NOW is the time! Part TWO

The purpose of this series is to discuss the current situation. I have heard it said that now is always the right time for anything. But it has spread around that the “housing bubble is going to pop.” While that can happen, here’s another reason why it’s not happening: DEMAND.

Home builders are increasing production and home sales are expected to be up 6.6%, why? Because there are 45 million millennials ages 26-35 years old in the first time homebuyer market. I hear it every single day as I take mortgage loan applications.

Sellers are often not selling due to the fact that they are afraid that they will not be able to find something else! The demand is very high and the supply of available homes to buy is so low that people are actually holding back from selling their homes and moving up or down due to fear of not finding something else.

The fact is all of us are stir crazy over being shut in for months/years during this pandemic. We feel like maybe there’s not quite enough space anymore for us. Families are growing, rents are rising, and now here we are looking for a bigger place and finding that it’s going to cost a LOT more. It’s a little bit like this: I go to sell my sports car because I have a family now and find that the mini-vans are much more expensive than I had thought. The same is true in renting and buying a home.

Hoping that the market crashes so that your cost goes down is to compete against inflation, rents rising, and the fact that demand is SO high and supply is SO low. It’s probably simply put, just not realistic.

What are some things you can do to be prepared to buy in this market? Check this out. And let’s get started here: http://www.successmortgagepartners.com/corey-vandenberg

NOW is the time! Part ONE

The purpose of this series is to emphasize why now is the time to finance/refinance/remodel. The first reason we are going to consider this time is inflation which has reared it’s ugly head.

You have probably seen inflation rob you of buying power. We have all heard it’s rising at an annual rate of about 7%, but more importantly, you have seen it, at the grocery store, convenience store, utilities, and services! What does that mean for mortgages?

Inflation simply put is the nemesis or archenemy of mortgage rates. If you were a lender lending for 30 years, it’s not very attractive to lend at half the going rate of inflation! You would be giving away your current income and the future income, literally giving away your money. So rates are bound to rise as inflation increases, we have already seen it’s effect in 2022 and will likely see it continue.

It was bound to happen eventually, the lowest rates in history have only occurred 3 times in history and we have been privileged to see them in the last 20 years, so we got a little spoiled by them, but they have now passed into the history books. The real rates over history have been higher and we are on the return trip there.

What’s the problem you ask? This pressure on rates affects directly your buying power. You may not be able to afford as high priced of a home as you thought. You may have to set your sights lower. But the problem is, all indicators say that later will be even worse, so NOW literally is better than later.

Look for my next in a series of articles soon…

http://www.successmortgagepartners.com/corey-vandenberg

What is real affordable housing?

Do you need more space or a different space? The question is, what is affordable to you? I remember not too long back hearing that someone paid $1,000 a month for rent, and saying, “Wow! That must be a mansion.” Usually I would get a giggle and they would explain how many bedrooms, usually 3 or more that they had, or the amenities, location, etc. What shocked me the other day is $1,200 in one of my 9 states, and it was for just a one bedroom! People in metro areas have experienced this a great deal, but not people in less urban areas.

I am also daily called by someone whose rent went up $50 or more, and they are now spurred into buying because they think that that is going to lower their housing costs. I know for years we have repeated that message in the real estate and lending world that it could be less than rent, but right now, with a competitive and some could say expensive real estate market, that is most likely not the case. Your housing payment for buying is usually much more than renting. Rent is catching up with home prices going up, not the other way around.

Sometimes I am also approached by people that have $1,000+/- to put towards buying a home. That simply isn’t enough, due diligence (the money you have to spend first to check out a home and go under a purchase contract) is often more than that. Here is an example: Earnest money is necessary to go with the purchase contract offer, that’s often a percentage of the home’s value and shows that you are serious about the offer, so $500 often doesn’t cut it, I have seen as high as $10,000, but most of the time I have seen $1,000-5,000, that holds the house for you while you line up your financing and inspections. Next step are the inspections, which can be just a general inspection, or could include specific things on the home, and even in some cases pest or well water tests. Often you pay for the appraisal up front. So all of those costs go into the home before you buy it, to make sure it’s something that you and your lender want to buy.

