Home Buying Information

Home Buying Information

In year 2023: 

• Current market, low inventory with high demand
• Rentals; increased rental cost nationwide
• Difficulty in taking out loans.
• Continued low interest rates and how long will they last.
• Rising interest rate market?

Prior to the COVID-19 pandemic, the real estate market experienced a shortage of available properties, resulting in a seller's market characterized by limited inventory and high demand. In such a market, sellers held a position of advantage, as they had greater leverage in negotiations. As a result, it became increasingly uncommon for sellers to cover the buyer's closing costs, as they were less inclined to do so.

This shortage of housing inventory had implications for rental markets nationwide. Rental prices escalated significantly due to various factors, including the complexity and decreased convenience of lending processes. Obtaining a mortgage became more challenging, as lending practices adjusted to the economic conditions. Many banks modified their guidelines and programs in response to the economic uncertainties and widespread layoffs experienced across various industries.

Lending is not as simple anymore. Banks are changing guidelines and programs. There are a lot of industries that are struggling in the economy, there are increased layoffs. There's a lot going on in the economy that makes home buying more challenging. Interest rates are unlikely to come down.

It is important to note that real estate market conditions and economic factors can vary over time and across different regions. Staying informed about the local market and seeking guidance from real estate professionals is crucial for navigating the challenges associated with home buying in the current economic climate.

Key Takeways when talking to a seller of a house to determine if it is a buyer or seller economy:

- Will you pay for closing costs?

- Are you willing to negotiate on price?

- Are you willing to pay for repairs?

In a seller's economy this will be nonexistant. 

Interest rates can be influenced by several factors, including:

• Monetary policy: Central banks, such as the Federal Reserve in the United States, play a significant role in setting short-term interest rates. Through actions like adjusting the benchmark interest rate or implementing quantitative easing measures, central banks aim to manage inflation, promote economic growth, and stabilize financial markets.
• Inflation: Inflation is the rate at which the general level of prices for goods and services is rising, eroding the purchasing power of currency. Central banks often raise interest rates to curb inflationary pressures and maintain price stability. Higher inflation expectations can lead to higher interest rates.
• Economic conditions: Interest rates are influenced by the overall health and performance of the economy. Factors such as GDP growth, employment levels, productivity, and consumer confidence can impact interest rates. During periods of economic expansion, central banks may raise interest rates to prevent overheating, while during recessions or periods of low growth, they may lower rates to stimulate economic activity.
• Government debt: Interest rates can be influenced by the level of government debt. When governments issue bonds to finance their spending, the interest rates on those bonds can affect the broader interest rate environment. Higher government borrowing and increasing debt levels may put upward pressure on interest rates.
• Global economic factors: Global economic conditions and events can impact interest rates. Factors such as international trade, geopolitical tensions, exchange rates, and monetary policy decisions by major economies can influence interest rates in interconnected financial markets.
• Market expectations and investor sentiment: Interest rates are also influenced by market expectations and investor sentiment. If investors anticipate future economic changes or policy actions, they may adjust their investments accordingly, which can affect interest rates.

Components of a great team:

Lender: Your lender should do more than just qualify you based on income. They should understand your unique circumstances and become a trusted financial partner. They don’t have to be local to the market you’re buying, just the best at what they do! 

Realtor: Your Realtor isn’t just your key to touring homes. They’re your advocate and skilled at assembling, presenting, & negotiating offers while ensuring that your best interests are protected with the appropriate inspections and contingencies. They know the market and can help you navigate the waters. 

Attorney/Settlement Company: This is where your closing will be held. Settlement or Title Companies execute all title work, prepare your deed, and ensure that your sale is accurately recorded with the local jurisdiction. 

Home Inspector: The home inspector is hired directly by you to provide you with a snapshot of the health of the home. They’re not there to assess value, but their role is to make you aware of any physical concerns in the home and to bring any deficiencies in the major systems or construction to your attention. How do I build the right team?

Choosing a lender:

When considering the down payment options for the future, it's important to understand that different lenders may offer varying paths. Choosing a suitable lender will require further discussion, which we can address separately once you have completed your residency training. Selecting a good lender involves several factors. Firstly, ensure that the lender offers the specific product you need. While lender guidelines are generally similar, each lender may have their own unique requirements and limitations. Some lenders may require a credit score of 720 for 100% financing, while others may offer 0% down options. It is crucial to connect with lenders who offer the desired down payment options you require. Furthermore, inquiring about the qualifying credit score is essential. Most lenders typically look for credit scores in the 700s, with some requiring a score of 720 or even 740. It's worth noting that lending practices and guidelines may change over time, so it's important to seek up-to-date and accurate information upfront.

