For new home buyers looking to buy a home around Lexington or Arlington MA, an early step you will take is to speak to a lender and obtain a pre-approval letter. You might be surprised to learn that many people are “less than truthful” with lenders when discussing their financing options. I always ponder the reasoning behind this “less than truthful” approach! When you think about it, what’s the point? Just as a doctor or accountant cannot give you accurate advice without your truthful participation, neither can a lender. If you pick and choose who who you share your truths with, there is ONE place you should be totally straight up, and that’s with your lending officer.

1) Professional Advice – When you are speaking to a lender and looking to secure a loan, you will be asked for certain information required for a lending institution to loan you perhaps hundreds of thousands of dollars. To be less than truthful is not only illegal on an application, your lender will be unable to give you the useful information you truly need to make good decisions for yourself and your family. Lenders know the ever-changing guidelines, and they will let you know not only what you can afford, but if you do have extenuating circumstances, they can help you work through them legally. To not avail yourself to their advice, and to deceive a bank of full disclosure, is double folly. Lying on stated income loan application is fraud, and can result in penalties or foreclosure.

2) What’s your time worth? –  Sometimes people don’t provide all the right details to their lender because they don’t want to take the time to gather all their financial information, but if the truth comes out while your loan is trying to pass through operations you may have to start over or go through additional procedures to set things right. If your purchase involves relocation, selling of existing home, etc. this delay could blow up to giant proportions and affect many people in the process.

3) Better service – Even if it is slightly embarrassing, be willing to share your obstacles. Regardless of the circumstances, whether it is it immigration status, several personally owned businesses, poor credit rating, income that is not documented, an ex-spouse that has you financially entangled (just an example), you MUST tell your loan officer of these noteworthy circumstances so he or she can work around (and through) them. Waiting until your documentation is in operations for approval is not the time to suddenly be completely truthful. Last minute surprises lead to underwriting complications and delays, possibly causing you to miss critical deadlines – a costly problem you want to avoid!

4) Lower interest rate – We have found that clients who do a full pre-approval well in advance of writing an offer and applying for a loan, who leave nothing out, supply all materials requested by their lender, and have no “surprise” information appear later, have the smoothest experience getting a loan, at the best rate. They will always try to save you money if your circumstances allow. Even though it feels unnatural to share much of your private information with a stranger, it is the only way to get excellent and true advice when making one of life’s biggest investments.

I have heard of people “doctoring” pay stubs, providing statements with intentionally missing pages, lied about marriages, divorce in progress, sources of funds intended for deposits, and even who have receive suspiciously large sums of money right before closing. In many cases a good lender can work around the challenge once it’s identified, but “surprises” of this nature normally ended up costing the client time, money and aggravation.

Don’t take it personally when you are asked for private information and documentation by a lending officer. They do not ask for personal information unless it is (a) required by law or (b) the policy of the institution. Since the person working on your mortgage cannot change the rules, it is in your best interest to take time to develop some trust, and if you put in an application, do it completely and honestly from the beginning. If you cannot be completely truthful, this may not be a good time for you to buy a home! Your lender has your best interest in mind, and you don’t want to tie their hands when they are the link between you and buying your Dream Home. Pick a reputable lender and you will not be disappointed.

So, when you start the pre-approval process, and you are asked for your personal and financial information, give it straight and you will get better service and save money and time.

This week’s guest writer for the Arlington, MA Real Estate Blog is Wells Fargo Senior Lender Michael J. Tanionos.

Like many of my clients, you might be following fairly responsible spending practices for most (or all) of your adult years, but could find yourself challenged to get the best interest rate on your home mortgage because your credit score is not what lenders consider to be excellent. Too often I come across very qualified new home buyers who end up paying more for their house over time, to the tune of tens of thousands of dollars – all over very simple issues.  Here are some common, but unknown, pitfalls:

1) Opening & Closing Credit Card Accounts: You are ready to buy a beautiful hand tufted oriental rug imported from China, and if you get the Macy’s charge card, you can save 30%. If it’s $1,500, that’s some significant money. You sign up for the card, buy the carpet, pay in full and then CLOSE the account. Why not? You are financially responsible and don’t want too many credit cards out there with your name on it, you think. But, the moment you close the account, your credit score will drop. That’s because you used to have access to, let’s say $ 5,000 of credit you no longer have access to. This increases what lenders call your total credit limit debt ratio, which negatively impacts your score. Thus, you are considered a greater risk.  It’s counterintuitive, but it’s true.

2) Haggling with Utilities: Due to some problem with a utility or the phone company, you have been more than fair and continued to pay your bill on time. But finally you are fed up, you take your complaint to anyone who will listen – in store, by phone, by mail, etc., and then decide that the thousands of dollars a year you give them isn’t worth this. There should have been a resolution by now, so you stop paying a month or so before your agreement is expired.  At this point, the issue is only over $30 (or it could be more), but the problems it will cause you, and the subsequent credit score risk that will follow , will eventually lead to paying exponentially more come mortgage time and for the life of the loan. No matter how right you may be, in the eyes of the credit gurus, it doesn’t matter who was right, they just see the lower credit score. Being so driven to win the battle over $30 can cost you thousands on your mortgage in unnecessary interest. So what’s the lesson? Pay the bill, then fight the good fight for a refund.

