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Thursday, August 27, 2009
Wednesday, August 26, 2009
Tips for First Time Home Buyers
So you’re thinking about buying your first piece of real estate? Before you even begin looking at a potential property, you need to make sure you can qualify for a mortgage. The following are some useful “tips for first time home buyers
.”
The first thing any potential homeowner should do is obtain a free credit report, either from Annualcreditreport.com or via a free trial website.
Once you’ve got your credit report at your fingertips, analyze it and determine what your monthly expenditures are. You will see a monthly payment next to each liability on the credit report. Add up all those payments and jot it down somewhere. These are your total monthly liabilities and will be important when determining how much you can afford.
Also scan the credit report for derogatory accounts and clean them up as best you can. If you’ve got delinquent accounts, resolve them. If you see collections, call the companies the disputes are with and do your best to make a deal. If everything looks good, you can move on. If not, you may want to repair your credit to a mid-score above 680 or higher before beginning your property search.
*One important note: Do NOT open any new credit accounts or make any large purchases using your credit cards within a few months before applying for a mortgage. This includes buying that plasma screen on a Best Buy card for your new crib. It can drive your credit score down needlessly which will result in a much higher interest-rate.
Now that you’ve got your credit in order, it’s time to figure out how much you can afford. Most banks and lenders allow borrowers to have a debt-to-income ratio up to 45%. Read more about debt-to-income ratios.
By taking your total liabilities and adding it to a monthly housing payment, and dividing that number by your monthly gross income you’ll come up with your DTI.
Let’s look at an example:
$10,000 monthly gross income
$1,500 total monthly liabilities
We know from the above example that your total monthly payments can’t exceed $4,500, or 45% DTI based on your $10,000 gross monthly income.
So if you already have $1,500 in total monthly liabilities, you can add a housing payment of $3,000 a month. This doesn’t leave much room in this market.
Let’s look at the same example with a housing payment, including taxes and insurance based on California rates:
$550,000 purchase price
$440,000 loan amount
6.25% interest rate
$2291.66 monthly interest-only payment
$572.92 monthly taxes
$128.33 monthly insurance
$2,992.91 total monthly housing cost
In the above scenario, a potential homeowner making $10,000 gross income a month can barely afford a $440,000 loan paying the interest-only payment. What does this tell us?
It tells us that there are a ton of homeowners out there living paycheck to paycheck and overstating income to qualify for homes they simply can’t afford. At least not in the eyes of banks and lenders that require borrowers to keep their DTI below 45%.
So now you’ve got an idea of what you’ll be able to afford. There are a number of mortgage calculators out there that will give you a better idea of what you can qualify for.
Now that you’ve got your credit profile in check and you know what you can afford, you’ll need to make sure you’ve got a verifiable housing history and seasoned assets.
Most lenders ask that you verify your last 12 months housing history. You can do this with cancelled checks or a VOR (Verification of Rent) from your landlord. This is important to determine the payment shock effect on the borrower.
Liquid assets are always helpful when applying for a loan, and are almost always a necessity for a first-time homebuyer. Make sure you have an account with at least two months PITI (Principal, interest, taxes and insurance) available. Also make the money in said account has been there for at least two consecutive months to ensure that it is seasoned. Banks and mortgage lenders don’t give much weight to unseasoned assets, as any friend, relative, or even a broker or loan officer can easily dump assets into your account before you apply for a mortgage to boost your net worth.
Now that you’re prepared, it’s time to be vigilant and proactive. Avoid predatory lenders and do your interest rate homework. Check out a rate sheet from the bank or lender that you’re being quoted from. Ask what the rate adjustments are. Ask if the loan carries a prepayment penalty and for how long? Get all the facts before you sign anything. And once you like it, lock it!
With all this preparation behind you, the loan flow will be a comfortable process with few surprises. It might not be perfect, but if you follow these rules you will definitely save money and reduce stress!
Let’s review the tips for first time home buyers in a condensed format:
- Order a free credit report
- Review your credit and clear up any derogatory accounts
- Do NOT open any new credit accounts or make any large purchases
- Calculate your total monthly liabilities
- Figure out your DTI and what you can afford
- Make sure you have a 12-month verifiable housing history
- Make sure you have a seasoned asset account with at least 2 months PITI
- Do your interest rate homework
- Lock your interest rate
Need some loan advice..call Angelica
310 665 8688
want an agent to help
call me..818 422 2040
.”
