Sara Besche
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Deciding When You’re ‘Ready’ to Buy a New Home

By Lynn Cattafi, in All Communities

Lynn is In

“We found the perfect home…but we are just not ready yet.”

This is a very common reaction. Many people that are happily enjoying their new Schell Brothers home today had this exact reaction when they realized they had found the floor plan and community of their dreams and that it could all be possible. Not all of these ecstatic homeowners were “ready” when the opportunity presented itself. How did they do it? How did they overcome the obstacles to make their dream a reality now?

I can speak personally to this dilemma, because I am writing this blog from the dining area of my gorgeous Schell Brothers Mayberry! I had many obstacles to overcome which felt daunting, and I am in the business so I know how you feel! I had a home to sell and I was concerned to take on additional debt before we had our home sold, I had to purge boxes and boxes of family stuff that was no longer serving me, I had to pull together funds for a down payment, plan for additional funds or a higher loan in case my home didn’t sell in time, and many other things. But, knowing what I do about the ways to make this happen with ease gave me the courage to jump in…and I am SO VERY glad I did!! So, allow me to help you….

The best way to go about this is to list out what your personal obstacles might be and look at them one by one. Which ones are temporary obstacles, meaning that once your home is sold, for example, that everything falls into place? Let me get you started…what applies to you?

  • I have a home to sell (or more than one)
  • I am not retiring for a few years yet
  • I am retiring now and don’t know what my income will be yet
  • I have a lot of debt to pay off first
  • I have no liquid cash
  • I don’t want more than one mortgage
  • I only want a small mortgage and that can’t happen until I sell my current home
  • The home we fell in love with is more than we wanted to spend
  • We need to think about this for awhile

Now, let me take each one of these and give you a few options to consider. Many times, all you need is a temporary fix, something that will carry you through the couple of months of transition, until your home is sold, or your pension starts, etc.

  • I have a home to sell (or more than one): This is a common one. While the new home will be your new primary residence, as long as you can qualify to do it as a vacation (second) home in case your home did not sell first, you are good! There is no difference in interest rate between a primary and a secondary home. We would qualify you for the “plan B”, which is a larger mortgage, temporarily, in case your home does not sell first.
  • I am not retiring for a few yearsMany people are in this position. Weigh the benefits of having your retirement home purchased, set up, and available for your enjoyment now, giving you the ease of simply walking in the door at the time of retirement. The lessening of stresses at the time of retirement is a huge benefit in itself. This is usually an emotional time for people, as it is a big change. Too many people try and do everything at that time (retire, find a new home, clean out the old house, move…UGH!) Pace yourself, and get your new residence ready now (and start cleaning out your current home, little by little, now also! You will thank me for this little tidbit!)
  • I am retiring now and don’t know what my income will be yet: This is an easier one that you think, and this can also be a good fix for any income issues, as long as you are 59.5 yrs old or older. You can set up a temporary monthly distribution from your retirement assets (IRA, etc) that lenders will recognize as income. It can be something that you only set up if you need it to qualify, and it does not need to be set up until 2 months prior to the new home settlement. It can be stopped after closing if you wish. This is something that we use as a “plan B” for many Schell buyers.
  • I have a lot of debt to pay off first:As long as you qualify without paying off debt now, this is something you can plan for from the proceeds of your home sale, or at a date that is most convenient for you. If you have the cash and want to pay off debt now, it will help alleviate any concerns you have about monthly expenses
  • I have no liquid cashPerhaps you can obtain a home equity line of credit on your current home. This is what I did in my situation. This way, you have cash available to you that does not require a monthly payment unless you use the line, and the line will be paid off upon the sale of that property. Or think about a loan against your retirement accounts, or a small liquidation for down payment, or a temporary loan from a family member.
  • I don’t want more than one mortgage at a timeNot many people do! LOL! But, if most homes are selling within 60 – 120 days of being put on the market and your new Schell home will not be ready for 120-180 days, or longer if you are in a later phase, the chances of having to carry more than one mortgage temporarily are amazingly small. And even then, it would be temporary.
  • I only want a small mortgage and that can’t happen until I sell my current home: If you go back to the answer in obstacle #1, let’s see if you can qualify for a larger loan temporarily. We can set up loan options that allow a larger loan to be reduced after closing, along with the payment, with no need to refinance. Ask me about a recast.
  • The home we fell in love with is more than we wanted to spend: I know…I had the same obstacle myself. I could have purchased a cheaper, used home and would have spent a lot more money making it the way I wanted it, along with the aggravation that goes with that. Or, I could have contracted with a different builder for a cheaper home, but the quality would not have been the same, and I would not be as happy as I am today. I got the home I wanted, and my monthly costs are a small fraction of what they were in my last home.
  • We need to think about this for awhile: I would suggest before you start thinking about it, call my team and let’s talk out your personal options. Once you know what can be possible for you, you can make the best decisions. Many people sit and think about the things that scare them and all the obstacles to making their dream a reality, without ever really knowing the possibilities.