And, of course the most obvious …

3) Don’t buy what you can’t pay for: Like eating, it seems simple … eat when you are hungry and stop when you are full. But many people (including myself) often struggle with that simple notion. Except for a house and a car, you shouldn’t finance anything else you don’t have to.  Your credit cards should be used to get points and free simple luxuries you may need (like travel, electronics, etc.) Paying for items with a credit card also helps you track where and how you are spending your money. So use them responsibly, and don’t carry balances over month to month.

A Positive Step to Take: Sign up for Free Credit Report Alerts. This seems like just another thing that will cost you money,  but trust me, it’s worth every penny. For as low as $12 a month you can sign up for a service that will alert you via email and or text anytime your credit score moves, your credit report is pulled, or a new account is opened. This is extremely valuable in preventing identity theft as often times if you can catch it early enough, the impact to your credit and financial life will be minimal.

I’ve advised many clients to practice these steps and come back in six months or a year, and they have saved thousands of dollars … just by buying a home at a time in their financial lives that made the most sense. I hope you do too.

Michael J Tanionos has graciously shared this information with our Blog readers. He may be contacted at michael.j.tanionos@wellsfargo.com

I believe in writing down goals, and buying a house or condo is one of life’s BIG GOALS. If you want to successfully buy your Dream Home, write down exactly what you would like to have in a house. Identify at least the following things:

• The TOWN or TOWNS you want to live in  (Arlington, Lexington, Medford, etc).
• The STYLE of house or condo you would like – could be Single Family and/or Condo
• Specify: TOWNHOUSE or TWO-FAMILY or BUILDING COMPLEX
• The NUMBER of BEDROOMS, BATHS (Full and half)
• Yard?  Y / N Basement? Finished or workspace or both?
• Fixer-Upper okay?   Small Projects ok?
• Distance from Public Transportation -  Living Area square footage  /  Lot square footage

Click HERE to download a Dream Home Criteria Worksheet. (Just click on #1 to open)

Get even more elaborate if you like! How many floors, amount of storage, how far from work, what school district, etc.

If you and a partner are buying a home together you should each fill one out – and compare them. Results may be surprising.
If you and your partner have very different views, this will help identify areas where your dream home does NOT overlap, and provide an opportunity to work things out before you get further along in an expensive purchase. After you have done this exercise you will find it easier to locate the home of your dreams. Trust me, I do this for a living!

So get started writing down the description of your Dream Home. And let me know how it goes!

Are you considering buying a Condo? Understanding the pro’s and con’s of condo living can save you a lot of heartache! About 50% of home sales in Arlington are condominiums. Condo ownership offers you certain advantages over owning a single family home, but the differences should be understood so you can make the best choice for you.

When you buy a single family home, you are buying the land and the buildings upon it, and you normally own it “fee simple,” which is the most complete form of ownership. Single Family homes provide the maximum privacy of ownership, and simultaneously more responsibility for upkeep and maintenance. Condominium ownership gives you exclusive right to the interior space of your unit, and you are a co-owner of the rest of the property, land, building, fences, driveways, etc.

Single family home owners are usually free to renovate or landscape at will, whereas condo owners would need the approval and cooperation of other unit owners, especially if joint funds are to be used for improvements.  The two-family home style condos in Arlington are mostly managed by the owners of the units, and arrangements can be informal.  In the larger condo complexes a professional management company handles most of the affairs of finances, repairs, and landscaping, etc. As a Trustee, you would be able to vote, but there is less absolute power of decision than either a two-family condo or a single family. In return for less responsibility for the upkeep of the property, individual unit owners have less say over decisions made and actions taken. At certain points in your life this may be a great choice.

Two-Family Style Condos in ARLINGTON

The majority of condos in Arlington are in Two-Family style homes, the largest density of which are located in East Arlington. A typical layout of a unit may have five rooms, two bedrooms and one bath. The early 1900′s was a boom for building most of these homes, and they still have the special charm of that era. Gleaming woodwork, built-in cabinets, crown molding, hardwood floors, and in some cases glass doorknobs (my favorite). Variations on the theme include fireplaces, sunrooms, and front or rear decks. Over time many of these have been updated to have amenities like granite and stainless steel kitchens, gorgeous modern baths, overhead lighting, better insulation, replacement windows, gas fireplaces, central air conditioning, and walk-ups to a finished 3rd floor. I always wonder what those original builders would think if they came back today and saw what we’ve done with their work!

When Two-Family homes are turned into condos, one property turns into two. Legal documents are created establishing the Condo Trust, the Rules and Regulations, Master Deed, Unit Deeds, and detailed floorplans including common and private areas. These documents must be recorded at the Registry of Deeds when the properties get sold.

If you buy a condo, you should review the Master Deed, Unit Deed, Rules & Regulations, Budget, and if possible, minutes of recent meetings. Normally your attorney reviews these during the inspection period, while you are also learning about the house itself. You also want to know if any future assessments are planned for improvements, which will be levied on unit owners. Your Buyers Agent will help get answers to these questions.

