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Types of Homes and Styles

Each of us has our unique style, so it’s a good thing that our homes also come in different shapes and sizes. You probably have some idea of what types of homes you’re attracted to, but the two main elements that make up a home are its structure type and style. Understanding these differences will help you to find the perfect home that fits your lifestyle.

Structure Types:

Before you begin your home search, you’ll want to have a good understanding of what kind of space you are going to need. Below are the most common home structures as well as some pros and cons of each.

Apartment

With an apartment, you are surrounded by a collection of other units while all sharing the same structure. In an apartment, however, you don’t have the option to purchase, leaving you unable to build equity in your home. Apartments can be great options for people planning on living in them for short periods, or if you prefer the resort-style amenities offered by many communities.  

Condo

Condos offer a lot of the same convenience as an apartment, except the difference is that you can own one if you want to. Condominiums are a great option if you enjoy living in the city, or if you are elderly and no longer want to maintain and upkeep a home.

Co-Op

Instead of outright owning a property, what if like the stock market, you could own a share of a residence and still be able to live there? When you buy into a housing cooperative, you are purchasing a fixed number of shares within the co-op, turning you into a shareholder tenant. Living in a co-op will bring a great sense of community and they are less expensive than owning a home, however, they offer less freedom.


Single-Family

With this home structure, you are completely detached from any other buildings, and are usually found in suburban areas. Single-family homes often offer much more space than the previous structure types. These structures are the most common home type in the U.S.

Townhome

With a townhome, you are living in an individually owned home that shares a wall with one other unit. These are very popular in big cities where space is limited. These home styles are usually multiple stories and share amenities with surrounding townhomes. They are generally cheaper than a single-family home but offer less privacy.

Home Styles:

Along with each structure type, comes a certain style. The different home styles available date back decades, with many people replicating them into new home structures today.

Mediterranean

These home styles highlight elements from Spanish and Italian villas with a large focus on outdoor space. Florida is no stranger to these types of homes, as they are most popular in a tropical climate. Some key features of these homes are tiled roofs, stucco walls, and warm stone and wood accents.

Ranch

In the early 1930s, ranch-style homes became increasingly popular for their one-story, low-rise ceilings with large windows and backyards. Most ranch-style homes are rectangular, but often can be built as a “U” or “L” shape.

Split Level

Split-level homes developed from the ranch-style home, adding more separation. These homes have multiple floors attached with short flights of stairs and are uniquely separated.

Victorian

Named after Queen Victoria, these homes became popular in the 1900s. These homes are categorized by Gothic influences and thoughtfully crafted woodwork. They feature pitched roofs, wraparound front porches, cylindrical turrets, and roof towers. A Victorian home does not offer lots of horizontal space, since their ceilings are high, but the rooms tend to be long and narrow.

Farmhouse

Think large white homes, with wraparound porches and you’re on the right track. These rustic homes offer tall ceilings, with exposed beams and barn-like roofs. This type of home has been modernized to feature updated finishings and an overall cleaner look.

There is certainly a multitude of different home structures and styles available, but deciding what best suits you, and your lifestyle will help you greatly narrow down your search. Talk to your VanDyk Mortgage Loan Officer about which home might be best for you and get approved for a mortgage before you begin your search.

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How to Find a Good Investment Property

If you are thinking about purchasing an investment property, you want to make sure that the home you buy is going to make your investment well worthwhile. Trust the experts as those who have gone before you and see what they did before finding the right investment home. Here are some best practices on what to do before you purchase an investment property.

Location

Ask yourself if the properties that you are considering are in a good location. A prime location will certainly bring you a better return as it will be more desirable to renters. Oftentimes, a good location can outweigh the features of a home. To find the right home, you have to be proactive. There are plenty of good deals on the market, but you need to make sure that you are quick and efficient in your search. The common goal of property investors is to make a profit, so you need to be committed to staying patient but remaining prompt and efficient throughout the process.

Avoid homes that need major work done

If a property has been on the market for quite some time, then that is a good indication that something is wrong. That can usually mean that there is extensive renovation work that needs to be done, and that can be costly. Homes with a solid foundation that could use just a few cosmetic upgrades like new flooring or a fresh paint job are minor tasks. Avoid homes that need any work done to the core structure of the home.

Think of your perfect renter

Contemplate the kind of renter that you would like to host in your home and find the type of neighborhood that would interest them. Find a property that suits the character of the neighborhood that you are looking at. You don’t want a run-down condo in a luxury beachside community. Consider the type of home that is needed for your desired renter. Purchasing properties that are appropriate for your area will bring you better success in finding quality tenants.

Find out why the property is on the market

Asking the seller what their reason is for selling their home can give you some insight that can inform your decision. Learning about when the home was initially purchased will also give you insight into assessing the home’s value and knowing when things will need replacing.

Consider its value

A home’s market value is what most property investors should be interested in. Market value is created from the rental revenue generated and its potential for appreciation. A beginner real estate investor should understand that properties don’t typically sell for their assessed value in this market.

Properties with the greatest ROI

To get the most return out of your investment, you will want to zero in on markets where people are willing to pay high prices to either live or vacation. Do some research in booming markets and figure out the average cost of rent per bedroom and square footage. Location drives demand, so a popular city or town is sure to keep your home among the most desirable rentals.

Investing in real estate is one of the best ways to earn a passive income. If you enjoy working with people, then acquiring a rental property might be the right option for you. Before you decide to go all in on purchasing a property, make sure to research and ask the right questions.

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Home Maintenance Tips to do Throughout the year

Just as we change up our personal routines through the seasons, our home maintenance schedule is just as important for its upkeep. After all, it may just be our life’s biggest investment, so maintaining it is extremely important. Keeping up with your home’s exterior, appliances, heating and cooling, plumbing, and electrical systems will help to ensure smooth sailing and keep repairs to a minimum. A regular maintenance schedule of these things will also keep your home looking its best.

Just as each season brings new weather, with it comes a different list of chores to take on. Here are some great tips to follow all year long to keep your home running like a well-oiled machine.

