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First-Time Homebuyers: Overcome the Odds with These Tips

Overcome the Odds - Buy First Home - Cressy & Everett Real Estate

Buying a home for the first time can be a challenge. At Cressy & Everett Real Estate, our real estate agents are always there to advise you. That means not only finding you the best South Bend homes for sale, but helping you make the right choices every step of the way.

Buying a home may seem intimidating at first, but there's good news. Many buyers simply jump into the process with both feet. If it throws them a curveball, they often end up having to walk away from the home they want. By spending some time researching – like you're doing right now – you are much more likely to succeed.

Your real estate agent is there to guide you, but in the end, you make all the decisions. So, the more you know about buying a property, the easier it'll be. A little knowledge goes a long way! Here's how to beat the odds as a first-time homebuyer.

  1. Explore Loan Programs for First-Time Buyers
    In most of the U.S., the 20% down payment required by a traditional home loan works out to more than 10 years of savings for a single person and five for a couple. Luckily, there are loan programs that provide funding while reducing or cutting the down payment. Many of these are designed especially for first-time homebuyers.

  2. Start Saving Early
    Even if you have no down payment to make, it's still a good idea to save as much money as you can before you go forward. You may need to take care of expenses out of pocket, such as a home inspection or earnest money. While it's possible to finance these "extras" sometimes, you'll save in the long run if you can pay cash.

  3. Get Preapproval First
    Preapproval is when a potential lender looks over your finances and determines what loan amount you qualify for. It can take several weeks to gather all the documentation you need and get through the process, so it's a good idea to start early. Once it's all done, you'll know what your budget is and can plan accordingly.

  4. Identify Your Top Priorities
    By establishing your top priorities early, it'll be easier to find a home that meets your needs without breaking the bank. Compromising on one or two areas can reduce the amount you spend – and a lower cost of living will pay off in the long run. Write out a list of your top three goals for a new home so you'll know where you're willing to cut back and what you won't budge on.

  5. Sweeten the Deal for the Seller
    There are several ways to stand out from other buyers. If you are sure the home is worth it, going over asking price is always a powerful move. But money isn't the only way: Offering the seller an extra month of occupancy can make moving easier and more convenient. On the other hand, some sellers are in a hurry, so moving fast can win their trust. Ask about their needs and adapt!

  6. Make a Personal Connection
    Writing a letter can motivate a seller to give your offer a closer look. A letter is the perfect way to introduce yourself and explain why this home is so important to you. This works especially well for relatively low-priced starter homes where the seller has strong emotional attachment. When there's not much difference between offers, the personal touch can make a winner.

No matter your budget, Cressy & Everett Real Estate has the insight you need to get to closing day. Contact us today to learn more.


Mortgage Application Denied? Take These Steps Next

Mortgage Denial Next Steps - Cressy & Everett Real Estate

Buying a new home is exciting! You've checked out available South Bend homes for sale, figured out your down payment, and have a mortgage pre-approval letter from a lender. You finally found the perfect home and it's time to get a mortgage. You apply, get excited, start packing and then you hear the two most dreaded words in the home buying process: "Mortgage Denied."

It happens. If you've been rejected for a loan, it can be jarring, but you can turn it around. The key is understanding the reason(s) why you were turned down, and how to fix any problems.

Reasons You Might Be Denied a Mortgage

Since 2008, banks have tightened mortgage lending requirements. It's not always as simple as being overextended on your current loans or having several accounts in collections. Often it can be small things, that can be resolved. 

Here are some common reasons you could get denied for a mortgage loan.

• You just received a new credit card or applied for a personal loan.
Taking on any new debt before you apply for a mortgage can decrease the chances of getting approved. Mortgage lenders look at an indicator called your "debt-to-income ratio." DTI is calculated by adding up your monthly payments and dividing by your monthly gross income. They want to see a ratio of 43% or less.

• You've recently changed jobs.
Lenders look for stability and one way they determine it is by looking at your employment history. If you've worked for the same employer for two years or more, it can help your application. If you've recently lost or changed jobs, it can raise a red flag with lenders.

• Low Appraisal
If the property you're interested in appraises for significantly less than the purchase price it can cause the "loan-to-value ratio" (LTV) to be higher than the lender can legally approve. Work to renegotiate a lower price if the appraisal is higher than similar homes in the neighborhood. Or if you can, make a larger down payment and accept a lower loan amount.

• Bad Credit
If you have bad credit (typically below 619) you can be denied for a mortgage. If you're denied a loan, you can get a free credit report within 60 days of a denial. Go through your report to see if it is up-to-date and accurate. If there are discrepancies, the credit bureau must correct any errors.

What to Do If You've Been Denied A Loan

If you are denied, there are some steps you can take.

