Avoid Problems By Saying It Straight On Purchase Contracts & When Applying For The Mortgage.
9-21-13
Topics Covered On This Podcast:
Questions answered by Attorney Ron Cohen:
1. How can I be sure the seller really owns the house he is selling me?
2. What is the difference between a warranty deed and a quit claim deed?
3. Why is it important that I have a written contract?
4. What does a contract for the sale of real estate have to have included to make it legal?
Make sure you spell out clearly any contingencies like needing to first sell a current home before buying the new house, contingencies on financing terms, and declaration of what personal property is included with the sale etc (and spelling out the amount and exactly what types of buyer’s cost are being paid by the seller)
Questions answered by Jenett Rochester
1. Can you think of specific examples of clients who have run into problems or been able to avoid problems with sellers who didn’t really have title to the property?
2. Can you recount an instance when a client ran into problems or avoided a problem with a contract that did not have clear verbiage in it?
Questions answered by Jo Garner
1. What are the most important items on the mortgage that you want to make sure are clear?
In most cases you’re going to live with the mortgage as long as you live with the house until you pay off the mortgage—hopefully sooner rather than later. The most important points to understand on your loan are the good faith estimate and the truth-in-lending form. Good luck understanding the government’s new “Simplified Version” of the good faith estimate—it’s a rubick’s cube. Most mortgage companies add a transactional summary which is like the old good faith estimate –one that you can understand. You want to know: 1. The amount of down payment 2. The amount of closing costs 3. The amount of your prepaid taxes and insurance 4. The amount the seller or anyone else is paying toward your costs. This gives your total move-in costs.
The payment amount is equally important. The payment is usually made up of the Principal and Interest payment from the loan. Monthly amount of property taxes, and the amount of homeowners’ insurance. Check to see if there is monthly private mortgage insurance . Also check to see if there is an association fee on the property. The association fee is not included in the mortgage payment but it will affect the income-to-debt ratios that the mortgage company uses to qualify you and it will affect your personal budget.
The truth-in-lending statement will tell you if the loan is a fixed rate or adjustable rate. It will tell you if the loan has a prepayment penalty or not (on traditional loans, there is usually no prepayment penalty), The truth-in-lending statement will say whether the loan is assumable or not, the terms of when the payment will be late and what the late fees are and more.
2. What are some points of communication that need to be absolutely clear at the time of the loan application to assure a smooth closing?
Want to have a smooth closing? It starts at the time of the mortgage application.
Numero Uno: Make sure you state your income correctly. If you are an independent contractor or 1099 employee, let the loan officer know this up front because the rules for calculating your income are totally different compared to if you are a full fledged employee.
If you are a temporary worker or self employed, let the loan officer know right up front.
If you write off unreimbursed employee expenses on your tax returns (like mileage, travel, entertainment, uniforms, marketing expenses), let the loan officer know. The amount of unreimbursed employee expenses are deducted from your other income.
If you have a side business where you write off a loss on your tax returns, let the loan officer know. If you own real estate let the loan officer know All of these things can affect the income the mortgage company is allowed to use to qualify you.
Numero dos: Assets. Be very clear where you plan to get the assets to close on your deal. If you are using money that is gifted to you and not already seasoned in your own account for the last 60 days, the loan regulations are different for using gift funds. In most cases you can USE gift funds but the underwriting requirements are different.
If you have large deposits other than payroll showing in your bank accounts, communicate clearly the source of these deposits.
In 3rd quarter: Kindness Korner: We are fighting back against acts of violence on the Real Estate Mortgage Shoppe radio show on AM 600 and IHEART by honoring unsung, uncommonly kind professionals in real estate related industries. Today we honored Beverly Coney, former mortgage officer, who has donated her services, her money and her baked goods to her customers, charitable organizations and others over the years without expecting anything in return. Cheers to you, Beverly!
If you know someone YOU would like to nominate, please contact Lynn Mcdonald of Lynn McDonald, Sales and Service, Allstate Insurance 901 849-7101, a participating member of The Kindness Revolution
In 4th quarter: Real Estate Tip Of The Week: Ron and Jenett put out a challenge for buyers and borrowers to take time to read the contract BEFORE signing –even if it is a standard form.
Good morning Memphis and to IHEART listeners around the country. There’s been a change in the weather in Memphis this week and a change in the mortgage rate climate across the entire nation. Glad you could join us on the Real Estate Mortgage Shoppe program. Our general topic today is “Avoid Problems By Saying It Straight On Purchase Contracts & When Applying For The Mortgage.” But we want to talk with you about WHATEVER real estate or financing topic you want to discuss. I’m your host, Jo Garner, mortgage professional with Evolve Bank and Trust. Our co-hosts today—we have Attorney Ron Cohen, co-owner of Premium Title Group.
Hello, Ron. Most of our regular listeners know you, but tell our new listeners a little bit about yourself and what Premium Title Group can do for them.
