Holiday Craft Show

Originals for sale by community artists

Mickleton (East Greenwich), NJ

Saturday ~ November 7, 2009

900am - 400pm

Location: The Little Red School House, located on Harmony Road, just off of King's Highway

Steve Kappre is a Mortgage Planner with Treasury Mortgage, a subsidiary of Aurora Financial Group. For more info check out:

• NJ First Time Home Buyer Mortgages, grants, down payment assistance, and more
• NJ Reverse Mortgages
• All aspects of purchase and refinance mortgages up to and over 100% of the home's value
• Home renovation loans for refinance or purchase
• Conventional, FHA, USDA, VA, HMFA, PHFA, Police and Fire, Live Where You Work, and more

Contact Steve Kappre directly: 856-419-3561 | Subscribe to Steve's blog via e-mail

Using Your Blog to Educate Both the Public and Professionals

There is a truism concerning people; We all like to learn and be in the "know". No one wants to be ignorant. Everyone wants to know how to do things right! Concerning real estate, a home buyer doesn't want seller concessions, APR, or first time buyer programs to be confusing. And certainly neither do the professionals that are in the business!

Some people have a passion to share and educate. That is indeed one of my passions. Here is how I use my blog to educate both professionals and the public.

• Professional: I write about things that I feel will help other professionals grow; Effective Blogging: Don't Kill Your Blog Posts by Sharing ALL of Your Thoughts,
• Public: I write about the questions I get most; How to Have a Seller Pay Your Closing Costs While Using a First Time Home Buyer Mortgage Program to Cover Your Down Payment
• Both: I write about current real estate events that are personal to me; Do You Have an October/November Settlement in NJ? Don't Be Caught Off Guard!

First and foremost these blog posts are used to educate. I LOVE this format because I don't really have to give a "sales pitch" to other professionals or to the public; they can just read about what I write and make the decision all on their own. This I've found is one of the best ways to lay the groundwork for a relationship (IMHO). 

If you haven't done it yet, create blog posts that you can use over and over again. One of my most useful series was one on credit:

• Credit Scoring: What Makes Up Your Credit Score? (Part 1 of 6)
• Credit Scoring - Payment History (Part 2 of 6)
• Credit Scoring - Balances (Part 3 of 6)
• Credit Scoring - History (Part 4 of 6)
• Credit Scoring - Mix of Accounts (Part 5 of 6)
• Credit Scoring - Credit Inquiries (Part 6 of 6)

I can't tell you how many people this series has been sent to. There is a large percentage of "lookers" that have low credit scores, and this series really allows those that are motivated to help their situation and to buy in the future. Most people are genuinely grateful, and have found that when they take an hour or so to educate themselves, that the results are generally fabulous.

When someone needs additional explanation or they have very general questions, (or I don't have time to talk), I will send them the links. I will also use these posts when someone e-mails me for information but I can not get back in touch with them. Here are some examples below (along with the above links already mentioned):

• Understanding and Using All of Your First Time Home Buyer Options
• NJ First Time Home Buyer Mortgages and Grants
• Financing and Mortgages with a Credit Score Below 620

I simply follow up later to see what questions they have and to help them understand. More times than not, the blog posts give a great foundation and education and we can move on from there, or at least help them to make an educated decision!

Feel free to contact Steve with any questions (see below)

Steve Kappre is a Mortgage Planner with Treasury Mortgage, a subsidiary of Aurora Financial Group. For more info check out:

• NJ First Time Home Buyer Mortgages, grants, down payment assistance, and more
• NJ Reverse Mortgages
• All aspects of purchase and refinance mortgages, up to and over 100%
• Home renovation loans for refinance or purchase
• Conventional, FHA, USDA, VA, HMFA, PHFA, Police and Fire, Live Where You Work, and more

Contact Steve Kappre directly: 856-419-3561 | Subscribe to Steve's blog via e-mail

Do You Have an October/November Settlement in NJ? Don't Be Caught Off Guard!

A quick reminder to real estate professionals and consumers alike: This time of year in New Jersey many property taxes are "updated", potentially causing the 2008 tax estimate that is showing on the MLS to be inaccurate. Sometimes the change is so small a buyer doesn't even notice. Sometimes a property's taxes could go up by $1,000 or more per year. It depends on the home you are buying.

Do not listen to rumors or leave it to chance. 

Have your real estate agent and title company do all the homework they can to find out what those taxes will be at the settlement table. Over the last month, I've seen no less than 4 closings where taxes where higher at settlement. In one case it was rather upsetting to the buyer who was already doing a 2/1 buydown so that she could afford the payment. On another occasion the buyer's taxes were about $90 more a month. That is a BIG DEAL on a $165,000 purchase!!

So if you are in New Jersey and are settling on your new home in October or thereafter, be forewarned.

Feel free to contact Steve with any questions (see below).