  • Find out why you were turned down.
    If you've been denied a mortgage, the lender must tell you why. Ask for their advice on what you can do to ensure it doesn't happen again.

  • Pull your credit report and search for errors.
    Your credit score plays a major role in the type of loan and rate you're eligible for. If your DTI is too high, pay down your debt. Once you've paid it down reapply. If the LTV is too high and you can afford it, put more money down to lower the loan amount, you'll also lower your monthly payment.

  • Shop around.
    There are many different loans out there and some lenders might be more flexible. Fill out applications with two or three lenders to increase your chances.

Your realtor may be able to help you find a lender willing to work with you. Here at Cressy & Everett Real Estate, our real estate agents are ready to help. If you're ready to begin your home search, contact us today!


Self-Employed? The Right Path to Mortgage Approval

Mortgage Approval for Self-Employed-Cressy & Everett Real Estate

Getting a mortgage isn't what it once was. After the market crash of a decade ago, getting the funding for the most expensive purchase most people will make during their lifetimes has been heavily regulated and for good reason. If you're looking for South Bend homes for sale and happen to be self-employed, your journey toward a mortgage comes with some additional challenges.

Even so, our real estate agents can help you take the right path to mortgage approval.

  • Get Your Documents in Order
    The first rule of getting a mortgage for anyone is to get all of your financial documents in order and be prepared to present them if asked by your lender. A non-self-employed person who earns regular wages can expect to provide a couple of months of bank statements, a handful of paystubs, and a couple of years of tax returns.

    The self-employed mortgage applicant, however, may be required to provide the same documentation but more of it. If you keep proper books, then it shouldn't be any trouble providing both business and personal documents that show cash flow through the business and translated into personal income. In short, be prepared to do a little more work to prove your financial status and income.

  • Keep Clean Credit
    Having a good to an excellent credit score will go a long way in getting approved for a mortgage if you're self-employed. Since many self-employed mortgage applicants can often have erratic earnings and income numbers, banks may look at you with a bit of skepticism. 

    Ultimately, however, a lender's job is to lend you credit for your purchase, and it's up to you to make a strong case for creditworthiness. If you have any outstanding debts that may affect your credit, take care of those items and make sure they're accurately reflected on your credit report before applying for a mortgage.

  • Keep Business and Personal Accounts Separate
    One of the things that can muddy the waters with lenders is when self-employed mortgage applicants can't show a clean break between their personal and business assets and expenses.  It's probably the biggest mistake you can make as someone self-employed when it comes to getting approved for a mortgage.

    It's good business to keep separate accounts and separate bookkeeping for both your personal income and spending and for your business. Not only does the IRS frown upon mixing the two classes of money, but lenders will likely require you to separate the two, which can lead to a lot of extra work and headache if you haven't kept separate books.  

    Even if you're self-employed and operating as a sole proprietorship, it's essential to establish a dedicated business entity to better differentiate you as a business from you as a person.  You can apply for a DBA (doing business as) from your state, which will allow you to create a Federal Employee Identification Number (EIN) and open bank accounts under a business name. All of these things can help keep your business and personal assets 100% separate.

If you have any questions about getting a mortgage while you're self-employed, then contact us to learn more about things you can do to get approved for your mortgage. Additionally, we can help you find the South Bend home of your dreams and get you started by looking through our current inventory of homes.


4 Steps to Mortgage Approval Despite Student Loan Debt


Mortgage Approval College Grads-Cressy & Everett Real Estate

Student loan debt is a growing problem, and for many Americans thinking about buying their first home, the weight of that debt can be crushing. We believe that owning a home should be possible for anyone, and our real estate agents are here to help. 

According to a recent report by Forbes, student loan debt is at an all-time high in 2019, with 44.7 million U.S. borrowers collectively owing $1.56 trillion in student loan debt. If you're one of them, that debt can feel like an impenetrable barrier between you and your dream of becoming a homeowner. Here's why it's not. 

Getting a Mortgage With Student Loan Debt

Student debt is especially a problem for first-time home buyers, who tend to be younger and less experienced. Many student debt holders cite their debt as a major reason for putting off buying a home, despite today's historically low mortgage rates and the variety of low to no down payment mortgage options available. 

The biggest question to focus on is how your student loan debt will impact your ability to get approved for a mortgage. It's important to understand how lenders will look at your debt so you can determine how to move forward. 

Credit scores are a big factor, but in most cases, having student loan debt won't drag down your credit score unless you've been missing payments. Just as important is your debt-to-income (DTI) ratio, which reflects the percentage of your monthly income necessary to repay your debts.