Our other guest is Jenett Rochester, manager for the Premium Title Group in Memphis. Jenett you’ve been in the real estate closing business for many years. Tell our listeners a little about yourself and what you do at Premium Title Group here in Memphis.
Ron, I know you’re up in Chicago today. Down here in Memphis our weather has made a big change from temps in the 90s’s to lots of rain and temps in the 50’s to 70’s. Wow, and that is sort of what happened this week when the Federal Reserve announced, to everyone’s surprise, that they were going to keep buying mortgage-backed securities at same pace instead of tapering off. This was a shocking announcement for most market investors. Almost instantly the stock market shot up and the mortgage rates started sifting down ending yesterday at a 6 week low.
30YR FIXED – 4.5%
FHA/VA – 4.25
15 YEAR FIXED – 3.5%
5 YEAR ARMS – 3.0-3.50% depending on the lender
(Jo) Rates in the 3’s and 4’s –sounds like Opportunity is knocking —- Now might be a good time to answer the door. Home purchases are on the rise—the prices on homes are on the rise and so are the number of homes for sale. For the last few weeks our preapproved mortgage customers are experiencing fierce bidding wars on the homes they want to buy. Other people are bidding back and forth against other bids on the same house.
Here’s a word to the wise: Get preapproved for your mortgage BEFORE you start making offers on homes. And another word to the wise (and you already know what it is) If the Deal Works For Your Today, Do It Today. And another wise nugget—Your mortgage is a tool and not a toy. Make sure you are comfortable with the terms on the home loan and that it fits into your budget and that you aren’t overextending yourself just because you want the bigger house. If you take care of the little things like sticking to a budget with your finances, you’ll be able to later afford to comfortably buy the bigger home one day and really ENJOY IT.
My assistant Susan Belew and I are still giving plenty of people joy by refinancing their homes and rental homes in Memphis and across the country. We are still offering the special HARP refinance program where you do not have to have a full appraisal to refinance to a lower rate, shorter term, or all of the above. FHA streamline and VA streamline refinances with no appraisal are still out there. For refinances we are doing more cash out refinances than before because some of the property values are going up and homebuyers are paying off higher interest rate debts or using the funds to invest in other places. Knocking down the number of years on a mortgage is still popular. Besides, the ultimate goal is to NOT HAVE A MORTGAGE, right? If you’d like for me to do YOUR numbers to see what scenarios might be available for you to get rid of some interest expense, call me on the air at 901 535 WREC –that’s 901 535 9732 or call me off the air more directly at 901 482 0354. 901 482 0354.
(like if you are asking the seller to pay ALL of your closing costs and prepaid taxes and insurance, don’t just say “seller to pay buyer’s costs.” You need to ask specifically for closing costs AND prepaid taxes and insurance. )
(Jo) If you have a question about a document or something on your mortgage disclosures, ASK your loan officer to explain it. There are no silly questions in this business. You can’t take ANYTHING for granted. The financial industry has been through so many regulation changes that what you experienced as a borrower a year ago or 8 years ago may not be reality today. AsK and READ THE FINE PRINT. Same on the home loan purchase contract. ASK YOUR REALTOR! Jenett and Ron at Premium Title have been SO helpful with answering questions too. ASK AND READ THE FINE PRINT.
Attorney Ron Cohen and Jenett Rochester of Premium Title Group are sitting around the coffee table with us this morning. We were starting to talk about how the home purchases have increased and how important it is that you state clearly in the contract what you intend and that you read clearly the items in your contract AND on your mortgage terms. What wisdom can you share with us today on the topic of contracts….
Questions answered by Attorney Ron Cohen:
5. How can I be sure the seller really owns the house he is selling me?
6. What is the difference between a warranty deed and a quit claim deed?
7. What if I do not get a warranty deed? Do I have to worry about the seller’s redemption rights like in the case of a tax sale?
8. Why is it important that I have a written contract?
9. How do I make sure I have a first-right of refusal on the sale of a home?
10. What does a contract for the sale of real estate have to have included to make it legal?
Questions answered by Jenett Rochester
3. Can you think of specific examples of clients who have run into problems or been able to avoid problems with sellers who didn’t really have title to the property?
4. Can you recount an instance when a client ran into problems or avoided a problem with a contract that did not have clear verbiage in it?
Questions answered by Jo Garner
3. What are the most important items on the mortgage that you want to make sure are clear?
In most cases you’re going to live with the mortgage as long as you live with the house until you pay off the mortgage—hopefully sooner rather than later. The most important points to understand on your loan are the good faith estimate and the truth-in-lending form. Good luck understanding the government’s new “Simplified Version” of the good faith estimate—it’s a rubick’s cube. Most mortgage companies add a transactional summary which is like the old good faith estimate –one that you can understand. You want to know: 1. The amount of down payment 2. The amount of closing costs 3. The amount of your prepaid taxes and insurance 4. The amount the seller or anyone else is paying toward your costs. This gives your total move-in costs.
