Cash at Home

Everyone has a different way of saving money. Some use savings accounts, money markets, certificates of deposits, or retirement accounts. Some prefer to keep the funds at home.

When you’re applying for a mortgage, the lender will need to source all large deposits. If you can deposit the funds 60-90 days before applying for a mortgage, you will not have to explain where those funds came from. If you need to apply right now though, we can go over the deposit guidelines with you.

Give us a call at the office at (815) 324-9760 for more information.

Real Estate Taxes and How it Affects Your Total Monthly Payment

One thing that many people do not consider when shopping for their home is how much their real estate tax bill is and it’s absolute a huge part of your total monthly payment. The monthly amount you pay towards your real estate taxes , in some cases, can be as high or higher than your actual principal and interest on your mortgage.

As a best practice, ask your realtor to provide you with the property tax information on each house you’re looking at. Once you have that information, we can tell you what your estimated total monthly payment is.

Another thing to ask your realtor is if the house has a homeowners exemption or not. If it does not include a homeowners exemption, your tax bill may adjust lower the next year. Being armed with this information, you’ll be able to make a more informed decision about the houses that you’re interested in.

Student Loans Income Driven Repayment Plans and Conventional Mortgages

On a conventional mortgage, our lenders will use the actual payment you are making according to your income driven repayment plan when you are applying for a conventional mortgage. Even if you are currently paying $0/month on your student loans, as long as we can give our lenders supporting documentation from your student loan providers evidencing that the $0/month is indeed what your income driven repayment plan is, we can use the $0/month in qualifying you for a conventional mortgage.

If however, your student loans are in a forbearance or deferment, they will take 1% of your student loans balance to figure out your payment or a fully amortizing payment on a conventional mortgage application.

This will make a big difference in how much of a house you can afford, so when applying gather up any documentation you have regarding your student loan payment plans.

FHA Mortgages and Houses Near Gas Stations

One thing to lookout for when shopping for a home with a FHA pre-approval is you don’t want to purchase a house within 300 feet of an above ground or subsurface stationary storage tank with a capacity of 1,000 gallons or more that holds flammable or explosive material. We would not be able to get you a FHA mortgage on that type of property. So if it looks like to you that the house you’re interested in is close to a gas station, make sure that you ask your realtor how far away it is from the tanks.

This does not pose a problem with a conventional mortgage, so if you have your heart really set on a property that’s within 300 feet of the tanks, ask us if you qualify for a conventional mortgage.

Self Employment and 1099 Independent Contractors

If you’re self-employed or you’re an 1099 independent contractor, we have a solution for you. Many accountants will reduce your income by as many expenses as they can find. That’s helpful on saving you money on taxes, but it’s not really helpful in getting you qualified for a mortgage.

Here’s the solution. We have lenders that instead of looking at your tax returns, will instead take a look at your bank statements. The formula is simple. They’ll either look at 12 months or 24 months of your bank statements. They’ll add up all those deposits and then divide them by the amount of months. If it’s in your personal account, they’ll use that figure as your income. If it’s in your business account, they’ll reduce that number by half because they understand that you’re going to have expenses to run your business. The one thing that you have to make sure of though is that you don’t skip any months. You have to have a consistent 12 or 24 months of deposits.

It’s as simple as that. Using this program, you’ll have a higher income and more purchasing power when looking to buy a home. Let us know if we can help.

The Difference Between an Inspection and an Appraisal

This question comes up a lot. What is the difference between an inspection and an appraisal and do I need them?

An inspection is a professional that will go out and inspect the home. They’ll point out any deficiency about the home that you may want to know before you commit to buying it. They’re the individual who will essentially give you peace of mind about the soundness of the house. Their inspection however is not required to get approved for the mortgage.

The appraisal is a report that will determine the value of the home. This report is often based on similar homes within a mile radius that have sold within the last 12 months. They will make sure that the house is up to the standard of the mortgage that you’re applying for and if it’s not they will require you or the seller to make arrangements for repairs to be made before they will sign off on the appraisal. This report and service IS required to get approved for the mortgage.

Struggling to Get Your Credit Score Up?

Never fear. Your favorite mortgage team is here to help you out. At Two Rivers Mortgage Company, we can evaluate your credit and have the tools to tell you exactly what you need to do to get your credit score up. We even have the ability to force the credit bureaus to give you a new score after you’ve made a change to your credit cards, installment loans, mortgages, or collections. With this program, you can get a new credit score within 3-5 business days. We’re not a credit improvement agency, but we will do everything it takes to help you improve your score and get you in a position to qualify for a mortgage.