When comparing 0% down versus 100% down, it refers to the amount of the down payment required for a purchase.

0% down: This means that no down payment is required. The borrower can finance the entire purchase price without making an upfront payment. This option allows the borrower to preserve their cash and enter into the purchase with minimal initial expenses. However, it's important to note that 0% down options may come with certain conditions or higher interest rates.

100% down: This indicates that the borrower is making a full payment upfront, covering the entire purchase price without the need for financing. By paying 100% down, the borrower avoids taking on any debt and becomes the outright owner of the asset or property. This option eliminates the need for monthly loan payments and interest charges.

Choosing between 0% down and 100% down depends on individual circumstances, financial goals, and available resources. Factors to consider include personal financial stability, investment opportunities, and the cost of borrowing. It is advisable to evaluate the pros and cons of each approach and consult with financial professionals or lenders to make an informed decision based on your specific situation.

When evaluating a loan officer for your home buying process, it's important to gather information about their experience and reputation. Here are some steps to help you assess their qualifications:

• Experience: Inquire about the loan officer's years of experience in the industry. Understanding their level of expertise and how long they have been working in mortgage lending can provide insight into their knowledge and familiarity with the process.
• References and Testimonials: Request references from the loan officer, such as previous clients or colleagues who have worked with them. Testimonials can give you an idea of their track record and how well they have met the expectations of past clients. You can find testimonials on platforms like Zillow, Redfin, or the loan officer's website.
• Online Presence: Check the loan officer's online presence, including their professional profiles on websites like LinkedIn or industry-specific platforms. This can help you gather additional information about their background, experience, and any endorsements or recommendations they may have received from peers.
• Reviews and Ratings: Look for online reviews and ratings for the loan officer or their lending institution. Websites like Yelp, Google, or specific mortgage review platforms can provide insights into other clients' experiences and satisfaction levels.
• Referrals: Seek recommendations from trusted sources, such as friends, family, or real estate professionals, who have worked with the loan officer in the past. Their firsthand experiences can give you valuable insights and help you make an informed decision.

LENDER

By gathering information about the loan officer's experience, seeking references and testimonials, checking their online presence, and considering referrals, you can gain a better understanding of their qualifications and reputation in the industry. This information will assist you in selecting a loan officer who can meet your needs and provide reliable support throughout the mortgage process.Key questions to ask your lender before choosing them:

• How many years have you been doing this?
• Do you have a loan officers website?
• How many closings have you done?
• What are your reviews?
• Can he/she work around your unique schedule?When selecting a realtor, it is crucial to consider several factors to ensure you have the right professional by your side throughout the home-buying process. Here are some key points to keep in mind:
• How quickly can he/she process your loan? Current capacity at all time highs for lenders. 30 days should be enough.
• Types of Lenders: Bank Correspondent-Broker - Internet


Adaptability and Technology: In the current market, realtors are increasingly utilizing virtual tools and video walkthroughs due to limited inventory and fast-paced transactions. It is important to find a realtor who can adapt to these changes and provide you with the necessary information and visual representation of properties, especially if you are unable to physically visit them.

• Trust and Communication: Remember that as the buyer, you are in control of the process, and your realtor works for you. It is essential to establish trust and effective communication with your realtor. Pay attention to how they treat you and address your concerns. A good realtor will provide you with the information you need, respect your preferences, and be responsive to your questions and requests.
• Availability and Commitment: Ensure that the realtor you choose is available and committed to working around your schedule. Full-time realtors who prioritize their clients' needs and are readily accessible are typically preferable over part-time agents who may have limited availability.
• Professionalism and Expertise: Look for a realtor with a solid professional background and expertise in the local real estate market. Their experience and knowledge can help guide you through the process and provide valuable insights into market trends, pricing, and negotiation strategies.
• Recommendations and Reviews: Seek recommendations from trusted sources, such as friends, family, or colleagues, who have had positive experiences with realtors in the area. Additionally, consider checking online reviews and ratings to gather feedback from past clients.
• By considering the realtor's adaptability to technology, trust and communication skills, availability, professionalism, and recommendations, you can make a well-informed decision when selecting a realtor who will prioritize your needs and support you throughout your home-buying journey.

