Financing And Local Lenders

M&I Bank is offering a unique Neighborhood Home Loan Program

M&I, soon to be BMO Harris Bank, is offering another fantastic financing option called the Neighborhood Home Loan Program (NHLP), which is a 30 year, fixed-rate loan with as little as 3% down with NO PRIVATE MORTGAGE INSURANCE! Potential clients would also be able to receive a $1,600 closing cost credit from M&I Bank if they open a Portfolio Checking account and establish auto-pay for their new mortgage.

Typically, NHLP is an income restricted program, however, there is no income restriction when utilizing the program for the purchase of a home in a "low" or "moderate" income census tract (defined by the Federal Government based on census data). This program can be used on owner-occupied single family homes, duplexes (with 5% minimum down), or condos that meet Freddie Mac guidelines.

NHLP loans can also be utilized by borrowers buying a property in Dane County who make under $65,500 gross annual income. Borrowers under this income limit can use this program to purchase owner-occupied homes that are not located in "low" or "moderate" income census tracts. These borrowers buying outside of a "low" or "moderate" income census tract would be eligible to receive a $1,100 closing cost credit from M&I if they open a Portfolio Checking account us and establish auto-pay for their new mortgage.

With interest rates still at or near historic lows, coupled with this lending option, you really shouldn't wait to make a move. Get into a new home before the holidays!

Where are the homes for sale that qualify for this great program? Call Carlos Alvarado today to find out. Or if you'd like to speak to our preferred M&I Bank lender about this program, please contact David Clem at 608.231.5675 or david.clem@micorp.com or visit www.bmoharris.com/dclem to apply online today.

JUST SOLD! 4310 Sentinel Pass, Madison WI

JUST SOLD - 4310 Sentinel PassAfter many months we are happy to congratulate the Rodriquez/Zuniga family on the purchase of the FIRST home! During a time that has proven challenging in the lending industry Carlos Alvarado and Dave Clem at M&I Bank worked hard to help this family buy a home that they loved and that would cater to their big family dinners, great parties and that place they can call home.

4310 Sentinel Pass is just south of the beltline off of Seminole Highway and features four bedrooms, two bathrooms and 1,908 square feet. On the market for 41 days it was listed for $219,900 and sold for $200,000 in July 2011.

Thinking about buying a house? Check out our buyer tips and contac Carlos Alvarado for a consultation today, 608.438.6757, carlos@thealvaradogroup.com!

Wisconsin VA Home Loans

  Moving with your Military Family 

Military families are well aware of how tiring it can be to move often. With military installations scattered across the country, these families get to see a number of great cities; however, finding a place to call home delivers a good feeling and living in the Midwest provides a central location, so military families are never too far from friends and family. Madison, WI serves as a great place for service members and veterans to call home and can be a very affordable option, especially when they use a VA loan to finance their home.

The VA loan program, created in 1944, is unmatched in the benefits it provides to service members and veterans. Unlike any conventional loan, VA loans in Wisconsin allow qualified homebuyers to finance 100 percent of a home purchase without paying anything down. Any conventional home financing option comes with a down payment, some as high as 20 percent, which cuts into the purchaser's savings. VA loans also offer a high loan limit in Wisconsin, which means homebuyers can fully finance their home up to $417,000 without putting a penny down.

Conventional loans' monthly payments can be costly, in large part because of private mortgage insurance (PMI). This monthly charge does not exist in the VA Home Loan program, thereby reducing military homebuyers' payments each month. In addition to lowering the payment, VA loans offer negotiable interest rates. VA-certified lenders are happy to reduce interest rates on Wisconsin VA loans because the VA backs up to 25 percent of each loan. Other benefits to Wisconsin VA loans include:

  • No prepayment penalty
  • Lower closing and concession costs
  • Capped interest rates for active duty members
  • VA Streamline, a way to refinance and lower interest rates
  • More lenient qualifying standards than conventional loans

Eligibility depends on discharge and service history. Veterans with a dishonorable discharge are ineligible for a Wisconsin VA loan. Honorable or injury-related discharges are permissible. Military homebuyers who may qualify for a VA loan fit one of the descriptions below:

  • While on active duty, military members who served for 90 days during wartime or 181 days during peacetime.
  • Reservists and National Guard members who served for at least half a dozen years.
  • Active duty personnel who meet the service requirements above.
  • Spouses of service members who died in the line of duty or because of a service-connected injury.

Completing a Certificate of Eligibility (COE) is the first step in obtaining a Wisconsin VA loan. COEs are available through the VA or from a VA-certified lender. The latter is available to answer any questions about VA loans in Wisconsin.