Remember, we’re not like the banks and credit unions. We’re not getting paid a salary to sit there and deny your mortgage loan application. We’re brokers, so the only way the lenders pays us if we get your mortgage approved. That means our interests are aligned and we want you to get the mortgage just as much as you want to. So let us help you make your dreams come true. We have the experience and the tools needed to make it happen.

Collections and FHA Applications

One thing that is coming up in many of our applications is collections. Let's face it. We've all been there. We have an unexpected medical situation that insurance does not fully cover. Since most of us do not have thousands of dollars that we just can't wait to spend on medical expenses, these expenses often go into collections.  

The good news with FHA mortgage applications is you can leave your medical collections open. They will still count as a debt on your application (5% of your balance owed will be the payment counted against you.) With NON-MEDICAL collections the magic number is $2,000. You need to get all of your non-medical collections at or below this number.  If it's now above that number, here's what I would suggest:

  1. Gather up a list of all your collections statements.

  2. Call each place and negotiate a lower amount that they'll accept to mark your account as settled. Collecting some money on your account is better than not collecting any.

  3. Go to your bank or local credit union and present them with your findings. Ask them for a signature loan to cover what you need to pay off. They'll likely want to pay the collectors directly and take your payment out of a direct deposit. Be prepared to let them do so.

Once your collections are cleaned up, you'll be in a better position to purchase a house. What's more, your credit score will start to improve.  

If you need a referral to a lender that can help you with an installment loan, call our office and we'll put you in touch with the right people. 

Things to Avoid While Applying for a Mortgage

The day has come. You picked out the perfect house to become your home. You have the contract negotiated at the terms that are acceptable to you and the seller. Your documents are in with your broker and you begin to work on your mortgage application. At this point, the house is not yours yet, but it’s moving in that direction. So what could go wrong? What should you avoid when you’re working with your broker and processor to get final approval and the clear to close on your mortgage application? Let’s go over just a couple:

  1. Don’t change jobs. Even if someone offers you a higher wage and better hours, don’t take the offer until the house is yours. The reason is that the lender will have to re-evaluate if you have a history of job stability. You don’t want to chance this and have them determine that you don’t.

  2. Don’t have your credit pulled. Right now is not the time to buy furniture for your future home or buy that new car or open up that new credit card. Leave everything as it is. The logic behind this is your lender gave you a conditional approval based on what your credit report said at the beginning. If you change the variables, it may change their decision.

  3. Don’t make large deposits. Every large deposit will have to be proven, so before you make any large deposit call your broker. They will be able to guide you in which type of documentation will need to accompany each type of deposit in order for it to be counted towards your assets requirements in your application.

There are other things along the way that you’re going to want to do. The best practice is to simply have an open conversation with your broker and processor. Their goal is to get you the final approval and clear to close on your mortgage application, so utilize them as a resource to get to the finish line of this process.

How to Pick the Perfect Home for You and Your Dog

How to Pick the Perfect Home for You and Your Dog.jpg

Written by: Cindy Aldridge of OurDogFriends.org

While having a dog is both a blessing and a joy, it can make house-hunting difficult. Will the landlord accept pets? Is there enough room for your pup to run around? Here are some things you should look for when moving to a new home.

Pick the Right Neighborhood

 Almost more than the house itself, it’s important that the neighborhood is pet friendly. Dogs, especially, will spend a good deal of time outside, so make sure there are plenty of areas to take your furry friend for walks. While you explore the neighborhood, look for signs of other dogs. Are there free doggy bags posted along walkways? Is there an open green space for dogs to romp? If there is a dog park in the city, and how close is it to your potential home? Make sure to inspect the dog park and see how the animals there behave. Do the dogs look healthy, and are they getting along? Also take into account if there is a nearby vet and what reviews say about him or her. You won’t want to have to make an emergency visit to the vet late at night if the nearest location is many miles away. Price may be a factor as well. The median listing price for a home in Ottawa, IL, is $155,000. It’s important to compare different cities to see what range is right for you.

