Think You Can’t Save Money?

Think again!

Like most of us living paycheck to paycheck, saving money seems incredibly difficult. It’s especially daunting when you want to buy or sell a house. Buyers have to put up earnest money, pay for inspections, and possibly cover some or all of the closing costs. Sellers need to think about getting their house ready for the market by painting, upping the curb appeal, or doing a few repairs. Even if you’re not actively buying or selling, savings are pretty important.

Financial advisers will tell you to start with an emergency fund and continue saving from there. Great! But where will the money come from? Google it. There are millions of articles out there on cutting costs to save money. This is not one of those articles.

“Stop buying lattes”, they say. Call me lazy, but I’m not getting up ten minutes earlier to make coffee, find my travel mug, and hope that I haven’t run out of creamer. I’m a huge fan of the snooze button and it’s pretty much guaranteed that I’m not getting out of bed until the last possible second. It’s part of who I am. I’ve stopped fighting it.

“Bring lunch from home”, they advise. We tried that and ran out of forks, spoons, and tupperware within a week. I’m not sure what our kids did with it all, but my best guess is that they left it on the tables and some counselor at day camp went to college with an almost complete set of my silverware and enough tupperware to support their Ramen habit for weeks at a time.

I’m not saying that the ideas in all of the articles out there are inherently bad. I’m just saying they’re not always practical. And even if you have the iron willpower necessary to make these changes, will you diligently start transferring that amount of money into your savings each week or will it get eaten up some other way? Maybe in extra groceries because after a month of packing lunch, the thought of another PB&J makes you want to slit your wrists? Or will you spend more on those little K-Cups because it doesn’t make sense to brew an entire pot of coffee for the one cup you’re going to take with you? I know I sound like a Negative Nelly. Bare with me. I found a solution. Not only does it work – it’s easy. Impossible, you say? Prepare to be impressed.

It’s called Digit. Some super brainy math gurus came up with some very confusing, very awesome algorithms that allow you to save without even noticing! I’ll admit, I was extremely skeptical at first. I mean, how is this thing going to take money out of my checking account without me noticing? I still don’t know the answer to that question, but it does. It’s super easy to sign up. Then Digit analyses your habits for a little while and before you know it, you’ve become an unstoppable saving machine. A savings superhero if you will; cape optional. There are even bonuses for things like inviting your friends or keeping a balance for 3 months or more. It sends you awesome text messages letting you know your checking balance and your Digit savings balance. You can respond to the texts to get info on your most recent transactions, tell Digit to save more or less aggressively, or withdraw from your Digit savings back to your checking account. The best part is that the texts aren’t boring and robotic. Check out this screenshot from one of mine:

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That’s $100 in painless savings with a dancing duck gif, ya’ll! It doesn’t get any better than that.

I wanted to use the service for a while before I started talking about it. In fact, the Anthony part of Team Lapinsky doesn’t even know I signed up. I really wanted to put it to the test. If he didn’t notice, I knew it worked. A month an a half in and he still hasn’t said a word. So, do I recommend Digit? I absolutely 110% recommend it. I certainly plan to continue using it and it might just be the answer for those of us who have a hard time regularly saving. Wanna try it out? Sign up here!

*Other than using their services, I am not affiliated with Digit in any way and I was not paid to write this article. I just enjoy sharing the financial tools that work really well for us.

Interview with a Lender: Mortgage Insight From an Expert

Earlier this week, I had the pleasure of sitting down with a good friend and colleague of mine, Mike Simpson from New Penn Financial. I baited him with the promise of lunch, but I really wanted to pick his brain about mortgages. Don’t judge me. It was all in the name of educating you guys! Luckily he was a good sport and I got a lot of information to share with you today.

Jen and MIke

Jen: Tell us a little bit about yourself.

Mike: I am a native Delawarean born and raised in Kent County Delaware. I graduated with a Bachelor’s degree in Accounting and from Wesley College and have 15 years of experience in the financial services industry. I currently reside in Smyrna, DE with my wife and 3 beautiful children. My hobbies include going to sporting events, traveling and spending time with the kids.

Jen: Tell us about New Penn Financial.

Mike: New Penn Financial was established in 2008, amidst a challenging era for the real estate and mortgage industries, New Penn Financial® quickly became a major player in the new lending environment. The sea of change in the industry worked in our favor, allowing us to rapidly assemble a management team with decades of collective experience. New Penn has forged a national industry presence built on competitive interest rates, exceptional customer service, and healthy lending practices.

Jen: Many of our clients want to start looking at houses right away. It seems like the first logical step. Why is it important to get a pre-approval first?

Mike: It is important to get a pre approval prior to shopping for a home so you know exactly what price you qualify for as well as what type of mortgage. In order to put an offer in on the home of your dreams, you need a pre approval letter to accompany the offer.

Jen: What’s involved in getting a pre-approval? What type of information will you need?

