Scents have powerful effects on us and your favorite smells can play a big role in making you feel more relaxed and at home in the new house. Light candles or incense throughout the rooms. To rid the house of the previous owner’s scent, or the smell of fresh paint, spray Febreze in all the rooms. The goal is to give your new home the same smell and atmosphere as your old one.

You can also make your new house feel like home by giving it the same, or similar, look as your old one. By surrounding yourself with familiar objects – your furniture is a good place to start. When rooms are sparse, without enough furniture to fill the space, you too will feel empty inside. You have to strike the right balance. Too much furnishings can feel cluttered and claustrophobic. But the right amount of furnishings can make a home feel nice and cozy. Some homeowners looking for a fresh start, buy new furniture to fill the rooms in their new homes, even choosing a new style of furniture.

Filling the rooms with family pictures is another way to make your new house feel like home. Surrounded by pictures of your family and friends is comforting to you and your kids. It can take you back to the memories you made at your old house with one look, bringing the feeling of home to your new space. Even your favorite artwork helps. Pictures and artwork on walls is also inviting to guests.

Surrounding yourself with your favorite items is another way to make your house feel like home. This is especially important for your kids. Favorite toys, video games, movies and stuffed animals will make your child’s new bedroom their own personal space. A favorite pillow on a sofa, your favorite vase or china on display in a china cabinet are all expressions of who you and your family are and should be on display in your new home.

It’s important to establish at least one room within the first week of moving into your new home. Unpacking one room with a comfortable setting will inspire and motivate you to unpack further and make the rest of the rooms in your new house feel like home. For many families, the two most comfortable rooms in their homes are the kitchen and their family rooms. With a comfortable place to sit and relax, unpacking is not as daunting and you find the process is over sooner than you’d anticipated.

Giving a new house the look, smell and feel of home is the number one priority for new homeowners during their first week after the move. Surrounding yourself and your family with favorite scents, furniture, pictures and items are all ways to make your new house feel like home.

Many subdivisions in the St. Louis area and across the state have various ordinances and pet licensing requirements. Be sure you are familiar with these before you move in. You can familiarize yourself with your new home’s state/province laws by contacting the State Department of Agriculture or the State Veterinarian’s Office. In fact, depending on your new address, your pet may need additional medications, vaccinations or health certificates.
If your pet doesn’t like to travel, be sure to get your vet’s recommendations for behavior modification tactics or medication that can lessen the stress of travel. Your current vet may also be a valuable resource for lining up your pet’s vet in your new home town.

As soon as you know your home’s new address you should order a new pet ID tag. Be sure to include your pet’s name, your name, address and phone number. An up-to-date ID tag is the best way to have a lost pet return home.

For your pet’s sake you should maintain your normal routine as long as possible. Many homeowners do their packing gradually over a period of time. But this causes commotion and disrupts your pet’s habits and routine. Moving is typically crazy and hectic and it’s important you remain as calm as possible. Pets can feel your stress. It’s up to you to maintain a sense of calm.

Before moving day, you should have a plan for keeping your pet safe in your vehicle. This is a crucial part of pet travel often taken for granted. Unfortunately, hundreds of pets are injured and killed every year, especially given free rein in cars, trucks, RVs and SUVs. And drivers are at risk too as they are distracted by their “enthusiastic” pet while driving, resulting in thousands of accidents every year. This is why wise pet owners are using pet barriers, pet seat belts, car seats and travel crates, keeping their pets and them safe during travel. Do yourself and your pet a favor and familiarize your pet with the vehicle restraint several weeks before your move. If you are traveling by plane, be sure to purchase and familiarize your pet with the appropriate airline approved pet carrier.

If you are staying overnight in a hotel on your way to your new home, check the hotel’s pet policy ahead of time. You’ll be glad you booked a pet friendly hotel in advance. Don’t forget to keep leashes, pet food and pet dishes nearby for those inevitable pit stops along the way. Like you, your pet will need to eat and bathroom breaks.

Moving into a new home is stressful for pets and their owners. But with some preparation, you and your pet will have an easier transition into your new home.

It’s important for parents to understand that kids have different concerns at different ages. For preschool children, moving elicits fears of being left behind or separated from their parents. Older kids between the ages of 6 and 12 have concerns about how their daily routines will be impacted. Teenagers worry about what a move will do to their social lives and about fitting in at their new school.