When it comes to the legal aspects of the home-buying process, you have the option of working with either an attorney or a settlement company, also known as a title company. While some states require the involvement of attorneys, most transactions are handled by settlement companies. These companies are often referred by your realtor, as they have established relationships and ensure efficient coordination throughout the process.

The primary responsibility of a settlement company, or title company, is to conduct thorough research on the property's title history over a specific period, typically the past ten years. This research aims to identify any potential liens, judgments, or ownership issues that could affect the property's title. Their goal is to ensure a clear title, free from any encumbrances or unresolved ownership disputes.

In states like New York, an attorney is typically required for real estate transactions. However, the cost difference between working with a settlement company and an attorney is generally not substantial. Ultimately, the choice between an attorney and a settlement company is a matter of personal preference. Your real estate agent will provide guidance based on the specific requirements of your state or county.

What is a lien?

A lien is a legal claim or encumbrance placed on a property by a creditor to secure the repayment of a debt. It gives the creditor the right to take ownership of the property if the debtor fails to fulfill their financial obligations. Liens can be imposed by various entities, such as banks, financial institutions, contractors, or government agencies.

There are different types of liens that can be placed on a property, including:

Mortgage Liens: When a homeowner takes out a mortgage loan to purchase a property, the lender typically places a mortgage lien on the property. This lien gives the lender the right to foreclose on the property and sell it to recover the outstanding loan balance if the borrower defaults on their mortgage payments.

Tax Liens: If a property owner fails to pay their property taxes, the government may place a tax lien on the property. Tax liens take priority over other liens and can lead to the forced sale of the property to cover the unpaid taxes.

Judgment Liens: When a court awards a monetary judgment against a person or entity, a judgment lien may be placed on their property. This lien ensures that the creditor can collect the owed amount from the debtor's property if other methods of collection are unsuccessful.

Mechanic's Liens: Contractors or suppliers who provide services or materials for property improvements but are not paid may file a mechanic's lien on the property. This lien allows them to seek payment by forcing the sale of the property.

Liens can affect the transfer of property ownership and may need to be addressed or resolved during real estate transactions. It is essential for buyers and sellers to understand any existing liens on a property to ensure a clear title and minimize potential legal and financial complications.

Lender:

WHERE TO LOOK FOR A LENDER 

www.themdpreferrednetwork.com

www.studentloanplanner.com

www.leveragerx.com

www.leveragerx.com

www.physicianbanks.com

www.whitecoatinvestor.com

Truist Bank Regions Bank

Bank of America

First National Bank 

Fifth-Third Bank 

Citizens Bank 

BBVA 

Compass First Horizon Bank

How your credit rating is lowered:

• Late or Missed Payments: Payment history is a significant factor in determining your credit score. Late or missed payments on loans, credit cards, or other debts can have a negative impact.
• High Credit Utilization: Credit utilization refers to the amount of available credit you are using. If you consistently use a large portion of your available credit, it can indicate higher credit risk and lower your credit score.
• Applying for New Credit: Each time you apply for new credit, such as credit cards or loans, it can result in a hard inquiry on your credit report. Multiple hard inquiries within a short period can lower your credit score.
• Collection Accounts: Unpaid debts that are sent to collections can significantly harm your credit score. It's important to address and resolve any outstanding debts promptly.
• Bankruptcy or Foreclosure: Filing for bankruptcy or going through foreclosure can have a severe negative impact on your credit score. These events may stay on your credit report for several years.
• High Debt Levels: Having a significant amount of debt compared to your income can lower your credit score. Lenders may view it as a higher risk of defaulting on payments.
• Closing Old Credit Accounts: Closing old credit accounts can reduce the average age of your credit history, which is a factor in determining your credit score. It's generally advisable to keep older accounts open, even if you don't use them frequently.