Mike: Obtaining a pre approval is really simple. It consists of me interviewing the client and obtaining some basic information about their financial situation. The interview consists of information required to review the credit report. The information required are standard financial documents, including paystubs, tax returns and bank statements.

Jen: Sometimes, client credit isn’t where it needs to be. New Penn offers free credit enhancement, can you tell us about that?

Mike: This is one of my favorite things about the company I work for. If a customer has a credit score of 580 or above we do offer a credit enhancement service that is free of charge to the customer. This service offers solutions where we can rapidly increase the customers credit score vs. naturally waiting for the required changes to report.

Jen: When is credit enhancement not enough? Who should consider a credit repair service?

Mike: Our internal credit enhancement department is for those consumers that have a minimum credit score of 580. Although, the service is for customers with a 580 score or higher, I still would encourage everyone to speak with a mortgage professional first.

Jen: Once a client has a pre-approval, what are the next steps in the mortgage process?

Mike: Once a pre approval has been issued the next step is to do the fun part….find a house. Once a contract has been executed the real mortgage process starts. We then need to do the background work that really makes this transaction come to fruition. We work with several third parties, including an appraiser, title companies, inspectors and attorneys to protect the buyer. We collectively protect the buyer and ensure they are purchasing the quality of home that they are under contract to buy.

Jen: What can clients do to make the process go as smoothly as possible?

Mike: I always say that the buyer is the most important person in the process. It is extremely important that all information that is requested by the mortgage company is provided in an extremely urgent manner. Unfortunately, over recent years banks have “tightened” up and are required by law to document all we can to make sure we are making the most informed financial decisions.

Jen: What types of loans do you generate?

Mike: We are a full service mortgage company and have wide range of products. I pride myself on exceptional customer service and working for a company that is extremely competitive in the marketplace. Some of our products include:
– Fixed rate
– Adjustable rate
– Jumbo
– FHA
– Conventional
– USDA
– VA
– Home Improvement
– Harp Refinances

Jen: What are the advantages of working with New Penn Financial, and you in particular?

Mike: The primary advantage of working with me is I know the Delaware market and real estate laws. I also pride myself on being available when my customers need me, even if it is on the weekend or in the evenings.
I know the area and can serve as an additional resource / expert on the area. We offer extremely competitive interest rates and some closing cost assistance options.

I want to give a huge thanks to Mike and New Penn Financial for taking the time to sit down with us. Do you have any mortgage questions? Let us know in the comments below!

The 4 Most Common Types of Mortgages

You took a giant leap of faith and decided to buy a home. Congratulations! This is one of the most exciting purchases you’ll ever make. Unless you’re sitting on piles of cash, you’ll need to finance your home. There are several different types of mortgages, but all of the jargon can get confusing. Whatever you do, don’t underestimate the importance of your lender. They really know best. They sit through hours of mind-numbing classes, read a metric ton of mortgage information, and attend stuffy conferences in order to stay on top of the latest mortgage laws and trends. They do all of these things so that you, the clients, and we, the Realtors don’t have to. It’s so important to work with a lender you trust and lean on them for guidance. That being said, here’s a quick breakdown of the mortgage products we frequently work with.

mortgage
401(K) 2013 / Foter.com / CC BY-SA

VA Loans
VA Loans are government backed loans that are serviced by traditional banks. They’re great for buyers with little or no money to put down. In fact, VA financing is available with 0% down! You are eligible for a VA Loan if you or your spouse have served in the military. In addition to the usual documents, your lender will need proof of military service. If you’ve used a VA Loan product before, don’t despair. There is a common misconception that VA Loans can only be used once. This simply isn’t true. You can use them multiple times, up to a certain amount. Check with your lender for more information.

USDA
USDA Loans are also government backed. These too are serviced by traditional banks and can be had for 0% down. There are several eligibility requirements for USDA Loans. The property you purchase must be in a “rural” area. If you’re interested in using this type of loan, it’s relatively easy for your Realtor to find out if a particular address is eligible. There are multiple locations in Delaware that qualify. Don’t worry, they’re not all isolated from civilization in the middle of nowhere. You’d be surprised! Other requirements include a maximum income, a minimum credit score and a maximum DTI (Debt to Income Ratio). These requirements vary by location and during the pre-approval process, your lender will be able to tell you if you are eligible.

FHA
Another government backed loan, FHA loans are for First Time Buyers. Also serviced by traditional banks, these loans require a low down payment of 3.5%. Nobody likes difficult math, so let’s keep it simple:

FHA Down Payment Math
If you’ve owned a home in the past, you may still qualify for an FHA Loan. The term, “First Time Buyer” is relative. If you haven’t been a homeowner in the past 3 years and you meet the eligibility requirements, an FHA Loan is yours for the taking. A bit more lenient than USDA, FHA Loans still have credit score, DTI, income, and purchase price requirements. During the pre-approval process, your lender will let you know if you qualify.

