YGRENE, PACE AND HERO: Green Efficiency Programs

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Today, we are going to go over the green efficiency programs (YGRENE, PACE and HERO) and see how we may benefit from them, but see as well what risks may be involved.

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Saving water and energy is good for the environment, and you also benefit in the form of lower utility costs. But big upgrades like drought-resistant landscaping solar panels can be costly. If you’re looking to make green improvements, a PACE loan might be an option for funding. PACE financing makes it easy to qualify for relatively affordable long-term loans, but there are pros and cons to using these programs.

What Is PACE?

Property Assessed Clean Energy (PACE) is a way to borrow money for clean energy projects. Property owners get financing for upgrades and repay through property taxes. Getting approved will mainly depend on home’s equity.

Common uses of PACE include solar installations, energy efficient heating and cooling, water-saving landscaping, and numerous other projects for residential and commercial properties.

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However, in Sean La Rue Home Loans we recommend to check the laws related to PACE in your state, as this type of financing is not available in all states.  Some of the most well known programs are Home Energy Renovation (HERO) and Ygrene.

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Advantages of PACE Loans

These programs have certain features that we thought were important to mention:

It’s Easy to Qualify for them: getting approved for these loans seems much easier than with conventional loans. Your FICO credit score won’t be as important with PACE as with conventional loans, but current or recent issues in your credit reports can cause problems. You must also be current on all property taxes.

No down payment needed: PACE allows you to fund the entire cost of a project with no need of a down payment.. As a result, you don’t need to save up money before jumping on a PACE loan, but keep in mind that there will be higher interest costs and higher payments.

Can be transferred to the next owner: If you sell a property after making improvements, you don’t necessarily have to pay off the loan. The loan is attached to the property, so it can be transferred and paid off by the next owner.  However, many federal loan programs will not allow a buyer to get financing with these tax liens assessed on the property and would need to be paid off at closing.

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Time to repay: PACE loans can be paid off over extended periods of time and, as a consequence, payments can be kept relatively small. But, remember that the longer it takes you to pay it off, the bigger the interests will be.

Potential tax credits: PACE funding might make it easier to qualify for environmental tax credits — check with your tax advisor before making any decisions.

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Problems With PACE Loans

Before using PACE funding for your project, get familiar with some of the pitfalls.

Conflicts of interest: PACE financing is often arranged through contractors who might have an incentive to promote expensive upgrades.  Some of them may make misleading statements to get some of those incentives directly from you.

In addition to getting paid for the work they’ll perform, contractors might get additional referral fees from a lender if they arrange funding, and that’s where a potential conflict of interests may come into place.

Payment shock: You may be faced with a surprise expense when it’s time to make those inflated payments. In some cases, the PACE payment will be added to your monthly mortgage payment in smaller chunks.

Interest costs: PACE funding is relatively easy to qualify for. However, interest rates are sometimes higher than you’d pay if you simply use a home equity loan— especially if you have good credit. Don’t be fooled, PACE loans are not necessarily cheap, energy efficient, or the most cost effective.

Costs and benefits: It’s easy to get approved for PACE programs, but is it worth it? These programs make the most sense for individuals who cannot afford less expensive loans (often due to credit problems or limited income). Projects like replacing your windows can add to your home’s value, so you should get some of that money back when you sell. However, you won’t necessarily see a substantial change in utility costs — and you’ll still have to make higher tax payments.

Risk of foreclosure: PACE loans are secured by your home, so it’s possible to lose your home in foreclosure if you don’t make the payments. It is common to see foreclosure even if you make your regular mortgage payments, which is a position that no homeowners should be in.

The risks above do not mean that PACE programs are bad. However, it’s worth knowing the pros and cons of these arrangements before signing up. Unfortunately, the risks are often overlooked because PACE programs are perceived to be “safe.”

 

So that’s all for today, hope you found this article useful so far and don’t hesitate in reaching me out if you have any questions or need a consultation.

 

Stay hungry and stay positive!

