Worried about Rising Mortgage Rates?

The overall costs of Lending has been on the rise for the last several months. With the latest Inflation Rate of 9.1%, this will cause the Federal Reserve to raise rates again and most likely more aggressively than previous rate hikes.

We have come up with a SPECIAL program to relieve this stress! You can now LOCK in to Today’s Mortgage Rate while you are shopping for a home. This allows you to shop up to 90 Days with the security of knowing you are locked in.

This program is good for Fannie Mae and Freddie Mac loan limits in your area. Here is a link to the Fannie Mae Loan Limits in your Area. Depending upon the County you are in will determine the maximum loan amount for this program.

For more information on this program, feel free to call or email me anytime!

Bill Nickerson | NMLS #4194 | Mortgage Equity Partners | Email | (c) 978-273-3227

The Home Buying Deal Killers

Buying a home is very exciting. However, nothing can be a bigger disappointment than finding out that your loan is denied before you are about to close your transaction!

You’re a week away from having the keys to your new home and your loan officer calls to let you know that your loan was denied due to a change in your financial profile. This can and does happen, But there are a few things that you can do to make sure that this won’t happen to you.

Keep the following points in mind while you are in the process of buying your home:

1. Don’t Apply for New Credit of Any Kind.  Don’t respond to any invitations to apply for new lines of credit and don’t establish new lines of credits for furniture, appliances, computers, department stores etc.  Even if there are no payments for 12 months, we will need to count this debt against you.  This will also have an adverse effect on your credit score.  Wait until your loan closes to purchase items for yourself and new home.  It is also important to limit the amount of times you have your credit pulled, as each occurrence will need to be explained.

2.  Don’t Max Out or Over Charge on Existing Credit Cards. Running up your credit cards is the fastest way to bring your score down.  Once you have engaged in the loan process, try to keep your credit card balances to below 30% of the available limit.

3. Don’t Close Credit Card Accounts. If you close a credit card account, it can negatively affect your FICO scores as your credit is based on History.  You may have a card that is never used, but dates back 10 years and your scores do weigh heavily on this. If you really want to close an account, wait until after you close the loan.

4. Don’t Raise Red Flags to the Underwriter. Don’t change your name and address, don’t co-sign on another person’s loan. Don’t open up a new checking/savings account, make sure your taxes are filed. The less activity that occurs while your loan is in process; the better it is for you.

5. Don’t Make Large Unexplained Deposits Into Bank Accounts. Any Deposits into your bank accounts that do not match your past income history will be questioned by an underwriter unless the deposit is documented as a gift or can be explained.  This includes cash deposits and moving funds from one account to another. Make sure you write your offer check from the same account you intend on writing your purchase and sales deposit.  All bank accounts must be verified.

6. Don’t Make Changes to Your Employment/Income. Employment stability is a huge factor in the underwriting loan process.  Quitting or changing jobs or even moving positions within the same company can greatly endanger your loan approval.   Inform your loan officer immediately of any changes to your job, position or income and even the hours you work.

7. Your Down Payment:  Do you have your down payment all set? Is it in one account?  Have this prepared before you purchase your home.  Whether it is gift funds, liquidation of your retirement or moving funds from one account to another.  By having these funds all in one account, it will simplify the process.  If you receive a Gift, let’s say for $1,000 from family, Don’t deposit $900 or $1100, as this will be hard to explain why the amount is different from the Gift amount.  Keep it Simple!

8. Do not make any Large Purchases:  If you purchase furniture with no payments for a year, banks will debt you for this.  If you buy a small home in cash, banks will debt you for the taxes and insurance.  College Tuition, even if the loans are deferred, banks will add this to your debts.

Bottom Line: Don’t Make Any Adjustments/Transfers in Your Financial Picture. If you even had to question your decision, make sure you talk to your loan officer first. Don’t make any changes in investments, Move your accounts or transfer, close accounts, open new accounts, or substantially alter your asset picture.

Share this with anyone you know who may be purchasing a home.

Remember, if you have a question, please call me anytime!!  It may be the difference in owning your new home or being denied!!

Bill Nickerson | NMLS #4194  | (c) l 978-273-3227 | Email Me.

Bill’s Website

Proactive Buyers help escrow close on time!

Maybe it’s not the most fascinating topic of the day. If you’re buying a home, however, and that “time is of the essence” phrase on the purchase agreement is really applied, how easily and quickly your escrow closes is indeed the kind of thing that can keep you up at night. No one likes a long, drawn-out closing process if it can be avoided. So let’s look at what YOU and all parties can do to make this closing thing a piece of cake.

