Blog | Archives for April 2019

What to Expect and How to Prepare for Refinancing Your Home

By Southern Trust Mortgage
April 30, 2019

If you are a current homeowner, it’s likely you’ve heard the term “refinance” before. You may have even refinanced a home you owned in the past. If you purchased your home more than a year ago, there’s a good chance that you have been sent information about refinancing from the loan officer who helped you secure financing when you purchased your home. Whether you’ve refinanced before or you’re just now exploring the concept as an option, we hope to address some common questions about refinancing in this post.

What does it mean to refinance a mortgage?

When you apply to refinance your home loan, it means you are attempting to pay off the existing loan and replace it with a new loan. The remaining balance on the former loan is paid off using the new loan, and after closing you begin to pay off the balance on the new loan.

Why do people refinance?

Refinances are not required during the life of any loan, but if you might be able to get a better rate or term or other benefit, it’s worth looking into at least. The reasons why people refinance their homes typically comes from a place of wanting to improve or insure their family’s financial futures. This can be done in a myriad of ways, with multiple options for refinancing offering different outcomes for the borrowers. These options include but are not limited to lowering your interest rate, attempting to shorten the loan term, using the equity already paid into a home to finance a large purchase, or consolidating debt.

How does the refinance process differ from the purchase process?

The primary difference you will notice between the purchase and refinance process is, unlike the loan process when you purchased your home, you are already the homeowner. That means there will be no selling contract, no down payment to assemble, and no real estate agents involved, among other things. Much of the loan process for a refinance will be the same as the process for purchasing. Your credit and income will be evaluated. You will take out a loan application with a loan officer, and a team of underwriters and processors will review your application in hopes of issuing an approval. Most types of refinance loans require an appraisal for the property being refinanced for the same purpose as the appraisal in the buying process; before lending, the lender will want to verify that the property is worth the amount being loaned.

How do I need to prepare for refinancing?

To make your refinance process go smoothly, prepare in advance as much as you can. Assemble your financial documents, namely your most recent bank statements, your W2s and/or your tax returns from the past two years. You may also be asked to provide recent pay stubs, so have those on hand as well when you apply. If you are uncertain of your credit score or your score needs reviving, contact the loan officer of your choosing before you apply. At Southern Trust Mortgage, we have credit experts on staff to help you rehabilitate your credit score before applying.

As for your home, you will want to make sure that your property meets regulations for health and safety measures, such as smoke detectors and being certain that any additions you may have made to the property since purchasing were permitted by the city in which you live. Since the appraised value of your home can tie directly to the rates lenders offer you, it is in your best interest to get your home into the best possible shape before applying.

Southern Trust Mortgage has been helping clients buy and refinance properties since 1998. Our loan experts are knowledgeable in all aspects of how a home loan refinance can benefit you. Contact us today to learn more!

Blog | Archives for April 2019

Should I Buy a Second Home or an Investment Property?

By Southern Trust Mortgage
April 25, 2019

Is it time for a little getaway? Maybe you’re looking for a new, exciting way to invest for your future. If either of those apply to you, keep reading! Occasionally, buyers purchase a home with the intention of using it as a either a second home or as an investment property. While the processes for purchasing a second home or a home to use as an investment property are similar (and don’t differ much from the usual mortgage process, either), there are a few key differences and some benefits that make these kinds of purchases unique. In this post, we will explain the similarities, the differences, and how each may benefit you.

How are they similar?

The main similarity between second homes and investment homes is that neither can be listed as your primary residence at any point in time. Both also may come with certain tax benefits. These benefits include mortgage interest being used as a tax deduction in the case of second home loans, and the cost to upkeep the property being a possible tax write-off in the case of investment properties.

How are they different?

If you’re thinking of purchasing a second home, it’s usually with the intention of using the property as a vacation home or another place where you can comfortably spend a good portion of your time. That is all well and good, but you should know that most lenders will only consider a property a second home if it is at least fifty miles from your primary place of residence. That means if -for example- you’re making a thirty-minute commute every week and want to buy a second home closer to your place of employment, you will not be able to purchase a second home in that location. Additionally, you can only own one second home in any given area. If you purchase two homes close to another and try to claim both as a second home, you may be told to consider one of the homes as an investment property.

