Archive for January, 2012
Housing Market to Improve in 2012
January 31st, 2012 categories: Buyers, Money and Mortgages
Housing Market to Improve in 2012 as Banks Loosen Credit Standards.
Capital Economics expects housing to improve this year, according to a report released last Tuesday. One of the reasons: loosening credit. The analytics firm notes the average credit score required to get a mortgage loan is 700. While this is higher thans scores required before the crisis, it is the same with requirements one year ago.
Additionally, a Fed Senior Loan Officer Survey found credit requirments in the 4th quarter were consistent witht he past 3 quarters. However, other market indicators point not just to a stabilization of mortgage lending standards, but also a loosening of credit availability.
Banks are now lending amounts up to 3.5 times borrower earnings. This is up from a low during the crisis of 3.2 times borrower earnings.
Banks are also loosening loan-to-value ratios (LTV), which Capital Economics indicates “the clearest sign yet of an improvement in mortgage credit conditions.” In contrast to a low of 74% reached in mid-2010, banks are now lending at 82% LTV.
While conditions may have loosened slightly, some potential homebuyers are still struggling with credit requirements. In fact, Capital Economics points out that in November, 8% of contract cancellations were the result of a potential buyer not qualifying for a loan.
Additionally, Capital Economics says, “any improvement in credit conditions won’t be significant enough to generation actual house price gains.” and potential ramifications from the euro-zone pose a threat to future credit availability.
So if you or anyone you know is on the fence about buying a home, I urge you to get back in the game now, before loan standards tighten up again. Feel free to call or email me for a free consultation. If you like this and other articles, please like Kathy Villa Real Estate. We look forward to connecting with you!
Article Source: DSnews.com
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Having New Mortgage in 2012 Benefits Potential and Current Homeowners
January 26th, 2012 categories: Buyers, Money and Mortgages
There are some good reasons to get a new mortgage in 2012! Besides continued low mortgage rates expected throughout the new year, Bankrate.com lists the following reasons:
- Some potential homebuyers may be discouraged by recent reports of a damaged housing market. However, a lack of applications and activity does not mean buying a home is a bad idea, says the news report, as shrunken house prices and low mortgage rates will continue to provide buyers high affordability.
- Some benefits of owning a home include not having to pay rent to a landlord while making a personal investment. Homeowners also receive federal income tax deductions, which makes a difference over time.
- Current homeowners may decide to refinance to get a better rate, says the report. Homeowners may also benefit from locking in low rates by changing to a fixed interest rate versus an adjustable rate that is subject to change within the market. Be aware that homeowner’s equity and a decent credit score are required for refinancing.
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Six Must-Haves for Mortgage Approval
January 19th, 2012 categories: Buyers, Money and Mortgages
Interest rates are at historical lows! Low interest rates increase affordability, making it easier for buyers to qualify. Yet stories of buyers waiting months to get loan approval, and home purchase transactions not closing on time due to lender’s strict underwriting, are all too common.
Some buyers are turned down for illogical reasons. For example, if you have investments- even if they’re performing well, an underwriter might deny the mortgage because your portfolio doesn’t fall into the underwriter’s risk assessment model.
One couple was turned down because the husband had worked at his current job for less than a year. Even though he was making more money at the new job than he was before! These buyers were well-qualified. The wife worked several years for one employer and was able to qualify for the loan on her own. So the transaction closed, although two months late.
Generally, it’s more difficult to qualify now than it was a year ago. Most conventional lenders require a 20-25 percent down payment. For the lowest interest rates, your credit scores need to be in the 700 range. You need to have verifiable income and cash reserves in addition to your down payment and closing costs.
You could run into underwriting problems if you’re self-employed, as W-2 income is much easier to verify. Other hurdles are lapses in employment and owning a lot of property. Some lenders won’t lend to buyers who have more than three or four residential properties.
If you’re buying a new home before selling your current home, you’ll need to have 30 percent equity in your current home. This needs to be verified by the lender’s appraiser. Also, the lender will want to see a copy of the cashed check from the tenant for the first month’s rent to verify rental income if needed to qualify.
HOME BUYING TIP: As soon as you’re serious about buying a home, find the best mortgage broker or loan agent that can assist you. Don’t make your selection based on interest rates alone. A good track record counts for a lot. I can refer you a great mortgage broker if you need. -Just ask!
Closing the deal should be your primary goal. If you have to pay 0.25 percent more to assure your transaction closes on time and that you’re not turned down at the last minute, it’s worth it.
Be honest with your loan professional about anything in your financial picture that might impact loan qualification. A good loan agent or broker will be able to assess your financial situation and anticipate what you’ll need to do to satisfy the underwriter.
Be aware that appraisal issues can impact your loan approval. For example, if a previous owner added square footage without a building permit, the additional square footage probably won’t be included as livable square feet.
If the appraisal comes in for less than the purchase price, the lender might not lend you enough to close the deal. Include an appraisal contingency in your contract.
There are more jumbo financing options available now. Adjustable-rate mortgages that are fixed for 10 years and then revert to an adjustable have a starting rate about 0.25% less than a 30-year fixed jumbo. A five-year fixed starts about 0.5% to 0.75% lower, but is riskier.
Bottom line: Because of the risk factor, the lender may want you to have a large cash reserve. Your retirement accounts counts toward this.
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Five Reasonable Home Updates to Complete Before Listing Your Home
January 5th, 2012 categories: Sellers
There is no perfect formula for selling your home efficiently, but by following these 5 tips prior to listing, you can increase your chances to close quickly at a higher price.
1.) Update your old garage door. Garage doors seem like a non-issue, but many times they make up a significant percentage of the front of a home. Because of this, they are one of the first things that buyers notice when they pull in the driveway. Replacing, or even just painting, these central fixtures will do wonders when it comes to instantly impressing perspective buyers and standing apart from your competition. The market has changed drastically since many of us purchased our homes here in town. I frequently hear buyers say that they have crossed a house off their list because of the lack of curb appeal. This issue is especially important to people on busier streets, corner lots, or near a neighborhood eyesore.
2.) Replace old windows. Outdated windows age a home significantly, and you can often upgrade standard windows to vinyl for a reasonable $300 per window. The average home has 8 windows, so this upgrade doesn’t cost nearly as much as you might think and it will make a huge difference to the value perceived by prospective buyers. Key point to remember is that when buyers view a home they love, if they see it has older windows, they consider it a time-consuming and costly headache. First-time buyers have never replaced windows and often dramatically overestimate the cost to cure this issue. By replacing before listing, you can actually save money. A well priced, move-in condition home will sell for far more than one with windows in need of repair.
3.) Assess your floors. If you have hardwood flooring, it’s worth the investment to have them refinished considering buyers put an extremely high value on them. You’ll get the most bang for your buck if they are refurbished. Carpets should be shampooed or replaced if they are stained or look worn. You don’t need to spend large amounts of money on the highest grade or most modern name but something inexpensive and neutral will certainly bring you a return on the investment. Even the smell of new carpet will make buyers set your home apart from the comparables.
4.) Paint the trim. If you can’t afford the overwhelming task of painting your entire house, painting just the trim will still make a big difference when it comes to curb appeal. Painting the whole house can be expensive, time consuming and delayed by wether conditions; painting just the trim will give your home a fresher look. Interior trim is equally as important.
5.) Update fixtures. Keep an eye out for sales at home improvement stores and replace outdated lighting, plumbing and hardware fixtures. Simply replacing lighting fixtures and knobs in the bathroom or kitchen can update the entire look of the room. You can find many modern brand name fixtures online on contractor supply websites by searching terms like: sale faucets, sale plumbing fixtures etc.
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