Tuesday, April 7, 2020 / by Nicole Merwin
The American bank robber, Willie Sutton, was asked why he robbed banks and his answer was "because that is where the money is." During his 40-year career, he stole about $2 million but Internet scammers are stealing many times that amount in phishing schemes preying on unsuspecting home buyers.
These crooks know where the money is because buyers have the down payment and closing costs and are expecting to transfer it to the close the sale of their home. The FBI, in their 2018 Internet Crime Report, stated victims lost over $149 million and the CFPB estimates the losses at over $1 billion as a result of fraud in real estate transactions. The scammers want to take advantage of the situation while it is still in the buyer's account.
Commonly, during the closing process, scammers will send spoofed emails to homebuyers from someone they expect to hear from regarding the transaction like the real estate agent or the settlement agent.&nbs ...
Thursday, April 2, 2020 / by Nicole Merwin
While you're isolating at home, there are things you can do to help buy a home now or in the near future. Instead of spending time surfing the Internet looking at homes, do the groundwork necessary to be able to purchase the home that you find.
There is a lot of documentation necessary to qualify for a mortgage and to be approved. This part of the homebuying process can be done in advance, long before you even start looking at homes much less finding the one that you want.
Assemble all documents to make a pre-approval
Two months current pay stubs
Last two years' W2s
Complete copies of checking and savings statements for last three months
Copies of statements for IRAs, 401k, savings, CDs, money market funds, etc.
Employment history for last two years with addresses and contacts
Proof of commissioned or bonus income
Residency h ...
Wednesday, February 26, 2020 / by Nicole Merwin
The advantages of a 15-year loan over a 30-year include the obvious shorter term, usually a slightly lower interest rate and that equity builds faster. The disadvantages are higher payments that are required regardless of temporary personal economic conditions.
If a borrower is experiencing unexpected expenses that make it difficult to make the higher payments on the 15-year loan, there is no option to make a lower 30-year payments until the situation improves.
The borrower could have originated a 30-year loan but make payments like it were a 15-year loan. The additional amount would be applied to the principal which would still save interest, build equity faster and shorten the term of the mortgage. The big difference in this scenario is that the higher payment is optional.
If the situation arises, the borrower is only obligated to make the 30-year payment. When the situation improves, the borrower can resume the higher payments to re ...
Thursday, February 6, 2020 / by Nicole Merwin
House-hacking refers to buying a multifamily property on an owner-occupied mortgage, living in one unit and renting the others. If you're thinking about becoming a rental mogul, starting early is an advantage. Not only will you have longer to accumulate a larger portfolio, you can increase the leverage on the first acquisitions if they are owner-occupied.
Leverage is the use of other people's money to finance an investment. The higher the loan-to-value, the greater the leverage which can increase the yield.
A $200,000 rental property with an 80% LTV at 4.5% for 30 years producing a 16.88% before-tax rate of return would increase to a 23% return on investment by increasing the mortgage to 90%. A typical down payment on an investor property in today's market is 20-25% but, in some cases, a higher loan-to-value is possible.
Owner-occupied, multi-unit properties, two to four units, allow a borrower to occupy one of the units and rent the ...
Monday, January 27, 2020 / by Nicole Merwin
If you have a mortgage on your home, your total house payment may include 1/12 the cost of the annual taxes and insurance. Those amounts are held in an escrow account so the lender can pay them when they become due.
The most common reason an escrow account shortage occurs is that taxes and insurance premiums increase, and the amount being collected isn't enough to pay them when they become due.
As an example, let's say the taxes increased and there was a $600 shortage. The lender will probably give the borrower the option to pay the $600 in cash or adjust the payment to cover the shortage. If the borrower chooses the increased payment, it will be increased not only $50 to cover the shortage from last year but another $50 a month to pay the increased amount for the coming year.
Regardless of which option the borrower takes, their payment will increase. If they pay the shortage in cash, the payment still must go up to cover the i ...