Buying a Home in a Gig Economy

A gig economy refers to a workplace in which temporary or flexible jobs are the norm, such as freelance or contract work, as opposed to permanent, full-time jobs.  There is no fixed salary, so income may be irregular and sometimes it may not even be documented.  Future income is also unpredictable while working freelance or contract jobs.  This may lead to some complexity if you are trying to obtain a mortgage, but it’s still possible.

So how do you get a mortgage when you don’t have a standard, full-time job?

First thing’s first; it’s time to get organized.  Start by getting your paperwork together.  You will need to provide copies of signed federal tax returns from the last two years and a year-to-date profit and loss statement.  You will also need a list of your debts (monthly payments such as car loans, credit card debt and/or student loans) and assets (checking and savings accounts, stocks, bonds and other securities).  Two years’ worth of documented income will also be reviewed.  Additional paperwork will also be required; the loan officer will keep you in the loop of what is needed.

Keep adding to your down payment.  Having a larger down payment will lower your loan-to-value ratio, or LTV.  The LTV is the relationship between the amount of the mortgage loan and the value of the property. The lower this ratio is (the larger amount you put for a down payment), the less risk you are as a borrower to repay your loan.

Pay down your debt.  Work to eliminate all of your debt, or get your balance as close to zero as possible.  Having a lower amount of debt will lower your debt-to-income ratio, or DTI.  Your DTI measures your ability to manage monthly payments and repay debts.  The lower your DTI is, the less risk you are as a borrower to repay your loan.  Repaying all of your debts, on time, is also a key factor in keeping your credit score high and healthy, which is important when obtaining a home loan.

Contact one of our loan officers to see how to get the ball rolling.  Having an informational conversation will educate you on what to expect during the home buying process and what type of paperwork will be required.  Having this initial conversation does not require you to apply for a mortgage, but it will give you the insight needed when you are ready to purchase a home.

How to Win in a Competitive Market

It’s a seller’s market in the mortgage world these days. That means there are more buyers looking to purchase homes than there are homes for sale, giving way to some strong competition. Properties may be going off of the market more quickly since there is higher interest, and they may be selling for more than the asking price. So how are you supposed to beat out the competition? Take these tips into consideration the next time you find yourself in a seller’s market.

Be proactive.

Homes may go off the market lightning fast in a seller’s market, so be ready to act fast. Research houses in your preferred neighborhood a few months before you are ready to buy to get a feel for the market. This will help you determine what the typical price range is and how quickly homes are sold. When you are ready to purchase and have found a home, if possible, try and schedule a tour before the weekend open house. This will give you an advantage over other buyers to put in an offer before they even see the house.

Get pre-approved.

When buying in a competitive market, you should always be as prepared as possible. First, start by getting pre-approved. Getting pre-approved shows the seller you are serious and ready to buy. Having your finances in order indicates you have the means to purchase the house and won’t need to back out of the contract for financial reasons. Your pre-approval letter will show how much you can afford and what type of mortgage is best for you.

Make a strong offer.

Bringing your strongest offer to the table may save time by eliminating a negotiation period or bidding war. A seller may not want to deal with the hassles of negotiating, so if you present a solid offer, it may have a better chance of being accepted right away. Also, bringing your strongest offer will save you time, and probably money, by taking you out of a bidding war. Presenting an offer that is much lower than the asking price could deter the seller and they will take your offer right off the table. If you have done your due diligence, you will know the best offer to make.

Get personal.

Writing an additional letter to the seller, along with your offer letter, may help you stand out against other buyers. If you plan on making the house your forever home, write a formal letter to the seller explaining how you envision your family in the home. Maybe you see yourself cooking breakfast for your family every morning in the kitchen, or describe how you can see your kids playing in the backyard on sunny days. Adding a personal touch to your offer may give you an advantage over your competition.

It’s a tough market out there right now, but with the right mindset and game plan, you will be enjoying your new house in no time!

If you are ready to get started, contact one of our loan officers.