Steve Kappre is a Mortgage Planner with Treasury Mortgage, a subsidiary of Aurora Financial Group. For more info check out:

• NJ First Time Home Buyer Mortgages, grants, down payment assistance, and more
• NJ Reverse Mortgages
• All aspects of purchase and refinance mortgages, up to and over 100%
• Home renovation loans for refinance or purchase
• Conventional, FHA, USDA, VA, HMFA, PHFA, Police and Fire, Live Where You Work, and more

Contact Steve Kappre directly: 856-419-3561 | Subscribe to Steve's blog via e-mail

Steve Kappre is a Mortgage Planner with Treasury Mortgage, a subsidiary of Aurora Financial Group. For more info check out:

• NJ First-Time Home Buyer Mortgages, grants, down payment assistance, and more
• NJ Reverse Mortgages
• All aspects of purchase and refinance mortgages, up to and over 100%
• Home renovation loans for refinance or purchase
• Conventional, FHA, USDA, VA, HMFA, PHFA, Police and Fire, Live Where You Work, and more

Contact Steve Kappre directly: 856-419-3561 | Subscribe to Steve's blog via e-mail

How to Have a Seller Pay Your Closing Cost While Using a First Time Home Buyer Mortgage Program to Cover Your Down Payment

Being a first time home buyer can certainly be a confusing situation. If you do not work with a Realtor and loan officer that know the business well, the complexities of buying a home can whirlwind out of control. As a first time buyer using first time home buyer mortgage options, these situations must be handled even more delicately. This article will focus on how to get the seller to pay the closing costs associated with the purchase of a home, and how to utilize local state or county first time home buyer grant/assistance programs to cover your required down payment needed to purchase a home.

STEP ONE - LINE UP YOUR FIRST TIME BUYER PROGRAM

Meet with a loan officerto be pre-approved for a first time home buyer mortgage and to confirm the amount of concessions you will need (or, how much you need the seller to pay for you). These options and figures can vary greatly based on the location of the home, the loan programs available, credit profile, the home's taxes, and more. It is vital that you find a loan officer that has a working knowledge of all of the local first time home buyer programs.

It is not uncommon for a loan officer to give inaccurate advice based off of his/her specific bank's limited options. The fact is that most lenders do not offer local first time home buyer financing. Many lenders simply state that, for instance, FHA or USDA loans are first time buyer programs. This is inaccurate, and indeed this can keep some people out of the home buying "game". To complicate matters, even if you find a lender that offers one of this programs, their loan officer(s) may have never worked with this type of program.

So to reiterate, find a local, experienced "first time home buyer" loan officer, and don't be afraid to ASK MANY, MANY QUESTIONS. Any reputable loan officer will be happy to answer all of your questions.

Some first time buyer grant/assistance programs are tied to the actual mortgage - they are a one-in-all financing scenario. Other grant/assistance programs are completely separate from the mortgage approval process. Depending on where you are looking to by, some of these programs may overlap. You may prefer one program above another, or sometimes even use more than one at the same time. Again, another reason to work with a loan officer experienced in helping first time buyers with these types of financing.

STEP TWO - DETERMINE CONCESSIONS

Once the first time home buyer grant/assistance program is determined, the lender can then calculate the amount of seller concessions you will need (the amount the seller will need to pay for you). Let's look at the following example to determine how a lender would determine this.

For our example, we will use the SMART START program currently offered in New Jersey (to participating lenders). With the NJ Smart Start program, a buyer can obtain assistance of up to 4% of the loan amount. In most cases, the buyer will select an FHA mortgage which requires a 3.5% down payment. (in this case, the mortgage is approved together with the assistance program).

Let's break this down:

Home buyer purchases a home for $200,000

FHA down payment requirement is 3.5%, or $7,000

The loan amount after the 3.5% down payment required would be $193,000

The assistance program, in this case, would be 4% of the loan amount, or $7,720

We find that the assistance of $7,720 covers the required down payment of $7,000

The left over assistance money ($720) would be used towards the buyer's closing costs.

Let us assume the buyer's closing costs plus prepaid items come to $6,000

To find out how much you need the seller to pay, you would take $6,000, subtract the positive credit from the assistance program ($720), and that is the amount the buyer would need to request for the seller to pay = $5,280

STEP THREE - START MAKING OFFERS

Meet with a Realtor to discuss your pre-approval and your objectives. Even though many Realtor's are familiar with seller concessions, many are not familiar with home buyer programs such as those mentioned above. To be ultimately successful you will want your loan officer and your Realtor to speak in detail about your specific loan approval and financing terms. As a buyer, do not assume all parties are on the same page. As a buyer, your involvement, even as a first time buyer, is very valuable.

Some Realtors will be priceless when making offers and negotiating for a buyer. Some will have a tendency to make offers based on the pre-approval amount only, not paying attention to the seller concessions desired (or required). Some agents may request the maximum amount of seller concessions allowed with FHA, which is 6%, but this is rarely needed.  If not structured correctly, the buyer will potentially lose out on the excess concessions they don't use, meaning that they over pay for the home. 

