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Help Your Loan Get Approved Faster

Help Your Loan Get Approved Faster

For the past twenty years, three standard mortgage practices have occurred behind the scenes during the mortgage process:

  • Verification of Employment (VOE)
  • Changing of the “mortgage clause” on your homeowner’s insurance (HOI) declaration page
  • Credit supplements, such as a Verification of Mortgage (VOM) or supplements to verify credit card or student loan monthly payments

In the past these three procedures have usually occurred without the applicant’s knowledge. The lender was just required to send in a copy of the applicant’s signed Borrower’s Authorization that gave written permission to release information. But privacy policies have tightened on the employer, HOI, and consumer-credit levels, and these standard practices now need the mortgage applicant’s verbal approval before they are completed.

If you are alerted by your Human Resources or Payroll Department that Meridian Home Mortgage is requesting a Verification of Employment, please give them permission to provide this information.

Likewise, if your HOI company lets you know they have received a request from Meridian Home Mortgage to change the mortgagee clause (basically just changing the lender name) on your insurance declaration page, please give your permission to make the change.

You may also receive a phone call from our credit vendor, CBC Innovis. This is the credit agency that Meridian uses to pull your initial credit report. Please work with CBC Innovis as quickly as you can to provide any needed information or perform any requested conference calls with your current creditors. This will help to expedite the underwriting process. If you ever feel uncomfortable returning a call to CBC Innovis or providing them with any requested information, please feel free to call your Meridian Home Mortgage contact first to verify their authenticity.

Following these three basic suggestions will help your team at Meridian prepare your loan file for underwriting in a timely manner. Please be sure to call at anytime to discuss further. We look forward to speaking with you soon.

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Your Loan is Reviewed by an Underwriter

Your Loan is Reviewed by an Underwriter

The most important step in the loan application process, after your home value is determined, is the loan review by a Conventional, FHA or VA underwriter.

It is important to know that before we submit your loan to an underwriter we do everything within our professional power, through diligent pre-processing, to make sure the underwriter has the ability to issue a Conditional Approval on every file. There are several things that you can do to help us move your loan to underwriting as quickly as possible.

Underwriting

The underwriter acts as a “gate keeper”, protecting the interest of the lender and safeguarding the limited funds they have to lend. Underwriters follow strict black-and-white guidelines established by industry investors. These guidelines are harsher than they were during the mortgage lending boom of 2002 – 2008. The days of what many industry professionals describe as “common sense underwriting” are long gone.

Once an underwriter reviews your refinance application they will issue one of three determinations: a Conditional Approval, a Suspension, or a Denial.

When a Conditional Approval is issued, a member of our Pipeline Team will call you immediately to review the approval and discuss any conditions needed before we can schedule your loan to close.

Rest assured that an underwriter issuing a Suspension or Denial on your loan does not end your relationship with Meridian Home Mortgage. This is where Meridian Home Mortgage steps in to defend you, as your advocate. We have an entire team at Meridian dedicated to overcoming underwriting objections, re-working your application, and unearthing underwriting errors.

Still, we will be candid with you at anytime during the process if we do not believe your application has an opportunity to close. Just know that we are devoted to exhausting every last ounce of effort to match your family’s financial situation to a qualified loan program.

While Meridian will be shouldering most of the work, we have come up with a small list of things that you can do to help ensure that your loan closes as quickly as possible. Please do your best to adhere to Meridian’s list of Do’s and Don’ts while your loan is being underwritten.

Here are a couple of other important things to know:

  • Turn-times vary
    Depending on the type of loan for which you are applying and the saturation of the current market, the underwriting process for your application may take up to 5-14 days. A large portion of Meridian’s service to you is to gently, but proactively, nudge the underwriter to review your file as quickly as possible.
  • Disclosure Mailings:
    You will most likely continue to receive loan disclosures throughout the process, either electronically or through the mail from your designated lender. Although there may be cover letters with these lender disclosures that state you need to sign and return them, there is no need for you to take any action. They are simply being sent to you by the lender so that they remain in compliance with State and Federal disclosure laws. Feel free to discard these documents.