Investment properties, however, are not meant to be used as residences by the buyer; this means you will not be able to stay for any great length of time in the investment property for as long as it’s financed as an investment property, but unlike second homes, there is no requirement concerning a minimum distance from your primary residence. Investment properties may be either a residential rental property, a commercial property, or a property purchased with the intention to “flip” it once the pre-designated amount of time required to pass between sales of a home has passed.

The Benefits: Second Home

The immediate benefit for purchasing a second home in a location you visit frequently is no more hotel reservations! Instead, you get to build equity into a home that you own. Also, financing for a second home is usually a bit more lenient as second home mortgages are viewed as lower risk than loans for investment properties.

The Benefits: Investment Property

Investment properties may be used by their buyer infrequently; in fact, they are designed to be rented out, and this can be a benefit to you as a buyer. Being that rent for an investment property is paid monthly, it serves as a consistent form of income especially if the rental payment is higher than the monthly mortgage payment. Done correctly, investment properties may yield a better return than some CD or savings accounts. If you decide to use a property management company to manage the renting out of the investment home, you may be able to write it off when you file your taxes; this might also be true of certain other property related expenses.

There is much more that goes into buying investment and second homes, but at Southern Trust Mortgage we have all the information you need to make an informed decision about your purchase. Contact us today to speak with one of our loan experts and let us help make home (be it primary, second, or investment) happen for you!

Blog | Archives for April 2019

10 Spring Cleaning Tips to Help You Sell Your Home

By Southern Trust Mortgage
April 22, 2019

If you are living in your home as you try to sell it, it may seem impossible to keep the house up to selling standards without infringing on your family’s daily comfort or routine. It can, however, be done! Here, we’ll detail just a handful of tips for cleaning and sprucing up that will make your house both spring and sale ready!

1. De-clutter.

This tip is one you may already be considering since you’re planning to move out of your home. De-cluttering your house can be as simple as reorganizing your books and DVD collection, or as massive as the entire family sorting through and getting rid of clothes. If you decide to pack the excess items that are deemed clutter, store them neatly in the attic or in an offsite storage unit while you try to sell your home.

2. Make the beds

Here’s one for the whole family to keep up! Making your bed neatly lends your room a nice, finished appearance. If there is no other straightening you achieve in your bedroom on any one day, doing that alone will still make a big difference in how the bedrooms in your home look.

3. Put away family photographs and personal items.

This tip may seem contradictory. After all, don’t you want any potential buyers to be able to imagine a family living in the house? Yes, but having photos or very personal items out can affect how a buyer views the house. You want them to imagine themselves in your home, so it’s more important to make your home look warm, inviting, and lived-in, while not attaching the image of a specific family to it.

4. Paint high-traffic or worn areas like door frames and window sills.

You may not have the time or the budget to repaint whole rooms before listing your home, but invest in a can of paint (usually white) for areas that experience the most wear and tear. Door frames see a lot of damage just from daily use, and so do window sills and frames and baseboards. Touch up each with a little bit of white paint and see what a difference it makes!

5. Clean the fridge, oven, microwave, and appliances.

This tip is especially important if you have stainless steel appliances. It won’t be possible for you to completely avoid using your appliances while you are still living in your home, but you can clean the appliances inside and out. Enlist your family’s help in keeping the appliances spic-and-span by doing a quick spot-clean after every use.

6. Wash the windows and blinds.

Dirty windows and dusty blinds can really bring a room down, so wash both with a cleaner before you list your home. Don’t forget to dust the window sills! When a daytime showing is scheduled, open the blinds before you leave. The natural lighting through the open windows will make your home look larger and more inviting, and it photographs beautifully!

7. Weed and maintain the flower beds and yard.

If you weren’t blessed with a green thumb, keeping your flower beds neat and weed-free will still make a positive impression rather than letting weeds sprout freely. Keep your lawn trimmed. Spray and mulch where needed. If you have no foliage planted and would like to add some for appearance, place some potted plants in the flower bed. They can then be transferred to your new home once you sell.