4 Steps You Can Take

No matter how much student loan debt you may have, buying a home is not outside the realm of possibility. Here's what you can start doing today to improve your ability to get approved for a home loan, and buy your first home: 

  1. Watch your credit score. Your credit score plays a big role when it comes to getting a mortgage. Make consistent, timely payments to improve your credit score and demonstrate your ability to be financially responsible. Setting up auto-pay for your accounts is a great way to make sure your payments are always on time. Also, keep an eye on your credit utilization—the percentage of your available credit you actually use—and keep it as low as possible. 

  2. Improve your DTI ratio. Lenders will look at your debt-to-income ratio when deciding whether to offer you a loan, so it's important to manage your debts. This is one of the areas where having student loan debt impacts your home buying ability the most. Do your best to repay as much debt as possible, and/or increase your monthly income to improve your DTI ratio. 

  3. Get pre-approved. Having pre-approval for a home loan will give you a much more solid picture of what you can afford. Just keep in mind that any potential lender will need to take a detailed look at your financial records before offering pre-approval, but having student loan debt does not make it impossible to get pre-approved.

  4. Consider down-payment assistance. A wide range of down-payment assistance programs is available, even if you have student loan debt. Options include FHA loans through the Federal Housing authority, VA loans for those who have served in the military, and USDA loans, which often include zero-down mortgages for rural and suburban homeowners. Be sure to investigate state and local assistance programs as well. 

If you don't want your student loan debt to stand between you and your dream home, contact us. Our team of dedicated real estate agents is here to help every step of the way. 


Read This Before You Apply for a Mortgage

Buying a Home - Read This Before You Apply for a Mortgage

Our real estate agents often hear from our new clients that the process of getting a mortgage is intimidating. That's understandable!

Having an experienced real estate agent on your side does a lot to make applying for a home mortgage manageable.

Even so, it's important to know a few things about the process. Once you learn more, you'll see exactly what you need to do to make things easier.

That can be just what it takes to make your worries evaporate. The truth is, most people learn getting a mortgage is quite a bit easier than they imagined. It just takes some preparation.

These four steps will make it easier:

  1. Get the Right Paperwork Together
    No matter what type of home mortgage you want, you'll need to document income before you can finish your application packet. This almost always requires a month of recent pay stubs from anyone on the loan and the last two years of tax filings. You'll also need at least three months of bank account statements – but collect six months' worth just in case.

  2. Know the 28/36 Rule
    The 28/36 Rule is a widely accepted, unofficial principle of mortgage lending.

    It goes like this:
    • Your monthly mortgage payment should be no more than 28% of your gross income.
    • All monthly bill payments you make should be no more than 36% of gross income.

    This isn't a hard and fast rule, and it doesn't always apply to government-backed mortgage programs such as those for first-time homebuyers. However, it'll give you a sense of how big a mortgage you may qualify for. The sooner you write out a budget, the more you'll know about your situation.

  3. Get Insight on the Market
    A good real estate agent is a walking encyclopedia of knowledge on the local market.

    Each real estate market has its own quirks, and some of these can influence how easy it is to obtain mortgage funding. Luckily, you won't have to search high and low to get the facts you need. Simply ask your real estate agent if there's anything special you need to know.

  4. Start Saving Soon
    The less debt you have, the better off you'll be when it comes to home financing.

    Ideally, you should start saving for six months to a year before you apply for a mortgage loan. There are two ways you can use any extra funds that will both be beneficial to you:
    • One, paying down any existing debt, such as credit card debt and car loans.
    • Two, saving cash so that you can provide a larger down payment on a home.

    Your financial situation dictates the best move for you. For example, paying down old credit debt will relieve you of some money worries and may make it easier to spend on your home.

    In some situations, having a big down payment isn't a priority. However, a down payment will cut the amount of money you have to finance and may even improve your interest rates.

  5. Getting a Good Mortgage Loan Package Comes Down to Dollars and Sense
    Make a few moves to improve your financial health – and choose the right home for your budget – and you could find getting a mortgage is a snap.

We help buyers with many different financing needs to achieve the dream of homeownership. To find out more, contact Cressy & Everett Real Estate.


Buying a House: Why Pre-approval Should Be Your First Step

Pre-approval is your first step to buying a house
When you commit to the idea of buying a new home, you'll probably want to jump right into it. You'll want to search online listings, check open house schedules and track For Sale signs in your neighborhood of choice. These activities will play an important role in buying a house, but it's important to obtain a mortgage pre-approval as your first step. 

Our REALTORS® have helped many new homeowners in their home buying efforts. Experience has taught us that the mortgage pre-approval letter is important, but the approval process itself is an efficient way to address the financial aspects of buying a house. It can also help you make key decisions about your future home. Here's why the mortgage approval process is so important.

It's a financial reality check

When you seek pre-approval, you subject your finances to ruthless inspection. You ask a mortgage company to evaluate you financially to determine if you are capable of paying back a substantial longterm loan. It's a big step that requires you to document your income, assets, savings, credit rating, proposed down payment, and other financial details. You must produce formal records.

