What Happens at a Mortgage Loan Closing Meeting? Let’s Take a Look

What Happens at a Mortgage Loan Closing Meeting? Let's Take a LookSo you’ve found the perfect home, the seller has accepted your offer, and now you’re just waiting for the mortgage to close before you wrap up the sale and take possession. It’s time for the closing meeting.

But what does this meeting entail? And what do you need to prepare for it? Here’s what you need to know.

The Day Prior: Walking Through The Property

24 hours before the closing meeting, you’ll be given an opportunity to walk through the property and do a final inspection. During this inspection, you’ll be able to look for any damage that may have occurred between contract and closing, which means you can negotiate repairs with the seller.

It can be a good idea to schedule your closing date around the 20th of the month, so that if you do find any problems during the walkthrough, you can address them before you take possession.

The Closing Meeting: Title Insurance, Contracts, And More

Typically, the mortgage closing and the home sale closing happen at the same time. During your closing meeting, you’ll need to sign – and bring – a variety of documents in order to take possession of the home. You’ll want to ensure that you bring your good faith estimate, proof of homeowners insurance, contract, and inspection reports to this meeting.

You’ll also want to bring any and all documents that you sent to your bank as part of the home buying process. At this meeting, you’ll discuss the sale with the seller, the seller’s agent, the representative from the title company, the closing agent, the lender, and any attorneys that may be present. By the end of the meeting, you’ll receive a variety of documents, including a deed of trust or mortgage contract and a settlement statement.

You may also be required to sign a mortgage note, which is a note that states you intend to repay the mortgage loan. This note details the terms of your mortgage, including the amount of the loan and what action the lender is entitled to take if you miss payments.

A mortgage loan closing meeting doesn’t have to be complicated. Although there’s a lot that will happen at this meeting and there are a number of documents you’ll need to bring, a qualified mortgage advisor can guide you through the process. Contact your trusted mortgage professional today for a list of what you’ll need to bring and what you can expect to happen at your closing meeting.

Thinking About Downsizing? Here’s What You Need to Know About Life in a Condo

Thinking About Downsizing? Here's What You Need to Know About Life in a CondoThe shift from home living to condo life may seem like a minor one, but there are plenty of things that will differentiate your lifestyle other than size when it comes to making a condominium purchase. If you’re contemplating this move and wondering about some of the things that this might entail, here are a few factors that are worth considering.

The Fees You’ll Have to Pay

While a smaller condo is unlikely to have the same associated costs as a large home, you will be paying a monthly condominium fee that will be covering maintenance and insurance so that many repairs and upgrades won’t have to be paid out of pocket. While this cost will not cover each and every maintenance issue that can occur in a condo, it should keep you covered for many standard home costs. When purchasing a condominium, it’s important to read about what this monthly fee entails.

The Life of Central Living

Life in the suburbs can often mean that you’re far away from the amenities of the city, but many condominiums are built in areas that are full of restaurants, pharmacies, cultural centers and grocery stores which are only a short distance away. If you don’t mind getting into the car to run your errands, this might not be that important to you, but if you enjoy the exercise and like having amenities close by this type of living situation can be a welcome change.

Less Room for Stuff & Storage

Condo life can certainly eliminate many of the responsibilities of having a home, but if you’re downsizing there’s a possibility that you may have to get rid of a large number of items to successfully fit into your new space. If you’ve thought about the decision a lot and are convinced that condo living is the right choice, it’s still worth considering how much storage space you will have in your new home so that you can plan for this change, and shift your living style to fit the demands of a smaller space.

There are a lot of things to think about if you’re planning to downsize into a condo, but if you’ve considered the space you’ll have to work with and the conveniences that will make your life easier, you’re probably already prepared for the shift. If you’re curious about condo living and are ready to look at what financal options are available for your current situation, you may want to contact your trusted mortgage professional for more information.

How to Give the Ultimate Christmas Gift: Paying Off a Family Member’s Mortgage

How to Give the Ultimate Christmas Gift: Paying Off a Family Member's MortgageChristmas is just around the corner, and if you’re in a position to do it, paying off a family member’s mortgage is one of the biggest gifts you could give this holiday season. A mortgage can be a heavy burden on a young homeowner, which is why paying it off is the ultimate act of charity. But when it comes to paying for someone else’s mortgage, the process isn’t entirely straightforward.