Maybe it goes without saying, but you "Get what you pay for" when you choose a professional to work with. Except in this case, you may pay much more (for a house) and get much less (from the seller). Ask as many questions as possible. It will help you find the right person(s) to work with.

Steve Kappre is a Mortgage Planner with Treasury Mortgage. Steve specializes in;

• All areas concerning NJ First-Time Home Buyer Mortgages, grants, down payment assistance, tax credits, and more.

• Reverse Mortgages

• Equity Management strategies for high-end homes and high net worth individuals.

Contact Steve Kappre directly at 856-419-3561 or at www.stevekappre.com

Helpful information regarding FHA, inspections, FHA appraisals, etc. I get asked this question all the time. This is a brief explanation of the difference between a FHA appraisal, a home inspection, and the "myth" of the standalone FHA inspector. Your Realtor should definitely know the difference as well.

Thanks goes to Texas Realtor Ashley Myers for making me aware of this great video. Since I'm a lender I only deal with a small portion of what you are about to see. If you are a buyer looking to invest in a short sale property or foreclosure, you'll get a good laugh from this while sadly being educated in how things tend to pan out with some of these transactions.

Steve Kappre is a Mortgage Planner with Treasury Mortgage. Steve specializes in;

• All areas concerning NJ First-Time Home Buyer Mortgages, grants, down payment assistance, tax credits, and more.

• Reverse Mortgages

• Equity Management strategies for high-end homes and high net worth individuals.

Contact Steve Kappre directly at 856-419-3561 or at www.stevekappre.com

Rates - APR - Points - Fees: How the Playing Field is Still "Crooked"

I talked to a client today who was shopping me against some other lenders. I don't blame people, and frankly if I think someone else has a better offer and they are legit, I advise "my client" so and have no hard feelings.

In the scenario today, said client was offered 4.5% with no points. I told him it wasn't possible, but lest I be ignorant, I dropped by this other lender's website. Indeed, the lenders website quoted 4.5% with no points and an APR of 4.878%. The website gave the assumed loan amount and purchase price. So I went and did the math. What did I find out?  To make the rate and APR accurate, I had to add 2.25% in points ON TOP OF all of the regular fees (title, appraisal, etc.).

In other words, even though the quote was 4.5% with zero points, the TRUE cost was 4.5%, plus typical closing costs, PLUS 2.25% in additional fees/costs.

Please send me your Goofy Good Fake Faith Estimate!

There are several issues with this scenario

1. APR is supposed to HELP consumers, not confuse them. Clearly this bank (a large bank at that) is charging hefty fees instead of points. This brings us to our next point ...
2. Points are tax deductible costs - most other fees are not. Charging high fees in lieu of points is an injustice to the consumer. We see rates quoted with NO POINTS to make them look better to consumers. However the total cost is ultimately higher than a lender that is straight forward, charging the same dollar amount but in the form of points. A loan with the same cost in points (versus fees) is a far better deal, saving a consumer hundreds or thousands in tax deductible costs.
3. APR is "pliable" - Certain fees are calculated into the APR calculation, others are not. Do not assume lenders don't play with the "names" of fees to artificially lower their APR's. That doesn't seem to be the case in the above example, nonetheless keep this in mind.
4. Lastly, said bank WOULD NOT give the buyer a good faith estimate without having him apply for a mortgage. OK, not so crazy, but the good faith estimate would not be given for 3 days. And if the bank charged an application fee? That would just be another deceptive way to lure a consumer in and tie them to the bank.

Any lender should be able to offer you a good faith estimate (GFE) in a fairly short amount of time, 24 hours or less, allowing some time for when a lender is very busy. Assuming the lender is honest and accurate with their fees, you should be able to see the true cost of their offered rate. You should be able to see, as in the above scenario, that their rate of 4.5% with no points really has a lender fee of $4,119 (Actual additional cost based on their APR). This same week I had another rate shopper send me a goof good faith estimate with 1% in points and $2,100 in application fees. THIS IS NOT NORMAL or fair to you as a consumer, especially on a purchase loan.

I am not angry for losing business. I am however angry because of the lenders and loan officers that mislead and decieve consumers who are just looking out for themselves by rate shopping. What we often see, is that many consumers that search the world over for the lowest rate, actually end up paying much higher costs via deceptive lenders. Consumers can be blinded by a low rate, not allowing them to see the true cost.

Steve Kappre is a Mortgage Planner with Treasury Mortgage. Steve specializes in;

• All areas concerning NJ First-Time Home Buyer Mortgages, grants, down payment assistance, tax credits, and more.

• Reverse Mortgages

• Equity Management strategies for high-end homes and high net worth individuals.

Contact Steve Kappre directly at 856-419-3561 or at www.stevekappre.com

NJ First Time Home Buyer Seminar: South Jersey - Clearview Adult Community School Class

Are you a first time home buyer in New Jersey?  Do you need more information to make an educated decision for buying a home? Buying a home isn't a snap decision, it is a pivitol time in life, and means that making good decisions when buying a home can effect the life of you and your family for many years to come.