We appreciate your cooperation and patience while your loan is being underwritten. Please do not hesitate to call with any questions or concerns that you might have. We look forward discussing your upcoming Conditional Approval with you very soon.

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Do’s and Don’ts While Your Loan is Being Underwritten

Do’s and Don’ts While Your Loan is Being Underwritten

Any change in your employment, income, or credit profile, no matter how small or seemingly insignificant, can adversely affect your loan approval. It is critical that you follow this list of Do’s and Don’ts while your loan is being reviewed by an underwriter:

  • Do make the minimum monthly payments on your consumer debt until your new loan closes and funds. Any deviation from this may negatively affect your mortgage application.
  • Do make sure that your mortgage payments are no more than 15-days late until your new loan closes and funds. As your application gets closer to settlement, please inform your Meridian Home Mortgage contact if you are at risk of paying your mortgage payment more than 15 days late.
    **Never pay your mortgage payment 30 or more days beyond the initial due date**
  • Do answer or return calls from the Title Company working on your application. On occasion there are outdated or unreleased liens which can cloud the ownership of your property, or similar situations which require the Title Company to contact you and request information to clear your title in preparation of your potential closing.
  • Do fax or email us any items that we request from you immediately. These items are required by the underwriter. All of the documents in your file have an expiration date. Every day that passes between the underwriter’s request and the time you provide them means additional items have the potential to expire. We will always be battling the underwriter to crunch time frames on your behalf and to immediately establish the first available closing date.
  • Do hold onto all of the pay stubs, bank statements, retirement account statements, pension statements and social security statements that you receive electronically and through the mail until your new loan closes and funds. You may be required to provide them.
  • Do not resign from your current job or retire during the loan process. If you have an opportunity to leave your current job for a better opportunity please reach-out to us prior to making a decision to determine how it might affect your loan.
  • Do not open any new credit accounts or apply for new credit accounts prior to your new mortgage loan closing. Any new account or credit inquiry can easily be identified by the underwriter and may put your application at risk. We understand there are life situations that arise, such as the need to apply for student loans to finance a child’s upcoming college semester. We ask that you discuss these types of scenarios with us prior to taking action.
  • Do not make any balance transfers on your existing credit card balances. Any new account or balance transfer may slow your mortgage application process.
  • Do not pay off any existing consumer credit accounts in full (e.g. credit cards, auto loans, etc.) unless it is through the natural progression of making your minimum monthly payment.

Following these instructions will help to prevent any delays in your loan closing. Please call us at anytime if you have any questions or if you would like to discuss any specific scenario.

Pros and Cons of Online Property Valuation Tools

Pros and Cons of Online Property Valuation Tools

Anyone who’s bought or sold a home in the past 10 years will be familiar with some of the online property valuation tools now available. Although each tool is slightly different, most allow you to search for and assess properties without the help of a realtor. So, now can we forgo realtors altogether and save on real estate commissions?

Definitely not. While these tools are useful, they’re certainly no substitute for a qualified, experienced realtor. To see why, let’s take a closer look at a few of these tools.

Zillow

Seattle-based Zillow is the biggest player in the online property valuation tool market. Zillow contains information about properties for sale and rent, such as listing/rent price, number of bedrooms and bathrooms, lot size, year built, etc.

Zillow gets its information from public records and data uploaded by property owners and listing agents. It makes its money through display ads and real estate agent subscribers (for lead generation).

Unique to Zillow are “Zestimates,” which are property value estimates based on individual properties, the neighborhood and other factors.

Trulia

San Francisco-based Trulia provides much of the same information as Zillow. In fact, it’s difficult to find anything that really differentiates the two.