 

Call or email me, and let’s put your obstacles into the proper perspective! Remember what they used to say on Extreme Home Makeover…let’s move that bus!!

 

Home to sell? Here’s a smarter way.

By Lynn Cattafi, in All Communities

Lynn is In

“My home isn’t sold and I don’t want a big mortgage, so we are going to wait”.  

When you decide to build a new home with Schell Brothers, and still have a home to sell, there are many ways to get a head start on the process with a transition build that will benefit you financially. One of your options with a transition build is to use something called a principal curtailment, also known as loan recasting, if your lender offers it, once you’re home sells.

Let’s look at a common example of how this works. 

Principal curtailment, are also known as loan modification or recast. Lenders tend to use these terms interchangeably, but it is a way, after closing, to reduce the principal balance on your loan and have that lower principal balance reflect in a lower monthly payment. Normally if you pay down a fixed rate loan, it just pays you forward, but does not lower the monthly payment. That is why the principal curtailment is so beneficial for buyers that expect to pay a large sum down on the new home after closing.

Not all lenders will do this. Those that do, don’t advertise it. It can generally be done not long after closing with just a phone call to the lender and a small one-time fee (often $175-$300). The nice thing is that you would keep the SAME interest rate and the same place in the payoff schedule, and it does NOT require a refinance! Nice, huh……who knew!

So, in the event your property is not sold yet, and as long as you can qualify for a higher loan amount temporarily, you can move ahead with the comfortable knowledge that you will be able to recast into the loan payment that you want soon after you are in your new home.

This relieves a big worry you have had tucked in the back of your mind! You may carry a higher loan for a short period of time, but:

You don’t have to liquidate investments (but this is also an option).

You don’t have to go through a refi or an equity line on your current home to get the cash (but this is also an option too).

You don’t have to miss out on today’s rates or today’s home pricing.

You can pay down the loan after  the Schell Brothers settlement to meet the payment needs that you want to live with long term.

Please feel free to reach out to me with questions, and know that there is a wonderful option for you so that you no longer have to put your life on hold! Happy Building!!

Bridge the Gap – Lynn is In

By Lynn Cattafi, in All Communities

Lynn is In

My current home has not sold yet, how do I bridge the gap?

If you are thinking that you need to sell your current home before you can even think about your new dream home, think again! There are many ways to make your dream a reality prior to selling your current home. It is true that for some people selling first is a must, but believe it or not, that is surprisingly rare. Here are just a couple of examples that might work for you.

Let’s assume you have a great deal of equity in your current home. You can set up a line of credit against the existing home. It is a good idea to set this up for your possible use now, because once your current home is on the market, many banks will not approve an equity line of credit. The good news is that the line of credit carries no monthly payment until you actually pull money from it, so you can set this up and have it ready to use for your new home deposit.

Another great option is to start the process of creating this new dream home as a secondary residence. There is usually no interest rate difference between a loan for a primary home vs. a secondary residence. Plus, as long as you can qualify to carry both homes for a short time if necessary, you can move forward now. Many people I work with go this route because it’s more simple. It takes away the need for two moves (what if you sell your current home before your new home is completed), and it also enables you to put your current home on the market at a time that is the most advantageous for you.

Imagine being able to put your home on the market after you have already moved out of it! No obsessive cleaning and staging, no waiting for showings or having to leave the house at a moment’s notice when a realtor wants to “bring someone by”. Sounds pretty glorious, right?