Topics Covered:

• First Time Home Buyer Grants
• Down Payment Assistance
• Mortgage Programs: FHA, USDA, Specialty loans
• Upfront costs to expect as a buyer
• How to read a Good Faith Estimate
• The process of buying a home from A-Z
• Credit scoring info and tips
• Q&A session

Registration required - more information below.

Place and Location

Wednesday, October 14th  |  7pm 

Clearview High School, 625 Breakneck Road, Mullica Hill, NJ 08062

To Register for this class - View the Class Brochure and Follow the Instructions or contact Steve for help.

Steve Kappre is a Mortgage Planner with Treasury Mortgage. Steve specializes in;

• All areas concerning NJ First-Time Home Buyer Mortgages, grants, down payment assistance, tax credits, and more.

• Reverse Mortgages

• Equity Management strategies for high-end homes and high net worth individuals.

Contact Steve Kappre directly at 856-419-3561 or at www.stevekappre.com

Swedesboro - Woolwich, NJ Day 2009 - Sept 26

5k Run

Swedesboro / Woolwich Day 2009 begins with the 5k Dragon Race at 8AM. There is also a 1 mile walk. These two events benefit the Nathaniel Boerlin Scholarship Fund, a scholarship given to a deserving graduate from Kingsway Regional High School. (NateRocksHeaven.org)

Car Show

The Swedesboro / Woolwich Day Car Show is held at the south end of King's Highway. With a dozen different categories, your classic or hot rod has a place to fit in. Pre-registration ended 9/12, but you can still register the day of the show for $20. Parking starts at 10am.

Crafts, Vendors, Community groups

There is great variety regarding the vendor stations; real estate, local professionals, chair caning, churches, crafts, hardware, and of course plenty of food!!

Swedesboro - Woolwich Day runs from 10am - 4pm (Race starts at 8am)

For more information check out SwedesboroWoolwichDay.com

Steve Kappre is a Mortgage Planner with Treasury Mortgage. Steve specializes in;

• All areas concerning NJ First-Time Home Buyer Mortgages, grants, down payment assistance, tax credits, and more.

• Reverse Mortgages

• Equity Management strategies for high-end homes and high net worth individuals.

Contact Steve Kappre directly at 856-419-3561 or at www.stevekappre.com

Are First Time Home Buyer Mortgage Programs Ending Soon?

For first time home buyers in New Jersey and many other states, the first time home buyer tax credit not only gave some incentive to purchase a home, but it also gave them the availability to purchase homes they otherwise could not have qualified for. Let me explain.

Most states, if not all, have first time home buyer mortgage financing programs. In New Jersey, we have the New Jersey Housing and Mortgage Finance Agency (NJHMFA) that offers first time buyer grants, first time buyer mortgages, and a handful of other great options. In Pennsylvania, there is PHFA.

Many of these finance agencies made available a way to utilize the federal first time home buyer tax credit to buy a home. I'm not talking about settling on a home and getting the tax credit sooner through a revision of 2009 tax returns. I'm talking truly using the federal tax credit money for a down payment and/or closing costs. In New Jersey this is known as the Tax Credit Loan Program, or The "Prefund" Program.

There are several benefits to this program that make it a great option.

1. The interest rate on this program is lower than a first time home buyer program that has a grant program tied to it (Such as the Smart Start program offered by the same agency).
2. The Tax Prefund Program is not restricted to certain geographical areas like some other first time home buyer programs are.
3. Because the interest rate is lower, it allows borrowers to qualify in situations were approval is marginal. The difference in rate from one program versus the other could be as high as .75%. This changes a buyer's debt ratio and can allow for an approval when a buyer's profile is not perfect.

For some first time buyers who's price range is near the lower end of the market, these seemingly small differences make a huge difference to their buying power and loan approval. In 3 of the 4 transactions I personally have originated using this program, these differences were enough to allow for approval. That's three extra buyers this market may otherwise have not seen! That is GREAT news for them!!

Some first time home buyers who wait will be losing a lot more than just $8,000 when the tax credit expires; They will be losing their current oppurtunity to purchase a home.

Steve Kappre is a Mortgage Planner with Treasury Mortgage. Steve specializes in;

• All areas concerning NJ First-Time Home Buyer Mortgages, grants, down payment assistance, tax credits, and more.

• Reverse Mortgages

• Equity Management strategies for high-end homes and high net worth individuals.

Contact Steve Kappre directly at 856-419-3561 or at www.stevekappre.com

Mullica Hill, NJ

Gloucester County

Sidewalk Sale

Labor Day

September 7th

People come from all around to visit Mullica Hill. This historic town in Gloucester County (South Jersey) is full of antique shops, historic homes, and great local businesses such as coffee shops, the Amish Market, book stores, and more.

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There are always events going on in Mullica Hill, especially around the holidays; Ghost walks and festivals for the fall, Christmas tours for the winter, and the list goes on and on.