Spring

Exterior

The weather is finally starting to warm up again, it’s time to open the windows, and you are ready to prepare the house for spring. The best place to start might be the exterior. Depending on where you live, your yard may be thawing out and ready for some TLC. Rake up those leaves and lay down some fresh mulch in your flowerbeds and hedges to prevent drought. Check your outside faucets for any damage that could have occurred. You might want to consider having your trees checked by a professional for any signs of illness that could pose a safety hazard. You’ll also want to clear out your gutters and inspect the chimney for any damage.

Interior

If your home has central air and heat, you will want to call your HVAC technician to schedule your system’s biannual service. This is to check the ductwork and clean the furnace and A/C compressor. Check the plumbing, including underneath sinks, for any signs of leakage.

Summer

Exterior

During the summer, you should plan on upkeeping and not fixing. This is the time to enjoy the outdoors and your yard. Keep your lawn mower on its highest setting to avoid cutting the grass too short to avoid exposing it to weeds and potential drought. Keep your garden and plants watered by checking your sprinkler heads and hire a professional if you can’t do it yourself. Your pool will also need regular care now that it will be used more frequently. Ensure that you are cleaning the filter basket and chemical levels weekly and scrub it once a month to prevent algae.

Interior

During this season, you will want to reverse the setting on your ceiling fans counterclockwise to cool you off and not push up the heat. Plan your home for extreme heat waves to pass through by making sure that the correct lining is attached to the doors. You aren’t the only one trying to enjoy the cool air this summer. Bugs and other pests pose bigger problems during this time of the year. Regularly clean your surfaces to avoid starting any infestations. If you notice a bug problem, it can often be eliminated with a bug repellent spray before having to call a professional. In some tropical climates, summertime can bring on natural disasters such as hurricanes. You’ll want to make sure that you have a plan in place, and a disaster kit ready in the event of an emergency.

Fall

Exterior

As the temperature begins to drop, it’s time to prepare your house for the winter. If you live in a warmer climate, your preparations won’t be as hefty. To prepare your yard, you’ll want to make sure that your plants have plenty of water before going dormant for the winter. Once those fall leaves begin dropping, you will want to make sure you are regularly cleaning out your gutter to prevent any blockage. Before temperatures start dropping heavily, you’ll want to shut off your outdoor faucets so that they don’t freeze over. If you have a pool, make sure that you clean and close it for the winter.

Interior

During this time, you will want to have your furnace and HVAC serviced. Having a clean system will ensure energy efficiency and take care of any problems before it gets cold. It’s a smart thing to make sure that your dryer vent is inspected and always free of lint. You’ll want to ensure that a professional inspection is done annually. During the fall it can also be a great time to take on some indoor projects. Since you aren’t spending as much time outside of your home, fall can be a good time to paint the living room or update your bathroom.

Winter

Exterior

Depending on where you live, you may or may not be spending much time outdoors during this season. If you are from colder climates, you will want to make sure you have a few things ready to tackle the harsh winter storms. Ensure that you have the proper tools ready for that first snowfall such as your snowblower. Make sure it’s running smoothly by sending it in for a quick tune-up. You’ll also want to make sure that you have plenty of supplies. If you are visited by snowstorms frequently, you’ll want to make sure that you have ice melt on hand. Be sure to check the labels on certain brands, as some chemicals can be harmful to pets if ingested.

Interior

Heat will be your best friend during these colder months, so check to make sure that the filters on your heating systems are changed. Having a generator on hand can save your life in the event of a blackout. Even if you don’t use it, you should have it serviced throughout the year and make sure you have enough fuel for when you do need to use it. A strong winter storm can leave you stranded for several days, so make sure that you have plenty of firewood, water bottles, and canned food.

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Home Renovations with the Greatest ROI

As a homeowner, you may have some spaces within your home that could benefit from a little upgrading. Whether or not you plan on selling your property or would just like to enjoy a few simple upgrades to make your home feel newer, there are several ways to increase your return on investment through home improvements. Before you begin renovating your home, you might want to ask yourself these important questions:

  1. Is my home at least one step above comparable properties in my community?
  2. Will upgrading my home increase its value?
  3. Is my home updated and attractive to potential buyers?

Housing prices are continuing to rise, so a home improvement project can increase your home’s value even more. The first places buyers look for in a home are kitchens and bathrooms. These two areas can be a great place to begin your first project. A renovation project doesn’t have to be a complete remodel either. A few minor changes can bring a major return.

Kitchen Remodel

According to Remodeling magazine’s annual analysis of cost versus value, a kitchen “face-lift” will return more than a full redesign. These changes can include a fresh paint job, refinished surfaces, or new appliances. According to a post made by Fortunebuilders, the average cost of a minor kitchen remodel is about $15,000 with an ROI of 98.5%.

Bathroom Renovation

A minor bathroom remodel may only include replacing the shower head or changing the lighting to give a brighter appearance. These changes could cost you less than $5,000 and bring you a 100% return on your investment. If you want to take things a bit further and undergo a major bathroom renovation, then it would be best to start with a clean slate. If fixtures aren’t adding to the bathroom’s overall look, they are hindering it. When you fully upgrade a bathroom, especially a master bath, that can be the deciding factor for someone purchasing your home.

Landscaping

No matter the home type, a property’s landscaping will give off a strong first impression. If a yard is maintained and well kept, then potential buyers will assume the same for the interior of the home. The average cost of new landscaping can cost around $3,500 bringing you a return of $4,900. An often-overlooked aspect of a home’s landscaping is the outdoor lighting. If the lighting in the front yard is outdated, invest in a replacement. Be sure to test the lighting at night to see if any elements need rearranging. If you live in a condo or apartment, a few thoughtful touches on a patio or deck can go a long way.

