The Mervin Mortgage Team
I believe the most important keys to success in this business are honesty and integrity first and foremost. I bring my clients and partners a relentless work ethic combined with fifteen years of industry experience in real estate and mortgage planning as well as relationship building throughout the Delaware Valley and Greater Philadelphia Metro Area. My core business is advising local real estate agents on how best to market their services and provide for the needs of their clients. My goal is to educate and serve the residents of the Philadelphia Metro Area by establishing long-lasting client and partner relationships.
What to Expect for a Down Payment on a New Home
A lot of people ask me, "How much money is needed for a down payment?" There are a lot of misconceptions about down payments. Today, we'll go over the down payment options available to buyers who use FHA and conventional loans, since that's how most buyers finance their home purchase. The minimum down payment for an FHA loan is 3.5% down. If you were to buy a $200,000 home, that means you would need to put $7,000 down. For conventional loans, the minimum is technically 5% down, but if you meet additional criteria, you'll need as little as 3% down. If you were to buy a $200,000 home, depending on the criteria, you could owe between $6,000 and $10,000 down. Another thing buyers should keep in mind is closing costs. Both FHA and conventional loans offer a seller's assist, where the seller would offer a credit to the buyer to offset all or some of those closing costs.
Many people say that you need to put 20% down and if you don't, you have to get mortgage insurance, which is a waste of money. Actually, there are many different ways to deal with mortgage insurance. You can build it into the rate and pay a slightly higher interest rate over the life of the loan, pay a lump sum up front, or make a monthly mortgage insurance payment that goes away once you have a certain amount of equity in the property. The main thing you need to keep in mind is that it does not take as much money as people think to buy a home. If you have any questions, give my team a call or send us an email. We would be happy to help you!
What Are Your Financing Options When You Need Renovations?
Today I’ll be discussing your financing options for making repairs on your home. You might have moved into a home that may need some larger repairs, or maybe you’re about to sell but you need a little extra help with your finances. What are your options for funding these repairs or remodels? You can file for an FHA repair loan, which is called a 203K loan. Fannie Mae can also help you with their Homestyle Loan. Almost all of the same rules apply to these loans as do their regular mortgage products. FHA will be a little more flexible, but Fannie Mae might provide you with better terms if you qualify.
If you’re not sure what kind of loan will work for you, then I recommend speaking with us. We always work with experts to help our clients find the best possible loan. It’s really important that we find a good fit for you because there could be a bumpy road awaiting you if we don’t fit you in with a good loan product. If you need a loan - whether it’s to repair your home or buy a new one - please don’t hesitate to reach out to us. We look forward to hearing from you!
How You Can Use Seller’s Assist When Buying Your Next Home
What is seller’s assist?
- Seller’s assist is a way for the buyer to finance all or some of their closing costs and escrows. The escrow account is the money collected, by the lender, to pay the buyer's taxes and insurance. Closing costs and escrow payments both make up settlement charges. Settlement charges determine the total amount of cash required to close. Thus, seller’s assist allows you to finance a certain percentage of the settlement charges into your new loan.
Why is this advantageous?
- Depending on your location and purchase price, it could be common to experience settlement charges over $10,000. However, in today’s market, it only costs approximately $5 a month for every $1,000 you borrow. Many borrowers would prefer to keep $10,000 in their pocket, if the cost is only $50 a month.
Who would this be a good fit for?
- It’s a great fit for anyone who either doesn't have the cash to close without it, or who would like to keep the money they have for other things while having a minimal impact on monthly payment.
Are there restrictions?
- All loan programs allow seller’s assist. However, there are in fact restrictions for different types of properties and loans. For instance, the maximum seller’s assist for investment properties is 2%. A primary property can get anywhere between 3% to 9%. A government loan can get up to 6%. A conventional loan allows anywhere between 3-9%.
One more thing to add: just because it’s allowed, doesn’t mean you can get it! It depends on the market. There are factors out of your control that affect seller’s assist. That’s why it’s so important to work with a great Realtor and mortgage lender. We work together to try to negotiate this for you if it is something you need.
Has TRID Really Affected Mortgage Closing Times?
