Seems like you should just be able to pick up the phone or go online and apply, right? Well technically you can. If, however, you want to help the results here are five things you can do, starting right now, to help yourself get the best mortgage for your buying and credit power.

1 – Pull Your Own Credit – A little inside joke, not funny because it’s at the borrower’s expense, is when a loan officer asks during the initial consultation, “you have any late payments or other derogatory information on your credit” and the application prospect answers “no” only for the loan officer to pull the credit of the applicant and find a couple of pages of nothing but late payments. Don’t let this be you. You can pull your own credit a any number of websites and usually for free. All you really need to look for is if you have late payments, judgments or liens against your credit, if you see something that isn’t yours, and get a general familiarity with your own credit report. You should do this at least once every year anyway.

Caution: You do not know how to make credit decisions so the advice above is not meant to have you think just because you have a late or two on your credit you are not going to be approved. Every loan solution is different. The advice above is just so that you already have some familiarity with your credit record which you always should anyway. Even if you see lates on there go ahead and call a licensed professional in your area.

2 – Know Your Finances – If you are the type of person who has no idea how much you have in your checking account you should take this time right now and review. If you never balance your checkbook this may be a difficult process for you because you’re going to be digging for some paperwork regardless of where you close your loan. Take the time before starting the application and familiarize yourself with your assets. Check your banking balance, retirement accounts and other liquid type investments so you’ll know the answers when asked and you won’t have any surprises later.

Caution: Every loan program is different and loan purposes are different, too. Purchase loans where you are making a large down-payment will require you to demonstrate you have the funds for the down-payment and closing costs and that they are, indeed, your funds. In other words you’ll have to prove it’s your money and it didn’t come from the seller trying to “help” you buy the home. If you have had the money for at least 2 months it is now called seasoned and the burden of proof diminishes rapidly to nil.

3 – Know Your Work Info and History – All mortgages require 2 years of employment history. Sometimes that can be a little crazy especially if you, or the borrower, work temp jobs. What this means is the lender (we) need to know everywhere you have worked for the last two years and if there are any gaps in employment a good reason. Go ahead and map this out and get the contact information and your pay history for each of these employers.

Caution: Even if you have gaps or have worked at multiple places in the last 24 months you cannot count yourself out.

4 – Know Your Residence History – You would be surprised how many people don’t know their last address when it’s needed on the loan application. We, any lender, will need to know where you have lived for the last two years and to whom you paid rent. If you are currently or have lived rent free we will need what is called a “rent free” letter that we get from the person who owned the home or had authority to permit you to live with them for free. Examples of this are room-mate, friend or even family. This is important because we are trying to prove your ability and intent to repay the money we are about to buy your new home with.

Caution: Only a mortgage professional who knows the guidelines and makes the lending determination can make the final decision on this. Don’t think you can’t buy just because your residence history is jumbled or obfuscated.

5 – Get Your Records Together – Most lenders for most loans are going to need (at least) some or all of the following so you may as well start getting them together right now. Find the last 2 (or even 3) years of tax returns, all pages, all schedules. Find the last 2 months of your bank statements for checking and savings all pages – even blank pages believe it or not. Find the last 2 years of your W2 forms. Find your last 1 month’s worth of your pay stubs. Some lenders need more, some lenders may not ask for all of these though most do.

Caution: Chances are you’re going to asked for some verification or statements about something so be prepared when you get asked by the loan officer or processor to provide them. Arguing about it really doesn’t do much good so it helps to be prepared and understand you are asking someone to “let you hold” $100k to $500k or more to purchase a property with really no guarantee you’re ever going to pay it back. It is their job to protect both you and the investor in the transaction.

Most of all it is better to not be surprised at the things that come up during your approval process. If you are a detailed record keeper you will be just fine. On the other hand if you’re a little shakey in the personal history department you may have a bit of a bumpy ride with the underwriter “making” you look for things. The best thing to do is find them now, before you apply.

Avoid online mortgage companies or big banks where you may be nothing more than a number and a dot on the page. Call a local, licensed, mortgage professional and be prepared to help them get you approved!

