Buying a Home this Spring? Make Sure You Get the Details Right.

Front Door Flowers

Spring marks the beginning of the selling season and is often considered the busiest and best time to purchase a home. As more people look to purchase a home in the coming months, it’s important to understand the buying process. Here are some tips from DORA (Department of Regulatory Agencies) and the Division of Real Estate.

Talk to your lender early in the process. Meet with your lender before contacting a real estate agent to simplify the home buying process. Getting prequalified for a mortgage gives you a solid price range for homes to consider.

Determine your working relationship with your broker. Many homebuyers don’t know that Colorado has two options when it comes to your relationship with your broker – a Single Agency broker (an agent for the buyer OR seller) or a Transaction Broker (for the buyer or seller OR both). A single agency broker will advocate for and work solely on a single client’s behalf. A transaction broker facilitates the sale by fully informing the parties, presenting all offers and assisting the parties with any contracts, including the closing of the transaction without being an agent or advocate for any of the parties.

Understand the real estate contract. An offer for the purchase of real estate must be in writing to be valid. The Colorado Real Estate Commission requires every real estate broker licensee use a contract form approved by the Real Estate Commission, unless the contract is drawn by either the seller or buyer or the attorney for the buyer or seller.

Recognize contingencies in the contract. The contract approved by the Real Estate Commission allows for the buyer and their licensed broker to make the contract contingent on certain items. Contingencies can be items such as the property appraising for the purchase price, approval of financing, a satisfactory home inspection, or the sale of their current residence. It is critical for a buyer to include those contingency items in the contract to eliminate misunderstandings about what circumstances will allow for a successful execution of the transaction.

Meet all deadlines and put down your earnest money. Once your offer has been accepted by the seller, you will put down a good faith deposit, often called earnest money. Both the buyer and seller will need to meet specific deadlines before you close on your home. As a buyer, if you miss a deadline, you might not be able to cancel or withdraw your offer unless you are willing to forfeit your earnest money. Your offer allows you to make decisions regarding when to close on your new property, when you can take possession of that property, and what remedies are available if the contract dates are not met.

This is a lot of information. If you’re ready to get started on the homebuying process, contact us to start with step one and get you pre-qualified today.

What is a Mortgage Rate Lock?

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The mortgage lending world is full of terms that may not be familiar to you but are important to understand if you are considering buying a home or refinancing. One of those terms is mortgage rate lock. 

A mortgage rate lock is an arrangement between a lender and a borrower in which a mortgage’s interest rate is locked for a certain period of time. Typically, the locked-in rate will be the current market interest rate.

Some lenders choose to charge borrowers a lock fee if they choose to lock in the interest rate. Also, it’s common for lenders to start at a higher rate in case the homebuyers do not exercise their options to lock in a rate.

When a borrower and lender agree to a mortgage rate lock, it is important that both parties are bound by the agreement. This agreement would mean, for example, that the borrower could not unlock the rate because the market interest rate had lowered. Interest rates will usually be locked from the moment that the mortgage is offered until it is closed.

Unless a change occurs to the loan application, the interest rate will stay the same and will not be affected by market changes. Changes to the mortgage application, such as an increased loan amount or an updated credit score for the borrower, can result in the interest rate changing. Interest rates can also change if the home is appraised at a higher or lower amount than expected, or the borrower changes the type of mortgage for which they are applying.

Mortgage rate locks have some drawbacks from the borrower’s standpoint. For example, if the market rate falls during the term of the mortgage, a borrower would not be able to take advantage of these lower rates. The same would be true for lenders if the market rate rises.

A lock deposit can be a good way to make sure that both the borrower and the lender hold to the terms of the mortgage lock agreement. This deposit shows that both parties are committed to upholding the agreement. A loan estimate and a rate lock can be issued at the same time, and the period of the mortgage rate lock can be between 10 and 60 days. A longer rate lock period typically means that the borrower and lender have agreed to a higher interest rate.

Questions about mortgage rate locks or anything related to home mortgages? Please contact us today. 

Why Do Home Loan Rates Move Up and Down?

Miniature House on A Blue Financial Graph

More now than in recent years, we are hearing the question: Why are home loan rates rising so much? 