Flooring

Another great home improvement project that can completely change a home’s look is replacing the flooring. Changing out carpeted areas for hardwood floors can make a home feel brand new again, which can convince a buyer to pay more for the home. In some cases, you can have a return of up to 80% when you update the flooring. If you have existing hardwood floors, consider having them refinished by a professional to bring them back to life. In no circumstances should you cover up existing hardwood with carpet or you are guaranteed to lose money. Along with these different home improvement projects, there are plenty of other ways to upgrade your home on a smaller scale. A fresh paint job to either the interior or exterior of the home can neutralize its appearance and bring a fresh fragrance to a home. Another option is to change the old blinds for modern ones. Replacing old shades/blinds can make buyers believe a home is much newer than it is. Regardless, if you are planning on living in your home for the long term then you should make any upgrades that fit your desired lifestyle. However, if you plan on turning a profit when you sell, you should try upgrading your home to bring you the greatest ROI. The highest home renovations for increasing your return on investment can improve the demand and value at the same time. It’s important to make the right upgrades to your home because the highest ROI improvements will show to be most effective and worthwhile.

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Costs to Consider When Purchasing a New Home

When purchasing a home, it is important to keep in mind that the total cost includes more than just the original sale price. Planning for these unexpected costs is the best way to ensure a seamless home-buying experience. So, what are they?

Down Payment

A down payment is the cash you pay upfront when purchasing a home. This is your contribution toward the purchase and represents your initial ownership stake in the home. The required amount will vary by mortgage type.

Closing Costs

Closing costs are expenses, above the property’s price that are incurred at the closing of a real estate transaction. These costs can include application fees, origination and/or underwriting fees, title insurance, title search fee, and in some cases a transfer tax.

Insurance

There are two types of insurance to consider when purchasing a new home:

Homeowner’s Insurance

This type of insurance protects you from unexpected damages to your home such as effects from a natural disaster, theft, or vandalism.

Private Mortgage Insurance

PMI provides protection for the lenders if the buyer defaults on their loan and is required when a homebuyer puts down less than 20% of their down payment. For FHA loans, insurance is required regardless of the amount of the down payment.

H.O.A.

Homeowner’s Association fees are applicable when buying a home or condo in a community that is run by a homeowner’s association. They are used for services and amenities like security, landscaping, and recreation centers.  

Property Taxes

Property taxes are used to fund services like education, transportation, and community parks. They vary by geographic location and can increase along with the value of your home.

Move-In Expenses

Often overlooked, moving expenses are necessary to any home-buying experience. Some of these include hiring a moving truck or purchasing cleaning supplies.

Maintenance, Repairs, Utilities

Having a fund available for things like maintenance, repairs, and your new utility bill is always a good idea when purchasing a new home. Some experts suggest saving 1% of the home’s value as an emergency maintenance fund when these almost certain expenses arise.

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Declined for a Mortgage? You Could Still be Eligible for Homebuyer Assistance

According to an analysis done by Down Payment Resource, there has been an overwhelming amount of mortgage loan applications declined. It was determined that it was due to either insufficient cash-to-close or disqualifying debt-to-income ratios. These declined loan applications represent $3.7 billion in volume furnished by mortgage lenders. Most of these denied applications would have been eligible for homebuyer assistance if they had applied.

Report Findings:

A significant portion of denied loan files were eligible for assistance programs.

  • This large portion of loans that were potentially recoverable with homebuyer assistance at the time of denial demonstrates an extremely low-cost opportunity for lenders to have increased their purchase volume.

Denied applicants were found to have been eligible for multiple programs.

  • Findings reported that declined applications were eligible for an average of 10 homebuyer assistance programs.

 Declined loans had the potential for recovery with homebuyer assistance.

  • Applying homebuyer assistance to a denied loan application on average would have reduced loan-to-value by almost 6%. This would have recovered the application and welcomed more opportunities to achieve a more affordable mortgage with different financing options, lower insurance, and interest rates.
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What Do I Need to Apply For A Mortgage?

In order to apply for a mortgage, you will need to have a few important documents on hand for your VanDyk Mortgage Loan Originator. This will help verify your employment history, creditworthiness, and overall financial situation. This will also ensure that you can easily make your payments and that you meet all the underwriting guidelines.  

The first step in applying for a mortgage is to submit a Uniform Residential Loan Application. This is something that each borrower must do to simply tell a lender about you.  Following that application, you will be asked to provide documents that support your application. Below is a list of some of the items you are going to need.  

Proof of Income. 

One of the first things you should gather is your tax return. This will allow lenders to make sure that your annual income is consistent with your reported earnings. Our VanDyk Loan Originators will also want to see your pay stubs. Although your tax return shows your annual earnings, your pay stubs will represent your current earnings and will help to confirm that you can pay back the amount that you want to borrow.  

Bank Statements and Assets. 

Next, you will want to provide bank statements for all financial accounts, including investments. This is to ensure you will have the funds to cover your down payment, and closing costs, and maintain cash reserves if it is required. When assessing your risk profile, our Loan Originators may want to look at your bank statements and other assets such as your investments and insurance. These documents can be requested so that our Loan Originators can ensure that you have several months of reserves to make payments in case of an emergency. 

Credit Report. 

Your credit history will be checked by your Loan Originator with your permission when applying for a mortgage as it is a big part of the process. Minor hiccups won’t prevent you from becoming a homeowner, however, an accumulation of late payments, collections, or any other derogatory marks on your credit report will prompt a lender to ask for an explanation. The better your credit score, the lower your interest rate will be.  

Alimony or Child Support Documents. 

If you are someone who relies on this type of income, then you must show proof that you will continue to receive additional payments for at least 3 years. 

Self-Employment 

 If you are self-employed, generally most Loan Originators will require you to have at least a steady 2 years in the same industry. Ways to prove this can be by providing client contracts or providing your business license or proof of insurance.  

The list of documents that are required may vary based on the type of mortgage you are applying for, and your current financial status. These are just the initial documents that you will need, and additional information might be requested once the underwriter has reviewed everything. Ask your VanDyk lender for a list of paperwork you might need to provide and start collecting prior to beginning your application process. Gathering these documents can take some time but by remaining organized and staying ahead can help you get to the closing table faster.  