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If you are looking to take a nice day trip, or even just spend a few relaxing hours out, don't pass up on Mullica Hill. Along with the nice day out, you may make a great find of anything from an old childhood toy to a great piece of fine art.

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For additional information or upcoming events, check out Mullica Hill's website at www.mullicahill.com.

Steve Kappre is a Mortgage Planner with Treasury Mortgage. Steve specializes in;

• All areas concerning First-Time Home Buyer Mortgages, grants, down payment assistance, police and fire loans, rehab loans, and more.

• Reverse Mortgages

• Equity Management strategies for high-end homes and high net worth individuals.

Contact Steve Kappre directly at 856-419-3561 or at www.stevekappre.com

Gloucester County, NJ First Time Home Buyer Series: Home Buyer Timeline (Part 4)

Basic timeline for buying a home in Gloucester County, NJ

Step one: Get Pre-Approved. This will help you determine what you can afford, what you qualify for, and what terms need to be negotiated when making offers on homes.

Step two: Start looking at homes. Search online, have your agent send you MLS listings, and take time to drive through neighborhoods you may be interested in.

Step three: Make an offer on a home(s). This should be done through the agent that represents you as a buyer. Making an offer on a home via the agent listing the home will most often put you in a compromising situation, which is not in your best interest.

Step four: Negotiate terms to purchase a home. IMPORTANT: If you are asking for the seller to pay any of your fees/closing costs, this is the time to arrange this, NOT after you come to a price/terms.

5 weeks prior: Sign contracts and updated mortgage application. Once the buyer recieves a copy of the fully executed contract (signed by all parties), attorney review begins. This is the time when buyer has an oppurtunity for an attorney to review the contracts. Attorney review is 3 business days.

4 weeks prior: Order appraisal, inspection(s), survey, and titlework. You will need to pay for the appraisal upfront ($300-$400). Your lender will order the appraisal. The buyer arranges for the home inspection and termite inspection. A home inspection also requires payment upfront, made directly to the inspection company of choice.

3 weeks prior: Mortgage loan approved as supporting documents requested are completed such as the appraisal, title, and job verification.

2 weeks prior: Clear up any outstanding issues, documents, verifications. Some loans require "outside" approvals such as USDA loans or NJ state first time home buyer loans. Your loan should be sent out to these offices at this point as to not delay settlement.

1 week prior: Call utility companies to transfer utilities (gas and electric are most important).

Several days before: Obtain certified funds needed for settlement costs. Estimate a little on the "high" side. For example, if you believe you need $5,000 for settlement, get certified funds for $5500. Overall you shouldn't have any surprises, but be prepared to possibly reimburse the seller for some items such as oil in an oil tank, water and/or sewer bills they have prepaid.

Day of settlement: Bring your certified funds, photo ID, and any other important items to closing, such as other verifications, reports, or items requested by your lender or real estate agent.

Steve Kappre is a Mortgage Planner with Treasury Mortgage. Steve specializes in;

• All areas concerning First-Time Home Buyer Mortgages, grants, down payment assistance, police and fire loans, rehab loans, and more.

• Reverse Mortgages

• Equity Management strategies for high-end homes and high net worth individuals.

Contact Steve Kappre directly at 856-419-3561 or at www.stevekappre.com

The Loan That "Can't" Be Done, and How the Big Lenders Can Hurt You as a Buyer

I've been working with a certain buyer (Mr. Buyer) for a few months now. Since he is looking at the low end of the market his home selection is very limited. We had to work on his credit profile, and we successfully got his credit scores boosted enough to get him approved in the automated system (DU).

So with all this excited Mr. Buyer goes out and finds a GREAT deal, a home that appears to be about $50,000 below market value, which in this case is like having a 33% price reduction. The MLS listing is misleading - it states that the property is corporate owned, when really it is a REO. (Realtor mentioned something saying she can't put "bank owned" anymore on her listings ... that's another topic) FRUSTRATING!!

The MLS also states that the buyer must be approved by"XYZ Big Bank" (Name kept secret since you may work there). We weren't sure if they had a special relationship with the "corporate" owner of the home. Typically we wouldn't care and would just tell someone to get pre-approved with the said lender and then we will write the loan for them. But this one is different, and I knew it before the buyer even talked to the "Big Bank" mortgage rep.

The mortgage rep from "Big Bank" stated that there was no way my buyer could get approved.

I BEG TO DIFFER!!

I told my buyer before he talked to the "Big Bank" mortgage rep that they would say this. We have him approved for a more specialized loan program called the Tax Credit Prefund Mortgage Program.

Big Lender = No Loan for You?

In the case of a big, nationally known lender, a buyer may have less home buying options. A big lender like this most likely will not have access to state/county/local programs. Score one for the local mortgage banks! Frankly the "Big Bank loan officer" should have said "I CAN NOT DO THIS", and not "There is no way a lender can do this!" 

"SPEAK FOR YOURSELF" hot shot!

