themarycoxteam.wordpress.com - Credit

Time to Buy Again

For people who have experienced a distressed sale of a home and gotten their finances and credit back in shape, there can still be an unanswered question of “How long do we have to wait to qualify for another mortgage.” The loan types for the new loan will differ in amounts of time based on the event.

The different lending authorities, VA, FHA, Fannie Mae (FNMA) and Freddie Mac (FHLMC), establish their own waiting periods. A borrower may be eligible to qualify for one type of mortgage before another type, even though during this waiting period, that the person was current on all payments and maintained a history of good credit.

The following chart indicates how long a person might have to wait.

A recommended lender can give you specific…

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Auto Pay Your Mortgage Payment

In the time that it takes to write one check, you can set it up with your bank and never have to do it again. You won’t have to write checks, envelopes or buy stamps anymore. You’ll save time, money and benefit in other ways too.

1. Never be late … avoid late fees and protect your credit
2. Schedule additional principal contributions monthly to save interest, build equity and shorten the mortgage term.
   An extra $200 a month applied to the principal on a $200,000 mortgage at 4.5% for 30 years will result in shortening the loan by 8.5 years. If the loan was paid to term, it would save $52,977 in interest. Use the Equity Accelerator to see how much you can save.
3. It’s convenient … by doing it online with your bank, you’ll have a centralized history…

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FHA Advantages

The Federal Housing Administration, operating under HUD, offers affordable mortgages for tens of thousands of buyers who may not qualify for other types of programs. They are popular with both first-time and repeat buyers.

The 3.5% down payment is an attractive feature but there are other advantages:

• More tolerant for credit challenges than conventional mortgages.
• Lower down payments than most conventional loans.
• Broader qualifying ratios – total house payment with MIP can be up to 31% of borrower’s monthly gross income and total house payment with all recurring debt can be up to 43%. There is a stretch provision taking it to 33/45 for qualifying energy efficient homes.
• Seller can contribute up to 6% of purchase price; this money must be…

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Don’t Pat Yourself on the Back Just Yet

You’ve got $500,000 in liquid assets for your retirement and you’re still 15 years away. All your bills are paid; you have a small mortgage on your home; cars are paid for and great credit. Don’t break your arm patting yourself on the back yet.

People think more about what they’re going to do when they retire than whether they’ll have the funds to do them. Ask anyone who has retired, it takes more money than you thought it did. Let’s look at a hypothetical situation.

To retire with $125,000 income in today’s dollars with a life expectancy of 25 years after retirement, you’ll need to have a net worth of $1.5 million at retirement including what Social Security may provide. Your $500,000 will grow to $1,045,420 in 15 years which will leave you about a…

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Your Home’s Equity Could Be the Answer

A home equity line of credit, HELOC, is a mortgage loan made to homeowners to be used on an as-needed basis. A lender, such as a bank, will approve a borrower for a specified amount based on the equity in their home and all the necessary paperwork is signed to authorize the loan.

The line of credit amount is available to the borrower and no interest is due until some or all the money is used. When the money is paid back, the line of credit is again available in full to the borrower.

The specifics of the repayment will depend on the HELOC lender. It may require interest only or it may require amortized payments of principal and interest.

The proceeds from a HELOC can be used to make improvements on the home or anything else such as medical…

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Down Payment Problem – Are You Sure?

There is increasing difficulty for first-time home buyers to save for their down payment as indicated in the graph.  Several factors that contribute to this trend include rising rents, rising home prices, student loan debt and flat wages.

Some would-be buyers feel they cannot buy a home today but a large part of those decisions may be based on inaccurate assumptions.

Nine out of ten non-owners believe they need ten percent or more for a down payment. The typical down payment for first-time buyers is six percent. VA has 100% loan programs as well as USDA for certain qualifying areas and buyers. FHA is known for 3.5% down payments. And FNMA and Freddie Mac have down payments as low as 3% and 5%.

There are gift provisions available for buyers who…

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Indecision May Cost More

More has been lost due to indecision than was ever lost to making the wrong decision.” Interest rates have as much effect on housing costs as price and when they are both trending upward, it can be very expensive to wait.

There can be some legitimate reasons for postponing a purchase such as needing to save the down payment, improve your credit or waiting to find out about a possible transfer. The problem is that prices and interest rates could, and very likely will, go up in the future.

If the price of $250,000 home went up 5% and the interest rate went from 4.5% to 5.25%, the payments would increase by $176.42. The additional cost over a seven-year period would be close to $15,000.

The questions that indecisive buyers need to ask themselves is…

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Indecision May Cost More

More has been lost due to indecision than was ever lost to making the wrong decision.” Interest rates have as much effect on housing costs as price and when they are both trending upward, it can be very expensive to wait.

There can be some legitimate reasons for postponing a purchase such as needing to save the down payment, improve your credit or waiting to find out about a possible transfer. The problem is that prices and interest rates could, and very likely will, go up in the future.

If the price of $250,000 home went up 5% and the interest rate went from 4.5% to 5.25%, the payments would increase by $176.42. The additional cost over a seven-year period would be close to $15,000.

The questions that indecisive buyers need to ask themselves is…

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Attracting Buyers

There is a common body of knowledge among real estate professionals that indicates that the longer a home is on the market, the lower the price will be. Many sellers discount this belief in the beginning because they feel confident their home will sell quickly.

Lowering the price is the most obvious thing that can be done to encourage buyers but it might be good to look at what builders do. Builders offer a variety of incentives such as upgrades, seller-paid closing costs, interest rate buy downs, washers, dryers, refrigerators or big screen TVs.

Interestingly, much of the resale market doesn’t employ these techniques. According to the latest NAR Home Buyers and Sellers Profile, 64% of sellers did not offer any incentives at all.

21% of sellers…

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Facts or Myths

• “It’s impossible to get low down payment loans.” – MYTH!
  FHA down payments are 3.5% and VA is 0%. In some areas, there may be some 0% down payment USDA loans available. FNMA and Freddie Mac have 3% down payment programs.

  

• “It takes perfect credit to get a loan.” - MYTH!
  There is a relationship of better rates to better credit but many issues on a credit report can be explained or corrected. The way to know for sure is to speak to a reliable lender.
• “If I’ve had a bankruptcy or foreclosure, I can’t qualify.” - MYTH!
  Credit history following a bankruptcy or foreclosure is very important and there can be extenuating circumstances. It only takes a few moments with a reliable lending professional to find out if your individual situation will allow…

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