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Six Tips to Help You Get The Home You Want

With a soaring demand for homes in the US and little to choose from, forming an offer that will stand out can be the reason you secure your dream home. Here is a list of pro tips that can help you beat the competition this year.

  1. Show them you are financially ready.

In today’s market, you will likely need to make an offer that exceeds the asking price to get the home that you want. Even just a few thousand dollars extra can be the reason for winning or losing out on a home. Your real estate agent will likely be able to give you a good estimate of how much you will need to go over the asking price, however, sometimes you will naturally have a good idea.

2. Put yourself in the seller’s shoes.

A seller will usually be reviewing and comparing the multiple offers that are on the table. You will want to position your offer to stand out among the rest in any way that you can. They will be looking closely at the offer amounts, length of escrow, and any leaseback periods or contingencies. Place yourself in the mind of the seller and think about what their goals are to get a better idea of how to work with your budget, and turn your offer into the strongest version of itself.

3. Get pre-approved for the specific home that you want to purchase.

With multiple offers, sellers want to make sure that at the end of the day, the sale will go through. A pre-approval letter will show the seller that you are not a risk and give you higher ground to work on. In addition to your pre-approval letter, ask your lender to write you one that is specific to the home you are attempting to purchase.

4. Eliminate any Contingencies.

Sellers want to close as quickly as possible so keeping your contingencies as short as possible will eliminate ways for a buyer to back out of a deal. If you can’t remove a contingency altogether then see how you can shorten its timeline while remaining protected from any risks.

5. Be flexible with timing.

Agree to a closing date that accommodates the seller’s needs. Working your schedule around the sellers is a way to set yourself apart by showing that you value their time.

6. Make it Personal.

It’s not always easy for sellers to part with their homes, so they often will want a buyer that will love it the way they do. Adding any kind of personal touch is likely to be appreciated, and shows them you are serious about sealing the deal. A handwritten letter introducing yourself to explain why you love the home can be an effective method. Sending them flowers and a family photo can help create a personal connection as well.

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Costs to Consider When Purchasing a Home.

Buying a home is likely to be the largest purchase you make in your lifetime. Along with the price tag, there are other costs to also consider. Costs will vary from buyer to buyer due to a few different factors including the type and length of the loan you receive, as well as location and demand. It is important to familiarize yourself with these financial obligations prior to beginning your home search. To help with understanding more about what comes along with the purchase of your home, here is a list of costs you will need to consider.

Down payment:

The down payment is a set price you pay upfront when you purchase a home. Through a conventional loan, a down payment is required and will be determined based on the property type and the price of the home. The amount you put down on a home will affect your interest payment as well. The larger the down payment, the lower your interest rate. However, some loans such as a VA loan or USDA don’t always require a down payment.

Closing Costs:

To finalize your mortgage loan and receive the keys to the property, you will have to submit all closing costs. These costs are each directly related to your mortgage and include the following.

  • Application fee
  • Appraisal fee
  • Credit check fee
  • Underwriting fee
  • Title insurance
  • Title search fee

Property Taxes:

Your property taxes are calculated by your local government where your property is located, and you are required to pay them as long as you own the home. These taxes are based on the value of your home or property and if over time the value is assessed to a higher value, your taxes will increase.

Homeowners and Mortgage Insurance:

Home insurance protects your property against the cost of potential damage from unforeseen circumstances. Homeowners insurance will vary as there are many options available, so it is best to shop around before deciding which one to go with. Mortgage insurance reduces the lender’s risk if you can’t make your mortgage payment.

HOA Fees:

If you are purchasing a home overseen by a homeowners association then you will be required to pay a monthly fee to the community. These fees are in place to keep shared spaces within the neighborhood maintained such as a gym, pool, or landscaping. They also protect other people’s property values by restricting a single homeowner from making a change to their home.

Maintenance Fees:

No matter where you choose to live, you will always have to keep up with regular maintenance and home repairs. Keeping extra funds on the side or setting up an emergency fund for replacing items will help you be better prepared when things break. Planning out a budget and knowing what costs to expect as you begin your home buying journey will eliminate any surprises that you may not have been prepared for.

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Is My Credit Good Enough to Buy a Home?

Is My Credit Good Enough to Buy a Home?

Achieving a high credit score should always be something to aim for. When it comes to buying a home, the higher your score is, the easier it will be to attain a loan since it shows the likelihood of you paying back your debt to the mortgage lender. Potential homebuyers should strive for a credit score of at least 760 in order to attain the best rates. However, it is still possible to purchase a home with a slightly lower score, although you will likely face higher rates. If your credit falls on the lower end of the spectrum here are a few ways to improve your score.

  • Review your credit report: once per year you are entitled to a free copy of your credit report. By obtaining your report you can check to see if there are any errors that have impacted your score.
  • Pay down maxed credit cards first: This will help alleviate your credit utilization rate by paying down the cards who have or almost reached their credit limit
  • Become an authorized user: Being added as an authorized user on a friend’s or family member’s credit card will help you to build credit with the help of someone else.
  • Don’t apply for new credit lines: This can hurt your credit score significantly especially if you were recently denied opening a new account.

Depending on which type of home loan you are applying for, the minimum credit score can vary with some being as low as 500. When purchasing a home, find out how much you can get pre-qualified for based on your current credit score.

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Tips on Navigating a Short Sale for Buyers

Are you a buyer considering purchasing your next home through a short sale? Consider our 5 helpful tips for buyers navigating a short sale.

  1. Get an inspection. Even though the property in a short sale is sold “as-is” it is important to get an inspection before going to the closing table. This will help you determine how much work you can expect to put into the home, as well as its real value. In some cases, proving that the home is in much worse condition than it seems, can persuade the lender to accept a lower price.

  2. Make a realistic offer. It is important to do your homework before putting in an offer. Though buyers can expect to get a deal when purchasing a home through a short sale, they will still need to be willing to make a reasonable offer. If the offer comes in too low, it is likely the lender will move on to another buyer.

