Consumer Protection from Irresponsible Mortgage Practices

Congress enacted the Dodd-Frank Act in 2010 in response to the mortgage crisis that led to America’s Great Recession. The two parts that apply closely to homebuyers are the Ability-to-Repay (ATR) and Qualified Mortgages (QM).

A Qualified Mortgage is a category of loans that have certain, more stable features that help make it more likely that borrowers will be able to afford their loan. These loans do not allow certain risky features like an interest-only period when no money is applied to reduce the principal; negative amortization that would allow the mortgage balance to increase; and, “balloon payments” at the end of the loan that are larger than the normal periodic payments.

A debt-to-income ratio of less than or equal to 43% has been established to provide a limit on how much of a borrower’s income can go toward total debt including the mortgage and all other monthly debt payments. However, the Consumer Finance Protection Bureau believes these loans should be evaluated on a case-by-case basis and in some cases, can exceed 43%.

There is a limit for up-front points and fees the lender can charge.

By showing that the lender made an effort to be certain that the borrower has the ability to repay the loan, the lender in turn, receives certain legal protections. Underwriting factors considered by the lender include:

  1. current or reasonably expected income or assets
  2. current employment status
  3. the monthly payment on the covered transaction
  4. the monthly payment on any simultaneous loan
  5. the monthly payment for mortgage-related obligations
  6. current debt obligations, alimony, and child support
  7. the monthly debt-to-income ratio or residual income
  8. credit history

For more information, see the Consumer Financial Protection Bureau fact sheet … protecting consumers from irresponsible mortgage lending.

Quick Plumbing Inspection

No one wants to waste water or money. For that reason, take a few minutes every other month to do the following inspections:

  1. Check to see if cutoff valves on sinks and toilets are working properly.

    Many times, builders will put individual cutoffs on supply lines to sinks and toilets. It is reasonable to expect them to work but after some time, they can corrode which prevents opening and closing. It is a good idea to test them occasionally before you need them in an emergency.

  2. Fill each sink with a few inches of water to see if they drain in what you feel is a normal time.

    A slow-draining sink can be an indication of a clog that builds up around the insides of the pipe. Common causes are food, grease, hair and soap scum. Plunging can take care of some slow-running sinks. After partially filling the sink with water, seal the plunger over the drain and pump it up and down a few times.

  3. Inspect each toilet to see if they are leaking water from the tank into the bowl.

    Toilets that continue to run after being flushed can use a large amount of water in a month’s time. Generally, the problem comes from a flapper that doesn’t seat properly. Sometimes, the chain is keeping it from closing properly or the flapper itself may need to be replaced.

    Another issue could be that the flush valve needs to be replaced. These can be purchased at Lowe’s or Home Depot for about $20.00 and are relatively easy to change out. There are lots of instructional videos on the internet and it can save money if you give it a try.

If you need a recommendation for a good plumber to take care of something you discover, please feel free to call me at (919) 247-4667.

Act Decisively

Whether it is hesitation or procrastination due to uncertainty, it can cost buyers by having to pay more for both the house and the financing. This is one of those markets where most of the experts expect interest rates and prices will continue to rise through 2019.

The National Association of REALTORS® reports there is currently a 4.2-month supply of homes for sale which is close to the same as last year’s inventory. Normal inventory is considered to be a 6-month supply.

If during the period you’re waiting to buy, the price of the home goes up by 5% and the mortgage rate increases by 1%, the payment on a $275,000 home with a 95% mortgage could be $233.80 more each and every month. Over a seven-year period, the delay to purchase would total close to $20,000.

To act decisively, you need good information; a confused mind will not generally make a decision. In today’s market, you need to know exactly what price home you can qualify for and you need to know what kind of home you can expect for that price.

You’ll want a housing and a mortgage professional you can trust to give you the information you need to make good decisions for yourself and your family. We’d like to be your real estate professional and can recommend a trusted mortgage professional.

To get a better idea about what it may cost you for a home in your price range, use the Cost of Waiting to Buy calculator. If you have any questions, call me at (919) 247-4667.

