking to buy a home have limited money to put down or are looking to save for a rainy day! FHA offers a great alternative to purchasing a home with a minimal down payment.
FHA is a great program allowing people to purchase a home with just 3.5% down payment. You are able to keep the majority of your money and still purchase a home. For instance, if you purchase a condo or single family house for 200K your obligation is only $7500 plus closing costs. This is an amazing program that can help many who qualify to achieve their dreams of home ownership.
So your first step should always be to consult a mortgage representative to find out how much you can afford to pay for a house. Once you have figured out this number and what your payments would be and what you are comfortable paying, it is time to start your real estate search. You don’t necessarily have to find a Realtor right away, there are plenty of sites such as www.zillow.com that can help you figure out what you can afford in the different areas that you may be interested in looking at. Once you narrow down your search to a specific town or towns, than you are ready to start looking for a Realtor. It is important that you find someone that knows your market or is an expert negotiator. Any Realtor can find you a home, but the good ones will be able to answer a lot of your real estate questions and make sure that you are comfortable in the home buying process.
FHA has some more guidelines than most other programs out there and if you are buying a condo or a town-home than you have to make sure that the community is FHA approved. FHA wants to make sure that the community fits into the criteria that they have in order to lend to you within that community. To check and see the eligibility of a condo that you are looking into check out the HUD approved condo list. This is the quick and easy way of looking into it, but the long answer is they want to make sure that there are more owner occupied units in the community and also that the majority of the people are paying the home owners association dues. There are some other ins and outs, but these are really the main two points. This is put into place to make sure the stability of the association and the community, and to protect you as a borrower.
Now that you are informed it is time to get the process started. If you have additional questions in relation to all of this feel free to message me. We are here to help!
November 7th, 2013 by Gary Mawson Jr.
Have you thought about buying a home at the shore? Have you thought about what you want in your new home at the shore? What are the most important factors that you should consider in your purchase? There is a lot to consider when you begin your search. The following are some of the first things that you should consider.
- Towns (What areas do you want to be in?)
- Price (What is your total budget?)
- How far from the beach do you want to be? (This may help determine town and budget.)
- Type of home and size (Do you want a fixer upper or a move in ready home, or if you have considered building than #5 is important
- Lot Size (Local building codes will dicatate the size of home that you can build without a variance. It is important to know this if this is an option that you are considering)
This is a great place to start though. If you can answer the majority or all of these questions than you may want to seek the help of a Real Estate Professional that specializes in the area that you are interested in buying a home in. Good luck in your search and keep in mind that lot size and location can significantly impact your purchase price, but will also appreciate in value more as time goes on.
October 1st, 2013 by Gary Mawson Jr.
Have you noticed the the price of rents have gone up steadily in NJ? How much longer can the market sustain the constant increase in rent? What will happen to my rental when the rental bubble does finally burst? All of these questions come to mind when thinking about the rental market. So when is the bubble going to burst?
My opinion is it will be in the next couple of years! The market has continually increased and the rents have gone up, but everything else around has stayed the same. The job market has not gotten any better. Median income has dropped, and the people who are hanging on to jobs are getting very minimal raises. So with all of this in mind what is the next step?
I think that these people should begin to buy again. Prices are still relatively low, and interest rates are very low as well. The buying power is tremendous right now and you can begin to build equity in a home rather than paying someones mortgage for them. There are a lot of homes on the market and as we enter the winter months the buyer pool shrinks and homes tend to sit a little longer. This may allow some buyers to get a better deal on a home than if they would have bought in the summer months when the market was on fire and everything was selling.
This rental market is always going to be strong in Monmouth County because of the proximity to the city, but let be realistic here, the market is going to come down a bit and we will see some of the undesirable areas become desirable rental markets in the future. There is only so much people can afford before they hit the breaking point.