Key takeaways:

- mortgage pulls have low impact, because banks know you are making a big investment on house

- credits for vehicles, shopping for vehicles will impact credit, applying for credit cards

- if multiple lenders pull credit it will be bad

Loan Application

• Application Method: You can apply for a loan through various channels, such as telephone, online platforms, or in-person at a financial institution.
• Personal Information: You will be required to provide your full name, date of birth, and social security number as part of the application process. This information is necessary for identification and verification purposes.
• Residence History: You will need to provide a detailed history of your residential addresses for the past two years. This information helps the lender assess your stability and residency status.
• Tax Returns and W2s: Generally, lenders require copies of your tax returns and W2 forms for the past two years to evaluate your income and assess your ability to repay the loan. However, if you are a first-year resident or medical student, you may be asked to provide school transcripts instead of W2s.
• Assets: You will need to disclose the accounts that will be used to demonstrate sufficient funds to cover the down payment, closing costs, and reserves. This typically includes bank statements, investment account statements, and other relevant financial documents.
• Gift Funds: Some loan programs allow for gift funds to be used as part of the down payment or closing costs. You should inquire with the lender to determine their specific guidelines regarding the use of gift funds.

Let's imagine you have found a couple of potential lenders, but there's one in particular that you're considering for your loan application. Nowadays, the application process is commonly done over the phone or through online platforms with secured websites. In-person applications are less common these days, and online applications are more prevalent. During the application process, the lender will request certain information from you, including your personal details such as your name, date of birth, social security number, and a two-year history of your residence. They will also require two years of tax returns and W2 forms, or in the case of students, two years of student transcripts. If you have a spouse or partner who will be on the loan with you, their income and financial information will be necessary. Depending on their employment status, self-employed or 1099 versus W2, the lender may require different documentation. A cosigner, who is not occupying the property with you, is typically not considered for income calculation unless they will be living in the house with you. Most lenders do not include the income of a non-occupying cosigner. School transcripts can be provided as an alternative to W2 forms for certain situations. When it comes to assets, the lender will typically request two months of bank statements. If you are receiving a gift for the down payment or closing costs, it's important to ensure that the funds have been in your account for a sufficient period of time, usually two to four months, so that they are properly sourced and not subject to scrutiny. Lenders usually only accept gift funds from relatives, so be mindful of the source. It's advisable to have large deposits in your account well in advance of the loan application to avoid questions about their origin. Reserves, which are equivalent to one month of your mortgage payment, may be required by some lenders. Certain loan amounts and high-income areas may necessitate larger reserves. When communicating with potential lenders, it's important to ask about their policies regarding gift funds, closing costs, down payment requirements, and reserves to ensure you are well-informed about what is expected.

Property Types: 

- Single Family

- Condo: housing or residential complex in which there are separate units, with each unit being owned by an individual.

- Co-op

When it comes to property types, there are certain considerations that can make it challenging, especially for new PGY1 individuals with limited income. Single-family homes are typically preferred by lenders because they usually have lower or no HOA fees compared to condos and townhouses. Condos, in particular, tend to have higher HOA fees, even if the purchase price is lower compared to a single-family home. This means that even if you qualify for a higher-priced single-family home, you may not qualify for a lower-priced condo due to the high fees associated with condos. It's crucial to communicate your preference for condos with your lender upfront so they can assess the feasibility based on your income and the condo fees. They can quickly determine if your debt-to-income ratio meets the requirements. Some condos may have high fees that can significantly impact your ability to qualify for a mortgage. Co-ops, especially in metropolitan areas like New York, often have strict down payment requirements. It's important to discuss with your real estate agent the typical down payment expectations for co-ops in the area you're interested in. Most co-ops do not accept 0% down payment and typically require at least 10% or more, with 20% being the common expectation. Multi-family homes, where you live in one unit and rent out the others, are generally not allowed by most lenders for the type of mortgage product you may be seeking. Lenders typically do not consider the potential rental income from additional units when evaluating your eligibility for the loan. It's crucial to have a clear understanding of the property types you're considering and communicate your preferences and financial situation to your lender and real estate agent. This will help ensure that you find a property that aligns with your qualifications and financial goals.

What are HOA Fees?

HOA fees, or Homeowners Association fees, are regular payments made by homeowners who belong to a homeowners association. These fees are used to cover various expenses associated with maintaining and managing common areas and amenities within a community or development. The specific services and amenities covered by HOA fees can vary depending on the community, but they typically include the maintenance of shared spaces such as landscaping, parks, swimming pools, fitness centers, and community buildings. HOA fees may also cover expenses like insurance for common areas, security services, trash removal, and sometimes even utilities.

