Looking to simplify your home buying process? It is important to work on getting your financing ducks in a row before looking for a home.

Check out the latest “One Cool Thing” from the California Association of Realtors about seeking financing when buying a home:

Most home buyers are following their realtors advice and seeking financing first in their home buying journey. They also want greater speed, simplicity and communication from their providers.

• 73.5% sought out home financing options before looking for a home.
• 75.4% said their agent and lender communicated with each other about their home buying process.
• 49.5% desire a faster or easier home buying experience.
• 34.1% had trouble understanding mortgage fees.

Source: loanDepot and mellohome

The Lawhead Team would like to share the latest One Cool Thing about borrowers views on making the mortgage process a little bit easier:

Home buyers want the mortgage process to be less onerous and faster, but they also want more personal interaction as they navigate a transaction.

Borrowers views on how to make the mortgage process easier:

• 27% reduction in paperwork
• 20% easier to shop and compare terms from lenders
• 16% less back and forth during the process

Mortgage shoppers want the person-to-person interaction:

• 65% prefer a person to explain mortgage terms and options
• 58% want assistance reviewing final loan documents
• 58% prefer a person to help them review final documents
• 56% want help singing loan documents

Source: Fannie Mae National Housing Survey

Planning to apply for a mortgage? Borrowers have been impressed with the smooth process The Lawhead Team provided for them!

If you are shopping for a home, you will also want to shop around for the right home mortgage to fit your needs.

The Lawhead Team would like share some common home loans and why they are beneficial. If you have any questions about applying for a home mortgage, please call us and we would be happy to help steer you in the right direction.

• 30 Year Fixed – These are mortgages where interest and mortgage payments remain the same for 30 years, at which time you will have paid back the entire loan. This is good for those who prefer the security of fixed-monthly payments like fixed-monthly mortgages. Often, this mortgage is more expensive than its adjustable-rate counterparts, but is easier to understand and provide the greatest payment stability. If you can afford this loan and plan to be live in your home for 10 or more years, this may be the best option for you.
• 15 Year Fixed – These are mortgages where interest and mortgage payments remain the same for 15 years, at which time you will have paid back the entire loan. These loans offer the lowest fixed rates but have the highest monthly payments because you are paying off the loan in a shorter timeframe. This is good for those who prefer the security of fixed-monthly payments and can afford the higher monthly payments of a 15-year term like this mortgage. You will build equity quickly, but the high monthly payments may restrict the overall price of the home you can afford.
• ARMs – Adjustable-rate mortgages (ARMs) are mortgages where the interest rate you pay adjusts at a specified time and frequency. There are many different ARM products, but generally they offer a lower initial rate than a 30-year fixed and they adjust with market trends. Therefore, when your initial rate period ends and your ARM is ready to adjust you may be paying more (with higher current market trends) or less (with lower current market trends) than your initial rate. Generally, ARMs follow this pattern: the shorter the initial term, the lower the initial rate.
• Interest Only – These are fixed or adjustable rate mortgages where you the option of paying interest only for a specified term, usually five to ten years. After the initial term the mortgage switches to a fully-amortizing mortgage for the remainder of the loan. This is good for people who expect their financial situation to change in the near future. Young professionals like doctors and lawyers may also prefer this mortgage since they believe they will be making significantly more money in the future than they do now.
• Payment Option “flex pay” – These are mortgages where you have the option of paying different amounts each month. Usually, the monthly payment options include a low payment option, an interest-only option and an interest plus principal option. The low payment option creates negative amortization and usually adjusts yearly with a maximum rate cap. This is good for people that do not have steady incomes may like this loan. It provides the most flexibility from month to month.

Credit is a powerful tool you need on your side when it comes to buying a home. The Lawhead Team would like to share some tips to increasing your credit score so you can qualify to buy a home.

Your credit score will be analyzed by a lender to determine if you qualify for a home mortgage, a car or any other type of loan. Before they lend you money, they want to know how much of a risk you are. The higher your credit score, the less of a risk they feel you will be.

Building your credit takes time and requires an ongoing effort from you. Follow these tips to building your credit:

• Always pay your bills on time. Late payments have a majorly negative impact on your credit score. If you have past due bills, get them current and keep them that way.
• If you know you will have a problem paying a bill on time, call your creditor to work out a payment arrangement so you do not go late on your payments.
• Keep your debts low. High debt to credit limit ratios drive your credit score down. Pay off your debt, don’t just move it around.
• Don’t close unused accounts. A zero balance may help your score.
• Don’t open new accounts you don’t need. This can lower your score.
• If you open new accounts within a short amount of time, this can be a red flag. Avoid opening up new accounts especially if your credit is less than three years.
• Avoid multiple credit inquiries within a short amount of time. If multiple inquiries are necessary – such as if you are shopping for a new car or home loan – have them pull the inquiries as close together as possible.
• Monitor your credit. Checking your own credit down not affect your score plus you will know if anything suspicious or bogus appears on your credit history.
• If you have had credit problems in the past, you may want to open a new account and keep it paid on time and not maxed out.
• If you manage them correctly, a mixture of credit cards and installment loans can help raise your credit score. However, multiple installment loans can lower your score since payments remain the same until balances are paid in full.

Do you have questions about applying for a home loan? Please call The Lawhead Team, “Because two Lawheads are better than one!”

In the event a friend or relative comes to you and asks you to co-sign a home loan for them, what should you do?

Perhaps you want to be supportive and stay on good terms with them or maybe you just like doing favors. However, when you co-sign on a loan, you must understand what you are getting yourself into. Even if you completely trust the person you’d co-sign for, accidents happen that one cannot plan for. The last thing you want to happen is to compromise your own financial status if the debtor cannot make the payments.

Whether the person you are interested in co-signing for doesn’t have bad credit nor has no credit at all, keep in mind the lender doesn’t trust his ability to pay the loan back, thus requiring you to co-sign. Did you know the Federal Trade Commission reported that 75% percent of all co-signers end up having to repay the loan? Think twice before co-signing.

You may be tempted to co-sign on a home loan to support a friend or relative who is in the process of buying a home.  Suppose you co-sign and the debtor misses a payment.  In many cases, the lender will approach you, the co-signer, first to collect the payment without attempting to collect from the borrower. With this being said, you may have to pay fines such as late charges or legal fees. You may have to disclose your assets and you could possibly lose your property. In the worst case, you can also be sued.  This will not only scar your credit record but prevent you from getting future credit for your own personal needs.

In many cases parents will help out their children who are buying a home and have not yet established credit. No matter what the reason, make sure you will be able to afford to pay back the money if the borrower defaults on the loan. Don’t jeopardize your own financial security and credit record.

If you do decide to co-sign the loan, request documentation from the lender which states you will only have to pay the principal balance of the loan if the borrower defaults. By doing this you avoid having to pay an attorney’s fees if the lender wants to sue.

Another good idea is to have the lender agree in writing to tell you when the debtor is behind on a payment. This will give you a head start in preventing a possible default situation from snowballing.

Do you have bad credit but would like to buy a house?

There are some simple steps you can take to fix your credit and make it possible to get approved for a home loan.

When you apply for a loan with a lender, your reputation as a debtor is the main deciding factor in determining your interest rate and reliability.  This said, making your your credit is at its best is crucial.  Without a good credit history and score, lenders can also deny a loan outright, make the loan more expensive or heavily reduce your borrowing amount. If you think you have bad credit the five steps below will help you repair it.