The key to easing these worries is acknowledging and addressing them with your children. If possible, take your children on a visit to your new home and neighborhood. If your new home is out of town or in a different state, providing your children with pictures and videotape of your new house will help them to feel more comfortable with their future surroundings. Calling the local Chamber of Commerce and requesting brochures about the area is another way to help your children visualize what their new town will be like.

Parents should have several discussions with their children about what the new area will be like before moving day. Visiting the new school or daycare center with your children and meeting their teachers is another way to help with the transition. Some parents have even been lucky enough to establish pen pals the same age as their children, helping them to learn about their new area while gaining a new friend in the process. Ask your children what their favorite things are in their lives at your existing home so you can make as many of those things happen at your new home.

Kids will inevitably have lots of questions and it’s important to answer them positively, focusing on things to look forward to like a first snowfall or their new bedroom. One way to put this into action is by asking your children how they would like to decorate their new room, allowing them to pick the paint color or new bedroom set.

You can get your kids actively involved with the moving process by having them pack their own belongings. Many parents have their younger children decorate their boxes with stickers and crayons, keeping this box close at hand during the move.

One of the hardest parts about moving is leaving friends behind. By throwing a going away party for your child with their friends, you can take lots of pictures and make a scrapbook for them to look back on. Be sure to give your children pre-stamped cards and stationary to help them to stay in touch with their friends.

Moving into a new home in a different city or state can be scary for children. Understanding your children’s concerns is the first step to acknowledging and addressing them. By helping your children to focus on things to look forward to, actively packing their personal belongings and making choices about how to decorate their future bedroom, moving won’t seem so scary.

On the night of their scheduled closing they were ready to sign when their closing officer’s cell phone rang. He handed Tom the phone. Their rate was much higher than Tom expected and the loan couldn’t be approved after all.

It’s a scenario many potential homebuyers fear. And while it is rare, it does happen. It happens when prospective homebuyers go on credit card binges, buying big ticket items for their new home like furniture, paint and appliances once their loans are approved.

With today’s economic uncertainty, there are nervous underwriting departments with stricter processes than before. Because of the bad loans that were approved during the less stringent subprime market of the late 1990s and early 2000s, some underwriting departments are taking a last minute look at credit scores to insure the prospective homebuyer won’t be overextended when the first payment is due.

In fact, because of lender caution, the minimum requirement for the best rates on a 30-year fixed mortgage is 20 points higher than it was just a few years ago. But your credit score is only one major part of the picture. Another factor is loan-to-value. The loan-to-value is a way to tell how much of a property is being financed. For example, in round numbers, let’s assume you want to buy a home that’s appraised at $100,000. You pay $20,000 for a down payment and finance the remaining $80,000, making your loan 80% of the home’s total value. So your loan-to-value is 80%. This is a much less risky scenario than loans that are for 100% or more of the home’s value.

But if your loan-to-value is 100% of the property’s value, all is not lost and there are strategies potential homebuyers can use. Many real estate agents who feel a responsibility to their clients are telling them to keep good credit data, to not go crazy buying things before the closing and to wait until they are in their new house or condo a while to see how they use the space because they’ll be better able to assess exactly what appliances and furniture they need. Vigilant consumers have the advantage. Potential homebuyers who pay their credit card bills on time and monitor their balances going forward are being rewarded with more attractive mortgage rates. Consumers who are late once on a credit card bill, but have a history of being clean over the last couple of years, are also granted certain leniencies. Bringing balances on all lines of credit, especially credit cards, to 50 percent of their limit while cutting from there is the key.

The bottom line for new homebuyers is to not go wild buying things right before their closing. When working with a lender it’s important that homebuyers have realistic expectations about the mortgage rate they can secure. Good mortgage lenders explain the process with you every step of the way. The better your credit score and loan-to-value percentage, the more attractive your mortgage rate will be. By thinking long term about how you’re going to afford everything once you get into your new home, you won’t be distracted by as many short term purchases.

The last thing a seller should do is be present for the home’s showing because sellers are often sensitive when it comes to hearing potential buyers point out the house’s flaws. Sellers often take this personally, interpreting it as criticism for how they’ve maintained the home. The observations buyers make can be harsh but have nothing to do with the owner. When the seller hears negative feedback, emotions interfere and cloud the seller’s judgment sometimes causing them to reject acceptable offers. Real estate agents have also found potential buyers are not as comfortable expressing their observations with the sellers present. This is why the real estate agent should be the only person present at a home showing, insulating the seller from the process and filtering relevant information. This also saves time and effort for everyone involved, with the agent only meeting the buyers when there’s a serious offer on the table.

