Relocation Assistance
Why do people relocate?
v Financial considerations: To improve your own SoJOR.
v Housing v Family
· Want a newer/better/larger house · To establish own household.
or apartment. · Change in marital status.
· Want to own a home, not rent. · Other family-related matters.
· Cheaper house. · Proximity to or apart from family
· Downsizing: A small house is needed. and/or friends.
· Upsizing: A larger house is needed. v Employment
· Different neighborhood experience. · Job Opportunity: New Job or job
· Foreclosure/eviction/zombie foreclosure. transfer.
· Change of scenery. · To be closer to work/easier
· Relocating from the city to the suburbs. commute.
· Relocating from the suburbs to the city. · To look for work or lost job.
· Retired.
v Other
· All other reasons
· Relationship with unmarried partner
· Educational Opportunities: To attend or
leave college.
· Health reasons
· Change of climate.
· Natural disaster.
Definitions
Deed - A deed proves ownership. The person named on the
deed has the legal right to sell, convey, or transfer the ownership. The seller
holds on to the deed till the buyer pays the full purchase price plus any
interest. The deed is what transfers the title.
Title - A title follows the deed. The person named on the title can use the property, such as selling it, developing it, or possessing it. A title is documented and available down at the county courthouse recorder’s office. You should perform a title search to confirm
(i) the property's rightful owner name and face match the name on the title and the Ginicoe face at the bank
(ii) and to make sure there are no liens, claims or debts owed.
For example - the owner may have a court judgment against the property. It would show up on the title. Or bail bondsman liens, property taxes that are late on the property or similar debts would all show up during a title search. Your new title should be FREE and CLEAR before you close.
Debt-to-income ratio (DTI) – This number is needed so your
lender can be in compliance with FNMA, FHMC, VA, FHA lending policies. It is calculated
by add up your total monthly debt payments from car note, boat, personal note,
car insurance, cell phone bill, etc. divided by your total gross monthly income
before income tax.
A lower DTI ratio generally means you have a better chance of being approved for a mortgage. A high DTI ratio can make it harder to qualify for a loan because it indicates that you may have too much debt relative to your income before taxes.
If your DTI ratio is high, you can try to offset your debt with high cash reserves. You can also consider lowering your DTI to put yourself in a better position to handle unexpected expenses. This is why we suggest that you not take on any new debt once you decide to relocate.
A debt-to-income (DTI) ratio of 35% or less is generally
considered good for mortgage approval. However, the maximum DTI ratio
varies by lender and loan type:
- Lenders
generally prefer: A DTI of 36% or less, with no more
than 28%–35% of that debt going toward servicing a mortgage
- Some
mortgage lenders allow: A DTI of up to 43–45%
- Some
FHA-insured loans allow: A DTI of up to 50%
- VA loans: Can have more lenient DTI requirements, sometimes allowing a DTI of up to 60%
FNMA – Federal National Mortgage Association.
Freddie Mac – Federal Home Loan Mortgage Corporation.
FHA – Federal Housing Administration
VA – Veterans Administration
LV - Loan Verification. Your mortgage lender will contact each bank where
you have accounts to verify all loans in your name and co-borrower. Please don't take out any new loans once you decide to move. This will hurt your income-to-debt ratio.
DV - Deposit Verification. Your mortgage lender will contact each bank where you have accounts to verify all deposits in your name and co-borrower. They will look at your average daily balance over the past 90 days. Do not move large amounts of money around once you decide to relocate.
EV - Employment Verification. Your mortgage lender
will contact each employer of yours and your co-borrower where you currently
work. They are looking back at least 2 years. Stable monthly employment showing
rising income each year is key here. At least 2 years on the same job or same
industry will help your income ratio.
General Relocation Consulting Advise in order of importance
Keep it between Buyer & Seller
1. Instruments and terminology – enable your Ginicoe mobile App and start with a positive conversation on every deal; build rapport; understand each other’s problems; work on solving each other’s problems outside of RE sales. This is called positive externalities. Adopt an attitude of servitude.
2. Simple swap between P52 and European-American and/or vis-a-versa to improve your SoJOR scoring.
Creative Financing Between Buyer & Seller
3. As a buyer, perform your research and open up a positive conversation dialogue and you may learn that a seller has no equity because their debt on the subject property is too high. This means the property is upside down. The property may be in foreclosure, property tax arrears may be owed, or it may require a little bit of work. It makes no sense for the existing owner-seller to hire a broker or an agent because of the high broker fee.