Last October, TRID was enacted to regulate the mortgage process. With new rules, regulations, and timelines, many people feared that it would take longer to close a mortgage. Although many people worried that TRID would prolong the mortgage process, it hasn’t added much time to mortgage closings for the better lenders. Although TRID made the mortgage process more complex, the companies that have always done well will continue to do well while the companies that used to struggle will continue to struggle. We see this as a great opportunity to separate ourselves from the competition. As a consumer or referral partner, TRID reinforces the fact that you want to work with a great mortgage professional when buying a home. In February 2016, the official industry standard was an average of 47 days to close a mortgage purchase. Many lenders can close much quicker. Our Newtown Branch average close time is 28 days. By working with us, you can cut that industry standard (47 days) in half. We have no trouble hitting deadlines thanks to our great underwriting and processing team. Everyone's goal in our branch is to meet or exceed closing dates. We like to meet and exceed deadlines to raise the bar. We have even closed in 17 days post-TRID. That is not standard, but we can absolutely close in 20 to 25 days if you need us to. As the market heats up and multiple offers are more common, our quick closing time is a significant competitive advantage to you. Keep in mind that every loan is unique. If you have very complex tax returns or extenuating circumstances, it’s always a good idea to check first. However, in a vast majority of situations we can close in 30 days or less.
If you have any questions, give us a call or send us an email. We would be happy to help you!
What’s the Difference Between Pre-Approval and Pre-Qualification?
Today, we’re going to discuss the difference between a pre-qualification and a pre-approval. Although people who aren’t in the mortgage business use these terms synonymously, they are actually quite different. AnnieMac Home Mortgage does an excellent job with pre-qualifications. We don’t want customers to get their hopes up thinking they will get approved for a mortgage only to find out they can’t qualify. We look at tax returns, W-2s, and pay stubs. We do a full analysis of the items you need to get qualified. The loan originator reviews this information and determines whether the loan will fall within the program guidelines. A pre-approval goes one step further. This is a much more stringent process. Not all lenders offer pre-approvals, either. We offer a TBD (to be determined) pre-approval. You can get this pre-approval before you even have a house picked out. We will submit your credit, income, and assets to the underwriter, who ultimately signs off on the work the loan originator has done.
The pre-approval letter carries more weight when you make an offer. It also takes a load off your mind because you know that the loan has been properly vetted up front. A pre-qualification can be done very thoroughly, but the pre-approval is signed by the underwriter, who is the lender’s ultimate decision maker. The pre-approval really strengthens your negotiating position and eases anxiety because you know you won’t hit any roadblocks.
If you have any questions, just give us a call or send us an email. We would be happy to help you!
New Mortgage Rule Could Hurt Your Mortgage Qualifications
Recent changes have affected the way that student loan payments will factor into FHA mortgage qualification, and it affects a lot of people looking to buy homes. Prior to September 2015, if you had a student loan debt in deferment at least 12 months past the closing date, those debts weren't counted against you as far as how much mortgage you could qualify for. The rule that changed last fall now states that if a payment is in deferment or the payment is zero (like an income-based repayment plan), they now require us to use 2% of the balance as a payment toward your debt ratio. So what does this mean? If you have $50,000 worth of student loans in deferment, that is the equivalent of $1,000 a month that we now need to count against you as far as how much you can qualify for. That's almost like a whole other mortgage payment. Obviously, this has had a huge impact on people, especially those with large student loan debt loads.
There are some workarounds however. Even though a student loan debt is in deferment, we've had some successes contacting student loan companies and requesting to get an estimated payment of what the payments would actually be once the deferment expires. In many cases, that payment is far less than the 2% payment that we have to use if we don't have any payment at all. In those cases, we're able to use that estimate because the lender at least has an idea of where that payment is going to be once the deferment is over. So like I always say, the best thing to always do is to get out ahead of the home buying process. If you have student loan payments, reach out to us early in the process and come in for a consultation where we can review and see where we stand. Then we can see if we can come up with some solutions to make sure this change doesn't keep you from getting into your next home.
Is the Lowest Interest Rate Always the Best Option?
Is lowest always best? All things being equal, of course paying the lowest interest rate would be the best option, but there all kinds of scenarios where this simply isn’t true. We don’t want to create unnecessary fear, but you only have to go online and do a little digging to see that the experience people have when buying a home and getting a mortgage is far from uniform. There are all kinds of stories about missed deadlines and false promises. You might have terrific credit, or be principled enough to say that you’ll walk away if the numbers change, but as you’re getting ready to move your family into a home and you’ve already invested as much as $1,000 for things like appraisals and inspections, sometimes it just doesn’t happen. The first and most important thing to remember is what you see is not always what you get. Whether that’s missing contract deadlines, missing closing dates, or the mortgage lender just misquoting certain things, there are some mistakes you just can’t be protected from. The other important thing to consider (which is often overlooked) is that many mortgage people act in a very transactional manner. Their goal is to get you to do business with them. They may present some options or numbers that might not be in your best interest, but you’re most likely to accept anyway because you’re assuming a low interest rate is great no matter what.
