Scott Storace - Branch Manager, 100 Pacifica Drive Ste. 140, Irvine CA 92618 NMLS #226339 949.973.0141

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Home Financing Tips for 2016

Home Financing Tips for 2016: They're less drastic than Tips for Dealing with a New Driver!

Home Financing Tips for 2016: They’re less drastic than Tips for Dealing with a New Driver!

Last year, I wrote Home Financing Tips for 2015 with a great focus on what went wrong in 2014.  After all, isn’t that what a “tip” is?  But, I’ve learned that “tips” used as “forewarnings” are about as energizing as schooling a new, teen driver.  Parents who have handed their teenager keys to a car for the first time know what I am talking about.  The thrill of some new found freedom just doesn’t compare the angst we parents feel.

That’s why, I’ve revisited my approach to home financing counsel.  Of course, let’s remember that Mortgage Banking isn’t quite as important or as emotional parenting.  It does, however, come with a great deal of responsibility and sensitive attachment.  Helping to counsel and guide new and current homeowners through an ever-changing process and environment is challenging.  Especially when I have the foresight that current or prospective clients may not have.

Therefore, l remain intensely committed to “parenting” some of my prospective clients once they’ve decided to purchase or refinance a home.  Still, I’ve been awakened to the difference between “parenting” and “squandering the splendor of home financing!”  Oh, yes!  The home financing options available today to current and prospective homeowners are just like the “keys to freedom!”  It doesn’t matter if we’re talking about a new driver or a new home buyer, the sentiment is all the same.

So, in the spirit of protecting the excitement that comes with purchasing or refinancing a home, I offer you my suggestions for 2016!

Home Financing Tips for 2016

Tip 1: Whether you’re actively planning or still debating a home purchase, have a lender review your mortgage profile first. This is especially important because mortgage reviews and equity evaluations can help you best understand what you can buy, how to build and protect wealth and how soon you can step into the housing market. Mortgage and equity reviews are also important because they can help you see the benefits of owning as opposed to renting. Though economic data can prompt volatile market reactions, it also produces trends that can be used to help assess your current vs. future value.

Tip 2: Shopping for a home is exciting. Especially once you’ve found one you want! When that happens, there’s not much that can curb your urge to go, go, go!   But, please remember this: Without a comprehensive review of your mortgage profile, you’re not likely to have a properly structured request for funds. And, without a properly structured request for funds, your transaction could end up dead in the water.

Take for example a buyer with variable income or a complex tax structure. These two items need more than just a quick glance. Expected future and historical income are primary factors and must be calculated correctly. Working with a trusted lender who is capable and willing to do this work upfront is crucial.

And, what about your assets? Assuming that you have enough for a down payment, closing costs and reserves can actually become pitfalls for a transaction. Sourcing sufficient assets can be tricky when a buyer decides to use a 401k loan, business and/or foreign funds. Cash on hand, though seemingly harmless, is another no-no. Why? As of now, the $20,000 in your gun safe is not a verifiable source of funds. If that changes, I will certainly let you know!

Finally, will you qualify for a loan? Mortgage guidelines vary with your current structure and strategy. For instance, if you have four financed properties and you’re looking to finance a fifth, there will be more questions and documentation required to determine eligibility.

These subtle differences I’ve mentioned thus far are sure to trigger a complete shift in programs and guidelines. Though it’s absolutely normal for this to happen, save yourself the drama and get this information before you fall in love with a home. It’s also wise to take the product of a comprehensive mortgage review to your financial advisor if you see fit. Allowing yourself the space and the time to make shrewd financial decisions now will give you freedom and peace of mind in the future.

Tip 3: Review your equity positions and real estate strategies. Questions to ask yourself:

  1. Am I paying an inflated interest rate that is eating unnecessarily into my cash flow?
  2. Do I want to access my equity?
  3. Have I reviewed my terms?
  4. Do I have an adjustable rate nearing term? If so, do I know how it will adjust and if it will recast?

If you do not already know the answers to these questions, enlisting the support of a mortgage banker is an active step towards protecting your investment… and long-term wealth.  Additionally, the support is likely to offer options with better terms to help you save money and/or re-invest elsewhere.  The overall goal with reviews like these is not to waste time, I assure you.  Consider it a tune-up so that you can keep cruising comfortably along PCH on a warm Saturday afternoon!

For more home financing tips and information or guidance regarding home financing tips as they best apply to your specific scenario, please contact me!

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