The Federal Reserve monitors the U.S. economy and, when necessary, takes steps to address inflationary concerns to avoid economic recession. When the Fed discusses interest rates, it is primarily concerning the Fed Funds Rate, which is the rate banks use when lending money to each other overnight.

Home loan rates, on the other hand, are dictated by the trading of Mortgage Backed Securities (MBS), which are a type of Bond.

At the real heart of home loan rate movement is the dual relationship between Stocks and Bonds, as they compete for the same investment dollars on a daily basis. Inflationary pressures, economic conditions and geopolitical events all influence the direction of both Stocks and Bonds.

When economic reports are weak or disappointing, investors often move their money from riskier investments like Stocks into Bonds, which are considered safer. Since home loan rates are tied to Mortgage Bonds, this helps home loan rates improve.

In contrast, strong economic news often causes investors to move their money into Stocks to take advantage of any gains. This can cause Mortgage Bonds and home loan rates to worsen.

Inflation reduces the value of fixed investments like Bonds. This means that a low inflation environment tends to be good for Mortgage Bonds and home loan rates, while high inflation can cause both to worsen.

Political turmoil or economic crises around the world can also cause investors to move their money into the safety of the Bond markets, helping Mortgage Bonds and home loan rates improve.

If you are second-guessing whether now is a good time to purchase a new home, contact us. We’ll analyze your financial situation together and create a plan that’s right for you. And if you have friends or family members considering a home purchase or refinance, please share our information with them.

What Can You Do with a Pumpkin Besides Carve It?

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Have you ever wondered what you can do with your pumpkin besides carve it, paint it or leave it on your porch until after Thanksgiving? Here are some fun uses for pumpkins that don’t require a lot of money or effort but do provide some unique fall decorations, healthy snacking choices and even beauty and wellness options.

Create clever fall decorations.

Carve the perfect fall vase. Cut off the top of your pumpkin, carve out the center and then place a container filled with water inside. You can choose a short pumpkin, tall pumpkin or something in between, based on the size of your glass container. Add your favorite bouquet. Or float fall candles.

Make pumpkin fries. Use a potato peeler to remove the pumpkin’s skin, then cut the squash into fry-like strips. Coat them with the spice of your choice, arrange on a cookie sheet lined with parchment paper and then bake at 350 F for about 30 minutes. Serve with a spicy aioli or another dipping sauce.

Create a fall candle holder. Take a small or miniature pumpkin and remove the stem. You can snap it off or cut it off, but make sure that the top is smooth or evenly indented. Place a votive candle where the stem used to be. You can leave the display as is, or add a glass hurricane shade over it. Try grouping several together or spreading them across the center of your table to create the illusion of a glowing runner.

Let your pumpkin pack a punch by doubling as a punch bowl. Get a short, round/fat pumpkin. Cut off the top and remove the pumpkin pulp from the inside. Place a short glass bowl into the pumpkin and pour in your favorite punch. Add a ladle and you’re good to go with this fall party table decoration.

Make a pumpkin drink dispenser. This item may be used during Halloween, or for other fall-themed events, such as Thanksgiving. This project may be of interest to those who enjoy arts and crafts, entertaining, or even those who want to undertake a fun project with other family members. Click here for easy instructions for this family craft.

Get spicy and creative with the seeds.

Stay classic and bake the seeds. Bake the seeds with your favorite spices at 350 F until they are toasted, about 20-30 minutes, tossing every 10 minutes. Make sure you rinse the seeds and let them dry before bake them. Or use them in granola. Add the seeds to oats, dried cranberries or other favorite snacks for a great granola blend.

Spice up your guacamole. Use pumpkin seeds to liven up your favorite guacamole. Bake the seeds with chili powder and mix them into your
traditional snack for a little healthy fall fun.

Add pumpkin to your health and beauty regime.

Scrub away with your pumpkin with a pumpkin exfoliant. For a full body treatment, you can use purée pumpkin and brown sugar (oatmeal is another great exfoliant). Put the exfoliant on a damp loofah or cloth and scrub onto skin in circular motions. This helps to drain toxins from the body. Finish with a nice warm shower.