Townhomes in Arlington

Another popular style of home is the Townhouse, or side-by-side condo. The layout provides a unit to have multiple levels of living area, from basement to second or third floor. Some recent builds (since the late 1990′s) have become some of Arlington’s most popular housing options. These could have 2500′ or more of finished living area, built to modern code standards, while maintaining yesterday’s charm. These townhouses range from the mid $400,000′s to the mid 5′s.

There are about 20 larger condo complexes in Arlington, which are managed professionally. Condo-living in a building or larger complex has the appeal of requiring less physical involvement in the upkeep, and are potentially more private (less involvement with your direct neighbor) than living in a Multi-Family style condo. A larger building condo may also have under-cover parking and elevators. These are advantages, and you do pay for them. Condo Fees are usually higher in building-style condominiums, and can range from $300 a month to as high as $800! Check the listing sheet!

As a rule of thumb, the interior living space of a “renovated condo” is higher than that of a single family home when compared dollar-for-dollar. Taking exmples straight from recent MLS sales in Arlington, here are photos of kitchens from properties that sold for around $300,000. See if you can guess which one belongs to the single family home, and which one belongs to the condo:

SINGLE FAMILY HOMES in Arlington

Depending on your stage in life maybe you are physically and financially ready to tackle landscaping, repairs, shoveling, and maintenance. Perhaps you need the room for a growing family. Many people forego the fancy condo updates in favor of the privacy of owning their own house. Over time you can make improvements that will add to your enjoyment and the value of the home. With some soul-searching and thorough property touring, I believe you will come to your own conclusion of which is right for you, a Single Family, or a Condo. There’s no right or wrong answer to this one, just where you think you’d like to call HOME.

Condos make a great alternative to renting, and are ideal for First Time Home Buyers. Once you outgrow your space there will be someone thrilled to buy your condo when you move up to your Single Family Home!

What other advantages or disadvantages do you expect from owning a condo? If you would like help exploring this topic, feel free to contact me for some help. I specialize in helping first time home buyers, who often find condos in Arlington the perfect choice.

First Time Home Buyers are still looking for solid advice and guidance, learning how to buy a home in Arlington MA or any surrounding area. All are invited to attend the January 26 First Time Home Buyer Seminar, presented by Dream Home Arlington and Wells Fargo Home Mortgage. Learn HOW to buy a home before you find your Dream Home!

• When: Wednesday January 26
• Time: 7 – 8:30pm
• Where: Bowes GMAC Real Estate Office – 1010 Mass Ave, Arlington
• Cost: Free!

Packed with insider knowledge of home-buying, timely information about the local Arlington and Middlesex County real estate market, and financing guidance, this is a “how-to” persons dream come true. We’ll cover home-buying in a step by step process, from establishing your Arlington Dream Home criteria, through Financing and pre-approvals, to Open Houses, Offers, Inspections, and on to Closing Day.

Taught by Arlington’s finest First Time Home Buyer Specialists (Realtor and ABR Bija Satterlee from Bowes GMAC Real Estate) and Mike Tanionos (Senior Lender, Wells Fargo Home Mortgage), you will discover:

• How to get a “good buy” on your first house or condo in Arlington
• How to identify and find the house or condo of your dreams
• How to get the best Financing and interest rate for your Arlington MA home purchase
• How to get the advantages of having a dedicated Buyers Agent
• How to make your Offer stand out from other Buyers, and more!

We have already seen plenty of buyers scouring the limited inventory of homes for sale in Arlington and surrounding areas like Lexington, Medford, Bemont and Cambridge. NOW is a great time to become a savvy buyer. Register for the January 26 First Time Home Buyer Seminar now. And the best part? It’s free!

Read Testimonials of some of our Seminar graduates!

email bija@dreamhomearlington.com to register for the Seminar. Seating limited, Register Today!

Buying your Arlington Dream Home in 2010: Are you Ready?

If owning your own home is on your 2010 ‘to do list’ then here’s how to make sure it happens.

Even you are months away from writing an offer, there are significant things you can do right now to get your “house-buying ducks” in order. My past clients will all testify that these steps done early save you stress, money, and other problems!

• Getting pre-approved for a loan early in the process
• Chosing a Buyers Agent who understands you and will protect your interests as you buy your home
• Getting explicit about your Dream Home Criteria — (Fill Out the Dream Home Criteria Worksheet)
• Attending a First Time Home Buyer Seminar
• Finishing up “old business” that may be holding you back~ like selling a house, saving for down payment, improving credit score
• Learning the inventory ~ whether through MLS (Multiple Listing Service) or open houses or private appointments.

I can’t emphasize enough how much less stressful buying a home will be if you follow these preliminary steps! Read the first success story here of a couple who took the right steps from the beginning, and who now live in an adorable home they love.

As the new year approaches I wish you peace, prosperity and good health. And if your Dream Home is in your future, now is a great time to plan and prepare for it so you can spend NEXT HOLIDAY SEASON in your new home, whether in Arlington or a surrounding area!

Be safe, and let’s make 2010 your year!

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