Reduce Refinancing Costs

There is much more than a lower rate and payment to determine whether to refinance a mortgage. Lenders try to make refinancing as attractive as possible by rolling the closing costs into the new mortgage so there isn’t any out of pocket cash required.

The closing costs associated with a new loan could add several thousand dollars to your mortgage balance. The following suggestions may help you to reduce the expense to refinance.

· Tell the lender up-front that you want to have the loan quoted with minimal closing costs.

· Check with your existing lender to see if the rate and closing costs might be cheaper.

· Shop around with other lenders and compare rate and closing costs.

· If you’re refinancing an FHA or VA loan, consider the streamline refinance.

· Credit unions may have lower closing costs because they are generally loaning deposits and their cost of funds is less.

· Reducing the loan-to-value so mortgage insurance is not required will reduce expenses and lower the payment.

· Ask if the lender can use an AVM, automated valuation model, instead of an appraisal.

· You may not need a new survey if no changes have been made.

· There may be a discount on the mortgagee’s title policy available on a refinance.

· Points on refinancing, unlike a purchase, are ratably deductible over the life of the loan ($3,000 in points on a 30-year loan would result in a $100 tax deduction each year.)

· Consider a 15-year loan. If you can afford the higher payments, you can expect a lower interest rate than a 30-year loan and obviously, it will build equity faster and pay off in half the time.

A lender must provide you a list of the fees involved with making the loan within 3 days of making a loan application in the form of a Loan Estimate and a Closing Disclosure Form. Every dollar counts, and they belong to you.

Moisture & Mold

Moisture is mold’s best friend and it thrives between 40 and 100 degrees Fahrenheit which is why it is commonly found in homes. Mold spores float in the air and can grow on virtually any substance with moisture including tile, wood, drywall, paper, carpet, and food.

Moisture control and eliminating water problems are key to preventing mold. Common sources of moisture can be roof leaks, indoor plumbing leaks, outdoor drainage problems, damp basements or crawl spaces, steam from bathrooms or kitchen, condensation on cool surfaces, humidifiers, wet clothes drying inside, or improper ventilation of heating and cooking appliances.

  • Control the moisture problem
  • Scrub mold off hard surfaces using soap and water or other cleanser; dry completely
  • Do not paint or caulk moldy surfaces
  • Discard porous materials with extensive mold growth
  • Avoid exposing yourself or others to mold
  • Periodically, inspect the area for signs of moisture and new mold growth

The EPA suggests that if the moldy area is less than ten square feet, you can probably handle the cleanup yourself. If the affected area is larger than that, find a contractor or professional service provider.

Increasing ventilation in a bathroom by running a fan for at least 30 minutes or opening a window can help remove moisture and control mold growth. After showering, squeegee the walls and doors. Wipe wet areas with dry towels. Cleaning more frequently will also prevent mold from recurring or keep it to a minimum.

A simple solution to clean most mold is a 1:8 bleach/water mixture. Since homes have thermostatically controlled temperatures and water is used all day long in the kitchen and bathrooms, the environment is conducive to mold.

See Ten things you should know about mold written by the EPA.

What to Avoid Before Closing Your New Home

It’s understandable; you’re excited; you’ve found the right home, negotiated a contract, made a loan application and inspections. Closing is not that far away, and you are making plans to move and put personal touches on your new home.

Even if you have an initial approval on your mortgage, little things can derail the process which isn’t over until the papers are signed at settlement and funds distributed to the seller. The verifications are usually done again just prior to the closing to determine if there have been any material changes to the borrower’s credit or income that might disqualify them.

Most lending and real estate professionals recommend NOT to:

  • Make any new major purchases that could affect your debt-to-income ratio
  • Buy things for your new home until after you close
  • Apply, co-sign or add any new credit
  • Close or consolidate credit card accounts without advice from your lender
  • Quit your job or change jobs
  • Change banks
  • Talk to the seller without your agent

The lender and I are working together to get you into your new home. It’s understandable to be excited and feel you need to be getting ready for the move.

Planning is fine but don’t do anything that would affect your credit or income while you’re waiting to sign the final papers at settlement.

