Scott Swinford - Your Northwest Indiana Loan Guy
Home Mortgages and Refinance Loans Made Simple
From Lake Michigan to the Ohio River and everywhere in between, Indiana offers a diverse landscape of areas to call home. Whether you like living in the city or prefer the suburbs, or you are looking for lakefront property to rest and relax or country living to farm or raise livestock, Indiana offers it all in an affordable package that you can call Home!
Cash-to-close is the amount of funds that you will be required to bring to the closing table when you sign the final documents to make the house your own. It includes the purchase price of the home plus lender’s fees, appraisal fees, title company closing costs, required down payment, costs to start your escrows for property taxes and insurance (and more) MINUS the funds you are borrowing (the mortgage), earnest money deposit, seller concessions, and in Indiana, the prorated property taxes that the seller owes the county but is not due yet.
While it may sound odd to the borrower, it is very important to provide proper asset documentation and the actual source of the funds for the earnest money deposit, down payment and closing costs. Lenders use the term sourced and seasoned meaning that the funds came from a verifiable source and can be proven to be available at closing.
For example, if your employer pays by direct deposit, it is easy to match your pay statements to the deposits in your checking account making the verification process easy. However, if you receive a physical paycheck, you should always deposit the entire check and then withdraw any required cash. This way, the lender can see the exact amount matching the paycheck being deposited on or near the payroll date. If you were to cash the check, pocket some of the funds and deposit the remainder, it will be more difficult to show where the funds came from.
Since the underwriter typically wants to see two months of bank statements, it’s important to pay attention to what your account looks like before you start house shopping. While it’s true that the underwriter wants to make sure you have enough funds to close, they may be less inclined to loan you hundreds of thousands of dollars if you have numerous overdrafts on your account. They like to see good money management skills.
Warning – Unverified sources of cash are NOT acceptable. This includes “Mattress Money”. If you need $5,000 for closing costs and have $10,000 on hand but only $4,000 can be sourced and verified, you will NOT be able to close.
It is very important to discuss the source of your down payment and closing costs as early in the loan process as possible to make sure that it will be acceptable to the underwriter. While it is OK to use funds from your wedding or to sell an asset such as a car to get the necessary cash, it must be documented well and in a way that the underwriter will accept.
At the closing, you will need to have the funds wired from your account or bring with you a cashier’s check for the closing costs depending on the amount. While you can wire smaller sums, any amount over $10,000 MUST be wired to the title company prior to closing.
There are numerous factors that a home buyer will consider when visiting homes; everything from the location to the layout to the asking price. While all buyers have their own ideas of what makes a perfect home, there are some factors that they need to be aware of and keep their eyes open for. A few of these red flags are listed below to serve as warning signs when touring your potential next home.
Signs Of Poor Or Deferred Home Maintenance
Unless the home is new construction, you should expect to have some signs of wear and tear. Since it is common for the sellers to make the home as presentable as possible before listing it for sale, a home that seems to be in poor shape should be a warning sign. If the sellers have not kept up on the aspects that you can easily see when walking through it, you should consider what other problems you may find that are not easily visible.
The Grading In The Yard
When approaching your prospective new home, be aware of how the yard is graded. In other words, when it rains or the snow melts, does the water flow towards or away from the house? If the water flows towards the home, issues with flooding and erosion are concerns. Even small issues such as downspouts not discharging the rainwater far enough away from the home can cause flooding or even structural damage.
Something Smells Fishy (Or Worse)
It is pretty common for someone selling a home to want it to smell as pleasant as possible. They may use deodorizers to mask a smell or even bake bread or cookies to make the home seem more appealing. It’s important for a home buyer to determine if this is just a tactic to make you want the home more or to cover up an underlying issue such as mold, mildew, or even backed-up sewers or leaking gas.
Repairs To Only One Area
Many times a homeowner will repaint or redecorate a wall to make it look more appealing, cleaner, and brighter. This in and of itself is not cause for alarm, but use some caution if you note that one wall or section of a wall appears to have been recently painted and/or repaired. This could be something as minor as covering a child’s drawings to as serious as water damage and mold.
Signs Of Wildlife And Other Pests
Another red flag could be the signs or pests or even wildlife that has invaded the home. Even if you don’t see an army of ants in the kitchen, a wasp nest in the bedroom, or a raccoon in the living room, the presence of bug spray, traps, and other related items may be a clue that the seller has an issue with unwanted pests.
While some of these warning signs may be obvious when you walk through a prospective home, others may require more skill and specialized equipment to see. Because of this, it is always a sound idea to order a home inspection to learn more about the condition of the home before agreeing to finalize the purchase of what is probably the largest investment you will make in your lifetime.
What are manufactured homes?
