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

How will the higher Mortgage Rates affect your Buying Power?

We have been spoiled with mortgage rates over the last few years  as we saw the the 30 Year Fixed Rate get to the 2.50% range.  As we move forward in 2022, mortgage rates have already started to climb.  Rates are in the 4.00% to 4.25% range and we now have to adjust our purchasing power. Each half of a percent (.50%) in mortgage rate equates to about $25,000 of buying power. Depending upon when you were “Pre-Approved” for a mortgage, the new rates may greatly affect the home you now qualify for.

What should you do? Call your Lender or Bank and have your “Pre-Approval” updated to reflect the current mortgage rate of today.  This will bring your purchase price and loan amount down as these higher rates will increase the overall cost of your mortgage payment.

Why is this happening?  When the Fed raises the federal funds target rate, the goal is to increase the cost of credit throughout the economy. Higher interest rates make loans more expensive for both businesses and consumers, and everyone ends up spending more on interest payments.

Those who can’t or don’t want to afford the higher payments postpone projects that involve financing. It simultaneously encourages people to save money to earn higher interest payments. This reduces the supply of money in circulation, which tends to lower inflation and moderate economic activity—a.k.a. cool off the economy.

 Click here to learn more about mortgage rates

Economists have been warning us for the last few years, mortgage rates have to go up!  The longer you wait, the more it will cost to buy a home. Or another way to look at this, you buying power could drop by 10% or more for each 1% increase in mortgage rate.  Buy now while the mortgage rates are still low as we may not see these rates again in our lifetime!!

For more information on Mortgage Rates and Programs, feel free to call or email me anytime.

(C) 978-273-3227 or Bill’s Email 

Senior Loan Officer | NMLS #4194 | bill.nickerson@flagstar.com

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

Over-improving your Home: doing too much of a good thing

Homeowners doing major renovations this summer may not want to hear it, but there’s actually such a thing as doing too much. Spending too much. Adding too much.

Bankrate‘s Dana Dratch says over-improving means you may be bringing a curse upon yourself: sinking so much into upgrades, renovations or additions that you’ve burned nearly all the equity of your home. If you plan to stay in your house for the rest of your life, perhaps it can eventually pay off. While it may increase the value of your property if you, like many homeowners, need to sell in the next 5-10 years, it’s likely you may never get 100 cents on the dollar, no matter what the improvement.

No. It doesn’t mean to stop dead in your tracks for your next renovation project. But it does mean you need to be careful in planning it, costing it out, and making sure it isn’t an exception to the rule in your neighborhood. Of course, if the improvements are for your own convenience — like adding a first-floor bedroom because you can’t face the stairs any more — that’s fine. But if your sole purpose is to increase the price of your home when you go to sell it, don’t take bets on it.

Dratch recommends asking yourself a few questions before you dive in. As mentioned, go ahead and over-improve if you’re going to stay there for a long time. If not, and your plan is to move in the next three to five years, resist the urge and bide your time. Realtors agree, however: there’s one in every neighborhood. There is always one guy who convinced himself that if he adds enough granite, hardwood, and molding to his modest house, he can get a premium price when it sells. Dratch quotes a Realtor who says, “Just because a house has new countertops and a brand-new master bath doesn’t mean you’ve made more square footage in your house. Compared to houses down the street with the same amount of square footage, the prices will be basically the same,” she says.

Watch a lot of HGTV? Remember that the Fixer Upper couple as well as the Property Brothers look for the shabbiest, lowest-priced house in the BEST neighborhoods. Once they’ve done their magic, that house will simply match the value of the homes around it.

If you own a $400,000 house in a $400,000 neighborhood and do a slew of renovations and additions, don’t plan to turn around and list it for $700,000. Your Realtor can help you by checking values and running comparable properties in your area to see if your plans are in line with what appraisers can get their heads around or you are totally off-base. Why do you need to appease appraisers? Because the majority of homebuyers get a mortgage, and a bank won’t lend on a house unless the appraisal makes sense.

Seems unlikely, but even kitchens and bathrooms can be overdone. AND it can scare buyers. If your house is the most expensive in the neighborhood, potential buyers will be apprehensive about signing on the dotted line. Adding a room and increasing the square footage may mean the house should be worth more, but if that addition puts you at or over the highest prices in the neighborhood, it won’t be a cakewalk to sell. On top of that, you may have just taken up a chunk of yard space with it. The size of the yard matters to buyers, even in the most upgraded house.