  3. Provide a large down payment. Lenders are looking to liquidate short sale properties as soon as possible to make back their money invested. By offering more cash up front in the form of a down payment, buyers are more likely to get their offer accepted.

  4. Offer to pay for the seller’s closing costs. Though it is typical for the lender to pay commission and other seller fees, by offering to pay these costs the buyer can gain a competitive advantage to others also placing an offer.

  5. Hire a real estate professional. Short sales are a more complex process than that of a typical home sale. Hiring a knowledgeable real estate professional with experience in such complicated transactions can give buyers a leg-up and help them better navigate the process.

For more helpful tips on how to navigate a short sale, contact a VanDyk Loan Originator today!

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Process for Buyers Purchasing a Short Sale

Because a lender is much more involved in the purchase of a short sale, it is important to recognize that the process is not as simple as the typical home buying process between a seller and a buyer.

To help, we’ve broken it down into 6 unique steps that buyers must take when purchasing a short sale.

Step 1: Get approval for financing.

Like with a typical home purchase, the buyer must first get approved by the lender to take out a mortgage loan. This is especially important during the process of a short sale, as the lender will need to be sure that the new buyer is financially sound enough to make their mortgage payments – to avoid a future similar situation.

Step 2: Work with a real estate agent to find a home.

If you are committed to purchasing a short sale, it is important to find a real estate agent who can help you navigate the process. If you choose to find a home without the help of a real estate professional, you may want to focus your energy on looking at homes that are listed as ‘pre-foreclosure properties’ or searching through public records.

Step 3: Research, research, and research some more.

Before making an offer, it is vital to research said home and gain as much insight into the property’s history, as well as its current market value. Since, with a short sale, the seller owes more than the home’s actual value, you will want to find exactly how much the seller owes the lender.

You will also need to find out if there are any claims on the property by an outside person or entity, like a lien. The best way to be sure of this is to hire a title company to run a title search on the home.

This is another perk to hiring a real estate agent to help you, as they have exclusive access to important tools that can help you find this information.

Step 4: Make an offer.

Though many buyers look to short sales as a way to purchase a home for an especially good deal, it is important to keep in mind that the lender is still trying to make back the money on their initial investment. This is why it is important to get a realistic understanding of how much the home is worth before putting in an offer. You can do this by looking at what other homes in the area have sold or are currently priced at. Your offer will still have to be close to the market value if you want a chance that it is accepted.

Step 5: Get a home inspection.

Because of the nature of a short sale, they are sold “as-is.” This means buyers are not able to negotiate for a lower price if they discover problems with the property. Even with this, it is always a good idea to get a home inspection before purchasing a property, to get an understanding of any defects or issues with the home. If repairs are needed, this knowledge will help prepare the buyer.

Step 6: Close on the property.  

For a short sale to close the seller must provide documentation of the following:

  • Hardship letter, explaining that the seller is in financial distress and unable to make their mortgage payments
  • Proof of income and assets, which shows 2 years’ worth of bank statements and tax documents as proof that the seller is not financially equipped enough to pay back their debt.
  • Up-to-date list of liens, showing proof that there are no other individuals who can make a claim on the property.
  • Comparative market analysis, which shows the lender a list of comparable properties currently for sale and have sold within the last 6 months.

Though they are not necessarily an ideal situation for sellers to find themselves in, short sales can be beneficial to buyers and sellers alike.

To learn more about the process of purchasing a short sale, contact a VanDyk Loan Originator today!

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What are the Pros & Cons of Selling a Short Sale for Sellers

Though they are not necessarily an ideal situation for sellers to find themselves in, short sales can be beneficial to financially distressed sellers looking to avoid foreclosure.

What are the benefits of a short sale for sellers?

  • Seller can avoid foreclosure. A short sale is one of the last options that a seller has before going into foreclosure, which is more detrimental to their credit.

  • Save on common fees. Sellers can avoid paying common fees, like the cost of a realtor’s commission if they sell their home with a short sale.

  • Possible debt forgiveness for the seller. In certain cases, the lender will accept the money made from the short sale and forgive the seller’s remaining debt. It is important to note that, in some cases, a short sale will not eliminate a seller’s debt if the lender chooses to get a deficiency judgement against the seller for debt owed.

  • No barrier to re-enter the housing market. With a short sale, sellers are eligible to re-enter the housing market if they wish to purchase a new home with an FHA loan, in some circumstances.

What are the drawbacks of a short sale for sellers?

  • No negotiation power. When a seller decides to sell their home through a short sale, they are relinquishing any negotiation power they may have had because the sale is now in the lender’s hands.

  • Loss of profits. Because the seller still owes money to the lender in the case of a short sale, all the profits go to the lender.

  • Damage to credit score. Though the damage to the seller’s credit is much less damaging than in the case of a foreclosure, the seller will still experience a negative effect on their credit.

  • Delay in obtaining another mortgage. When a seller goes through a short sale, they are required to complete a waiting period anywhere from 2-7 years before they can qualify for a new mortgage.

  • Deficiency judgement. There are some instances when the lender will choose to sue the seller for the remaining money owed on the property in what is called a ‘deficiency judgement.’ If the lender chooses to do this, the seller will experience a hit on their credit, like that of a foreclosure.

Are you looking to sell your home through a short sale? To learn more, contact a VanDyk Loan Originator today!

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Mortgage News Matters

What are the Pros & Cons of Purchasing a Short Sale for Buyers

In a short sale, a financially distressed homeowner sells their home for less than the amount owed on the mortgage and all the proceeds go to the lender. Though it is often a more complicated and lengthy process, there are both benefits and drawbacks to purchasing a home through a short sale.

What are the benefits of a short sale for buyers?

  • Purchase a home at a discounted price. Though the property in a short sale will be priced at market value, lenders are eager to sell. This means that buyers can usually count on getting a better deal.

  • Less competition. Because short sales are a much more complicated process than the typical homebuying process, they attract much less attention from buyers. This means that those who are willing to invest the time, will have much less competition.