So how do you pay off a family member’s mortgage? Here’s what you need to know.

Be Wary Of The Gift Tax

Under US law, you can provide a cash gift to someone else – entirely tax-free – as long as it doesn’t exceed the annual limit for that calendar year (for 2015, the annual limit is $14,000). If the gift amount exceeds the annual limit, you’ll need to pay tax on the difference or tap into your lifetime exclusion.

The IRS gives all citizens a unified credit/lifetime exclusion, which allows the transfer of up to $5.43 million – tax-free – over the course of your lifetime. If you exhaust this amount, you’ll need to pay taxes on all financial gifts you give thereafter.

Make Sure You Write A Gift Letter

If you plan on paying off a family member’s mortgage, you’ll want to include a gift letter with the payment – otherwise, the bank and the government may believe the money is a loan. A gift letter clearly states that you are giving money to a relative to assist them with a mortgage. In your gift letter, you will need to plainly state that you have no intention of ever seeking repayment and that you claim no ownership stake in the property in question.

Remember: You Don’t Get To Claim Mortgage Interest

Mortgage interest payments are usually a tax-deductible expense – if you’re the homeowner. But if you’re paying someone else’s mortgage, you’re not eligible to deduct the interest on your taxes – only the homeowner can do that. Even if you feel a personal obligation to assist the homeowner in paying the mortgage, it’s not your debt to pay – and that means you can’t claim interest on your taxes.

Paying off a relative’s mortgage is a fantastic gift that will help your relatives to get out of debt and pursue their life goals. And although it’s a fairly straightforward process, you still need to take the time and care to ensure you process the gift properly. Contact your local mortgage professional to learn how you can give the gift of a mortgage.

What’s Ahead For Mortgage Rates This Week – November 30, 2015

Whats Ahead For Mortgage Rates This Week November 30 2015

Although last week’s economic calendar was cut short by the Thanksgiving holiday, several housing-related reports were released. The FHFA reported on third quarter results for its Housing Market Index and the Commerce Department reported on new home sales for October. Freddie Mac released its weekly report on mortgage rates and data on new weekly jobless claims was also released.

FHFA, Commerce Department report Gains for Home Prices, New Home Sales

Home prices for mortgages associated with mortgages owned or backed by Fannie Mae and Freddie Mac increased 1.30 percent during the quarter ended September 30. This was the 17th consecutive seasonally adjusted quarterly increases for home prices based on sale-only transactions. FHFA home prices rose by 0.80 percent from the second to third quarter of 2015 and rose by 5.70 percent from third quarter 2014 to third quarter 2015 readings.

New home sales rose by a seasonally adjusted annual rate of 10.70 percent to 495,000 sales based on a downwardly revised September reading of 447,000 new home sales.

New home sales results were mixed according to the Commerce Department. Sales of newly built homes rose by an astounding 135.30 percent in the Northeast and increased by 8.90 percent in the South and by 5.30 percent in the Midwest. Sales of new homes declined in the West with a reading of -0.90 percent.

Home shoppers received good news as the median price of a new home fell 6 percent to $281,500. Inventory of new homes increased to its highest level since 2010. Higher inventory could ease demand and rapidly rising home prices associated with low supplies of new homes for sale.

Mortgage Rates Mixed, Jobless Claims Lower

Average mortgage rates varied last week according to Freddie Mac. 30-year fixed mortgage rates were two basis points lower at 3.95 percent; the average rate for a 15-year fixed rate mortgage was unchanged at 3.18 percent, and the average rate for a 5/1 adjustable rate mortgage was three basis points higher at 3.01 percent. Average discount points where 0.70 for a 30 year fixed rate mortgage and averaged 0.50 percent for 15-year fixed rate mortgages and 5/1 adjustable rate mortgages.

