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The Mortgage Brothers Show

Author: Eddie and Tom Knoell

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From Phoenix Arizona, Eddie and Tom Knoell answer the mortgage questions that buyers, sellers, and real estate agents have when it comes to the process of getting a home loan in Arizona. Eddie and Tom's family has been living in Phoenix for 4 generations and they have a 30 years combined experience in the mortgage and real estate industry.
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How Much Home Can You Afford VS How Much Home Should You Buy?A lot of people ask us “how much can we qualify for” or “how much should we qualify for?” when it comes to applying for a mortgage. In other words: What prices of home should I be looking at? No matter where you are in the market, the prices are what matter. There are so many variables that go into this, but really the questions are: How much should I be willing to spend?What do you need to keep your mortgage payment below? How does this translate to a home price?” If you’re already budgeting (how much you spend on your car, eating out, insurance, etc.) you’re going to want to add in your potential mortgage and see how that would fit in with your current expenses.  Let’s take a look at an example.  Let’s say your income is $100,000 a year, and you have $750 dollars of credit debt. This doesn’t include your bills and the like. It’s just what shows up on your credit report. We’re also basing these estimations off a 4% interest rate. We know this isn’t where things are right now, but we want these calculations to err on the conservative side. So, with these numbers you’d likely get approved for a loan amount up to $475,000, which translates to a 30-year fixed mortgage with a monthly payment of ~$3,000. Could vs. ShouldOn a percentage basis, a loan of $475,000 with a monthly payment of $3,000 a month would account for ~35% of your income. Now this is what you could afford. But that’s not the same things as what you should afford, or budget for.  What’s the responsible amount of your income put toward a mortgage payment?As a general rule of thumb, we recommend that you keep your mortgage payment making up no more than 25% of your annual gross income. So, if you’re making $100,000 a year and you have $750 a month in debt, we wouldn’t suggest you get a loan above $342,000, which would translate to ~$2,080 as a monthly payment. What amount of my income should go toward my mortgage payment if I’m getting a second home?If you’re getting a second home or a vacation home or that cabin in the woods, we still think that your combined mortgages shouldn’t require up more than 25% of your gross annual income. Budgeting Is ImportantEveryone’s financial circumstances are different, but regardless of where you live and how much you make it can never hurt to be conscientious with how you spend your money and how much you are able to put toward housing or a mortgage. This is where good loan officer comes in. They’ll help you figure out what the bank can do for you and they’ll help you identify what sort of mortgage you should get. We do this all the time and we’d be happy to help.  ••• Let us know if you have any questions you’d like us to answer on our podcast. You can email your questions to team@azmortgagebrothers.com or give us a call at (602) 535-2171.Be sure to ask us for a free quote on your next mortgage. We’ll personally work with you and help you through the whole process. Signature Home Loans LLC does not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only. You should consult your own tax, legal, and accounting advisors before engaging in any transaction. Signature Home Loans NMLS 1007154, NMLS #210917 and 1618695. Equal housing lender.
What’s the BIG Deal About Escrow Accounts?Why do banks encourage borrowers to have an Escrow Account? What is the purposeBanks want to make sure they know that a borrower’s taxes and homeowners insurance is being paid on time…why?Unpaid taxes will become a priority lien on your property…banks don’t want that to happen. If your homeowners insurance policy not in effect due to any issues of non payment, the bank is unprotected against fire and destruction. The home is collateral for the loan. What are the pros of an Escrow Account?You don’t have to deal with paying your taxes twice a year and your homeowners insurance once a yearThe bank is putting those funds aside for you, and so, they are basically saving the money for you without you having to think about. If you pay taxes and homeowners insurance on your own you’ll have to bite of those big invoices a couple of times a year. Having the escrow account keeps your budget nice and stable. What are the Cons of an Escrow Account?Taxes and Homeowners Insurance change every year so it is very possible that annually your mortgage payment will have to adjust a little bit. Some homeowners find this annoying that they have to adjust their autopayments etc. The money that you have in your escrow account is setting at the mortgage company bank so you are technically not earning interest on that money. Most of the homeowners that we talk to tell us this is the primary reason why they don’t want to have an escrow account. The interest is so minimal that it really isn’t a good reason in our opinion. 
This Podcast is to warn borrowers about the effect of Trigger Leads. What is a Trigger Lead? The 3 credit bureaus notify businesses, who purchase trigger leads, when you have your credit pulled. Trigger leads can lead to scammy phone calls from other mortgage lenders who try to give the impression that they are associated with the transaction that we are working on. They are trying to hijack the mortgage process and get you to give them all your personal information and ultimately do you mortgage. Solutions to prevent this;Go to https://www.optoutprescreen.com and it will guide you through the steps to opt out of unsolicited offers https://www.donotcall.gov/  The do not call list is a good way to slow down the number of unsolicited phone callsThe Federal Trade Association page here is a really good resource to help direct you to all the different opt out options available https://www.consumer.ftc.gov/articles/0262-stopping-unsolicited-mail-phone-calls-and-email 
Lender considers your mortgage late if your payment is received after the 15th of the month. Typically a 5% fee is assessed (of your loan amount ). This will not be reported to the credit bureausCredit Bureaus will consider you late if your lender hasn’t received your payment by the end of the month. Credit Bureaus will reflect 30, 60, 90, and 120 day lates. Keep in mind that if you are 90 days late on your mortgage payment, your lender will likely start the foreclosure proceedings. The lender will send you a notice in writing warning that your home will be sold at auction within 90 days if you do not get your payment current. 
If income is eligible to be grossed up, here are the gross up limits;·      Gross up to 25% on Conventional loans·      Gross up to 15% on FHA loans·      VA loans do not allow grossing up any income The Following Income types never subject to taxes that can be grossed up with Conventional and FHA loans:* Adoption Income* Foster Care Income* Child Support Income* Military Income - Regular Military* Military Income - Reserves or National Guard* Supplemental Social Security Income - Received on Behalf of a Client* Supplemental Social Security Income - Received on Behalf of a Non-Client* VA Income Benefits - Service Connected Disability Compensation* VA Income Benefits - Non-Service Connected Pension* VA Income Benefits - Program of Comprehensive Assistance for Family Caregivers* VA Income Benefits - Dependency Indemnity Compensation* Temporary Disability or Temporary Leave Income (Workers' Compensation) The following sources of income may be subject to income taxes depending on the client's adjusted gross income, and therefore may or may not be grossed up depending on amount of income that is not taxable according to borrower tax returns.  * Annuity Income* Housing Allowance* IRA Distribution Income* Private and Long Term (Permanent) Disability Income* Pension Retirement Income* Recently Retired and Not Yet Receiving Pension Income* Retirement Account Income (401k, 403b, Keogh)* Social Security Disability Income - Received on Behalf of a Client* Social Security Disability Income - Received on Behalf of a Non-Client* Social Security Retirement Income - Received on Behalf of a Client* Social Security Retirement Income - Received on Behalf of a Non-Client* Social Security Retirement Income - Recently Retired and Not Yet Receiving Income
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