Conventional
The easiest type of loan to get, conventional loans are the way to go if you can’t meet the requirements of a government backed loan and have some money saved up. With down payments averaging around 20%, these loans require a heftier out-of-pocket amount. Ready for some more simple math?

Conventional Down  Payment Math
Because the buyer is putting down a significant portion of the purchase price, these loans are a little easier to get. Banks feel more confident when buyers have some skin in the game. As always, your lender will guide you through the process.

And there you have it: The quick and dirty facts on mortgages. If you thought that was boring, imagine how your lender feels!

As always, we’re here to help: If you have questions, or are ready to buy a home, contact us or leave a comment below!

Questions Answered...
Travelin' Librarian / Foter.com / CC BY-NC-SA

The Truth About Short Sales: What Buyers and Sellers Need to Know

What is a short sale?

House, Property, Real Estate For Sale Sign
MarkMoz12 / Foter.com / CC BY

Plenty of buyers call us very excited about deals that sound too good to be true. They’ve found a great house in a great neighborhood for an unbelievable price. It’s a short sale, but what exactly does that mean? A short sale becomes available when the seller owes more on their mortgage than what the house is worth. In essence, they’re “shorting” the bank if they sell. To avoid foreclosure, many homeowners decide to put their home on the market as a short sale, thus offering it to the general public at a discounted price.

Who Should Consider Listing a Short Sale?

American Dollar
thinkpanama / Foter.com / CC BY-NC

Maybe you had an unexpected illness or injury that caused you to become delinquent on your mortgage. Maybe you’ve suffered a recent job loss or began caring for an elderly parent. Whatever the reason, you’ve fallen behind on your mortgage payments and don’t see a way to get caught up. You’ve got to do something before you receive that acceleration notice. What’s an acceleration notice? It’s the final letter in a series of nasty-grams from the bank in which they demand full payment of the mortgage balance. If you can’t pay the full balance, the bank will foreclose on the house and sell it at a sheriff’s sale. The key is to get in front of the problem and talk to the bank before you get to this point.

It seems easier to avoid the calls and letters, but all you are doing is creating bigger problems down the line. Unlike many other things we own, a home is extremely personal. It’s easy to look at the bank as the enemy when everything is going wrong in your life and they are threatening to take the one place you are supposed to feel safe. Take a deep breath, calm yourself, and try not to demonize the bank. It will just make them harder to work with. If you are only 30 – 60 days delinquent, talk to your lender. They are more understanding than you may think and will likely work with you on a repayment plan to get your loan current again. When you’re beyond the 90 day mark and it looks doubtful that you can catch up, it’s time to consider a short sale.

In the first several years of home ownership, the majority of your payments go towards interest instead of principal. Unless you’re making regular additional payments to the bank, your balance remains relatively high until more time has passed. If you purchased the home at market value and have no equity built in, this means that you probably owe more than the home is worth. Especially if there are any repairs needed. With a short sale, you have the option of listing and selling the home, having the remainder of your debt forgiven, and possibly receiving money from the bank to help you move into a more affordable place.

Who Should Consider Purchasing a Short Sale?

Single (20)
singlerentinmobiliaria / Foter.com / CC BY-ND

Literally anyone can buy a short sale. Sure, there are some downfalls, but there are also great deals to be had. So, what does it take to buy a short sale? In one word; patience. You’ll tour the house, fall in love, and put in an offer. Then you’ll wait. And wait some more. And just when you think the waiting should be over, there will be – you guessed it, more waiting. It can be really trying, especially when you’re excited to move into a new home. Unfortunately, banks work on their own time frame and no one really knows what that is. You could get lucky and receive a response to your offer within a week or two. Or, you could wait a couple of months. However, if you have the staying power, you can get a fantastic price on the home of your dreams.

Once the bank has accepted your offer, you’ll go through the rest of the process as normal: inspections, appraisals, and then closing. Sometimes, inspections find things with the house that make it unmortgageable. This could be anything from mold to foundation or roof issues. Unfortunately, sellers that have listed their home as a short sale generally do not have the funds available to fix any major issues that come up in home inspections. If this happens, your Realtor will need to renegotiate a lower price with the bank and you may need to consider a construction or 203k loan which allows you to roll the costs of repairs into your mortgage. (More on 203k loans soon) Start to finish, the process could take anywhere from the average 60 days up to several months. If you have the time and patience, you could close on a home for several thousand dollars less than market value and move in with equity.

Our partner

Gerry

Team Lapinsky has partnered with Gerry Gray Law. Gerry is a local attorney who specializes in short sales. An excellent resource for homeowners, Gerry guides many of our clients through the process of listing and selling their homes via short sale. He holds the same high standards for customer care that Team Lapinsky strives for in every transaction. Give us a call to discuss your options today!