New jobless claims fell from the prior week’s reading of 272,000 new claims to 260,000 new claims. Analysts expected a reading of 270,000 new claims. The four-week rolling average of new jobless claims was unchanged at 271,000 after an adjustment to the prior week’s average of 270,750 new claims to a weekly average of 271,000 claims filed over the previous four weeks.

What’s Ahead

This week’s scheduled economic news includes reports on construction spending along with Labor Department releases on the national unemployment rate and Nonfarm Payrolls. Freddie Mac’s report on mortgage rates and weekly data on new jobless claims will be released as usual.

S&P Case-Shiller: September Home Prices Gain Across U.S.

SP CaseShiller September Home Prices Gain Across US

Home prices increased across the S&P Case Shiller 20-City Home Price Index in September. According to the 20-City Home Price Index, Year-over year home price gains increased to 5.50 percent from August’s reading of 5.10 percent. 17 cities posted higher year-over0year price gains in September as compared to August.

Western cities led price gains with San Francisco, California reclaiming its lead with a year-over-year gain of 11.20 percent in September. Denver, Colorado followed with a year-over-year gain of 10.90 percent and Portland, Oregon achieved the third highest year-over-year home price gain of 10.10 percent. Phoenix, Arizona had the longest consecutive run of year-over-year price gains for ten months and had a year-over-year gain of 5.30 percent.

Month-to Month Home Prices Indicate Stronger Housing Markets

After seasonal adjustment, the 20-City Home Price Index reported a month-to-month gain of 0.60 percent in September with home price gains in 19 cities. David M. Blitzer, Chairman of the S&P Indices Committee, said that home prices are growing at more than twice the rate of inflation. While this is good news for home sellers, it also means that home buyers are finding that home prices are rising faster than other economic sectors. Rising home prices present a challenge for first-time and moderate income home buyers. First-time buyers drive housing markets as their home purchases bring new demand into the market and allow current homeowners to move up to larger homes.

Mr. Blitzer also said that in spite of widespread media coverage of the Federal Reserve’s likely plan to raise its target federal funds rate from 0.00 to 0.250 percent to 0.25 to 0.50 percent in December, the increase in the federal funds rate should not cause an major rise in mortgage rates, which are expected to stay near 4.00 percent for a 30-year fixed rate mortgage.

Based on readings for national median income, median home price and average mortgage rates, Mr. Blitzer said that affordability for homeowners within the median income range who were buying median priced homes had “slipped recently.”

Year-end reports on housing markets and general economic conditions will likely cause adjustments to forecasts for home prices and affordability. Strong labor markets may improve affordability for home buyers and the actual impact of any Fed move to raise rates will influence housing markets and home prices in 2016.

Goodbye, Junk! 5 Tips for Reducing the Amount of ‘Stuff’ You Need to Move to Your New Home

Goodbye, Junk! 5 Tips for Reducing the Amount of 'Stuff' You Need to Move to Your New HomeAre you in the process of buying a new home? Then now is the perfect time to finally go through all the clutter and make some tough decisions about what needs to move with you and what needs to go away.

There is no point in waiting until after a move to go through the junk lying around, as tempting as it may be, so here are five ways to decide what should find a new home before a move.

Start With A Trip To The Dump

Before starting your move, grab some garbage bags and do a sweep of the house, making sure to toss out anything that needs to go to the dump. This will clear up the home of anything unnecessary and makes it easier to throw out some items when there’s no decision making pressure.

Decide What Furniture Will Be Replaced In Advance

A new home often means new furniture. By deciding in advance which items will be purchased new, homeowners can prepare to either sell or give away their older furniture before they move. Saving space and cutting down one extra step after moving in.

Sell Or Donate What You Don’t Need

Holiday decorations are the perfect example of items that are only taken out once a year and tend to be replaced before they are ever reused. There are probably similar boxes or shelves in every home filled with items that will never be used again but are still held onto.

Now Is A Good Time To Go Through The Closet

Clothes are not looked at as seriously as other objects when clearing space because they can easily fold down or be tucked away. It’s simpler for most people to just throw all their clothes in a box or travel bag before moving, but this is the perfect time to finally go through and donate anything that doesn’t fit or is never worn.