The first thing any potential homeowner should do is obtain a free credit report, either from Annualcreditreport.com or via a free trial website.
Once you’ve got your credit report at your fingertips, analyze it and determine what your monthly expenditures are. You will see a monthly payment next to each liability on the credit report. Add up all those payments and jot it down somewhere. These are your total monthly liabilities and will be important when determining how much you can afford.
Also scan the credit report for derogatory accounts and clean them up as best you can. If you’ve got delinquent accounts, resolve them. If you see collections, call the companies the disputes are with and do your best to make a deal. If everything looks good, you can move on. If not, you may want to repair your credit to a mid-score above 680 or higher before beginning your property search.
*One important note: Do NOT open any new credit accounts or make any large purchases using your credit cards within a few months before applying for a mortgage. This includes buying that plasma screen on a Best Buy card for your new crib. It can drive your credit score down needlessly which will result in a much higher interest-rate.
Now that you’ve got your credit in order, it’s time to figure out how much you can afford. Most banks and lenders allow borrowers to have a debt-to-income ratio up to 45%. Read more about debt-to-income ratios.
By taking your total liabilities and adding it to a monthly housing payment, and dividing that number by your monthly gross income you’ll come up with your DTI.
Let’s look at an example:
$10,000 monthly gross income
$1,500 total monthly liabilities
We know from the above example that your total monthly payments can’t exceed $4,500, or 45% DTI based on your $10,000 gross monthly income.
So if you already have $1,500 in total monthly liabilities, you can add a housing payment of $3,000 a month. This doesn’t leave much room in this market.
Let’s look at the same example with a housing payment, including taxes and insurance based on California rates:
$550,000 purchase price
$440,000 loan amount
6.25% interest rate
$2291.66 monthly interest-only payment
$572.92 monthly taxes
$128.33 monthly insurance
$2,992.91 total monthly housing cost
In the above scenario, a potential homeowner making $10,000 gross income a month can barely afford a $440,000 loan paying the interest-only payment. What does this tell us?
It tells us that there are a ton of homeowners out there living paycheck to paycheck and overstating income to qualify for homes they simply can’t afford. At least not in the eyes of banks and lenders that require borrowers to keep their DTI below 45%.
So now you’ve got an idea of what you’ll be able to afford. There are a number of mortgage calculators out there that will give you a better idea of what you can qualify for.
Now that you’ve got your credit profile in check and you know what you can afford, you’ll need to make sure you’ve got a verifiable housing history and seasoned assets.
Most lenders ask that you verify your last 12 months housing history. You can do this with cancelled checks or a VOR (Verification of Rent) from your landlord. This is important to determine the payment shock effect on the borrower.
Liquid assets are always helpful when applying for a loan, and are almost always a necessity for a first-time homebuyer. Make sure you have an account with at least two months PITI (Principal, interest, taxes and insurance) available. Also make the money in said account has been there for at least two consecutive months to ensure that it is seasoned. Banks and mortgage lenders don’t give much weight to unseasoned assets, as any friend, relative, or even a broker or loan officer can easily dump assets into your account before you apply for a mortgage to boost your net worth.
Now that you’re prepared, it’s time to be vigilant and proactive. Avoid predatory lenders and do your interest rate homework. Check out a rate sheet from the bank or lender that you’re being quoted from. Ask what the rate adjustments are. Ask if the loan carries a prepayment penalty and for how long? Get all the facts before you sign anything. And once you like it, lock it!
With all this preparation behind you, the loan flow will be a comfortable process with few surprises. It might not be perfect, but if you follow these rules you will definitely save money and reduce stress!
Let’s review the tips for first time home buyers in a condensed format:
- Order a free credit report
- Review your credit and clear up any derogatory accounts
- Do NOT open any new credit accounts or make any large purchases
- Calculate your total monthly liabilities
- Figure out your DTI and what you can afford
- Make sure you have a 12-month verifiable housing history
- Make sure you have a seasoned asset account with at least 2 months PITI
- Do your interest rate homework
- Lock your interest rate
Need some loan advice..call Angelica
310 665 8688
want an agent to help
call me..818 422 2040
Thursday, August 13, 2009
Want to smile? read this...
