​by Christian Scully

I've found that the most helpful topics to discuss on BL+F are questions that I am often asked by either borrowers or realtors. Appraisal gaps have always been an issue, but their instances have exploded in the past couple years. Home values have grown massively nationwide. Buyers are often paying in cash above asking price and waiving all contingencies. This sets the stage for a home selling for greater than a licensed appraiser can value the property. The difference between the selling price of a home and its appraised value is called an appraisal gap or an appraisal shortage. 

For example if a home sells for $250,000 and the appraiser values the home at $225,000 - there is a $25,000 appraisal gap. A typical purchase and sale agreement would state that the contract is contingent upon the home appraising for at least $250,000. When the buyer applies for a mortgage it will be based on the sale price of $250,000, which combined with their down payment will dictate their loan-to-value ratio. A conditional approval from the lender based on these terms would state that the loan approval is subject to the appraisal of the property at or above $250,000. 

There are five important options for a buyer and their realtor to know about preparing for and solving an appraisal gap. The chosen path completely depends on the buyer's goals and finances. 

​by Christian Scully

As we witnessed in 2020, news headlines and online advertising are enough to stir up excitement and send borrowers shopping and applying for refinances. 2020 even saw some interest rates under 2%! What those news headlines often forget to mention is the $10,000+ in discount points you'd be paying to get a rate under 2%. 

Sometimes borrowers will start a conversation with me by inquiring about the current interest rates. This is not a black and white question. Those advertised rates are generally the best rate you could possible qualify for under perfect conditions. However, in the process of applying for a mortgage, other details about the transaction are filled in. Those details can trigger a "loan level price adjustment" or LLPA. 

LLPA's can add or subtract a small amount to the interest rate for various reasons. The most recent newsworthy example of this would be the half-point (0.5%) fee that Fannie Mae and Freddie Mac added to all refinances after 9/1/20, named the "Adverse Market Refinance Fee". In most cases, this would cause the interest rate to increase simply for the fact that the loan purpose is a refinance. 

Other details that will affect a borrower's qualifying interest rate include their credit score. For example, if the borrower has a 580 credit score, their interest rate will increase more than if the borrower as a 660 credit score. If the borrower is applying for a mortgage on a primary residence, the interest rate will be lower than if it is a second home. Interest rates for investment properties are significantly higher. Interest rates for multifamily properties will be higher than for single family properties. Rates for 5% down payment will be higher than 20% down payment.

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by Christian Scully

Cryptocurrencies have reached new levels of popularity with individual investors and institutions around the world. Amid a record breaking bull run, with currencies like Bitcoin and Ethereum gaining a combined total of nearly $1.5 trillion, it is estimated that over 15% of American adults hold some amount of cryptocurrency in their investment portfolios. 

With decentralized finance, or DeFi, projects gaining more steam and attention, bringing real use cases to market, more than simply a buy-and-hold asset, the future of financial technology is poised for exponential breakthroughs in the next decade. 

Since central governments have generally not yet made major policy decisions regarding regulation and taxation of cryptocurrencies, critics argue the high volatility and lack of current uses make cryptocurrency a poor investment. 

When it comes to uses, some investors - while buying and holding crypto for long term gains - would like to at least know they can use their crypto gains for something as generic as buying a home. After all, what good are major gains if you can't use them? 
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by Christian Scully

Applying for a home loan can sometimes feel like a challenge, but the best thing you can do as a borrower is to be informed, prepared and to not make things harder for yourself. If you have already been prequalified for a mortgage, you are going to want to keep your current financial situation unchanged. Consider that you are building an image of yourself for your lender, you don't want to change that image before the lender can make the ultimate decision. If you are working towards getting prequalified for a mortgage, you want to avoid anything that will be detrimental to your credit history. If you are already under contract or in the middle of a refinance application, there are a few easy mistakes to avoid. No matter what point you are at in the mortgage process, make note of the following eleven things you should not do.
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Opening new credit accounts could have two potentially negative effects. First, if you open a new credit account you could be adding debt to your credit report. Additional debt could change the loan amount you qualify for. Second, opening new credit accounts will lower the average age of your credit accounts which could lower your credit score. 
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If you have applied for a credit card and been denied, don't keep applying for more cards thinking eventually one will approve you. Every time you apply for credit there is a hard inquiry on your credit report, potentially lowering your score. Applying to a few different mortgage lenders in an attempt to shop around for the best rate and terms is okay. Typically if you have a few inquiries from mortgage lenders in the same month it will be clear that you are shopping around and your score likely won't be impacted too much.  However if you have 8 inquiries for credit card, 4 inquiries for auto loans and a few mortgage inquiries, it does not paint a very good picture of your financial situation, especially if those inquiries don't lead to actually opening a credit account. It shows lenders that you likely are not qualified for credit.

+ Better Note: Hard inquiries stay on your credit report for two years. If you are applying for a mortgage, your lender will likely ask for explanations if you have several recent hard inquiries on your credit report. They want to know that you don't have new debt obligations that have not yet been reported.

by Christian Scully

At this point you should have already been working with a loan officer, gone through the prequalification process, and been issued a prequalification letter that tells you, your realtor and any seller to whom you submit an offer how much you are qualified to borrow and what type of loan you will be applying for.

If you have not been through the prequalification process, then take a few minutes to start with the previous article on this topic here.

If you have been prequalified, congratulations! If you are still working towards prequalification, stay the path and keep working hard. The next step in the mortgage process is applying for the mortgage. If you are working with a good lender and they did a thorough prequalification, then you should already be in a good position to get through the application process almost effortlessly.
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Let’s break down the mortgage application process so you know exactly what to expect and you can be prepared.