Guest post by Matt Polsky with the www.vamortgagecenter.com and the www.vabenefitblog.com.

There are many lenders in the area that can help with your VA loan. Please check with your preferred lender to see if they can help or email Matt Polsky for more information at mpolsky@vamortgagecenter.com.

FREE Home Buyer Education Classes

Great Home Buyer classes for people looking to buy in the Madison WI and Dane County areas..and for FREE?! Space is limited so please call Project Home at 608-246-3737 for more information or to register.

Classes will be held Tuesday July 12, 2011 AND July 19th, from 6:00 pm to 9:30 p.m. Homebuyers must attend both sessions in full and a 1 hour counseling session to be scheduled individually. Classes located at Project Home's Training Center, 1922 S. Stoughton Road Madison WI. 

The First Time Home Buyer Education classes offered by Project Home and GreenPath, Inc. allow first time home buyers to learn about homeownership in an environment that encourages questions and protects the potential home buyer from being solicited. They learn about the pros and cons of home ownership, money management skills, credit issues, how to choose a realtor and lender, down payment assistance programs, shopping of a home and obtaining financing.

We began this partnership in April 2011 and in the first 3 months of classes we have had 67 individual participants in 50 households. We are reaching the populations targeted - 96% are first time homebuyers and approximately 74% are at or below 80% of County Median Income and therefore may be eligible for most down payment assistance programs.

To receive funds for most down payment assistance programs, potential homeowners must complete education and/or counseling. This program is designed to meet the National Industry Standards for Home Ownership Education and Counseling created by the National Advisory Council of NeighborWorks® America. Our course is 7 hours of face-to-face group education and 1 hour of 1-on-1 counseling.

The Housing Center is a joint venture between Project Home and GreenPath Debt Solutions to expand and sustain affordable home-ownership in Dane County. 

Project Home is a local non-profit organization offering help to Dane & Green County residents for the last 40 years. Project Home's mission has been to improve the quality and affordability of housing for low-to-moderate income residents. With the rising cost of housing, utilities, and building materials, it is difficult and expensive to tackle the repairs that all homes need. Project Home provides services that will improve homeowners' comfort, safety, and reduce energy bills.

GreenPath Debt Solutions is a nationwide, non-profit financial organization that assists consumers with credit card debt, housing debt, and bankruptcy concerns. Our customized services and attainable solutions have been helping people achieve their financial goals for 50 years.  The Madison office has been serving local customers for 12 years.  Ellen Bernards has been a housing counselor and housing educator for the last 7 years and was the 2010 recipient of the National Foundation for Credit Counseling's Individual Counselor of the Year award.

This information provided by Ellen Bernards, GreenPath Debt Solutions. Thank you Ellen for all you do!

It's all about the Down Payment in Madison's market!

Save for Down Payment to Buy a Madison WI Home For Sale

Saving for a Down Payment

While Madison WI's real estate market presents challenges for many, it still remains an optimal market for first time home buyers and investors. Reasonable home prices, a healthy inventory (search Madison homes here) and still low interest rates create a winning combination for those looking to make the leap from renter to owner. Many of the Alvarado Group's featured listings are a perfect fit for first time home buyers.

As a result of tightened lending standards, however, securing a healthy down payment is even more important than ever. The days of zero-down loan programs are a thing of the past and more money on the table upfront can mean a faster approval for your loan and, perhaps, a better rate.

While you should be sure to leave some cash reserves in place to handle unexpected costs associated with your new home, there are several steps you can take to start building a sizeable down payment. Here are some worthwhile suggestions:

Set up an automatic savings plan

Every financial advisor will tell you that when money comes directly out of your paycheck and into a savings account before you even receive it, you will hardly notice the difference. For most, this was money spent on mindless discretionary purchases, anyway, from a daily latte to random online shopping -- chances are, you won't miss it at all.

Sell something

You might have a high-ticket item in your possession that you really don't use or need -- perhaps a boat, motorcycle or even an extra big-screen T.V. Cashing in any collectibles or assets can free up funds to go directly into your down payment savings.

Liquidate investments

Liquidating stocks, mutual funds, savings bonds or other investments can also help. Cashing in any extra assets will only add to your growing down payment sum.

Look into government programs

Talk to your WI real estate agent or mortgage professional to see if you may qualify for a special home buyers program. For example, HUD's Good Neighbor Next Door program offers teachers, police officers, firefighters or other public servants extreme discounts on homes in certain neighborhoods.