Three Ways to Predict the End of the Housing Bounce
By Andrew Jeffery
On Thursday August 13, 2009, 12:20 pm EDT
Buzz up! 0 Print.Companies:Bank Of America CorporationCitigroup, Inc.Fannie Mae
The only question that really matters in the housing market right now is the following: Does the recent strengthening in sales data signal an imminent bottom, or are we smack in the middle of a dead-cat bounce?
Related Quotes
Symbol Price Change
BAC 16.83 +0.90
C 4.10 +0.12
FNM 1.06 +0.03
FRE 1.45 +0.08
WFC 27.81 +0.64
{"s" : "bac,c,fnm,fre,wfc","k" : "c10,l10,p20,t10","o" : "","j" : ""}
The answer, of course, is complicated. And as I've discussed in the past, the concept of a "bottom" in the housing market is meaningless, as stabilization and eventual recovery will happen on a localized, market-by-market basis.
Nevertheless, there are some key factors to watch that will provide clues as to how long this rally's legs really are, and what could trigger a reversion in the miserable state of the market we've become accustomed to over the past 4 years. Here are, in my mind, the top 3 "tells" to watch when it comes to the direction of the housing over the next 6-12 months:
1. Jobs
In the words of HousingWire's Paul Jackson, "If housing is central to recovery, and jobs are central to housing, and jobs aren't doing very well -- what's the real forecast for housing?"
Despite jobs data that appears to have stopped getting worse, the employment outlook in the US remains dismal. Government-backed loans through the Federal Housing Administration (FHA), Fannie Mae (FNM), and Freddie Mac (FRE) dominate the mortgage market right now, all of which have strict requirements for job stability. This means that even if companies start hiring again, recently laid-off workers will still have a hard time qualifying for a mortgage.
Furthermore, even though layoffs have slowed, the majority of firings that occurred in the past year haven't yet resulted in mortgage delinquency. As struggling homeowners gradually succumb to the pressures of losing a job, default and eventual foreclosure can occur many months after the layoff itself. We're yet to see any material improvement in default data, especially in high end markets. See, "What Does Employment Mean for the Market?"
2. The FHA
The FHA offers taxpayer-backed insurance for mortgages that are underwritten to their specific guidelines. Originally intended to provide home loans for low-income borrowers by requiring minimal down payments and overlooking blemished credit records, by the end of 2008, FHA loans accounted for almost 40% of all new loans -- up from less than 5% at the beginning of 2007, according to data compiled by Lender Processing Services (LPS).
In distressed markets, where ongoing foreclosure moratoria are keeping bank-owned homes off the market to artificially limit supply, FHA borrowers make up the vast majority of buyers. This has helped the likes of Wells Fargo (WFC), Bank of America (BAC), and Citigroup (C) unload foreclosures at higher prices, but it has prolonged the eventual recovery as banks slowly bleed out distressed homes into the market.
To help alleviate the housing crisis, Washington upped FHA limits so that in some areas, buyers can get an FHA loan for as much as $719,000. This widening of FHA's lending criteria has helped buoy many mid-tier markets, as borrowers can now buy $500,000 or $600,000 homes with a paltry 3% down. (Just ask Toll Brothers (TOL) if the FHA helped boost sales in the past 6 months. See, "Robert Toll, Robber Baron.")
If the FHA tightens its guidelines or lowers its loan limits, look out below, as a huge source of liquidity for the housing market will evaporate.
"THIS IS THE MOST IMPORTANT ATTENTION GRABBER"
3. November 30, 2009
This November, the $8,000 first-time homebuyer tax credit expires. If I were a betting man (which I'm not), I'd wager if the market stumbles even slightly between now and the end of the year, a new tax credit will be issued in some form. (They may extend it regardless of how the market performs.) Even if the credit is extended, many first-time homebuyers are already scrambling to make purchases while they can still get a check from Uncle Sam.
To wit, check out the advertisement currently running on ZipRealty, a popular online real estate brokerage:
Circle November 30 with a big red pen, because first-time buyers now account for fully one-third of purchase transactions according to the National Association of Realtors. If this demand dries up, sales could resume their downward spiral.
The bottom line is this: The outlook for housing is murky, at best.