I founded a career on closing loans "Mr. Big Bank Loan Officer" said could never be done. I thought when Alt-A was out the window that specialized lending was also. Man, was I wrong! - it is more important than ever!

You lose, I lose, We all Lose

So Mr. Buyer is rejected from buying a home because it is owned by a bank. Mr. Buyer's income docs have already been reviewed by an underwriter. We can even get a commitment for Mr. Buyer. But this STILL wouldn't mean anything to "Big Bank" since they themselves can not get Mr. Buyer approved. Everyone loses, and another home sits longer negatively affecting the local market. If this is the protocal for big banks and their REO inventory, there may be a lot of "shooting of the feet" yet to come.

Steve Kappre is a Mortgage Planner with Treasury Mortgage. Steve specializes in;

• All areas concerning First-Time Home Buyer Mortgages, grants, down payment assistance, police and fire loans, rehab loans, and more.

• Reverse Mortgages

• Equity Management strategies for high-end homes and high net worth individuals.

Contact Steve Kappre directly at 856-419-3561 or at www.stevekappre.com

Gloucester County, NJ First Time Home Buyer Series: Mortgage Programs (Part 3)

So maybe you've taken the jump to get pre-approved and have done your homework to understand your credit score information. Now when it comes to financing your new home, which mortgage option is the best for you? Understanding mortgage programs can be both simple or complex, depending on your needs.

Conventional Mortgages, FHA Mortgages, USDA (100%) mortgages, and VA mortgages are all available for both first time buyers as well as homeowners relocating.  Below is a short comparison of these options. We will also discuss first time home buyer loans below.

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The scope of this article is to further discuss first time home buyer options. The loan options mentioned above are listed only to make reference to, as each of the options above is available within the options listed below. It may sound a bit confusing, but with the help of an experienced mortgage advisor it will all come together.

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NJ First Time Home Buyer Options

As a first time home buyer in NJ, you have several options and angles to purchase a home. We will briefly review several of the current options available. (Aside - A first time home buyer is considered someone who hasn't owned a home in the last 3 years).

NJHMFA

The New Jersey Housing and Mortgage Finance Agency has several options for first time home buyers. These options are obtained by working with an approved HMFA lender, such as Treasury Mortgage (A division of Aurora Financial Group). Some confusion exists because the majority of mortgage lenders in business DO NOT have access to these loans. "Big Name" national lenders and mortgage brokers do not have access to NJHMFA options. Even most direct lenders or "correspondent lenders" do not have access either. 

Smart Start Grant Program

This popular option is a mortgage program with a grant option. You may obtain a grant of up to 4% of the loan amount used to finance your new home. For example, if you are buying a home and financing $100,000, a grant of up to $4,000 can be utilized. The most common use of this grant is to satisfy the FHA requirements of a 3.5% down payment (see above chart). In this case, the grant covers the down payment requirement, as well as come of the closing costs. (To see other ways to use your first time buyer options to cover a down payment, closing costs, and more check out Understanding and Using All of Your First Time Home Buyer Options.

Prefund Mortgage Program

A more recent and great addition to the NJHMFA mortgage options list is the Tax Credit Prefund Mortgage Option. This program allows $5,000 of the current federal tax credit (up to $8,000) to be prefunded and used for a down payment and/or closing costs. The benefit of this program over the Smart Start Grant option mentioned above is that the interest rate is .75% lower. For a home purchase price of around $150,000 or less, or for a situation where a buyer doesn't need a full 4% and would only benefit from having a "little" help, this option works very well.

A little more info: These programs have income limitations, but are quite high for many counties. They require a bit more paperwork than other options, but certainly can be worth the extra homework.

County Grants 

Many New Jersey counties have their own grant options for first time home buyers. Grant options vary greatly from several $1,000 to $10,000 or more. These options also usually have income limits. For instance Gloucester County has an income limitation for single buyers that is in the $40k's.

Some counties require no special education on the buyer's behalf, and some require several months of education along with a monetary investment. This article does not have the space to go into multiple county options, but here is something you want to keep in mind; Work with a lender that can help you understand how to incorporate several options together when you purchase your home. The link to the article above explains how a NJ first time home buyer can utilize a grant program, seller concessions, the tax credit and more, all at once!!

What to do now ...

There are MANY home buying and mortgage options out there. The most important thing to do is find a lender (mortgage advisor) to work with that understands ALL of these options. DO NOT settle for just anyone. Secondly, educate yourself as much as you can. Even the brightest and most experienced loan officers can benefit from an educated buyer bringing thoughts and options to the table that the buyer may have not brought up otherwise.

Look out for additional articles in this NJ First Time Home Buyer Series.

Steve Kappre is a Mortgage Planner with Treasury Mortgage. Steve specializes in;

• All areas concerning NJ First-Time Home Buyer Mortgages, grants, down payment assistance, tax credits, and more.

• Reverse Mortgages

• Equity Management strategies for high-end homes and high net worth individuals.