A manufactured home is a structure that is built almost entirely in a factory. The house is then placed on a steel chassis and transported to the site where it will be permanently located. The wheels are then removed, but the chassis stays in place. They can come in many sizes
and shapes; from simple one-story homes to ones that are large and complex and do not look like the were built in a factory. They are not built under existing local building codes, but under the guidelines of HUD, the Department of Housing and Urban Development.
While many use the terms manufactured and modular interchangeably, these homes are constructed differently and follow different lending guidelines.
What are the benefits of a Manufactured Home?
There are several benefits to purchasing a manufactured home. The greatest benefit is the cost. Since the cost of construction is generally less than that of a similar-sized home built on-site, the manufacturer can pass the savings on to the buyer.
There are several reasons why the cost of construction is less, but they include the following:
Is it difficult to get financing to purchase an existing manufactured home?
Not really! Many manufactured homes can be purchased using a conventional mortgage with a 5% down payment or a government-backed loan under FHA guidelines with just 3.5% down. USDA does not currently allow financing on preexisting manufactured homes but will lend on new homes. Most borrowers that will qualify for financing on a traditional home will be able to secure a mortgage on one that is factory built.
Get more information on FHA Loans or Conventional Loans for manufactured housing.
Are there any additional requirements when I apply for a mortgage?
The only differences are in the appraisal and inspection process. The appraisal is a little more detailed, but that is something that the appraiser will handle. Due to this, the appraisal is usually a little more expensive.
The only other difference is that the guidelines require a structural inspection to verify that the home is correctly attached to the foundation, whether it be a slab or a crawl space. This requires a structural engineer ‘s report and usually costs around $400.
Both the appraisal and the inspection fees are usually paid prior to the inspections being completed, so there are some additional out-of-pocket costs that may need to be budgeted for.
What do I do now?
If you are interested in purchasing a manufactured home, the first step would be to get preapproved. This allows you to make sure that there are no existing issues with debt or credit that need to be addressed and often make you look better in the eyes of a seller when you submit a purchase offer.
You may fill out an application here.
If you have questions or need additional information, feel free to contact me at 219-695-0369 or email scott@nwiloanguy.com.
This page is meant to provide some basic information on the FHA 203k Streamline loan. The information is NOT all-inclusive and should be used for guidance only. If you need further information, you should contact a lender like myself who is familiar with the guidelines before submitting a purchase offer on a home.
General Overview
May be used for purchase or refinance of one-to-four (single family) residences, including HUD REO properties
May be either a Fixed or Adjustable rate mortgage
Combines the funds to purchase or refinance (pay off existing liens) along with the funds needed to repair/rehabilitate the property. Repairs are completed after closing. (NOTE: Cannot do a Cash-Out Refinance)
One closing, with rehabilitation funds escrowed and disbursed as the work is satisfactorily completed
Can be used to update homes, correct health and safety issues, pay for higher cost items such as a roof, etc.
Property value must be sufficient to purchase/refinance and complete the rehabilitation
Borrower and credit eligibility same as for other programs (No Investors, including REO sales)
ELIGIBLE IMPROVEMENTS INCLUDE:
Repair/Replacement of roofs, gutters, and downspouts
Repair/Replacement/upgrade of existing HVAC systems
Repair/Replacement/upgrade of plumbing and electrical systems
Repair/Replacement of flooring
Minor remodeling, such as kitchens, which does not involve structural repairs
Painting, both exterior and interior
Weatherization, including storm windows and doors, insulation, weather stripping, etc.
Purchase and installation of appliances, including free-standing ranges, refrigerators, washers/dryers, dishwashers and microwave ovens
Accessibility improvements for persons with disabilities
Lead-based paint stabilization or abatement of lead-based paint hazards
Repair/replace/add exterior decks, patios, porches, sidewalks, driveways
Basement finishing and remodeling, which does not involve structural repairs
Basement waterproofing, including mold removal
Window and door replacements and exterior wall re-siding
Septic system and/or well repair or replacement
INELIGIBLE IMPROVEMENTS INCLUDE:
Major rehabilitation remodeling, such as the relocation of a load-bearing wall
New construction (including room additions)
Repair of structural damage
Manufactured Home foundation repairs/upgrades to meet HUD standards
Landscaping or similar site amenity improvements, including fence
Any repair or improvement requiring a work schedule longer than three (3) months; or Rehabilitation activities that require more than two (2) payments per specialized contractor.
Repairs requiring detailed drawings plans or architectural exhibits, or require a plan reviewer
Connection to public water or sewage system
Summary
Again, this is just a brief overview of the 203k Streamline loan and is not all-inclusive. The guidelines require bids from licensed contractors, as well as other requirements. Although the purchaser is able to do some of the work involved, there is no “sweat equity” allowed.
If you would like more information on this or any of our other loan products, please feel free to contact me at 219-695-0369 or email scott@nwiloanguy.com.
Are you ready to stop paying rent forever? A first-time homebuyer? This is where you should start your search!