Rising Rates Affect the Cost Too

Mortgage rates have risen 0.5% in 2018 on 30-year and 15-year fixed rate mortgages and experts expect them to continue to increase. Buyers paying attention to the market understand the relationship that inventory has on pricing; when the supply is low, the price usually goes up. Rising interest rates can affect the cost of homes also.

When interest rates go up, fewer people can afford homes. Lower numbers of buyers can affect the demand, which could cause prices of homes to come down. The question is how much do the interest rates have to go up to affect demand?

As the rates gradually go up, the affect may not be noticeable at all except for the fact that the payments for the buyer have increased.

A ½% change in interest is approximately equal to a 5% change in price. A $300,000 mortgage at 4.5% for a 30-year term will have a $1,520.06 principal and interest payment. If the mortgage rate goes up 0.5%, it would affect the payment the same as if the price had gone up 5%. The difference in payments for the full term of the loan would be $32,547.

There are some things beyond buyers’ control, but indecision isn’t one of them. If they haven’t found the “right” home yet, it is understandable. However, when that home does present itself, the buyer needs to be ready to make a decision. If they are preapproved and have done their due diligence in the market, they should be able to contract before significant changes occur in the mortgage rates.

Home Improvements with High ROI

(Family Features)–If the ultimate goal of your home improvement project is aesthetic, the greatest benefit may come from your personal enjoyment of the new space. However, if you're looking to add true value to your home, it's important to consider which projects are likely to bring the greatest return on your investment.

Flooring
Flooring speaks volumes about a home. Replacing and updating worn floors can instantly add value. A timeless selection like wood flooring, particularly in heavy traffic areas, is durable enough to withstand wear and complements a wide range of interior designs. If you already have wood floors that are in reasonably good condition, whether in use or under carpet, go ahead and refinish them for a budget-friendly alternative to installing new flooring. Another option that holds or even increases the value of your investment is tile, particularly in spaces like kitchens, bathrooms and laundry areas.

Roofing
Re-roofing a home gives it an instant value boost, but it's a job that needs to be repeated periodically. One longer-term and on-trend alternative to traditional roofing is metal. Performance is the big selling point for metal roofs, but not only does the roof itself increase the home's value, the safety benefits and peace of mind that come with knowing strong, fire-resistant metal roofs can last forever only add to the benefits.
With a variety of styles available, you can find a metal roof to match nearly any home style.

Landscaping
Curb appeal often counts for a lot, whether it's for your own enjoyment or a potential future buyer. Enhancing your home's exterior can pay off handsomely when you add vegetation and hardscaping that improve the overall aesthetic. Keep in mind that more unconventional styles are better reserved for private spaces like the backyard; for the street view, stick to a motif with broad appeal to garner the strongest return on your investment.

Entryway
An outdated entry point isn't just an eyesore; it can pose a security risk and even be the source of significant energy loss for your home. Replacing front doors and even garage doors can both bring a return on your investment and potentially start saving you money right away on heating and cooling costs. A new, properly installed entry door is likely to fit more snugly and allow for fewer air leaks. In addition, a heavier door and frame is more likely to stand up against forced entry.

Insulation
It may not be glamorous, or even anything that you'll see on a regular basis, but many experts agree that upgrading your insulation is a sound investment. In addition to adding value in terms of comfort and reduced energy costs, it's an attractive selling point should you choose to list your home.

If you're still uncertain about the right investments for your home, it may be wise to consult a local real estate expert who can provide insight on the features that bring the most value in your market.

Source: CertainTeed

Thanks for visiting my Blog site. If you would like to discuss this topic with me or get more information please contact me by calling 919-247-4667 or emailing me at Tim@TheTrianglesBroker.com. And you can always visit my personal real estate website for lots of additional information and to search for homes at www.TheTrianglesBroker.com or www.BuyAndSelllingTriangleHomes.com  McBrayer – The Triangles Broker.

Reprinted with permission from RISMedia. ©2018. All rights reserved.

Do You Have An Emergency Disaster Plan?

Don't let disaster hit you unprepared. When every moment counts, it's important to know what steps to take to keep you and your loved ones safe. Consider the following from USAGov.