Contact Steve Kappre directly at 856-419-3561 or at www.stevekappre.com

Steve Kappre is a Mortgage Planner with Treasury Mortgage. Steve specializes in;

• All areas concerning First-Time Home Buyer Mortgages, grants, down payment assistance, police and fire loans, rehab loans, and more.

• Reverse Mortgages

• Equity Management strategies for high-end homes and high net worth individuals.

Contact Steve Kappre directly at 856-419-3561 or at www.stevekappre.com

Gloucester County, NJ First Time Home Buyer Series: Understand Your Credit Score

If you are a first time home buyer,you have no doubt come across the fact that your credit score is one of the most important factors regarding your mortgage options. With the way this country revolves around money and finances, you would think that understanding the credit scoring model would be required education. Instead year-after-year we see the same ignorance towards credit.

The basics for credit need to be understood by all. Even those with great credit scores need some background on understanding the credit scoring model.

Mortgage programs in relation to credit scores.

Credit scores range from 350 - 850. The higher the credit score the better. The majority of mortgage programs today require a score of  620 or better. Some mortgage programs will allow scores below a 620 credit score, but these are limited and may not be the programs you need. Ideally you want as many options as possible, and the higher the credit score the more mortgage options you will have.

Credit scores do not always relate to lower or higher interest rates. For instance, if you choose to use an FHA mortgage to buy a home, the rate will be the same if you have a 720 or an 820 credit score. Most lenders will also give you the same or very close rate with a 620 credit score.

A conventional loan on the other hand requires more money down, has stricter guidelines, and has several price and/or rate increases depending on the credit score. A low credit score when utilizing a conventional loan can very quickly become expensive because of increased rates and costs. That is if you can even utilize a conventional loan. Many people are currently priced out of the "conventional loan" market due to their credit scores.

Mortgage insuranceis another credit related mortgage necessity. Mortgage insurance is required on a conventional loan with less than 20% down payment, and depending on one's credit score, even though a conventional loan may be a possible option, if there is no mortgage insurance company that will offer you insurance coverage because of a lower credit score, you can not use a conventional loan. Credit scores really can rule the day.

The good thing is that FHA loans are often there to save the day and offer great rates and low fees.

Education IS the key (to home ownership)

Now that we understand some of the ways that a credit score can determine what options are available for mortgage financing, it is now up to you to take about an hour to read up on the credit scoring model and how to obtain and maintain a great credit score.

Don't leave this important aspect of your life a mystery. A few minutes of education here will serve your life finances well, and long term will save you thousands and make a big difference in your life and the life of your family.

Additional articles for a better understanding of credit scores and the credit scoring model

• Credit Scoring - What Makes Up My Credit Score? (1 of 6)
• Credit Scoring - Payment History (2 of 6)
• Credit Scoring - Balances (3 of 6)
• Credit Scoring - History (4 of 6)
• Credit Scoring - Mix of Accounts (5 of 6)
• Credit Scoring - Inquiries (6 of 6) 

Steve Kappre is a Mortgage Planner with Treasury Mortgage. Steve specializes in;

• All areas concerning NJ First-Time Home Buyer Mortgages, grants, down payment assistance, tax credits, and more.

• Reverse Mortgages

• Equity Management strategies for high-end homes and high net worth individuals.

Contact Steve Kappre directly at 856-419-3561 or at www.stevekappre.com

Closing Purchase Loans with Credit Scores Below 600 - Say it Ain't So!

In this current credit tightening market, there are still some options out there for financing a home mortgage with a credit score below 620. In case you are not aware, 620 is the current magic number (cut off) for the majority of loan options available today.* But not all loans are created the same!  

As an example, one of the options still available today for credit scores below 620 are the NJ first time home buyer mortgage programs. Last week we closed a purchase transaction where the buyer had a 597 FICO score. That is not a typo ... 5-9-7.

There are still some mortgage programs out there that can be approved through an automated system with lower credit scores. Even where an automated (computer generated) approval is unavailable, a buyer with a lower credit score can still be approved as a manually underwritten loan. This is where an underwriter crunches their own numbers, and digs into the file. You know, the way they did it before the computers and Internet took over.  If the file is solid you may be approved.

What would be considered a solid borrower or a strong file? Here are some examples:

• Good debt ratios - your total monthly debts are in line with your gross income: Around 41%. This can not be overstated. Going far above this in many cases isn't good for a borrower.
• Good work history - longer work history is typically a safer borrower. A sound profession in this current economic environment would also work in your benefit.
• Reserve assets - Will you have money after you settle? The "more the merrier";. Even retirement accounts left untouched will make a borrower look stronger. In case of emergency, they would be able to pull these funds out.

You might think of it this way; Would you want to lend money to you? Are you a bit over extended? Is the underwriter going to look at this and say, "I'd be scared if I was in this position and buying a home?" Are you familiar with making a rent payment and have you been consistently on time? These questions will help you understand how an underwriter may think. As well as what you may want to think about.

"I know my credit scores aren't high enough!"

