MV Lions Club Update - April 2019

By Etta Gross, Meadow Vista Lions Club

Thank you to all those that supported our annual crab feed on February 2.  You made the following events possible through your support!
We are looking forward to seeing all our community youths on Saturday, April 20, 2019 at the soccer field (Placer Hills Campus play-yard).  This community Easter Egg Hunt starts at 10 a.m.  Ages 0 to 10 years are welcome to join in on the fun.  We ask that you come early since this event is over by 10:10 a.m.  Remember to bring your Easter Basket to collect eggs in.  Thank you for the assistance to the Colfax LEOs and Meadow Vista Scouts Pak and Troop 6.  The Easter Bunny said he would make a guest appearance at this event.  So bring your cameras!
On Sunday May 12, 2019 will be the Meadow Vista Lions Mother’s Day Breakfast.  Moms are FREE, family and friends are very reasonable priced.  Bring your Mom to breakfast and mingle with the community.  This event is held in the cafeteria at Sierra Hills School.  Starting time is 8 a.m.
We look forward to seeing everyone at Meadow Vista Park for Pioneer Day on June 2, 2019.
Any questions please visit our website at www.meadowvistalions.com or email us at meadowvistalionsclub@gmail.com.  Or please speak with any Meadow Vista Lions member. 

62 or older? More Info About Reverse Mortgages

By Toni Ryan, Synergy One Lending

A reverse mortgage is an increasingly popular loan for senior homeowners age 62 and over. It allows senior homeowners to tap into their current home equity or purchase a home without using all their cash. There is no monthly mortgage payment but homeowners are still responsible for paying property taxes, insurance, and maintenance. The repayment of the loan is deferred until the homeowner dies, sells or moves out of the home.
To qualify for a reverse mortgage loan you must own a home, be at least 62 years old and have enough home equity. The loan works in two ways. First, payments are made to the borrower based upon a percentage of the equity that has been built up in the home. Second, any current mortgage is paid off thus eliminating the monthly mortgage payment. The loan is repaid when the borrower sells the home, moves out of the home or dies. The factors that impact the amount you are eligible for include your age, the value of your home, interest rate and loan limits.
As with any large decision, it's important to understand the pros and cons.

Pros:

•  You continue to live in your home and retain title to your home, as long as you continue to pay your property taxes, insurance, and maintenance.

•  You generally receive the proceeds of the loan as tax-free cash in which you can use the money as you see fit. It is recommended though to speak with your financial advisor to verify your specific situation.

•  You no longer make monthly mortgage payments, during the course of the loan. You do have to follow the constructs of the loan guidelines and are responsible for paying your property taxes, insurance and maintenance.

•  A reverse mortgage is a non-recourse loan. Neither you nor your heirs are liable for any amount of the mortgage that transcends the value of your home.

•  There are several ways in which you can receive the proceeds of the loan.

•  Many lenders offer a free reverse mortgage loan calculator which allows you to get an estimate as to how much you may qualify for.

Cons:

•  Fees associated with the loan are generally higher than with other financial products. You should ask your lender about options available.

•  The balance of the loan increases over time as does the interest on the loan and the fees associated.
Contact a mortgage professional to learn how you can use this valuable tool to enjoy your retirement.

Teaching Children to Save

By Natalie Litchfield, Integrated Financial Concepts and Insurance Marketing

This is something I always get excited about. Children are a relatively blank canvas and most haven’t had any real experience with money yet. We also know that kids learn most of their habits from the adults in their lives. This could be a good thing or a huge problem.
Unfortunately, here are some statistics of adults today:
• Americans owe $1.1 Trillion in student loans debt and $845 Billion in Credit Card debt.*
• 1 in 4 Baby Boomers has nothing saved for retirement.*
• 52% of Generation X expect a decrease in their standard of living when they retire.**
• 39% of Millennials worry that they will not have enough money to retire when they are ready.**
Fortunately, this gives us an opportunity to create those financial habits in our kids that we wished came easier to us. Giving children a basic foundation to understand how to properly budget and save for the future is extremely powerful.
One of the best and most impactful lessons is the importance and the value of delayed
gratification. You can teach this with simple and easy to understand concepts. Here are two ideas to get started:
1. Offer your child one M&M right now, two M&M’s if they wait for five minutes, or five M&M’s if they wait ten minutes. This is a simple way to teach your child about savings and compound interest that can be earned the longer they wait.
2. Do they have that one game or toy that they really want? Help them set a goal to earn enough money to buy that toy or game. Then create a way for them to earn that money through a chore chart or activity chart or let them be creative with ways to work to earn money towards their goal.
Guiding this learning at at young age can help them to build a solid foundation for good money management habits when they grow up. Here are some simple concepts that can kickstart your child’s early learning.
1. Do you need it or want it? What is the difference?
2. Wait! Some things are worth it. Or they may realize they don’t want or need it as badly as they thought.
3. Share what you have earned.
Taking these simple actions is a great way to set a positive example for your children about how to properly save for the future.