I am a multi-year veteran of the industry who has served in the highest offices in the industry. I can help you get the best deals and avoid getting ripped off!
Contact form on this web site

Atlanta Luxury Home Market – People are always asking me, how’s the Atlanta real estate market? In August 2011 there were 32 luxury homes that sold that were listed for over $1,000,000.  In August 2010, that number was pretty close to the same with 28 luxury homes sold.

What was the difference?

In August 2010 the lowest sales price was $850,000 with just 11 days on the market.  The average number of days on market for all the luxury homes sold was 193 days and an average sales price of $1,317,598.  The highest price Atlanta luxury home sold for $2,400,000 with 805 days on the market.

In August 2011, we saw a decrease in the number of days on the market in the Atlanta Luxury Home Market.  The lowest number of days on market is 0, yes, not even 1 day on the market for a home that was listed at 1,099,000 and sold for $520,000 in McDonough.  The average number of days on market for all luxury homes in the Atlanta area was 116 days with an average sale price of $1,620,534.  The most expensive luxury home that sold in August in the Atlanta area was $9,000,0000.  It was on the market 454 days.

Many of the Atlanta Luxury Homes are in golf course communities with fabulous amenities.

Where did the Atlanta area Luxury Homes sell in August 2011?

Buckhead  - 8 of the Luxury homes sold in Buckhead

• London Estates in Atlanta
• Kingswood – Atlanta Fulton County
• Woodward Investment (near Buckhead in Atlanta)
• Sugarloaf Country Club in Duluth – Gwinnett County – 2 of them sold here – For the same time period last year, 4 Luxury Homes sold at Sugarloaf
• Peachtree Manor Heights –Atlanta in Fulton
• Atlanta National in Alpharetta in Fulton
• St. Marlo in Duluth Forsyth County
• Tuxedo Park – Near Buckhead in Atlanta
• High Gates on Robinson in Marietta – Cobb County
• Chatham Park in Roswell –Fulton County
• Riverwood in Johns Creek – Fulton
• Sentinel Ferry at the River in Sandy Springs –Fulton County
• Lake Lanier in Cumming – Forysth
• Atlanta National – On the Golf Course in Alpharetta
• McDonough in Henry County
• Atlanta Country Club in Marietta
• Country Club of the South in Johns Creek –Fulton County
• Chastain –Atlanta Fulton County – Last year same time period 3 Luxury homes sold in Chastain
• Spalding Stables Estates in Atlanta – Sandy Springs area of Fulton County
• Chatsworth in Atlanta near Buckhead
• The Enclave at Jett Ferry – Dunwoody – New construction by John Wieland

If you’re thinking of buying or selling an Atlanta Luxury Home, contact Jen Bowman, Broker Associate with Keller Williams Realty Atlanta Partners, Luxury Homes by KW at 404-456-5024.

www.LuxuryHomesGA.com

I am a multi-year veteran of the industry who has served in the highest offices in the industry. I can help you get the best deals and avoid getting ripped off!
Contact form on this web site

It would be simple to say “closing costs” are the amount of money required to be brought to the closing table at the time of purchase or refinance. Oh that it were that simple yet it is not. In fact different agencies and organizations have different definitions for the same term. Perhaps we can do some good here and provide the true definition for the components of closing costs, establish which costs go where and which costs are negotiable.

If you want to say closing costs are the total fees you bring to the closing table that would include this list and maybe more in some cases:

1. Appraisal fee – to the appraiser
   

   Pie Chart of Closing Costs

2. Credit score fee – to the credit bureau
3. Origination fee – to the loan officer
4. Funding fee – to the lender
5. Underwriting fee – to the lender
6. Processing fee – to the processing company
7. Broker fee – to the mortgage broker (if there is one)
8. Recording fee – to the county courthouse
9. Loan registration fee – to the state department of banking and finance
10. Title exam – to the title company/private investigator
11. Attorney fee – to the closing attorney
12. Attorney’s wire fee – to the attorney
13. Lender’s title insurance – to the title insurance company
14. Owner’s title insurance – to the title insurance company
15. Real estate taxes and escrow – to the state, county, city where due
16. Home owners insurance – to the owner’s insurance company
17. HOA fees – to the HOA/COA

Some of these fees are only closing costs because the lender, unless the borrower chooses to waive escrows of taxes, insurance and HOA, would be required to be paid over time anyway. In fact most HOAs require an initiation fee even if you are paying cash. That is the best way to think of closing costs as associated with purchasing a home anyway: which fees would exist even if there were no lender: attorney fees, recording fees, appraisal fee, home owner’s insurance, etc.

