Julianne Krutka
Park Square Realty | 413-297-6718 | julianne.krutka@gmail.com


Posted by Julianne Krutka on 10/5/2017

For the generation that grew up at the height of the subprime mortgage crisis, buying a home is a scary concept. Many young people in the 18-34 age range are dealing with high rent, a poor job market, unpaid internships, and student loans the size of a home loan. Yet, others are finding their footing and realizing that owning a home is advantageous in the long run. If you're thinking of delving into the world of home ownership for the first time here's a crash course in Home Buying 101.

Figure out your finances

You should be an expert at you and your significant other's personal finances if you are thinking about buying a home. The first thing to look at is your income and expenditures. Put the following information in a spreadsheet:
  • Total monthly income
  • Total monthly expenditures (bills, gas, food, etc.)
  • Total monthly savings
  • Total savings and assets
  • Credit and FICO score (request both of these online)
When crunching these numbers you should (hopefully) find that your income is higher than your expenditures and your savings should account for most of the difference. If your savings is lower than it should be, you either missed something on the expenditures list or you are spending more than you should be if you want to buy a home. Down Payments Down payments on a home, post-financial crisis, range from anywhere between 0-25 percent of the price of the home, 20 being the median. A down payment ideally shouldn't break your savings in case you have any unforeseen expenses once you buy your home. Moving is time-consuming and can be pricey, so you'll need to account for this in your finances.

Lock Down Your Financing

There are several types of mortgages that you'll need to choose from, and you'll want to learn about fixed and adjustable mortgage rates. This information should be informed by your long-term plans. Are you looking for your first home or your forever home? If you don't plan on fully paying off the home you might look for a low, adjustable rate while you earn money. But if you want to stay in your home until it's paid off, a fixed rate might be better for you.

Finding and buying your home

Once you've determined your price range, start thinking about things like location and the kind of home you can afford. If you're handy with tools and have the time, it might be in your best interest to buy a home than needs some work at a lower cost. If you'd rather put in more hours at work, go with the home that needs less work and save money that way. Depending on whether or not you're in a buyer's market or a seller's market, the ball can be in your court or the seller's. In a seller's market, which is more likely today in many parts of the country, the seller will have more leverage in negotiations, including closing dates and move-out dates. Due to high competition, you should also be prepared to miss out on some offers. But be patient, and you should find the home you're looking for.  





Posted by Julianne Krutka on 12/1/2016

When you’re shopping for a home, there’s so much to consider. Between the questions of what neighborhood you should live in and what style house you like, you need to think of the most important thing: finances. When you think that you’re financially ready to buy a home, you often will get the notion that it’s a good time to just start shopping. There’s several steps that you must take first before you start shopping for a home. One of the first steps you should consider taking before you make the leap into home ownership is to get preapproved. While buyers still tend to skip the preapproval process, doing this can help you immensely throughout the home buying process. While it may seem an insignificant and kind of boring step, getting preapproved is important for your finances. It may even help you to land in a home that you love faster. It’s actually detrimental to make an offer without a preapproval, because some lenders won’t accept an offer without one. Many realtors verify and require that offers come along with the stamp of preapproval. What Does Getting Preapproved Involve? You may have heard of a prequalification. This is much different from being preapproved. Prequalification involves buyer provided information, just to get a sense of how much they can spend on a home. Preapproval involves credit scores, bank statements, tax returns and more. This process states exactly how much lenders will be willing to give to the borrower. All of the documents needed for preapproval are the same exact documents needed for a mortgage. This helps you as the borrower prepare ahead of time as well. These are some of the kinds of documents that you’ll need for preapproval: Pay stubs W-2s from the previous year Federal tax returns from the past two years Two Months of Bank Statements from all of your accounts A credit report While a preapproval is only one step in the long process of buying a home, it speeds up the later steps of securing a mortgage. The process also helps buyers face their financial reality. Don’t put off the important process because you fear that you won’t be approved for the amount that you need. It’s also common for buyers to assume that because someone they know has been approved for a certain amount of money that they will be able to get that same loan amount as well. This isn’t always the case and another great reason to get preapproved. Errors On Credit Reports Often, there are errors on credit reports. That’s why you need to check them often. If you have some errors on your credit report, getting preapproved is a great way to check if there are any errors and give you time to fix them before you apply for a mortgage.




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Posted by Julianne Krutka on 4/23/2015

If you are in the market for a mortgage you will need to know how a lender determines if you are a good candidate for a loan. When you apply for a mortgage or look to refinance your current mortgage there is a mortgage loan underwriter who who has the job of reviewing your loan application and all of the accompanying documents. After you have completed all the paperwork on your end, you may be wondering what exactly is the underwriter looking for? Typically, the underwriter is looking for two things: 1.) your general creditworthiness and 2.) your debt-to-income ratio. How does an underwriter evaluate creditworthiness? Your creditworthiness will give the lender an idea of your willingness to repay your debts. The most common way to determine creditworthiness is to use your credit score. The lender usually uses your FICO (Fair Isaac Corporation) score. Your FICO score is based on an analysis of your various credit files by the three major credit repositories, Experian, TransUnion and Equifax. How does the underwriter determine debt-to-income ratio? The second thing the underwriter wants to determine is how the new mortgage payment will impact your ability to repay. The underwriter will use a calculation called debt-to-income ratio (DTI). When calculating DTI the underwriter compares your monthly gross income (before taxes) and your monthly debts. DTI requirements vary but typically the underwriter is looking to see if the ratio of debt to income— after the cost of your mortgage principal, interest, real estate taxes, insurance and any private mortgage insurance — is less than 40 percent. There are many other factors that go into whether or not you will be able to obtain a mortgage but these are two of the biggest factors.





Posted by Julianne Krutka on 7/19/2012

It is almost impossible to predict the future and predicting where mortgage rates may go can be difficult too. But if you know how to watch the indicators you will have some degree of advantage. It may help you decide whether to borrow funds or wait until rates drop. Consider that with any prediction there can always be a great deal of margin of error. Here are a few things to consider to make a more reliable mortgage rate prediction: History History can always be a good predictor. What is the economic climate? If rates are high in economic down times that you should predict that rates will rise when the same crisis hits the market. Look not only to long-term history but also to rates recent history. Watch for the changes carefully, track them by the month. Factors to consider are: Are the rates going up or down? What factors are causing them to behave in such a way? Influencing Factors Factors that influence mortgage rates can be controlled by you. One of those factors is the amount of down payment you have or if refinancing the amount of equity you have in the home. Also for consideration on the rate you will receive is your debt to income ratio and your credit score. Some factors you cannot influence include the state of the real estate market, the inflation rate and the funds available for consumers. Inflation Inflation drives most everything and always is a constant consideration of the mortgage interest. If inflation is higher, the interest rate will go up as well. Conversely, if inflation is low rates do down. Credit Availability How much credit is available? If limited funds are available than mortgage interest rates will be higher. The Bottom Line The bottom line is you have to be flexible. You can never predict what the exact mortgage rate will be. Instead, look to the factors that influence rates. This will give you an idea of where rates are and a better picture of if it is the right time for you to take on a mortgage.