*ACL Retirement Survey, 2016
**”The Five Most Important Money Lessons to teach Your Kids” by Laura Shin, Forbes.com
Natalie Litchfield and her firm IFC are State Registered Investment Advisors. Past performance is no guarantee of future results. This is not a solicitation for the sale of securities.

The Child Custody Mediation Process

By Sue McCurnin, Attorney, A. L. Harvey Law, PLC

If you are going through a divorce, and you and your partner have children under the age of eighteen, then child custody is most likely one of the issues you are most concerned with. In California, custody mediation is required by most courts before a court order is made. Mediation has many advantages: it is less threatening, parties are usually willing to compromise more frequently, the mediator is an unbiased third-party, it is less expensive and finally it offers a quicker solution than going to court.  Prior to mediation you should take the following actions in order to be fully prepared:

• Write out your current daily schedules for you and your child(ren).
• Write out a custody and visitation proposal that you would like to present at the mediation session.
• Put together a folder or binder of your child’s records.
• Consider getting professional legal advice from an attorney who can advise you on relative legal matters.

The child custody mediation process can be broken down into five steps. This five step process will take significantly less time depending on the intricacy of custody issues and the parents ability to reach an agreement.

Step 1: Meet With The Mediator:  At this initial meeting, the mediator will cover the rules of the
process and the confidentiality factors.

Step 2: Identify and Organize Issues: After making a list of all issues that need to be covered through mediation, it is necessary to prioritize those issues with the mediator.
Below, are some issues and topics to discuss during mediation:

• Custody and visitation scheduleand exceptions such as holidays and vacations 
• Parental communication
• How will you communicate with your ex-partner regarding your child? Ie: face-to-face during drop-offs, text, email, call and/ or video chat.
• Religion
• Medical and/or healthcare
• Extracurricular activities
• Education
• Future changes agreement

Step 3: Discuss Solutions to Issues: Each party should provide solutions to the issues at stake. It is
essential to honestly discuss what you believe is fair and you must be willing to work in your child’s best interest.

Step 4: Draft A Custody Agreement: After the issues are presented and solutions are provided, the mediator will prepare the custody agreement. It is advised you have your attorney review this agreement since it is a legally binding contract.

Step 5: Sign The Custody Agreement: Coming to a custody agreement through the mediation process will
avoid the stressful and heart-wrenching child custody battle in court.
Through all of this, it is most important to put your child(ren) first and give them the best childhood as possible.  This should not be construed as legal advice.

Credit Management During the Holidays

By Toni Ryan, Synergy One Lending

Holiday shopping is fun (and stressful) at best but if planned well, it will not affect your credit score.
Below are some important reminders when spending during the holiday season:

Tip #1 - Don't sign up for new credit unless the savings is substantial. Many stores promote 0% interest on a purchase if you sign up for their credit card. This application will result in a credit inquiry which can affect your score negatively – do not add new credit unless the savings is substantial.

Tip #2 - Do not put all your purchases on one credit card – Unless you plan to pay off the balance when the payment is due, charging more than 35% of the total credit allowed, can lower your credit score significantly.

Tip #3 - Always pay at least $5 more than your minimum monthly payment each month. If you cannot pay down your balance, always pay a little more.  This action, although it seems minor, can actually improve your credit score. Credit ratings are based, in part, on behavior patterns. A person who pays more than the minimum payment is less likely to pay late or overcharge.

These are simple actions that help to keep you in control of your credit and thoughtful of your spending.
Wishing you all the joy the Holiday Season can bring!

Should You Add Solar Panels?