With interest rates hovering just above their thirty-year lows, a multitude of flexible and low-cost loan programs are available that can help many past renters and first-time buyers experience the joy of homeownership. In short, the economic environment simply couldn’t be better to buy your first or next home. However, if you have always been a renter then you probably aren’t as well informed of the intimate processes of obtaining a home mortgage as you’d like to be.
To guide you through this exciting but often confusing time, this report details six tips that will help make your purchase a much smoother experience, save you money and eliminate your anxieties.
Before you begin your home search, before you make one single decision regarding a home purchase, get preapproved by a mortgage professional. Preapproval is free and will give you a definite advantage in the buying process.
During the evaluation stage, it will clarify your financial situation, indicating how much home you can afford. This may influence your decision for location, narrowing your search. You’ll also know exactly how much home you can afford, further clarifying your search.
Preapproval will also give you a step up on your competition. Homebuyers that are preapproved have increased leverage with Realtors and sellers over buyers who are not. Essentially a preapproved buyer becomes a “cash” buyer.
Like most industries, the quality of mortgage professionals can and does vary significantly. With the advancements in lending practices, consolidation between companies and aggressive start-ups, there is significant awareness of the value of your business.
A few unscrupulous lenders will make promises that they are unable to keep just to get you in their door, then hit you with a higher rate or charge you discount points at closing. They know that many borrowers are uncomfortable walking away from the closing or disputing the lender’s agreement with the seller, the Realtors and others in attendance and the documents on the table.
Since a home is often the largest purchase you will ever make, be sure that your chosen loan officer follows a Code of Ethics and that you choose one that you completely and unconditionally trust.
Be careful! The lowest interest rate does not always translate to the best deal. Look at the loan programs that are being offered, not just the rate. There are several factors that have to be taken into account when evaluating programs – the loan type (fixed or adjustable), the loan term (15 year or 30 year), the rate and the down payment requirement. The 2 most important questions to ask are “How much will I pay at closing?” and “What is the monthly payment?”
Adjustable Rate Mortgage’s (ARM’s) are typically lower at the beginning but can escalate quickly. These are good for short-term purchases. Traditionally, long-term mortgage holders may be better off with a fixed rate if it will help them sleep better at night knowing that their principal and interest payment will always be the same.
An applicant who has very good credit (over 760 FICO) may find their monthly out-of-pocket costs below someone with a 620 score. The phrase to remember is that “higher risk equals higher rates”, meaning that your credit score is very important.
In the past, a potential homebuyer would have needed 20% down before a lender would even consider giving them a loan. Now there are programs that offer 100% financing for someone with decent credit. The key is to make sure that your loan officer is getting you into the best loan program for your particular situation.
By getting prequalified, you will be made aware of any potential problems in your credit history. Don’t despair if the credit report is not stellar. Even if an incident cannot be taken off the report, by knowing the background of your financial history your lender may be able to put your financial situation in a better light when submitting the actual loan application.
Review your credit report carefully. A large number (about 79%) of credit reports contain errors and identity theft is on the rise. Your mortgage professional will help you address problems that show up on the credit report. Many times, a simple letter to the creditor explaining the circumstances at the time of the incident will rectify the situation. However this may take a few months, so start early.
A good mortgage professional will take the time to carefully go over your credit report with you and can provide tips and hints that may help you raise your score. They will also tell you not to make any large purchases that can lower your score before you complete the purchase of your home.
As a first time homebuyer, the biggest mistake you can make is believing that you can save money if you do not use a Realtor ®. Although the seller pays the commissions, some listing agents will tell you they can represent both you and the seller fairly.
While in some cases this may certainly be true, it’s better to be safe than sorry. Get a real estate agent that represents your interests solely. A buyer agent will make sure the home is inspected properly, do the due diligence on any hidden issues, and more times than not, the money they save you on negotiating the price of your new home will more than offset any reduction in price due to the commissions not being paid by the seller.
There will be many decisions as you start this process. Your Realtor will take you to several different homes, some you will like, some you won’t, but most will land somewhere in between.
“I love this home except it doesn’t have…” or “That home would be perfect if it only had…” will be common phrases during this process.
Decide now what features you feel are “necessities” in a home and which features are items that would be “nice to have”. This list will no doubt change the farther along you go, but the list will be extremely useful as you begin to look at homes. It will also be useful to the Realtor so he or she can better qualify the homes that he shows you.
If you are ready to begin the process, feel free to contact me. I can be reached at 219-695-0369 or at scott@nwiloanguy.com. You may also click here to fill out an application.
Hancock Mortgage is a DBA of City First Mortgage Services LLC #3117
NMLS #138422 | State Lic: IL 031.0045475; IN 12677 | Corp NMLS #3117 | Illinois Residential Mortgage Licensee
Illinois Department of Financial and Professional Regulation, Division of Banking, 100 West Randolph, 9th Floor, Chicago, IL 60601
All loans are subject to Underwriting approval *Certain restrictions apply. *Call for details..