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Avoid These Financial Sins When Applying For a Mortgage

If you are planning to buy a home soon, make sure that you are aware of all the factors that can affect your ability to qualify for a mortgage approval. Many people think it is as easy as walking into a bank and saying ” I want to buy a home.” Banks are in the business of lending and making money… they need to ensure you are financially responsible and able to repay possibly the most money you have borrowed to date. To allow for a higher probability for an approval and the best terms, follow these 10 home buying commandments.

Thou shalt not change jobs, become self-employed, or quit your job.

Changing jobs resets the clock. You need 2 years of full time employment or employment within the same field to be a god candidate for a mortgage. Any sudden changes raises a red flag. 

Thou shalt not buy a car, truck, or van.

Do not incur any additional debt when you plan to purchase a home. This not only affects your debt-to-income ratio, it also affects your credit score. You essentially just borrowed against your home loan. BAD IDEA

Thou shalt not use credit cards excessively.

I think this is a no brainer but again, do not incur any additonal debt. It shows that you are not responsible financially.

Thou shalt not miss payments.

Your credit score is made up of history of payments. If you show lenders you cannot repay your current debt… do you think they are more or less likely to approve you to take on more debt?

Thou shalt not spend money you have set aside for down payment and closing costs.

Purchasing a home is expensive, let’s be honest. Do not spend ANY money until you have keys to yout new place. There are usually surprise costs so be prepared. 

Thou shalt not buy furniture.

Again, NO SHOPPING until you are the legal owner of the property.

Thou shalt not originate any inquires into your credit.

Do not apply for any other credit, loans etc until AFTER you own your home. Inquiries raise red flags.

Thou shalt not make large deposits without checking with your loan officer.

EVERY DOLLAR needs to be accounted for. Do not make deposits or large withdrawals from your account without checking with your loan officer. They can advise on what to do, how to “source” your money etc. This goes back to money laundering, they need to ensure it is your money and not someone using you to “clean” their money.

Thou shalt not change bank accounts.

DO NOT CHANGE ANYTHING that affects your finances in any way until you take ownership of the home. 

Thou shalt not co-sign a loan for anyone.

DO NOT and i repeat DO NOT co-sign for anyone for anything. I have 2 kids and I already let them know… I will not be co-signing for student loans, car loans, nothing. If they laps on payment, it affects your credit score. Their debt also becomes your debt and impacts your debt-to-income ratio.

 

I hope these commandments help you as you start thinking of purchasing a home. Check back on our site for more information on how to make yourself the best candidate for a mortgage approval. 

Email us your questions and we will create a blog post on them to assist others searching for the same information. CONTACT@MANDRELLCO.COM

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When you are preparing to sell a MultiFamily, Here are 8 things you should do to ensure a smooth transition and to limit surprises. 

  1. Hire a Certified Professional Accountant (CPA) who is well versed in real estate. You want to know what your tax consequences are when you sell. There are capital gains taxes associated and you want to know next steps before you begin the process.
  2. Talk to a Realtor who is familiar with your area and multi-family homes. It is not just about listing your home, they need to understand the intricacies of a multi-family and how rent, condition, location etc affects the value. Is it a buyer’s market or a seller’s market?
  3. Does it make sense to sell as condos? Boston is experiencing a real estate boom and oftentimes in some neighborhoods, it is more profitable to divide the property and sell as condos as opposed to selling as a multi-family.
  4. Informing tenants of the sale. You want to inform them as early as possible. You want to be respectful of your relationship because a disgruntled tenant can hinder the sale of your property. You want their cooperation in coordinating showings, assist them in providing information for relocating.
  5. Gather property Financials. Buyers want to know the additional cost associated with the property so they know if the numbers make sense
  6. Gather tenant lease information. The buyer will want to see the lease agreements. When do leases expire? Are they market rent rates or below market rents?
  7. Fix any major and minor repairs in home. You want building in best shape possible as first impressions are lasting. Also, home inspections are a time to renegotiate the price. If you do not want to renegotiate the price, repair as much as you can that makes sense (discuss with realtor) so that you get the strongest offers.
  8. Connect with a real estate attorney. You want to ensure your best interests are protected.

For more information and helpful tips, please follow our blog posts or connect with us on  facebook or email at contact@mandrellco.com

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What’s a Good Offer?

We are in the peak of the 2016 real estate season.  Buyers are getting out bid and sellers are sometimes overwhelmed with the multiple great offers they have to decide on.

As long as we are in a multiple offer market there will be one winner and many disappointed losers for every listing…. So how do we submit the best offer?

Other than price, what matters to most sellers?

Timing – look at date flexibility, find out what the sellers need and deliver those dates. Consul with your mortgage professional to ensure they dates you select are actually doable on his/her end.

Down Payment Size – The greater the down payment, the more attractive the offer! I think that goes without saying. Offers with extremely low/ zero down payment, usually have a better chance in the winter that in the summer.

Cash – Cash is King! Pay cash if you can, you can finance the property at a later date. This is why investors are cleaning up shop in Boston.

Speed –Most agents will not show you property without first obtaining a copy of your pre-approval. The process is not difficult but it does require gathering a lot of documents. 

What about contingencies?