So where you might qualify for a single-family homes, they I don't know, at 300,000, right? You may see a condo that is only 180,000, but you still may not qualify for that 180,000 combo even though you qualify for the $300,000 single-family home because the fees on the condo or through the roof, and we've seen that quite a bit. So you want to make sure if you're looking at condos that you are addressing that with your lender up front, that you're making them aware or her aware that this is what you're primarily looking at and have an idea of what the condo fees and the price ranges so they can look at it and tell you almost instantaneously, I'm going to qualify for this debt ratio is we need a 43% debt ratio. You're at 50% or 60%. I mean, it could be that high. A co-op, short for cooperative housing, refers to a type of residential housing where the residents do not own their individual units or apartments directly. Instead, they own shares or memberships in a cooperative corporation or association that owns the entire property. In other words, rather than owning real property, co-op residents own shares in the cooperative entity.

In a co-op, each shareholder is granted the right to occupy a specific unit or apartment within the cooperative building or complex. The shareholders collectively make decisions regarding the management and operation of the co-op through a governing board or elected representatives.

Unlike condominiums or single-family homes, where individuals have individual ownership and control over their properties, co-op residents typically have more limited control over their living spaces. The rules and regulations of the co-op, as well as decisions regarding maintenance, improvements, and occupancy, are generally governed by the cooperative association and its bylaws.

Co-ops often have a strong sense of community and may offer shared amenities and facilities for the residents to enjoy. The financial structure of a co-op can vary, but typically shareholders pay a monthly fee that covers the operating expenses, maintenance, and sometimes even property taxes of the cooperative.

When considering purchasing a co-op unit, it is important to thoroughly review the cooperative's bylaws, financial statements, rules, and regulations. Additionally, prospective buyers may need to undergo a cooperative board approval process, where the board evaluates their suitability as shareholders based on criteria such as financial stability, references, and background checks.

It's worth noting that co-ops are more common in certain areas, such as New York City, where they make up a significant portion of the housing market.

Key Takeaways:

- Single Family homes have less HOA

- Condos and Co-ops have more HOAs

- Condos may require higher down payments, especially in NYC they'll have higher down payments, you may be looking at 20%

- fees on condos may be through the roof

- co-ops may require 20% down, will not utilize 0%

- multi family homes not allowed by any lender

- ask if they do visas

VISA types:

Visa, H1B, J1

VISA: A visa is a general term used to refer to any document issued by a country's government that grants permission to enter and stay within its borders for a specific purpose and duration. Visas can be issued for various purposes such as tourism, business, education, or employment. The specific requirements, application process, and conditions vary depending on the country and the type of visa being sought.

H1B Visa: The H1B visa is a non-immigrant visa category in the United States that allows U.S. employers to hire foreign workers in specialty occupations. It is typically sought by professionals in fields such as IT, engineering, finance, or healthcare. To qualify for an H1B visa, the applicant must have a job offer from a U.S. employer, possess specialized knowledge or skills required for the position, and meet certain educational qualifications. The H1B visa is usually granted for an initial period of three years and can be extended up to a maximum of six years.

J1 Visa: The J1 visa is an exchange visitor visa issued by the United States for individuals participating in approved exchange programs. It is designed to promote cultural exchange and international understanding. The J1 visa covers various categories, including students, research scholars, professors, trainees, and participants in cultural or educational exchange programs. The specific requirements and conditions of the J1 visa vary depending on the program and the participant's role. The duration of stay on a J1 visa can vary from a few weeks to several years, depending on the program.

DTI: Debt to income ratio:

Calculating your debt-to-income ratio (DTI) is crucial when navigating the current high-interest environment. For residents, fellows, and young attendings, it's important to consider your anticipated length of stay in the area. Since your initial home during training or starting a new job may not be your forever home, adjustable-rate mortgages (ARMs) can be more favorable compared to a 30-year fixed mortgage, especially when the latter has higher interest rates. Now, let's delve into the tricky part: the calculation of your DTI. Lenders assess your credit report to determine your monthly obligations rather than focusing on overall balances. They will factor in the mortgage payment for the property you're considering, alongside your student loan debt. While some lenders, like doctor loan providers, may not count student loans against you during the PGY1 stage, private student loans with payment records shown on your credit report will be considered. Most lenders typically aim for a DTI around 43%, although some may accept up to 50%. It's important to inquire about specific policies regarding certain types of debt. For example, if you have an installment loan, such as a car payment nearing completion or one that someone else is paying for, you can ask lenders if they will exclude it from your DTI calculation with proof of another party making the payments. However, lenders may require a longer payment history, usually around 12 months, rather than just a few months. It's worth noting that situations where your parents are paying an installment loan, like a vehicle loan, can be tricky. Lenders consider that if your parents were to stop paying the loan, you would become responsible, so they would count it against you. Therefore, it's essential to be cautious in such scenarios. With ARMs, the challenge arises when your projected monthly mortgage payment and student loan payment are factored into your debt ratio calculation. Lenders divide this total by your gross income (before deductions) to determine your debt ratio. Understanding these aspects of DTI and the different variables involved will help you navigate the complexities of securing a mortgage in your current financial circumstances.

