10
Jan
By First Rate Financial Group
Mortgage

10 US Cities With Highest Mortgage Denial Rates

10 US Cities With Highest Mortgage Denial RatesFor many, owning property is seen as a rite of passage. At the same time, for most people, accomplishing this dream is largely dependent on the approval of a mortgage. For this reason, it is important for people to think carefully when deciding who to ask for a mortgage. Some cities have a higher mortgage approval rate than others.

Identifying Problems With A Mortgage Application

Before applying for a mortgage, it is important to think about the most common reasons why someone might be rejected. First, if someone has a debt to income ratio that is too high, they are more likely to be turned down for a mortgage.

It is understandable that if someone already has too much debt, they are unlikely to be able to handle the added burden of a mortgage. Another possible reason for being turned down might be out of someone’s control entirely. This has more to do with geography.

Application Problems In The Sunshine State

For those who might not know, the sunshine state is Florida. Many of the cities with the highest rejection rates are right here. For example, Miami, Jacksonville, Tampa Bay, and Orlando are all among the cities with the highest rejection rates on mortgage applications.

Some of the other cities on the list include New York, San Antonio, San Jose, Detroit, Birmingham, and Houston. Those who live in these cities need to make sure that their mortgage applications are in excellent shape. Otherwise, it could end up in disappointment.

Take, for example, Miami, Florida. More than one in nine mortgage applications are rejected. The most common reason why someone might be denied a mortgage in this major city is debt to income ratio.

Another common reason why those applying for a mortgage in this city might be denied is a lack of collateral. Florida has a reputation for attracting retirees; however, most of the jobs in this state have to do with hospitality. This is an industry that is largely seasonal and has low wages, contributing to a high rejection rate on mortgage applications.

Preparing For The Application Process

Anyone looking to buy property, particularly in these cities, must make sure their application is in order. Getting approved for a mortgage is a critical part of buying a home. For this reason, try to maximize credit scores while minimizing outstanding debt. This can go a long way toward getting approved.

And as always, talk with your trusted mortgage professional for personal guidance through the application process. They are experienced and have the best vantage point to make sure your application is set up for success.

09
Jan
By First Rate Financial Group
Real Estate

What Is A Short Sale?

What Is A Short SaleNobody enters into a mortgage assuming they are going to fall short on their payments; however, life happens and borrowers might need a way out. In serious situations, lenders may elect to foreclose on homeowners who are unable to make their mortgage payments. Fortunately, there might be another way out. This is called a short sale.

A short sale can be used to help homeowners who are struggling cater to those who are looking to buy a home. At the same time, there are risks to both parties. Therefore, there are a few important points to keep in mind.

What Is The Structure Of A Short Sale?

If someone owes more on their mortgage than the property would otherwise sell for, this is called a short sale. In this situation, the lender accepts the money coming from the sale of the home rather than that money going to the homeowner. This is because the homeowner still owes a significant amount of money on their mortgage.

Take, for example, someone who owes $300,000 on their mortgage. In a short sale situation, he or she would sell the home for $250,000 in a short sale. In this fashion, the lender agrees to accept a smaller amount of money for the home than he or she would get otherwise. In essence, the lender is then short $50,000. This is where the name comes from.

This is different from a foreclosure. A foreclosure happens when the borrower falls so far behind on payments that the lender reclaims the property.

The Benefits Of A Short Sale

The biggest benefit of a short sale is avoiding foreclosure. A foreclosure is a disastrous event for someone’s credit score. When someone agrees to a short sale process instead, he or she will often buy a more affordable home shortly thereafter. 

Buying A Home In A Short Sale

On the buyer side, the biggest benefit of targeting a short sale home is that there is usually a great deal on the price. The lender is already not getting their money on a regular basis and is often motivated the sell the home quickly to recoup their money.

On the other hand, short sales often take longer to proceed. The lender has to approve the sale and price, which might lead to delays. The condition of the house may also not be in good shape. Therefore, be sure to get a home inspection.

Calling your trusted real estate agent and mortgage loan professional is the best thing to do if you have questions regarding your home and a possible short sale.

08
Jan
By First Rate Financial Group
Real Estate

Why Buying A Home In An Adjacent Area To The Best Neighborhood Is A Wise Strategy

Why Buying A Home In An Adjacent Area To The Best Neighborhood Is A Wise StrategyHave you ever seen a scientific experiment with things growing in a Petri dish? This is a metaphor for how neighborhoods grow as well. Things in a Petri dish grow towards the areas that have more nutrition to attract them and repel from areas that have bad things that they do not want.

A popular neighborhood does a similar thing. It may have boundaries that are certain street or other physical barriers. Nevertheless, if the area builds its popularity, it tends to grow and might also cause an improvement in the surrounding areas.

Homes In Adjacent Neighborhoods

An adjacent neighborhood is one that is right next to another one. For example, in the Los Angeles Metro Area, just to the west of Beverly Hills is Century City. Century City is a fine area so it is usually called by its name. However, properties in Century City are also “Beverly Hills – Adjacent.”

This nomenclature is a bit like identifying a “used car” as a “pre-owned vehicle.” It is a marketing technique to say a home is located in a neighborhood adjacent to a popular one. However, those homes are indeed special. If the popular area appreciates significantly, this may have a positive impact on the neighborhoods surrounding it.

Mapping Adjacent Neighborhoods

It is a terrific strategy to look at the opportunities for buying a home in an adjacent area near the best neighborhood in town.

Use Google maps to find the map that includes the best area of town and what is around it. Then, research the listing prices for homes that are within the best neighborhood and those that are in the adjacent areas. For comparison, look for homes of the same style, type, and size

Zoom in on the satellite view of the streets to get a close look at the places just inside and just outside the official boundaries of a great neighborhood. It may be surprising to find areas that have a significant pricing differential, even just for a few blocks on a few streets. Those particular areas are worth further exploration.

Barriers To Progress

Be aware that physical barriers are stronger than psychological ones. A river, a very wide street, a public park or another major physical barrier can permanently separate a neighborhood from another adjacent one. These may block a growth opportunity.

What to look for are adjacent areas where the barrier between the neighborhoods is psychological and there is nothing at all very different between the great neighborhood and two blocks down the street. These few blocks in the adjacent neighborhood are where one might discover a treasure. It is possible to find a home that has a slightly better price. It might appreciate at the same rate as the best neighborhood next door or faster to catch up with other similar homes.

Summary

Using the adjacent neighborhood strategy may help avoid buying a home only in the most expensive areas that may be over-priced. Many find that the adjacent areas are just as nice and a home there may be a better value. 

Work with a real estate agent that knows the area well. Your agent should be able to help you discover the up-and-coming adjacent areas and properties that might offer an enhanced investment opportunity. As always, your trusted home mortgage professional is the best resource for current financing options.