Low-end markets are benefiting from government support on both the supply side (foreclosure moratoria) and demand side (tax credits, FHA) of the equation. Meanwhile, high-end markets -- as defaults on prime mortgages keep rising and the job market remains lousy -- are seeing steep home-price declines.
Anyone touting housing's so-called "bottom" is likely trying to sell you something -- namely, a house.
Nothing contained in this article is intended as a solicitation for business of any kind or for investment in the firm.
See this is the kinda news that realtors like me, read with glee but in reality this is good news..cheers!!
By Andrew Jeffery
On Thursday August 13, 2009, 12:20 pm EDT
Buzz up! 0 Print.Companies:Bank Of America CorporationCitigroup, Inc.Fannie Mae
The only question that really matters in the housing market right now is the following: Does the recent strengthening in sales data signal an imminent bottom, or are we smack in the middle of a dead-cat bounce?
Related Quotes
Symbol Price Change
BAC 16.83 +0.90
C 4.10 +0.12
FNM 1.06 +0.03
FRE 1.45 +0.08
WFC 27.81 +0.64
{"s" : "bac,c,fnm,fre,wfc","k" : "c10,l10,p20,t10","o" : "","j" : ""}
The answer, of course, is complicated. And as I've discussed in the past, the concept of a "bottom" in the housing market is meaningless, as stabilization and eventual recovery will happen on a localized, market-by-market basis.
Nevertheless, there are some key factors to watch that will provide clues as to how long this rally's legs really are, and what could trigger a reversion in the miserable state of the market we've become accustomed to over the past 4 years. Here are, in my mind, the top 3 "tells" to watch when it comes to the direction of the housing over the next 6-12 months:
1. Jobs
In the words of HousingWire's Paul Jackson, "If housing is central to recovery, and jobs are central to housing, and jobs aren't doing very well -- what's the real forecast for housing?"
Despite jobs data that appears to have stopped getting worse, the employment outlook in the US remains dismal. Government-backed loans through the Federal Housing Administration (FHA), Fannie Mae (FNM), and Freddie Mac (FRE) dominate the mortgage market right now, all of which have strict requirements for job stability. This means that even if companies start hiring again, recently laid-off workers will still have a hard time qualifying for a mortgage.
Furthermore, even though layoffs have slowed, the majority of firings that occurred in the past year haven't yet resulted in mortgage delinquency. As struggling homeowners gradually succumb to the pressures of losing a job, default and eventual foreclosure can occur many months after the layoff itself. We're yet to see any material improvement in default data, especially in high end markets. See, "What Does Employment Mean for the Market?"
2. The FHA
The FHA offers taxpayer-backed insurance for mortgages that are underwritten to their specific guidelines. Originally intended to provide home loans for low-income borrowers by requiring minimal down payments and overlooking blemished credit records, by the end of 2008, FHA loans accounted for almost 40% of all new loans -- up from less than 5% at the beginning of 2007, according to data compiled by Lender Processing Services (LPS).
In distressed markets, where ongoing foreclosure moratoria are keeping bank-owned homes off the market to artificially limit supply, FHA borrowers make up the vast majority of buyers. This has helped the likes of Wells Fargo (WFC), Bank of America (BAC), and Citigroup (C) unload foreclosures at higher prices, but it has prolonged the eventual recovery as banks slowly bleed out distressed homes into the market.
To help alleviate the housing crisis, Washington upped FHA limits so that in some areas, buyers can get an FHA loan for as much as $719,000. This widening of FHA's lending criteria has helped buoy many mid-tier markets, as borrowers can now buy $500,000 or $600,000 homes with a paltry 3% down. (Just ask Toll Brothers (TOL) if the FHA helped boost sales in the past 6 months. See, "Robert Toll, Robber Baron.")
If the FHA tightens its guidelines or lowers its loan limits, look out below, as a huge source of liquidity for the housing market will evaporate.
"THIS IS THE MOST IMPORTANT ATTENTION GRABBER"
3. November 30, 2009
This November, the $8,000 first-time homebuyer tax credit expires. If I were a betting man (which I'm not), I'd wager if the market stumbles even slightly between now and the end of the year, a new tax credit will be issued in some form. (They may extend it regardless of how the market performs.) Even if the credit is extended, many first-time homebuyers are already scrambling to make purchases while they can still get a check from Uncle Sam.