Did you go crazy taking out closets to make playrooms, dens, and home offices or using a bedroom as a walk-in closet? You just lowered your bedroom and bath count and lowered the value of your home. Appraisers don’t consider a room a bedroom without a closet. Oh, and that gorgeous pool and spa you spent $50K putting in? To some buyers, it represents hours of good times and entertaining. To others, it represents bigger energy bills and maintenance. It also might take up too much of your yard, leaving little room for kids to play and dogs to romp.

If you are selling your home in the near future, keep your improvements neutral and check with your Realtor about whether the renovations you have planned offer a decent return on investment.

Source: Bankrate, TBWS

Bill Nickerson | NMLS #4194 | 978.273,3227

Can you answer Yes to any of these questions??

If you or someone you know can answer Yes to any of these questions, we should talk!!

• Paying PMI (private mortgage insurance)
• Have an Adjustable Rate Mortgage
• Credit Card Balances over $10,000
• Need cash for renovations to your home
• Have a First and Second mortgage to combine
• Your Home Equity Line of Credit keeps going up?
• Simply lower your rate and payment
• Reduce your term to a 20, 15 or 10 year mortgage
• Finance your Child’s College Education
• Is your your 30 Year Fixed Rate mortgage over 4.00%?
• Is your your 15 Year Fixed Rate mortgage over 3.50%?

These are just some of the reasons it may be time to refinance your home and create cash-flow monthly.  It’s not just about interest rate anymore, it’s about cash-flow!  Creating wealth by increasing your monthly cash-flow.

Will you create a positive monthly cash flow each month?

The longer you have the new loan, the more the savings add up. A $1,200 per year savings could grow to tens of thousands over the life of the loan. If you apply your monthly savings to your principal, you will save even more on interest and own your home sooner.

Bottom Line: If it saves you money  by lowering your rate,  lowering your term or consolidating debts to create cash flow to improve your financial situation, then it is worth looking in to.  If it allows you to create more space in your home, update or renovate, invest in a second home, or even cover the costs of College or a Wedding, then its worth looking into.  Everyone’s loan balance is different, credit score, income and the amount of money borrowed.  So your situation will be different from others.  You owe it to yourself and your family to create your own wealth.

I am always happy to go over real numbers specific to your situation. Reach out anytime and we can see what advantages might be available for you and your family.  

Feel free to call me on my cell at 978.273.3227 or Email

Bill Nickerson NMLS #4194

As-Is; What does it really mean in a Real Estate transaction?

When Billy Joel wrote the song Just the Way You Are, it wasn’t about buying a house. It would be too unromantic to say, “I’ll take you as is.” But that’s what many sellers are stipulating when they list their homes.

Those few words can have a significant impact on your transaction if you are the buyer. In a typical sale, after the buyers do all their inspections, they’re allowed to negotiate the recommended repairs with the sellers. It’s a “push-me-pull-you” kind of thing. The sellers will agree to have some portion of the work completed by a qualified professional or, alternatively, they will agree to give the buyers a credit towards the cost of the work.

That all changes when you buy a home in “as-is” condition. In real estate terms, a home that’s being sold as-is essentially means that you’re willing to accept responsibility for any work that needs to be done to the home.

This does not mean you have to skip inspections, however. You still have the option to do inspections for your own benefit, but the information you glean will be informational rather for negotiating purposes. That being said, it’s wise to do the inspections to understand what you’re in for — a new roof? HVAC system needs to be replaced? If you find that the house needs more work than you can handle, you’ll have the option to back out of the deal.

By now you may wonder why to consider an as-is purchase at all. The one big benefit is that you can usually get it for a better price. Forbes’ Tara Mastroeni writes, “Since the sellers are unwilling to negotiate on repairs, they’ll often price the home lower than would be expected in order to make their property seem more attractive to potential buyers.” She goes on to say that the other benefit is that you’ll have more control over any repairs done to the home once you’re the homeowner. “In a typical sale, the sellers get to choose who does the repairs that they’ve agreed to make. In this situation, you’d be able to hire professionals that you trust.”

As for reasons NOT to buy an as-is condition home? Risk. Even if you do your inspections, that home that took your breath away at first sight might end up costing more than expected and, in this case, you’d be the one responsible for footing the bill.

If you are on the selling end of the equation, you’ll need to educate yourself before listing a home as-is. Many homeowners assume that selling as-is relieves them from all the general obligations that come with the sale of a home, including unloading the property for whatever price they can get while avoiding the need to talk about or disclose any issues with the home. This is where they’d be wrong. Disclosure still rules, but the terms of disclosure rules can vary from state to state.