Sources of debt (this is how they calculate the monthly obligation):

- Student loan debt

- private loans

- Vehicle debts

- Monthly mortgage

Usually 43% is the highest they will go

ARM: adjustable rate mortgages are tied to the market and can go up and down:

When calculating your debt ratio, lenders consider your projected monthly mortgage payment and student loan payment. For qualifying purposes, on a 30-year fixed mortgage, the lender uses the note rate, such as 6.5%, to determine your eligibility. However, for adjustable-rate mortgages (ARMs), the majority of lenders add a margin to the rate, typically around three points, making it higher than the 30-year fixed rate. This can pose challenges for borrowers seeking lower payments with ARMs.

It's important to communicate with your lender upfront to understand which mortgage product will work best for you, considering your visa type, student loans, and desired debt ratio. It's also crucial to be aware that ARM rates are subject to change as they are tied to an index, like the SOFR (Secured Overnight Financing Rate). If the index rises, it can affect your qualification, even if you were pre-approved with a specific debt ratio. This is why ongoing communication with your lender throughout the home search process is recommended.

As you prepare to look at homes, it's beneficial to stay in touch with your lender or loan officer. Ask about the current rates for both 30-year fixed mortgages and the adjustable-rate options (e.g., 7 or 10 years, depending on the length of your program). Consider the duration you expect to be in the house and evaluate whether an adjustable ARM aligns with your needs. It's worth noting that an ARM fixes the rate for a specified period, such as seven years, after which it can adjust annually based on market conditions.

Understanding the nuances of adjustable-rate mortgages and staying informed about current rates will help you make informed decisions and avoid potential surprises down the line. By maintaining open communication with your lender, you can adapt your home search strategy accordingly.

30 year rate, 

5-7 year ARM

If you opt for an adjustable-rate mortgage (ARM), let's say with an initial rate of 5.875%, lenders often add a margin of three percentage points to that rate. This adjustment brings the qualifying rate to 8.75%, which can catch borrowers off guard when comparing it to the 30-year fixed rate. To make informed decisions, it's crucial to ask your lender upfront about the different mortgage products, including how they calculate the debt ratio, taking into account your visa status and student loans.

With a 30-year fixed mortgage, the lender uses the rate they offer, such as 6.5%, for qualification purposes. However, when it comes to ARMs, most lenders add a margin, making the qualifying rate higher than the 30-year fixed rate. It's important to note that ARMs are subject to market fluctuations, particularly tied to an index like SOFR (Secured Overnight Financing Rate). If the index rises, it can affect your qualification. For example, you could be pre-approved with a debt ratio of 41%, but if rates increase before you lock in the rate with a ratified contract, your qualification may change.

As you prepare to look at homes, it's advisable to maintain open communication with your lender or loan officers. Discuss the current rates for both 30-year fixed mortgages and the available ARM options (e.g., 7 or 10 years, depending on the length of your program). Consider how long you anticipate staying in the house and whether an adjustable-rate mortgage aligns with your needs.

It's important to understand how an adjustable ARM works. The initial rate is fixed, such as 5.875% for a seven-year ARM, and the payment is amortized over 30 years, resulting in a lower payment compared to a 30-year fixed mortgage. However, at the end of the seventh year, the rate can adjust based on market conditions. It can go up or down, depending on various factors. Typically, ARMs have a floor rate, often around 2.5%, which sets a minimum rate limit to protect borrowers from excessive increases.

Staying informed about current rates and regularly communicating with your lender will help you navigate the home buying process more effectively, especially when considering adjustable-rate mortgages.

Typically, adjustable-rate mortgages (ARMs) have a floor rate, which is the minimum interest rate that the rate can adjust to during the life of the loan. The floor rate is usually set based on the index used by the lender. For example, if the index is 2.5%, the floor rate for the ARM would be that index or slightly above it.