To wit, check out the advertisement currently running on ZipRealty, a popular online real estate brokerage:
Circle November 30 with a big red pen, because first-time buyers now account for fully one-third of purchase transactions according to the National Association of Realtors. If this demand dries up, sales could resume their downward spiral.
The bottom line is this: The outlook for housing is murky, at best.
Low-end markets are benefiting from government support on both the supply side (foreclosure moratoria) and demand side (tax credits, FHA) of the equation. Meanwhile, high-end markets -- as defaults on prime mortgages keep rising and the job market remains lousy -- are seeing steep home-price declines.
Anyone touting housing's so-called "bottom" is likely trying to sell you something -- namely, a house.
Nothing contained in this article is intended as a solicitation for business of any kind or for investment in the firm.
See this is the kinda news that realtors like me, read with glee but in reality this is good news..cheers!!
Saturday, August 1, 2009
Welcome to the bottom: Housing begins slow rebound
Housing begins to reverse 3-year recession in every US region, but 2nd half looks rocky
By Adrian Sainz, David Twiddy, Daniel Wagner, Alex Veiga, Associated Press Writers
On Saturday August 1, 2009, 10:39 am EDT
Buzz up! 74 Print.It was -- note the past tense -- the worst housing recession anyone but survivors of the Great Depression can remember.
From the frenzied peak of the real estate boom in 2005-2006 to the recession's trough earlier this year, home resales fell 38 percent and sales of new homes tumbled 76 percent. Construction of homes and apartments skidded 79 percent. And for the first time in more than four decades of record keeping, home prices posted consecutive annual declines.
A staggering $4 trillion in home equity was wiped out, and millions of Americans lost their homes through foreclosure.
Now take a deep breath and exhale. The worst is over.
By every measure, except foreclosures, the housing market has stabilized and many areas are recovering, according to a spate of data released in the past two weeks. Nationwide, home resales in June are up 9 percent from January, on a seasonally adjusted basis. Sales of new homes have climbed 17 percent during the same period. And construction, while still anemic, has risen almost 20 percent since the beginning of the year.
Even home prices, down one third from the top, edged up in May, the first monthly increase since June 2006.
"The freefall is over," says Dean Baker of the Center for Economic and Policy Research.
The problem is that, Baker, like many economists, expects the housing market will "be bouncing around the bottom" for the second half of the year.
More story.....
http://finance.yahoo.com/news/Welcome-to-the-bottom-Housing-apf-1993519878.html?x=0&.v=1
my take.....well you wanted a bottom here it is....now are you still gonna sit on the fence..prices are getting a green light to rise..and even if they dont the interest rates will...my 2 cents.
By Adrian Sainz, David Twiddy, Daniel Wagner, Alex Veiga, Associated Press Writers
On Saturday August 1, 2009, 10:39 am EDT
Buzz up! 74 Print.It was -- note the past tense -- the worst housing recession anyone but survivors of the Great Depression can remember.
From the frenzied peak of the real estate boom in 2005-2006 to the recession's trough earlier this year, home resales fell 38 percent and sales of new homes tumbled 76 percent. Construction of homes and apartments skidded 79 percent. And for the first time in more than four decades of record keeping, home prices posted consecutive annual declines.
A staggering $4 trillion in home equity was wiped out, and millions of Americans lost their homes through foreclosure.
Now take a deep breath and exhale. The worst is over.
By every measure, except foreclosures, the housing market has stabilized and many areas are recovering, according to a spate of data released in the past two weeks. Nationwide, home resales in June are up 9 percent from January, on a seasonally adjusted basis. Sales of new homes have climbed 17 percent during the same period. And construction, while still anemic, has risen almost 20 percent since the beginning of the year.
Even home prices, down one third from the top, edged up in May, the first monthly increase since June 2006.
"The freefall is over," says Dean Baker of the Center for Economic and Policy Research.
The problem is that, Baker, like many economists, expects the housing market will "be bouncing around the bottom" for the second half of the year.
More story.....
http://finance.yahoo.com/news/Welcome-to-the-bottom-Housing-apf-1993519878.html?x=0&.v=1
my take.....well you wanted a bottom here it is....now are you still gonna sit on the fence..prices are getting a green light to rise..and even if they dont the interest rates will...my 2 cents.
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