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4 Myths about Mortgages for Millennials

By: Shoshana R. Cohen

MYTH #1: It is very difficult for Millennials to become homeowners

FACT: Despite the fact that Millennials face many hurdles, such as student loan debt, underemployment, and high rental prices, many creative finance structuring options exist. Today, it is possible to close a loan for up to $636,100 with only 3.5% down payment, which is a manageable course of action. As with any financing, reserves are required. However, they are not pledged in any way.

MYTH #2: My branch at (insert personal bank here) offers loans. I should go there.

FACT: Unlike direct lenders who only represent the bank, brokers work with a variety of wholesale banks and specialized lending institutions. Make sure to prepare your paperwork in advance. This cannot be stressed enough as there are many variable layers in the homebuying procedure. If any bank deposits are out of the ordinary, provide that information too. Mortgage brokers know what questions to ask and work with you to fill in gaps. Their technical experience allows them to package the loan to highlight your strengths and minimize any issues.

MYTH #3: I don’t need to start working on my mortgage until I find a house I want to make an offer on.

FACT: In order to prevail in today’s aggressive market, it is imperative that homebuyers are prepared to present an offer with minimal contingencies as soon as possible. A pre-approval letter makes a prospective buyer seem more attractive because it shows that the buyer does not have an issue in obtaining a loan. You should arm yourself with a pre-approval letter customized to your needs, which can subsequently be tweaked later in the process depending on the home’s selling price. Pre-approval and approval letters are taking on a new dimension, as well-regarded pre-approval letters are even able to compete with all cash offers.

MYTH #4: It is hard to improve my credit score

FACT: With proper support, there are many strategies for repositioning your credit score, which is subjective based upon your spending and payment history. Mortgage brokers run the 3 Bureau Credit Report, which better reflects your credit score than any report you can run online. With this scoring system, brokers can do an analysis of credit cards that can be strategically paid down to certain amounts to pump up your overall credit score. Additionally, it is not unusual for trivial things, such as minor medical collections, to impact the credit score.

If you are a Millennial First-Time Homebuyer, feel free to contact CenTek Capital Group at 310-275-3202 to take advantage of any of our gratis mortgage services. We are available on M-F from 7:00 AM- 7:00 PM to run what-if scenarios. We also return calls on the weekends.

We know that breaking into the housing market alone can be rigorous and time-consuming for young professionals. With 30+ years of experience, CenTek Capital Group has funded every type of loan, issuing a detailed up-front loan approval for many programs and closing purchase transactions in about 25 days. CenTek acts as your partner throughout the financial process, guiding our millennial clients through mortgages and more. Our team maintains long standing relationships with a vast network of funding sources to gain unparalleled access to the most aggressive real estate financing options and solutions on the market. Ultimately, we utilize our technical knowledge in conjunction with our decades worth of professional connections to help clients and their agents prevail with their offer and close the deal.

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Important Purchase Tips

A few general concepts to help you prevail with your potential offer.  Please contact us and we will strategize together how to submit an offer as it relates to financing, based on our extensive experiences. The market is requiring aggressive posturing with multiple offers being so frequently at play and the current competition being so intense.

Important concepts to consider for purchases:

  • Loan package must be fully ready to issue disclosures when there is finally an open escrow.
  • 30 day closes are possible with many transactions.
  • We can issue DU (direct underwriting) approval upfront for many programs (which means you are officially approved for the loan).
  • Another common technique is to cut an appraisal contingency down to 5 days.
  • Never waive an inspection contingency.
  • With condos, the listing agent should provide contact HOA phone numbers at the opening of escrow (Naturally your agent would have vetted the property pre your offer).

A few random thoughts to help you get to the escrow level:

  • Waiving all conditions ASAP.
  • Release of the deposit– if money is needed by the seller and you are approved.
  • Offer a 30 day lease back if the seller does not have a new property for the relocation.

These are just a few important thoughts to proceed with a successful purchase.