Consider the Layout

 Smaller homes can be less expensive, but will your dog have enough room to really stretch his legs? You should look at floor plans that offer the optimum amount of space depending on the size and energy level of the breed you have. Pay attention to the locations of windows as well. If they are low to the ground, your dog may not realize that there is a barrier and may run into them. Will your dog be able to navigate the stairs easily as he ages? This is an important thing to consider if you live in an apartment with many floors to walk up. If you’re looking at houses, make sure the yard will be large enough for your dog to enjoy. Is there a fence that extends underground to keep your dog from digging his way under and escaping?

Look at Nearby Traffic

 Just because you live in a busy city does not mean you have to live in a high-trafficked neighborhood. You won’t want to live near a busy intersection. No matter how well-trained your dog is, there is always the risk of escape. If your dog does manage to get out, you will want some assurance that the traffic is slow or light.

Know Jurisdiction Regulations

 From housing associations to city ordinances, there are so many things you need to be aware of when considering a home. Some jurisdictions may limit the number of animals you can own or how much space is needed for each one. You will need a license and history of vaccinations, but you may also need to be aware of noise ordinances for your city and particular association. Unfortunately, some cities and counties outlaw certain breeds, so research that as well. You may need to make compromises to find a location that meets your specific requirements. If you’re looking at apartments, there are likely to be weight or size limits. If you’re looking to rent, be prepared to have a letter from your vet and a previous landlord detailing your history as a pet owner.

You may have more hoops to jump through than the average home seeker, but finding the right place for you and your pet will be worth the work. A positive, safe environment will be one that both you and your pooch will enjoy together.

Image Courtesy of Pixabay

Quick Credit Improvement Tip: Credit Cards

If your credit score is not quite what you want it to be, the first thing you should look at is your credit cards. 

Do you have your credit cards maxed out? If so, you are losing a considerable amount of points.  The credit scoring algorithm takes that as a sign that you are dependent on your credit cards for your daily living and therefore more of a credit risk. 

Do you not have any credit cards opened up? Strangely enough, this is not a good thing either. The credit scoring algorithm wants to see that you're able to responsibly handle a mixture of different types of credit. A balanced approach of on-time payments to both installment accounts (car loans, signature loans, student loans) and revolving (credit cards, store cards) is what will help you maximize your credit score.  

For more help, feel free to call us or email us.  

Consider Utilizing a Seller's Credit

Let's face it. One of the main questions you probably have in your head is how much money am I going to need to purchase this house? That's a really good question.  A couple of things you'll need to get to the finish line of purchasing a home is your down payment, your closing costs, your insurance, and your escrow funding.  

Depending on what time of the year you purchase your home, the property taxes that the seller owes you from living there last year may help you reduce the amount of money you need to bring to the table. However, if you're buying your home close to the time your county's tax bill is due, this may not be the case. If you're not going to benefit from a tax proration, the next thing you should do is ask your realtor to ask for a seller's credit.  

A seller's credit is the seller agreeing to pay for a portion (or all) of your closing costs, insurance, and escrow funding.  On a FHA application this amount can be 6% of the sales contract and on a conventional this number can be 3% of the sales contract.  So to keep math easy, let's say the house you want to put an offer for on is $100,000.  That means on a FHA application, the seller could give you up to $6,000 towards your closing costs, insurance, and escrow funding.  Or if in this example, they had to have $100,000. Maybe ask them to accept an offer of an amount higher than $100,000. + a seller's credit. You could structure the offer at $106,000 with a seller's credit of $6,000.  They're still going to get their $100,000 ($106,000 - $6,000 = $100,000), but you will have essentially financed your closing costs, insurance, and escrow funding into your mortgage.  

The only word of caution in this strategy is that the house will need to appraise for the amount of the loan. So if you do add a seller's credit in over the original asking price, it just needs to appraise for that amount. The majority of the time this does not create an issue, but it is something to know ahead of time. 

If you have any questions about this strategy, please give us a call at the office at (815) 324-9760.   

We're a Mortgage Brokerage: Here's What that Means

If you've been looking at our page for very long, you probably know that we're different than banks and credit unions. We outright say that and are proud of it.  You may not know what a mortgage brokerage is though and why the structure of our business works to your advantage.  

A mortgage brokerage very simply put is your personal shopper for mortgages.  We are connected to wholesale lenders all across the country that have every single mortgage program available.  Let's just look at a few:

  1. FHA
  2. USDA
  3. Conventional
  4. VA
  5. Bank Statements for Business Owners and Independent Contractors 
  6. ITIN
  7. Alt-A
  8. Non Owner Occupied Investment Properties
  9. Second Homes

If the program exists, we have it.  So if you like having options, you're researching the right business.

