Breaking Down Borrowers
Monthly Payment Estimates
When prospective borrowers first contact me, their main focus is often on the following 3 things ...
- What their prospective total monthly housing expense will be
- What money they'll need to buy/finance a home
- The chances of their being approved for a mortgage
They have a laserlike focus on these 3 facets of the process. As a result, I typically find it's best to immediately address their concerns.
Subsequently, a discussion regarding those elements that contribute to their future total housing expense/monthly payment ensues. Mentally this "frees" them and allows them to move on to the other important aspects we need to cover regarding their mortgage process.
That talk touches on:
- The monthly Mortgage Principal and Interest payments
- Real Estate Taxes
- Homeowner's Insurance
- If applicable, Private Mortgage Insurance
While initially much of their focus is on the Principal and Interest (and interest rates) portion of the monthly payment ... I always stress that the Real Estate Taxes and Homeowner's Insurance (etc.) portion of their payment is of equal importance. And as such, it's something that they and their agent need to be cognizant of when searching for homes.
Here's an example of why this is so very important ...
A recent prospective home buyer of mine requested that I estimate a monthly mortgage payment on 3 properties they'd viewed and were considering. Two of the 3 properties were on the same street and within one block of each other.
These two closely-located homes were found within a tract subdivision in the same city and were the very same model of home. That should be easy enough, right?
Well ... not exactly ...
These particular homes were in an IL city that is somewhat unique. It has portions of itself that are located in 4 separate counties. And each of those counties has a different tax base and uses a different reporting system.
So my research on these properties constituted:
- Taking the property addresses and determining the correct county in which each of the properties resides
- Visiting each county's Property Assessor and Treasurer website(s)
- Finding (verifying) each property's respective PIN (Permanent Index Number) a number unique to every property
- Searching and finding the amount of the latest annual real estate taxes
- Learning how each tax bill was calculated
Now if you guessed that I found via my research that 2 drastically different tax bills existed for these 2 closely-located properties ... you're right. Although these homes were basically identical ... on the same block, of the same age, the same size, the same design, with Listing Prices only $5,000 apart ... a $450 difference between their latest annual tax bills was revealed.
Because of that, the "Qualifying Housing Expense" provided my clients for each home was quite different too. My comparison showed that a $65 gap in monthly housing payment between the two homes existed for them.
A little more research revealed just why this difference in total annual real estate property taxes existed. One of the homes was not lived-in by its Owner, while the other property was owner-occupied.
The property assessments for each home were nearly identical but after the homeowner living in their property received their Homestead Exemption, the Net Assessment of the owner-occupied property was lower and therefore reduced the annual tax bill due. In this particular case, by $450 per year.
If my borrower ends up choosing the property with the higher tax bill, successfully closes, and moves into the property ... the next year's tax bill will be reduced, as the new homeowner/property will reap the benefit of their Homestead Exemption.
This discussion ... these comparisons, are just one example of the many important discussions and comparisons a borrower should hold with their Mortgage Originator. An understanding of this basic component and how it affects their total monthly mortgage payment ... and ultimately their success in achieving Mortgage Approval ... is vitally important for borrowers.
Recently I saw an industry marketing piece that suggested to Originators that they use an advertised "easy-to-use and inexpensive program" for determining accurate real estate taxes. They could also then use the tool to disclose correct monthly housing payments and housing expenses to their borrowers during their mortgage process with peace of mind.
I submit that it's wise for borrowers to seek an Originator that does not need this type of service. That their Originator should know how and where to find the tax and assessment information for the properties that they are considering for purchase and/or financing.
Their Mortgage Originator should thoroughly understand property tax and assessment systems and calculations ... and then be capable of accurately calculating and explaining the ramifications of those tax calculations (and property assessments) on monthly housing payments, expenses, and tax escrows to their borrowers ... both in the current and future tense. How can an Originator possibly expect their borrowers to understand it all if they do not understand it well themselves?
"Combined Housing Expense" and monthly mortgage payments are a main focus and concern for borrowers as they enter into their home buying and financing. Rightfully so, as much depends on the info and answers they are provided by their Originator.
A new Buyer/Borrower is focused on and hungry for this important information. Understandably so, as their choice of home, the affordability they seek and find, their future finances, and ultimately their mortgage approval rests upon it ...
Choose your Mortgage Originator wisely ...
* Are you hoping to buy or refinance a home or investment property in New Lenox, Will County, or elsewhere in the Chicagoland, IL/Wisconsin area?
Contact Me! I'll put my 40+ years of mortgage experience and expertise to work answering your questions and fulfilling your financing needs.
I'm easily found at:
Gene Mundt
Mortgage Originator - NMLS #217987 - IL Lic. #031.0006220 - WI Licensed
American Portfolio Mortgage Corp.
NMLS #175656
Direct: 815.524.2280
Cell/Text: 708.921.6331
eFax: 815.524.2281
Gene Mundt, Mortgage Originator, an Originator with 40+ years of mortgage experience, will offer you exemplary mortgage service and advice when seeking: Conventional, FHA, VA, Jumbo, USDA, and Portfolio Loans in Chicago and the greater Chicagoland region, including: The Lincoln-Way Area, Will County, (New Lenox, Frankfort, Mokena, Manhattan, Joliet, Shorewood, Crest Hill, Plainfield, Bolingbrook, Romeoville, Naperville, etc.), DuPage County, the City of Chicago, Cook County, and elsewhere within IL & WI.
Referrals are Greatly Welcomed & Appreciated!
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