Unless your purchase is a cash transaction, the typical agreement calls for a 30 to 45 day close in which buyers, sellers, and vendors are working tirelessly to execute the terms of the purchase. The reason so many buyer agents put an escrow or transaction coordinator (TC) in charge of this process is simple — having one person there to keep everyone on track is more than a luxury. If closing is to take place on time, it’s a necessity. Once a purchase price is agreed to, and your earnest money deposit has been deposited in the escrow account, the TC will become your best friend. If you make him or her happy, you’re halfway there.

The first thing many agents and homebuilder reps do is to have you and the seller fill out a contact sheet. This sounds like a ridiculously simple task, and it is. But its importance should not be minimized. With all contact info of all parties, escrow is then able to proactively reach out and communicate to everyone and begin gathering all the necessary paperwork and information. This includes information on not only buyer and seller, but also their lenders (if the home is paid off, happy day…). The title company to be used is also listed, plus anyone else vital to the transaction closing.

Of course, the purchase agreement needs to be buttoned up with all the necessary signatures, and escrow will need to contact any homeowner associations (if they exist) that need to be made privy to the transaction. Yes. This part is important. Ask any agent around, and they will tell you that escrow is often not made aware when there is a 2nd HOA, leading to closing delays. The more complete the information is upfront, the better the process will be. In fact, it’s wise to ask your agent for a “road map” for how closing works so that you can gaze at it as each step is completed. It may help you stay sane.

Just because you’re in escrow doesn’t mean it’s time to take that much-needed vacation. There will be time for that after the close of escrow, even if it took you many months traipsing through hundreds of houses to find this one. Finding parties to the agreement for vital information is ten times more difficult when they are floating in a pool somewhere on a tropical island. When escrow calls and emails with a request, jump. You heard that right. The quicker you respond, the more time and energy is saved. Check voicemail, texts, and email regularly during this 30-day process and respond promptly to all vendor requests to ensure an on-time close.

And don’t be afraid to ask questions through the process. Typically, the person in charge of your escrow will move quickly through a lot of their checklist, but they are never too busy to answer questions and explain how and what the documents mean. Escrow also appreciates clear communication on any special requests. Can’t be there for the close and prefer to sign documents in the office with a notary, e-sign on your phone or computer, or have a mobile notary visit your home to sign? These are arrangements that need to be put in place long before the closing date. And if there are other parties to the transaction (like co-signers) the same applies to them.

The lender and escrow will inevitably need to rely on each other for accurate and timely disclosure of all fees, so introduce them right away. The sooner they become household words to one another, the quicker the documents can be produced accurately and made available for review. This shortens wait times and helps avoid unnecessary delays when the deal comes closer to final loan documents, which will begin being referred to as “docs” — not of the medical variety.

Home inspections and final loan approval (any and all conditions placed on your approval must be removed) must be satisfied and signed off on before that magic day happens. So, if you’re in doubt that you are not doing all you can, call your lender, the TC, and even the escrow company to ensure that you are doing all you can to make this happen on time. Be the squeaky wheel, even though you may feel you are surrounded by all manner of experts who reassure you everything is fine. They may have dozens of transactions to be concerned about. You only have one.

Source: TBWS

Training for the Pan Mass Challenge

Bill Nickerson | NMLS #4194 | 978.273.3227 | Bill@billnickerson.com

 

If you can afford to Rent, Then you can afford to Buy!

If You Can Afford to Rent…Then You Can Probably Afford to Own.

Interest rates are near historic lows. Purchasing power has increased, and the cost of renting in many areas is now greater than the cost to buy. Some say mortgage loans are impossible to obtain without perfect credit and 20% down. Want the truth? Read on, and we’ll cite the three basic factors for qualifying for a home loan. 

Income – If you have a job or steady source of income, you’re off to a great start. If you’re already able to pay your rent on time each month, this could actually be easier than you might think. 

Assets – You rarely need a 20% down payment. In reality, many programs will work with 5%, 3.5% or 3%, and in some cases, even 0% down. As well, closing costs can sometimes be paid by lenders, sellers or come from gifts or grants. So if you think you’re out of luck just because you don’t have tons of cash, no worries. Chances are still good there’s a solution that may work.