Tiny House, Large Living: The Tiny House Movement

Living large doesn’t necessarily mean owning a mansion and filling it with an abundance of possessions. Just ask those who have joined the tiny house movement. You may be asking, what exactly is the tiny house movement? The latest trend involves homeowners downsizing to a home, generally measuring 400 square feet or less. Small, right? How can one live in such a small space? It’s definitely a lifestyle change and it’s not for everyone, but those who have joined this movement have benefited big time!

So why would someone choose this lifestyle? There are many benefits to going tiny. Affordability is a major factor; the cost of a tiny home is substantially cheaper than a normal-sized home. Typically, tiny homes can range from $10,000-$50,000 depending on the type of home, amenities and if you build it yourself or purchase a pre-built home. That is a fraction of the cost of an average house in the suburbs. The cost of upkeep of a tiny home tends to be less as well since there is less square footage to maintain.

Going tiny can also simplify your life. Since your home is smaller, there is less room for material items and possessions. Freedom from objects will allow you to focus on experiences and connecting with people and nature rather than focusing on “things”. The less time you spend focusing on things, the more time you can focus on yourself and finding activities that make you happy.

Another benefit of going tiny is being more mobile and not tied down to one location. Some tiny homes can be placed on a trailer bed and towed and some are fixed on wheels. Either option lets you travel often and experience adventures you may not have been able to if you were tied down with a non-mobile home or a large mortgage payment.

Sounds great so far, doesn’t it? While there are many advantages of a tiny home, they do have a few drawbacks as well. Some states and/or counties have their own set of strict rules regulating where owners can place/park their tiny homes, making it difficult to stay in one place for a long period of time. Their small size creates limited storage areas, so renting a storage unit may be an additional cost homeowners need to budget for. If you decide to grow your family and need to move out of your tiny home, there is a very small market for tiny home buyers, so selling could be an issue.

As mentioned before, tiny house living isn’t for everyone, but those who choose to live this lifestyle have the financial and personal freedom to live how they want and where they want.

Wire Fraud on the Rise

E-mail hacking and wire fraud schemes are on the rise in the mortgage industry. In the past few years, homebuyers have been schemed into losing thousands of their hard-earned dollars, and unfortunately, a lot of that money has not been recovered.

So what exactly is wire fraud? It’s a crime in which a person (hacker) creates a scheme to defraud or steal money based on fabricated information. It is common for hackers to gain access to e-mail addresses, whether they are from a settlement agent, title company, realtor or mortgage lender, and impersonate them. The hacker will send an authentic looking e-mail to the borrower with a new set of wire instructions. These wire instructions route the money to a fraudulent bank account rather than the settlement agent’s account. Once the money is out of the borrower’s account, it is very difficult to trace where it was sent, making it tough to recover.

While this is a widespread problem, there are ways borrowers can prevent being schemed into wire fraud.

  • Carefully verify all e-mail addresses on every e-mail received and sent. Hackers will slightly adjust the appearance of an e-mail address to make it seem like an original copy. Even if the signature line and logos are exactly the same, pay attention to the actual e-mail address.
  • Always call the settlement agent to confirm the wire instructions before sending any money. Use a previously known or verified phone number.
  • Instead of wiring money, ask if a certified check or cashier’s check can be brought to closing.
  • If you receive an e-mail changing the wire instructions, call the settlement agent immediately! Wire instructions seldom change. Again, use a previously known or verified number. DO NOT use the phone number in the e-mail with the revised wire instructions, this could be a number directed to the hacker.
  • After wire instructions and have confirmed and money wired, call the settlement agent to confirm the money was received.
  • Instead of having wire instructions sent through e-mail, pick them up from the settlement agent’s office.

If you suspect you have been targeted for wire fraud or something seems out of the ordinary, don’t hesitate to reach out to your loan officer or settlement agent. Raising concern and asking a few extra questions is a lot better than losing thousands of dollars, and most likely losing the house you worked so hard to get.

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