Redfin

Unlike Zillow or Trulia, Redfin is a licensed real estate brokerage with agents who work directly with buyers and sellers. Unlike traditional brokerages, Redfin pays its agents an annual salary, instead of commissions.

Pros and Cons

You don’t have to search far to find negative reviews of these sites, especially Zillow and Trulia. Some people complain they overstate the number of properties for sale to drive more web traffic. Others complain that market value estimates are often wildly inaccurate.

Yet, in spite of these claimed inaccuracies, these tools are still a great way to get an overview of a neighborhood, such as nearby schools, transit services and walk scores. They’re also good at providing general market information, such as market trends and mortgage information.

They can give users a broad sense of neighborhood house values, but with the caveat that individual home values can vary widely.

If you’re looking to buy or sell a home, especially in a new city or neighborhood, then these tools are a great place to start. But after you’ve done some preliminary searching, it’s time to call a broker.

Indeed, that’s what most people seem to do. According to a March 2013 Bloomberg Business-week article, the majority of buyers (89%) still work with a real estate broker to finalize a deal. For most of us, buying or selling a home will be the biggest transaction of our lifetime, so it’s important to get professional guidance and accurate information.

If you’re looking to buy a home, Meridian Home Mortgage offers mortgages in 17 states and can help you with all your home lending needs. Have questions? Give us a call. We’re here to help.

The Effect of Home Improvements on Appraisal Value

The Effect of Home Improvements on Appraisal Value

After discovering that Meridian covers the appraisal costs for all pre-selected candidates, you’re probably wondering what your home improvement and maintenance projects around the house are going to do to your property value.

Thanks to a rebounding economy and real estate market, more people are remodeling and making home improvements. And that includes you and your neighbors.

In the second quarter of 2016, The Remodeling Market Index reached 53%, according to The National Association of Home Builders (NAHB).

Nielsen Scarborough reported that 53% of US adults made some type of home improvement in the last 12 months – and 56% spent $1,000 or more on developments.

What are people spending their money on? According to the NAHB, people are making major additions and alterations, minor alterations and repairs, as well as regular maintenance and repairs.

All this is good, since you recoup any money you put into your house, right?

Well, yes and no. Before I explain, let me define 4 terms associated with a home’s value that are often used interchangeably but mean very different things.

The 4 Home Values

  1. Appraised value – This opinion of value is determined by a trained and certified professional. As the saying goes, the opinions of people can vary! Three different appraisers can appraise your home on the same day and get three different values.
  2. Assessed value – The value given by the local government in order to determine the property tax owed. Appraisers and home lenders don’t consider tax-assessed values when appraising homes.
  3. Market value – The price a seller can expect to receive for their home on the open market, similar to a listing price.
  4. Sale price – The final price a home actually sells for. Sale prices are what matter most to home appraisers when valuing a property.

Unfortunately, most common home improvements have little impact on a home’s appraised value.

Many homeowners believe their weekend home improvement projects automatically increase the value of their home, but expectations hit a wall when the appraised value of their home is much lower than anticipated.

Why Appraisers Don’t Look at Home Improvements

When an appraiser determines the value of a home, they don’t take into account your new Berber carpets, your new glass-paneled kitchen cabinets, or even your new roof.

This is due to 2 reasons:

  1. Replacing a roof, furnace, or carpet is considered maintenance, not an improvement that adds to the appraised value.

    Maintenance is expected and therefore doesn’t increase value. However, if you neglect the general condition of your home, causing “deferred maintenance,” the appraiser will adjust the value accordingly and home loan financing will become more difficult.

  2. Appraisers primarily base their opinions of value on broader factors, such as:
    • Age of the home
    • Square footage
    • Style (i.e. ranch, colonial, Victorian, condo, duplex, etc.),
    • Number of bedrooms and baths
    • Lot size
    • Overall condition

Most importantly, the appraised value of a home is primarily based on the sale prices of similar homes in the immediate neighborhood.