On the other hand, there is also a cap on how much the rate can increase over the life of the loan. The cap limits the maximum adjustment allowed for the interest rate. Caps are usually defined as a percentage increase over the initial rate or as a specific rate increase limit. For instance, if the cap is 5%, the rate cannot increase by more than 5% above the initial rate, regardless of how high the index goes.

So, using your example, if the rate was 4% a year ago on an ARM and the index has moved significantly, it's possible for the rate to increase as high as 9% depending on the specific terms of the ARM, including the cap and floor rates.

It's essential to carefully review and understand the terms and conditions of the ARM, including the cap, floor, and adjustment intervals, to assess the potential risks and affordability of the loan over time.

When comparing lenders and loan options, it's important to gather accurate and detailed information from each lender. Requesting a cost breakdown or a Cost-to-Finance (CTF) sheet is a good practice. This sheet provides information about the interest rate, APR (Annual Percentage Rate), and closing costs associated with the loan. The APR is designed to give you a better understanding of the overall cost of the loan by factoring in the interest rate and certain fees. It helps you compare loans with different interest rates and fee structures.

When reviewing the CTF sheets from different lenders, it's crucial to pay attention to both the interest rate and the APR. If you see a significantly lower interest rate but a higher APR, it may indicate that there are additional fees or points associated with that loan. On the other hand, a lower APR and a higher interest rate could mean that the lender is incorporating closing costs into the loan, resulting in a higher overall cost.

The important thing is to carefully evaluate the terms and costs associated with each loan option, considering factors such as interest rates, APR, closing costs, and any points or fees. This will help you determine which loan is the best fit for your financial situation.

Regarding 100% financing programs, it's true that some loan programs offer the option to finance the entire purchase price of a home without requiring a down payment. However, it's important to note that closing costs typically cannot be rolled into these loans, so you should have funds available to cover those costs separately.

Additionally, some lenders may argue that loans with 100% financing and no mortgage insurance have higher interest rates compared to conventional loans. It's essential to compare different loan options and weigh the pros and cons of each to make an informed decision.

Remember, it's advisable to communicate with your lender, ask questions, and clarify any concerns or uncertainties you may have about the loan terms and costs.

APR stands for Annual Percentage Rate. It is a measure used to represent the annualized cost of borrowing, including both the interest rate and certain additional fees or costs associated with a loan. The APR is expressed as a percentage and is designed to help borrowers compare the costs of different loan offers.

The APR takes into account not only the interest rate charged on the loan but also any origination fees, points, mortgage insurance, and other costs associated with obtaining the loan. By considering these additional costs, the APR provides a more comprehensive view of the total cost of borrowing.

When comparing loan offers, borrowers can use the APR to evaluate and compare the overall cost of different loans more accurately. It helps borrowers understand the true cost of borrowing and make informed decisions when selecting a loan option.

It appears that you're discussing the APR (Annual Percentage Rate) in relation to loan offers from lenders. The APR is a measure that combines the interest rate and certain fees associated with a loan to provide a clearer picture of the overall cost of borrowing. It is designed to help borrowers compare different loan offers more effectively.

The APR represents the true cost of borrowing over the loan term and includes not only the interest rate but also other fees such as origination fees, points, and certain closing costs. It takes into account the total amount you will repay over the life of the loan, including these additional costs. The APR is expressed as a percentage.

When comparing loan offers, it's important to consider both the interest rate and the APR. If you encounter a situation where one lender offers a lower interest rate but a higher APR compared to another lender, it suggests that there may be additional fees or costs associated with the loan, which could impact the overall affordability.

By reviewing the APR, you can gain a better understanding of the total cost of the loan and make an informed decision about which offer is most suitable for your financial situation. It's always recommended to carefully review all the details, including the interest rate, APR, and any associated fees, before choosing a loan.

what is loan to value: 

•Up to 100% LOAN TO VALUE (LTV)

• 0% Down=less money needed at the closing table

•NO MI (mortgage insurance)

•Can close on your home 60-90 days prior to start date

•Maximum loan amount for residents (what’s that #)

•Maximum loan amount out of residency

•Up to 100% LTV = $750,000 -$1,000,000

•Up to 95%LTV = $1,250,000 - $1,500,000

•Up to 85% - 90% LTV = $2,000,000

•Up to 75% LTV $3,500,000

Loan to Value:

Loan-to-value (LTV) is a financial term that represents the ratio of a loan amount to the appraised value or purchase price of a property. It is commonly used in mortgage lending to assess the risk associated with a loan.