  • Bank statements
  • Check stubs and W2s
  • 1099s and other proof of self-employed income
  • Income taxes

It forces you to consider home affordability

A mortgage company will pre-approve you if they believe you're capable of paying back a loan based on your projected home purchase amount. If they can't finance you for the original amount you requested, the original mortgage company or another mortgage company might consider approval at a lower amount. Of course, the back and forth effort can be frustrating. If there's an application fee, it can also be costly.

To eliminate this problem, you should understand ahead of time what your monthly payment might be and if you can afford it. An online mortgage calculator can help. You input the cost of the home, the down payment, and the interest rate. It projects your monthly payment based on the amount financed. If you know you can't afford to pay the monthly amount it suggests, you can downgrade your expectations on home pricing before you seek pre-approval.

REALTORS® will know you're serious

Your REALTOR® will gladly commit time, effort, and energy to help you find a home that meets your needs. Before an agency goes to work for you, they'll want to know that you're willing to make an equally strong commitment. A pre-approval letter tells both a buyer's realtor and a seller's realtor that you're serious about buying a home and you're ready to get started.

Homebuyers will see you as a viable prospect

In a seller's market, a homeowner may have a number of prospects interested in their home. With a list of potential buyers from which to choose, a seller has more than one selling option. They won't feel pressed to consider any offer you make without proof that a mortgage company is ready and willing to finance the deal.

We can help

Our real estate professionals have the knowledge and experience to guide you through your home-buying quest. Contact us when you're ready to buy or sell your home.  We can provide you with more information about the pre-approval process.


How to Pay Your Home Off Early

Pay your home loan early

A home mortgage is a commitment that affects your financial picture for a good portion of your life. It's a big ambition, but paying off your home mortgage even a little bit early can save you thousands of dollars over time. Our real estate agents have put together this list of ways to pay your home off early.  

Three Ways to Pay Off Your Home Loan Much Faster

Savvy budgeting and a commitment to "stick to the plan" will serve you well in your quest to pay your home loan off early. When it comes to any big goal like this, adopting a number of small, helpful habits is your best bet. By chipping away at your mortgage payment every month, you'll get closer to your goal.

  1. Kick In an Extra Payment 
    Making extra payments to the principal of your home loan adds up. Just one extra payment per year can shave years off your mortgage.

    Many people swear by the concept of the biweekly payment: Here, you pay half your regular payment every two weeks instead of the full payment every month.  Since there are 52 weeks in a year, this results in an extra full payment annually.

    In addition, rounding up your payment can make a noticeable difference as well.  When you come across some extra money--like a tax return or a holiday bonus--you always have the option of using it for your mortgage expenses.

  2. Refinance Your Long-Term Mortgage
    When you were searching for a mortgage lender, you probably learned all about Annual Percentage Rate or APR. APR is a measure of how much interest you can expect to pay on your mortgage over time. All other factors being equal, a lower APR is better. Unfortunately, it's often hard to find a truly outstanding APR unless the real estate market is strongly favoring home buyers.

    Once you've had your mortgage a year or so, start monitoring the market and keep your eye out for refinancing deals. Refinancing can be a complex process, but doesn't involve many out-of-pocket costs and will cut down on your total mortgage investment going forward. If you find a favorable refinancing loan, there's rarely any reason not to go for it.

  3. Downsizing Your Home
    If you are interested in replacing your large mortgage payments with smaller, more affordable payments, downsizing your home may be the way to go.

    By selling your larger home, you may be able to use the profits from that sale to buy a smaller, more affordable home and reduce your overall debt.  The smaller the balance on your new home loan, the easier it will be to pay off more quickly.
    Contact Cressy & Everett Real Estate for expert help and advice when you're buying or selling your home.
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Disclaimer: All information deemed reliable but not guaranteed. All properties are subject to prior sale, change or withdrawal. Neither listing broker(s) or information provider(s) shall be responsible for any typographical errors, misinformation, misprints and shall be held totally harmless. Listing(s) information is provided for consumers personal, non-commercial use and may not be used for any purpose other than to identify prospective properties consumers may be interested in purchasing. Information on this site was last updated 08/19/2022. The listing information on this page last changed on 08/19/2022. The data relating to real estate for sale on this website comes in part from the Internet Data Exchange program of MichRic (Michigan Regional Information Center) (last updated Fri 08/19/2022 6:17:49 AM EST) or GNIAR MLS (last updated Fri 08/19/2022 6:17:51 AM EST) or IRMLS (last updated Thu 08/18/2022 11:11:59 PM EST). Real estate listings held by brokerage firms other than Cressy & Everett Real Estate may be marked with the Internet Data Exchange logo and detailed information about those properties will include the name of the listing broker(s) when required by the MLS. All rights reserved. --

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