By Toni Ryan, Princeton Capital

"Going Solar" is a hot phrase! If you're considering solar, review some of the pros and cons:

The Pros of Adding Solar Panels to Your Home
• Lower Electric Bill  - Depending on the size of your home and your electricity use, adding solar panels to your home can reduce your monthly bill.
• Installation Costs are Lower than Ever - Since 2011, the cost of installing solar panels has dropped by 60%. There are also federal and local tax credits & subsidies to help lower the upfront setup costs.
• Flexible Purchase Options - Due to the increased interest in solar energy, there are more companies to choose from for installing solar panels  more ways to afford the installation. You can choose to lease, buy or finance. There are also energy assistance programs such as mPower that tie the payment for the solar in with your real estate taxes. It is important to make sure than any financing option has a lower payment than your average electricity bill to ensure that you are saving money.

The Cons of Adding Solar Panels to Your Home
• Not a Simple "Quick Fix" - You will need a professional who can recommend proper panel size and placement as well as install additional wiring that is necessary for energy conversion and use. There are concerns that damage done to a roof during installation may result in water leaks.
• Hefty Upfront Cost - The national average of panel installation is $17,000. This can be a lot of up-front expense for many homeowners who will need to have a long-term plan to stay in the home to see overall savings.
• Increase in Insurance Premium - If you decide to add solar panels, expect to see your homeowner’s insurance premium increase to cover the potential replacement of these fixtures.
• Leased Panels Don't Add Appraised Value - If you choose to lease solar panels, keep in mind that you don't own the panels. Appraisers will not add value for the solar panels when assessing your home’s value because the panels are not owned and permanent fixtures to the home.
• Financed Panels May Turn-Off Buyers (& Lenders) - When you secure a loan to pay for your solar panels and then decide to sell your home - the new buyers must be willing to not only buy your home but also take over the solar panel loan. This can make it difficult for some buyers who may fail to qualify or who don't like the terms of your solar loan. Many lenders will not lend with a PACE

program (example mPower) in place which collects the payment through your home’s real estate tax bill because this is recorded as a tax lien. To sell or refinance, this loan would need to be paid off.
• Added Maintenance & Repair Requirements - Just like any appliance or fixture, there is necessary maintenance and cleaning required. As the panels age, there will also be necessary repairs to keep everything in working order.
 
Hopefully, this information helps you make a more informed decision about adding solar panels to your home. Remember to explore all the options to making your home more energy efficient before you decide. Often upgrading windows, appliances and caulking can add more value to your home and lower your energy bill with less cost. When in doubt, talk to a mortgage professional about your unique situation.

Canceling Private Mortgage Insurance

By Toni Ryan, Princeton Capital

Private Mortgage Insurance is a special type of insurance policy, provided to protect the lender against loss if a borrower defaults on their loan. Most lenders require PMI when a homebuyer makes a down payment of less than 20% of the home's purchase price.
The Homeowners Protection Act provides two methods for you to remove PMI (Private Mortgage Insurance) from your home loan: requesting cancellation or automatic cancellation. Keep in mind that these rules apply to conventional mortgage loans and are only applicable to loans that closed after July 29, 1999.
Requesting PMI Cancellation
You can request that your lender cancel PMI when the principal balance of your mortgage falls, or is scheduled to fall to 80 % of the original value of your home.
Here are some additional requirements that must be met in order to cancel PMI:
• Your request must be in writing.
• You must have a good payment history and be current
on your payments.
• Your lender may require you to certify that there are no junior liens (such as a second mortgage) on your home.
• Your lender can also require you to provide evidence, usually with an appraisal, that the value of your property hasn't declined below the value of the home when you first bought it. If the value of your home has decreased, you may not be able to cancel PMI.
Automatic PMI Termination
Your PMI will automatically terminate on the date when your principal balance is scheduled to reach 78 % of the original value of your home. You must be current on your payments on the anticipated cancellation date. Automatic PMI termination is different than a cancellation request. Your lender must terminate PMI even if the principal balance of your loan has not actually reached 78% of the current value of your home – for example, because the value of your home declined.
Cancelling PMI on FHA and VA loans
If your loan is guaranteed by the Federal Housing Administration (FHA) or Department of Veterans Affairs (VA), these rules generally won't apply because there are often minimum time limits required for the premium payments.
If you have questions about mortgage insurance on any type of financing, contact your loan professional.

What is Happening to Mortgage Rates?

By Toni Ryan, Princeton Capital

Mortgage Rates continued their move higher, as financial markets adjust to the price of the “new perceived” realities of the presidential election. The average 30yr fixed rate has surged .5% higher.  The last time rates moved in this manner was in mid-2013.