Transition Home Buyer – Lynn is In

By Lynn Cattafi, in All Communities

If you are planning a move to a new Schell Brothers home, you might hear the term “Transition Home Buyer”. This term covers a lot of ground, so what does it mean?

The very nature of a move is a transition: cleaning house, packing up, and getting from point A to point B. But you may find that there are certain major life events that also need to occur in order to make your dream a reality. Maybe you have to sell your current home or more than one home, or are retiring from your career and reducing your income. Maybe these changes are already in process, or maybe they will not be happening for another couple of years.

These types of changes make you a transition home buyer. It may seem daunting, but I will tell you how to “eat the elephant”, just one bite at a time! My role as a loan officer is to help you navigate through these changes and help you plan for the effect they will have on how you will finance or pay for your new home.

When we look at your personal situation, there are two important questions to consider: 1.) what is your situation today, and 2.) what will your situation be at the time your new home is completed and ready for settlement. If you are planning on obtaining a mortgage, any difference in income or liquid cash must be considered. The best way to plan is to think of the cash you have right now and the income you will have later.

Let’s assume you are planning on selling your current home to pay cash for the new one, let’s call this “Plan A”. We cannot consider those funds as available until the house is really sold. So, we look at a “Plan B” as your backup plan. Plan B might be a mortgage that could be taken if needed, and would be paid off once your current home actually sells. Having both a plan A and a plan B will give you peace of mind.

We look at income in a similar way. Let’s say you are still working and make $5,000 per month in income, but by the time your new home is complete, it is your plan to retire and start collecting a pension, which would reduce your income to $3,500 a month. To be safe, we would use the lower income in the preliminary loan approval process. Or, you could decide to keep working and retire a little later, if that works more in your favor.

Looking at your areas of transition now empowers you to know what you can afford and also to help plan your move timetable. See, one bite at a time!

Lynn is In: Preliminary Loan Approval

By Lynn Cattafi, in All Communities

Lynn is In: Preliminary Loan Approval

You’re interested in moving to Delaware and building a new Schell Brothers home. Hooray!  How exciting!! But, where do you start?

Let’s start with the Preliminary Loan Approval

Part of your Schell Brothers purchase agreement will require you to call me right away for a preliminary loan approval. You have the option to choose any lender you like when you go to settlement on your new home, but I will run the preliminary approval process for you. Why is that?

Traditionally, when someone gets “pre-approved” or “pre-qualified,” it is not complete. It is just an application, a credit check, and it does not require document review or take into consideration that you might be in transition (getting ready to sell a home, retire, changes in income) between now and when your new home is ready. And from a builder’s perspective, it is important to have a consistent, thorough review of every home buyer’s ability to purchase the home. Plus, it is very much in your best interest to know what you can and can’t do or if any planned life changes would limit your ability to qualify.

Here are the steps we go through during a preliminary approval or pre-commitment:

1. Click on this link  www.twmortgage.com/lynn to submit your info directly to me. It is free of charge, secure, and there is no obligation to use Tidewater (If you have any issues completing it, call and we can do it manually with you over the phone, or you can come in).
 
2. My assistant, Gina, will reach out to you to set up a phone appointment with me, and then I will pull your credit from the info you provided. Our phone chat will last about an hour, and we will review your application, discuss your situation and loan scenarios, and you will have time to ask questions.
 
3. At the end of our phone call, I will e-mail you a set of initial disclosures, a Good Faith estimate, and a list of things you will need to provide us.
 
4. Once everything is in order, I review your documentation and then will issue you a preliminary approval letter. This will also be copied to Schell Brothers and your realtor (if you have one).

 

Later, you can decide if you want to complete the loan process with me, or if you want you can choose another lender. I do hope you stay with me, and I can assure you our rates are very competitive.

NOTE FOR CASH PURHASERS: you do not have to go through the above process if you intend to pay full cash for your new home. All you need to do is provide a bank statement, retirement account, or investment account statement showing sufficient funds for purchase price and estimated closing costs. You can always call me during the building process if you decide to finance part of the home.

Even if you have already received pre-approval from a lender, Schell Brothers still will want you to run through my process. I will do all I can to make it as painless as possible and give you the most thorough understanding of your unique situation. Delaying the preliminary approval process can derail your home start, and they will not begin building without it.

I look forward to assisting you in making your home a reality! Find out more at www.twmortgage.com