A marketed property receives the most attention during the first two weeks. If the home is priced right, educated buyers who have been in the market for such a house will make a serious offer. What sellers need to understand is that the longer their house sits on the market, the worse the offers are likely to get. Don’t let an early bid scare you into thinking you underpriced your home. When an early offer is near the asking price, you’ll know you priced your home correctly. It’s counterproductive to wait for better offers. Doing so can result in your home languishing.

Selling your home is an emotional undertaking and ironically it’s one of the biggest mistakes you can make as a homeowner. Taking buyer observations personally can interfere with your ability to make a sound judgment when it comes to accepting a serious offer for your home. As a seller you need to be prepared to hear criticism and use it as a negotiating tool instead.

When you obtain a mortgage loan to purchase a home, the collateral used to secure the loan is the house. If you fail to make payments and default on your loan, your lender has the option to claim ownership of the house due to its security interest.

Collateral = your home  -  this is the what secures the mortgage loan in case you don’t make your payments

While property type and occupancy are important considerations for lenders, the value of the property is the most important part of collateral. The chief concern is that the property is worth enough to easily be sold to recoup losses should there be a default on the mortgage loan.

The value of the property is the most important part of collateral.

Quick Facts video 4: How collateral impacts your ability to qualify for a mortgage loan

Licensed appraisers estimate the value of a property by comparing it to recently sold properties in the neighborhood, generally within the last 6 months.  These comparable houses are similar with respect to land, square footage, total rooms, bedroom count, age, and general appeal.

Recently sold properties in your neighborhood that are similar to the home to be financed are used by appraisers to help determine its value.

What is LTV or Loan-to-Value?

LTV or Loan-to-Value ratio   =   amount being borrowed/ value of the home

Once the property value is determined, it is used to compute loan-to-value which is the amount being borrowed divided by the value of the house. For example, if a home is valued at $250,000 and the mortgage loan is $200,000, the LTV is 80%.

$200,000 / $250,000 = 80% LTV  (Loan-to-Value ratio)

If a second mortgage for $25,000 is on the home as well, then the combined loan-to-value, or CLTV, is 90%.

$200,000 first mortgage loan + $25,000 second mortgage = CLTV of 90%  ($225,000 / $250,000)

The higher the LTV, the greater the risk because the likelihood of a loss in the event of default goes up.  Consequently, if a higher LTV means higher risk, it also will generally mean a higher rate for the borrower, or in some cases, a higher one time cost, or higher monthly costs.

A higher  LTV or CLTV  = higher risk to the lender = higher the cost to the borrower

In order to compensate for increased risk, most lenders will require mortgage insurance?

Mortgage Insurance (MI)

Mortgage Insurance (MI) is used to compensate for increased risk of default.

Properties with Loan-to-Value ratio’s over 80% typically require mortgage insurance, or “MI” of some sort. Usually the cost of the mortgage insurance is passed on to the borrower as an added expense on their monthly mortgage payment.

LTV’s over 80% almost always require MI, this will usually be added to your monthly payment.

You will need to budget for MI in your monthly payment if you are financing more than 80% of your home.

monthly payment = interest + principle + escrow ( taxes and insurance) + mortgage insurance

So to wrap up collateral, the more you owe on your home, the more risk there is to the lender, the more you will pay. So plan accordingly.

With respect to collateral, a larger amount owed = higher lender risk = higher borrower cost.

Thanks for viewing our quick facts Collateral video, I hope you found it helpful.  If you have any questions please feel free to call us, our loan officers are friendly and ready to help 1-800-Granny-8!

How likely are you to be able to pay back your mortgage?  Steady employment is the best determinant of your ability to repay.  W2 wage earners are viewed as most stable from an underwriting standpoint because their income is easily documented.  Overtime, commission, and self employment income are considered less stable and are more difficult to document.

YES!               W2’s and tax returns prove steady employment

Maybe             Overtime, commission, self employment

NO way!         stated income loans (no documentation)

In our current market, full income documentation in the form of W2s and/or tax returns are required whether you’re self-employed or a wage earner. Stated income programs, which don’t require proof of income, are a thing of the past.

What is DTI?  Debt-To-Income ratio or DTI expressed as a percentage is the most important ratio to know when qualifying for a mortgage. You compute your DTI by dividing your total monthly obligations by your monthly before-tax income.