What's more is that these lenders do not have extra rules like your bank or credit union may have. Your bank may want a high credit score. Your bank may want to have other loans with you. Your bank may want to see a checking account or savings account. None of these things are things that our lenders care about. They simply want to see if you can afford the house and meet the qualifications of the program. If you can, great. If you can't, we'll help you find a better program to meet your needs. 

If you like lower interest rates, you've also come to the right place. Because these wholesale lenders do not have all of the overhead that your bank and credit union does, they can actually charge you lower interest rates.  Whether your credit has taken a couple of beatings or you have kept your credit score perfect, it's in your financial interest to use us because we are a mortgage brokerage.  

We have programs, we have low interest rates, and lastly we are really good at what we do. Just last week, we closed a FHA loan in 11 business days.  That was the application, the appraisal, and everything in between that takes to process the loan. The attorney, realtor, and borrower were all blown away. We'd love to do the same for you. 

In short, why use a mortgage brokerage and why use us? Because we have the programs, low interest rates, and exceptional customer service that will turn your dream of getting a home to call your own, a reality.  

You Deserve a Better Mortgage

You deserve a better mortgage. For years you've only had two options: go to the bank or go the credit union. The banks and credit unions of our community are necessary. We need a place to keep our money, right? What you don't need though is to pay for all of their overhead costs. By getting a mortgage at a bank or a credit union, you are paying a higher interest rate to cover their higher overhead costs. 

Savvy borrowers know that the way to get the best deal on a mortgage is to use a mortgage company. As we're closing out 2017 and entering into 2018, it's time to arm yourself with a better mortgage. Refinance or get pre-approved today.  You deserve a better mortgage.

Dear Clients: We're Thankful for You

Dear Clients,

From the bottom of our hearts, thank you.  This first year in business has been an exciting one. You have supported our business in ways that we did not expect. From the very first day of opening to going into our second year of business now, you have kept our schedules filled with appointments.

Each of your stories has been unique and they have all touched us. From keeping a family home that's been in the family for generations; to starting a new life together as newlyweds and purchasing your first home; to expanding your family and needing more space; to simply needing less space now that your little ones have grown and left the nest... all of your stories have been meaningful to us.  

What is touching us more and more each day is that you have been sending your friends and family. Our referral business is growing and growing and that's thanks to you.  These are people that you care about and love in a deep way and to trust us with helping them like we helped you, well, we don't take that lightly.

So as we reflect upon this Thanksgiving, we just wanted to let you know that at Two Rivers Mortgage Company, we are thankful for you.

With Grateful Hearts,

Two Rivers Mortgage Company Team

Kids Back To School: Time to Refinance

 

Now that the kids are back in school, maybe now is the time to look into that refinance you've been thinking about all summer long.

Maybe you'd like to consolidate your debt into one monthly mortgage payment. Maybe you'd like to get some cash out for some home improvements. Maybe your monthly payment is too high. Or maybe your interest rate well, let's face it, sucks.

Pick up the phone and talk to us or if it's after hours, just apply on our website. Keep in mind, we're a mortgage brokerage. Not the bank. Banks have one set of options for you. We have every option that's available out there. You come here, you basically get a chance to shop every single mortgage program out there and then we help you find the right one.

(815) 324-9760

You Might Want to Refinance If...

Let's face it, there are many reasons you might want to consider refinancing your conventional, FHA, VA, or USDA mortgage. Instead of writing out a big long article for you, let me just give you a list of reasons you might consider refinancing your mortgage.

  1. Removal or Lower Mortgage Insurance 
  2. Lower Interest Rate
  3. Lower Term (Flex Terms are Available) 
  4. Extend Term
  5. Lower Monthly Payment
  6. Cash Out for Home Improvements
  7. Cash Out for Debt Consolidation
  8. Cash Out for College Education
  9. Cash Out for Traveling the World
  10. Cash Out for Buying a New Car
  11. Cash Out for Investing in a New Business
  12. Cash Out for Medical Expenses
  13. Cash Out for Unexpected Expenses
  14. Cash Out for Investment Property
  15. Cash Out for Because You Can

You can probably come up with even more reasons. Basically, if you have a mortgage you can refinance it and it doesn't have to be with your original lender.  

If you own your house free and clear, you can also do a first mortgage refinance.  