Make it a great day,

Sean La Rue

 

Apply for a loan: https://www.SeanLoans.com

Facebook: https://www.facebook.com/SeanLaRueHomeLoans/

Instagram: @seanlaruehomeloans

Linkedin: https://www.linkedin.com/company/sean-la-rue-sr-vice-president-franklin-loan-center/

New Loan Limits for 2019

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Credit to Ben Lane( Housing Wire)- https://www.housingwire.com/articles/47489-fannie-freddie-conforming-loan-limits-increase-in-nearly-every-part-of-the-us

 

Loan limits don’t always change but sometimes they do year over year.  Fannie and Freddie have decided to increase the conforming loan limits for 2019.  This is proof of credit guidelines loosening and will allow home buyers to qualify under conforming loan guidelines instead of jumbo loans.  This is a huge opportunity for the market~ 

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 After not increasing the maximum conforming loan limits on mortgages to be acquired by  Fannie Mae  and Freddie Mac  for 10 years, the  Federal Housing Finance Agency  has now increased the conforming loan limit for the third straight year. 

The FHFA announced Tuesday that it is increasing the conforming loan limit for Fannie and Freddie mortgages in nearly every part of the U.S. 

According the FHFA, the conforming loan limits will rise from this year’s total of $453,100 to $484,350 for 2019. That’s an increase of 6.9% from this year’s loan limit to next year’s. 

As stated above, this marks the third straight year that the FHFA has increased the conforming loan limits after not increasing them from 2006 to 2016. 

Back in 2016, the  FHFA increased  the conforming loan limits from $417,000 to $424,100. Then, last year, the  FHFA raised  the loan limits from $424,100 to $453,100 for 2018. 

And now, the FHFA is doing it again, increasing the loan limit from $453,100 to $484,350 for 2019. 

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The conforming loan limits for Fannie and Freddie are determined by the Housing and Economic Recovery Act of 2008, which established the baseline loan limit at $417,000 and mandated that, after a period of price declines, the baseline loan limit cannot rise again until home prices return to pre-decline levels. 

But, as the FHFA noted earlier Tuesday, home prices are still on the rise, which necessitates a third straight yearly increase in the conforming loan limit. 

The FHFA’s third quarter 2018 House Price Index report, which includes estimates for the increase in the average U.S. home value over the last four quarters, showed that home prices increased 6.9%, on average, between the third quarters of 2017 and 2018.  

Therefore, the maximum conforming loan limit in 2019 will increase by the same percentage to $484,350. 

Loan limits will also be increasing in what the FHFA calls “high-cost areas,” where 115% of the local median home value exceeds the baseline loan limit. 

Under HERA, the maximum loan limit in those “high-cost areas” is calculated as a multiple of the area median home value, while setting a “ceiling” on that limit of 150% of the baseline loan limit. 

According to the FHFA, median home values “generally increased” in high-cost areas as well in 2018, which drove an increase maximum loan limits in many areas.  The new ceiling loan limit for one-unit properties in most high-cost areas will be $726,525, which is 150% of $484,350. 

Per the FHFA, special statutory provisions establish different loan limit calculations for Alaska, Hawaii, Guam and the U.S. Virgin Islands. In those areas, the baseline loan limit will be $726,525 for one-unit properties. 

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“As a result of generally rising home values, the increase in the baseline loan limit, and the increase in the ceiling loan limit, the maximum conforming loan limit will be higher in 2019 in all but 47 counties or county equivalents in the U.S.,” the FHFA said. 

For a county-by-county breakdown of the 2019 conforming loan limits, click here. 

 

https://www.housingwire.com/ext/resources/files/Editorial/Documents/FullCountyLoanLimitList2019_HERA-BASED_FINAL_FLAT.pdf  

 

 

So that’s all for today, hope you found this article useful so far and don’t hesitate in reaching me out if you have any questions or need a consultation.

 

Stay hungry and stay positive!

Make it a great day,

Sean La Rue

 

Facebook: https://www.facebook.com/SeanLaRueHomeLoans/

Instagram: @seanlaruehomeloans

Linkedin: https://www.linkedin.com/company/sean-la-rue-sr-vice-president-franklin-loan-center/

Why does every Realtor Want Me To Be Pre-approved?