What is the concern about the new perceived realities? Markets are repricing based on a Trump presidency and GOP-controlled congress. The problem is that markets have to “guess” as to the future outcome of the policies that Trump might enact as well, as the extent to which the legislative and executive branches will work collaboratively with his policies. Unfortunately, most of the best guesses are not good for US bonds. Higher spending, lower taxes, protectionist trade policies, and deregulation policies all add up to inflation. Inflation is the enemy of low interest rates.

Fortunately, this repricing of rates is likely to be short-lived. Unfortunately, that doesn't mean rates will simply come surging back to previous levels although we have clearly seen this happen in the past. We are looking at an actual feeling of increased risk (as opposed to just a reaction to the election). It would take a new motivation for the repricing to occur in a more positive direction. Until then, a lowering in rates isn't out of the question. Indeed, that can happen as a corrective move but there's no guarantee of its size or that rates may continue to move higher before it happens.

Working with a mortgage professional that offers many options will help you to acquire the best rate for your needs. Keep in mind that the rates today are still great. Do not let this increase stop you from the purchase of a home.

Economic Revolutions: Boomers to Millenials

By Toni Ryan, Princeton Captial

The Baby Boomers and the Millennials are two special generations. Their influence is worthy of evaluation especially because it is likely you will be interacting with both groups in some way in your daily life. Whether you work for a Baby Boomer or you’re trying to have a positive relationship with your kids (or grandkids), the trends and ideologies of these two groups of people are driving our social and economic structure.  Why? The Numbers – 82 million Millennials (born 1981 to 2001) and 77 million Boomers (born 1946 to 1964).
Baby Boomers were the generation that pushed revolutionary ideas in marriage, relationships, civil rights and social commentary. Millennials are the first generation to have computers in the home and classrooms, to have cell phones, instant messaging and hundreds of cable channels. The ease at which they use technology is the greatest difference between Millennials and every other generation.
Millennials have grown up very structured with very little free time. 60 Minutes stated that “It’s a generation in which rules seemed to have replaced rebellion, convention winning out over individualism and values are very traditional.” Confident and open to change, Millennials are on track to be the most educated generation in America.  Most millennials have Boomers as Parents.
How do each see the world?  Boomers are confident in themselves but have less faith in authority – Millennials are more trustworthy of authority and less of individuals - perhaps due to over-protective parents or terrorism. Boomers want a prestigious job title while Millennials want meaningful work. Boomers had controlling parents while Millennials had intrusive, hovering parents. Boomers were indulged as children while Millennials were protected. Boomers want freedom of expression while Millennials want structure and accountability.  Boomers resent oppression and want to attack it but Millennials crave community and social networks. Lastly, Boomers want to know what it all “means” while Millennials are curious to know how to “build” it to change the “wrong” in the world.
  At the core of these differences is the huge potential energy within the Millennials for achievement and the massive potential of the Boomers to mentor that energy.  Communication is the key.
To understand the uniqueness and similarities of these two groups of people, is to know how to succeed with your message.  Whether you are a business focusing marketing efforts for your product or service or just a person interacting at a social event, to understand the differences and similarities of these generations is to appreciate what is driving our society today.

10 Credit Do's and Don'ts to Remember Prior to Getting a Mortgage Loan

By Toni Ryan, Princeton Capital

How can a fully approved loan get denied for funding after the borrower has signed loan docs? Simple, the underwriter pulls an updated credit report to verify that there hasn't been any new activity since original approval was issued, and the new findings kill the loan.
This generally won't happen in a 30 day time-frame, but borrowers should anticipate a new credit report being pulled if the time from an original credit report to funding is more than 60 days. Purchase transactions involving short sales or foreclosures tend to drag on for several months, so this approval / denial scenario is common.
Why this happens?
It's can be an ugly cycle where by the buyer receives an approval and thinks everything is OK so they make a credit impacting decision (buys new car, furniture, runs up credit card balance).
The lender's Funder pulls new credit report right before they fund the loan to check for changes. The Funder sees the new credit or larger balances and denies the loan.
What do you need to know?
In the hopes of stemming the senseless slaughter of perfectly acceptable loan approvals, check the “Ten Credit Do's and Don'ts” List below to help ensure a smoother loan process. These tips don't encompass everything a borrower can do prior to and after the Loan Pre-Approval process, however they're a good representation of the things that will most likely help or hurt an approval.