Be Patient With Children

It is hard for kids to part with their toys, even ones they haven’t used in years. These are part of their identity and telling them what they need to throw out can impact them emotionally and make a move that much harder. Sit down with the children and have a long talk about moving and donating items to see if they are ready to go through their things.

Existing Home Sales Fall More Than Expected

Existing Home Sales Fall More Than Expected

Sales of previously owned homes reached 5.36 million sales on a seasonally adjusted annual basis and fell by 3.40 percent in October according to the National Association of Realtors®. Rising home prices and a shortage of available homes strained housing markets. Concerns over potentially higher mortgage rates may have sidelined home buyers as concerns over an anticipated rate hike by the Federal Reserve persisted. Many analysts expect the Federal Reserve to raise rates at its December meeting of the Federal Open Market Committee, which oversees the Fed’s monetary policy. Raising the target federal funds rate would cause consumer interest rates and mortgage rates to increase as well.

Shortage of Available Homes Could Lead to “Inventory Crunch” Next Spring

Lawrence Yun, Chief Economist for the National Association of Realtors®, cited concerns over the shortage of homes for sale. He said that a persisting shortage of available homes could lead to an inventory crunch during next spring’s peak selling season.

Home prices increased by 5.80 percent year over year to an average of $219.600. Rising home prices impacted decreasing sales in the West and South while home sales held steady in the Northeast, where home price growth was the slowest.

First-time Home Buyers Lag in Home Purchase Numbers

Although first-time buyers represented 31 percent of home buyers in October, which was a two percent increase over September’s participation, first-time home buyers usually represent approximately 40 percent of buyers of existing homes. First-time buyers are important to housing markets as they generate sales of homes by homeowners wishing to move up or relocate.

First-time buyers can be adversely affected by home prices and mortgage rates; a shortage of first-time buyers could create further slowdowns in home sales. There is good news due to steady job growth, which is important to those who are considering buying a home. Strict mortgage credit requirements are showing signs of relaxing and home builders are encouraged by current and future housing market conditions.

The National Association of Realtors® forecasts that 2015 sales of pre-owned homes at a level of 5.3 million sales, which would be the highest sales rate since 2007. Sales of existing homes are expected to rise by 3 percent in 2016, but mortgage rates and affordability will continue to influence actual sales and overall health of housing markets in the New Year.

What’s Ahead For Mortgage Rates This Week – November 23, 2015

Whats Ahead For Mortgage Rates This Week November 23 2015

Last week’s economic events included reports the National Association of Home Builders Housing Market Index, Housing Starts and the release of minutes for the most recent meeting of the Fed’s Federal Open Market Committee. The details:

NAHB: Builder Confidence in Housing Markets Dips

The National Association of Home Builders reported that builder confidence dropped to a reading of 62 as compared to October’s revised reading of 65. Any NAHB reading above 50 indicates that more builders are positive about market conditions than not. NAHB’s assessment of housing market conditions is based on readings for three aspects of current and future market conditions. November’s reading of 67 for current housing market conditions was three points lower than October’s reading of 70. Expectations for market conditions for sales of single family homes over the next six months fell by five points in November to a reading of 70. Builders’ sentiment about prospective buyer foot traffic in new single family developments rose by one point to 48.

Home builders started more new homes than at any time since September 2007; analysts cited wage growth and low unemployment figures along with high demand for homes as driving builder confidence in housing markets. Demand for homes continued to exceed homes available for purchase, which is a driving force for builder confidence.

NAHB Regional Builder Confidence Readings 

Regional readings provide a snapshot of regional housing market conditions on a month-to-month bases and on a three month rolling average. The monthly readings for November were lower except for the Western region, which gained one point for a reading of 77. The Northeastern region held steady with a reading of 52; the Midwest’s reading also decreased by one point to 59 and builder confidence in the Southern region fell by five points to 62.

Monthly regional readings for home builder confidence can be volatile due to regional economic conditions; the NAHB provides a three-month rolling average for its four U.S. regions. In November, the Northeast region reported a reading of 50 which was three points higher than October’s reading. The Midwest region was unchanged from October’s reading of 60; the South also reported no change from its October reading of 65. The Western region posted an increase of 69 to 73 over the three months between August and November.