Credit – Your credit is likely in good shape if you pay your bills on time and have avoided major issues like bankruptcy, foreclosure, short sales and judgments. Requirements will always vary, but there can still be reasonably flexible loan options, such as the FHA and Fannie Mae which both allow for low credit scores.

 That’s it. These three items are the fundamentals of mortgage lending. Exceptions will exist, but don’t be fooled into thinking the process is impossible. For those who work and pay their bills, there may not be a whole lot standing in the way of homeownership.

 I would like the oppurtunity to consult with you and start you on the path of Homeownership.  Whether it be for Today or planning for Tomorrow!

           Bill Nickerson NMLS #4194  | 978.273.3227  | Email | Website

Knowing the difference between a buyer’s and seller’s market is a good idea

There is one verse missing from the famous and well-worn song Turn, Turn, Turn written by the Byrds back in 1962. The one that should be added is “there is a time to buy, a time to sell…” Realtor’s Terri Williams likens it to a card game (which was also a song) about knowing “when to hold ‘em and when to fold ‘em.”

Buyers’ markets and sellers’ markets are simply part of the economy journey, reflecting not just what is happening on a national level, but also what happens depending on supply and demand. They might also reflect tax laws and consumer confidence. It’s a mixed bag. When it’s someone’s “market,” that means the market favors them. So a buyer’s market means it’s a great time to consider buying. A buyers’ market usually means a period of six months or longer where prices steadily soften. Inventory usually rises, and interest rates drop to fuel the market. The bigger the inventory, the more negotiating there will be, including asking for perks such as help with closing costs, a credit in escrow for a new paint job, etc. It may also mean a quick closing if you need the place right away.

So how does this affect sellers? It’s not a happy time for them. It takes longer for homes to sell and hoping to get the price the seller thinks their house is worth is often a pipe dream. They can stack the odds for it, however by making sure their home is move-in ready and shows well both in person as well as in photos.

 

For some time now, it has been the reverse of this. With little inventory, sellers have been reaping the rewards of the market with multiple offers and naming their terms. That is, however, now changing according to a recent CNBC article, which says that consumer sentiment in housing improved in August and that they believe mortgage rates will keep dropping. Say one Dallas-based real estate agent: “It’s not a seller’s market right now. Now is not the time for sellers to put out these crazy prices. Appraisals have gotten a lot harder, and buyers are a little more cautious. They’re more willing to take their time.” The article goes on to say that while mortgage rates are low, buyers are becoming more cautious. With competition cooling, sellers can no longer command any

price.

“Unfortunately, much of the lower interest rate environment can be attributed to global economic uncertainties, which appear to have dampened consumer sentiment regarding the direction of the economy,” said Doug Duncan, chief economist at Fannie Mae in the article. “We do expect housing market activity to remain relatively stable, and the favorable rate environment should continue supporting increased refinance activity.” CNBC writer Diana Olick agrees that home prices are still higher than they were a year ago, but the gains have been moderating.

Source: Realtor, CNBC, TBWS

Bill Nickerson NMLS #4194

Let’s Talk Credit: Understanding your Credit Score

Did you know?

• FICO is an acronym for Fair Isaac and Company.
• In the 1950’s, Fair Isaac and company created the mathematical calculation that is used to determine your credit score.  It is a tool that was designed to determine one’s credit score and dependability in paying bills.
• The terms credit score and FICO score are used synonymously.

Twenty or so years ago, lenders and banks would obtain the credit scores from the credit report as a reference point.  Loans were based on the overall financial strength of a borrower and their ability to repay a loan.  The Scores were important but they were not weighed nearly as they are today when making a decision.  If scores were on the low side, compensating factors were looked at such as: additional monthly reserves, the amount of credit accounts you carried, the amount of credit accounts that carry balances, do you have a retirement accounts, etc.  Banks in general want to see that you have at least 6 months of reserves in case you should leave your job and have a few months to carry the loan.  In the case where the loan is riskier or may be a low down payment, the lender will want to see more months of reserves, upwards of 12 months.

Your credit history shows the investor your ability to repay and manage debt.  The older the line of credit, the greater the chance of the scores being higher as credit is based on history.

In today’s lending market, your credit decision is first based on the score and can have an effect on your final mortgage rate.  In general, most banks will not lend on loans with scores that are under 640 unless there is an exception or compensating factors, but this is very limited.  Many banks today won’t go below 680 and don’t allow for any compensating factors as they feel these mortgages are far too risky to have on their books.  Based on current mortgage guidelines, if your score is under 740, it will affect the price of your mortgage rate and you are penalized.