Two of the biggest fees associated with the purchase of a home are not considered closing costs and those are the down payment and the real estate broker fees. Brokerage fees are not considered a closing cost because they are added to the sales price and the seller pays them and down payment is going straight to the purchase of the home. If we counted down payment as a closing cost then someone paying cash would be considered to be paying 100% closing costs.

What about “no closing costs” loans? Simple. They don’t exist. The buyer or home owner who is refinancing pays the costs either in cash, from the proceeds of the loan, using a down payment assistance program, or by the lender increasing the rate enough to earn more in interest. None of those closing costs go away when they are required. The attorney doesn’t work for free, the appraiser doesn’t work for free, the loan officer, processor and underwriters do not work for free.

Hopefully understanding these fees and where they go will help you in your next purchase or refinance to understand the cost and how to better manage or prepare for your closing.

*The set of closing costs used for this chart are typical for a mortgage broker. They will vary from state to state and lender to lender … but not by much.

Related articles

• Good-faith estimates bring higher closing costs (sfgate.com)
• Survey: Mortgage closing costs 37% higher (usatoday.com)
• New rules limit too-low estimates of closing costs (knoxnews.com)
• What are “seller concessions”? (kennycook.com)

I am a multi-year veteran of the industry who has served in the highest offices in the industry. I can help you get the best deals and avoid getting ripped off!
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You may have heard the term seller concessions in conjunction with a home purchase. What is generally meant by that term is when the seller uses part of the proceeds of the sale to pay some of the costs of the loan for the buyer. Generally speaking government loans allow up to 6% (of the loan amount) in seller concessions and conventional loans allow up to 3%.

Seller concessions are intended to pay closing costs and pre-paids, not down payment. If the seller wishes to contribute more than the allowed maximum in lender allowed concessions the simple solution is to lower the sales price. In return this lowers the loan amount and the seller can still cover the closing costs and pre-paids (taxes, insurance, HOA escrows) from the proceeds of the purchase. The proceeds, in case you are wondering, come from the money going to the seller for the purchase of the home.

Plain math example:

• Allowed seller concessions 6%
• Closing costs 1.5%
• Pre-paids 4.5%
• Sales price $200,000
• Loan amount $193,000
• 6% of $193,000 is $11,580
• Cash to seller decreased to $181,420 ($193,000 – $11,580)
• Cash from buyer $7,000 (down payment)

The seller cannot contribute (under most rules) to the down payment. Seller concessions can only go to closing costs and pre-paids. Check with your reputable lender and see what maximum concessions are and how they may be used for your particular loan program.

As a seller offering the max in concessions is a great way to attract buyers.

UPDATE: Taxes, insurance and HOA are NOT considered closing costs. Although they may be paid at the time of closing they are costs that would be required to be paid regardless of whether or not there is a loan. If you do not wish to escrow your taxes, insurance and HOA fees most lenders and most loan programs allow a “waiver of escrow” for a small increase in interest rate. The reason the interest rate increases is because loans without escrow accounts present a higher risk to the lender.

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While eating dinner with my wife at one of our favorite Mexican Cantinas, which also happens to be less than a mile from home, we overheard two other diners discussing something we know quite a bit about. What caught my ears was when one of the ladies said to the other, “So she pulls into my driveway in her Porsche and gets out in a tight black dress and heels and I think to myself, ‘this girl is not dressed to crawl around in my attic and crawl space’.”

