When you apply for a mortgage you have to provide a lot of documentation, like bank statements, tax returns, and pay stubs. But sometimes, lenders also require a letter of explanation to better understand your financial situation. This letter can be essential in securing loan approval and should be treated as a requirement. It helps fill gaps in your financial picture and provides a deeper understanding of your ability to repay the mortgage.

A letter of explanation is typically requested when specific information in your application raises a red flag for the lender. For example, it may be needed to explain a job change, past credit issues, new credit card applications, large bank transactions, or unsteady income sources. Proactively submitting a letter of explanation can be beneficial if you are aware of potential issues in your application.

Of course in the event you need to provide a letter, we can help with it so you’re not in it alone 

If you are going to be getting a loan funded Fannie Mae or Freddie Mac there are new few changes coming on May 1. Upfront loan fees will be changed due to alterations in Loan Level Price Adjustments (LLPAs), which are fees that differ for each borrower based on factors such as credit scores, down payments, property types, and more. These adjustments are connected to credit scores and the size of down payments.

In certain instances, individuals with higher credit scores might end up paying more, while those with lower credit scores could pay less.

What do the fee modifications entail? The entire fee matrix, based on credit score and down payment, has been revised. Although having an excellent credit score still results in lower fees compared to a poor credit score, the penalties for lower scores will be less severe after May 1st. For instance, with a credit score of 659 and borrowing 75% of the property’s value, you’ll face a fee equivalent to 1.5% of the loan balance. Prior to these changes, the fee would have been 2.75%. On a hypothetical $300,000 loan, this equates to a $3,750 reduction in closing costs. Conversely, if your credit score is 740 or above, you would have been charged a 0.25% fee on a loan for 75% of your home value before May 1st. After this date, you might pay up to 0.375%. If want to see how this affects your borrowing costs fill our our online qualifier or schedule a meeting on our website.

A letter of explanation is typically requested when specific information in your application raises a red flag for the lender. For example, it may be needed to explain a job change, past credit issues, new credit card applications, large bank transactions, or unsteady income sources. Proactively submitting a letter of explanation can be beneficial if you are aware of potential issues in your application.

Of course in the event you need to provide a letter, we can help with it so you’re not in it alone 

If you are ready to purchase a house – you are probably going to be excite and maybe a little nervous.

Here are 5 important things to do on a walkthrough to help lower any anxiety or future surprises.

1. Look For Wet Spots Check the ceilings for wet spots (rings or circles) and discoloration around windows. They can cause issues down the road and be hard to fix!

2. Check The Wiring Turn on the switches, dimmers, check the doorbell, garage door, basically check it all. If things are not working right, there could be an overall wiring issue.

3. Inspect the Bathroom Again look for water damage around toilets, showers and tubs. Also make sure everything is working properly, flush the toilets, check the showers and faucets to make sure the hot water works.

4. Test the hardware Basically check everything from fans to the washer and dryer. Make sure it all works.

5. Run the heat and AC You want to make sure the heat and AC are working properly – turn them on and let it run a few minutes. Finally make a checklist for all the items to be included in the sale and have the owner sign-off or initial it so there’s no confusion or disagreements at closing.

If you want to review with us – just go to our website and schedule a call with our easy online calendar tool.

If you’re fortunate enough to be considering buying a second home, but not sure about using it as a vacation house or as an investment property to generate income, understanding the differences between the two types of property is important to determine how much you’ll pay to finance and own it.

A second home is a vacation home, while an investment property is rented out with the goal of generating income. If you’re considering renting out the property occasionally, defining it depends on how much time you spend in it. If you use the property for 14 days or less during a year, it would be considered a rental property and the income earned would be taxable, but you would also deduct the expenses associated with the property.

The distinction between a second home and an investment property is important not only for tax purposes but also when seeking financing for the home. Investment properties usually have more stringent underwriting guidelines than second homes and primary residences because there is an assumed greater risk of default on properties that borrowers don’t occupy. The stricter standards for an investment property might also include a larger down payment requirement.

The tax implications for second homes and investment properties are also different. Mortgage interest is fully tax-deductible for investment properties, and owners can also deduct many expenses related to the property. In contrast, if you have more than $750,000 in mortgage debt between two or more properties, you’ve maxed out the amount you can use to deduct interest.

Homeowners who own a second home can only deduct mortgage interest if it falls within the $750,000 total debt limit. In summary, accurately defining a property as a second home or investment property is crucial to understand the financing and tax implications. Homeowners who wish to purchase an investment property should be prepared for stricter underwriting standards and a larger down payment requirement. Meanwhile, owning a second home is easier to finance, but tax deductions are limited.

To see how much you qualify and borrowing costs for today’s market fill out our quick purchase analyzer on our website.

This week we saw mortgage rates fall again according to data provided by Freddie Mac. This continues a streak now stretching four weeks, as homebuyers benefit from lower borrowing costs.

The average rate on a 30 year fixed rate mortgage fell to 6.28% down from 6.32% a week earlier.

Freddie Mac chief economist Sam Khater stated, “mortgage rates continue to trend down entering the traditional spring home buying season.” While rates have fallen there are still challenges for home buyers including low inventory of available for sale in many markets. If you are thinking about buying a new home this spring check with us to see how much you can get pre-qualified for. You can fill out our 30 second analyzer on our website to get started.

A second home is a vacation home, while an investment property is rented out with the goal of generating income. If you’re considering renting out the property occasionally, defining it depends on how much time you spend in it. If you use the property for 14 days or less during a year, it would be considered a rental property and the income earned would be taxable, but you would also deduct the expenses associated with the property.

The distinction between a second home and an investment property is important not only for tax purposes but also when seeking financing for the home. Investment properties usually have more stringent underwriting guidelines than second homes and primary residences because there is an assumed greater risk of default on properties that borrowers don’t occupy. The stricter standards for an investment property might also include a larger down payment requirement.

The tax implications for second homes and investment properties are also different. Mortgage interest is fully tax-deductible for investment properties, and owners can also deduct many expenses related to the property. In contrast, if you have more than $750,000 in mortgage debt between two or more properties, you’ve maxed out the amount you can use to deduct interest.

Homeowners who own a second home can only deduct mortgage interest if it falls within the $750,000 total debt limit. In summary, accurately defining a property as a second home or investment property is crucial to understand the financing and tax implications. Homeowners who wish to purchase an investment property should be prepared for stricter underwriting standards and a larger down payment requirement. Meanwhile, owning a second home is easier to finance, but tax deductions are limited.

To see how much you qualify and borrowing costs for today’s market fill out our quick purchase analyzer on our website.