Listing agents can often become the fall-guy in as-is transactions, as they are held to a higher standard when it comes to disclosing a home’s defects. This is due to the Consumer Protection Act (Chapter 93A). MaxRealEstate’s Bill Gasset says this means, “Realtors have an obligation to disclose any fact that could influence the buyer not to enter into a real estate transaction. For example, if a real estate agent knows that the seller’s basement floods every spring, this is something a Realtor has to disclose.” As for what might stand up in court if a buyer backs down, it can become a he-said-she-said conundrum.

Gasset lists examples of issues a real estate agent must disclose to a prospective home buyer, such as evidence of a structural defect like a major crack in the foundation, the appearance of mold in the home, termite damage, roof leaks, high radon levels, known plumbing or electrical issues, obnoxious noise levels and especially any legal issues such as a cloud on the title.

As for the issues a home has that are not evident or lie beneath walls and floorboards, real estate agents do have a duty disclose if they discover some problem on their own or the owner lets them know. No secrets allowed. Gasset says most real estate companies ask sellers they are representing to fill out a document called a “Sellers Statement of Property Condition” — a report that outlines what an owner knows and doesn’t know about their home.

So after all this information about as-is listings, why would sellers opt NOT to do this? Simple. There is a negative connotation with buying a home as-is. “Buyers will low-ball you,” says Gasset. “Under the assumption that your home has serious defects, the buyer will bargain with you like you are desperate. You can expect offers that are probably less than what you want, or what your home is worth.”

You’ll also have to work harder at justifying your sales price. “Because buyers will be coming into the transaction with so much negative baggage, it will be difficult to break through the assumptions to show that there are plenty of reasons why your home is desirable.”

Unless selling homes in your area is as easy as fogging up a mirror, you may also drive away a lot of potential buyers with an as-is stipulation. “Even if you are in a position where you want to put minimum effort or money into the home to make a sale, you could still benefit from avoiding the as-is designation in the listing,” says Gasset. “Let buyers come and make offers, see how you feel, and go ahead and turn down requests to make repairs if you feel it is the right choice.”

Sources: Forbes, MaxRealEstate, TBWS

 

Bill Nickerson NMLS #4194  | 978.273.3227  | Email | Website

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

 

What affects your credit?

Did you know that a large portion of your mortgage approval and mortgage rate are based on your credit scores.  In today’s market, it is now more important than ever to pay attention to your credit scores as well as the balances you keep.

Credit scores were developed by Fair Isaac and Company (FICO). The models created using FICO take all the detailed information about your credit report and produce your credit score using different weights and factors contained in the FICO models. The purpose of a FICO score is to show how likely you are to become at least 90 days late in making payments in the next 24 months based on patterns in your credit history, compared with patterns of millions of past customers.

Fair Isaac divides the scoring range into five risk categories

• 780-850 low risk
• 740-780 Medium, Low Risk
• 690-740 Medium Risk
• 620-690 Medium High Risk
• 620 and Below, High Risk or “Non-Prime”

Each of the three major credit bureaus uses their own version of the FICO scoring model.

Factors influencing your credit score are:

• Current or Late payments
• How late the payments are
• Number of open accounts you have
• How much credit you are using in relation to how much credit you have available
• If there are serious delinquencies on your file like bankruptcy, liens and charge of accounts

Your credit score is a snap shot, in that it is developed at the time of inquiry by a credit grantor pulling your credit file.  Your credit score can change with the passage of time as well as the addition of new information to your credit file.  As delinquency information in your file ages, it’s negative on your credit score lessens.

Credit Scoring is a snapshot, in that it is developed at the time of inquiry by a credit grantor pulling your credit file. Your credit score can change with the passage of time as well as with the addition of new information to your credit file. As delinquency information in your file ages, it’s negative affect on your credit score lessens.

Credit Scoring uses the following five areas of information to calculate the score:

• Payment history 35%
• Amounts owed 30%
• Length of credit history 15%
• New credit inquires 10%
• Type of credit used 10%

It is best to keep balances low on credit cards and other revolving accounts – maintain balances below 50% of the available credit limit. 24% is optimal. The best way to improve your score is to pay down revolving debt.

An inquiry is defines as a request by a lender for a copy of an applications credit report.  Inquiries on a credit report for two years, but credit scores only look at inquiries in the last 12 months.  Your own request for a credit report to review for accuracy is not considered in your credit score.

Apply for new credit accounts only when you need them. Remember that closing accounts does not make them go away. A closed account with a poor payment history may become a more recent account because the date of activity will change.  An open account with a low or zero balance is better than a closed account.

DID YOU KNOW?

