TOP 6 FREQUENTLY ASKED CENTRAL MASS HOME BUYER QUESTIONS

Like careful consumers who are investigating any major purchase, Central Mass. home

Chalkboard
“© Martin Konz/Adobe Stock”

buyers need to address some of the same basic queries. Among home buyers, those who already own Central Mass. homes may think they have different questions than do first-timers, but even for those who have successfully navigated the process before, if it’s been a while since then, some basics may need refreshing:

  1. Should I buy or rent? This is quite rightly the lead question any Central Mass. home buyer needs to answer. It’s not one that many Central Mass. residents who are already home owners spend a lot of time on since the answer for their own family has already been a “yes.” For them, unless some major changes have come to pass, they can safely assume that homeownership is still a no-brainer.
  2. How do I get started? There are two good answers here: Get a mortgage pre-approval, and/or tap the services of a great Central Mass. Realtor®. Although a lender’s pre-approval isn’t a requirement to work with me I do require a pre-qualification (as a minimum prerequisite), getting a green light in advance can’t help but create a positive atmosphere with sellers and their representatives. It demonstrates serious intent and in a competitive situation could even wind up winning the day.
  3. What’s the right credit score to buy a house? 620-650. Okay, okay, I know there’s actually no number that’s truly the “right” credit score for all circumstances. It depends on so many possible outside factors that the exceptions are too numerous to list. That 620 number (and higher) does seem to be one that lenders like to see; with 580 the common minimum low down payment FHA qualifier, but that can even be
    Roadside Signpost - Questions & Answers
    “© Indiloo Designs/Adobe Stock”

    less in order to qualify for the FHA 10% down payment program. The only bullet-proof answer for the “right” credit score is; the best one you can build!

  4. How much will the down payment be? This one depends on the Central Mass. property you choose, the home loan you select and also, to a degree, on how much you want to pay. It used to be common sense that you should pay as much as you can afford in order to minimize the amount of interest you wind up paying over the life of the home loan. But with interest rates as low as they are today, some financial gurus are less confident about that advice: there may be more lucrative ways cash can be put to work.
  5. How much do I have to pay my agent? Nothing. The buyer’s agent fee is paid from the proceeds of the sale.
  6. Should I use a real estate brokerThis answer comes from the HUD.gov website: “Using a real estate broker is a very good idea.” As HUD says, “the details involved in home buying, particularly the financial ones, can be mind-boggling.”

Needless to say, that last Top Home Buyer FAQ is a personal favorite. It’s really just another way of saying, “call me!”…..Realty Ace, LLC

fair housing logo

 

HAVE YOU PUT ASIDE ENOUGH FOR CLOSING COSTS?

Have You Put Aside Enough for Closing Costs? | Simplifying The Market

Have You Put Aside Enough for Closing Costs?

There are many potential homebuyers, and even sellers, who believe that you need at least a 20% down payment in order to buy a home, or move on to their next home. Time after time, we have dispelled this myth by showing that there are many loan programs that allow you to put down as little as 3% (or 0% with a VA loan).

MANY CENTRAL MA HOMEOWNERS HAVE THE OPTION: LOAN OR LINE OF CREDIT

There’s a reason the English language’s greatest playwright was called “The Bard of Avon”

Home equity loan written on a paper. Financial concept.
“© designer491/Adobe Stock”

and not “The Bard of Central MA.” In Hamlet, for instance, despite the fact that Shakespeare’s Polonius character is supposed to be a wise counselor, he gets at least one piece of advice wrong when he tells his son, “Neither a borrower nor a lender be.

This is flat-out terrible advice—at least for many Central MA homeowners.

The thing about borrowing is that if done prudently, borrowing can free some of the value a given home-grown residence represents. There are two different ways that happens:

First off, there is the property’s stored value (the equity). As each monthly mortgage payment whittles down the amount owed to the lender that equity builds; more so if the value of real estate happens to be growing in general, which has been true lately. Unlike the other daily living expenses a family incurs, the dollars paid for your Central MA shelter aren’t entirely “spent”; that is, lost. Like a savings account, the portion of the money that isn’t apportioned to interest will be recapturable when the home is sold.