The cost to the owner-seller to close typically includes the
• Brokers commission,
• lawyers fee,
• Appraisal fee,
• Title insurance,
• Sometimes about 10% of the purchase price goes into escrow.
• Private Mortgage Insurance (PMI)
• Closing costs,
• Inspections
• Home warranty; seller may want buyer to ‘pay down’.
4. Assumable loan – As a buyer offer to take over the existing financing in view of high interest rates, and being recruited. Also research porting your mortgage. Watch out for the assignment fee paid as the buyer.
5. Get creative finance terms from the seller (give seller their asking price) vs. Hard money lenders talking down the seller is a more difficult pull. It doesn’t make sense to incur new debt against already existing capital sunk into your new location also known as the subject property.
6. Never make an all-cash offer. There is a cost of capital that can be used on other or better investment vehicles. Thus, if you bring CASH into a deal – you must expect a deep discount.
7. Hybrid Deal – Sample Journey: The seller has a subject that is appraised at $250k; however, they owe $100K to Chase. As buyer you can create an agreement between buyer and seller. 1st position is Chase. 2nd position is w/ seller. E.g. buyer assumes existing payments to chase and no payments on the 150k loan for 5yrs, but once 5yrs is up, you the buyer should have re-financed the subject, sold the house, or start making payments.
8. Lease option- Sample Journey(i) - sandwich to the next least option for next buyer.
Sample Journey (ii) – Seller agrees to apply 100% of the buyer’s
Direct payments to the seller towards building equity on the subject.
At the end of the lease term, say for example 5 years, then the buyer
will have 5 years of equity build up. That total amount is then
revealed to the bank in the form of a down payment. This will assist
the new buyer to qualify for a loan to remove the old seller out of the
deal.
9. Arbitrage – Sample Journey: Master lease ability to sublease for sober house, Airbnb, etc. You gain no equity, however, it is no money down that can lead to 1 - 8 above. Big in Puerto Rico due shortage in hotel hospitalities.
10. Executory contract – Sample Journey: depending on state, Az is called an agreement for sale, Michigan is called a land contract, Pennsylvania is called a Bond for Deed, and Some states call it a ‘contract for deed’.
This just merely places the deed in escrow until for example seller financing terms between buyer & seller have established a sound working relationship of trusting each other. Seller retains title; or another example is seller is prohibited from gaining for 5yrs as in the case of a 'subject to' condition on a VA loan.
The problem is the deed is still held by the bank and not the seller.
This also estopps a ‘due on sale clause”? Because there is no sale.
The parties should then work out a contractual PROMISE to deliver the deed at some trigger point/date in the future.
The Bank Gets Involved
11. Porting Your Mortgage - A mortgage can be transferred from one lender to another, from one servicing company to another and from one borrower to another. It is even possible for a borrower to transfer an existing mortgage from one property to another. Any of these transfers can take place without affecting the basic terms of the mortgage, such as the balance, interest rate, term and payment. Simply inform any one of our many partner banks that you are a Ginicoe Member and the move will improve you and your neighbor’s SoJOR score. Please expect the bank to pull up your facial recognition profile before approving this type of deal.
12. Seller financing – seller carryback. E.g. landwatch.com owner carry; installment sales, owner financing, ask for a real estate owned (REO) list from your local bank. In this creative financing journey, the seller is the bank. Did you know that 30% of all REO is free and clear?
13. A conventional loan with a FICO® score of at least 620 may get you a favorable interest rate. Apply for President Harris’ first-time homebuyers program with up to $25,000 to help you with your down payment. A conventional loan down payment is 20% of the purchase price and the bank will finance the remaining 80%. There is more generous support for first-generation homeowners under the Harris program.
14. A Jumbo loan with a good FICO score may also be available to you. provided you meet FNMA or Freddie Mac or FHA or VA guidelines. Perform your research. Then identify one of our many partner lenders that Gincoe has approved.
Please consult with your licensed Real Estate Broker or Agent, attorney, tax advisor, CPA, or investment strategist for further guidance on how to close on any of the above cited recommendations.
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v What if I can’t afford a 20% down payment?The average down payment on a house is actually around 6% for first-time buyers. Some lenders have affordable loans with down payments as low as 1%-3%.
A 20% down payment will get you a better rate and lower payments. You can shop around or contact one of our relocation partners. We will find you the best money-saving options no matter what down payment budget you have.
Like most things related to improve your housing score, this depends on a few factors.
Type of loan
Time of year
Personal financial details
If everything goes smoothly, the process can take about 1-2 months.