Debt-To-Income Ratio or DTI  =  Monthly obligations / Monthly pre-tax income

For example, if a borrower has a $250 auto payment, $150 in credit card payments, and a mortgage payment of $850 per month, then monthly obligations total $1,250. If your gross income is $4,000 a month then your debt to income ratio is 32%. A good rule of thumb is that you want a DTI no higher than 40%.

$250 + $150 + $850 = $1250 (monthly obligations)  /  $4,000 Monthly Income (pre-tax)  = 32%

Recommended DTI is 40% or less.

Another factor that impacts your ability to repay is the amount of liquid assets you have. Lenders want to see that you have enough cash reserves to cover your mortgage in “case of a rainy day”. Acceptable assets for reserves include checking, savings, and retirement accounts, as well as any other liquid cash accounts.

Saving for a rainy day pays off!

Checking, Savings, and Retirement Accounts as well as any other liquid assets make you more likely to be able to repay your mortgage.

Thanks for viewing our quick facts Capacity video, I hope you found it helpful.  If you have any questions please feel free to call us, our loan officers are friendly and ready to help!

Our loan officers are happy to answer any questions!  So give us a call at 800-Granny-8! (A text file of this video can be found on our website)

Quick facts video 2 – How do I get approved for a mortgage loan and improve my credit score?

How does my credit score impact my ability to qualify for a mortgage?

Let’s start with some basic information about credit.

There are three major credit bureaus:  Equifax, Experian, and TransUnion.

These credit bureaus document payment histories for mortgages, auto loans, personal loans, credit cards, and other consumer debt.  They also track and report derogatory information such as collections, foreclosures, judgments, charge offs, liens and bankruptcies.  From this compilation of debt and payment history a credit score is computed.

My credit history (list below) rent, utilities, mastercard, visa, student loans,

OH NO!!! (list below)  collections, foreclosures, judgments, bankruptcies…

Understanding credit scores

Credit scores range from 300 to 850 and have proven to be highly predictive of future repayment performance.  Lenders therefore depend on an individual’s credit score to determine the risk of a borrower defaulting on their mortgage loan.

In the past a credit score of 580 was commonly used as the lowest score acceptable for obtaining a mortgage, however after the 2008 mortgage crisis this score is now considered too risky and a score of at least 640 is now typically required.  Scores above 720 are considered “good” credit since they represent a low risk of default and therefore the best pricing is obtained by borrowers with the highest credit scores.

300 NO WAY!

580 Sorry – won’t work today

640 Acceptable – but by improving your score – you could save!

720 WAY TO GO! That’s going to save you some bucks!

850 Are you kidding? You go you little credit master!

How do I improve my credit score?

1. Well – make payments on time! This may seem obvious to some, but making your payments consistently on-time over the years is the most critical component of your credit score.
2. Check your credit on a regular basis and if there are any errors have them corrected immediately.  Federal law entitles you to one free credit report annually which can be ordered at freecreditscore.com
3. Keep your credit card balances to no more than 1/3 of the outstanding limit. Maxing out your available credit negatively impacts your credit score, even if you pay your bills on time.
4. Don’t close that account!  Keeping revolving accounts open especially over time improves your score.

1. Make Payments ON TIME!!

2. Check your credit at freecreditscore.com.

3. If your Visa limit is $15,000 don’t let your balance go above $5,000.  Maxing out your cards damages your credit score!

4. Don’t close that account, even infrequently used accounts can improve your score.

Thanks for viewing our quick facts Credit video, I hope you found it helpful.  If you have any questions please feel free to call us, our loan officers are friendly and ready to help!

Our loan officers are happy to answer any questions!  So give us a call at 800-Granny-8! (A text file of this video can be found on our website)

An ARM loan or Adjustable Rate Mortgage,  is a mortgage with a rate that can adjust. While the term has been vilified as one of the causes of the dreaded, “mortgage meltdown”, not all ARM’s carry mortgage rates that are unreasonable. Just like most anything, all it takes is a little effort to understand the different ARM programs and to see if they would be beneficial to you.http://www.granny8.com/wp-admin/post.php?post=669&action=edit#

To understand an ARM correctly, we need a few definitions along with our example:

John, in Chesterfield Missouri, has a mortgage application that has a start rate of 2.50%, 5/1 ARM with 5/2/5 “Caps”, and 2.75% “Margin” with the 1 Year US Treasury as the “Index”.