Better yet, you don’t have to sell the place in order to free some of the value of that equity. After all, if you had to move out of your house to make use of it, it would be highly inconvenient. But you can make use of the property’s value in the meantime by naming it as collateral for a loan; either a line of credit (HELOC) or a home loan (a second mortgage). Because both types are smiled upon by lenders since they are secured, the interest rate will be less than for other kinds of personal loans.

The second way that Polonius’ advice would have been wiser in Hamlet’s Denmark or Shakespeare’s England than it is here today involves a more contemporary character: Uncle Sam. Some or all of the interest paid on either a HELOC or a second mortgage may be taken as a personal income tax deduction, depending upon various factors. Polonius might foolishly offer some blanket advice about that but wiser counsel would be to consult your tax advisor.

Paper with words second mortgage on a wooden background.
“© designer491/Adobe Stock”

When it comes to deciding which makes more sense for tapping into your home’s equity— opening a line of credit or second mortgage, the choice depends on the uses planned for the cash. If you know exactly how much you need (as when a major home repair is needed), the key advantage of an equity loan is that the interest rate and repayment schedule are fixed. With a HELOC, you have more flexibility: it works like a credit card. You can repay a borrowed amount and later tap into the line of credit again without reapplying. On the other hand, the interest rate and repayment requirements can change over time. And like a credit card, there is a built-in temptation to overuse it. Polonius wouldn’t approve…

The financial wisdom of owning your home was around long before Shakespeare’s time— it’s one thing that doesn’t change. Whenever you have a question about your own plans and Central MA real estate, I hope you’ll give me a call. As usual, the Bard had something wise to say about that, too: “Better three hours too soon than a minute too late!”…..Realty Ace, LLC

fair housing logo

FREE FICOs AND THE SEARCH FOR AN IDEAL CREDIT SCORE

Something is being offered that is actually for free. No, really.

It is truly the case that lately some banks and credit card companies have been including a

fico size
“© Michael Brown/Adobe Stock”

new benefit for their Worcester County clients: free access to their current FICO credit score.

This isn’t the same thing as the ads we’ve been deluged with for years, the ones for “free” credit reports. Most of those wound up not really being completely free, at least not if you value your privacy (as in your email and other personal information). Most of them were bent on pitching you on surprisingly pricey subscription credit monitoring services. For anyone who placed value on the time it took to tell them “no” a half-dozen ways, these weren’t really “free.”

But if you are a lucky Central MA client of one of the outfits now providing continuous access to your FICO credit score, it IS interesting to click on it now and again. The score goes down and (we hope) up as various information flows into the FICO computers.

“FICO” is shorthand for the Fair Isaac Corporation, which is by far the dominant credit rating creator. But don’t be fooled: not all FICO credit scores are the same because there are three different companies (Equifax, TransUnion and Experian) who collect the data. They pay FICO to furnish their branded versions of the scores. Each one has FICO assign different weights to different parts of your history and the result is to create three different FICO scores.

That’s why when you read a headline like Tulia’s “Magic Number: The Ideal Credit Score For Securing A Mortgage,” you’re right to be a bit skeptical, since an “ideal” credit score for Equifax and TransUnion and Experian would be unlikely to be the same. Nonetheless, the number given as “ideal” was probably pretty much about the best rule of thumb number you could realistically come up with: 740.

If 740 or higher is the ideal FICO number (considered to be in the ‘perfect’ range for mortgages), another kind of correct number for mortgage applicants was 660, which they

Mortgage Documents
“© Itan1409/Adobe Stock”

thought was a credit score that would “land a better rate and avoid jumping through additional hoops” than would 620, the basic requirement “for many lenders” looking to originate a conventional home loan.

The “most lenders” qualification, along with the differences in the credit scores offered by the different companies, means that there is a lot of wiggle room that can affect not just whether or not an applicant is successful in being offered a loan for their new home, but what the terms of the mortgage will be. Given all that, it’s really impossible to take any one credit score number and say definitely what that will mean to your loan originator.

Who doesn’t appreciate being given free access to their FICO score even if you aren’t quite certain what the rises and falls are going to mean? The only time you actually get a real-world answer to that is when you are ready to buy a home and submit your application. Remember there’s more to getting a mortgage than just your credit score. That said, you can access your credit score for free once a year at AnnualCredit.com.  Call me when I can help!…..Realty Ace, LLC

fair housing logo