If any other questions pop up in your mind, give us a call at the office at (815) 324-9760 and we'd be happy to talk different scenarios.  

 

The Death of a FHA Mortgage Application: Unverified Deposits

I think it's time we told you one thing that is making our ability to get you a FHA mortgage a bit on the difficult side. It's not something that's impossible to overcome, but it will make both your life and our lives a lot tougher when it comes to processing your FHA mortgage application.  

Unverified Deposits on a FHA application. 

You're probably thinking, okay what the heck do you mean by unverified deposits? Unverified deposits are deposits that you can't explain where the source came from.  

For every deposit that is greater than 1% of your sales contract (example: $100,000 purchase price = anything over $1,000 deposit) has to be verified. So that means if you had cash laying around the house, you could not use those funds IF it were over 1% of your contract. If in this example, you had $500 to deposit, that would not need to be verified. 

Basically, the ways the FHA rules are written, they want you to be able prove where every penny came from if it's a large deposit (1% of your sales contract).  Why do they do that? We didn't write the laws, but we assume they don't want you to go sell a bunch of drugs to save for your down payment. Kidding, not kidding.  

We love our customers and don't want you to feel frustrated. 

More pro tips to come. 

Taking the Proper Steps to Finding Your New Home

If you've been thinking about buying a house, I'm going to guess something prompted you. Maybe you were tired of the landlord not fixing that running toilet or they said no when you asked to change the color of your wall. You started to think, if this were my place, I would just do this or that.  

Over the next week, you start to notice houses for sale.  That little ranch on the corner of that street that's kind of close to some people you know from the outside looks like it just might work for you. You could see yourself living there. So in your excitement, you might look it up online or you might even call a Realtor to look at it. 

Before you do that, STOP.  

I only say this because I care about you. I don't want you to get your head and heart involved in a house until you can find out what you can afford. So though it's exciting to go look at houses right away and get a Realtor, come to us at Two Rivers Mortgage Company first.  

Here's what you need to do.  Set an appointment with us to discuss your financial situation and get pre-approved. If you can, gather up the last two years of your tax returns and W-2s, the last two months of your bank statements, the last month of your pay stubs and bring it all to the meeting.  

At the meeting, we'll discuss your entire financial picture so that we can optimize your pre-approval. We want you to be able to get the house that you want and we'll look for a way to make that happen.

After the meeting, we will give ourselves 24 hours to run all your numbers and give you a firm pre-approval.  This is based on the computerized underwriting system that Fannie Mae, Freddie Mac, FHA, and others use.  We'll let you know what programs you're qualified for and how much you're qualified for.  If you're not quite qualified yet, we'll give you a credit improvement plan so that you can become qualified soon.  

So the proper to finding your new home are:

  1. Find out how much you can afford by getting pre-approved with us.
  2. Connect with a Realtor that will help you look at houses.
  3. Find the house that you want to turn into a home.

After that, the process begins with financing and we go to work for you.  If you follow this simple advice though, you'll ensure that your home-buying process will be smooth and less stressful. Equip yourself with the information you need to find that house that you'll turn into your home.

We're looking forward to meeting you. 

When You're Looking for your Home, Keep This One Thing in Mind

Buying a house is both an exciting and somewhat intense process.  Here at Two Rivers Mortgage Company, it's always our goal to make it as easy as possible for you.  

A lot of our first-time home buyers are qualifying for FHA loans.  That's wonderful because that means you'll have a low down payment and a low interest rate. 

After you have found the house that you want to purchase, an appraisal will be ordered. An appraisal is simply an evaluation of the house to determine what the house is worth.  However, with FHA appraisals, there are a couple of things to consider. If the house you are looking at has any of the following, tell your Realtor that you want the seller to fix them. 

  1. Peeling Paint
  2. Exposed Wires
  3. Make Sure there are Hand Rails on Stairs
  4. GFI/GFCI Outlets Have to be Installed Near Water Sources
  5. No Obvious Signs of a Leaking Roof 
  6. No Standing Water in the Basement

If any of these are evident to the appraiser, it will cause your FHA mortgage application to be delayed. The appraiser will require the seller to correct these items.before they sign off on the appraisal. The appraiser will then have to have a second appointment to inspect the completion of these items and there will be an additional cost to the appraisal.  

It's just best if these things are addressed ahead of time.  It will make the process go smoother and will be less stressful for everyone involved. So just keep an eye out for those things and communicate with your Realtor along the way and they'll help you find the right house.