What are the drawbacks of a short sale for buyers?

  • Time-consuming. Due to the lender’s involvement, a short sale typically takes longer than a traditional sale. If there are multiple lienholders involved, the process will take even longer as they will often take their time negotiating the sale to get the best deal possible. The process can also be delayed if the seller is unprepared with the necessary paperwork or changes their mind.

  • Riskier. Because a short sale is sold “as-is” buyers are taking a greater risk to purchase. They are also risking spending time and money on a property that is not guaranteed to sell.

  • Requires more work. The buyer must put in more effort when purchasing a home through a short sale. It is their responsibility to discover the market value of the home, the number of lienholders there are on the property, as well as any issues with the property’s condition.

  • Property condition. Buyers often end up spending more money on making necessary repairs, as the seller is unlikely to have been paying for needed upkeep.

Are you considering purchasing a home through a short sale? To learn more, contact a VanDyk Loan Originator today!

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Mortgage News Matters

What is the Difference Between a Short Sale & a Foreclosure

Short sale vs. Foreclosure: What’s the Difference?

Though both short sales and foreclosures provide financial relief to homeowners who are unable to make their mortgage payments, they are two entirely different processes that result in significantly different consequences for the homeowner.

Initiated by the lender, rather than the borrower, a foreclosure is the lender’s last option, in the case that a borrower can no longer make their mortgage payments. In a foreclosure, the lender seizes the borrower’s home to try and make back the money they’ve invested. Most often, foreclosures take place after the homeowner has already abandoned the home, but if the homeowners have not left, they are evicted.

When a foreclosure takes place, it is typically a much quicker process than going through a short sale as the lender will try and liquidate it as quickly as possible.

Foreclosures are kept on a borrower’s credit report for seven years and can prevent the borrower from purchasing a home for 2-7 years after the home is seized by the lender.

A short sale, which is typically a much longer process, is less damaging to a borrower’s credit. And, in some cases, allows the borrower to purchase another home immediately.

To learn more about the difference between a short sale and a foreclosure, contact me today!

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Mortgage News Matters

What is a Short Sale?

A short sale is when a financially distressed homeowner sells their home for less than the amount that they owe on the mortgage. In this case, all the proceeds from the sale go directly to the lender, and they either (1) forgive the remaining balance or (2) get a deficiency judgment, which requires the homeowner to pay the lender all or part of the difference between the sale price and mortgage amount. In certain states, the difference must legally be forgiven in the case of a short sale.

Key points of a Short Sale

  • A lender must approve a short sale before it takes place.
  • The lender, or bank, requires documentation explaining reasons for the short sale.
  • Short sales typically take up to one full year to process due to a laborious paperwork process.
  • Are not as detrimental to a homeowner’s credit rating, as a foreclosure.

When does a home go into a short sale?

A property will go into a short sale (pending the lender’s approval) when the homeowner can no longer afford to make the mortgage payments. Rather than go into foreclosure, which is more damaging to one’s credit, the homeowner can initiate a short sale process by submitting an application to the lender.

When determining whether to approve a short sale, the lender will look at the following factors:

  1. The home must be worth less than the amount that the homeowner currently owes on it. The lender will often review sales of comparable properties, to make sure that the decision is sound.

  2. The seller must be able to prove they are financially distressed. This requires the seller to show the lender proof of insufficient income or assets to pay the outstanding loan amount.

    It is important to note that the source of the homeowner’s financial trouble must be new and not something they were previously withholding.

To learn more about short sales, contact a VanDyk Loan Originator today!

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Mortgage News Matters

Pros and Cons of Holding an Open House

What is an Open House?

An open house is a scheduled time set for potential buyers to walk through a property that is for sale. Typically hosted by a broker, the owners or renters of the property are absent from the viewing and many potential buyers are welcome to tour the space.

How Does it Work?

Typically scheduled during weekends, brokers welcome potential buyers to leisurely view the property and ask questions, they would otherwise not have the opportunity to do so without a broker present. It is customary for brokers to provide drinks and small plates for those who attend, and many provide collateral that buyers can take with them and refer to with information on the home, such as square footage, number of rooms, and information on the surrounding neighborhood.

The goal of an open house is to secure interest from buyers by providing a rare opportunity to take their time looking at a property closely, before placing an offer.

Advantages of Holding an Open House:

  1. Provides an opportunity to attract potential buyers. When an open house is planned correctly and properly marketed, it can provide a great opportunity to attract potential buyers, and possibly even lead to an offer. Many realtors suggest sellers hold an open house the first weekend that the property goes on the market – to generate the most buzz.

    Open houses can also bring in potential clients who may not have even planned for such an event but happened to be driving by. It’s a great way to appeal to potential buyers in a more casual way and low-pressure scenario.

  2. Provides feedback to realtors from visitors. Another benefit of holding an open house is for the potential for realtors to gain real feedback from visitors – both positive and negative.

    Many realtors find that potential buyers often share their feedback out loud as they walk through the home. This can give realtors crucial insight into buyers’ perceptions and any issues that could keep the owners from making the sale.

  3. Can lead to an immediate offer. If done properly, and by generating enough buzz, an open house can sometimes lead to an immediate offer. When potential buyers are browsing a home with many others also looking to buy, they can get a good sense of their competition. If competition is high, this may encourage them to make an offer much quicker than they ordinarily would otherwise.

    This is beneficial to sellers and buyers alike, as it gives the buyers a realistic idea of how many others like them are also looking to buy in their desired neighborhood.

  4. Allows sellers to cast a wide net. Showing a home to multiple buyers, rather than one at a time only widens the reach of potential buyers for the seller. It is also much more efficient to spend the same amount of time showing a home to a group of people, rather than an individual.

    This, in addition to potential feedback from viewers and an understanding of competition in the market, are huge benefits to holding an open house.

So now that we’ve covered its advantages, what are some of the disadvantages to holding an open house?