In the context you provided, the following LTV percentages and corresponding loan amounts are mentioned:

Up to 100% LTV: This means you can borrow the full value of the property without making a down payment. It implies that no money is required at the closing table as a down payment. The specified loan amounts are between $750,000 and $1,000,000.

Up to 95% LTV: This indicates that you can borrow up to 95% of the property's value, with the remaining 5% being the required down payment. The mentioned loan amounts range from $1,250,000 to $1,500,000.

Up to 85% - 90% LTV: This suggests that you can borrow between 85% and 90% of the property's value, requiring a down payment of 10% to 15%. The loan amounts mentioned are up to $2,000,000.

Up to 75% LTV: This means you can borrow up to 75% of the property's value, necessitating a down payment of 25%. The specified loan amount is up to $3,500,000.

These figures indicate the maximum loan amounts you may be eligible for based on the respective loan-to-value ratios. However, it's important to note that specific lenders and loan programs may have additional criteria and requirements, so it's advisable to consult with a lender directly for accurate and up-to-date information regarding loan options and eligibility.

Pre-approval Conditional Approval

It seems like you're discussing various factors to consider when obtaining a loan and working with a lender. Here are some key points from your text:

Condo HOA fees: When considering condos, be cautious about high HOA fees, as they can affect your debt ratio and loan qualification. Even if the purchase price is lower, high HOA fees may impact your affordability.

Credit approval/conditional approval: After submitting all required documentation, the lender will provide you with a credit approval letter or conditional approval. This indicates that the lender has reviewed your file and determined your eligibility for a loan. Pre-approval does not guarantee final loan approval, as it depends on various conditions being met.

Trusting your loan officer: It's important to trust your loan officer and ensure they are knowledgeable and experienced in their role. They should ask the right questions, collect accurate documentation, and provide you with reliable information.

Local lender vs. best fit: While a local lender may have better knowledge of the area, it doesn't necessarily mean they are the best fit for your specific needs. Consider all available options, both local and non-local lenders, and choose the one that offers the right product and terms for you.

Due diligence: Do your research and due diligence when selecting a lender and working with a real estate agent. Make sure they are a good fit for your requirements and advocate for your best interests.

Desirable area gap: In highly sought-after areas, there may be a gap between the purchase price of homes and what you qualify for. This means that the prices of properties in desirable locations might exceed your loan eligibility, requiring additional funds or alternative financing options. If you offer more than the appraisal price.

Remember to consult with professionals such as lenders and real estate agents for personalized advice based on your specific financial situation and goals.

Supplemental letter: In some cases, lenders can provide a supplemental letter to give real estate agents and sellers more confidence in your loan qualification. This letter may reference the lender's review of your income, assets, and credit report, confirming that you meet their guidelines.

Purchase contract for rate lock: Once your offer is accepted, the lender will require a copy of your purchase contract to lock in the interest rate. This is particularly important in situations where the contract specifies an "on or about" closing date, as it can impact the rate lock period and potential interest rate changes.

Rate lock period: When locking in an interest rate, there is a specific period (e.g., 30 days, 45 days) during which the rate is guaranteed. However, if the closing is delayed beyond the rate lock period, it may result in the need to pay for an extended rate lock or potentially face a higher interest rate if rates have increased.

Communication with your agent: It's essential to communicate with your real estate agent about the expected timeline for closing and any potential delays that could impact the rate lock. This will help ensure that you don't miss important dates and can plan accordingly.

Title: the process of ordering a title search and title insurance to verify the property's ownership and address any potential issues with the title.

Please keep in mind that real estate practices and terminology may vary depending on the region, so it's always recommended to consult with professionals familiar with your local market and regulations.

•Lender provides you letter (referenced on previous page) to put your purchase offer in.

•Offer is accepted and you provide your lender copy of purchase contract, you can now ‘lock in the rate’

•Title ordered by lender, using borrower’s choice of attorney/settlement company.

•Appraisal ordered by lender (round robin)

•Loan Processor will contact you for any additional items (if

needed) before forwarding file to underwriting

 Appraisal department will review and sign off on appraisal once received from the appraiser.

● The underwriter will validate information on application and all documentation provided. Once file is clear to close it will be sent to closing department.

● Closing department will send initial CD (closing disclosure, minimum of 3 business days prior to closing date. This may not be your final CD.