1.   DO continue making your mortgage or rent payments
2.   DO stay current on all accounts
3.   DO keep the balances on your credit cards at less than 35%
4.   DON'T make a major purchase (car, boat, big-screen TV, furniture, etc…)
5.   DON'T open a new credit card
6. DON'T close any credit card accounts
7.   DON'T open a new cell phone account
8. DON'T consolidate your debt onto 1 or 2 cards
9. DON'T pay off collections (especially old ones!)
10. DON'T take out a new loan

Follow these Do's and Don'ts for a smoother mortgage approval and funding process.
Just remember this simple tip: Wait until AFTER the loan closes for any major purchases, loans, consolidations, and new accounts and always consult your loan professional for advice before you make any changes.

Bad Credit? Let’s Fix It!

By Toni Ryan, Princeton Capital

Fact: Poor credit history and a bad credit score can have a serious impact on your life. No one wants bad credit but sometimes mistakes happen. Sometimes factors like medical bills, job loss and tragedy influence our financial profile in ways we never could have predicted. Bad credit can happen to anyone.

Factors that Damage Credit
First let’s clarify what can lower your credit score and damage your credit profile.
• Excessive Debt: If your credit cards are maxed and you have several loans, your debt profile is probably contributing to your low score
• Late Payments: The credit bureaus note any 30, 60, 90 & 120 day payment lates. It is essential that you pay your bills on time.
• Dormant Credit: A dormant credit card is an account that has infrequent or no use. In some cases, if an account has no activity for a period of time, issuers may close the account which revokes future charging privileges. Dormant accounts may not have additional debt but they also don’t help your credit score.
• Collections: If you fail to make a payment or pay off your account – the creditor may send your account to collections. This severely affects your score. Make sure to work closely with your mortgage or credit professional regarding paying off collections. Note: Collections on federal loans such as student loans will prevent you from getting financing from most (if not all) lenders.

Get Familiar with Your Credit History
It’s time to take charge of your credit profile and the first step to doing this is by getting familiar with your credit profile. You are entitled to a free copy of your credit report from the following credit bureaus:
• Experian  • TransUnion  • Equifax
Please note that many of the advertised credit reporting companies will charge you fees. The law entitles you to a free credit report so use a site like annualcreditreport.com. You will notice that you the actual credit score is not included in the report. This is because credit scores differ between different kinds of financing. For example: a credit score for an auto loan might differ from a mortgage loan. The score is not really what’s important here. Review your credit report for any errors and misinformation. It is your job to ensure your credit report is correct.

Start Establishing & Using Your Credit Wisely
If you don’t have any or enough credit – it’s time to get some. Apply for a secured credit card (usually requires a deposit) that reports to the credit bureaus mentioned above. Don’t apply for too many cards at once as this can harm your score but make sure you are managing at least 3 cards.
Once you have your credit cards or with the cards you currently have – start using them wisely. You should use your card regularly and pay off all or most of your bill every month to start showing that you can effectively manage your finances.
This article with a harsh fact and now to end on another one: Repairing your credit takes time and discipline. Is it worth it? YES! Negative history will not go away overnight but you can do it and when you see that shining credit score at the end of the road, you’ll know just how powerful it really is. Good Luck!

Does Home Refinancing Make Sense for You?

By Toni Ryan, Princeton Capital

Refinancing a home mortgage is a big decision. Your situation and needs change so should your mortgage. Current market conditions have brought low rates and increasing home values so the time to evaluate your options is here.

If you have an FHA mortgage, which you entered into before January 2015, then you may want to take advantage of a new reduction in the mortgage insurance premium. This has opened the door to refinancing your mortgage using a streamline option which can allow a reduction with no appraisal or income qualification. Some restriction apply but the reduction can save you money on your monthly payment.

How do you decide if refinancing makes sense for you? Ask yourself these questions:
•  Are you in an adjustable rate mortgage?
• Do you have mortgage insurance added to your monthly payment?
• Are the current mortgage rates at least .75 to 1% lower than your current rate?
• Do you need cash out for other financial opportunities or to pay debt?
• Does the cost of refinancing divided by the monthly payment savings equate to a reasonable term for recapturing your fees?

If you answered “Yes” to any of the above questions, then you may want to explore refinancing and the savings that may apply to your specific circumstances. A mortgage professional can find the right refinancing solutions for you.