• Fico scores are used not only for a mortgage and credit cards, but for auto loans, insurance and utilities
• Credit reports reflect charge offs or collection accounts for up to 7 years and bankruptcies for up to 10 years.
• You can order a free credit report annually, at no charge, without impacting your credit score
• Paying off an old collection may result in a drop in your credit score
• Consolidating credit cards increases your ratio of debt to available credit and lowers your score.
• Using the maximum amount on a credit line can drop your score by 100 points

For more information about how your Credit can affect your Mortgage Rate, feel free to email me at Bill’s Email or call me at 978-273-3227.

Bill Nickerson, NMLS# 4194

 

Bill Nickerson Training for the PMC

10 Things to do before listing your home

 To help make the selling process easier for you, it makes sense to have your home inspected before listing it.  It may sound like a hassle but it could save you a lot of money and stress early on.  The inspection will pinpoint red flags and areas that have potential problems.  It also gives you the opportunity to address those issues before listing your home.  Having your home already inspected ultimately also gives the prospective buyers the comfort and confidence that the seller actually cared about their home in the first place.  Be sure to share this information with prospective buyers by supplying a copy of the home inspection.  It is perfectly okay to choose not to have your home inspected before listing.  If you take this route, just be sure to do your own pre-listing home inspection to keep things significantly less nerve-racking and not terribly costly before the buyer’s home inspector comes through.

Here are 10 areas to look at/fix up before listing your home.

1.  Fix any deteriorated paint jobs.  Touch up any dings on the walls or woodwork, scrape and paint any flaking areas.

2.  For furnaces over 10 years old; pay to have it serviced and cleaned.  Then display the inspection papers (store them in a Ziploc bag) by taping to furnace.

3.  Make sure all toilets are flushed.  Nothing worse than having a seldom used toilet not functioning properly.

4.  Run water down sinks and bathtub drains.  All drains need to flow steadily.  No slow drains!

5.  Check for leaks under sinks and in vanities.  Tighten up joints if necessary.

6.  Check out the condition of the roof.  You want things to look normal: no missing shingles.

7.  Clean out the gutters.  They need to be free of debris for good drainage.

8.  Open and close all windows.  Check for springs working properly so windows don’t slam down. Make sure all the locks work and windows close tightly.

9.  Test any appliances like the dishwasher that you are leaving behind.  You want them working properly. Make sure all burners/oven are working on your stove.

10.  Test the auto reverse on the garage door.  Make sure the safety mechanism works.

For more information about Home Inspectors or how to prepare to list your home, call or email me anytime.  Bill’s Email  | Phone 978.273.3227

Fed Leaves Interest Rates Unchanged… And…

A divided Federal Reserve held the line on interest rates Wednesday and indicated formally that no cuts are coming in 2019. The decision came amid divisions over what is ahead and still leaves open the possibility that policy loosening could happen before the end of the year depending on how conditions unfold.

The central bank predicts one or two rate cuts in its set of economic predictions, but not until 2020. Despite cautious wording in the post-meeting statement Wednesday, markets are still betting the Fed cuts, as soon as July.

These statements and what has been going on in the Whitehouse has caused the Bond and Treasury markets to rally hitting 2 year lows.  As a result, mortgage rates are hitting new lows everyday.  We are seeing the 30 year fixed rate at 3.75% with 0 points.  A rate we have not seen since 2017!

The U.S. central bank voted Wednesday to maintain its benchmark interest rate in a range of 2.25 percent and 2.5 percent, a move that many anticipated despite growing calls for the Fed to cut. But eight out of 17 officials penciled in rate reductions by the end of this year, which would be the first such adjustment since the economy plummeted into the depths of the Great Recession.

Language in Fed Chair Powell’s dictates the markets

The committee changed language from its May statement to indicate that economic activity is “rising at a moderate rate,” a downgrade from “solid.”

In their baseline scenario, FOMC members said they still expect “sustained expansion of economic activity” and a move toward 2% inflation but realize that “uncertainties about this outlook have increased.”

“In light of these uncertainties and muted inflation pressures, the Committee will closely monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion, with a strong labor market and inflation near its symmetric 2 percent objective,” the statement said. The “act as appropriate to sustain the expansion” language mirrors a statement from Powell in early June.

These may seem very subtle to most, but the slight change of “Moderate” to “Solid” speaks volumes to Wall Street. Wall Street is betting on future rate cuts and the markets are reacting positively!

Mortgage Rates Continue to Drop!

With the recent news of the Feds today, mortgage rates continue the rally.  The 30 year fixed rate with 0 points 3.75% based on a 740 credit score on a single family home with 25% equity. For more details about rates and terms, call or email me anytime!

Bill Nickerson NMLS #4194 | Bill’s Email | 978-.273.3227