At first I thought maybe she was talking about a real estate agent but she continued, “I mean what kind of appraisers are these banks sending out these days? I could just imagine her crawling up on the roof and on ladders – she didn’t even have a ladder.”

It was at that point I realized she, like countless others, likely does not know the difference between an appraisal and an inspection. Chances are more people do not know the difference than do. In fact I run into it regularly in my own work when people say things like, “the guy didn’t check the outlets or water pressure or anything”.

In an effort to help the reader better understand let’s start with saying what the lender wants in almost every case in an appraisal not an inspection. There are some cases where the lender may ask for an inspection but in almost every case it is an appraisal. The difference? The appraiser tells the lender what they believe the actual worth/value of the property to be. The inspector tells the future home owner if there may be issues with the property that need to be dealt with now or may present an issue in the future.

Inspectors are there to find things like water leaks, bare wiring, code violations, etc.

Appraisers are there to tell the lender their estimation of the value of the property.

Then you get very confusing terms from people who should know better like “appraisal inspection”. There is also something called a Broker Price Opinion (BPO) which is neither and has no value when a loan is being considered.

Related articles

• Home Inspection or Appraisal: What’s the Difference? ASHI Sets the Record Straight for Homeowners and Buyers (eon.businesswire.com)
• Hvcc Update!!!! It Hurts the Consumers & Our Economy!!! (annarborundressed.com)
• The Ten Reasons People Can’t Sell Their Homes (247wallst.com)
• What is a BPO? (Broker Price Opinion) (findwell.com)
• All You Need To Know About Appraisals (apartmenttherapy.com)
• Home Seller and Buyer Liability for a Home Inspection (brighthub.com)

I can’t say it any better than my friend Jennifer Fivelsdal “Just a few years ago it was not uncommon to see a house assessed at $200,000 selling for $400,000 and this made home sellers happy.  That was a market called a Seller’s Market, in other words more buyers and fewer properties.  The well known rule of supply and demand dictates that a higher demand with a limited supply will result in higher prices.  Today the scenario is so different.  Very high inventory and few buyers makes this a Buyer’s Market. In this case buyers want to spend less and get much more for their money.”

We are very much, for almost every market, in a buyer’s market. More now than ever before many sellers are having to short sell their home or bring cash to closing to pay the difference between the sales price and the mortgage pay off. To be sure a home seller may want to have their home appraised independently. While that appraisal cannot be used by the buyer’s lender due to all sorts of rules and regulations it should still be a standard, Uniform Appraisal and the result should be within a few percentage points. If you are in the Atlanta area I can give you the names of a few Atlanta area Georgia licensed appraisers.

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June 14, 2010   04:37 PM

Representative Thomas Price
U.S. House of Representatives
424 Cannon House Office Building
Washington, DC 20515-0001

Subject: Renew Critical Housing Programs: NFIP and RHS

Dear Representative Price,

Congress left for the Memorial Day recess, leaving two critical housing programs unauthorized or unfunded. On May 31, authority for the National Flood Insurance Program (NFIP) expired. Lenders have stopped accepting applications for the Section 502 rural housing program, which has exhausted its funding.

Until Congress returns and extends these programs, worthy homebuyers will be left without access to mortgages. Given the many challenges financial and real estate markets are facing, now is not the time to create another, but avoidable, obstacle to real estate transactions. Please do not let this continue.

As a Realtor, I understand the importance of these programs to every region of the nation.  A real estate recovery can’t survive the uncertainty created by Congressional inaction.

Rural families in every state in the nation rely on the Section 502 single family guarantee program to allow them to repair, renovate and purchase homes, as well as prepare sites with water and sewage facilities.

Today, property owners in every state depend on these programs. Each day the Congress fails to act, thousands of real estate transactions will be delayed and homebuyers and homeowners will be left in the lurch.  Upon your return, Congress must swiftly take the necessary steps to ensure the continuation of these critical and essential insurance programs.