Most appraisers won’t adjust for vinyl flooring versus hardwood or high-end plank siding versus standard. These “materials used” variances are noted in the appraisal, but the appraiser doesn’t use them to adjust the value of the home.

Home Improvements that Will Increase Appraisal Values

Major and minor additions, however, will increase the appraised value. For example, adding a new bedroom or bathroom will increase the appraised value as will finishing your basement or attic. New decks, swimming pools and fencing can also increase the appraised value.

Also, note that unique properties can be difficult to appraise and sell as both appraisers and buyers have fewer properties with which to compare.

A well-maintained home, on the other hand, does appeal to home buyers.

While an appraiser may not reward you for your brand new custom-designed, multi-zone furnace, water heater, and wired-in generator system (yeah baby!), a home buyer will.

Anything you do around your house, from installing energy efficient windows and doors to improving the landscaping and replacing the cracked driveway, will make it more appealing to potential buyers. As a result, your sale price could increase, which, unlike an appraiser’s opinion of value, means real money in your pocket.

Save Taxes with Home Energy Efficiency

Save Taxes with Home Energy Efficiency

The Residential Energy Efficiency Tax Credit is a federal program that gives homeowners a personal tax credit for making energy efficiency improvements to their homes. The program covers some upgrades to energy efficient systems such as:

  • Water heating systems
  • Windows, doors, skylights
  • Weatherization
  • Heating and cooling systems.

Ensure your upgrades qualify for tax credits

To be eligible for the tax credit, the home must be your primary residence and upgrades must meet certain requirements. Before you make improvements, make sure the product you’re installing meets the standards of the program. Even though a product is Energy Star certified, it may not qualify—always check with your contractor first. In addition, you may need a manufacturer’s certification statement to prove the eligibility of the product you install. For more information, see frequently asked questions on the Energy Star website.

Pay attention to costs and caps

The tax credit program has caps on the amount of credit you can claim. For example, improvements to building envelopes are capped at $500 and electric heat pump water heaters (with an energy factor of minimum 2.0) are capped at $300. Installation costs are not included in tax credit calculations.

The maximum aggregate amount of credit you can claim is $500 for purchases made in 2013. If you’ve already claimed this credit in previous years, you’re not allowed to claim it again.

Now is the time to upgrade

The Residential Energy Efficiency Tax Credit is set to expire on December 31, 2013. If you’re thinking of making energy efficiency improvements to your home, this is the time to do it. Although the program may be renewed, there’s no guarantee.

For more information about the Residential Energy Efficiency Tax Credit, visit energy.gov and DSIRE (the Database of State Incentives for Renewables and Efficiency).

In addition, many state and local governments also offer incentives for home energy upgrades. To see what your state has to offer, select your state on the DSIRE map of state incentives.

Additional tips for saving energy

Even if you have no immediate plans to install energy efficient systems in your home, you can still reduce energy consumption and costs through small changes, such as installing programmable thermostats and energy efficient light bulbs. For more ideas, see the U.S. Department of Energy’s EnergySavers: Tips on Saving Money and Energy at Home.

Homeowner Personal Tax Credits for Renewable Energy Systems

Homeowner Personal Tax Credits for Renewable Energy Systems

In an earlier post, I outlined personal tax credits for homeowners who make energy efficiency improvements to their homes. Whether you’re considering moving or staying put, improving your home may be a great investment. Energy improvements save you money over the long term
and many of them also come with tax rebates.

Today, I’ll discuss tax incentives for homeowners who install renewable energy technologies. Also sometimes called “alternative” energy systems, these relatively new technologies have been scaled down and developed for residential use. To learn more about each one, do a simple Google search.

Under the Residential Renewable Energy Tax Credit, the following renewable energy systems are eligible for personal tax credits:

  • Solar-electric systems – These small systems produce electricity for your home or office.
  • Solar water-heating systems – These systems use the sun to heat your water.
  • Fuel cell systems – An alternative energy system that generates heat and energy from one unit.
  • Wind-energy systems – With more systems being developed for residential use, wind energy can make a good supplement to traditional utility-based energy.
  • Geothermal heat pump systems – These systems use the earth’s natural temperatures to cool and heat your home.