Financing – I am against waiving a mortgage contingency because I think you have to protect your client at all costs. You never know what could happen or be found and you have no just cause to break the contract without financial penalty. This is not the same as paying cash – what it means is that buyer’s cannot get the deposit back if denied the loan. Buyers with complicated self-employment income or other unusual financial circumstances need to be cautious when considering waiving their mortgage contingency. 

Inspections – Some people remove the inspection contingency and some people have the inspection at or even before they make an offer. We have seen other offers accepted with the condition that they would have the inspection right away, but that the results of that inspection could not be used to cancel the contract on the house or to renegotiate the agreed upon price. Some buyers conduct an inspection and specify a dollar amount above which, the seller would have to repair anything above that value.

 

Our agents are well versed in negotiations and understanding the best offer terms given the specific market season.submitting significantly below asking price in the summer is a poor choice. 

Call us today: 617.297.8641 to learn more!
 

 

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Break These Habits To Get From Paycheck to Paycheck TO Owning Your First Home (Pt. 2)

We discussed some habits to get from living paycheck to paycheck to owning your own home last week. Let’s review some more habits you should consider altering if your long term goal is to build wealth. 

6. Buying Brand-Name Products

Consumers find comfort in using brands they know and love, but oftentimes generic brands work just as well as their brand-name counterparts. Step away from brand names, and try a few generics. For example, you can save money by buying store-brand medications. I love hunting for a good deal and saving money, medication, oatmeal, rice, milk, frozen vegetables, plates, plasticware, among others, all taste the same (or close enough) and are of similar quality. What is the real reason you purchase brand name? If you TASTE the difference, then do not switch, but if it’s all about the “name” then you are missing the point. 

TRUE STORY: I purchase the above stated items in the generic store brand from Stop n Shop, CVS or Rite Aid. I am a frequent shopper at these retailers and I have come to trust their brand as much as I would the actual brand name product. If I were blind folded… couldn’t tell you the difference. My friend can taste the difference in water… so when she visits, I have to purchase Evian. 

7. Buying Lunch or dinner nightly

You’ve heard it before, but buying lunch at work is a huge waste of money. Buddy up with your co-workers, and try “brown bagging” it at work. You can end up saving a good chunk of cash. Having dinner at a restaurant is a great luxury, but it can wreak havoc on your finances. Be mindful about how often you eat out. Even something as simple as eating dinner earlier in the evening can help you eat less and save more.

TRUE STORY: Become friends with sites like Groupon, you can find great deals on ready prepped food to cut your cooking time in half. Not only do you get home cooked meals, you don’t need to be creative….they do it for you. Saves time, saves money (with coupons). Save the recipes to use again later without the company mailing you ingredients. 

8. Requesting Faster Shipping

It’s hard waiting for your online purchases to arrive, but paying extra for expedited shipping is a waste of money. Patience is a virtue, but if you really just want everything now, sign up for a service such as Amazon Prime, which includes free two-day shipping on most items. If you do not want to spend the $99 for membership, consider sharing an account with a friend. If you are a student, you get 1/2 off yearly membership. I think it’s worth it

TRUE STORY: I’m an amazon junky… I would do Amazonaholics Anonymous but it’s too good to quit. My family understands… if I can’t buy it on Amazon… you probably won’t get it from me. My life is hectic, I don’t enjoy shopping in stores, I need fast, economical and FREE shipping lol. PRIME is my BFF. 

9. Spending More Money on Snacks

According to The Huffington Post, Nielsen data showed Americans spend more on snacks such as protein bars, chips and beef jerky than they do on real food. If you plan your meals and shop with a grocery list, then you won’t need to fill up on unhealthy and expensive snack foods. It’s hard and no one expects you to perfect this over night but starting is better than not even considering it an option

TRUE STORY: My friend is obsessed with potato chips. She eats several bags a day. I’ve been working on getting her to cut it down to 3 small bags a week and to pack vegetables and fruits for snacks. She’s had more failed days than successful ones but she’s not giving up and neither will I. Anything worth having (a savings account, a healthy heart) is worth fighting for. 

10. Signing Up for a Gym Membership

Once January hits, many of the treadmills at the gym are usually occupied, and the Zumba classes are bumping. But just a few months later, the place looks like a ghost town — what a waste of money. Skip the pricey gym membership, and try joining an exercise club. Or, download a cheap fitness app to get in shape. I think this may be the worst New Year’s resolution idea EVER! Man I wish I owned a gym franchise… FREE Money because people never come back.

TRUE STORY: I fell victim 2 years ago and signed up for a gym membership because it had free babysitting… I figured, it took care of one obstacle. Well… 2 years later and I have been to the gym ONCE. I thought I cancelled the membership until I actually scrutinized my credit card statement and saw I was STILL paying for it. Thats $500 over 2 years I will never get back, never see a return on my investment and hang my head in shame over daily (well… when I remember… it’s so out of sight out of mind, it’s embarrassing) 

 

For more strategies on how to break bad habits and start building wealth please join www.urbanmoneymatters.com. If we do not have a seminar in your area, please let us know a good location and we will try to get something on the calendar. 

 

 

 

Excerpts from full article.

 

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