There are all kinds of scenarios, though, where a different loan product or term might be better. I’ve had situations where I’ve actually gone with a higher interest rate but much lower closing costs because that kind of arrangement might be better for a person who might not be keeping a home for a long time. It’s a difficult conversation to have with a borrower to convince them to accept a higher rate in exchange for lower closing costs, but we can always run through those numbers to explain why it would make sense to them in the long run. If you’re looking for a mortgage lender with competitive interest rates, individuals that will take the time to understand your particular situation and make appropriate recommendations, and a local team that has a track record of delivering on their promises and their timelines, reach out to myself or someone on our team at the number listed below and we’d be happy to help you out.
Why is EFO important to us?
This video blog is typically dedicated to all things mortgage and real estate. While I can and still will talk about those topics all day long, today I wanted to talk about something near and dear to my heart. About five years ago, my church started going down to Haiti on short-term mission trips for disaster relief after the horrible earthquake left the country in ruins. We helped out a school/orphanage with rebuilding and fixing their water source. We went on a total of five mission trips, two of which I attended. Within those five trips, we were able to get the place up and in running condition, which made a huge impact on the daily lives of all the students. Although we helped rebuild, we couldn’t stop thinking about what would happen to those children at the orphanage once they were done with school and became adults. Unemployment is very high in Haiti, and there is little opportunity for them. This gave one member of our congregation an idea, and they started a separate non-profit foundation called EFO, or Education For Orphans.
The idea of this organization was to raise funds to give select students scholarships that granted the opportunity to advance into secondary school. When these students graduate, they can then come back and share those skills with others and inspire them to pursue education as well. Over the last two to three years, we’ve seen students advance and have a huge impact on their lives, as well as the day-to-day lives of those in the orphanage. Check out some video of our trips above, check out the website here, and consider helping out. Whether you donate time, money, or resources, we appreciate your consideration. I can say that it’s definitely been a very rewarding experience for me to be involved with an organization like this. If you have any questions, don't hesitate to give me a call. I would be happy to answer them.
How to Handle Mortgage Insurance as a Homebuyer
Have you heard of mortgage insurance? Do you know why it exists and when it comes into play? If you're buying a house with an FHA loan, you use it all the time. FHA loans always require mortgage insurance because there is always some unfavorable factor that comes with these loans. That factor could be a small down payment or below-average credit from the buyer, for example. Because of this elevated risk to the lender, insurance is required. Conventional loans have a little more flexibility. If you don't put 20% down, you'll have mortgage insurance. The kind of mortgage insurance most people think of is paid monthly, which comes in the form of a premium you pay until the balance of your loan is below 80% of the home’s purchase price. You can also pay mortgage insurance in a lump sum, where the whole cost is paid at once, and you never have to pay it again. Another way to pay mortgage insurance is with lender-paid mortgage insurance. You'll still have a lump sum, but instead of paying it all at once, the lender will give you a slightly higher interest rate on your loan and use the credit to pay the mortgage insurance.
Another option is split-premium mortgage insurance, which allows you to have a lump sum and some monthly payments at a reduced amount. The reason for choosing one method over the other depends on many things, like income. Mortgage insurance is not tax-deductible over certain income levels, whereas mortgage interest is. Someone with higher income would probably go with lender-paid mortgage insurance because of the difference in tax treatment between mortgage insurance and mortgage interest. If you're keeping the property long-term, monthly mortgage insurance is typically better because you pay more in the beginning, but then it goes away. As you can see, there are plenty of ways to deal with mortgage insurance. If you have more questions about this topic, please feel free to reach out to me or my team. We'd be happy to answer any questions you have.
How to Use a Second Mortgage
Sometimes, getting a second mortgage can be a proactive step in making your new home purchase easier and less costly. We’re not talking about a second mortgage where you use a line of credit to pay off debt. We’re talking about using it as a piggyback mortgage to purchase a home. Why would you want to have two mortgages at once? There are a few particular situations where it makes perfect sense. One thing you run into when buying a home is mortgage insurance. If you don’t put at least 20% down, you are going to have to pay it. Depending on a number of factors, it can get quite expensive. Most people don’t want to pay mortgage insurance, but many people can’t afford to put 20% down on a home either. The other reason for getting a piggyback mortgage is because of loan limits. The majority of the country, with the exception of a few extremely high priced markets, has a $417,000 loan limit. If you wanted to borrow more than that, you would have to get what’s called a “jumbo mortgage.” These typically have higher interest rates than regular mortgages and often times have more red tape involved.