No credit cap on most systems

The tax credit covers up to 30% of qualified expenditures. In most cases, the home must be located in the United States and be owned and used as a residence by the taxpayer.

To qualify for the tax credit, your renewable energy system has to meet certain requirements, such as minimum capacity and certification standards. Most systems have no maximum credit cap, with the exception of fuel cell systems, which are limited to a maximum credit of $500 per half kilowatt.

Any unused portion of the tax credit can be carried forward until 2016. You can only claim the tax credit after the renewable energy system has been installed.

Check your state for rebates, too

In addition to the federal program, many states also offer incentives for the use of renewable energy sources, such as personal tax credits, loan programs, property tax incentives, sales tax incentives, and rebate programs. To see what’s available in your state, select your state on the DSIRE incentive map.

Not sure if a renewable energy source is right for your home? Energy.gov has planning assistance and tips for homeowners.

When Shopping for Real Estate Professionals or Lenders, Get References!

When Shopping for Real Estate Professionals or Lenders, Get References!

The New York Attorney General publicized its recent sting operation. Conducted over the course of a year, the AG’s office caught 19 companies posting fake reviews to sites such as Yelp, Google Local and City Search. (See: Fake reviewers snared in NY Attorney General yogurt sting)

The AG’s office found that large and small businesses, including the family-owned bus company US Coachways, paid people outside of the U.S. to write bogus reviews, or they solicited people through Craigslist to write them.

Review sites can be helpful but . . .

You can learn quite a bit about a company’s products and services by reading review sites or the product reviews at retailer sites. Heck, I’ve not purchased things because of poor reviews.

But when it comes to hiring the experts involved with helping you buy or refinance your home (real estate agents, mortgage brokers or lenders, appraisers, home inspectors, etc.), it really pays to do your due diligence versus relying on review sites – for two reasons:

  • One, as the NY AG’s sting operation shows, you have no idea if the reviews you’re reading are from satisfied customers.
  • Two, buying or refinancing a home is a stressful process. You want to be sure you find the right people who know what they’re doing and who can solve any unexpected issue – calmly and efficiently.

For these reasons, you want to check out people carefully using the following three-step process.

Step One: Ask for referrals from people you know

Ask friends, family and co-workers for the names of people they’ve worked with in the past. If you’re active on LinkedIn, you can also ask your professional network for names of people.

To keep your information in one place, create a simple Excel spreadsheet where you can record people’s contact information such as business name, phone number and email. Also note any feedback you received about the person being referred.

How many names should you get? The standard answer is “three,” but you can ask for as many people as you like. I do recommend, however that you get more than two names so that you get a good mix of people.

One note: Don’t be swayed by your neighbor or family member gushing about an agent or other professional who is “the best!” and then foregoing your due diligence. It may turn out that this person isn’t right for you.

Step Two: Interview people

If you’d like to compare “apples to apples,” make a checklist of what you’re looking for with regard to your professional before you make any calls. If you’re looking for a home inspector, for example, your checklist might include:

  • How many years in business?
  • What are your credentials and can I see them?
  • Are you a member of a state or national association?
  • Can I see a sample report?
  • Do you have three references you can give me?
  • What is your Website URL?
  • What is your BBB rating?

Make a copy of your checklist and use it for each person you interview – this way, you’re sure to ask the same questions of each person. Having one checklist for each person also makes it easy to keep track of your notes.

Step 3: Check references

Once you’ve concluded your interviews, choose the top three people you believe look promising and check their references. Most people are very happy to tell you their experiences with an agent, lender or service provider, so don’t be afraid to call and ask.

Questions you might want to ask include:

  • Did this person do what they promised?
  • Did you run into any problems and how were they resolved?
  • Would you use this person again? Why or why not?