Next step is financing, which requires every moment of the time from the receipt of the purchase contract to the closing date listed to do the appraisal, verify everything on your application, go through underwriting, and make sure you have clear title to the new home. While not a hard cost usually, it does involve time and effort to answer questions and provide additional documentation.

The purpose of this article is not to dissuade a renter from buying their first home. I am convinced that it is a very good choice, but I am also very convinced that it requires preparation beforehand, money, and time that have to be dedicated to it. For example, renting is often coming up with the money for a deposit and showing up with it, buying requires proving where the money came from, and how you are going to pay both in the past and going forward. Each loan program has it’s requirements, not unlike renting, but signing up for 30 years should be harder than signing up for 1 year! If you are committed to doing all that’s required, let me take you through that process: http://www.successmortgagepartners.com/corey-vandenberg …

Check out why rates are headed up…

www.quora.com/Why-will-home-mortgage-rates-skyrocket-in-2022-and-what-impact-will-it-have-on-more-affordable-housing/answer/Corey-Vandenberg-4

How to make the process easier…

I feel compelled to share some “underwriting tips.” While not rocket science, these might be things we often overlook and I want to share some humor about a few of them…

Best Underwriting Practices:

Legible Copies of Documentation
- Drivers License
- Paystubs
- I actually use the illustration of “bigfoot,” no offense to any true believers, but most pictures are from a mile away of a dark figure by a tree. I tell people we have to read every single word of your documents and we need to see more than just that it exists, we need to be able to read it! Because of that, we recommend using free scanner software available on your smartphone that focuses on the words, not the background (like a camera does).
Evidence and Document Large Deposits (I often hear people worry about on social media if we can or can’t look into what they spend money on, it’s actually your deposits primarily that we are looking at. Normal paycheck deposits are not the question, it’s unusual for you deposits that have to be sourced or documented where they came from. The basic reason is that every penny used for your transaction has to be documented where it came from. You can’t borrow it generally speaking as that would add to your debts and have to be accounted for. You can’t break the piggy bank at home and deposit a large amount of unexplained cash. So it’s important to understand it’s best to ALREADY have the money in your account when you go for preapproval and not after you decide to buy a home. But if not, you will have to do some explaining and proving with more paperwork or it can’t be counted towards the transaction).
Submit ALL Numbered paged of Bank Statements (I get this argument all the time that it says blank or it’s “not important,” but it is, it’s simply not a complete bank statement if any page is missing).
Fully Completed application (Literally every question asked of you is important. Some loans require some information and others other information, so the government has standardized applications with questions about your dependents, past work and living history, and even government monitoring questions. Ignoring these or pretending “you don’t have to answer them,” is only making it harder for you to be approved. Frankly, it looks like you are hiding something.)
Fully Completed VOE (Verification of Employment) – while you don’t fill it out, we still need the information and it is on the application: Name, address, phone number, job title you held, and the period of time you worked there. EVERY employer for 2 years is verified. While this may pass electronically, the more information you supply, the easier it will be to carry this out.

As you can see, a lot goes into underwriting. But you can make your process go smoother by providing documents as needed QUICKLY and COMPLETELY. You can make the process easier or harder based on what you send, when you send it, and how you send it. Review everything please that you send first, and ask yourself, if I was a perfect stranger, would this prove what I hope it proves, or would I need to see something more than this? Providing “too much” is far better than “too little.” I would compare it to immigration or a government license application. They don’t accept halfway. You meet the requirements’ list, or you don’t get the license. Same with underwriting, they need to make sure you qualify for the loan you have applied for, it’s time to show it with clear, readable items that paint the clear picture that you do…

Start here: http://www.successmortgagepartners.com/corey-vandenberg

$350! Give yourself a raise!

That’s how much someone monthly could have saved recently refinancing!

What is your reason to refinance? Is it to reduce monthly payments? Consolidate debt? Get away from your lender? Shorten the term? Lengthen the term? There are lots of reasons…

Over the past almost 2 years we have all seen that lowering our payments, controlling our expenditures, is just like giving ourselves a raise. What can you get for a raise?