Using a second mortgage in conjunction with your first mortgage can accomplish a few different things. First, it helps you avoid a cumbersome loan process while getting a better-blended interest rate (the average of the two interest rates). This blended rate is often better than a jumbo mortgage rate would have been. Another way you can use a jumbo mortgage is if you don’t have 20% to put down on the home, but you still want to avoid paying mortgage insurance. You can get one mortgage for 75% to 80% of the home’s value, then get a second mortgage for 10% to 15% of the home’s value. You could end up borrowing 85% to 90% of the home’s value without having to pay mortgage insurance. There are all kinds of options, and each situation is a little different. Sometimes, it makes more sense to do a jumbo loan or pay mortgage insurance than it does to get two mortgages at once. That is why you need to partner with a professional who can give you the recommendations and the advice so you can be certain you are structuring your loan in the way that is right for you. If you have any questions for me or my team, give us a call or send us an email. We look forward to hearing from you.
Why Everybody is Refinancing Their Mortgages
There’s a lot of mortgage refinance activity right now, and for good reason. Refinancing can help you meet your financial goals in more ways than you’d think.
Does it make financial sense to refinance your existing mortgage right now? There has been a significant uptick in refinancing activity over the last 30 to 60 days, and this is due to a number of factors: To begin with, interest rates have fallen even further. They’re sitting very close to their all-time lows across the country, and many homeowners are looking to take advantage of this by refinancing their current mortgages. Also, home values in our area have been appreciating quickly. Why does this matter? If you have an FHA loan on your home or put less than 20% down on it, chances are that you have mortgage insurance. Mortgage insurance is that pesky extra amount of money on your monthly statement that serves no purpose other than to protect the banks because you didn’t have enough equity built up in your property at the time of purchase. Higher home values mean that refinancing now could not only bring down your interest rate but also could eliminate or reduce your mortgage insurance as well. Another refinancing option is a rate reduction, in which you would keep your mortgage terms the same. This would be great for anyone who needs improved cash flow for things like paying off extra credit card debt or sending a child to college for example.
While some people are afraid of refinancing their mortgage back into a 30-year loan, what they don’t realize is that these changes can be temporary – until that credit card debt is paid off or the child has graduated college – and those savings can then be put back into the mortgage to reduce it to as short or even shorter than the time remaining prior to the refinance. You can always put extra money back into your mortgage in order to pay it off quicker. In addition, homeowners can also take advantage of term reduction. Term reduction means lowering the interest rate on your mortgage and using those savings to pay your mortgage off quicker. As an example, I just helped a client refinance their mortgage from a 27-year loan into a 20-year loan, and it will only increase their payment by $50 per month; this will save them about $150,000 in interest. In short, there are a lot of different opportunities for people in many different situations to use a refinance to meet their financial goals. If you have any specific questions on how refinancing can help you meet your goals, give me a call or send me an email. I’d be happy to help you!
Why Now Is the Perfect Time to Buy a New Home
If you’ve been waiting for the best time purchase your next home, the time is now. Here are my top three reasons to buy a Newtown home today. If you’re considering purchasing a home, there may not be a better time than right now to do so. There are three primary reasons why:
- 1. Interest rates are still at all-time lows. This has a major impact on not only your potential monthly payment but your overall home cost as well. While many home buyers think about the cost of owning a home based solely on the total purchase price, they forget to account for the cost of the monthly payments as well.
- 2. Home prices are very affordable. We have seen home values rise a bit since the recession, but for the most part, home prices are still reasonable by most metrics.
- 3. Home values are increasing. If you were to buy a home today, there is a good chance that you’d see a fair amount of appreciation in value throughout the coming years. Because so few homes were built during the recession, supply is still low. This means that even if demand stays roughly the same, the fact of the matter is that there is just not enough supply on the market to meet that demand. As a result, the houses that are available should increase in price and allow buyers to build equity quickly.
As you can see, there are a number of factors that make now a great time to buy a home in the Newtown area, but let’s take a look at how much waiting to buy a home might cost you. Right now, we’re seeing about 5% appreciation in home prices, and it would not be unreasonable to see a .25% to .5% increase in interest rates over the next 12 months. This slight bump would still leave interest rates relatively low. However, that 5% appreciation and a small bump in interest rates could potentially add $40,000 in additional costs to the cost of a median-priced home in Newtown over the lifetime of a loan. This equates to $125 added to your monthly payment every single month for up to 30 years! I don’t like to create a false sense of urgency when talking to anybody who is looking to buy a home because I realize that everybody’s individual timing is very personal. However, in this case, the combination of affordable home prices and low interest rates makes right now an ideal time for many people to purchase a home, and may even mean a significant difference in the overall cost of owning that home. If you’ve been considering purchasing a home and would like any more information on our current Newtown market or what’s involved in a home purchase transaction, please don’t hesitate to give me a call or send me an email. I’d be happy to help you!