Housing Starts Lowest Since Spring Floods

According to the Commerce Department, housing starts fell by 11 percent to an annualized reading of 1.06 million in October. This was the lowest reading since last spring, when construction was adversely impacted by flooding. September’s reading was adjusted to 1.19 million starts. Meanwhile, building permits issued rose by 4.10 percent to an annual rate of 1.15 million starts in October.

While housing starts fell by 18.60 percent in the South, permits issued rose to their highest level since 2007. The South is the most active region for home construction and accounts for half of all new home construction in the U.S.

Mortgage Rates, New Jobless Claims Lower

Mortgage rates fell across the board last week according to Freddie Mac. The average rate for a 30-year fixed rate mortgage fell by one basis point to 3.97 percent; the average rate for a 15-year fixed rate mortgage fell two basis points to 3.18 percent and the average rate for a 5/1 adjustable rate mortgage was five basis points lower at 3.03 percent. Discount points averaged 0.60 percent for a 30-year fixed rate mortgage and 0.50 percent for 15-year fixed rate mortgages and 5/1 adjustable rate mortgages.

New jobless claims also fell last week to a reading of 271,000 new claims filed as compared to expectations of 270,000 new claims filed and the prior week’s reading of 276,000 new claims filed. Lower jobless claims indicate further strengthening of labor markets, but seasonal hiring may have positively impacted the reading for new jobless claims.

What’s Ahead

Next week’s scheduled economic news releases include several housing reports. Existing Home Sales, the S&P Case-Shiller Housing Market Index, FHFA House Prices and New Home Sales will be posted along with regularly scheduled reports on mortgage rates and new jobless claims. There will be no economic reports released on Thursday or Friday due to the Thanksgiving holiday.

What Factors Affect Mortgage Payments?

As you can see in the video below, the amount of the down payment the size of the mortgage loan, the interest rate the length of the repayment term and payment schedule will all affect the size of your mortgage payment. In bullets:

  • Down payment
  • Loan size
  • Interest rate – fixed or adjustable
  • Repayment term – how long
  • Payment schedule – how often

all affect the size of your payment.

A Step-by-Step Guide to Refinancing a Traditional Mortgage to a FHA Mortgage

A Step-by-Step Guide to Refinancing a Traditional Mortgage to a FHA MortgageRefinancing a mortgage can provide a homeowner with many benefits, and many are interested in refinancing their traditional mortgage into an FHA mortgage to take advantage of low interest rates. Depending on the specific circumstances, this step may lower the monthly payment, reduce interest charges, adjust the loan term so that it is more beneficial for achieving financial goals and more. Those who are interested in refinancing in an FHA mortgage may consider these steps.

Understand the Rules and Requirements

There are specific rules in place regarding refinancing under the FHA program. For example, the loan amount may be up to 96.5 percent of the value of the home, but the homeowner cannot take cash out of the refinance transaction. If cash is taken out, the loan-to-value limit under the FHA program is usually 86 percent of the property value. These limits are in place for loan amounts that are $417,000 and under. Loan amounts that are between $417,000 and $729,750 will fall under a different set of rules. Homeowners should be aware of these rules to ensure that the FHA program is the best fit for their unique goals.

Review Goals and Current Mortgage Details

The next step for homeowners to take is to review their own financial goals and to define their reasons for refinancing. In addition, it is important for homeowners to contact their current mortgage company to learn more about their current interest rate, if there is a prepayment penalty and the current loan balance. Estimating the property value is also important. Homeowners may have a reasonable idea about property value, or they can contact a real estate agent for a valuation. When all of this information is taken into account, the homeowner will have a better idea about what to expect from refinancing.

Each homeowner will be in a unique situation regarding current loan details, property value and goals that they want to achieve through refinancing. It can be confusing to decide if refinancing is the right move to make, and it can be even more complicated to determine which loan program is a best-fit for the goals of the homeowner. Those who are interested in refinancing from a traditional mortgage into the FHA loan program may contact a mortgage broker soon to discuss the options and to determine if this is a best fit option for them as a first step in the loan process.