Time Running Out For First-Time Homebuyers
Wednesday, 14 October 2009
By Chris Levister –
The clock is ticking for first-time home buyers scrambling to take advantage of an $8,000 tax credit set to expire November 30 – unless Congress decides to extend it.
This week, the White House said its economic team is evaluating the credit’s impact on home sales and will make a recommendation to President Barack Obama.
The National Association of Realtors and the National Association of Home Builders have launched marketing campaigns touting the credit and have pushed Congress to keep it going. But some lawmakers are balking at the cost, which may hit $15 billion – more than double the amount projected in February’s economic stimulus bill.
Unlike the home buyer tax credit Congress enacted in July of 2008, this allowance does not have to be repaid.
The federal tax credit covers up to 10 percent of the home price, or up to $8,000, for first-time buyers. Combined with low mortgage rates and falling prices the incentive is drawing first-time buyers like Alisha Baeza 30, and George Gonzalez 29 of San Bernardino.
In June Baeza used the tax credit to buy a 3-bedroom 2-and-a half bath home with a pool for $248,000. She enlisted veteran Spellacy Associates realtor Alice Wilson, and a San Bernardino program aimed at first-time home buyers. City staffers helped Baeza save money, lower her debt and arrange for a down payment.
“I started thinking about buying a home almost 2 years ago and at the time I couldn’t afford it,” recalls Baeza, a dietary manager at Saint Bernardine Hospital. Alice kept encouraging me - ‘you need to be a home owner’. Then she told me about the city program. It worked out great because they advanced the 20% down payment.
Baeza admits qualifying for a loan in the midst of a recession-caused credit crunch and wading through the mounds of required paperwork was no fun. “It was grueling – but worth it. I say to young people - go do it.” Her boyfriend George Gonzales an anesthesia equipment technician also saw his fortunes change after recently qualifying for a home loan. This weekend the couple went house hunting.
“Five years ago I couldn’t afforded a home. My credit wasn’t that good and home prices were outrageous. I figured I’d never own property,” said Gonzalez.
“When I got approved I jumped for joy, called Alisha and said come on let’s go celebrate. Now I tell people go fix your credit, save some money and see what you qualify for.”
Housing experts say first-time homebuyers snapped up three out of 10 homes sold in July. That’s about 10 percent below the average for the previous six years, according to the National Association of Realtors.
Alice Wilson says it’s a new era in home buying and home sales will struggle to rebound without a tax credit extension.
“Prices and home values are falling, banks are holding on to their wallets and there’s not a lot of housing inventory out there. That’s kept many would-be buyers on the sidelines,” she said.
She said with or without a tax break, consumers in this economy are looking for a bargain much like they are with retail sales and auto sales.
“Banks are being extra cautious, worried about the still-dire unemployment situation. The turn of the year isn’t likely to yield much good news on the job front so I don’t see a full-blown recovery on the horizon.”
Realtor Jeanine, Alice’s daughter, says while the tax credit has succeeded in energizing buyers and helping clear a glut of lower-priced homes, including foreclosed properties that are dragging down home values, buyers expecting to find a plentiful home inventory will be disappointed.
“For every decent home on the market – there are at least four or five people sometimes more bidding on it. A home can fall out of escrow and a week later its back in – with another buyer.” The problem is made worst said Jeanine because many banks are reluctant to put foreclosed properties back on the market. “Simply put, it’s very hard out there.”
The best approach is honesty said Alice.
“We tell prospective buyers with bad credit and or unstable employment. It’s just not going to happen.”
“The good ole days are behind us. Get your house in order before you dip your toes into the market,” added Jeanine, “Its bitter medicine. We’re just praying people don’t get discouraged.”
Couldn't have said it better....
Showing posts with label first time home buyer. Show all posts
Showing posts with label first time home buyer. Show all posts
Thursday, October 15, 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
Tuesday, July 14, 2009
I'm re thinking why people buy a home ...
I believe the only reason people buy a home is because they feel a grounding in life is very important..whether it's a milestone like a mark in life.. a decision has been made to initiate a significate change. I want to stand, sleep, eat, bathe, have a family and protect my possessions in my house. This is mine. The house will represent stability, security and the investment for the future. Most importantly we all need to have a home, a roof over our heads to shelter us. A door to a home that within has peace of mind when it is closed and when it is open, lets in opportunity and hope.
I want everyone in this life to experience those feelings and I hope I will be the realtor that helps to bring that important moment in your life to reality.
I want everyone in this life to experience those feelings and I hope I will be the realtor that helps to bring that important moment in your life to reality.
Tuesday, June 16, 2009
my latest craiglist ad is serious....