Sincerely,
Ken Cook
2300 Windy Ridge Pkwy
Ste. 840N
Atlanta, Georgia 30339

[httpv://www.youtube.com/watch?v=2Hfb0R7TCv4]

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Blog posts are generally best when timeless but this one should serve as a reminder to those who waited … and waited too long. For several months it has been told, reported and spread that interest rates would approach or hit another all time low while housing prices continued to be low and inventory continued to be high.

That time is now.

The truth is it is always a “good time to buy” especially when you are moving to a new city, upsizing, downsizing, or simply upgrading. The deeper truth is some times are better times to buy than others. Take the strawberry for example.

A few days ago I stopped in the local market to pick up some bread and meat and in the entrance there was a large display of bright red strawberries. It looked to be quite literally millions of them. They were loose and prepackaged in containers of various sizes all the way up to a “banana box” carton. This is the first time I have ever seen that many strawberries in that particular market.

Not only were there so many strawberries but the people were all over them. It was like a fire sale at the dollar store with bags and buggies and moms, dads and others looking over the display and taking them away swiftly. In fact there was a stock cart also filled with them sitting just a few feet away presumably to restock as needed. It looked as if it would be needed soon!

Most interesting was the price – 3 pints for $4. Now I’m not sure if that is a good price in your area but in our area it’s normally $5 for 1 pint. Obviously, even if you are really bad with the math, this is a tremendous bargain. In fact so tremendous one would imagine a lot of those packages going home will not be consumed in time and some will even go to waste.

The housing market right now is like those strawberries.

There is a huge amount of inventory and many professionals speak regularly of “shadow inventory”. It is said there are as many as a million or more homes which are simply not on the market right now because it may be more profitable to wait until the market recovers to list and sell. Maybe so. If that is accurate it only means the inventory levels will be high a little longer.

Top the overstock inventory with the very real fact that interest rates are the lowest they have been and you have a win win situation for any buyer.

I can say this about every commodity: the best time to buy is when others are having a difficult time selling. Overstocks (harvest time) and cheap money could absolutely make this the best time to buy in our lifetimes.

Actually this should be title “How to kill your chance of closing on time” or “How to sabotage your own home purchase or refinance”. Then again this is the short, short list of a long list of things you can do to bring your loan process to a screeching halt.

Be reminded of the number of people who put a lot of effort in your loan to get it to the closing table. In fact from my office door right now I can see four full-time people who work behind the scenes on every loan. I can see the set-up person, the processor, the compliance officer and the underwriting department supervisor. That doesn’t include your insurance company and the people who touch the policy there, the agents and all the people in their employment who work on your file, the appraiser, inspector, title office and all the people who are involved in working on your file and others. When you do not close all of the work of all of those people is for nothing. That time could have been invested in someone who doesn’t do the things we are talking about today.

Over the years I have seen a lot of reasons for people to be denied a loan after then have been pre-qualified and before they close. Everything from quitting their job to buying a new boat to something as simple as applying for a student loan and being approved. Here is the rule of thumb:

From the time you are pre-approved to the time you have your keys and paperwork in your hands plus about 90 days do not apply for any credit, quit your job, spend your saving, cash out your 401K, co-sign with someone on a loan, or anything else with your money or your credit. Think I’m kidding? I’ve seen it happen no less than two dozen times in the last few years.

Hopefully you are working with a loan officer who knows how to properly instruct you at the time of application or pre-approval and who knows how to accurately answer your questions about changes in employment, income, savings, or credit. If not call me and I’ll find one for you. I know loan officers in almost every state. Now get some popcorn and enjoy this brief video

httpv://www.youtube.com/watch?v=KoC3on2apH0

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Sounds easy to ask, doesn’t it? “When can we close?”

Sure, everyone would like to hear, “Oh, just whenever you’re ready!”

The truth? Whether you are a real estate investor looking for a mortgage for acquisition, rehab or construction or you are a homeowner just looking to purchase a home there are a couple of points you need to be aware of when it comes to closing speed and dates for any mortgage loan.