When making a credit decision, banks and lenders will pull your credit report that offers three different reporting agencies;  Experian, Trans Union and Equifax.  The middle score of the three credit bureaus is used.  Over time, these scores will be very close to each other.  Consumers who are just starting to build credit may find a discrepancy in these scores as not all creditors are required to report to all three bureaus.

Look at how a Credit Score affects your Mortgage Rate

The higher your FICO scores the less you can expect to pay for your loan. For example, on a $200,000 Loan using a 30 YEAR FIXED RATE MORTGAGE.
Your FICO score is:	Your Interest rate is	And your payment is
740-759	3.875%	$940.47
739-720	3.990%	$953.68
700-719	4.125%	$969.30
680-699	4.250%	$983.88
660-679	4.500%	$1,013.37
640-659	4.625%	$1,028.28
As you can see in this example using a snapshot of the same day’s rate, a person with a FICO score of 760 or better will pay $88 less per month for a $200,000 30-year, fixed-rate mortgage than a person in the lowest score category. Mortgage Rates are only used as an example and do not reflect the interest rate market of today.

Mortgage programs such as FHA allow for low credit scores so that you can get the most competitive rate but this comes with a price.  FHA will charge mortgage insurance, a monthly fee as well as an up-front fee that will be rolled into the loan amount.  After these insurance fees, a mortgage rate of 4.00% will net a rate of 5.40% with the costs of mortgage insurance that is being charged.  A mistake many borrowers make; chasing the lowest interest without truly understanding the real costs of the mortgage.

Written by Bill Nickerson

 

Before Putting Your Home on the Market

• Documents you will need
  • Deed
  • If you have right of ways, deed restrictions or easements get the documentation that clearly spells out the restrictions of the property.
  • Know if you are in a flood plain – FEMA’s website can be helpful.
  • Go to the Town Hall:
    • Field card at the assessor’s office
    • Get your most recent  paid tax bill
    • A plot plan
    • Title V report if it has been complete and the pumping schedule
    • Talk to the engineering department get a sense of any upcoming projects that may be done around the home.
    • Building department will have a list of all permits pulled and renovations done to the home including electrical, plumbing and addition upgrades
  • If you are in a condo
    • Condo financials to include the budget,  the last three months condo association meeting minutes and if they have it a list of current and future project that are going to be done to the properties
    • Condo Rules and Regulations
    • Master Deed and Master Insurance.
    • Verify there are no pending lawsuits with association
    • Know the owner occupancy rate of your complex
  • Home List
    • Create a list of renovations and updates that have been done to the property
    • Get utility bills for the last 12 months: Electric, oil, gas, propane, plowing, landscaping…
    • Write a letter to potential buyers of what you love about your home, neighborhood and town.

For more information about selling your home, feel free to contact me anytime.  I can be reached at 978-273-3227 or email be here: Bill’s Email

Bill Nickerson | NMLS #4194 | www.billnickerson.com | 978-273-3227 | bill@billnickerson.com

Feds leave rates unchanged

The Federal Reserve left borrowing costs unchanged, continuing to delay any rate moves amid persistently low inflation.

The U.S. central bank voted unanimously Wednesday to maintain its benchmark interest rate in a range of 2.25 percent and 2.5 percent, a move that many anticipated despite stronger-than-expected growth in the first quarter of 2019 and an unemployment rate near a half-century low.

“Economic activity rose at a solid rate,” while job growth continued to be “solid, on average, in recent months,” the Federal Open Market Committee (FOMC) said in its post-meeting statement released Wednesday in Washington. “Overall inflation and inflation for items other than food and energy have declined and are running below 2 percent.”

Inflation weakness driving Fed’s patience

Following their April 30-May 1 gathering, however, Fed officials signaled that the primary driver for holding the federal funds rate steady is now inflation – and specifically why it’s continued to register below the Fed’s target during an expansion set to become the longest on record. Fed Chairman Jerome Powell said during the press conference following the meeting that those global risks had “moderated” since officials last met.

The Fed in its post-meeting statement got rid of any language saying that the economy had “slowed” from its previous robust pace and that inflation remained “near” its 2 percent target. They also noted that household spending had “slowed.”

Prices excluding food and energy, as measured by the Fed’s preferred gauge, cooled in March to 1.6 percent, the slowest pace since January 2018, according to the Department of Commerce.

