Posts Tagged ‘Buying a Home’

After a Foreclosure

With the number of foreclosures, short sales and other financial hardships affecting so many people in Sacramento and elsewhere in the country, the question often comes up: Will I ever be able to buy a home again? Will any bank ever give me a loan to finance a real estate purchase?

The short answer is: yes. The longer answer is: yes, but…

And here’s the “but…” part of it. Lenders will always ask for reasons why. One friend said it very matter-of-factly that you will always have to explain a foreclosure but because there are so many right now, the stigma, if you will, of a foreclosure on your record at this time might not affect you as much as it would have during a financially good time. This does not mean that you will not have to provide documentation that you did not strategically let the home foreclose but getting a home loan might not be as distant and impossible as it seems today.

In approximately two to five years after a foreclosure, the financial situation of the borrower could look considerably different to a lender. And you want to keep in mind that although your FICO scores have suffered as a result of the foreclosure, you might be able to show other factors as a good savings history, employment history and so on. Also, other bills paid on time will have a great impact. A larger down payment might also be necessary.

This is to say that if you have genuinely experienced a financial downturn in your life, all is still not lost. The dream of homeownership might still come true for you. It just might take a little longer than you hoped.

Homebuyers: Protect Your Closing!

The old rules remain important: if you’re buying a home and have been credit approved, please, please don’t put anything on credit between the loan approval and the closing of the escrow. I remember telling this to home buyers six years ago and it’s still true today, a nice reminder that the old rules still hold true.

Effective June 1st as part of Fannie Mae’s new loan quality initiative to control underwriting and prevent fraud by borrowers, your lender will probably order a second full screening immediately before closing. This means that if you have obtained or even shopped around for a largish purchase on credit like a car or even a new credit card between the original application for a home mortgage and closing, there is a chance the lender could put the closing on hold pending additional research.

With escrow times getting longer, it’s imperative that potential homebuyers understand how to handle credit wisely and not plan on getting additional credit to buy things for the house just because they were approved for a home mortgage. The logic is this: If you’ve taken out new loans that are sizable enough to affect the debt-to-income ratio calculations used in your original mortgage approval, the deal could fall through. The added debt load could render you ineligible for the mortgage because you suddenly appear unable to handle the payments without a strain on your household budget.

So follow the old rule: if you’re buying a home, don’t even think about buying anything else!

Homebuyers Interested in Real Estate Investments

Move Inc. recently conducted a survey about real estate investments and attitudes of home buyers and here are a few of the highlights. Some of these are quite interesting to note. For one, interest in real estate investments has more than tripled in the past year. The survey said that in fact 17.2% of potential home buyers today said that they planned on purchasing a home in the near future as an investment compared to just 5.6% in March 2009.

The Move Homeownership survey also found that approximately half – 49% – of all homeowners they surveyed would buy another home today if they could sell their current home for what they paid for it or more. Some of the most important reasons influencing decisions to sell their current homes have to do with day-to-day budgeting. Many homeowners would like to reduce monthly expenses because of financially hard times, growing families or a better school district for their children. A few other reasons for selling have been moving closer to conveniences and purchasing a nicer or larger home. In many cases, loan modifications have not been available, although this is purely anecdotal evidence.

As far as perceptions go, real estate remains high on people’s radar with 55% of responders saying that they pay attention to their home’s values today as compared to a year ago. Just 10% said they paid less attention.

For the entire article published in Realtor.com go here.

Should You Say Goodbye to Your Landlord in 2008? Have Your DNA Tested and Find Out

One of the criticisms of Realtors® that I really don’t like is when people say, “Of course, if you’re a Realtor®, any time is a good time to buy or sell a home”.

At the heart of the matter is a confusion over what we do for a living and what we endorse.  No one says about doctors, “Of course, if you’re a doctor, any time is a good time to get sick.”

Should you buy a home in 2008? 

Well, that depends on a lot of things.

Let’s Start by Testing Your DNA.

Let’s start with something obvious, your “D”.  Do you want to buy a home in 2008?  If you’re paying rent and you’re happy about it, and you like where you live, and you like your landlord, and you think building equity in someone else’s property is a fair trade for having a low monthly payment, then there’s a good case that you should rent.

Now let’s talk about your “N”.  How about your situation?  Are you (and your spouse / significant other, if that applies) in a fairly stable job situation, or do you think you’ll be moving in the next one to three years?  In the short term, prices of real estate can fluctuate, and (as importantly) there are closing costs involved when you buy or sell a home.  If you’re thinking you need to move in a short time, you might be better off renting for now, and saving for a home at your destination.  Do you have sufficient space where you are now, or do you have to make a move for some reason — starting or growing a family or the like?

And let’s not forget to cover your “A”:  Do you know what your housing payment will be for the types of home you might be interested in?  Have you looked at good, conservative loan programs like fixed rate mortgages and decided that you can afford the payment?  Do you have money saved for a down payment, or, if not, have you found out if you might qualify for 100% financing?  Have you factored in tax and insurance, and are you still comfortable with the payment?

DNA — Desire, Need, Ability.  If you want a home, if it meets your needs, and if you have the ability to get into a home without overextending yourself, then, yes, now is a great time to buy a home.  Interest is still low, and prices have fallen throughout 2007, so homes in the area are more affordable than they have been in the last few years.  Many bank owned foreclosures are priced well below market, and not all of these are run down or in bad shape.

To find out more about if home ownership is right for you, we’re always happy to help first time buyers find out more about the process, discuss loan programs and properties / prices that are available in different areas.