Could have, would have, should have…

Reflecting back on recent years, I have spoken to several prospective customers that just didn’t move forward with their plans. It could be a refinance, a purchase to stop renting, down-sizing, up-sizing, and even remodeling. This article is meant not to reflect on their indecision or mistakes, but to motivate you not to make the same mistakes…

Refinance – a couple people this year held back because 2020 income was so bad, or work in 2021 wasn’t as solid as they wanted it to be. Unfortunately, in one particular case, they waited too long and took retirement. They should have refinanced while they still had a job, set themselves up with a lower payment, and made sure in retirement they could afford their housing. It takes several months to know what exactly retirement income will look like for them, but we could have already had this piece done. Moral of the story? Don’t wait for .125% lower, better this or better that, if refinancing now makes sense, it makes sense. Otherwise you may be stuck where you are for longer than you think…
Purchase instead of renting – I have a lot of people that re-signed a lease in Spring because they couldn’t find anything, didn’t move forward in time with the documents, etc. Besides the fact that’s another year renting, currently interest rates are up, housing prices are up, and we still don’t have a lot of good news that either is coming down significantly anytime soon. In fact, demand continues to be high, which means prices aren’t going down unless demand does (think of your favorite cellphone, when it’s new and hot, everyone wants it and it sells at top dollar. It’s only when something new and better comes out that prices drop with the demand also going down.)
I have had several customers request refinances, not like the rate, then come back later when rates are even higher or their credit is even worse and they are more desperate and have to take what I would have considered a worse deal. I have often thought about an illustration about this with traveling and taking a bathroom break. Ever thought, I will just take the next gas station or rest area and then surprise! There isn’t one for even longer than you thought and your desperation rises with every minute that passes. The moral of the story? If you qualify, take what you can get, the next opportunity might be farther away or harder than you thought.

I am always happy to discuss your current and future options with you: http://www.successmortgagepartners.com/corey-vandenberg

“I could have done better…”

This week I followed up on a couple prospective customers and at least 2 of them said some really interesting things about 2022 compared to 2021.

The first one actually said to me that after the holidays again renting, they “could have done better.” Curious, I asked what they meant. They explained that they had applied early in the year, I responded with a number of things they could work on to qualify, and they took their time doing it, actually they really just ignored it. So they felt bad looking at yet another year of renting when they could have been closer to buying if they had put into practice what I had told them. They resolved not to spend another December renting!
The second one was a little less direct about it, they asked me for the “list” again, the documents that they needed to get moving forward towards a preapproval. And they asked me to look at their credit score again. When I went back and reviewed the progress with them, they admitted that they felt it would just get better on it’s own and didn’t try too hard to make the adjustments. I gave them the straight counsel again about the credit score, and they vowed by April to be ready! They apologized for not taking it serious enough.

What I learned from this is that we are all human. Somehow we feel like if not now, well, someday. But we don’t see how our actions lead to the outcome. Some people may never get out of renting simply because they like it. Maybe they like living around other people, or they like the “freedom” of moving when they want and often, or they “don’t want to be tied down” to a place. (See the list of excuses here) But really, at the end of the day, we just want a roadmap we can follow, so that when we decide to, we can follow it. That’s what I do every single day and would love to help you make next year be in your dream home… http://www.successmortgagepartners.com/corey-vandenberg

The real scam is rent!

I put this picture out the other day and even put home loan preapproval. Boom! Social media exploded with scam. Funny how quick we are to judge these days. So I decided to turn it around and explain a little bit about the real scam, rent!