First-Time Home Buyer Programs with Down Payment Assistance

By Toni Ryan, Princeton Capital

There are several programs available that assist the first time homebuyer in purchasing their first home.  These programs provide up to 105% financing at low rates and allow for higher debt to income ratios.  The eligibility requirements include a minimum of a 640 middle credit score, zero interest second mortgages with deferred payments to cover the down payment and closing. There are maximum household income requirements so it is important to check with your mortgage professional regarding income and property eligibility.

• CalPLUS Conventional Program

The CalPLUS Conventional program is a first mortgage loan insured through private mortgage insurance on the conventional market. This loan is fully amortized for a 30-year term and is combined with the CalHFA Zero Interest Program (ZIP) for down payment assistance only.

• CalHFA FHA Program

The CalHFA FHA program is an FHA-insured loan featuring a CalHFA fixed interest rate first mortgage. This loan is fully amortized for a 30-year term and can be combined with the California Homebuyer's Downpayment Assistance Program (CHDAP).

• Cal-EEM + Grant Program

The Cal-EEM + Grant program combines an FHA-insured Energy Efficient Mortgage first mortgage loan with an additional Cal-EEM Grant, making energy efficient improvements even easier. The interest rate on the Cal-EEM is fixed throughout the 30-year term.

• Placer County First Time Home Buyer Assistance Program (FTHB)

This program is designed to promote home ownership for low-income, first time homebuyers. The assistance is in the form of a deferred loan (second mortgage), due and payable upon sale, default or transfer of property. The amount of assistance cannot exceed $100,000 and no more than forty percent (40%) of a home's value. The maximum sales price shall not exceed $300,000 for single family homes and $185,000 for condominiums. The combined loan to value cannot exceed 97%. This program does require the buyer to have 3% of the sales price for a down payment but those funds can be a gift from a family member.
Additionally, be sure to ask your lender if you qualify for the Mortgage Credit Certificate Tax Credit Program (MCC). This MCC Tax Credit program is a federal credit which can reduce potential federal income tax liability, creating additional net spendable income which borrowers may use toward their monthly mortgage payment. This program may enable first-time homebuyers to convert a portion of their annual mortgage interest into a direct dollar for dollar tax credit on their U.S. individual income tax returns. Borrowers would need to seek the advice of a financial professional.
The options are available to make homeownership a reality. Not all mortgage lenders offer these programs so check with a trained mortgage professional to understand your choices.
Prices are affordable and rates are low. Now is the time to take advantage of the assistance available and buy a home.

Federal Reserve Says Lending is Getting Easier

By Toni Ryan, Princeton Capital

Yahoo News recently reported that buying a home is actually getting easier. According to Ellie Mae research, in July 2014, out of all mortgages that were applied for - 67% actually closed. This is a major increase from the last year when the rate of mortgages that closed was at 53%. According to the president of Ellie Mae, Jonathan Corr, this is due, in part, to lenders easing their qualifying standards.
Does this mean that if you were turned down for a home mortgage in the last few years that you should reapply? Corr says, “Yes - depending on your circumstances, your chances of approval may have increased.”
Yahoo attributes this increased flexibility in the lending industry to 3 key factors:

1. Lower Credit Score Requirements - Many lenders have lowered the required credit scores to qualify for a mortgage. In July 2014, the average score for qualification was 727 - which may still seem high however in the past few years, that number has hovered around 750. The study also found that 32% of closed loans had an average FICO score of less than 700 which is 25% more loans than previous years.

2. Higher Debt-to-Income Allowances - Lenders assess your risk by considering your debt and income ratio. For example, if your gross income was $5,000 and all of your debt payments came to $1,500 - your DTI would be 30%. According to the study, as of July 2014, the average DTI for closed mortgages stood at 37% - up from last year. This means lenders are more confident in the economic recovery and people’s ability to stay solvent to allow for little more debt. Corr adds that, like credit scores, this is an average and should not worry those with slightly higher DTIs. He believes that borrowers with a DTI of 40% or even 43% can qualify.