Disadvantages of Holding an Open House:

  1. Requires much effort – sometimes more than it’s worth. Planning and executing an open house is not an easy task. In addition to coordinating a time that works best for the owners to be out of the house for an extended period, making accommodations for pets or children, and removing all personal items throughout the home, putting on an open house requires money and time spent on marketing to bring viewers in. And if no offer is made – it can feel like a huge waste.

    That’s why it is important to take the time to properly plan, market, and organize for your open house, if you decide to hold one.

  2. Compared to online listings, an open house requires more time to reach potential buyers. Nowadays, most homes for sale are listed online before they even schedule an open house. And most buyers go online and browse properties from the comfort of their own home.

    Buyers can find almost all the same information online as they would at an open house, like the condition of the home, its details, and even view photos of the property from every angle. This alone, can make open houses seem unnecessary and even antiquated.

  3. Owners are typically required to leave their home for a designated amount of time. Typically, when holding an open house, the homeowners are asked to leave their home and take with them any personalized photos or memorable that can be found throughout the home.

    This can be tedious and difficult to plan for with the daily bustle of normal life. Some would rather avoid having to deal with this added stress and simply list their home online.

  4. Can open the home up to potential theft. Though there are benefits to opening your home for sale to many individuals – with hopes that with increased awareness, comes increased offers – doing so can open you up to potential theft. Open houses can give opportunities for criminals to explore a property and plan a break-in.

    If you are considering hosting an open house, make sure to hide any valuables, or take with you anything that you would not want to get stolen or damaged.
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Mortgage News Matters

What are the Pros and Cons of HOA?

What is an HOA?

A HOA, or Homeowner Association, is an organization that oversees or manages a private community or subdivision. Run by a board of directors, made up of its community members, a HOA enforces rules and guidelines to be followed within the community, as well as provides upkeep and maintenance of facilities.

Where can you find a HOA?

A Homeowner Association is typically found within communities of single-family homes or multiple unit buildings, like condominiums.

Run by an elected group of individuals within the community, membership is usually mandatory for anyone who chooses to buy a home with an established HOA.

What are the Pros of HOA?

  1. Structure through a set of community rules and regulations. A HOA provides a set of rules and regulations that all community members must follow. This offers a sense of structure and stability for all members and protects and enhances the community’s property values.

    Many of the guidelines are aimed at preserving the home’s exterior, and are focused on the cleanliness of the property, the property’s condition, and any repairs or upkeep that need to be done. Typically, HOA guidelines are aimed at maintaining a uniform appearance for all properties within the community.

  2. Provides access to exclusive services, amenities, and facilities. Like many communities made up of single-family homes or multiple unit buildings, HOA communities offer access to exclusive services, amenities, and facilities.

    These amenities often include landscaping, parking lots, swimming pools, common areas, workout facilities, tennis courts, and party spaces. Some HOA will also cover the cost for snow removal and trash collection for its residents. In addition to offering such services, the fees that community members pay to their HOA covers the costs to maintain each area.

  3. Mediates problems between neighbors. If there is a disagreement or problem between neighbors living in communities with HOA, they can often look to the board to help resolve such issues. This can be anything from a neighbor who is violating a specific rule or regulation, or an issue with a service or amenity on the property.

    Acting as a mediator between community members, a HOA can ease tension and provide a more peaceful, regulated environment.

  4. Opportunity for self-governance of community. Many individuals who live in a community governed by a HOA enjoy the freedom of being a part of a democracy, made up of individuals who live within the community.

    By following rules and regulations set by fellow community members, rather than an outside landlord who may not live on the premises, offers a sense of self-governance and equality.

What are the Cons of HOA?

  1. Often include fees, dues, and assessments. With access to exclusive services and amenities, like workout spaces, swimming pools, and common areas, comes HOA fees that pay for maintenance of each. These monthly fees also go towards upkeep to the exterior of the homes within the community and can be as little at $100 per month and as much as several hundred dollars.

    Because these fees are a requirment for living within said community, they can deter many from moving in. It is important to also keep in mind that these fees can fluctuate and often increase year-over-year. If the fees do not cover the cost to make such needed repairs, they will need to be raised.

  2. Imposes rules and regulations. Though community rules and regulations may provide structure and stability for its members, they can often feel restrictive and unnecessary. Many HOA rules have to do with the outside appearance of the home and often dictate things like the color one can paint their home, as well as which type of windows and doors they can buy.

    HOA even have the authority to decide what type of decorations or landscaping one can maintain and how many vehicles they can have on their property. If these rules are violated, they often result in a fine.

  3. Repercussions for those who default on payments. In addition to fines for violating rules and regulations set by the HOA board, individuals will be faced with addition repercussions if they fail to pay their fees. Dues will be accrued until the individual pays and in some states, not paying these fees can put individuals at risk for foreclosure.

    Keep in mind that these fees go towards the maintenance of shared amenities and property values. Which means that if sufficient funds are not collected, the community will risk losing vital services that keep the community running properly.

  4. May be run ineptly. Because members of a HOA board are volunteers or elected individuals within the community, the association can, at times, be run ineptly.

    These members may not be experienced enough to run a community and often do not receive proper real estate training. This can often lead to more problems for community members and between those on the board itself.
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Mortgage News Matters

What Does a Title Company Do?

A Title Company is responsible for verifying that the title to a property is legitimate and that the seller has the rights to sell said property to a buyer. They do this by making sure that there are no barriers to purchase like liens, prior mortgages, fraudulent transfers, unknown heirs, and more.

Once verified, the Title Company will provide title insurance, that protects the lender if title issues surface, and potentially the buyer – depending on which policy they choose.

In order to issue Title Insurance, a Title Company must…

  1. Perform a Title Search.

    Typically, the first thing a title company will do, a title search checks to see if there are other people who have ownership or rights to the property. It can also reveal outstanding mortgages, any other existing liens, unpaid Homeowners Association dues, judgments or unpaid tax liens, restrictions, easements, and leases.

    In any of these instances, these fees – or restrictions – must be paid off or dealt with before both the seller and buyer can move forward.

