Archive for July, 2016

One simple way to save stress during the home buying process…Don’t Change the Picture!

July 29th, 2016

Dog On Rails With Suitcases.Dawg!  Don’t Do This to Yourself!

It’s time again for MN first-time home buyers, move-up buyers, those refinancing their homes – everyone involved in a financing process, whether that be building a new home, getting a construction loan, or buying  and financing your very first MN home – to hear some vital information that applies equally to all of you. Are you ready? This isn’t rocket science, but it is absolutely vital to saving you time, energy, and stress throughout your home buying process…

DON’T CHANGE YOUR FINANCIAL PICTURE. There – that was simple wasn’t it? It’s not a complicated concept, but unfortunately often seems to be misunderstood or simply not heard at all. The process from pre-approval to closing can be lengthy, particularly with a new construction home purchase. Until YOU CLOSE on your loan, changing your financial picture in any way could alter your loan approval, and leave you in the dog house instead of comfortably in your new home!

A few of these items may make you laugh or scratch your head, but even things that make good sense to you may impact your approval or the timing of your closing.

  • Adding a job – If your financing program is an income limit based program like Rural Development, a MN first-time home buyer program through MN Housing, or another income based down payment assistance program.
  • Buying a dog – If the purchase of your new furry friend depletes the balance in your bank account – it could be a problem!
  • Selling a truck – More cash – it’s a good thing – Maybe, IF it’s documented correctly upfront.
  • Going on vacation – This could be a multi-faceted issue. Vacations are good and we encourage them, but we don’t want to see large purchases on credit, depletion of savings, or have the inability to reach you during a vital time in the process.
  • Changing jobs – Even if it’s for better pay, it could get in the way.
  • Spouse getting a job – Back to #1. If you’re using a program for first-time home buyers or an income based program, many are household income based. Any change in total household income, even if they aren’t on the loan, could change the outcome.

Bottom-line? When in doubt – check it out!  We are here to answer questions and help you navigate your purchase, build, or refinance in a way that prevents as much stress as possible. Learn from our experience, and listen to the wisdom that comes from it.  We’re here to help! 



“Pre-approved” or “pre-qualified” – What’s the difference?

July 22nd, 2016

For sale signsWhen purchasing a house, borrower’s need to get “pre-approved” or “pre-qualified” before looking at properties or presenting an offer. While these mortgage terms sound similar, they are in fact very different. For a buyer, a pre-approval letter is going to be more beneficial in the home buying process than a pre-qualification letter, as it shows a seller they are more serious about their offer.

A mortgage pre-qualification is an initial assessment by a lender of a borrower’s ability to qualify for a mortgage loan. When the borrower is pre-qualified, credit report may or may not be pulled, and only verbal information about employment, income, assets and liabilities are given to the lender. None of this information is verified by the lender, which makes it less accurate than a pre-approval (see below). In the case of a pre-qualification, the lender is reliant on the buyer to provide an accurate estimate of these items.

A pre-approval is determined after a more in-depth analysis of the borrower’s income, expenses, assets, liabilities and credit score by the lender. Generally, documentation is provided by the borrower for all of the above items so that the lender can verify all of the information that was provided verbally at the pre-qualification stage. Remember, a pre-approval is not a commitment to lend, as only an underwriter can provide that. However, a pre-approval letter lets the seller know that the information you have provided to the lender has been verified, and it appears that the borrower will be approved for the loan. In the case of a pre-approval, the seller will be more likely to take your offer seriously.

Once a borrower becomes serious about purchasing a home, they should consider being pre-approved for a mortgage so that they know how much home they can afford and what mortgage options are available. It is important to remember that neither a pre-approval letter nor a pre-qualification letter guarantees that you will be approved for your mortgage, but by applying for pre-approval you are one step closer.

When your borrower is ready to purchase a home, I would love to meet with them to go over finances and credit report to begin the pre-approval process. Let’s make their dreams of homeownership a reality!  – Randy Cullen, NMLS 326128

Condition matters in appraising your home for maximum value

July 15th, 2016

appraisal pic







Here are some helpful tips to provide your clients when they are looking for top value for their home.

A home appraisal is an estimated value of what a home is worth based on a variety of factors, such as what comparable homes in the area have been sold for as well as the condition of the home. Lenders like Fairway Independent Mortgage Corporation will have an appraisal completed to certify that the asking price is fair.

While the condition of your home is important, the prices of surrounding homes have a far greater impact on the overall appraisal. To do everything you can to prepare your home, follow these simple steps:

  1. Check all safety equipment – Test all smoke alarms, carbon monoxide alarms, and home security alarms to confirm that they are properly installed and in good working condition.
  2. Consider curb appeal – Make sure that your grass has been mowed and your trees and shrubbery have been trimmed. If you have any dead trees in your yard, consider having them removed before the appraisal.
  3. Make necessary updates – If you have outdated flooring, countertops or other materials in your home, this can affect the appraisal. For the best possible appraised value, update your house as needed.
  4. Small improvements matter – Painting the walls and replacing faucet handles may not add much to the appraised value individually, but when added together they can make a significant difference. By making small improvements to your home, you are giving it a more modern appearance, which can have a very positive impact on your appraisal.
  5. Keep a list of large home improvements – Be sure to inform the appraiser of any large improvements you have made since purchasing the home such as kitchen or bathroom updates, new roofing, or upgraded HVAC units.

By preparing for your appraisal ahead of time, you will reduce stress and hopefully receive favorable results from your appraiser. The market is hot right now. Homes that are updated, well maintained, and well-staged will bring the most value, giving more equity to move into the next home. When you are ready to buy a home, utilize your real estate and mortgage professionals to review buying options and find the best loan program for you. – Randy Cullen, NMLS 326128


July 8th, 2016

Harvard Housing Study 2016As a follow-up to the housing market recap from The Harvard Housing Study, this week I am taking a look at the demographic driver portion of the study. We’ll look at housing growth through household formation, higher household income, immigration, millennials coming off the sidelines, and aging baby boomers, and how they drive housing demand.

According to The Housing Vacancy Survey, during the period of 2007 to 2013, household growth averaged 625,000 units annually. In 2013 the number grew to 653,000; in 2014, 1 million; and 1.3 million in 2015. Over the next decade, the aging of the millennial generation will lead to the formation of over 2 million new households each year through 2025. Many young adults, especially those fresh out of college and not employed, find themselves in the low wealth category and living with parents. They will eventually get jobs. Those that are employed, but not making enough to support their student loan payments and a house payment, have been saving money living with parents and are now ready to move to the next phase of their lives. And let’s not discount those of us in the aging baby boomer generation who may be downsizing so the kids cannot move back home. Our generation will either make properties user friendly to allow us to age in place, or we will downsize.

Immigration also drives household growth and housing demand. According to the Current Population Survey, immigrants contributed to over one third of the increase in household formations from 1994 to 2015. This increase in immigrant households, added to the much smaller Gen-X generation, helped stabilize housing demand as baby boomers were moving out of household formation.  Personally, I had not considered how these factors all played off of one another. Read the rest of this entry »