3. Fewer Investor Overlays - An investor overlay is essentially a stricter standard imposed by a lender or bank even though it’s not required by the government. For example, FHA mortgages are insured by the government and might have guidelines that require 3.5% down and a minimum credit  score of 580. However a lender offering an FHA loan might have an overlay that requires a minimum score of 620. This doesn’t contradict the FHA guidelines, but traditionally these overlays are added due to economic fears & defaulted loans. Thanks to the strengthening housing market, lenders are imposing less stricter overlays which allow more options for borrowers.
As you can see - 2015 is looking to be a great time to apply for a home mortgage. Keep in mind that everyone’s financial picture is different which is why it is essential to work closely with your mortgage professional to develop a strategy and identify all of your options.

How Does a Home Appraisal Work?

By Toni Ryan, Princeton Capital

During most real estate transactions, it will be necessary to have a home appraisal completed. This formal process of evaluation is the most effective, un-biased way to determine the current value of a home for everyone involved in the transaction. While the concept might not seem confusing, there are several misconceptions that can make the process seem complicated. Understanding what the appraiser does and how their evaluation plays a role in your financing can make the transaction easier.

Home values fluctuate because of a variety of factors including supply, demand and regional influences. A home appraisal determines the current market value of a property on the date the inspection is completed. Since this value will be used by the lender to determine the loan amount, an approved, reputable appraiser must be hired to complete the evaluation. It is important to note that the formal appraisal report is filed with a national bureau when financing is being used from FHA, FNMA and Freddie Mac. The report and the property value is registered with the national database and kept on file for six months. This keeps buyers and sellers from “shopping around” for a different value.

The lender will order the appraisal from a separate third party appraisal vender. The appointment for the real estate appraiser to visit your property (or the property you're looking to buy) is set by the assigned appraiser with you or the real estate agent.

There are some key things to prepare for to insure you receive an accurate appraisal for your home:

• Major repairs - water damage and broken structures need to be repaired. 
• Health & Safety Issues - bare wiring, mold, damaged stairs will need to be restored to safety standards. Smoke and CO2 detectors must be present and in working order. 
• In-progress Construction - all work should be completed. 
• Excessive Clutter - the appraiser must get a clear view of the basic structure. 

It is suggested to be present while the appraiser is at the home. By law, your loan officer cannot be present and cannot speak to the appraiser.

There are several methods and formulas utilized to calculate the final home value. Prices of other similar homes that have recently sold in the area are assessed and adjustments are made for features that are not the same. A Cost to Re-build the home in today's market is also included.

If the appraised value is at or above the expected value - this is good news! If the value comes in below expectations, most sellers and homeowners experience concern.  Always talk to your realtor and loan officer to find out all of your options. A home appraisal is a vital piece of the process when buying or refinancing a home

*Always check with your mortgage professional for acceptable extenuating circumstances and any other changes that may have changed to the  programs listed since this printing.  

Life After Bankruptcy, Foreclosure & Shortsale

By Toni Ryan, Princeton Capital

A common questions many home buyers have today is, “How long do I have to wait before obtaining financing after a bankruptcy, foreclosure or short sale?”

Below is an overview based on credit issue:

Bankruptcy 

Conventional
• Ch. 7 or 11: 2 years with extenuating circumstance*, 4 year without and re-established credit
• CH 13 – 2 years from discharge date or 4 years from dismissal date

FHA
• Ch. 7: 2 years from discharge date with re-established credit – no delinquencies for 2 years
• Ch. 13: 1 year of the payout date must elapse and satisfactory payment performance with permission from the court to enter into a mortgage

VA
•  Ch. 7: 2 years from discharge date with re-established credit – no delinquencies for 2 years
• Ch. 13: 1 year of the payout date must elapse and satisfactory payment performance with permission from the court to enter into a mortgage

 Foreclosure

Conventional: 7 years from completion date
FHA:  3 years from completion date
VA: 2-3 years from completion date with good explanation of circumstances – must have sufficient entitlement.

Short Sale:

Conventional: 2 years – (Changing to 4 years on 8/15/14) with extenuating circumstances*- 4 years without extenuating circumstances
FHA: 1 year if qualified for “Back to Work Program” – 2 years with extenuating circumstances* or all debts were current until the short sale date - 3 years if short sale was not due to extenuating circumstances or debts were not paid on time before short sale.
VA: 2-3 years from completion date with good explanation or circumstances. Must have sufficient entitlement for new loan

NOTE: Currently, Conventional financing backed by FNMA has offered a wait period for short sales as low as 2 years with extenuating circumstances but it is important to note that for those loan applications received after August 15th, the wait period increases to 4 years. If you fit into the above category and are considering financing, you should act now or you will be limited to FHA financing and possibly VA, if entitled to VA programs and have sufficient entitlement for a new loan. Time is of the essence to experience the joy of homeownership.
*Always check with your mortgage professional for acceptable extenuating circumstances and any other changes that may have changed to the  programs listed since this printing.