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Today we are going to tell you why getting a loan can be very beneficial for you and how to get the most out of it.

 

Here are the different points that we are going to touch during this post:

 

  • Getting a mortgage can be a great thing for your future
  • Interest deduction( what’s that and why should I know about it?)
  • Fixed payment
  • Increasing equity

 

Getting a mortgage sounds like a scary step for most of us, and rightfully so it can be if it’s not done right. When someone buys a house, it’s very common to see the case of a confident man/woman/couple who think that they can pay a 30 year mortgage quicker than they are supposed to, and this is a frequent mistake that leads to financial crisis in many cases and regretting having taken a mortgage in the first place.

 

Don’t be one of those people, and make sure you take your time and evaluate things before jumping off a bridge. If, at the moment, with your current financial situation, you just can afford to go for a 30 year mortgage, wait and save more money. Why? Because you don’t want to become a bank’s slave, pay extra commissions and having that mortgage as the worst of your nightmares. Nearly 100% of the US citizens end up paying extra commissions that benefit the richer and make them poorer in the end.

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Getting a mortgage can be a great thing for your future when you save a down payment of at least 10%, but ideally 25%, to then apply to a 15 year fixed-rate mortgage that will ensure a much brighter and happier future.

 

The interest deduction is another interesting matter to take a look at when buying a property. It can decrease the amount of taxes you’d have to pay for a mortgage, which is certainly something to take into consideration.

 

One of the reasons reason why in Sean La Rue Home Loans we recommend purchasing a property is because of building equity, which represents one of the main financial benefits of homeownership.

Equity means, in a simple way, how much you owe from your actual home. You have negative equity when you take your loan balance from the value of your home and the result is a negative number.

When can we improve our equity?

1- When we get rid of a good amount of our mortgage payment

2- When the market’s price of our place goes up

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*How to reduce loan balance:

  • Apply for short mortgages: on average, people struggle a lot more when having to pay longer term mortgages than shorter ones, so you may want to save some more money and make sure you pay your home in the least amount of time possible!
  • Make big payments when you can: if things are going well for you, why not  taking out some of that mortgage payment? I’m sure it’ll be such a relief.
  • Be consistent with your monthly payments: consistency is everything when paying a mortgage, that’s why as time passes, if you’ve been paying regularly every month, more of each payment goes towards equity, and less of each payment becomes interest charges.

 

People have mixed feelings about mortgages, some think that it’s like you are forced to save money every month, and what many don’t see is that you are building up the value of an asset. With a home, the asset isn’t cash in a savings account—it’s equity in your home.

So that’s all for today, hope you found this article useful so far and don’t hesitate in reaching me out if you have any questions or need a consultation.

Stay hungry and stay positive!

Make it a great day,

Sean La Rue

 

Facebook: https://www.facebook.com/SeanLaRueHomeLoans/

Instagram: @seanlaruehomeloans

Linkedin: https://www.linkedin.com/company/sean-la-rue-sr-vice-president-franklin-loan-center/

What’s the difference between Homeowners and Hazard Insurance

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In today’s post we are going to talk about homeowners insurance and hazard insurance, and why it is so important in order to protect property owners against the possibility of any possible thefts or damages from fires or any unfortunate natural events earthquakes, storms…

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When someone applies for a mortgage, it is requested to give proof of insurance in the property so that the bank can issue the mortgage. When it comes to home insurances, homeowners can get either take a look at all the options and pick one that suits best their needs, or leave it in the hands of their banks, which will add an extra cost to the mortgage given.

What does a homeowners insurance cover?  Interior damage, exterior damage, loss or damage of personal assets/belongings, and injuries that may arise while on the property. However, it’s important to remember when a claim is made by the homeowner, he/she will have to pay a deductible, which will be calculated based on the type of insurance policy, excess costs..etc

What is key here is to keep in mind is that the higher the deductible is on an insurance contract, the lower the monthly or annual premium on a homeowners insurance policy will be.

But of course, there is a liability limit, that usually stands at around $100,000, but it can go higher depending on the policyholder. What the liability limit does, is to estimate the percentage of the coverage that would go toward replacing or repairing damage to the property structures, personal belongings, and costs to live somewhere else while the property is worked on.