$250000 / 2br - PreApproved, first time home buyer (Los Angeles)
Skin in the game...Heard the expression before..you know what it means????..# 1 question you ask your self is Am I ready to purchase a home???, DO I have a down payment?("skin in the game") # 2 question you ask yourself...Am I pre approved?..# 3 question how important is it for me to accomplish this goal ?...I asked how important is getting the deal done, finished, door open, key in hand. Laugh but it's the essence of this advert. I'm so so serious...So many aren't. Why waste your time if you're not all the above. I'm the Facilitator, you need me I need you on my team...are you ready, Pre Approved first time home buyer? I have homes in all income ranges to show you anyday sunday through saturday...You wanna deal,you wanna finish this goal?...I know it's fustration dealing with going out looking, waiting, emotions up and down. I know, I know. but like a great team, you need a captain. Hire me. I will be there to answer your questions, show you the properties that meet your expectations and help you decide which one you want, that's worth the wait, the time, your and mine effort to make this as simple as possible. to make buying your home a good experience.
I'm adding this to the blog...
Oh by the way...the current intrest rates are low but are creeping higher...just a little every day, which means the banks are slowly reducing the amount of house (loan amount) you may qualify for.
From http://mortgage-x.com/general/mortgage_indexes.asp
CMT: Weekly Average Yields
Averages of Business Days
Week
Ending
May 29 June 5 Jun 12
1 Month 0.148 0.086 0.090
3 Months 0.160 0.150 0.188
6 Months 0.300 0.290 0.314
1 Year 0.485 0.496 0.556
2 Years 0.953 1.024 1.356
3 Years 1.472 1.586 1.962
5 Years 2.382 2.582 2.884
7 Years 3.137 3.308 3.530
10 Years 3.588 3.696 3.888
20 Years 4.465 4.546 4.672
30 Years 4.480 4.542 4.678
Year
Week 2009
# 22 2009
# 23 2009
# 24
Skin in the game...Heard the expression before..you know what it means????..# 1 question you ask your self is Am I ready to purchase a home???, DO I have a down payment?("skin in the game") # 2 question you ask yourself...Am I pre approved?..# 3 question how important is it for me to accomplish this goal ?...I asked how important is getting the deal done, finished, door open, key in hand. Laugh but it's the essence of this advert. I'm so so serious...So many aren't. Why waste your time if you're not all the above. I'm the Facilitator, you need me I need you on my team...are you ready, Pre Approved first time home buyer? I have homes in all income ranges to show you anyday sunday through saturday...You wanna deal,you wanna finish this goal?...I know it's fustration dealing with going out looking, waiting, emotions up and down. I know, I know. but like a great team, you need a captain. Hire me. I will be there to answer your questions, show you the properties that meet your expectations and help you decide which one you want, that's worth the wait, the time, your and mine effort to make this as simple as possible. to make buying your home a good experience.
I'm adding this to the blog...
Oh by the way...the current intrest rates are low but are creeping higher...just a little every day, which means the banks are slowly reducing the amount of house (loan amount) you may qualify for.
From http://mortgage-x.com/general/mortgage_indexes.asp
CMT: Weekly Average Yields
Averages of Business Days
Week
Ending
May 29 June 5 Jun 12
1 Month 0.148 0.086 0.090
3 Months 0.160 0.150 0.188
6 Months 0.300 0.290 0.314
1 Year 0.485 0.496 0.556
2 Years 0.953 1.024 1.356
3 Years 1.472 1.586 1.962
5 Years 2.382 2.582 2.884
7 Years 3.137 3.308 3.530
10 Years 3.588 3.696 3.888
20 Years 4.465 4.546 4.672
30 Years 4.480 4.542 4.678
Year
Week 2009
# 22 2009
# 23 2009
# 24
Thursday, June 4, 2009
I need your help...
Ok, ok this is the real deal…how many people are really looking to take advantage of the $8000 tax credit $10,000 new construction credit ? You know if your ready to move I can help you find that home where more memories will begin to change your life.
I have taken the time to locate several homes in the first time home buyer category if your house hold is in the 50-100k income range… start with me, because the home you buy today won't be your last, when your ready to move to a nicer home,I will be there.
I have also located homes in the second home or additional home category up to about 500- 1 million range..I can help you buy that home too….yes it’s a great time to buy with home prices down in some areas almost 40% from 2006 levels but you need someone out there looking and I'm here to help you.
I’m a Real Estate life coach, I can cheer you and be there to answer your questions anytime….
I have taken the time to locate several homes in the first time home buyer category if your house hold is in the 50-100k income range… start with me, because the home you buy today won't be your last, when your ready to move to a nicer home,I will be there.
I have also located homes in the second home or additional home category up to about 500- 1 million range..I can help you buy that home too….yes it’s a great time to buy with home prices down in some areas almost 40% from 2006 levels but you need someone out there looking and I'm here to help you.
I’m a Real Estate life coach, I can cheer you and be there to answer your questions anytime….
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