In addition to checking references, you can also call the Better Business Bureau to see if any complaints have been filed.

Also check the person’s Website – many professionals and service providers will place their BBB rating on their sites. For example, Meridian has an A+ rating with the BBB. This rating cannot be “gamed” as the rating you see comes directly from the BBB.

Once you’ve checked references, you should feel pretty confident choosing your agent, home inspector or lender / broker – knowing you did your due diligence!

Offset Your Underwater Mortgage – Rent Out Your House

Offset Your Underwater Mortgage – Rent Out Your House

While you’re waiting for HARP 3.0 to make its way through Congress, how do ease the financial pain of owing more on your home than it’s worth? One option is to rent out an available spare room, your basement or attic, an in-law suite – or your entire house!

Thanks to the Internet – and lots of savvy entrepreneurs – you can now list your room or home (or even your tree house, igloo or tropical island) on sites such as AirBNB.com and GameDay Housing.com.

Used by travelers, students, visiting faculty, sports fans, convention attendees – and people who simply don’t want to stay in a hotel – these sites let you easily market the space you have for rent – while taking care of all the backend issues for you, such as collecting money and screening people.

Make your empty space work for you

By renting out your available space, you help defray homeownership costs. And, depending on where you live and the space you have available, you can potentially collect more money in rent in just a few short months than you actually pay in mortgage all year.

Let’s say you live in an area that’s in a summer or winter vacation destination. You could rent a room or your entire home for the “season” (summer or winter) by the day, week or month. Vacation rentals during summer “high season” on Cape Cod, for example, can run anywhere from $800 to $4,000 per week.

(Of course, if you rent out your home for a season, you’ll have to find somewhere to go – i.e. in-laws, friends, etc.).

You don’t have to live in a tourist destination to gain the benefits of renting out space in your home. If you live in a college town, for example, you could rent to visiting faculty or students. If you live in a city that has a convention center, you can rent your spare room to exhibition or convention attendees – especially since local hotels often sell out in advance.

Is renting out your home for you?

When deciding whether to rent out unused space in your home – be it the basement or a spare room – you’ll want to consider the following:

Your family’s need for privacy – Do you want renters to become part of your family or no? You may want to draft “house rules” that explain to which parts of the house people have access and when.

Security – When determining which site to list your available space, do carefully consider how you’ll screen people. Some of the listing sites, such as AirBNB, have built-in security. Renters and rentees must verify their ID and sign in using a social network such as Facebook. AirBNB also insures each rental – no matter the size – for one million dollars.

Amenities – Does your space come with its own bathroom? Does it have a separate entrance? Will people have access to your kitchen? Do you have wifi? These amenities can help increase your rental rate – and make your space more attractive to renters.

Check applicable laws and regulations

Before renting out any part of your house, check with your town or city hall and state for any landlord-tenant laws or zoning ordinances. You’ll also want to call your insurance agent regarding your homeowner’s policy. And, don’t forget to call your accountant. If you meet certain conditions, the rental income you generate could be tax-free.

Rental listing sites

You can find dozens of places where you can list your unused space for rent – everything from Craigslist.com to Roommate.com. We’ve listed three of our favorites as they offer you a wealth of services – and they place a high emphasis on security:

AirB2B – Started by three guys with airbeds in 2008, AirB2B now boosts over 300,000 listings worldwide in over 33,000 cities. The site lets you upload photos of your space and includes a calendar where renters can see which days your rental is available. (And, if your bucket list includes a stay in a lighthouse, this is the place to book that wish.)

Gameday Housing – Owned and managed by real estate professionals who oversee the entire process for you, Gameday Housing allows you to list your home for rent to people attending sports events. According to the site, people who do this can earn $15,000 annually.

Homeaway.com – If you have a vacation home or second home, you can rent it out via this site. Homeaway offers five subscription levels that include advertising and listing options.