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The reason why at Sean La Rue Home Loans we think it’s a must to get hazard insurance when you acquire a property is because your average home insurance won’t usually  cover all sort of damages that your place could suffer. Acts of war or acts of God will usually not be covered in a homeowners insurance policy. Its actually a common requirement from a lender to ask to have a minimal hazard insurance when applying for a mortgage, to protect the investment and value of the new home.

Think about it this way: it’s much easier to deal with the cost from hazard insurance than having to pay off all the costs generated from an unfortunate event that may happen to your property. Better to be cautious than taking risks with this kind of stuff, specially when living in high-risk areas. Whenever you buy a home, you are making an investment. You are investing so much out of your pocket every month in that investment, so why not spending a couple hundred more per year to insure it?

How much hazard insurance do I need for my home?

We’ll know how to estimate how much hazard insurance is actually needed for our particular case based on how much cost would we have in the worst case scenario(event of a total loss).  This amount may change from one year to another, and could be significantly different from the property’s value, that’s why policies are usually written for one year and renewable. It’s very common that lenders include the costs of hazard insurance in the monthly mortgage payment.

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And that’s all for today’s post, hope you found it useful and don’t hesitate in reaching me out if you have any questions or you are interested in making a consultation.

Stay positive and stay hungry!

Make it a great day,

Sean La Rue

Youtube video: https://www.youtube.com/watch?v=nCg3I6G_Kds

Facebook: https://www.facebook.com/SeanLaRueHomeLoans/

Instagram: @seanlaruehomeloans

Linkedin: https://www.linkedin.com/company/sean-la-rue-sr-vice-president-franklin-loan-center/

Credit, Income, & Assets Test: Getting Pre-approved For a Mortgage

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As we mentioned in the video, C.I.A stands for credit, income and assets. We are going to go more in deep in this article about these 3 to learn what it takes to increase our chances of getting pre-approved for a mortgage.

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Here are the list of things we’ll have to pay attention to and how everything works:

1. We need to prove our income

Nowadays, we need to be prepared to start the process of getting a loan, by giving all kinds of documentation about the different sorts of income that we may have, such as:

  • W-2 statements from the past 2 years
  • Year to date income
  • any recent pay stubs that show income
  • 2 most recent years of tax returns
  • Any additional income(alimony, bonuses..etc)

2. We need to prove our assets

In terms of assets, we need to give proof of that we are in a position where we can afford paying the down payment and closing costs, as well as having some cash reserves after that. Normally there will be other requirements such as having to get private mortgage insurance or paying a funding fee, unless we put 20% down.

Also remember that your pre-approval will be based on your FICO credit score, debt-to- income ratio and other factors, and that all loans, except Jumbo loans, are conformed to GSE guidelines.

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3. We need good credit

You will find that most lenders require at least 620 FICO score or above to get your loan approved, even for FHA loans sometimes. What are FHA loans? they are those that require  lower minimum down payments than conventional loans. For these, as we mentioned in the video you’ll need at least a 580 credit score to get pre-approved. However, if your score is lower, you can still get a FHA loan with a 10% down payment.

If you have a high score (760 or above) lenders will offer you low interests, but if on the other hand, you have a low credit score, don’t worry as lenders will suggest ways to improve your score. The only downside for low score borrowers will be that they’ll have to pay their mortgages in longer periods of time.

That’s all for today, hope you found this content useful and don’t forget to follow Sean La Rue in all social media to stay tuned to all kinds of information about qualifying, real state finance… This has been the first of many articles for Monday Mortgage Madness.

Stay positive and stay hungry!

Make it a great day,

Sean La Rue

Facebook: https://www.facebook.com/SeanLaRueHomeLoans/

Instagram: @seanlaruehomeloans

Linkedin: https://www.linkedin.com/company/sean-la-rue-sr-vice-president-franklin-loan-center/

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How To protect Yourself against Hacking, Fraud And Identity Theft

Welcome to a new article for Woke Wednesday’s in Real Estate, where we’ll be talking about hacking and identity fraud/theft.