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5 Myths About Home Values

By Toni Ryan, First Priority Financial

During periods of economic growth, home values typically go up and most homeowners do not question appraisals.
Conversely, in times of turmoil when property values are declining, homesellers naturally question appraisal values.
The actual appraisal process has changed very little over the course of the housing boom and bust cycle but since the topic of home values seems to be a hot discussion, let's address the top five appraisal myths/questions.

Appraisal Myths:

Myth #1- Appraisal values are based upon a simple formula that uses dollar per square foot and comparable sales prices.
Reality - There are several factors the affect the value of a property which include comparable sales prices, location, amenities, exterior and interior condition, maintenance, lot size, bed and bath count, traffic and much more.  There is no simple formula.

Myth #2 -  A clean house appraises higher.
Reality - Appraisers do not care if your laundry is on the floor or dirty dishes in the sink. They notice maintenance issues like peeling paint, holes in flooring, etc. but the mess does not affect value. However, iIf there is a mess large enough so that the appraiser cannot see the floors or the walls, then it is a good idea to clean up.

Myth #3 - Telling the Appraiser the value you want means they will try to hit that value.
Reality - The first and foremost rule for the appraisal is that it is an UNBIASED report of value. Appraisers must act independently of the owner and the lender which better serves both parties. There have been strict guidelines put in place since the 2008 meltdown that do not allow the appraiser to discuss value with the borrower.

Myth #4 - The value of the home appraisal reflects the dollar for dollar value of recent improvements.
Reality - Rarely. Some improvements increase the value of the property while other improvements are the owner's preference. The appraised value is mainly based upon how your home compares with the homes that have sold recently in your area rather than on a list of improvements.

Myth #5 - An appraiser always uses the most recent closest sales, regardless of the term of the sale.
Reality - Only if necessary. If there are enough standard sales, meaning not a foreclosure or short sale, then we use those and avoid the REO sales as they are not often the best representation of the market. However, if we must use the REO sales, then we will adjust the REO sale by a percentage.  Many times when an REO sales Is used it is one of 5 comparables and carries less weight for the value.
Keep in mind that an appraiser is looking at several things when determining the value of a property. Your mortgage professional can run comparable sales to give you a better idea of the value range of your property before you proceed with the cost of the appraisal.

10 Credit Do's & Don't to Remember Prior to Getting a Mortgage Loan

By Toni Ryan, First Priority Financial

How can a fully approved loan get denied for funding after the borrower has signed loan docs? Simple, the underwriter pulls an updated credit report to verify that there hasn't been any new activity since original approval was issued, and the new findings kill the loan.
This generally won't happen in a 30 day time-frame, but borrowers should anticipate a new credit report being pulled if the time from an original credit report to funding is more than 60 days.
Purchase transactions involving short sales or foreclosures tend to drag on for several months, so this approval / denial scenario is common.
It's can be an ugly cycle where by the buyer receives an approval and thinks everything is OK so they make a credit impacting decision (buys new car, furniture, runs up credit card balance).
The lender's Funder pulls new credit report right before they fund the loan to check for changes. The Funder sees the new credit or larger balances and denies the loan.
In the hopes of stemming the senseless slaughter of perfectly acceptable loan approvals, check the “Ten Credit Do's and Don'ts” List below to help ensure a smoother loan process. These tips don't encompass everything a borrower can do prior to and after the Loan Pre-Approval process, however they're a good representation of the things that will most likely help or hurt an approval.

1. DO continue making your mortgage or rent payments
2. DO stay current on all accounts
3. DON'T make a major purchase (car, boat, big-screen TV, etc…)
4. DON'T buy any furniture
5. DON'T open a new credit card
6. DON'T close any credit card accounts
7. DON'T open a new cell phone account
8. DON'T consolidate your debt onto 1 or 2 cards
9. DON'T pay off collections
10. DON'T take out a new loan

Follow these Do's and Don'ts for a smoother mortgage approval and funding process.
Just remember this simple tip: Wait until AFTER the loan closes for any major purchases, loans, consolidations, and new accounts and always consult your loan professional for advice before you make any changes.