Add shine to your hair. Restore shine and moisture to dry and damaged strands with a homemade pumpkin hair mask. Combine one cup of pumpkin (you can purée chunks in a food processor or use the canned version), a half cup of plain yogurt and two tablespoons of honey into a bowl. Mix well, and then apply to hair from root to tip. Cover head with a plastic shower cap and sit for 15 to 20 minutes. Wash treatment out and
follow up with a thorough cleansing using a shampoo and conditioner.

We’ve answered some questions about pumpkins. We’d be glad to answer questions about home mortgages, too.

Why Working with a Local Lender Beats Working with a Big Bank

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Anyone who has gotten a home loan will tell you it’s not always an easy process. But if you ask a borrower who shopped for a home loan at a big bank and a borrower who shopped for a loan at a local lender, you’ll hear distinctly different stories. And the ending is almost always the same:

Working with a local lender is a more positive experience for homebuyers.

We focus on customer service.
Reputation is the cornerstone of a thriving business, and we rely on referrals rather than flashy advertisement. Unlike many big banks, we do not have other sources of revenue, like credit cards, personal loans, auto loans, etc.

Issues that arise can be more easily resolved because we have streamlined our operations. We hire only the best and most professional loan support team, and our operations are centrally located. With our support staff in one place and not spread across time zones, it’s easy to contact someone whenever you have a question or concern, and decision making is quicker and more thoughtful.

We have faster turn times for loans.
Because our systems and teams are centrally located, our borrowers often see faster loan processing, faster underwriting, and ultimately, faster closings.

We do one thing – mortgage loans – so we must do them well.

You have a main point of contact who’s accountable for your experience and your transaction.
At Universal Lending, each loan and each borrower is personal to us. We answer your calls, even outside of normal business hours, and get answers right away. Big banks often don’t take this personally, and most don’t answer their phones after 5 p.m. or on weekends.

We are not beholden to shareholders.
We keep our focus on our customers at all times, because we don’t have to answer to anyone else.

You are trusting your savings and your financial future to the loan officer with whom you work.
Our lenders are subject to strict licensing standards. Loan Officers at many big banks are not required to meet the same high standards. You want to work with someone you can put your faith in to handle your home loan intelligently and ethically.

You are helping to support a community business and jobs in your area.
Dollars spent in your community help to support the community – keeping other businesses and local nonprofits strong.

These are just a few of the reasons local is better. Stop by or give us a call. We are confident that you’ll see for yourself why working with a local lender makes sense, and you’ll be glad you worked with Universal Lending.

 

 

Meet First-Time Homebuyers, Carlee and Kasey – Universal Lending #FirstMove

 

First-time homebuyers have a lot on their plate. They are entering a financial world that is unfamiliar to them, they are saving nickels, dimes and dollars everywhere they can, and they often feel overwhelmed by questions for which they don’t have answers.

Carlee and Kasey were no different, but they were lucky. They had Universal Lending loan officer Elizabeth Turra on their team. Check out their story and learn how:

  • they gained the confidence to consider buying a home in a challenging market;
  • they were educated about the process and the difficulties that may arise during the loan process;
  • how they moved ahead with their purchase even when they occasionally got cold feet;
  • and how they learned to trust they were making the right move.

At Universal Lending, we are people helping people achieve their dreams. We work hard to communicate and educate each homebuyer, so they know their first move and all the moves after are the right moves.

Decisions, decisions – FHA or Conventional Loan?

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It’s easy to feel overwhelmed when you’re considering a home loan. The last thing you want to feel is conflicted and confused! We’re here to help. One of the questions we hear most often is “What is the difference between a conventional loan and an FHA loan?” Let us tell you.

FHA stands for Federal Housing Administration, which means that FHA loans are backed by the government. Originally, they were created to help make homeownership more accessible to buyers with damaged credit or minimal savings. Over time, they became popular across all income levels and especially with first time buyers.

Conventional loans are your “basic loan.” They must conform to specific guidelines, but they are not backed by the government. They also are very popular.

Both loans offer you flexibility in type (fixed rate vs adjustable rate) and term length (30 years or 15 years).

There are some key differences between the two loan types.