 

 

Welcome to a new article for Woke Wednesday’s in Real Estate, where we’ll be talking about hacking and identity fraud/theft.

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So first, let’s talk about what identity fraud means: it’s that unfortunate situation when someone steals your personal information to use it for his/her own benefit, which can end up really damaging your finances if that person decides to open credit cards with your personal info or stuff like that.

If your identity has been stolen, how do we find that out?

First, go to credit card charges to check if there are any charges that may surprise you, but you can also identify identity fraud by receiving a debt-collection call or if you notice that your credit scores has gone down. So in order to act quickly in case of identity fraud, make sure you check your bank statements regularly!

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We may still suffer from identity theft, but there are ways make it less likely to happen. Here are a few tips:

  • Use safe passwords
  • Be careful what you share online
  • Don’t give out your information easily
  • Get a shredder
  • Follow your instincts
  • Check often your credit reports

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So that’s all for today, hope you found this article useful so far and don’t hesitate in reaching me out if you have any questions or need a consultation.

 

Stay hungry and stay positive!

Make it a great day,

Sean La Rue

Apply for a loan at https://www.SeanLoans.com

Facebook: https://www.facebook.com/SeanLaRueHomeLoans/

Instagram: @seanlaruehomeloans

Linkedin: https://www.linkedin.com/company/sean-la-rue-sr-vice-president-franklin-loan-center/

What Documentation Do I Need To Get Pre-Approved For A Home Loan?

 

 

Getting pre-approved for a mortgage does always help to put yourself ahead of competition among other buyers when looking to buy a new home, as it proves that you can afford buying the property in the first place.

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What do we need to get pre-approved? We have to verify our income, employment, assets and debts. Depending in different factors, such as if you are self-employed, or if your income is coming from different sources, you may need to give more documents to your lender.

 

Let’s take a look at what documents we need to hand to our lender to get pre-approved for a mortgage:

 

1. Income and employment: You need to show how you make your money, if you’re working under only one contract this process will be much easier.

 

*W-2 wage earners: Copies of W-2 forms and your two most recent payroll stubs. If income includes overtime, bonuses or differential pay, you may need your most recent end-of-year payroll stub.

 

*Self-employed,freelancers and independent contractors: they would need to proportionate a year-to-date profit and loss statement and two years of records, including the Form 1099s

 

*Real state income: if you want to use this to apply for a mortgage, you need to give the documents related to the rental income, address of the property,lease and the property’s current market value.

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2. Tax returns: you will be asked to share the two most recent copies of federal and state returns

 

3. Assets:

 

  • Bank statements: copy 60 days’ worth of statements of all the accounts you’d use as assets to qualify for a mortgage(even the blank pages)
  • Retirement and brokerage accounts: two months’ worth of statements from IRAs,investment accounts and CDs, plus the last quarterly statement from 401(k), which shows the vested balance. Don’t forget to include all the pages!

 

4. Debts

 

  • Monthly debt payments: include all of them,with each creditor’s name and address and your account number, loan balance and minimum payment amount.
  • Real estate debt: If your current property is mortgaged, make sure you have your most recent statement — showing the loan number, monthly payment, loan balance and the lender’s name and address — and the declaration page of the insurance policy.

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5. Other documents you may need(some depending on your situation):

 

  • 30 days of paystubs

 

  • Schedule K-1 (Form 1065) for self-employed borrowers

 

  • asset account statements (retirement savings, stocks, bonds, mutual funds, etc.)

 

  • driver’s license or U.S. passport

 

  • divorce papers (to use alimony or child support as qualifying income)

 

  • gift letter (if funding your down payment with a financial gift from a relative)

 

So that’s all for today, hope you found this article useful so far and don’t hesitate in reaching me out if you have any questions or need a consultation.

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Stay positive and stay hungry!

Make it a great day,

Sean La Rue

Full Youtube Video: https://www.youtube.com/watch?v=mt7kVH1Qc7A&t=2s

Facebook: https://www.facebook.com/SeanLaRueHomeLoans/

Instagram: @seanlaruehomeloans

Linkedin: https://www.linkedin.com/company/sean-la-rue-sr-vice-president-franklin-loan-center/