Here are some steps you can take to become better prepared:

Download the FEMA App to get alerts and warnings about weather conditions. Receiving timely information about weather conditions or other emergency events can make the difference in knowing when to take action to be safe. The app also provides safety tips about what to do before, during, and after disasters.

Create and test a family communications plan. Your family may not be together if a disaster strikes, so it is important to know which types of disasters could affect your area. Know how you'll contact one another and reconnect if separated. Establish a family meeting place that's familiar and easy to find.

Document and insure your property. When a disaster strikes, having insurance for your home or business property is the best way to ensure you will have the necessary financial resources to help you repair, rebuild, or replace whatever is damaged.

Buy insurance that covers the specific risks associated with your region. Look for homeowners or renters insurance that covers damage caused by floods, high winds from tornados and hurricanes, earthquakes, or other concerns.

Strengthen your financial preparedness. Collect and secure personal financial, insurance, medical, and other records so you have the documentation needed to start the recovery process without delay. Know your disaster costs.

Get trained to help others. Minutes matter in a disaster, and if emergency responders aren't nearby, you can be the help until more help arrives.

Learn how to find volunteer opportunities and donate to survivors. After a disaster strikes, many people want to donate their time, money, or goods. Learn tips on how to avoid scams when you're searching for a charitable organization to work with, and the best steps to take to support first responders.

Source: USAGov, Ready.gov

Thanks for visiting my Blog site. If you would like to discuss this topic with me or get more information please contact me by calling 919-247-4667 or emailing me at Tim@TheTrianglesBroker.com. And you can always visit my personal real estate website for lots of additional information and to search for homes at www.TheTrianglesBroker.com or www.BuyAndSelllingTriangleHomes.com  McBrayer – The Triangles Broker.

Reprinted with permission from RISMedia. ©2018. All rights reserved.

Top Bathroom Renovation Tips That Can Add Value to Your Home

By Hannah Whittenly

A bathroom can be among the top selling points in a home. Upgrading your bathroom prior to listing the home for sale may enable you to sell it at a higher price point. Here are some of ways that you can improve your bathroom and get the highest possible return on your investment:
 
Add More Storage
There are many items that you want or need to keep in a bathroom at any given time. For instance, you'll likely want to keep extra rolls of toilet paper handy or have extra hand towels available. You'll also want to keep your toothbrush, toothpaste and deodorant in the bathroom. Adding a closet, a larger vanity or extra drawers underneath your current vanity, you provide plenty of space for multiple people to share the bathroom peacefully.
 
Add a Touch of Luxury
Buyers will have a harder time not putting an offer on a home when it has a luxurious feel to it. Adding a Jacuzzi to the bathroom will make a buyer feel as if he or she were about to buy a spa instead of a residential property. Working with companies can make it possible to make your bathroom luxurious yet affordable at the same time.
 
Put in New Tile
Replacing your current floor in favor of a tile one can improve the look and feel of the entire space. In fact, a remodeling contractor can add a heated floor that is ideal for those cold winter days or those chilly spring mornings. It can make it easier to face the prospect of walking to the shower or sink without the need to find your socks and slippers first.
 
Add an Additional Sink
If you have to share the bathroom with your spouse or kids, it's important to have multiple sinks. This allows both parents to get ready for work at once or both kids to get ready for school at the same time. It also allows each person to keep their area of the vanity as clean or as messy as they want without infringing on others.
 
Even if you don't have a large remodeling budget, you can still make your bathroom look and feel like the best room in the house. When done properly, this space can be the centerpiece of the home and help to attract eager buyers willing to pay top dollar for it.
 
This appeared first on RISMedia's Housecall.
 
Hannah Whittenly is a freelance writer and mother of two from Sacramento, Calif. She enjoys kayaking and reading books by the lake.

Thanks for visiting my Blog site. If you would like to discuss this topic with me or get more information please contact me by calling 919-247-4667 or emailing me at Tim@TheTrianglesBroker.com. And you can always visit my personal real estate website for lots of additional information and to search for homes at www.TheTrianglesBroker.com or www.BuyAndSelllingTriangleHomes.com  McBrayer – The Triangles Broker.

Reprinted with permission from RISMedia. ©2018. All rights reserved.