  2. Conduct a Property Survey.

    Sometimes, a property survey, or drawing of the property, is required. This will reveal any potential infringements on the property or the land the property occupies, such as a neighbor’s addition having been built in your property. A property survey will verify that the home is set within its boundaries.

    A property infringement could become an issue if there is physical damage caused as a result. If this is the case, the title company will have to take this into consideration when choosing an insurance policy.

  3. Prepare Abstract of Title & Title Opinion.

    An Abstract of Title is a document that shows the history of ownership of a property. This includes when the property was previously sold, and any history of inheritance, court litigation, and tax sales.

    Once the Title Company has the prepared Abstract of Title, they write an official Title Opinion. This document states the seller is the valid owner of the property and they are willing to insure the title for purchase or refinance.

What is Title Insurance?

This is a type of insurance that protects lenders and homeowners from any financial loss, in the case that another party makes a claim to the property title. There are two types of title insurance policies that homeowners can get. These are 1) Lender’s Title Insurance and 2) Owner’s Title Policy.

Types of Title Insurance

  1. Lender’s Title Insurance. Lender’s Title Insurance is required for anyone who is getting a mortgage license. This type of insurance protects the mortgage lender if there is an issue with the property’s title. It is typically paid for by the buyer, and in some cases, the seller will pay. The most important thing to understand about Lender’s Title Insurance, is that it does not protect any existing equity on the home, and for that, the buyer will need to consider a Owner’s Title Policy.

  2. Owner’s Title Policy. An Owner’s Title Policy is an optional insurance policy for buyers who are looking to protect the equity in their home. With this type of insurance, a buyer is protected in the case that another party shows proof of ownership to the title, and whoever transferred the property wasn’t authorized to do so. In this case, the buyer will still have to vacate the home, but they would be given money to buy a new property of equal or lesser value. Without this type of insurance, the buyer would have to leave the home and would not be compensated for any equity built into the home.

When should you consider getting Owner’s Title Insurance?

All homebuyers who purchase a home through a mortgage lender will be required to purchase a Lender’s Title Policy. However, it is their choice whether they want to obtain an Owner’s Title Policy. To help decide if an Owner’s Title Policy is right for you, ask yourself the following questions:

  1. Has the home had multiple owners? If the property has a history of many owners, there is more chance that a separate party could come forward with a claim on the title. Owner’s Title Insurance would protect the buyer for such claims.


  2. Would you be able to afford the legal fees to dispute any potential claims? Even if it is not legitimate, the buyer will still be responsible for the legal fees to dispute the claim to the title. With an Owner’s Title Insurance Policy, the title company is responsible for providing the defense for the buyer.


  3. How much is your peace of mind worth? By obtaining insurance, a buyer has a certain level of protection in the case that someone makes a claim on the title. It protects their investment on the home and pays for any legal fees that may be necessary.
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Mortgage News Matters

What’s the Difference Between Refinancing & Home Equity Loan?

One of the major benefits of owning your own home is that it can often be a major financial investment. In the long-term, real estate tends to increase in value over time due to the appreciation of the land it sits on and by building equity.

To determine the value of your property, let’s take a closer look at appreciation, how to build equity, and different ways to obtain a mortgage loan refinance.

What is Appreciation?

Appreciation represents the change in the value of your home over time. This change is typically due to the piece of land that the home sits on, rather than the structure itself which tends to lessen in value, due to typical wear and tear.

What is Equity?

A home’s equity represents the difference between the current market price of the home and the amount that is still owed on the mortgage. Equity grows as you pay down your mortgage. It is important to note that building equity takes time, as it takes a while to lower the principal balance owed on the mortgage loan.

Both appreciation and equity grow over time. This means the longer you own your home, the more valuable it becomes.

With this, homeowners who take out a mortgage to pay for their home can choose to access cash to cover events like unplanned emergencies, necessary repairs, and important updates by choosing to refinance their current mortgage loan.

Why would you want to Refinance?

The main reason homeowners choose to refinance is to lower the overall cost of their mortgage or obtain equity that has been built over time.

Borrowers can lower the overall cost of the mortgage loan by refinancing during a period of lower interest rates. Or, they can choose to access the equity they’ve built in their home get cash out to pay for upgrades, remodels, or other life expenses.

What types of Mortgage Loan Refinances are there?

The two most common forms of mortgage loan refinancing are rate-and-term refinancing, which is when a borrower exchanges their current loan for a new one, or by accessing equity in their home, which can be done by obtaining a cash-out refinance or home equity loan. Though these are the most popular forms of refinancing, there are many methods out there and it is important to understand each to assure that you are selecting the right one for your unique situation.

What is a rate-and-term refinance?

A rate-and-term refinance is when a borrower replaces their current mortgage with a new one, typically with a better interest rate. No money is exchanged in this type of refinancing, other than any costs associated with closing or funds from the new loan to pay off the existing one.

What is the difference between a cash-out refinance and a home equity loan?

A cash-out refinance pays the homeowner a portion of their home’s equity in cash. This method results in a new mortgage loan for the homeowner at a larger amount than was owed on the previous loan, giving owners cash in hand. Compared to a rate-and-term refinance, a cash-out refinance will typically result in borrowers paying a higher interest rate or more points.

A home equity loan gives homeowner’s cash in exchange for the equity they’ve built up in their property as a separate loan. They typically carry a lower interest rate than personal loans because, when you get

Home equity loans are often structured as lines of credit with variable interest rates and payments which make them less predictable. Borrowers should consider obtaining a copy of their credit report before going through the process of applying for either loan, to be sure it is the right decision for them.

What are the benefits of refinancing?

Refinancing can be beneficial to homeowners in many ways. Whether you are looking to lower your mortgage payments or access equity in your home to pay for necessary upgrades, a child’s education, or collect some extra cash for the upcoming holiday season, a refinance can help you access cash quickly.

Visit our blog post on the Top 5 Reasons to Refinance here.

To learn more about the different methods of mortgage loan refinancing and to determine which one is right for you, contact a VanDyk Loan Originator today!