Don't be afraid to ask

If there is an event coming up in your life that friends and family will most likely get you a gift for, don't be shy -- let people know you are saving to buy a home and would appreciate a check. Loved ones will be more than happy to contribute to this cause. If you're fortunate enough to receive a very sizeable gift, however, let your real estate agent know; lenders may want to know how your down payment was funded in order to make sure you can handle monthly mortgage payments on your own.

These suggestions are just the tip of the iceberg. Please contact the Alvarado Group team for more detailed information about securing a down payment, and be sure to share these ideas with others (real estate tips via Twitter) you know who may soon be making the move to homeownership!

Appraisals - Real life in Madison WI Real Estate

We had a listing with an accepted offer of $157,000. One week prior to closing we had to amend the price to $155,000 because that is what the appraisal came in at. Result: a successful closing. Sellers were prepared for potential issues with appraisals and accepted the position they were in to adjust the price. Buyer was happy. Sellers were happy that it didn't kill the deal.

We worked with a buyer on a foreclosure that had an accepted offer of $155,000 - the appraisal came in at $172,000. Result: a successful closing. Happy buyers. I'm not sure the bank cared.

One of our listings got an accepted offer for $274,000. It was appraised at $258,000. Result: that appraisal killed the deal. Unhappy Buyers. Unhappy Sellers.  

We are in a different market. Prepare yourself and your home properly!

Madison WI fixer upper

Not a good candidate for an FHA loan

10 Ways to Prepare Your Home for an Appraisal:

 1.  You only get ONE chance with the appraiser. Make sure your home is ready because not only are first impressions important, but the appraisal can affect the outcome of your sale. Take this part of the home selling process very seriously. 2.  Get your home in good condition. Be sure to trim the lawn, clean out and garage, repair cracked windows or torn screens, check for leaky faucets and secure gutters and down spouts before your appraisal. Basically get your home in the best showing condition you can. No longer are the days of drive by appraisals. FHA appraisers have to complete a different set of inspection forms and if there is chipping paint, missing handrails or evidence of pests (for example), the lender may require repairs done to comply with the FHA lending regulations. Not all repair items are part of inspections - some items come up as part of financing requirements with FHA loans. Talk to your agent about what to expect. 3.  Get organized. Put together a checklist that will help you get ready for your appraisal. 4.  Be flexible when scheduling the appointment. Don't delay it. Work with their schedule. 5. The appraiser will need approximately 30 minutes to one hour to complete the inspection phase of the appraisal process, which includes: exterior photos of the front and rear of the home and a photo of the street in front of the property; measurements of the exterior of the home, garage and any outbuildings; a walk-through inspection of all rooms and levels of the interior of the home, including the basement. 6.  Provide marketing materials and list of improvements. If your Real Estate Agent has a booklet with information about ages and dates of mechanicals, appliances and any features that add value to the home, please leave that information out for the appraiser to review. Don't make them guess how old the roof is. 7.  Point out any amenities that may not be obvious to the appraiser: sprinkler systems, radiant floor heating, security systems, built-in vacuum, energy efficient and green features. 8.  Allow your appraiser access to the entire property, including access to any crawl space or attic areas. This is specifically important for FHA appraisals. 9.  Provide a copy of last year's tax assessment information. 10.  The first thing appraisers look for is comparables, so be prepared and have a list of recent sales of similar properties in the immediate neighborhood. You shouldn't have to provide this to the appraiser, that is their job. However, you can prepare yourself by asking your real estate agent to show you at least 4 or 5 comparables that are similar in style, proximity, square footage, age and number of bedrooms. Finding comparables is a balance in science and art.   

Following these steps will go a long way toward making the home appraisal process a bit easier. For more information on the appraisal process and preparing your home for sale, please contact Sara and feel free to forward these tips to your family and friends.

 

Mortgage Options for Madison's Homebuyers

Madison WI homebuyersWhile many great deals exist in today's real estate market in the Madison WI area, securing the optimal mortgage is a critical part of your home purchase decision.