8. Never underestimate the impact of well-placed fresh flowers.

Leading off of the last point, placing fresh flowers on an entry way or focal point can elevate a rooms appearance as well as release a fresh scent throughout the house. Go for flowers that are low allergy but visually make a statement, like hyacinths or peonies, or buy something long-lasting, like fresh eucalyptus branches.

9. Polish the kitchen and bathroom cabinets.

If you’re short on time, you don’t need to stress about re-finishing, re-painting, or replacing your kitchen and bathrooms cabinets. Rather, give the cabinets a good polishing with a wood polish, either homemade or store bought. Polishing will restore some luster to older wood, refreshing your cabinets appearance and hiding imperfections.

10. Clean the baseboards.

This is a tip that seems small but makes a huge difference in the overall perception of your home’s cleanliness. Dirt and dust tend to accumulate around the baseboards, the joint where the walls meet the flooring, making the rooms appear dingy or less kept. You only need to a rag and a mixture of dish soap diluted in warm water to clean this mess up; with any luck, you shouldn’t need to do it more than once before you sell your home!

We hope these tips have helped you plan your spring cleaning and sale sprucing!

Blog | Archives for April 2019

Everything You Need To Know About the Good Neighbor Next Door Program

By Southern Trust Mortgage
April 17, 2019

Are you a teacher, firefighter, EMT, or police officer? Great news: the US Department of Housing and Urban Development has developed a program specifically with you in mind. The goal of this program is to provide affordable housing to our valuable community helpers. Think of it as a thank you for your service in whatever role you serve in your community.

What is the Good Neighbor Next Door program?

The purpose of this program is two-fold: it aims to revitalize neighborhoods through affordable homes while also helping those who fill some of the most important duties in the community achieve their goals of homeownership. As the purpose of the program is dual, so is the incentive; HUD offers borrowers who qualify a fifty-percent discount from the list price of the home, and in exchange, you must agree to purchase and live in one of the pre-determined eligible properties for thirty-six months (three years) as your sole residence.

What are the requirements for borrowers?

As with all loan programs and benefits, certain requirements are in place both for eligible borrowers and the properties being purchased. The requirements vary depending on which role you occupy within your community.

Law Enforcement: To participate in the Good Neighbor Next Door program as a member of law enforcement, you must be employed full-time by a law enforcement agency of the federal government, state, unit of general local government, or Native American tribal government.
Teachers: To participate in the Good Neighbor Next Door program as a teacher, you must be employed as a teacher full-time by a state-accredited public or private school. The school must provide services to students from the pre-kindergarten ages through 12th grade. Additionally, if you are qualifying as a teacher, the area in which you purchase a home through the program must be the same as the area in which you work.
Firefighters and Emergency Medical Technicians: To participate in the Good Neighbor Next Door program as a firefighter or EMT, you must be employed full-time as a firefighter or EMT by a fire department or emergency medical services responder unit of the federal government, state, unit of general local government, or Native tribal government. You must also serve in the area where the home is located.

Financing for homes through this program is available through the FHA. Standard FHA requirements apply. You must also be able to finance all the closing costs and pre-paid expenses associated with the purchase through an FHA-insured mortgage. HUD also requires that you sign a second mortgage note for the discounted amount. No interest or payments are required on this second (called a “silent second”), and provided you fulfill the minimum occupancy requirement, the second mortgage is forgiven at the end of three years. All equity in the home then becomes yours.

What are the requirements for properties?

With the Good Neighbor Next Door program, eligible homes are located in what HUD calls revitalization areas. Areas chosen for revitalization must meet certain criteria based on median household income, homeownership rate, and FHA-insured mortgage foreclosure activity. Homes located in revitalization areas are listed for sale exclusively through the Good Neighbor Next Door program; the listings last for seven days and change weekly. If more than one qualifying borrower submits an offer on any one home, a selection will be made by HUD via a random lottery. The number of properties is limited.

At Southern Trust Mortgage, we are grateful to the women and men who help to make our communities better every day. We’ve been helping community heroes just like you purchase homes since 1998. Contact us today; we would be honored to help make home happen for you.