Index

An Index is a guide used to measure interest rates. Examples of interest rate changes are, 1 year LIBOR(London Interbank Offered Rate, 1 year treasury, and Prime).  This is available on any financial website. Your interest rate is computed based on the index, the month before your adjustment period ends.

Margin

An easy way of thinking of Margin is as the lender’s markup on funds.  It’s added to the index. If you don’t know your index, its normally available on your note, or ask you loan officer if you are yet to close. This is where you need to pay close attention. Abusive lending practices were introduced into margins. A normal margin is about 2.75%, however during the time where the causes of the mortgage meltdown happened, some margins were as high as 8%.

Adjustment Period

The adjustment period is the disclosure of periods the rate is fixed before it adjusts. In our example, John from Chesterfield Missouri mortgage has a 5/1 ARM means the interest rate is 2.5% for the first 5 years, adjusting on the 61^st month, then every 1 year thereafter.

Interest rate Caps

Cap on a mortgage discloses the maximum percentage an ARM can adjust per period and over the life of the loan, or “Capped”.  For example, the 5/2/5 caps means John in Chesterfield’s ARM can’t adjust to more than 7.5% on the first adjustment, no more that 2% per year thereafter, and no more than 7.5% over the life of the loan. Again, this is also a place to pay close attention. ARM caps are there to protect the consumer against unreasonable interest rate jumps. A normal ARM cap for the 1^st adjustment is 2-5%. During the pre-mortgage meltdown days, we saw no cap and a life cap of up to 18%!

So How is my ARM rate computed?

Index + Margin = Interest rate, limited by the interest rate cap.

So, using our example above.  John from St. Louis (Chesterfield) has had his ARM mortgage for 5 years now and the US Treasury is at 1%.  So Index of 1 + margin of 2.75=3.75% will be John’s new interest rate for the next 12 months.

When Should I choose an ARM?

Provided this isn’t your first rodeo owning and financing a home, you could consider and ARM if:

1. You plan on being in your home for the a time period less that the fixed period of the ARM. Say, if you are planning on moving in 4 years, a 5/1 ARM may work well for you.
2. You have additional income coming in soon. Say, you are first in line for the next promotion and Junior’s college fund has not yet been fully funded.

So, to conclude, ARM’s aren’t for everybody, and they can have some tricky parts. However, provided you’ve done your research, they can be of benefit in the right circumstances.

So kids, you want to buy a home in St Louis?  Homestead Financial is a Mortgage Company in St Louis and Kansas City with answers to the most common questions and the information you will need to qualify for a mortgage loan.

• How do I qualify for a mortgage?
• What does my credit score need to be?
• How do I improve my credit score?
• How much down payment do I need?

Let’s start with the 3 C’s of qualifying for a mortgage: Credit, Capacity, and Collateral.

Credit, Capacity and  Collateral

CREDIT: You used to be able to get a decent interest rate and big mortgage with a credit score at or around 580. Now it takes at least a score of 640, if you are below that, you’ll have to work on improving your credit.

580 with X thru   640 underlined or circled

There are many ways to improve your credit score, but paying bills on time and keeping balances low are the best places to start.

Ways to improve your credit score:

Rule no. 1   Pay bills ON TIME

Rule no. 2    Keep credit card (and other monthly debt balances) LOW

CAPACITY: You need to be able repay your mortgage loan and support that ability to repay with documentation. Borrowers must prove sufficient income as well as demonstrate an acceptable debt-to-income-ratio. In other words, your documentable income must be good, but you also cannot be carrying a lot of debt. It’s a good idea to reduce your credit card debt as much as possible before beginning the home buying process.

Most recent pay stubs, W-2 (last 2 years), tax return (for self employed last 2 years)

A debt-to-income ratio below 40% is recommended   for example: $2000 monthly obligations/$5,000 gross mo income = DTI of 40%

COLLATERAL:    Today most banks want borrowers to put down 20% of the purchase price of the home. However, there are many programs offered by the FHA as well as Mortgage Insurance Companies that insure mortgage lenders against loss while providing options to help consumers buy or finance homes with less than 10% down.

Recommended down payment is 20% of the home purchase price

OR

Reduce required down payment amount with:

FHA programs (such as 1^st time home buyer programs)

PMI (private mortgage insurance)

Thanks for viewing our 3C’s quick facts video, I hope you found it helpful.  If you have any questions please feel free to call us, our loan officers are friendly and ready to help!

Our loan officers are happy to answer any questions!  So give us a call at 800-Granny-8!