FHA vs Conventional Credit Guidelines

FHA Credit Score Requirements
FHA has lower credit score requirements. A credit score of 580 or over allows you to make a down payment of just 3.5%. If your score is between 500-579, and you need to put down at least 10%. Buyers with credit scores under 500 likely won’t be able to qualify.

Conventional Credit Score Requirements
Exact credit score numbers needed vary from lender to lender and are impacted by other factors, but as a “rule of thumb,” 620 is generally the lower limit of conventional credit requirements.

Down Payment Requirements
One of the biggest myths about mortgage loans is that you need to put 20% down to buy a home. There are options available to put as little as 3% down.

FHA Loan 3.5% Down Payment
With an FHA loan, you can put as little as 3.5% down. For many, this is the same amount as you’d put down for a rental deposit.

Conventional Loan 3% Down Payment
With a conventional home loan, you can go as low as 3% with the program’s “conventional 97 loan.”

Private Mortgage Insurance for FHA and Conventional
If you put less than 20% down using any loan except a VA loan, you must have private mortgage insurance. Private mortgage insurance (PMI) protects lenders in the event that borrowers with low equity default on their loans.

FHA Loans
FHA loans insurance is an upfront amount paid at closing, with a monthly mortgage insurance premium. To remove this, borrowers must refinance when they have 20% equity in their homes. 

Conventional Loan PMI
PMI is simple with conventional loans. Once you have 20% equity in your home, PMI drops off. You can get there by putting 20% down on the house for your down payment, or by paying PMI until you hit 20% equity with your monthly mortgage payments. Your lender is legally required to drop your PMI automatically at 22%, or per your request at 20%.

Income Requirements
Debt to Income (DTI) is the percentage of your gross monthly income that will go toward paying off debt Lenders use the following formula to work out this number:
monthly expenses ÷ pre-tax monthly income = DTI %

FHA Debt to Income Requirements
With FHA home loans, some lenders may offer a bit more flexibility if the borrower’s finances and credit are good.  However, you want to choose a lender who has your best financial picture in mind, so working with someone who wants you to get your DTI more in line is a positive factor for your long-term financial security.

Interest Rates
FHA loans tend to come with lower interest rates than conventional loans, likely due to the fact that FHA borrowers have historically been less likely to pay off their mortgage early than conventional borrowers. However, if interest rates are your only factor, the difference is usually negligible, and you can easily pay more in PMI during the life of the loan.

Property Eligibility for FHA and Conventional Loans

FHA Property Guidelines
FHA home loans are backed by the government and are designed to help families, so they place more restrictions on the type of house that qualifies.
• Must be occupied by the buyer
• Must be your primary residence
• Must be occupied within 60 days of closing
• Must be assessed for safety with an additional home inspection
• Must be under the capped lending amount

Conventional Mortgage Property Guidelines
Conventional loans have fewer restrictions. Second homes and investment properties both qualify, and don’t require special inspections.

They have a capped loan amount called the conforming loan limit, which your lender can share with you.

Conventional 97 Property Qualifiers
However, if you use a conventional 97 loan and put just 3% down, there are additional requirements:
• The property must be a one-unit, single family home, co-op, PUD, or condo
• The property will be the buyer’s primary residence
• The buyer (or one of the buyers) can’t have owned a house in the last 3 years
• The loan amount is at or under the capped amount

Which Mortgage Loan is Right for You?
There’s no definitive answer here. Your lender will help you to review your finances to determine your best choice. You may want to consider the following:

An FHA loan may be best if:
• You have lower or no credit
• You have a lot of debt
• You already have an FHA loan and want to refinance
• You don’t plan on staying in the home long enough to hit 20% equity
• You have a bankruptcy or foreclosure in your past

A conventional loan may be best if:
• You have fair to excellent credit
• You have a reasonably low DTI ratio
• You need to be able to make the smallest possible down payment
• You want to be able to dump PMI without having to refinance
• You’re buying an investment property or second home

Remember, this is just a guideline to these two loan types. At Universal Lending we work to educate and inform our borrowers so they make the best financial decisions possible to keep themselves and their families financially secure while enjoying the benefits of homeownership.