Our team of Madison WI real estate professionals are well versed on the factors in many mortgage loan package that will determine whether or not you can afford the house you want to buy. A couple of years ago it was easy for many people to get a loan for a home and the question wasn't, "What are you pre-approved for?" it was, "What are you comfortable paying each month?" Because banks were approving borrowers for more than they were comfortable spending. Now things are different. The most important factors to take into consideration are: interest rate, points, mortgage type, closing costs and fees, and down payment and mortgage insurance. Here's a closer look at each:

  1. Interest Rate: The interest rate determines the amount of your monthly payment. Keep in mind that different lenders offer different interest rates, so it is important to shop around. Generally, a short-term or adjustable-rate loan will offer a lower interest rate because you agree to repay the lender more quickly or to pay fluctuating rates.
  2. Points: Points are fees charged by the lender to originate your loan. A point equals one percent of the total mortgage amount. Lenders will charge different numbers of points for different loans, so it is important to understand how many points a lender will be charging. For example, in some cases, lenders may advertise very low interest rates, but build a high point charge into the cost of issuing the loan, making the deal less valuable than a loan at a higher interest rate.
  3. Types of Mortgage Options:
    • Fixed Rate. On a fixed-rate mortgage, the interest rate does not change for the entire life of the loan.
    • Adjustable Rate. Adjustable rates, on the other hand, are interest rates that fluctuate based on market conditions. Since no one knows how the market will behave, they are riskier than fixed-rate loans. Over the life of the mortgage, you could end up paying more or less than you would have with a fixed-rate loan.
    • Balloon. The next common type of mortgage is a balloon payment loan. A balloon payment loan allows you to make relatively small monthly payments for an initial period, but requires a lump-sum payment toward the end of the term. These are risky to consider unless you are confident that you can either refinance the loan or sell the home at the end of the initial loan period.
  4. Closing Costs: Closing costs and fees are additional amounts that the buyer and seller must cover during the course of the mortgage loan transaction. They include items like credit report fees, appraisal fees, title search fees and title insurance.
  5. Down Payment and Mortgage Insurance: When searching for the right type of mortgage for you, the amount of your down payment, the need for private mortgage insurance (PMI) and other factors, such as whether you are a first-time home buyer, a teacher or a peace officer, will also affect your monthly mortgage payment.

A professional real estate agent, such as a member of the Top 5 in Real Estate Network®, or a trusted mortgage broker can help you decide what makes the best financial sense for you. Check out more home buying tips on our website where we also have a very handy mortgage calculator and a page of frequently asked questions from Buyers. Or simply contact us at 608.251.6600 or info@thealvaradogroup.com, we are happy to help!

Do you know what impacts your Credit Score? It's Quiz Time!

Understanding Credit Scores from Alvarado GroupTake the Alvarado Real Estate Group's monthly quiz and find out if you know what impacts your credit score: According to credit experts, 42% of U.S. consumers have credit scores between 550 and 699. As a result, these consumers typically don't qualify for preferred interest rates and, depending on their overall credit profile, they may not even qualify for certain loans and credit cards.

As a Madison WI Real Estate Broker, I have worked with many home buyers and sellers throughout my years in the business and have seen first-hand how credit scores can really upset the opportunity of securing a favorable mortgage. Most clients I work with don't have a clear picture of what impacts their credit profile and, more importantly, don't know what steps they can take to help improve it. I find this short quiz, from credit consultants ApprovalGuard.com, to be very helpful when it comes to understanding how your credit profile works.

1. To have the best credit-profile impact, what is the maximum amount of your monthly credit line that should be used?

a) 70% b) 30% c) 50%

2. What is the number-one contributing factor to a good credit score?

a) Length of credit history b) Amounts you owe c) Payment history

3. If you pay 2% each month on your credit card (typical minimum payment), when will you pay off a $3,000 balance at 10% interest?

a) 18 years b) 6 years c) 3 years

4. After paying off a high-interest credit card, you should:

a) Continue using it occasionally b) Close the account c) Use the full amount of available credit every month

5. Applying for credit cards in order to just receive a free sign-up gift (t-shirts, mugs, etc.) has no impact on my credit profile?

True or False

6. Rewards points on credit cards are a good deal when:

a) I get cash back b) I get free airline tickets c) I carry no balance each month

7. To have a credit score, I must have at least one creditor reporting activity on my credit report for:

a) 12 months b) 8 months c) 6 months

8. Credit bureaus that manage your personal credit report data and credit scores are a:

a) Government entity b) Non-profit agency c) Regular business corporation

9. Banks and credit card companies think you are creditworthy by how many credit offers you receive by mail?

True or False

10. Credit scores are used by lenders mainly to:

a) Tell how I compare to other consumers b) Tell if I make my payments on time c) Predict the likeliness that I will repay my loan on time

Answers: 1 - c, 2 - c, 3 - a, 4 - a, 5 - False, 6 - c, 7 - c, 8 - c, 9 - False, 10 - c

If you find you answered more than half of these questions wrong, you're not alone. ApprovalGuard says that the majority of consumers do not know the answers to these and similar types of questions. The good news is it's not too late. With a good understanding and proper guidance of how credit works, consumers can learn how to effectively manage their personal credit profile. For more information, you can email me at sara@thealvaradogroup.com and since I'm not a credit expert, I can connect you with the right person if I can't answer your question(s). Please feel free to forward this quiz to others.