“Those aren’t conditions under which the Fed feels compelled to change interest rates in either direction,” says Greg McBride, CFA, Bankrate’s chief financial analyst. “The economy looks better than it did when the Fed last met in March, but with inflation readings continuing to decelerate, the Fed is no closer to resuming rate hikes.”

Pressure mounting for a rate cut

The Fed’s decision comes amid President Trump’s repeated calls for the U.S. central bank to cut interest rates. The chief executive on Tuesday renewed his requests in a tweet, urging the Fed to lower borrowing costs by one percentage point to send the economy “up like a rocket.”

The markets are also looking for signs of a cut. Fed watchers are betting there’s nearly a 30-percent chance that the U.S. central bank will cut rates at some point this year, according to CME Group’s FedWatch tool.

Officials, however, gave no indication of whether their next move could be a cut.  “We think our policy stance is appropriate, and we don’t see a strong reason for moving in one direction or the other,” Powell said.

information provided and written by:

SARAH FOSTER   @SARAHFFOSTER

MAY 1, 2019 in FEDERAL RESERVE

Bill Nickerson of Fidelity Cooperative Bank

What are Closing Costs?

Closing costs are an accumulation of charges paid to different entities associated with the buying and selling of real estate. For buyers in Massachusetts, closing costs will come to about $3500 plus lenders title insurance and any pre-paid items such as real estate taxes, insurance and interest.

There may be closing costs customary or unique to a certain locality, but closing costs are usually made up of the following:

Third Party Fees (The Hard Costs)

• Attorney’s fees (yours and your lender’s if applicable)
• Appraisal
• Credit Report Fee
• Lenders administrative costs
• Recording fees
• Plot Plan or Survey fee
• Title insurance (yours and your lender’s)
• Loan discount points (click to the left to see if points are worth it)
• Any documentation preparation fees

Pre-Paid Items:

• Property taxes (to cover tax period to date)
• Interest (paid from date of closing to the following first of the month)
• First payment to escrow account for future real estate taxes and insurance
  • 3 to 4 months of real estate taxes to be held in escrow
  • 2 months of homeowners insurance to be held in escrow
• Paid receipt for homeowner’s insurance policy (including fire and flood insurance if applicable)
• First premium of mortgage insurance (if applicable)

Additional Items that No One Tells You About:

• Purchase and Sales Review
• Recorded Homestead Act
• Representation from a real estate attorney other than what the bank provides
• Home Inspection
• One Year of Homeowners Insurance up front
• Owners Title Insurance
• Buying the Oil in the Oil Tank of your new home

For more details regarding these items, please see my blog post: Home Buying Closing Costs: What to Expect

Or for more clarification on closing costs and how you can save your buyers money, feel free to contact me anytime at bill@billnickerson.com 

 

 

Don’t lose that bid!!

In the housing market, the best deal doesn’t always come with the lowest price.

Price vs. Payments – If you’re financing your purchase, you’ll probably never come close to paying the actual price. You’re making a comparatively small down payment and then paying interest on the loan until you refinance or sell. Yes, you will have a higher payment if you pay more for the home, but an extra $10,000 of mortgage money can add less than $50 per month on a low-rate, 30-year loan.

Relative Prices – Our natural tendency to pay as little as possible is not as meaningful for an investment, such as a home, as it is for a consumable. In this case, what you pay now can affect your sales price later. There may be little difference in total earnings if you pay less and sell for less or pay more and sell for more.

Influencing Value – For appraisers, the last sale or “comp” in an area sets the value for similar homes. Whatever you pay helps to establish what your home and comparable properties are considered to be worth.

Setting the Trend – If you pay less for your home than was paid for the last similar home, you may be contributing to a downward price trend, which can be difficult to reverse. Conversely, helping to maintain a trend of price appreciation can end up paying you back many times over.

One Chance – No two homes are ever exactly the same. Even when structure matches, your land, your view, your address and your immediate neighbors will always be different. You truly may have only one chance at just the right house. Industry professionals have all seen buyers lose out on what they really wanted. We don’t want that to happen to you. Nor do we want you to pay more tomorrow for something less than what you could have had today as a result of increasing prices and rates.

Reach out, and we’ll be happy to help you weigh your options for the home you would really love to own today.

Bill Nickerson   NMLS #4194  | 978.273.3227 | Email: bill@billnickerson.com | Web: http://www.billnickerson.com

Winter, it’s only a state of mind.

Providing Residential Mortgages since 1991