Closings are not demandable even by your real estate agent – a common fallicy among inexperienced agents. Many moving parts are involved in closing on a purchase or a refinance. Pay special attention to the list of items at the end of this article which can cause delays. Take special note to how many of those are under your control or within the control of the lender/broker. The person who will actually be making the final scheduling of your closing will be the lender who will pass that information to the processor who will pass it to the attorney. Real estate agents do not control or have the ability to affect closing dates and times (although some want to force the issue around their schedule it’s actually up to the lender first and you second – I don’t care when you close so long as you close!)

Here is an average sampling of how this works. You’ve already called us and been prequalified – since you know that’s the correct order of things – and now you’re shopping and you’ve found a house.

1. We know the most often required documents so we gather those from you ahead of time.
2. You make an offer on a house.
3. A couple of days later that offer is accepted.
4. Generally, the offer is going to show a closing date 30 days from the day the offer was made. Not from the day it was accepted.
5. You tell us the offer was accepted so we start “start the ball rolling”.
6. An appraisal must be done and this requires an executed sales contract. Sometimes we get that in our office right away, sometimes – for one reason or another – it is delayed. Appraisals take 2 days to a week as a general rule.
7. While we’re waiting on the appraisal we’ll “update your docs” which means we’ll ask for current pay stubs, bank statements, and any other documentation to prove income and assets. If you get those back to us right away there’s no delay. If you drag your feet – there is a delay!
8. We’ll need insurance documentation – this is entirely dependent on the co-operation of your insurance company. As I am writing this our processing department is “having fits” with an insurance company who has held up a closing for over 5 days while we wait on proper documentation. That’s rare, most insurance companies are prompt and professional.
9. Once we have all the required documentation we send the “package” to the underwriter. Underwriting can take as little as one hour and as much as several days. The deciding factor is underwriter workload.
10. The underwriter may ask for additional documentation. If they do you can (a) argue with the processor about having to provide it and end up sending it anyway or (b) get it back in as quickly as possible.
11. Once the underwriter has issued a “Clear To Close” with no further conditions you’re good to go.

Average closing time from application to close? About 14 days industry wide. It can happen in as little as 48 hours but that is rare [edit: since this article was originally published in 2006 new federal regulations have been passed requiring a minimum of 3 business days for the borrower to contemplate the mortgage offer before the lender can proceed which adds a little time to closing].

Lenders and brokers who advertise 24 hour closings are omitting the first 10 steps from above. NOBODY can close a purchase loan in 24 hours from the time your offer was accepted.

Delays in closing can be caused by many things. More often than not delays are caused by one or more of the following:

1. Fully executed contract delayed. This happens more often on foreclosures where the seller is a bank and it takes them a few days to sign the contract and return it.
2. Appraisal coming back with a value lower than the sales price. Very rare but it has happened.
3. Appraisal coming back with “subject to repair” comments which exceed those allowable by the lender.
4. Lack of co-operation from the insurance company. Loss-Payee Clauses are requested in writing and are generally returned within 24 hours. Anything longer is considered a delay.
5. Lack of co-operation from current mortgage company in returning pay-offs or Verification of Mortgage (VOM).
6. Lack of co-operation from employer in returning Verification of Employment (VOE).
7. Income and/or assets on application used for pre-qualification being overstated and not supportable by documentation.
8. Borrower’s earnest money check not being deposited into the Real Estate Broker’s escrow account.
9. Problems with the title to the property – discovery of liens or multiple title changes in short succession.

These are just a few “hiccups” that are fairly commonplace on my side of the desk. The most important thing to remember is that the staff at your mortgage broker or lender is working for you. They don’t get paid unless and until your loan closes. So guess what? That’s right! They really want your loan to close.

It takes dozens, often hundreds, of man-hours to take a loan from application to closing. There are many people involved in the process that you never know exist. Some of them work on commission and only get paid if your loan closes. Others are on salary and of that group some just don’t care.

Most broker’s are very committed to you. I can speak for my own staff and say they definitely take it personally … the good and the bad.

Ken Cook – Georgia – FHA, USDA, VA and Conventional Home Loans (678) 439-8683 NMLS ID 208452 – Originally published in Active Rain on July 24, 2006.