We were all renters at some time or another. I am sure there is good reason to be a renter, in a place temporarily, don’t want to fix anything, and don’t have money to buy a home. So let’s just address each one of those:

In a place temporarily – there are motels/hotels for that, usually an apartment is rented for 6 months to one year, and that lease protects the landlord from having tenants change regularly. But ask yourself this, how many times did I get stuck somewhere much longer than I thought? Maybe buying would have made more sense if I had done so sooner rather than later?
I don’t want to fix anything – not many of us are handymen, so I understand. I hate working on home projects, mine never turn out professionally. So like most homeowners, I pay someone to do it for me. Maybe that’s rare, maybe I am crazy, but I don’t think so. Ask yourself this, aren’t you really doing the same thing when you hope the landlord who you are paying rent to every month spends money on you for maintenance or repairs? Why do you think that’s more secure or a sure thing? There are plenty of people I hear from that say the landlords “don’t fix anything.”
I don’t have money to buy a home – this is true, and I don’t want to minimize it. As an industry, we trump way too much $0 down, but the fact remains that it might be less than you think is needed. There are SO many down payment assistance options and programs. Then the seller can pay your closing costs. Between the two, there are good ways to get the unicorn transaction, little to no money at the closing table. But just to hammer it in, do you think security deposits (from what I hear you don’t often get them back) and first and last month’s rents, is cheaper, really?

We can debate leasing a car and buying a car all day long. And there are many many arguments both ways. But a home is something very different than a car. A home is in many people’s minds a sense of security, belonging, and stability. It is worth the sacrifice to get in it, worth the sacrifice to keep it, and worth the time to look at your options and leave the rent scam behind…

Start your journey here: http://www.successmortgagepartners.com/corey-vandenberg

5 reasons why a contract sale isn’t a good deal for you

So before I begin, let me begin by saying I do understand that some people can’t qualify credit wise, there are circumstances where a contract sale makes sense, etc. (And this article does not address a lease with an option to purchase, though it is similar, the intent is to have the first right to purchase the property, not to buy it from the beginning like a land contract or contract sale) But literally in every case, you need to refinance and get out of that contract as soon as possible! Why?

It’s glorified rent, it’s even called “rent to own.” There are get rich quick schemes published on the internet that promote getting rental properties changed over to land contract sales because you get the down payment and “if they don’t pay,” you can kick them out “easily,” and then contract sell it again! The idea is that just like rent, miss a month and you lose out.
It’s hard to get out of. Your contract is typically limited to 1-5 years, so unless you can turn around whatever circumstance led you to pick this option, the homeowner has no reason to extend. Often they do, but there’s no guarantee past the original contract. They can change the terms, cancel if you don’t come through with the entire amount (balloon payment or forced refinance), or simply extend, usually for a shorter period of time and more money.
Rates are high, traditionally, the rate matches the risk, I have seen 6-8% commonly (at the time of writing, that’s almost double the going rates for regular mortgage loans), although I have also seen more reasonable rates, it all depends on what the landlord is looking for, but like #1 mentioned, they are in it to make money not for the goodness of their heart.
Unless your name is on the property taxes (and not in care of), homeowner’s insurance, and title, and I mean all 3, not just one, it’s not yours. It’s almost an illusion of owning, like when you lease a car, and say I “bought” it, when you are done paying and have to turn it back in. Some people, I would venture to say based on #1 above, most people, do not complete the purchase on contract! So they never do see their name on all 3…
Laws vary by state and area, but you should know why #1 exists. #1 exists because by doing this type of contract (which often mimics a rental contract), the landlord maintains their rental rights and not the foreclosure protections afforded to you when you have a mortgage loan. In other words, you don’t write the contract for sale (like you do when buying a home), you accept the landlord’s contract and then think that somehow it’s not a one-sided to their favor contract?

So what should you do instead?

Begin the process by making sure you don’t qualify for the many loan options available.
Begin the contract if you choose, knowing exactly what you need to do and when to qualify for a refinance or purchase option.
Match that to the contract timeframe, hopefully giving you more than the needed time to arrange your affairs and qualify.

I have helped a great deal of people refinance using traditional mortgage loans from a land contract to a traditional mortgage. There are some things to keep in mind: you can’t get cash out (you have to get it in your name first), you need to have the landlord’s assistance as they will have to help with the paperwork and payoff, and you need normal mortgage requirements: income, credit history, and money, but on a positive side, it will finally be in your name and most of the time we can roll in closing costs!

Let’s get started: http://www.successmortgagepartners.com/corey-vandenberg