The payment amount is equally important. The payment is usually made up of the Principal and Interest payment from the loan. Monthly amount of property taxes, and the amount of homeowners’ insurance. Check to see if there is monthly private mortgage insurance . Also check to see if there is an association fee on the property. The association fee is not included in the mortgage payment but it will affect the income-to-debt ratios that the mortgage company uses to qualify you and it will affect your personal budget.
The truth-in-lending statement will tell you if the loan is a fixed rate or adjustable rate. It will tell you if the loan has a prepayment penalty or not (on traditional loans, there is usually no prepayment penalty), The truth-in-lending statement will say whether the loan is assumable or not, the terms of when the payment will be late and what the late fees are and more.
4. What are some points of communication that need to be absolutely clear at the time of the loan application to assure a smooth closing?
Want to have a smooth closing? It starts at the time of the mortgage application.
Numero Uno: Make sure you state your income correctly. If you are an independent contractor or 1099 employee, let the loan officer know this up front because the rules for calculating your income are totally different compared to if you are a full fledged employee.
If you are a temporary worker or self employed, let the loan officer know right up front.
If you write off unreimbursed employee expenses on your tax returns (like mileage, travel, entertainment, uniforms, marketing expenses), let the loan officer know. The amount of unreimbursed employee expenses are deducted from your other income.
If you have a side business where you write off a loss on your tax returns, let the loan officer know. If you own real estate let the loan officer know All of these things can affect the income the mortgage company is allowed to use to qualify you.
Numero dos: Assets. Be very clear where you plan to get the assets to close on your deal. If you are using money that is gifted to you and not already seasoned in your own account for the last 60 days, the loan regulations are different for using gift funds. In most cases you can USE gift funds but the underwriting requirements are different.
If you have large deposits other than payroll showing in your bank accounts, communicate clearly the source of these deposits.
In 3rd quarter: Kindness Korner: (1 minute) Lynn McDonald of Allstate Insurance will call in and on behalf of the McDonald Allstate Insurance Agency and the Kindness Revolution she will honor a real estate professional in the Memphis Marketplace who has shown uncommon kindness in the industry.
In 4th quarter: Real Estate Tip Of The Week:
Jo has two announcements: Talk Shoppe offers the community free education and networking to anyone interested in real estate or business. This Wednesday at DeVry University 6401 Poplar Ave 6th floor Memphis, TN 9A-10A at Talk Shoppe you can participate in the Mastermind Principle : based on the book by Napoleon Hill Think and Grow Rich. For more information about Talk Shoppe, go to www.TalkShoppe.BIZ.
Next Saturday 9A CST , join us again on the Real Estate Mortgage Shoppe program where we offer YOU solutions to your real estate and financing challenges.
Transition Songs: “Straight Talk” by Dolly Parton; “Warning Signs” by John Michael Montgomery; “Straight Up” by Paula Abdul
On the show today:
Attorney Ron Cohen
Ron A. Cohen
Of Counsel: Kusper & Raucci, Chartered
33 N. Dearborn Street
Suite 1530
Chicago, Illinois 60602
312-332-5000
312-346-1145 (direct)
312-332-4663 (facsimile)
Jenett Rochester, Memphis Manager Premium Title Group (901) 752 1587
Lynn McDonald, insurance agent with Erin McDonald Allstate Insurance (901) 849-7101 coordinating the “Kindness Korner” for the Kindness Revolution
Jo Garner, radio show host and mortgage professional with Evolve Bank and Trust (901) 482-0354 www.MoneyShoppe.NET and www.mortgageloansblog.com
Jo Garner is a mortgage officer with extensive knowledge in tailoring mortgages to her customers who are refinancing or purchasing homes all over the country. She offers conventional, FHA, VA or other loan programs for refinancing and purchases.
Jo can help you look at rent vs buy, when it makes sense to refinance, how to get the best deal on your home purchase financing.
Jo Garner has been in the real estate/financing business for over 20 years. She got her start in Portland, Maine where she first began her real estate career. She received her real estate education from the University of Southern Maine and was personally mentored in San Diego, California by Robert G. Allen, author of Nothing Down, Creating Wealth and The Challenge.
On moving back to West Tennessee in 1987, she went into business buying and selling discounted owner-financed notes secured on real estate. In 1990 Jo went to work for a residential mortgage company and has been a mortgage loan officer for over 20 years. Her goal is to offer excellent, affordable service to her customers, tailoring the loan programs to the specific needs of her clients.
In addition to her work in the mortgage field, Jo Garner is the primary sponsor and founder of Talk Shoppe in Memphis. www.TalkShoppe.BIZ She was also the radio talk show host of the Real Estate Mortgage Shoppe program on News Radio AM 600 WREC and currently publishes on her blog posts and podcasts on www.MortgageLoansBlog.com .
For real estate financing solutions, plug into the Real Estate Mortgage Shoppe program. You can find mortgage rates, FHA Streamline refinance with no out-of-pocket costs, refinancing options, home purchase loan programs, answers and real estate, money-saving tips and more.