From a local Madison WI perspective, credit discussions come up a lot in conversations about short sales and foreclosures. This is a hot topic because there are so many factors in understanding your best options if you are in financial distress. And I'll save that for another post so stay tuned!

Interest Rates Drop for WHEDA loans!

This just came through from WHEDA (Wisconsin Housing Economic Development Authority)

Thanks to a change in our underlying cost of funds, WHEDA effective immediately is substantially reducing the interest rates on its WHEDA Fannie Mae Advantage suite of first mortgage products. The new rates are as follows:

WHEDA Fannie Mae Advantage 4.95% WHEDA Fannie Mae Advantage - Price Point 4.40% WHEDA Fannie Mae Advantage - MI Choice 4.60% WHEDA Fannie Mae Advantage - Low LTV 4.60%

WHEDA will reduce the interest rates accordingly on all loans that are currently locked but have not yet funded. Lenders will receive a revised Confirmation of Rate Lock. Rates are subject to change daily, so lenders should visit www.wheda.com periodically for the most up-to-date interest rates.

WHEDA issues mortgage revenue bonds (MRBs) to raise proceeds to fund its mortgage loans. Changes announced yesterday to the New Issue Bond Program (NIBP) by the U.S. Department of Treasury will effectively reduce the interest rate on MRBs WHEDA will issue through December 31, 2011, making this one-time decrease in interest rates possible. Under NIBP, the Treasury, through Fannie Mae and Freddie Mac, is investing in a portion of MRBs issued by state housing finance agencies (HFAs) in an attempt to lower borrowing costs for low-to-moderate income first-time home buyers as a means of increasing affordable housing lending activity nationwide.

Before you start touring Madison WI homes for sale...

Alvarado Real Estate Group For Sale SignSometimes I get a call from a buyer that wants to go look at a home (one would hope that I would get calls like that!) and as I  ask some basic questions I quickly realize that this potential buyer is very early in their home buying process. Asking questions is the key to being an good Realtor and asking the right questions is the key to being an effective Realtor. Before you start calling around to request showings please consider the following in your process: 

- Research and gather information about neighborhoods and schools. Ask your friends and co-workers what they like and dislike about where they live to give you a clear picture of a neighborhoods features. And narrowing down your search based on a school district is important to your search too (if relevant). Don't wait until you fall in love with a home to then find out that the school district isn't good fit for your family. You can search homes in specific school districts on our website. This is also an important time to understand agency and the difference between a Buyer's Agent and a Seller's (or Listing) Agent and what that means in your search.

- Discuss and determine what you want beforehand - how many bedrooms, approximate square footage, preferred neighborhoods, energy efficient and green homes, and how much you can afford to spend. A buyer consultation (usually a no obligation appointment) is crucial to a successful search. One of the most common complaints is, "My Realtor showed me homes that weren't a good fit. S/he just didn't listen to my needs." And that is why this meeting is so important. Sitting down at a table with all parties openly talking ensures your Realtor will understand what is important to you in your next home.

- Make sure your credit report is accurate. There would be nothing worse than finding the perfect house and missing your chance to make an offer because there's an error on your credit history that places you in an unfavorable light with a lender.

- Get pre-approved for a mortgage before you begin looking at homes. Not only will this give you an exact price range for your purchase, but pre-approved will add muscle to your offer. This is when you can start conversations with lenders but don't feel like you have to work with the lender you get pre-approved with. There are a lot of great lenders out there with different programs that you'll want to understand clearly. And what you are pre-approved for isn't necessarily what you want to spend. Use our mortgage calculator to help you figure out what you're monthly payment will be.

- Keep in mind that there's no such thing as the "perfect" home. Instead, set priorities. Determine what may be more important on your list. For example you may want a 2 car garage in a specific area where many homes only have a one car garage. You may have to decide if the garage or the neighborhood is more important to you. Our team of buyer specialists are specially trained to help you with these decisions and give you important input on what will help you sell later too.

We can help and we want to help. Contact us to schedule a free and no obligation buyer consultation to see if we are a good fit for you: office@thealvaradogroup.com, 608-251-6600. You can find us on Facebook too!