Even if your scores are a bit lower than where they should be, a little education and a little tweaking of your credit profile could give you the boost in a credit score to make things happen. Getting a credit score boost of 20-30 points typically isn't too difficult. And a higher increase may be obtainable as well, depending on your credit profile. Just make sure you are working with a lender that knows the credit scoring model inside-and-out before you take their advice!!

Where to go now ...

There is no doubt that the credit markets have tightened over the last few years. In some cases a little too much. But not all is lost. If you find yourself or someone you know in a tough situation, find a local expert to help you out. The reality is that not everyone will qualify, but there is no doubt that some more would qualify if they knew the options were even available - somewhere.

*Even when mortgage guidelines don't have specific credit score requirements, there may be something called "lender overlays".  These are additional restrictions on top of the basic guidelines and can vary among lenders. For this reason at times one lender have more flexible guidelines than another one down the street.

Steve Kappre is a Mortgage Planner with Treasury Mortgage. Steve specializes in;

• All areas concerning First-Time Home Buyer Mortgages, grants, down payment assistance, police and fire loans, rehab loans, and more.

• Reverse Mortgages

• Equity Management strategies for high-end homes and high net worth individuals.

Contact Steve Kappre directly at 856-419-3561 or at www.stevekappre.com

Gloucester County, NJ First Time Home Buyer Series: Get Pre-Approved!

The first and most important part of being a first time home buyer is to get your ducks in order from the beginning, and that is by getting pre-approved before doing anything else. Getting a knowledgeable loan officer to pre-approve you shouldn't take long. The initial conversation only takes about 10 - 15 minutes. Expect your loan officer to take 24-48 hours to complete a pre-approval. Some situations require (literally) hours of a loan officer's time to complete a pre-approval.

It is important that you are clear, honest, and don't hide anything regarding your income, assets, credit, or anything else regarding your finances. Keep in mind that the loan officer is your friend. Your loan officer does not ultimately approve your loan and offer a commitment to lend you the money. An underwriter does that. The loan officer is there to help you structure your loan; To create the best financing for your situation, to make you aware of your options, and to help you navigate together to settlement.

Be forewarned: Going onto a website and plugging in your income, assets, and some other minor info is NOT the same as having a conversation with a knowledgeable loan officer. Completing a form like this on the Internet may be what some consider a pre-qualification. This is typically a worthless analysis and has only very minor helpfulness for you in determining your potential approval.

A pre-approval will help you with;

• Knowing what you can afford/estimated payments
• Knowing how much money you will need to complete the transaction
• What terms you should negotiate when making an offer on a home
• What time frame you will need to consider as some loan options take longer to complete

A pre-approval should't cost you anything upfront. However, expect to start paying fees once your loan has to be processed.

Your initial mortgage pre-approval conversation will cover your income, assets, credit, work history, and of course what you are looking to accomplish as a first time home buyer. Once you speak with your lender you should start to gather the necessary documentation needed for your approval. A loan officer may issue you a pre-approval without reviewing your documents, however you run the risk of wasting time and money if anything different or out of the ordinary comes up after a review of the supporting documentation.

Basic documents needed

• Pay stubs for the last 30 days
• Asset statements for the last 2 months (Checking, savings, retirement accounts, etc.)
• W2's for the last 2 years
• Photo I.D.

Other documents that may be needed:

• Tax returns (personal / business)
• Divorce/Child Support/Alimony documentation
• Letter(s) of explanation regarding derogatory items on your credit
• Loan specific mortgage documents
• Profit and loss statement(s)
• Collection/judgment payoffs/verification
• Other forms for verification of data pertinent to your approval

Documents needed once you find a home and an offer is accepted

• Signed mortgage application
• Signed agreement of sale (by both parties)
• Appraisal fee ($300-400, varies by appraisal type)
• Pest Inspection, well certification, septic tests, and other supporting documents
• Other documentation on the home and/or your personal finances

Your pre-approval should be updated once a home is found that you would like to put an offer in on. Keep in mind that credit reports are only valid for about 120 days. If it takes you a few months to find a home, your credit will need to be pulled again to allow it to be valid through the settlement date. Therefore, be very careful to do everything possible to keep your credit score as high as possible. A good loan officer will give you sound advice on credit scoring, but BE SURE to know the rules for yourself. This can not be overstated.

Lastly, a pre-approval is based on a monthly payment, not just a purchase price. So a cheaper home with higher taxes doesn't guarantee that you will qualify. This will have to be reviewed by your loan officer, so keep in constant contact with your loan officer to ensure your success.

Be sure to visit the next installment in the Gloucester County, NJ First Time Home Buyer Series.

Steve Kappre is a Mortgage Planner with Treasury Mortgage. Steve specializes in;

• All areas concerning NJ First-Time Home Buyer Mortgages, grants, down payment assistance, tax credits, and more.

• Reverse Mortgages

• Equity Management strategies for high-end homes and high net worth individuals.

Contact Steve Kappre directly at 856-419-3561 or at www.stevekappre.com